
Employment Law News – November 2011 Legislative Nov 01, 2011 Related Attorneys Expertise Practice Areas Employment Federal Bi-Partisan Computer Professional Update Act Introduced (S.1747) Section 13(a)(17) of the Fair Labor Standards Act creates overtime and minimum wage exceptions for computer professionals provided they perform certain duties and receive a certain minimum salary or hourly wage. Specifically, it exempts "computer systems analysts, computer programmers, software engineers, or other similarly skilled workers" who perform certain statutorily-enumerated "primary duties" and are compensated at least $455 per week on a salary basis or on an hourly basis at least $27.63. In recent years, critics have complained this language is too stringent and fails to reflect recent changes in computer and technology systems and occupations. A recently-introduced bi-partisan bill known as the Computer Professionals Update Act (or the "CPU Act") would amend this exemption to expand the type of work that would qualify, while leaving unchanged the salary or hourly rate component. As amended, section 13(a)(17) would apply to "any employee working in a computer or information technology occupation (including but not limited to, work related to computers, information systems, components, networks, software, hardware, databases, security, internet, intranet, or websites) as an analyst, programmer, engineer, designer, developer, administrator, other similarly skilled worker whose primary duty is (A) the application of systems, network or database analysis, techniques and procedures, including consulting with users, to determine or modify hardware, software, network, database or system functional specifications; or (B) the design, development, documentation, analysis, creation, testing, securing, configuration, integration, debugging, modification of computer or information technology, or enabling continuity of system and applications; or (C) directing the work of individuals performing duties described in subparagraphs (A) or (B), including training such individuals or leading teams performing such duties; or (D) a combination of duties described in subparagraphs (A), (B) and (C), the performance of which requires the same level of skill. AGENCY California Slight Increase in Computer Professional Salary for Overtime Exemption Labor Code section 515.5 provides that certain software employees are exempt from the overtime requirements in section 510 if certain criteria are met, including the performance of statutorily-enumerated duties and that the employee's hourly rate of pay is not less than the statutorily-specified rate. The Division of Labor Statistics and Research (DLSR) is responsible for annually reviewing this salary to determine if any adjustments are needed for the following year, and usually makes these determinations by the end of October. For the last two years, the DLSR had determined that no adjustments were needed to this salary level. However, on October 28, 2011, the DLSR announced there will be a slight increase effective January 1, 2012 for the computer professional exemption. Specifically, the minimum hourly rate will increase from $37.94 to $38.89, the minimum monthly salary exemption from $6,587.50 to $6,752.19, and the minimum annual salary exemption from $79,050.00 to $81,026.25. DLSE Promises Wage Theft Prevention Act Template by Mid-December As discussed in last month's newsletter, the Wage Theft Prevention Act (AB 469) takes effect January 1, 2012 and requires covered employers to provide the following information in writing to new hires: (1) the employee's pay rate and basis for pay rate (e.g., salary, commission, hourly, etc.); (2) allowances, if any, claimed as part of the minimum wage, including meal or lodging allowances; (3) the regular payday designated by the employer; (4) the name of the employer, including any "doing business as" names used by the employer; (5) the physical address of the employer's main office or principal place of business, and a mailing address, if different; (6) the employer's telephone number; (7) the name, address, and telephone number of the employer's workers' compensation insurance carrier; and (8) any other information the Labor Commissioner deems material and necessary. This statute requires the Labor Commissioner to develop and make available a template employers may use to comply with these requirements. According to the Department of Labor Standards Enforcement website, this template will be issued by mid-December. Federal DOD, GSA and NASA Adopt Final Rule Precluding Reimbursement of "Persuader" Costs In January 2009, President Obama issued Executive Order 13494 which stated that the costs of activities of preparing and distributing materials, hiring or consulting legal counsel or consultants, or holding meeting and planning activities during work hours, when undertaken to "persuade" employees to exercise or not exercise collective bargaining rights, would not be reimbursable from taxpayer funds. On November 2, 2011, the Department of Defense, the General Services Administration and the National Aeronautics and Space Administration published a final rule, effective December 2, 2011, amending the Federal Acquisition Regulation to implement Executive Order 13494 and preclude reimbursement of "persuader" costs. This Final Rule does not amend the cost principle contained in FAR 31.205-21 addressing labor relations costs, which states that costs incurred in maintaining satisfactory relations between the contactor and its employees, including costs of shop stewards, labor management committees, employee publications and other related activities are allowable costs. Instead, the Final Rule adds a new provision stating that the costs of any activities undertaken to "persuade" employees, of any entity, to exercise or not exercise or concerning the manner of exercising the right to organize and bargain collectively through representatives of the employees' own choosing are unallowable. The Final Rule also provides the following specific examples of activities the costs of which are unallowable when performed in connection with persuader activities: (1) preparing and distributing materials; (2) hiring or consulting legal counsel or consultants; (3) meetings, including paying the salaries or the attendees meetings held for this purpose; and (4) planning or conducting activities by managers, supervisors, or union representatives during work hours. The Final Rule clarifies it shall only apply to contracts resulting from solicitations issued on or after the December 2, 2011 effective date. The Final Rule is available at www.gpo.gov/fdsys/pkg/FR-2011-11-02/pdf/2011-27790.pdf. DOD, GSA and NASA Adopt Final Rule Regarding Federal Contractor Posting Requirement The DOD, GSA and NASA have also adopted as final, without change, an interim rule amending the Federal Acquisition Regulation to implement the DOL's regulation implementing Executive Order 13496. This final rule is effective as of November 2, 2011. Executive Order 13496 requires covered federal contractors to display a notice for employees of their rights under federal labor law, and the DOL has determined that the notice shall include employee rights under the National Labor Relations Act. The DOL previously issued its Final Rule regarding Executive Order 13496 in May 2010 and it took effect on June 21, 2010. With this agency final rule now effective, covered contractors must post the required poster, but need not use the DOL-issued version provided their own version includes the requisite information and specifications (e.g., the DOL's size, form and content requirements). This final rule is available atwww.gpo.gov/fdsys/pkg/FR-2011-11-02/pdf/2011-27779.pdf. OSHA Issues Interim Final Rule Amending Sarbanes-Oxley Regulations The Occupational Health and Safety Administration (OSHA) has issued interim final rules revising regulations to reflect the 2010 Dodd-Frank statutory amendments to the Sarbanes-Oxley Act of 2002. Amongst other things, the revised regulations would adopt Dodd-Frank's provision protecting employees from retaliation by "nationally recognized statistical rating organizations" as defined in the amendments. Secondly, the revised regulations clarify that the term "company" under Sarbanes-Oxley whistleblower provisions includes any subsidiary or affiliate whose financial information is included in the consolidated financial statements of a company. Third, the revised regulations adopt Dodd-Frank's extension from 90 to 180 days the period to file a retaliation complaint after the violation occurs or after the date on which the employee becomes aware of the violation. OSHA will accept comments on the proposed interim final rule until January 3, 2012, through www.regulations.gov. The full text of the interim final rule is available at: http://www.osha.gov/pls/oshaweb/owadisp.show_document? p_table=FEDERAL_REGISTER&p_id=22220 JUDICIAL California California Supreme Court Declines to Review Appellate Court Decision Invalidating Arbitration Agreement Waiving PAGA Representative Actions As discussed in the August newsletter, a California court of appeal held the United States Supreme Court decision in AT&T would not preclude employees from pursuing a representative action under California's Private Attorney General Act (PAGA), and that any arbitration agreement provision waiving the right to maintain a PAGA claim would be unenforceable. (Brown v. Ralphs Groc. Co.(2011) ___ Cal.App. ___, 2011 Cal.App.LEXIS 902.) In recent months, there had also been conflicting federal court decisions concerning the enforceability of so-called PAGA waivers in arbitration agreements, and this legal uncertainty suggested the California Supreme Court may attempt to resolve this issue. However, the California Supreme Court recently denied review in Brown,meaning it remains good law and indicates how at least one California appellate court views the enforceability of PAGA waivers in arbitration agreements. Several Sexual-Related Comments over Lengthy Period Insufficient for a Hostile Work Environment A female executive sued her former employer for FEHA sexual harassment based upon an e-mail she inadvertenedly received commenting on her breasts, several incidents directed at others she observed, and several offensive e-mails she discovered while investigating her potential claim. The jury awarded her $250,000 on her sexual harassment claim, but the trial court and the appellate court reversed the verdict finding as a matter of law that there was insufficient evidence of severe or pervasive sexual conduct to create a hostile work environment. Relying heavily on the California Supreme Court decision in Lyle v. Warner Bros. Television Productions (2006) 28 Cal.4th 264, the appellate court observed a hostile work environment exists only when the harassing behavior is pervasive or severe, and not when harassment is only occasional, isolated, sporadic or trivial. It also observed that conduct that is aimed at persons other than the plaintiff is generally considered less severe and offensive than conduct that is directed at the plaintiff. While a plaintiff may maintain a harassment claim based upon conduct she observed towards others, the plaintiff must demonstrate such conduct "permeated her direct environment" meaning that it was directed at others in her immediate work environment and that she personally witnessed it. The court first concluded plaintiff's evidence (an e-mail commenting on her breasts which she received accidentally and several comments she observed towards others) did not constitute "severe" conduct, which generally involves unwelcome physical contact, or threats, propositions or sexually explicit language directed at the complaining party. The court also concluded the one e0mail to her and the several comments she observed towards others were unprofessional, but not pervasive since spread over a period of several years. The court also downplayed the significance of the other emails making negative sexual references to third-parties that plaintiff found during her investigation, on the grounds these e-mails had been sent long before her discovery and therefore did not permeate her work environment. Lastly, the court also downplayed the fact her supervisor had discussed plaintiff's personal life with her, noting the plaintiff had initiated some of these discussions and had not demonstrated these conversations were unwelcome. (Brennan v. Townsend & O'Leary (2011) ___ Cal.App.4th ___, 2011 Cal.App.LEXIS 1309.) (NOTE: While a favorable result for this employer, the jury had initially ruled in the employee's favor and it undoubtedly cost the employer substantial attorneys' fees and costs to ultimately prevail. Thus, this case is a good reminder about the importance of having a sexual harassment policy and avoiding sexually-related conversations in the workplace.)
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Federal

Bi-Partisan Computer Professional Update Act Introduced (S.1747)

Section 13(a)(17) of the Fair Labor Standards Act creates overtime and minimum wage exceptions for computer professionals provided they perform certain duties and receive a certain minimum salary or hourly wage. Specifically, it exempts "computer systems analysts, computer programmers, software engineers, or other similarly skilled workers" who perform certain statutorily-enumerated "primary duties" and are compensated at least $455 per week on a salary basis or on an hourly basis at least $27.63. In recent years, critics have complained this language is too stringent and fails to reflect recent changes in computer and technology systems and occupations.

A recently-introduced bi-partisan bill known as the Computer Professionals Update Act (or the "CPU Act") would amend this exemption to expand the type of work that would qualify, while leaving unchanged the salary or hourly rate component. As amended, section 13(a)(17) would apply to "any employee working in a computer or information technology occupation (including but not limited to, work related to computers, information systems, components, networks, software, hardware, databases, security, internet, intranet, or websites) as an analyst, programmer, engineer, designer, developer, administrator, other similarly skilled worker whose primary duty is (A) the application of systems, network or database analysis, techniques and procedures, including consulting with users, to determine or modify hardware, software, network, database or system functional specifications; or (B) the design, development, documentation, analysis, creation, testing, securing, configuration, integration, debugging, modification of computer or information technology, or enabling continuity of system and applications; or (C) directing the work of individuals performing duties described in subparagraphs (A) or (B), including training such individuals or leading teams performing such duties; or (D) a combination of duties described in subparagraphs (A), (B) and (C), the performance of which requires the same level of skill.

AGENCY

California

Slight Increase in Computer Professional Salary for Overtime Exemption

Labor Code section 515.5 provides that certain software employees are exempt from the overtime requirements in section 510 if certain criteria are met, including the performance of statutorily-enumerated duties and that the employee's hourly rate of pay is not less than the statutorily-specified rate. The Division of Labor Statistics and Research (DLSR) is responsible for annually reviewing this salary to determine if any adjustments are needed for the following year, and usually makes these determinations by the end of October. For the last two years, the DLSR had determined that no adjustments were needed to this salary level.

However, on October 28, 2011, the DLSR announced there will be a slight increase effective January 1, 2012 for the computer professional exemption. Specifically, the minimum hourly rate will increase from $37.94 to $38.89, the minimum monthly salary exemption from $6,587.50 to $6,752.19, and the minimum annual salary exemption from $79,050.00 to $81,026.25.

DLSE Promises Wage Theft Prevention Act Template by Mid-December

As discussed in last month's newsletter, the Wage Theft Prevention Act (AB 469) takes effect January 1, 2012 and requires covered employers to provide the following information in writing to new hires: (1) the employee's pay rate and basis for pay rate (e.g., salary, commission, hourly, etc.); (2) allowances, if any, claimed as part of the minimum wage, including meal or lodging allowances; (3) the regular payday designated by the employer; (4) the name of the employer, including any "doing business as" names used by the employer; (5) the physical address of the employer's main office or principal place of business, and a mailing address, if different; (6) the employer's telephone number; (7) the name, address, and telephone number of the employer's workers' compensation insurance carrier; and (8) any other information the Labor Commissioner deems material and necessary.

This statute requires the Labor Commissioner to develop and make available a template employers may use to comply with these requirements. According to the Department of Labor Standards Enforcement website, this template will be issued by mid-December.

Federal

DOD, GSA and NASA Adopt Final Rule Precluding Reimbursement of "Persuader" Costs

In January 2009, President Obama issued Executive Order 13494 which stated that the costs of activities of preparing and distributing materials, hiring or consulting legal counsel or consultants, or holding meeting and planning activities during work hours, when undertaken to "persuade" employees to exercise or not exercise collective bargaining rights, would not be reimbursable from taxpayer funds. On November 2, 2011, the Department of Defense, the General Services Administration and the National Aeronautics and Space Administration published a final rule, effective December 2, 2011, amending the Federal Acquisition Regulation to implement Executive Order 13494 and preclude reimbursement of "persuader" costs.

This Final Rule does not amend the cost principle contained in FAR 31.205-21 addressing labor relations costs, which states that costs incurred in maintaining satisfactory relations between the contactor and its employees, including costs of shop stewards, labor management committees, employee publications and other related activities are allowable costs. Instead, the Final Rule adds a new provision stating that the costs of any activities undertaken to "persuade" employees, of any entity, to exercise or not exercise or concerning the manner of exercising the right to organize and bargain collectively through representatives of the employees' own choosing are unallowable. The Final Rule also provides the following specific examples of activities the costs of which are unallowable when performed in connection with persuader activities: (1) preparing and distributing materials; (2) hiring or consulting legal counsel or consultants; (3) meetings, including paying the salaries or the attendees meetings held for this purpose; and (4) planning or conducting activities by managers, supervisors, or union representatives during work hours.

The Final Rule clarifies it shall only apply to contracts resulting from solicitations issued on or after the December 2, 2011 effective date. The Final Rule is available at www.gpo.gov/fdsys/pkg/FR-2011-11-02/pdf/2011-27790.pdf.

DOD, GSA and NASA Adopt Final Rule Regarding Federal Contractor Posting Requirement

The DOD, GSA and NASA have also adopted as final, without change, an interim rule amending the Federal Acquisition Regulation to implement the DOL's regulation implementing Executive Order 13496. This final rule is effective as of November 2, 2011.

Executive Order 13496 requires covered federal contractors to display a notice for employees of their rights under federal labor law, and the DOL has determined that the notice shall include employee rights under the National Labor Relations Act. The DOL previously issued its Final Rule regarding Executive Order 13496 in May 2010 and it took effect on June 21, 2010. With this agency final rule now effective, covered contractors must post the required poster, but need not use the DOL-issued version provided their own version includes the requisite information and specifications (e.g., the DOL's size, form and content requirements). This final rule is available atwww.gpo.gov/fdsys/pkg/FR-2011-11-02/pdf/2011-27779.pdf.

OSHA Issues Interim Final Rule Amending Sarbanes-Oxley Regulations

The Occupational Health and Safety Administration (OSHA) has issued interim final rules revising regulations to reflect the 2010 Dodd-Frank statutory amendments to the Sarbanes-Oxley Act of 2002. Amongst other things, the revised regulations would adopt Dodd-Frank's provision protecting employees from retaliation by "nationally recognized statistical rating organizations" as defined in the amendments. Secondly, the revised regulations clarify that the term "company" under Sarbanes-Oxley whistleblower provisions includes any subsidiary or affiliate whose financial information is included in the consolidated financial statements of a company. Third, the revised regulations adopt Dodd-Frank's extension from 90 to 180 days the period to file a retaliation complaint after the violation occurs or after the date on which the employee becomes aware of the violation.

OSHA will accept comments on the proposed interim final rule until January 3, 2012, through www.regulations.gov. The full text of the interim final rule is available at: http://www.osha.gov/pls/oshaweb/owadisp.show_document?
p_table=FEDERAL_REGISTER&p_id=22220

JUDICIAL

California

California Supreme Court Declines to Review Appellate Court Decision Invalidating Arbitration Agreement Waiving PAGA Representative Actions

As discussed in the August newsletter, a California court of appeal held the United States Supreme Court decision in AT&T would not preclude employees from pursuing a representative action under California's Private Attorney General Act (PAGA), and that any arbitration agreement provision waiving the right to maintain a PAGA claim would be unenforceable. (Brown v. Ralphs Groc. Co.(2011) ___ Cal.App. ___, 2011 Cal.App.LEXIS 902.) In recent months, there had also been conflicting federal court decisions concerning the enforceability of so-called PAGA waivers in arbitration agreements, and this legal uncertainty suggested the California Supreme Court may attempt to resolve this issue. However, the California Supreme Court recently denied review in Brown,meaning it remains good law and indicates how at least one California appellate court views the enforceability of PAGA waivers in arbitration agreements.

Several Sexual-Related Comments over Lengthy Period Insufficient for a Hostile Work Environment

A female executive sued her former employer for FEHA sexual harassment based upon an e-mail she inadvertenedly received commenting on her breasts, several incidents directed at others she observed, and several offensive e-mails she discovered while investigating her potential claim. The jury awarded her $250,000 on her sexual harassment claim, but the trial court and the appellate court reversed the verdict finding as a matter of law that there was insufficient evidence of severe or pervasive sexual conduct to create a hostile work environment.

Relying heavily on the California Supreme Court decision in Lyle v. Warner Bros. Television Productions (2006) 28 Cal.4th 264, the appellate court observed a hostile work environment exists only when the harassing behavior is pervasive or severe, and not when harassment is only occasional, isolated, sporadic or trivial. It also observed that conduct that is aimed at persons other than the plaintiff is generally considered less severe and offensive than conduct that is directed at the plaintiff. While a plaintiff may maintain a harassment claim based upon conduct she observed towards others, the plaintiff must demonstrate such conduct "permeated her direct environment" meaning that it was directed at others in her immediate work environment and that she personally witnessed it.

The court first concluded plaintiff's evidence (an e-mail commenting on her breasts which she received accidentally and several comments she observed towards others) did not constitute "severe" conduct, which generally involves unwelcome physical contact, or threats, propositions or sexually explicit language directed at the complaining party. The court also concluded the one e0mail to her and the several comments she observed towards others were unprofessional, but not pervasive since spread over a period of several years. The court also downplayed the significance of the other emails making negative sexual references to third-parties that plaintiff found during her investigation, on the grounds these e-mails had been sent long before her discovery and therefore did not permeate her work environment. Lastly, the court also downplayed the fact her supervisor had discussed plaintiff's personal life with her, noting the plaintiff had initiated some of these discussions and had not demonstrated these conversations were unwelcome. (Brennan v. Townsend & O'Leary (2011) ___ Cal.App.4th ___, 2011 Cal.App.LEXIS 1309.)

(NOTE: While a favorable result for this employer, the jury had initially ruled in the employee's favor and it undoubtedly cost the employer substantial attorneys' fees and costs to ultimately prevail. Thus, this case is a good reminder about the importance of having a sexual harassment policy and avoiding sexually-related conversations in the workplace.)

Employment Law News – November 2011

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