Federal
Bill to Limit Credit Checks Re-Introduced (H.R. 321)
Known as the "Equal Employment for All Act," this bill would amend the Fair Credit Reporting Act to substantially limit an employer's ability to obtain or use credit information against prospective and current employees when making employment decisions. Specifically, this bill would prohibit employers from using or obtaining consumer reports or investigative consumer reports regarding "creditworthiness" unless the employee is applying for or currently holds employment requiring national security or FDIC clearance, or the employee applies for or holds a high-level position at a financial institution, or where otherwise required by law. These prohibitions would apply even if the employee consented to the acquisition or use of such reports for employment purposes.
(NOTE: a similar bill has been vetoed in California the last three years, but the new Governor likely would sign the almost-certain-to-be-reintroduced version in California. Several other states have enacted similar bills in the last couple years suggesting there may be growing momentum for this limitation, including at the federal level).
AGENCY
Federal
IRS' Mileage Reimbursement Rate Increases to 51 Cents per Mile
As a reminder, as of January 1, 2011, the Internal Revenue Service's standard mileage rate has increased for business travel from 50 cents to 51 cents per mile.
Reminder: OSHA Form 300A Posting Deadline February 1st
The Occupational Safety and Health Act of 1970 ("OSHA") imposes a number of reporting obligations on certain employers, including an annual obligation to post by February 1st a Summary of Work-Related Injuries and Illnesses in the preceding year (the so-called Form 300A). Employers subject to this posting duty must complete and post the Form 300A even if there are no injuries or illnesses during the prior year, in which case the form must be posted with zeroes in the total line. A properly-certified form must be posted in a conspicuous place from February 1, 2011 until April 30, 2011. A sample Form 300A along with instructions may be downloaded at
http://osha.gov/recordkeeping/new-osha300form1-1-04.xls.
USCIS Issues Updated Handbook for Employers for I-9 Issues
The United States Citizenship and Immigration Services (USCIS) department has recently published its revised "Handbook for Employers" to assist employers with the Form I-9 process (this so-called M-274 was last updated in 2009). Amongst other things, the updated version contains information about new regulations (including regarding electronic storage and retention of Form I-9s), as well as visual aids for completing the Form I-9 and it addresses public comments and frequently asked questions. It also contains expanded guidance on processing employees to H1-B and H2-a status and on extensions of stay for employees with temporary employment authorization. The newly-revised M-274 is available at www.uscis.gov/files/form/m-274.pdf.
JUDICIAL
California
Pregnant Employee's E-mails to Plaintiff's Attorney from Work Computer Not Privileged
A pregnant employee resigned and sued for FEHA sexual harassment and constructive termination after her supervisor sent two e-mails questioning her honesty about her pregnancy and suggesting that he would accommodate her pregnancy although it would be burdensome. The California court of appeal summarily adjudicated her FEHA harassment claim stating that the two e-mails were not sufficiently severe or pervasive to create an objectively unreasonable hostile work environment. The appellate court also dismissed her constructive termination claim observing the two e-mails did not constitute objectively intolerable conditions forcing her to quit, especially since the supervisor had indicated he wanted her to stay and would make it work.
The court also held the employee's e-mails to her attorney from a work computer the day before her resignation were not privileged since she had no reasonable expectation of privacy. The court conceded a communication does not lose its privileged character simply because it is communicated by electronic means or because persons involved in the delivery or storage of electronic communications may have access to the communication's contents. In this case, however, the employee had used the employer's computer after receiving the employer's electronic communications policy stating personal e-mails were prohibited on work computers, that the employer retained the right to monitor its computers for compliance, and that she had no expectation of privacy in her e-mails. The court reasoned the employee's communications were thus no different than if she had used the employer's conference room to consult with her attorney in a loud voice. (Holmes v. Petrovich Dev. Co., LLC (2011) ___ Cal.App.4th___, 2011 Cal.App.LEXIS 33.)
(NOTE: this case underscores the importance of a carefully-worded electronic communications policy that limits an employee's expectation of privacy in their workplace electronic communications.)
FEHA Sexual Harassment Claims Time-Barred
A party seeking to file a FEHA harassment or retaliation claim must first file an administrative charge with the Department of Fair Employment and Housing within one year of the date on which the unlawful practice occurred. In this case, the California court of appeal concluded the employee's FEHA harassment and retaliation claims were time-barred because the employee did not file her DFEH administrative charge until fifteen months after the last harassing or retaliatory action occurred. The court also held the so-called "continuing violations" doctrine, under which unlawful conduct occurring outside the statutory period may be considered if sufficiently related to unlawful conduct occurring within the one-year period, did not apply because no unlawful conduct occurred within the one-year period before the DFEH charge was filed. (Trovato v. Beckman Coulter, Inc. (2011) ___ Cal.App.4th ___, 2011 Cal.App.LEXIS 99.)
Employer's Mistake of Law Does Not Constitute "Inadvertence" Excusing Violation of Labor Code's Wage Statement Requirement
Labor Code section 226(a) provides that every employer shall, semimonthly or at the time of each payment of wages, furnish each of its employees an accurate itemized statement in writing showing, inter alia, the amount of gross wages earned, the total hours worked by the employee, any deductions, net wages earned, and the period for which the employee is paid. Section 226.3 of the Labor Code provides that an employer who fails to comply with this statute is subject to civil penalties, but requires the Labor Commissioner to consider whether the violation was inadvertent and to use its discretion whether to penalize an employer for a first violation due to clerical errors or inadvertence.
In this case, the Division of Labor Standards Enforcement ("DLSE") assessed more than $70,000 in civil penalties against an employer who failed to provide itemized wage statements to sixteen employees lacking social security numbers. Instead, the employer had treated them as independent contractors, issuing them Form 1099 federal income tax statements at the end of the year. The employer argued that its noncompliance was "inadvertent" within the meaning of section 226.3, as it had mistakenly assumed that statements are only required when the employer withholds taxes from the employee and since the employer could not withhold taxes from employees without social security numbers, no statements were necessary.
The appeals court rejected the employer's argument that the statute contained a "state of mind" requirement and determined that the term "inadvertence" was to be provided its plain and commonsense meaning (i.e., "unintentional," "accidental," or "not deliberate.") The court determined this employer's failure to provide itemized wage statements was intentional, and held ignorance of the law was not a defense to noncompliance. (Heritage Residential Care, Inc. v. Division of Labor Standards Enforcement (2011) ___Cal.App.4th___, 2011 Cal. App. LEXIS 83.)
Federal
United States Supreme Court Upholds Background Checks for Government Contractor Employees
Current employees of contractors working at NASA's Jet Propulsion Laboratory were informed they must complete a standard background check mandated by a 2004 executive order or they would be denied access to the lab and face possible termination. The employees sued claiming this background check process violated their constitutional right to informational privacy. In particular, the employees objected to inquiries about their treatment or counseling for recent illegal drug use, and to open-ended questions sent to the employees' designated references concerning whether they have "any reason to question" the employee's "honesty or trustworthiness" or have "adverse information" concerning a variety of subject matters. The Ninth Circuit Court of Appeals precluded these inquiries finding the drug-treatment-related questions were not of legitimate interest and the open-ended inquiries about "trustworthiness" were not sufficiently narrowly-tailored.
A unanimous United States Supreme Court reversed, upholding the government's ability to conduct standard background investigations on federal contract employees. The Court observed government employers have a legitimate interest in conducting basic background checks to ensure a "competent, reliable workforce" and noted these particular inquiries have long been used in the public and private sectors. The Court concluded that the background checks were reasonable given the government's interests even if these employees were contractor employees, and it rejected the argument that the government must show that the questions are "necessary" or are the least restrictive means of furthering its interests. The Court also found it significant that all information collected in connection with these background checks would be subject to non-disclosure pursuant to the Privacy Act. (National Aeronautics and Space Admin. v. Nelson (2011) ___ U.S. ___, 2011 U.S.LEXIS 911.)
Employees Who Leave Due to Impending Business Closure Have Not "Voluntarily Departed" for WARN Act Purposes
The Worker Adjustment and Retraining Notification Act (WARN Act) provides that an employer may not order a plant closing or mass layoff, which results in an employment loss for 50 or more employees during any 30-day period, unless the employer provides a 60-day written notice of such an order to each affected employee. In this case, employees who stopped reporting to work after receiving notice their employer would close in less than two weeks sued alleging the employer failed to provide the required 60-day WARN notice.
The employer argued a WARN Act notice was not required because all but 30 employees "voluntarily departed" their jobs prior to the scheduled closure date, meaning they had not suffered an "employment loss" as defined by the WARN Act. The Ninth Circuit Court of Appeals rejected this argument, holding that employees who leave a job because the business is closing have not "voluntarily departed" within the meaning of the WARN Act.
The court also observed that the statute requires "affected employees" be given notice of the impending closure. "Affected employees" are those who may "reasonably be expected to experience an employment loss as a consequence of a plant closing." Thus, the affected employees must be determined prospectively in order for the employer to give proper notice. Additionally, as the DOL has suggested, the starting point for determining whether there is an actual or reasonably expected employment loss (as a consequence of a plant closure) is to determine how many positions will be eliminated by the closing. The court also determined that "unless there is some evidence of imminent departure for reasons other than the shutdown, it is unreasonable to conclude that employees voluntarily departed after receiving notice of the upcoming closure." (Collins v. Gee W. Seattle LLC (9th Cir. 2011) ___F.3d ___, 2011 U.S. App. LEXIS 1169.)
Ninth Circuit Holds Employer May Only Recover Attorneys Fees Incurred Exclusively on "Frivolous" Claims
As most employers know, California and federal courts routinely reward prevailing civil rights plaintiffs their "reasonable" attorneys' fees, while prevailing employers may only recover if they demonstrate the unsuccessful plaintiff's claims were "frivolous" and/or unreasonably prosecuted. In this case, the ninth circuit reversed a $125,000 attorneys' fees award in a prevailing employer's favor, and articulated a standard making it even more difficult for employers to recover, even when the employee's claims are frivolous. Specifically, the Ninth Circuit Court of Appeals held that under Title VII, an employer may only recover fees attributable exclusively to a plaintiff's frivolous claims. In other words, the employer must identify those fees incurred solely because of frivolous claims and the employer cannot recover any fees for work that was also related to non-frivolous claims, even if at least a portion of the work was also related to the frivolous claims.
(Harris v. Maricopa County Super. Ct. (9th Cir. 2011), ___F.3d___, 2011 U.S. App. LEXIS 1068.)
Employer's Failure to Respond to Internal Harassment Claims Precludes Summary Judgment
A temporary employee working on an all-male production line informed his trainer/working foreman and Human Resources that co-workers were making disparaging comments about his sexual orientation. Two days after his complaint to Human Resources, the company terminated him for violating its call-in policy when he took a day off due to stress. The district court granted the employer's summary judgment motion but the Ninth Circuit Court of Appeals reversed concluding triable issues of fact regarding the employee's Title VII retaliation claim and the adequacy of the employer's response to his sexual orientation harassment claim.
The appellate court noted the jury would need to determine whether the "trainer" was a "supervisor," in which case the employer would be vicariously liable for his harassment and have his knowledge imputed to it, or a "co-worker" in which case the employer could potentially argue it had taken appropriate remedial action upon learning of the co-workers' harassment. The court noted this determination would depend not upon the job titles or the workplace's formal structure, but upon the extent of the "trainer's" authority over the individual. The court also raised questions about Human Resources' response reiterating its duty to adequately investigate and discipline if needed, and reminding that "inaction constitutes a ratification of past harassment, even if such harassment independently ceases." Finally, the court concluded the temporal proximity (two days) between the Human Resources complaint and the termination provided sufficient evidence of pretext to warrant a jury trial on the Title VII retaliation claim. (Dawson v. Entek Int'l (9th Cir. 2011) ___ F.3d ___, 2011 U.S.App.LEXIS 468.)
United States Supreme Court Upholds Third-Party Retaliation Claim
An employee sued for Title VII retaliation alleging his employer terminated him in retaliation for an earlier EEOC discrimination claim filed by his fiancé, who worked for the same employer. The district court and the Sixth District Court of Appeals dismissed the claim holding Title VII does not permit third-party retaliation claims. However, a unanimous United States Supreme Court reversed holding that on these facts as plead, the discharged employee had standing to pursue a Title VII retaliation claim even though he had not previously engaged in a protected legal activity.
Drawing upon its recent decision in Burlington N. & S. F. R. Co. v. White (2006) 548 U.S. 53, the Supreme Court first concluded that the employer's discharge of the employee would constitute actionable retaliation even if directed against someone other than who filed the initial internal complaint. The Court reiterated that Title VII's retaliation claim is broader than its discrimination claim and applies not simply to actions affecting the terms and conditions of employment, but to actions that might dissuade a reasonable worker from making or supporting a charge of discrimination. The Court reasoned that a reasonable worker might be dissuaded from engaging in protected activity if she knew her fiancé would be fired as a result. Notably, the Court recognized its ruling might make it difficult to determine how far these protections extend (i.e., would they apply to a girlfriend being fired? Or even a close friend?) and it declined to identify a fixed class of relationships for which third-party reprisals are unlawful.
The Court next concluded the discharged third-party fiancé had standing to sue for Title VII retaliation. The Court noted that Title VII permits any "person claiming to be aggrieved" to pursue a civil action. The Court concluded that the term "aggrieved person" permits suit by persons failing within the "zone of interests" of the statute (i.e., possessing an interest sought to be protected by the operative statute). The Court concluded that the fiancé, as an employee of the retaliating employer, fell within the "zone of interests" sought to be protected by Title VII, but noted as an example, that a shareholder whose stock price dropped because the employee had been terminated would not have standing under Title VII. (Thompson v. North American Stainless, LP (2011) ___ U.S. ___, 2011 U.S.LEXIS 913.)
(NOTE: The California Supreme Court has yet ruled on the issue of third-party retaliation claims under the FEHA. However, because the pertinent FEHA provisions contain similar language permitting suit by any "person claiming to be aggrieved" (Gov. Code § 12965(b)) it is foreseeable California courts may follow Thompson.)