Monday, October 05, 2015

California Health Care Industry Meal Period Waivers Are Back

Governor Jerry Brown just signed SB 327 (text here).  This bill overturns a court of appeal opinion that was going to significantly affect the health care industry and its meal break scheduling practices. That decision, Gerard v. Orange Coast Memorial Medical Center (2015) 234 Cal.App.4th 285, is on review to the California Supreme Court. It may be moot now.  And yes, the issue applies only to the health care industry (hospitals, nursing homes, etc.).  Everyone else, go back to your Facebook.

Here's the deal.  Wage Order 5 is the industry order that applies to the health care industry.  That Wage Order contains a special provision allowing health care workers to waive one or the other of their two meal periods when they are scheduled to work > 10 hour shifts.  That provision is section 11(D):
Notwithstanding any other provision of this order, employees in the health care industry who work shifts in excess of eight (8) total hours in a workday may voluntarily waive their right to one of their two meal periods. In order to be valid, any such waiver must be documented in a written agreement that is voluntarily signed by both the employee and the employer. The employee may revoke the waiver at any time by providing the employer at least one day’s written notice. The employee shall be fully compensated for all working time, including any on-the-job meal period, while such a waiver is in effect.
Seems pretty straightforward, right?  The intent is to allow those health care workers who have 3 X 12 hour shifts or 4X 10 hour shifts (which are common) to have only one meal period so they can go home to their families a half hour earlier.

But Gerard, cited above, held that section 11(D) was not valid.  That's because Gerard held that Labor Code 516 invalidated section 11(D) because section 516 is a statute that says that the Wage Orders have to be at least as generous as section 512. And section 512 does not permit waiver of either one of two meal periods by health care workers.

Confused?  So were employment lawyers, hospitals and everyone except three judges in Gerard.  Not to worry, Gerard is no more.   Because the Legislature amended section 516, thusly:
(a) Except as provided in Section 512, the Industrial Welfare Commission may adopt or amend working condition orders with respect to break periods, meal periods, and days of rest for any workers in California consistent with the health and welfare of those workers.
(b) Notwithstanding subdivision (a), or any other law, including Section 512, the health care employee meal period waiver provisions in Section 11(D) of Industrial Welfare Commission Wage Orders 4 and 5 were valid and enforceable on and after October 1, 2000, and continue to be valid and enforceable. This subdivision is declarative of, and clarifies, existing law. 
So, under (b), section 11(D) was is and will be valid.  That means the plaintiff in Gerard probably will lose this case at the Supreme Court, and all will be well in health care once again.

This is an urgency statute, meaning it takes effect immediately.

Sunday, October 04, 2015

CA Governor Signs AB 1506, a Bill Granting Limited PAGA Relief Re Wage Statements

Governor Jerry Brown signed AB 1506 (text here), which amends the Private Attorneys General Act, or PAGA.

This law affects only PAGA claims that are based on defective wage statement claims asserting violations of Labor Code section 226. And only those claims were the alleged defects are that the employer does not include on the wage statement:
(6) the inclusive dates of the period for which the employee is paid, 
(8) the name and address of the legal entity that is the employer
So, a PAGA claim based on those two criteria may be avoided if the employer "cures" the defect upon receiving notice from the employee.   How do you cure?

A violation of paragraph (6) or (8) of subdivision (a) of Section 226 shall only be considered cured upon a showing that the employer has provided a fully compliant, itemized wage statement to each aggrieved employee for each pay period for the three-year period prior to the date of the written notice sent pursuant to paragraph (1) of subdivision (c) of Section 2699.3.
So, to "cure" you just have to re-do your wage statements for three years and re-issue them to all employees who received the defective ones.   It also means that the "aggrieved employees" must be "made whole," but it's unclear what that means unless someone has suffered some harm because the proper weeks or employer name were not listed on the wage statement.

The cure must occur after the employer receives notice of a PAGA claim within the 33 day period before the employee can file a lawsuit. If the employee claims the employer has not cured the defect, the employee may appeal to the DLSE. The DLSE has 17 days to rule on whether or not the defect was cured.  If not, the employer has three more days to cure.  If the employee still disagrees, he may appeal to the superior court.  If the DLSE finds the the employer did not cure, then the employee may file suit.

So, this is a very minor amendment to PAGA, but one that may help employers avoid an expensive claim in limited circumstances.

This is an "urgency" measure, which means it takes effect right away. Stay tuned for explanations of some of the other legislation that will take effect in January.

Friday, August 28, 2015

NLRB's "Joint Employer" Case Matters to Non-Union Employers, Too

As you may have read, the NLRB has changed its definition of what is a "joint employer" relationship.  In the labor law context, this may come up, for example, when the Board decides what is an appropriate unit for bargaining or voting.  Additionally, a joint employer may have to bargain alongside its co-employer about the employment conditions under its "joint" control. Joint employers also can be jointly liable for unfair labor practice decisions and more. 

Before you decide this is "union stuff" and irrelevant, remember that courts may use the "joint employer" doctrine to impose liability on one company for the discrimination, sexual harassment, etc.  perpetrated by employees of another company.  The standards for transferring liability between separate companies (single employer, integrated enterprise, alter ego, joint employer) are influenced by NLRB decisional law.   So, this case could affect other areas of the law unrelated to union stuff.  Plus, the NLRB's reach continues to expand. Sooner or later, it is going to create more private-sector unionization unless the current trend is reversed. So, it pays to pay attention.

"Joint" employer is when there are two separate entities, owned and managed by different enterprises. But they both exercise sufficient control over a group of workers that they are considered "jointly" responsible for issues that arise.  A "single" employer or "integrated enterprise" on the other hand, usually refers to when there are related entities, like parents and subsidiaries, that are deemed one enterprise.  An "alter ego" is when one entity pretends to be unrelated to another, usually to disguise itself and avoid liability.

Joint employer relationships often come up in the context of temporary agencies, or when an employer subcontracts some of its work to a separate company, such as cleaning.  

In the case under consideration, Browning-Ferris Industries operated a recycling plant.  They employed their own employees, who operated forklifts, loaders and other equipment.   Inside the facility, there are a series of conveyor belts that sort the recycled materials.  BFI hired another company, Leadpoint, to staff the conveyor belts.  The Leadpoint workers cleaned the facility, sorted the materials and performed other work.  A union sought to represent the Leadpoint workers. The same union already represented the BFI employees mentioned above.   

BFI and Leadpoint had a written agreement, under which Leadpoint was the employer of its workers. Here are some of the provisions:

  • Leadpoint had its own supervisors and managers on site.
  • Leadpoint management scheduled its workers
  • Leadpoint evaluated its own employees' work.
  • Leadpoint had its own HR manager on site.
  • Leadpoint made all hiring decisions, but BFI provided criteria / job qualifications
  • BFI imposed hiring criteria including a drug panel and skills test
  • Leadpoint made all discipline and termination decisions, although BFI requested a couple of discharges after catching Leadpoint employees engaged in misconduct at the facility.
  • Leadpoint set pay rates with employees, but BFI's agreement provided the maximum it would reimburse Leadpoint.
  • BFI set the hours of operation of the plant and the shift times. But Leadpoint scheduled the employees.
The Board undertook an historical analysis of the joint employer test. It found that the Board over the years had narrowed the test to exclude many relationships that were "joint employers" under older Board and case law.   The Board then announced its "new" rule, which it argues is really a "return" to the old rule:

The Board may find that two or more entities are joint employers  of a single work force if they are both employers within the meaning of the common law, and if they share or codetermine those matters governing the essential terms and conditions of employment. In evaluating the allocation and exercise of control in the workplace, we will consider the various ways in which joint employers may “share” control over terms and conditions of employment or “codetermine” them, as the Board and the courts have done in the past

So, there are two prongs.  First, what is "employer within the meaning of the common law?"   The Board quoted from the Restatement of Agency:

a servant is a person employed to perform services in the affairs of another and who with respect to the physical conduct in the performance of the services is subject to the other’s control or right to control.

The Board emphasized that, going forward, it would merely look to the "right" to control, rather than the exercise of control.  So, BFI owns the equipment, sets the starting and ending times, and has its own quality and management standards in play in its own plant.  Does BFI always have the "right" to control its own property and, therefore, the sub's employees to one degree or another?  Probably yes, right?  I think that's the way the Board wants it.    Am I just trying to scare you?  Nope. From the opinion:
The common law, indeed, recognizes that control may be indirect . For example, the Restatement of Agency (Second) §220, comment l (“Control of the premises”) observes that

[i]f the work is done upon the premises of the employer with his machinery by workmen who agree to obey general rules for the regulation of the conduct of employees, the inference is strong that such workmen are the servants of the owner... and illustrates this principle by citing the example of a coal mine owner employing miners who, in turn, supply their own helpers. Both the miners and their helpers are servants of the mine owner.
So, that is the outer limit of what an employee is, but it's not enough to ensure joint employer status. Hence the second prong: "share or codetermine those matters governing the essential terms and conditions of employment." Here, the Board decided to return to prior case law that expanded the list of criteria it considers relevant to "share or codetermine." 

Essential terms indisputably include wages and hours, as reflected in the Act itself.82 Other examples of control over mandatory terms and conditions of employment found probative by the Board include dictating the number of workers to be supplied;83 controlling scheduling,84 seniority, and overtime; 85 and assigning work and determining the manner and method of work performance
The Board overruled at least four decisions "and others" that conflict with its new standard.  

Then, the Board turned to BFI and found, yes, it is a joint employer with Leadpoint.  

  • Re hiring, BFI required drug testing, asked Leadpoint not to hire those BFI previously employed and deemed ineligible, and BFI could reject anyone brought to its premises.  
  • Re discipline and termination, BFI could report to Leadpoint employees whom BFI felt should be disciplined or discharged.
  • Re working conditions, BFI had the right to control its conveyor belt, including the speed at which it operated.  BFI held meetings with Leadpoint employees to provide feedback and training.  And because BFI set the shift times and decided how many workers were needed to staff the plant, those were indirect indicia of control. 
  • Re wages:
Under the parties’ contract,  Leadpoint determines employees’ pay rates, administers all payments, retains payroll records, and is solely responsible for providing and administering benefits. But BFI specifically prevents Leadpoint from paying employees more than BFI employees performing comparable work.111 BFI’s employment of its own sorter at $5 more an hour creates a de facto wage ceiling for Leadpoint workers. In addition, BFI and Leadpoint are parties to a cost-plus contract, under which BFI is required to reimburse Leadpoint for labor costs plus a specified percentage markup.112 Although this arrangement, on its own, is not necessarily sufficient to create a joint-employer relationship,113 it is coupled here with the apparent requirement of BFI approval over employee pay increases.114

The Board's decision is 3-2.  Two Members dissented in an opinion that expressed more than a touch of concern about the affect the majority's decision may have on labor law.  Here are a couple of  excerpts from the beginning of the dissent:
Today, in the most sweeping of recent major decisions, the Board majority rewrites the decades-old test for determining who the “employer” is. More specifically, the majority redefines and expands the test that makes two separate and independent entities a “joint employer” of certain employees. This change will subject countless entities to unprecedented new joint-bargaining obligations that most do not even know they have, to potential joint liability for unfair labor practices and breaches of collective-bargaining agreements, and to economic protest activity, including what have heretofore been unlawful secondary strikes, boycotts, and picketing.
What do you really think, dissenters?
no bargaining table is big enough to seat all of the entities that will be potential joint employers under the majority’s new standards.
But, the majority said that the Board is merely returning to an existing set of precedents, right?
today’s majority holding does not represent a “return to the traditional test used by the Board,” as our colleagues claim even while admitting that the Board has never before described or articulated the test they announce today. Contrary to their characterization, the new joint-employer test fundamentally alters the law applicable to user-supplier, lessor-lessee, parent-subsidiary, contractor-subcontractor, franchisor-franchisee, predecessor-successor, creditor-debtor, and contractor-consumer business relationships under the Act. In addition, because the commerce data applicable to joint employers is combined for jurisdictional purposes,11 the Act’s coverage will extend to small businesses whose separate operations and employees have until now not been subject to Board jurisdiction.
This decision will mean more collective bargaining, and that can't be bad!  Can it?

The Act encourages collective bargaining, but only by  an “employer” in direct relation to its employees. Our colleagues take this purpose way beyond what Congress intended, and the result unavoidably will be too much of a good thing. We believe the majority’s test will actually foster substantial bargaining instability by requiring the nonconsensual presence of too many entities with diverse and conflicting interests on the “employer” side. Indeed, even the commencement of good-faith bargaining may be delayed by disputes over whether the correct “employer” parties are present. This predictable outcome is irreconcilable with the Act’s overriding policy to “eliminate
the causes of certain substantial obstructions to the free flow of commerce.”
The dissent then goes into great detail to explain its reasons for why the new Board decision is so problematic, contrary to the Board's authority, and how it will have unintended consequences.  But I have a day job so I cannot summarize it all here. 

This case likely will be appealed to the court of appeals. So we will see it it is enforced.  The courts are very deferential to board decisions, however. So, the odds are that this is another major shift in labor law.  Or "fundamental transformation" as someone might say.

This case is Browning-Ferris Indus. of Calif. and the opinion is here.

Wednesday, August 19, 2015

Court of Appeal: Incorporation of AAA Rules = Delegation to Arbitrator

In many employment arbitration agreements, the employer provides that the arbitration will be conducted under the employment dispute rules of the American Arbitration Association or AAA.  (The formal name of these rules is the National Rules for Resolution of Employment Disputes.)  Why?  These rules have been upheld as sufficiently benign to employee rights such that arbitration under those rules will be compelled.  And sometimes they're probably just included by default.

The Court of Appeal in Universal Protection Service LP v. Superior Court (opinion here) decided that the parties' arbitration agreement incorporating these rules meant that the arbitrator, rather than the court, had the power to decide whether class-wide arbitration was available.

UP employees sued the company based on wage-hour claims and termination-based claims in a purported class action. The employees sought to arbitrate the class action. UP sought to compel individual claims to arbitration. The trial court ordered the entire claim, class and all to arbitration and stayed the lawsuit, thereby leaving the decision on whether the class was arbitrable to the arbitrator.   UP sought relief from the Court of Appeal via writ of mandate.  UP wanted the appellate court to rule that only individual claims were arbitrable.

Here's what the arbitration clause said:
“I further expressly acknowledge and agree that, to the fullest extent allowed by law, any controversy, claim or dispute between me and the Company . . . relating to or arising out of my employment or the cessation of that employment will be submitted to final and binding arbitration before a neutral arbitrator . . . for determination in accordance with the American Arbitration Association’s [AAA] National Rules for the Resolution of Employment Disputes as the exclusive remedy for such controversy, claim or dispute.”
Given that incorporation of AAA rules, the Court of Appeal noted that the AAA employment dispute rules authorize the arbitrator to rule on the scope of the arbitration agreement:

Paragraph No. 6(a) of those rules provides: “The arbitrator shall have the power to rule on his or her own jurisdiction, including any objections with respect to the existence, scope, or validity of the arbitration agreement.”

The Court also noted that the AAA rules include supplemental rules governing purported classwide claims.
“Upon appointment, the arbitrator shall determine as a threshold matter, in a reasoned, partial final award on the construction of the arbitration clause, whether the applicable arbitration clause permits the arbitration to proceed on behalf of or against a class (the ‘Clause Construction Award’). The arbitrator shall stay all proceedings following the issuance of the Clause Construction Award for a period of at least 30 days to permit any party to move a court of competent jurisdiction to confirm or to vacate the Clause Construction Award.”

Having found these provisions were included in the parties' agreement to arbitrate, the Court decided that the Arbitrator had the power to rule on whether the arbitration would include class-based claims.

Employers of course may mandate individual employees to arbitrate their individual claims (excluding PAGA claims).  Employers also may exclude class-based claims from arbitration.   Employers may do so expressly, which is legal.

The parties to an arbitration agreement may agree to have courts rule on arbitrability of class claims or may agree on having an arbitrator do so.  This decision simply says that incorporating the AAA employment rules means that the parties elected the arbitrator as the decider of this critical issue.  Not that there's anything wrong with that.

Tuesday, August 04, 2015

California Supreme Court Upholds California's Tough Arbitration Jurisprudence Again, Mostly

In a non-employment decision, the California Supreme Court held the following:

1.  The U.S. Supreme Court's decision in AT&T Mobility v. Concepcion requires the Court to uphold a waiver of class actions in a consumer arbitration agreement (this one within an auto-sales contract). This is not news, as the California Supreme Court already recognized this rule in a prior case, which was decided while this one was pending.

2.  SCOTUS's Concepcion case permits California to continue to apply an "unconscionability" defense to arbitration agreements under state law, provided the courts do not single out arbitration contracts for disfavored treatment.  However, the Court, perhaps subtly, is putting some brakes on how courts may apply the doctrine of "unconscionability" to invalidate arbitration agreements.

This case involved a contract between a consumer and car dealership over the sale of a luxury car. So,  not an employment case. We will have to wait some more for the courts of appeal to apply this decision, Sanchez v. Valencia Holdings LLC, to employment agreements. I think there will be a relaxation of the unconscionability standard, but not enough to allow significant changes to employers' arbitration contracts.

The language of the arbitration agreement is not entirely transferable to employment agreements. But some of the provisions may allow employers to include provisions that previously had been struck down as "unconscionable."

Justice Liu penned the 6-1 opinion.  Justice Liu does not provide a lot of concrete standards for what is going to be considered "unconscionable."  For example, as Justice Chin, concurring and dissenting, points out, the majority simply refuses to announce one formal standard for what counts as "unconscionable."  Does a contract have to "shock the conscience" or must it be simply too one-sided that it's too unfair to the other side?

The standard the court distills is quite mushy and guarantees continued litigation over unconscionability:
The ultimate issue in every case is whether the terms of the contract are sufficiently unfair, in view of all relevant circumstances, that a court should withhold enforcement.
Nevertheless, the Court set forth a definition of unconscionable that appears to signal that courts should not be too eager to strike down terms that they feel are simply unfair:
that unconscionability doctrine is concerned not with ‗a simple old-fashioned bad bargain‘ (Schnuerle v. Insight Communications Co. (Ky. 2012) 376 S.W.3d 561, 575 (Schnuerle)), but with terms that are ‗unreasonably favorable to the more powerful party‘ (8 Williston on Contracts (4th ed. 2010) § 18.10, p. 91). These include ‗terms that impair the integrity of the bargaining process or otherwise contravene the public interest or public policy; terms (usually of an adhesion or boilerplate nature) that attempt to alter in an impermissible manner fundamental duties otherwise imposed by the law, fine-print terms, or provisions that seek to negate the reasonable expectations of the nondrafting party, or unreasonably and unexpectedly harsh terms having to do with price or other central aspects of the transaction.‘ (Ibid.)‖ (Sonic II, supra, 57 Cal.4th at p. 1145.) Because unconscionability is a contract defense, the party asserting the defense bears the burden of proof. (Id. at p. 1148.
* * *
unconscionability requires a substantial degree of unfairness beyond ‘a simple old-fashioned bad bargain.’ (Id. at p. 1160, italics added.) This latter qualification is important. Commerce depends on the enforceability, in most instances, of a duly executed written contract. A party cannot avoid a contractual obligation merely by complaining that the deal, in retrospect, was unfair or a bad bargain. Not all one-sided contract provisions are unconscionable; hence the various intensifiers in our formulations: ―overly harsh,―unduly oppressive,―unreasonably favorable. (See Pinnacle, supra, 55 Cal.4th at p. 246 [―A contract term is not substantively unconscionable when it merely gives one side a greater benefit . . . .].)

The Court also made clear that it wants to avoid federal intervention be emphasizing that courts may not single out arbitration agreements for more scrutiny than other contracts.
our unconscionability standard is, as it must be, the same for arbitration and nonarbitration agreements. (Concepcion, supra, 563 U.S. at p. __ [131 S.Ct. at p. 1747].) Of course, unconscionability can manifest itself in different ways, depending on the contract term at issue. (See, e.g., Washington Mutual Bank v. Superior Court (2001) 24 Cal.4th 906, 916–917 [choice of law clause]); City of Santa Barbara v. Superior Court (2007) 41 Cal.4th 747, 777 [waivers of liability provision]); Moreno v. Sanchez (2003) 106 Cal.App.4th 1415, 1434 [statutes of limitation provision]; Smith, Valentino & Smith, Inc. v. Superior Court (1976) 17 Cal.3d 491, 495–496 [forum selection clause].) But the application of unconscionability doctrine to an arbitration clause must proceed from general principles that apply to any contract clause. In particular, the standard for substantive unconscionability — the requisite degree of unfairness beyond merely a bad bargain — must be as rigorous and demanding for arbitration clauses as for any contract clause.

Here are a few issues the Court addressed that can help employers' arbitration agreements:

1. The Court made clear that there is no obligation to set an arbitration provision apart from other contractual provisions or call it to the consumer's attention.

2. The Court also does not have lot of sympathy for the argument that the consumer did not read the contract or that it was buried under a lot of other papers, which employees often argue.

3. The Court upheld a provision where the plaintiff could appeal a $0 award to a panel of 3 arbitrators, and the defendant could appeal if the award exceeded $100,000.  Therefore, provisions do not have to be 100% mirror image, which some lower courts have insisted on.

4.  Along the same lines, the Court said that requiring the plaintiff to bear the expenses of the appeal was not unconscionable because the plaintiff did not prove he was unable to bear that cost.  However, this case arose under a different statutory scheme than applies to employment disputes.  So, employers should continue to bear any "type" of cost that is not incurred in court.

5. On the mirror-image "mutuality" issue, the Court said that a provision exempting "self help" such as repossession was OK because of the car dealer's legitimate business needs to repossess cars, and because the agreement exempted small claims cases, which benefited the consumer. Trade-offs, therefore, may save unconscionable provisions.  Caution, though, because the Court in part based its decision on the fact that "self-help" itself is outside of litigation, so it was naturally something that need not be arbitrated.   If the lower courts run with this, employers may be able to "carve out" some issues from arbitration - like intellectual property - if they carve out other claims that favor employees - like expense reimbursements maybe, for example?  We shall see.

To sum up, the Supreme Court upheld the business's agreement. But it did not set forth clear standards on unconscionability. It may have relaxed the law of unconscionability a bit, but it did not hold that Concepcion guts California's (de facto) tough stance on arbitration agreements.

This case is not a blockbuster for employers or employees.  It remains to be seen whether the employer or employee will try for U.S. Supreme Court review.

The court system in California is still under water. It can take a long time to get to trial. Judges are worked hard, and may not give your case the attention you think it deserves.  So, arbitration can be quicker, which can cut down on defense costs.  On the other hand, the cost of the arbitrator and administration can be expensive.  And arbitrators are not afraid to issue large awards when they find cause to do so.  So, arbitration is a yellow light, before and after Sanchez.  Nothing in this case changes that view for me.   Just my 0.02. YMMV.  YOLO.  [Insert cliche].

Sanchez v. Valencia Holdings LLC is here.

Wednesday, July 29, 2015

Ninth Circuit: Employee Who Threatens to Kill Co-Workers Not "Qualified Individual with Disability"

Timothy Mayo was a welder. He made some specific threats to kill certain supervisors at his employer, PCC Structurals, Inc.  Co-workers complained.  The company sent him home.  The police visited him and he checked into a hospital.  The company terminated his employment.

Mayo sued under Oregon's version of the ADA, which is modeled under the federal statute. The 9th circuit reviewed the employer's successful motion for summary judgment.

The court decided that a person who makes violent threats against co-workers cannot claim protection under disability discrimination laws:

Even if Mayo were disabled (which we assume for this appeal), he cannot show that he was qualified at the time of his discharge. An essential function of almost every job is the ability to appropriately handle stress and interact with others. See Williams v. Motorola, Inc., 303 F.3d 1284, 1290 (11th Cir. 2002). And while an employee can be qualified despite adverse reactions to stress, he is not qualified when that stress leads him to threaten to kill his co-workers in chilling detail and on multiple occasions (here, at least five times). This vastly disproportionate reaction demonstrated that Mayo could not perform an “essential function” of his job, and was not a “qualified individual.” This is true regardless of whether Mayo’s threats stemmed from his major depressive disorder. Cf. Newland v. Dalton, 81 F.3d 904, 906 (9th Cir. 1996) (“Attempting to fire a weapon at individuals is the kind of egregious and criminal conduct which employees are responsible for regardless of any disability.”).
The court was careful to limit its holding to serious threats of violence or harm, in a footnote:
We emphasize that we only address the extreme facts before us in this case: an employee who makes serious and credible threats of violence toward his co-workers. We do not suggest that off-handed expressions of frustration or inappropriate jokes necessarily render an employee not qualified. Nor do we imply that employees who are simply rude, gruff, or unpleasant fall in the same category as Mayo. See U.S. Equal Emp. Opportunity Comm’n, supra, at *15 (advising that an “anti-social” employee with a “psychiatric disability” can be a “qualified individual,” even if he is “abrupt and rude”).

The court also distinguished its line of cases in which it has excused "conduct resulting from a disability":

This ruling is consistent with our cases holding that “conduct resulting from a disability is considered to be part of the disability, rather than a separate basis for termination.” Humphrey v. Mem’l Hosps. Ass’n, 239 F.3d 1128, 1139–40 (9th Cir. 2001); see also Gambini v. Total Renal Care, Inc., 486 F.3d 1087, 1094–95 (9th Cir. 2007); Dark v. Curry County, 451 F.3d 1078, 1084 (9th Cir. 2006). Unlike in Humphrey, Gambini, and Dark, we do not need to consider whether PCC has offered a legitimate, nondiscriminatory reason for terminating Mayo, as he has failed to establish a prima facie case at step one of the McDonnell Douglas framework.
Only Gambini involved hostile action by the employee.  And the court pointed out that the employer in that case did not argue that Gambini was not a "qualified individual" on appeal.

Summing up, after recognizing the serious problems of mental illness in society, the court remarked:
we disagree with Mayo that employers must simply cross their fingers and hope that violent threats ring hollow. All too often Americans suffer the tragic consequences of disgruntled employees targeting and killing their co-workers. While the ADA and Oregon disability law protect important individual rights, they do not require employers to play dice with the lives of their workforce. We thus conclude that PCC’s actions in this case were lawful.
This case is Mayo v. PCC Structurals, Inc. and the opinion is here. 

Monday, July 20, 2015

U.S. DOL Issues Administrator Interpretation Re Independent Contractors

The U.S. Department of Labor issues "Administrator Interpretations" now instead of opinion letters. In the past, the DOL would respond to individual employers' or  other constituents' questions about an FLSA issue.  The DOL would offer its opinion about the specific situation and disclaim that it broadly applied to other factual contexts, etc.

But in 2010, the DOL started issuing "Administrator Interpretations." These are not tied to any particular request for advice.  Rather, the Wage-Hour Administrator would pick a topic and offer an interpretation of an existing regulation.  Courts do not give these interpretations the same deference as actual regulations. But they are considered.  And the U.S. Supreme Court recently upheld the practice, discussed here.

With that background, you are ready to read the DOL's latest "Administrator Interpretation."  The agency has weighed in on the test for whether someone is an independent contractor or employee.  As you will see, in Administrator Interpretation 2015-1, the Administrator makes clear the DOL's enforcement position.  Here is the conclusion, verbatim:

In sum, most workers are employees under the FLSA’s broad definitions. The very broad definition of employment under the FLSA as “to suffer or permit to work” and the Act’s intended expansive coverage for workers must be considered when applying the economic realities factors to determine whether a worker is an employee or an independent contractor. The factors should not be analyzed mechanically or in a vacuum, and no single factor, including control, should be over-emphasized. Instead, each factor should be considered in light of the ultimate determination of whether the worker is really in business for him or herself (and thus is an independent contractor) or is economically dependent on the employer (and thus is its employee). The factors should be used as guides to answer that ultimate question of economic dependence. The correct classification of workers as employees or independent contractors has critical implications for the legal protections that workers receive, particularly when misclassification occurs in industries employing low wage workers.
(emphasis mine).

The Interpretation reaches that conclusion by analyzing the federal "economic realities" test for whether a worker is economically dependent on the employer (and therefore an employee) or in business for him or herself.  It should be noted that this economic realities test differs from the "right of control" test that California courts use, although there is overlap.  However, the Interpretation opines that the right to control is just one factor and that the economic realities test is actually broader, in that it sweeps more workers into employee status.   That is because, the Interpretation provides, the "economic realities" doctrine explains whom the employer "suffers or permits" to work, which is the definition of "employ" under the Fair Labor Standards Act.

The Administrator goes through familiar economic realities factors such as:
 - Is the work performed an integral part of the business?  (If so, employee)
 - Does the worker's managerial skill affect his / her opportunity for profit / loss (if so, contractor)
 - What is the nature of the worker's "investment" vs. the employer's investment relative to the work?
 - Does the work require special skill or initiative? (If so, contractor)
 - Is the relationship permanent or indefinite (if so, employee)
 - What is the nature of employer control.

As you will see, the Administrator emphasizes that no one factor is determinative.  The overarching issue is whether, based on the totality of the circumstances, the worker is in business for him or herself, or is economically dependent on the employer.  However, if the Administrator's views of the test carry the day in court, there will be far fewer independent contractors out there.

The Administrator Interpretation, No. 2015-1 is here. 

California Governor Signs Bill Making Request for Reasonable Accommodation Grounds for Retaliation Claim Under FEHA

The Courts of Appeal have held that an employee's requesting reasonable accommodation is not a "protected activity" for which a retaliation claim will lie under the Fair Employment and Housing Act. (See, for example, Rope v. Auto-Chlor, discussed here).  That is because protected activity was (previously) defined as "opposing" some unlawful practice, or participation in an investigation or proceeding involving FEHA-based claims.  A request for accommodation is not "opposing" an unlawful practice, so it did not fall within the previous definition.

Not to worry. The Legislature just added to the list of protected activities an employee's request for accommodation, whether or not it is granted.  So, when an employer denies reasonable accommodation, that was and is separately actionable. Now, the employee likely will assert a retaliation claim as well, claiming that the denial was in retaliation for the employee's making the request.  

May the employer lawfully deny an accommodation because it's not "reasonable" or because the employee is not a "qualified individual," but still be liable for retaliation? We'll see how the courts react.

The new law is AB 987, text here.