Tuesday, October 30, 2007

Instant Leave of Absence Notes (dot.com)?

Here's something you know: employees sometimes take time off when they are not sick, or at jury duty, etc.

Here's something you may not know: There's a new website that actually sells pre-printed, official looking forms authorizing leaves of absence. Sort of like a fake note a kid gives to his or her school. The concept is not new, but the availability of excuse forms on the internet may be. The url is "my excused absence dot com" I'm not linking to it.

What will happen when an employee is caught using a fake note? What if a real doctor signs a fake note? Will a business sue the website for unfair business practices? Oh, the mind boggles.

Anyway, if you did not have enough to worry about, be on the look out for doctors' notes and jury duty excuses that may not be genuine.


Monday, October 22, 2007

California Court: No Preemption of State Law Claims for Bank

Banks have a special weapon in employment litigation (including wrongful termination and even discrimination claims). The National Bank Act preempts these state law claims, at least as they relate to bank "officers."

So, may a bank subject to the National Bank Act designate "officers" at will to come within the preemption provisions? No, said the court of appeal in Ramanathan v. Bank of America. Quoting from an earlier California Supreme Court case, the court reviewed the criteria for evaluating whether a bank employee is an "officer" and covered by the National Bank Act's discharge provisions:

a bank ‘officer’ within the meaning of section 24 possesses the following attributes: First, he or she holds an office created by the board of directors and listed in the bank’s bylaws. (Citation.) Second, he or she is appointed by the board of directors, either directly or pursuant to a delegation of board authority set forth in the bylaws. (Citations.) Third, he or she has the express legal authority to bind the bank in its transactions with borrowers, depositors, customers, or other third parties by executing contracts or other legal instruments on the bank’s behalf. (Citation.)
Fourth, his or her decision-making authority, however it might be limited by
bank rule or policy, relates to fundamental banking operations in such a manner
as to affect potentially the public’s trust in the banking institution. (Citation.) If a particular bank employee holds a position possessing these features, he or she may be viewed as the bank itself in the eyes of third parties. Such an employee is an ‘officer’ and serves at the pleasure of the board of directors.”

The court then applied these criteria and found that Ramanathan, a "vice president," raised a triable issue of fact as to whether he was an officer under the National Bank Act. Therefore, the court vacated summary judgment and remanded for trial on Ramanathan's claims for discrimination, harassment and wrongful termination brought under California law.

Thanks to Connecticut Employment Law Blog for reminding me to post about this case.

Monday, October 15, 2007

Governor Vetos Two More Bills

Our recap of new California legislation affecting employers is here.

Governor Schwarzenegger vetoed two more bills in the final hours of the session:

AB 1707 - New requirements for personnel files.


SB 180 - "Card checks" for agricultural employees seeking union representation.


That wraps up this year's legislative session. I think you will see most of the vetoed bills introduced again in the coming year.


Court of Appeal Explains Attorney-Client Privilege Applicable to Corporations

The attorney-client privilege may apply to communications between lower-level corporate employees even when an attorney is not a party to the particular communication. That's what the Court of Appeal held in Zurich American Ins. Co. v. Superior Court. "If legal advice is discussed or contained in the communication between Zurich employees, then to that extent, it is presumptively privileged. A communication reflecting a discussion of litigation strategy which expresses that the strategy is in response to advice of counsel would come within the privilege."

The Court framed the issue as follows:

The fundamental issue in this case is whether corporate communications not directly involving an attorney, but which discuss legal advice, come within this privilege. As we have seen, the discovery referee and trial court adopted a definition of the attorney-client privilege limited to "items in the claim file that contain actual copies of letters or e-mail communications from outside counsel, or documents that have been created by counsel, or received by counsel, or that contain direct communications from counsel, as indicated in the comment section of the attached listing of documents,... " This definition is inadequate because it fails to take into account language of section 952 expressly contemplating that confidential communications include information transmitted to persons "to whom disclosure is reasonably necessary for the transmission of the information," and those to whom disclosure is reasonably necessary for "the accomplishment of the purpose for which the lawyer is consulted." Section 952 expressly includes legal opinions and advice given by a lawyer within the definition of confidential communication.

The court of appeal reversed a trial court's determination that several communications were not privileged. Here is the test for privilege the court developed:

The first relevant inquiry is whether the document contains a discussion of legal advice or strategy of counsel for Zurich. Section 952 provides that a "confidential communication" "includes a legal opinion formed and the advice given by the lawyer in the course of that relationship."

If it is determined that the document reflects legal advice or opinions and is thus privileged, the court must determine whether Zurich waived the privilege by distributing the advice within the corporation. Section 952 extends the privilege to confidential communications shared with "those who are present to further the interest of the client in the consultation or those to whom disclosure is reasonably necessary for the transmission of the information or the accomplishment of the purpose for which the lawyer is consulted,... " The disputed documents must be reviewed to determine whether the Zurich employees to whom legal advice was relayed come within this broad definition.
[citations] . . . .

The key concept here is need to know. While involvement of an unnecessary third person in attorney-client communications destroys confidentiality, involvement of third persons to whom disclosure is reasonably necessary to further the purpose of the legal consultation preserves confidentiality of communication." [citation]

The relay of legal advice to corporate personnel not present at the attorney-client consultation was addressed by the INA court. "[D]isclosure may be made to persons not present at the attorney-client consultation, i.e., the third persons need not necessarily participate in the legal consultation." (Id. at p. 766.)
. . .

The Court also noted a couple of additional issues that arise in litigation over privilege (bullets are mine for ease of reading):

- otherwise routine, non-privileged communications between corporate officers or employees transacting the general business of the company do not attain privileged status solely because in-house or outside counsel is "copied in" on correspondence or memoranda. [citations]
- In addition, Zurich may not shield facts, as opposed to communications, from discovery. Any relevant fact may not be withheld merely because it was incorporated into a communication involving an attorney.
- In addition, "It is settled that the attorney-client privilege is inapplicable where the attorney merely acts as a negotiator for the client, gives business advice or otherwise acts as a business agent. . . . [citations]

Sunday, October 14, 2007

Governor Takes Action on Pending California Employment Bills

We covered pending bills here. Governor Schwarzenegger vetoed nearly all of the burdensome proposed measures. As of this writing, two remain pending. If he does not sign them by midnight tonight, they become law automatically.

So, here is what we believe to be a comprehensive list of 2007 employment law bills that were signed, vetoed, and the two that remain pending.

We will provide more detailed summaries of the new laws in future posts.



SB 812 - Alternative workweeks for pharmacists

AB 392 - Military leave for spouses

SB 929 - Prevailing wage and lowers the hourly wage applicable to the "computer exemption" from over $49 to $36 per hour.

SB 14: - California National Guard qualify for membership in the Public Employees Retirement System (PERS), and can purchase additional PERS service credit.

AB 338 - Increases availability of workers' compensation temporary disability benefits


AB 504 - Lockouts - fines for employers.

AB 622 - Independent Contractors.

SB 936 - Workers' Compensation benefits.

SB 942 - (More) Workers' Compensation benefits.

AB 8 - Health care tax on employers to fund universal health care.

AB 124 - Applying meal period laws to certain government employees.

SB 549 - Mandated bereavement leave.

SB 836 - Familial status discrimination.

AB 377 - Labor contractors and pay records.

SB 727 - Expansion of Paid Family Leave.

AB 435- Extending statute of limitations for equal pay claims.

AB 1043 - Voiding forum selection and choice of law clauses in employment contracts.

Still Pending as of this Writing:

AB 1707 - New requirements for personnel files.

SB 180 - "Card checks" for agricultural employees seeking union representation.

Finally, here are a bunch of public sector-related bills that the Governor signed last week (thank you, o thank you, state bar labor and employment law section email):

AB 1307 Public employee benefits: supplemental contribution program. http://www.leginfo.ca.gov/pub/07-08/bill/asm/ab_1301-1350/ab_1307_bill_20071011_chaptered.pdf

AB 1432 – State teachers' retirement.

SB 901 - State teachers' retirement: postretirement earnings. http://www.leginfo.ca.gov/pub/07-08/bill/sen/sb_0901-0950/sb_901_bill_20070906_enrolled.pdf

AB 246 - County employees' retirement: retirement boards. http://www.leginfo.ca.gov/pub/07-08/bill/asm/ab_0201-0250/ab_246_bill_20070904_enrolled.pdf

AB 554 – Public employees: benefits.

AB 754 - Public employees.

AB 756 - Memoranda of understanding: addenda.

AB 757 - Teachers: retirement and employment.

AB 1124 - County employees' retirement.

AB 1288 - County employees: vision care. http://www.leginfo.ca.gov/pub/07-08/bill/asm/ab_1301-1350/ab_1316_bill_20070910_enrolled.pdf

AB 1316 – State teachers' retirement: disability.

AB 1317 - Public employees' retirement: executive compensation.

Friday, October 12, 2007

California Legislature's Season of Autumn Leaves

It's Fall, and the California Legislature's thoughts turn to.... leaves. Not the pretty yellow, orange and rust-colored leaves one finds during fall foliage drives along idyllic country roads, as the cold weather paints a rosy hue on the cheeks of children :::cue the banjo:::
Sorry. A little too much cider.

Anyway, the Vermont legislature thinks of foliage. The California Legislature's thoughts turn to new leaves of absence. The first one signed by Governor Schwarzenegger this year is AB 392. This law is an "urgency" statute, which means it takes effect immediately because of soldiers in Iraq and Afghanistan who will be taking leave.

Under the new law, employers must grant up to 10 days of job-protected, unpaid leave to employees seeking time off when a "spouse" (which under AB 205 includes registered domestic partner) obtains a qualified leave from military conflict. Here is a summary of the provisions:

- The law applies to employers with 25 or more employees;
- The employee seeking leave must inform the employer within 2 days of receiving notice that the soldier will be on leave
- Leave is available only to employees working 20 or more hours per week.
- Qualified leave is limited to employees with spouses who have been deployed to military conflict as defined in the statute. The statute is unclear as to whether guardsmen/women and reservists have to be deployed to the area of conflict like members of the armed services.

This law will be codified at Section 395.10 of the Military and Veterans Code, rather than in the Labor Code where several other leaves appear.


Court of Appeal's Meal and Break Opinion in Long Awaited Brinker case

....too bad it's unpublished for now.

Meal and break claims have been all the rage in employment law circles. Plaintiffs have alleged in class actions that employers have denied rest breaks, and have not properly "forced" employees to take meal periods that are long enough, early enough, or free enough from duty.

Today, though, the employers won a significant ruling which, if eventually published, could shift some of the momentum.

With respect to rest periods, the court summed up that the trial court should not have granted class certification, and that rest period law is as follows:

Had the court properly determined that (1) employees need be afforded only one 10-minute rest break every four hours "or major fraction thereof" (Cal. Code Regs., tit. 8, § 11050, subd. 12(A)), (2) rest breaks need be afforded in the middle of that four-hour period only when "practicable," and (3) employers are not required to ensure that employees take the rest breaks properly provided to them in accordance with the provisions of IWC Wage Order No. 5, only individual questions would have remained, and the court in the proper exercise of its legal discretion would have denied class certification, with respect to plaintiffs' rest break claims because the trier of fact cannot determine on a class-wide basis whether members of the proposed class of Brinker employees missed rest breaks as a result of a supervisor's coercion or the employee's uncoerced choice to waive such breaks and continue working.

With regard to meal periods, the court clarified the law regarding the timing of meal periods. The court noted employees are entitled to a thirty-minute meal period for each work period of more than five hours per day. That does NOT mean that a second meal period must occur within five hours of the first meal period. That means that if an employee works ten hours, two meal periods must be provided at some time during the shift. There is no such thing, therefore as "early" lunch violations.

The court, however, punted on the most eagerly awaited issue: is an employer required to "ensure" the employees take their meal periods, or must they simply be "offered" like rest periods? The court of appeal refused to decide the issue until the trial court had the opportunity to do so. Therefore, we must continue to wait and see on that issue. The federal district court in White v. Starbucks Corp. (N.D.Cal. July 2, 2007) 497 F.Supp.2d 1080 has held that meal periods merely have to be offered, but that decision is not binding on California courts.

It is unclear why the Court of Appeal chose not to publish this decision. However, I believe the defense bar may seek an order of publication. Yeah, I know, bold prediction.

The opinion is in Brinker Restaurant Corp. v. Superior Court.


Wednesday, October 03, 2007

California Court of Appeal Limits Administrative Exemption

Insurance claims adjusters were ruled "non-exempt" under the administrative exemption in what is known as the Bell cases. See Bell v. Farmers Ins. Exchange (2001) 87 Cal.App.4th 805; Bell v. Farmers Ins. Exchange (2004) 115 Cal.App.4th 715. So, in Harris v. Superior Court, the Court of Appeal found that Liberty Mutual claims adjusters likewise were non-exempt.

The headline here, though, is that the Court thoroughly analyzed the administrative test, and explained the limited applicability of the administrative test in California (although the court claimed it was relying on federal regulations). The two key points are these:

- exempt administrative work must involve policy making, higher level, office work. The court sets a high bar here, rendering lower level employees in traditionally administrative

- "production" work - by definition not administrative - does not have to involve actually producing the product or service that the employer sells. Rather, even office work is "production" when it is simply carrying out policies.

This decision should be closely examined when classifying employees in back-office departments such as MIS, accounting, and maybe even HR. The exemption may be tougher to prove for lower-level administrative jobs in the more vertical, larger organizations.


Supplemental Disability Pay Does Not Affect Salary Basis Test

Generous employers sometimes supplement California's state disability insurance coverage with salary continuation programs. No good deed goes unpunished? Not this time. Employees brought a class action alleging unpaid overtime. They claimed they were misclassified as "exempt" because the employer's salary replacement program resulted in impermissible "deductions" from their salary during the initial week of "disability." The complaints were that the salary continuation program did not fully replace salary, that payments were delayed because the employer required the employee to present the SDI check so the payments could be coordinated, and other perceived flaws. The legal issue was whether the salaries could be reduced under the "bona fide" disability plan exception to the salary basis required.
The Court of Appeal turned back all of the plaintiffs' arguments. The Court also rejected the DLSE's enforcement position that reliance on SDI was improper under the "bona fide" plan exception.
The case is Sumuel v. ADVO, Inc. and the opinion is here.