A business subject to the federal Age Discrimination in Employment Act (ADEA) (those with 20 or more persons on payroll) must ensure it terminates, disciplines or denies benefits to any “older” employee (40 years or more) on “reasonable factors other than age ” (RFOA).

Workplace discrimination claims come in two main forms. “Disparate treatment” claims allege outright discrimination because of the employee’s protected characteristic (age, gender, race, national origin, etc.). “Disparate impact” claims allege that seemingly neutral business practices result in a pattern of discriminatory impact upon persons sharing some protected characteristic, for example a company layoff policy that results in more terminations of older people than younger individuals.

Disparate impact and age discrimination is particularly touchy. For example, a company may well conclude that younger workers should be retained when, as a rule, such individuals tend to more knowledgeable and skilled in particular industries, trumping older employees’ experience. However, a seemingly logical, business-based practice could be successfully challenged if the employer does not systematically document the performance-based criteria applied in such layoff decisions.

Following two Supreme Court decisions critical of Equal Employment Opportunity Commission’s (EEOC) regulations in this area and a 50% increase in age discrimination charges since 2000, the agency published on March 29, 2012 its final rule on Disparate Impact and Reasonable Factors Other Than Age Under the Age Discrimination in Employment Act.

The EEOC’s press release announced the new rule “clarifies that the ADEA prohibits policies and practices that have the effect of harming older individuals more than younger individuals unless the employer can show that the policy or practice is based on a reasonable factor other than age … The final rule strikes the appropriate balance between protecting older workers from discriminatory, unreasonable business decisions and preserving an employer’s ability to make reasonable business decisions.”

To successfully assert the RFOA defense, the EEOC directs that an employer must show that its workplace practice was both designed and applied to achieve “a legitimate business purpose.” The final rule specifies relevant considerations in this process:

• The extent to which the asserted “reasonable factor” is related to the employer’s stated business purpose;
• The extent to which the employer defined and applied the factor fairly and accurately, including the extent of training or guidance to managers and supervisors;
• The extent to which the employer limited supervisors’ discretion to assess employees subjectively, particularly where supervisors would tend evaluate individuals on negative age-based stereotypes;
• The extent to which the employer assessed the demonstrable adverse impact of its employment practice on older workers; and
• The degree of actual impact or harm to individuals within the protected age group as well as the extent to which the employer took steps to reduce that harm.

These newly clarified criteria create the renewed importance for businesses to examine and document key practices and programs that can disproportionately impact older workers, including hiring, training, discipline and termination. An experienced employment law attorney can assist. While the new rule applies to the federal law, state counterpart guidelines could well follow. In California, businesses with five or more on payroll are subject to the age (40-plus) discrimination prohibitions of the Fair Employment and Housing Act (FEHA).

photo: Dorothe Lange

March 29, 2012

A business subject to the federal Age Discrimination in Employment Act (ADEA) (those with 20 or more persons on payroll) must ensure it terminates, disciplines or denies benefits to any “older” employee (40 years or more) on “reasonable factors other than age ” (RFOA).

Workplace discrimination claims come in two main forms. “Disparate treatment” claims allege outright discrimination because of the employee’s protected characteristic (age, gender, race, national origin, etc.). “Disparate impact” claims allege that seemingly neutral business practices result in a pattern of discriminatory impact upon persons sharing some protected characteristic, for example a company layoff policy that results in more terminations of older people than younger individuals.

Disparate impact and age discrimination is particularly touchy. For example, a company may well conclude that younger workers should be retained when, as a rule, such individuals tend to more knowledgeable and skilled in particular industries, trumping older employees’ experience. However, a seemingly logical, business-based practice could be successfully challenged if the employer does not systematically document the performance-based criteria applied in such layoff decisions.

Following two Supreme Court decisions critical of Equal Employment Opportunity Commission’s (EEOC) regulations in this area and a 50% increase in age discrimination charges since 2000, the agency published on March 29, 2012 its final rule on Disparate Impact and Reasonable Factors Other Than Age Under the Age Discrimination in Employment Act.

The EEOC’s press release announced the new rule “clarifies that the ADEA prohibits policies and practices that have the effect of harming older individuals more than younger individuals unless the employer can show that the policy or practice is based on a reasonable factor other than age … The final rule strikes the appropriate balance between protecting older workers from discriminatory, unreasonable business decisions and preserving an employer’s ability to make reasonable business decisions.”

To successfully assert the RFOA defense, the EEOC directs that an employer must show that its workplace practice was both designed and applied to achieve “a legitimate business purpose.” The final rule specifies relevant considerations in this process:

• The extent to which the asserted “reasonable factor” is related to the employer’s stated business purpose;
• The extent to which the employer defined and applied the factor fairly and accurately, including the extent of training or guidance to managers and supervisors;
• The extent to which the employer limited supervisors’ discretion to assess employees subjectively, particularly where supervisors would tend evaluate individuals on negative age-based stereotypes;
• The extent to which the employer assessed the demonstrable adverse impact of its employment practice on older workers; and
• The degree of actual impact or harm to individuals within the protected age group as well as the extent to which the employer took steps to reduce that harm.

These newly clarified criteria create the renewed importance for businesses to examine and document key practices and programs that can disproportionately impact older workers, including hiring, training, discipline and termination. An experienced employment law attorney can assist. While the new rule applies to the federal law, state counterpart guidelines could well follow. In California, businesses with five or more on payroll are subject to the age (40-plus) discrimination prohibitions of the Fair Employment and Housing Act (FEHA).

photo: Dorothe Lange

March 29, 2012

The federal National Labor Relations Board (NLRB) guarantees the right of employees to organize unions to “bargain collectively” with their employees.

With a few exceptions, employers will soon have to conspicuously display the agency’s “Employee Rights under the National Labor Relations Act” poster. The original November 14, 2011 deadline was recently moved to January 31, 2012 “in order to allow for enhanced education and outreach for employers, particularly those who operate small and medium sized businesses.”

Employers who customarily post personnel and rules and policies on an internet or intranet site are required to post the notice electronically.

The notice must be posted in English and in any other language spoken by 20% or more of the workforce (if the 20%-plus are not otherwise proficient in English).

Among other things, the poster informs workers they have the right to:

• Organize a union to negotiate with their employer concerning wages, hours, and other terms and conditions of employment
• Discuss wages, benefits, other terms and conditions, or union organizing with co-workers
• Strike and picket, “depending on the purpose or means of the strike or the picketing” (a subject capable of filling several volumes; and
• Choose not to participate in any organizing activities, “including joining or remaining a member of union”

The poster also informs the reader on the improper actions of employers (e.g., cannot prohibit workers from “talking union” during non-work time) and of the unions (e.g., cannot “threaten or coerce” in order to gain a worker’s support for the union).

The exemption rules (no need to post the notice) are extensive. Labor unions grossing more than $50,000/year must display the poster. Hospitals that gross $250,000 or more annually, casinos making $500,000-plus/year, and colleges, universities and private schools with $1,000,000 or more income yearly all must post. There are many threshold level in between for other sorts of companies. See the NLRB’s “Frequently Asked Questions” for more.

… and, oh yes, there are no fines to an employer for failure to post. The NLRB informs us that an employer who is found to have neglected this requirement will receive the equivalent of a wrist slap. The agency also advises “If an employer knowingly and willfully fails to post the Notice, that failure may be considered evidence of unlawful motive in an unfair labor practice case involving other alleged violations of the NLRA.” Emphasis supplied.

January 31, 2012

The federal National Labor Relations Board (NLRB) guarantees the right of employees to organize unions to “bargain collectively” with their employees.

With a few exceptions, employers will soon have to conspicuously display the agency’s “Employee Rights under the National Labor Relations Act” poster. The original November 14, 2011 deadline was recently moved to January 31, 2012 “in order to allow for enhanced education and outreach for employers, particularly those who operate small and medium sized businesses.”

Employers who customarily post personnel and rules and policies on an internet or intranet site are required to post the notice electronically.

The notice must be posted in English and in any other language spoken by 20% or more of the workforce (if the 20%-plus are not otherwise proficient in English).

Among other things, the poster informs workers they have the right to:

• Organize a union to negotiate with their employer concerning wages, hours, and other terms and conditions of employment
• Discuss wages, benefits, other terms and conditions, or union organizing with co-workers
• Strike and picket, “depending on the purpose or means of the strike or the picketing” (a subject capable of filling several volumes; and
• Choose not to participate in any organizing activities, “including joining or remaining a member of union”

The poster also informs the reader on the improper actions of employers (e.g., cannot prohibit workers from “talking union” during non-work time) and of the unions (e.g., cannot “threaten or coerce” in order to gain a worker’s support for the union).

The exemption rules (no need to post the notice) are extensive. Labor unions grossing more than $50,000/year must display the poster. Hospitals that gross $250,000 or more annually, casinos making $500,000-plus/year, and colleges, universities and private schools with $1,000,000 or more income yearly all must post. There are many threshold level in between for other sorts of companies. See the NLRB’s “Frequently Asked Questions” for more.

… and, oh yes, there are no fines to an employer for failure to post. The NLRB informs us that an employer who is found to have neglected this requirement will receive the equivalent of a wrist slap. The agency also advises “If an employer knowingly and willfully fails to post the Notice, that failure may be considered evidence of unlawful motive in an unfair labor practice case involving other alleged violations of the NLRA.” Emphasis supplied.

January 31, 2012

Basic Rules and Rates for Weekly or Daily Hours

California requires employees who are not “exempt” receive overtime pay for time worked beyond forty hours in any one workweek or after eight hours in a workday.

A “workweek” is any seven consecutive days, starting with the same calendar day each week beginning at any hour on any day, so long as it is fixed and regularly occurring. It is thus a fixed and regularly recurring period of 168 hours, seven consecutive 24-hour periods.

A “workday” is a consecutive 24-hour period beginning at the same time each calendar day, but it may begin at any time of day.

California’s overtime (“premium”) rates range from 1.5x to 2.0x an employee’s regular rate of pay. “Regular rate” is generally that worker’s total compensation for the workweek (including wages, piecework pay, bonuses and commissions) divided by the number of working hours in that week. In no case may the regular rate of pay be less than the applicable minimum wage.

The rules include:

• Hours worked over 40 hours in a workweek are compensable at 1.5x regular rate
• Hours worked over eight, but less than 13, in a workday are also compensable at 1.5x regular rate
• Hours worked over 12 in a workday are compensable at 2.0x regular rate
• The first eight hours worked on the seventh consecutive day in a workweek are compensable at 1.5x regular rate; and
• Hours worked over eight on the seventh consecutive day in a workweek are compensable at 2.0x regular rate.

These are some of the basic rules. There are many other applicable laws and regulations an employer must also grasp and apply. For instance, an employer may establish different workweeks for different employees, but once an employee’s workweek is established, it remains fixed regardless of his or her working schedule.

California also provides detailed rules for workers who qualify for exemption from overtime pay. See, e.g., “California’s Exemptions from Overtime”, “Administrators and Overtime Pay in California”; “The California Administrative Exemption”; “The California Executive Exemption”; “Is Your Commissioned Inside Sales Representative Exempt From Overtime?” and “The California Computer Professional Exemption.”

Navigation through and compliance with California’s overtime standards is best accomplished with the help of experienced legal counsel.

January 27, 2012

How Far Can Employers Go to Curb Use by Employees?

An employer’s ability to legitimately discipline or terminate workers who use Facebook, Twitter and other social media to tee-off on allegedly improper work conditions or practices is likely to remain a hotly contested issue for years to come.

The National Labor Relations Board (NLRB) is currently attempting to help draw a sensible line between the rights of union workers to publicly express grievances and management’s right to control the disclosure of internal, confidential or otherwise private information.

In its January 25, 2012 Operations Management Memo, the second such report in the last five months, the NLRB highlights 14 social media cases it has handled in the last year. The report advises:

• Employer policies should not be so sweeping that they prohibit the kinds of activity protected by federal labor law, such as discussion of wages or working conditions among employees, and, on the other hand
• An employee’s comments on social media are generally not protected if they are mere gripes not made in relation to group activity among employees.

The two NLRB memos to date underscore the importance to employers of issuing social media rules not so broad that they create potential worker claims for unlawful restrictions on discourse over work conditions. An experienced labor and employment lawyer can likely assist in the process.

The U.S. Supreme Court has issued its first decision on the “ministerial exception” to workplace discrimination laws, Hosanna-Tabor Evangelical Lutheran Church & School v. Equal Employment Opportunity Commission (January 11, 2012). In a unanimous ruling, the Court found that while certain laws authorize workers to sue their employers for employment discrimination seeking reinstatement and damages, the constitutional protections for religious free exercise and from excessive state intrusion into church affairs bar such suits “when the employer is a religious group and the employee is one of the group’s ministers.”

“The interest of society in the enforcement of employment discrimination statutes is undoubtedly important,” Chief Justice John G. Roberts Jr. “But so, too, is the interest of religious groups in choosing who will preach their beliefs, teach their faith and carry out their mission.”

After completing training that included a course in theology, Cheryl Perich accepted the Hosanna-Tabor Church and School’s invitation to teach fourth grade as a “commissioned minister” of the Lutheran faith. Ms. Perich taught secular subjects as well as a religion class. She also lead her students in daily prayer and took them to a weekly school-wide chapel service.

Ms. Perich had to take a long leave of absence at the beginning of the 2004-05 school year to address a narcolepsy condition. When Ms. Perich notified the school a few months later that she was ready to return to work, the principal responded that the school had already filled her position with a lay teacher for the remainder of the academic term.

She refused the school’s offer to pay her additional benefits if she resigned. As the relationship degenerated with Ms. Perich threatening suit, the school fired her for insubordination and disruptive behavior. Ms. Perich filed a charge of disability discrimination with the EEOC. The EEOC then sued Hosanna-Tabor for alleged retaliation against Ms. Perich for her threatening to file suit.

The church responded that Ms. Perish was subject to the “ministerial exception” and thus prevented from suing for supposed violation of the anti-employment discrimination laws. The Supreme Court has now agreed, holding the First Amendment’s Religion Clauses immunized the church from such a suit brought by one of its ministers. This was true, Chief Justice Roberts wrote, even though “her religious duties consumed only 45 minutes of each workday and … the rest of her day was devoted to teaching secular subjects.”

The Court observed that the EEOC and Ms. Perich foresaw “a parade of horribles” that would follow upholding the ministerial recognition, including protecting churches from suits for retaliation against priests who report child abuse or other criminal misconduct. However, the Court emphasized it was only ruling that the ministerial exception barred an employment discrimination claim brought by or on behalf of a minister. “We express no view on whether the exception bars other types of suits…”

January 11, 2012

Personal Liability and Mandatory On-Line Flogging for Misclassifying Employees as Independent Contractors

We recently warned of the economic risks for an employer who chooses to cut corners by classifying a regular worker as an independent contractor. A wide range of California and federal agencies have the power to impose back taxes, interest and penalties upon companies who unsuccessfully attempt the tactic. See, “Independent Contractors and Employees Avoiding Misclassification of Hired Workers in California.”

The potential costs are about to escalate significantly. At midnight January 1, 2012, California Senate Bill 459 (S.B. 459) becomes Labor Code sections 226.8 and 2753, authorizing the California Labor and Workforce Development Agency, the state’s Labor Commissioner or a court to impose civil penalties between $5,000 and $25,000 for each instance of willful misclassification. Employers, as well as any outside “person [but not a lawyer] who, for money or other valuable consideration, knowingly advises an employer to treat an individual as an independent contractor to avoid employee status” can be liable.

The mathematics can be straightforward. A business that has deliberately mislabeled even ten workers as independent is exposed to total fines between $50,000 and $250,000. There are few small to moderately sized employers that can afford to that kind of a hit.

In the modern equivalent of the Elizabethan and Puritan stocks, the state agency or court directing payment of any such penalty must also direct the business or person to “display prominently on its [,her or his] Internet Web site … a notice” for one year, signed by a company officer (as applicable), specifying:

(1) That the State of California or a California court “has found that the person or employer has committed a serious violation of the law by engaging in the willful misclassification of employee”;

(2) “That the person or employer has changed its business practices in order to avoid committing further violations of this section”;

(3) “That any employee who believes that he or she is being misclassified as an independent contractor may contact the Labor and Workforce Development Agency. The notice shall include the mailing address, e-mail address, and telephone number of the agency”; and

(4) “That the notice is being posted pursuant to a state order.”

If the subject employer or other person does not have a website, then he, she or it must display the notice prominently “in an area that is accessible to all employees and the general public at each location where a violation occurred.”

With the potential costs of misclassification now higher than ever and with greater scrutiny by representatives of an income-hungry, deficit-challenged state government, California companies who regularly hire independent contractors should carefully review worker classifications before the new year. Consult an experienced labor law attorney for assistance.

January 1, 2012

On January 1, 2012, the California Fair Employment and Housing Act (FEHA) will prohibit businesses from discriminating against applicants and employees based on genetic information. The new law will impose California standards tougher than the federal 2008Genetic Information Non-Discrimination Act (GINA).

Both the federal and California law are aimed at curbing discrimination of qualified and performing employees due to genetic traits. GINA applies to employers nationwide with 15 or more persons on payroll. The new FEHA prohibitions will apply to California employers with five or more individuals on payroll.

GINA and FEHA define genetic information similarly, including a potential or existing employee’s genetic test results, the test results of a family member, the “manifestation of a disease or disorder” in the individual’s family, or the receipt of “genetic services” by an individual or his/her family. Examples would include results of tests for genetically carried diseases, such as sickle cell anemia, the contracting of a gene-based disease by a relative, and even an employee’s or family member’s seeking such testing.

A key difference between GINA and the upcoming FEHA provisions is the greater potential for damages under the California law. GINA’s damages cap at $50,000 for small employers and at $300,000 for the largest ones. There are no caps on FEHA damages.

These federal and California laws stem from a 1998 federal court decision, Norman-Bloodsaw v. Lawrence Berkeley Laboratory (9th Cir. 1998) 135 F.3d 1260, which found the University of California’s conduct of medical tests on its employees to determine intimate medical conditions without their knowledge or consent violated employee rights to privacy.

The new law creates an immediate need for those California employers affected to educate themselves and to distribute information internally on the applicable company obligations and workers’ rights. Actions should include policy and posted-notice revisions as well as training supervisors and human resources personnel to ensure compliance and to ensure the privacy of such genetic information.

For assistance revising your company’s anti-discrimination policies to include this and other workplace laws new for 2011, contact an employment legal specialist.

January 1, 2012