As discussed in Bowles Law Report Volume 8, Issue 3, California courts have differed on what it means to “provide” hourly, exempt-from-overtime workers their meal and rest breaks. Until the California Supreme Court clarifies labor laws on breaks, we advise employers to err on the side of caution and require workers to take all applicable meal breaks.

California Labor Code Section 226.7 requires employers to pay non-exempt employees an additional hour of pay for each meal or rest period the employer fails to provide. In August 2007, the California Supreme Court found this additional pay fit the legal definition of “wages” and was thus subject to a three-year statute of limitations. See Murphy v. Kenneth Cole Productions Inc.

For example, if a full-time non-exempt employee was misclassified as exempt-from-overtime and thus consistently did not take her uninterrupted thirty minute meal breaks, she can file a claim for one additional hour of pay for each missed meal period going back three years from the date of her claim. Multiply this by a number of employees and the cost for employers can be exorbitant.

California employers are currently awaiting further clarity from the California Supreme Court as to what break labor laws define as “providing” meal breaks. The issues are (a) whether they must ensure their workers’ meal breaks are taken without fail, such as by literally policing their employees and enforcing meal breaks; or (b) whether they simply need to make meal breaks available to their staff without necessarily verifying staff actually took those breaks.

The uncertainty should be resolved once the California Supreme Court rules on Brinker Restaurant Corp. v. Superior Court. Although both sides have submitted their written arguments (briefs), as of March 12, 2010 the Court has yet to set oral argument. The Court has 90 days to issue its ruling after that argument date.

In the interim, employers should take all reasonable measures for ensuring non-exempt workers actually take timely, uninterrupted meal periods. Such measures include:

• Audit meal and rest period policies and practices to ensure they comply with applicable breaks labor laws;
• Ensure all non-exempt employees read and acknowledge in writing their understanding of the company’s meal and rest period policies;
• Determine if any exception applies for mandatory unpaid meal periods, such as an “on-duty” meal period and, if so, properly document such exception by written agreements in compliance with California law. See our blog article ” On-Duty Meal Breaks .“
• Have supervisors and managers conduct and document regular monitoring to ensure employees are taking their meal and rest periods and entering their unpaid meal period start and end times on time cards or sheets;
• If a worker is not taking the required meal period, correct the matter; pay the additional hour of pay to the worker if appropriate; document agreement by the worker to take those periods in the future; and discipline the worker for any further non-compliance; and
• Ensure proper record-keeping is in place and maintained for at least a rolling four-year period, or longer if currently engaged in litigation.

If you have any questions, please contact me or any of our other employment law attorneys. Best, Cindy Bamforth.

An Introduction

Stemming from my lifelong interest in international law and development, the African Human Rights Leadership Campaign is a pro bono project of Youth for Human Rights International to train young leaders in African countries for human rights advocacy and the eradication of human rights abuses in their lifetimes.

Along with Liberian Jay Yarsiah, Ghanaian Sammy Jacobs Abbey and numerous volunteers in Africa and the States, we have expanded the initiative to five African countries since its 2006 inception. We are intent to see this initiative not only help Africa address the violation of human rights but to contribute to making global human rights the reality.

We now have a separate blogsite for the Campaign, offering From the Ruins, a 12 minute introductory film directed by young filmmaker Ian Jay and with original music from his father Stephen. For more on the Campaign’s human rights work, including its purposes, progress and promise, and to see the video, please see www.africanleadershipcampaign.org.

If you have any questions on this project, please contact me. Best, Tim Bowles

In a January 6, 2010 press release, the U.S. Equal Employment Opportunity Commission (EEOC) divulged the number of workplace discrimination charges filed nationwide during fiscal year 2009 (October 1, 2008 to September 30, 2009). Cumulatively, the 93,277 charges filed in 2009 reached the second highest number in history, with monetary relief obtained for complainants totaling over $376 million.

Job bias charges, including those filed against state and local governments, reached record highs for charges alleging workplace discrimination based on disability, religion and/or national origin. Age-based discrimination charges reached the second-highest level ever.

Workplace retaliation was the most frequently cited charge, totaling 33,613 charges.

The EEOC filed 281 new lawsuits against employers last year.

These trends will most likely continue to rise in the coming year. In the 2010 Omnibus Appropriations Bill, Congress authorized the allocation of an extra $23 million to the EEOC. The EEOC is now hiring approximately 200 new investigators to help reduce its 70,000 case backlog.

In addition to sexual harassment prevention training and well-worded anti-discrimination policy, employers should also receive training on other forms of discrimination, such as discrimination by age, religion or disability to better protect their organizations from such discrimination and retaliation charges and lawsuits.

If you have any questions regarding anti-harassment, discrimination or retaliation training or any other employment law issues, please contact me or any of our other employment law attorneys.

To obtain a copy of the EEOC’s January 6, 2010 press release, go to http://www.eeoc.gov/eeoc/newsroom/release/1-6-10.cfm.

To obtain a copy of the EEOC’s charge filing statistics, go to http://www.eeoc.gov/eeoc/statistics/enforcement/index.cfm.

If you have any questions on these or any other employment laws, please contact me or any of our other employment law attorneys. Best wishes, Cindy Bamforth

On December 3, 2009, the IRS announced its 2010 standard deduction mileage rates (online at http://www.irs.gov/newsroom/article/0,,id=216048,00.html). As of January 1, 2010, the IRS is decreasing the IRS standard employee mileage deduction for business use of a motor vehicle to 50 cents per mile. (In 2009 the IRS mileage standard deduction was 55 cents per mile.) Employers that use the IRS rate or lower may deduct that amount as a business expense. However, employees who receive higher reimbursement may be required to pay taxes on the difference between their employer’s reimbursement rate and the IRS mileage deduction as “wages.” Employers should notify their employees if they intend to change the reimbursement rate.

If you have any questions on this or any other employment laws, please contact me or any of our other employment law attorneys. Best wishes, Bob Edwards

Effective January 1, 2010, the Civil Air Patrol Employment Protection Act (new Labor Code Sections 1500 through 1507) requires employers with 15 or more employees to provide ten days or more of unpaid leave per year for volunteer members of the California Civil Air Patrol Wing to respond to emergency missions.

To qualify for this leave, volunteer Civil Air Patrol members must be employed by their current employer for at least 90 days immediately preceding the commencement of the leave. Employees are required to give the employer as much notice as possible of the intended dates of the leave.

At the conclusion of the leave, the employer must restore an employee to the position held when the leave began or to a position with equivalent seniority status, benefits, pay and other terms and conditions of employment.

If you have any questions on this or any other employment laws, please contact me or any of our other employment law attorneys. Best, Bob Edwards

As a result of a November 30, 2009 decision, the California Supreme Court (the Court) has now paved the way for employees to more easily establish harassment claims against individual supervisors.

Toward the end of her 25-year customer service career at McKesson Corporation, Roby began experiencing unanticipated, temporary “panic attacks” which caused her to be absent from work unexpectedly. Roby’s immediate supervisor, Karen Schoener, openly expressed her displeasure with Roby’s poor attendance record. Compounding this problem, Roby’s medication gave her unpleasant body odor and she also developed a nervous disorder causing her to dig her fingernails into her arms, producing unpleasant open sores. Schoener made disparaging remarks about Roby’s body odor in front of other workers and she also called Roby “disgusting” because of her open sores and excessive sweating. Schoener reprimanded Roby in front of her coworkers and spoke about her job in a demeaning manner. Schoener also openly ostracized Roby, ignored her at staff meetings, refused to give her holiday gifts or travel trinkets, and excluded Roby from office parties by ordering her to cover the office telephones. Roby complained to senior management about Schoener’s conduct but to no avail.

McKesson suspended Roby pending an investigation into her excessive absences and then terminated her shortly thereafter. After her termination she depleted her savings, lost her medical insurance, developed agoraphobia (anxiety in public places) and became suicidal.

Following a jury trial against defendants McKesson and supervisor Schoener for wrongful employment termination, discrimination, harassment and failure to accommodate, the trial court rendered judgment of approximately $3.5 million against McKesson and $500,000 against Schoener. In a separate verdict, the jury found punitive damages of $15 million against McKesson and $3,000 against Schoener.

Both defendants appealed. The appellate court held that Roby’s evidence was insufficient to support the harassment verdict, stating that a plaintiff may not use personnel management actions as evidence in support of a harassment claim. The appellate court thus threw out the harassment verdict as to Schoener and also reduced Roby’s award to $1.405 million plus $2 million in punitives.

The California Supreme Court disagreed, ruling that the appellate court erred when it divvied up Roby’s evidence between her harassment claim and her discrimination claim.

Under California law, discrimination focuses on explicit changes in the terms, conditions or privileges of employment, that is, changes involving some official action taken by the employer, such as hiring, firing, failing to promote, adverse job assignment, or change in pay or benefits.

Harassment, on the other hand, focuses on situations in which the workplace’s social environment becomes unacceptable because the harassment suffered on the job communicates an offensive message to the victim.

Even though discrimination and hostile work environment harassment are different legal constructs, evidence of discrimination is not necessarily different from evidence of harassment. The Court stated that the evidence brought forth to establish discrimination and harassment claims can overlap and thus “acts of discrimination can provide evidentiary support for a harassment claim by establishing discriminatory animus on the part of the manager responsible for the discrimination, thereby permitting the inference that rude comments or behavior by that same manager was similarly motivated by discriminatory animus.”

Because the appellate court had incorrectly separated out and disregarded the “business and management” evidence when determining whether Roby was unlawfully harassed, the Supreme Court reinstated the jury’s harassment verdict against McKesson and Schoener.

Thus, when evaluating whether a supervisor has engaged in unlawful harassment in the workplace, the trial court (and jury) need to consider all of the supervisor’s conduct, even conduct that would ordinarily be construed as “official” acts made on the company’s behalf under the supervisor’s managerial duties and functions. Managerial acts which previously could only support a discrimination claim may now be used to prove individual harassment liability against the acting supervisor. Therefore, plaintiffs may have an easier time defeating summary judgment and bringing their case to trial since they are now permitted to introduce a broader range of evidence in support of their harassment claim.

If you have any questions, please contact me or any of our other employment law attorneys. Best, Cindy Bamforth

Although well-established law in California holds that an employer may not retaliate against an employee who has a valid wage claim, a November 30, 2009 appellate court ruling also protects employees against retaliation for mistakenly believing they have a valid wage claim. Barbosa v. IMPCO Technologies, Inc. (2009 Westlaw 4227462).

Former employee Manuel Barbosa sued employer IMPCO for wrongful employment termination after IMPCO fired him for allegedly falsifying his time card. According to his testimony at trial, Barbosa, an hourly team leader of eight other workers, became convinced after talking with two of his group’s workers that he and others were missing two hours of overtime. Barbosa approached the company’s payroll administrator and informed her that most of his group’s workers were not paid that overtime, possibly because the recently-installed time clock was malfunctioning (the previous time clock system was known to make timekeeping mistakes). After Barbosa’s supervisor said he trusted Barbosa and approved the overtime pay, the payroll administrator paid all eight employees in Barbosa’s group the additional two hours of overtime.

Upon further investigation into the accuracy of the new time clock, the payroll administrator and human resources manager reviewed security tapes against the time clock records which effectively determined Barbosa and the others could not have worked the claimed two hours of overtime. Additionally, one of the group workers informed the human resources manager that she should not be paid for extra overtime because she had not worked those hours.

Barbosa was then questioned before company management officials. When asked if he was sure he and his group worked overtime as he claimed, he said yes. After showing Barbosa the security gate report, he said he was confused and he offered to pay the extra overtime back to the company. However, the company refused his offer and terminated Barbosa for falsifying time card records. Barbosa testified the stated reason for termination was “cheating the company.”

After Barbosa finished putting on his evidence at trial, IMPCO successfully moved to dismiss his case. Barbosa appealed.

The appellate court reversed, ruling that (a) public policy protects Barbosa from being terminated if he made a good faith claim to overtime; and (b) Barbosa presented sufficient evidence at trial to support a jury finding that the overtime claim was indeed made in good faith.

The appellate court determined that when an employee exercises his or her legal right to overtime wages out of a reasonable good faith belief he or she is entitled to those wages, he is still protected from employer retaliation even if the employee later discovers he is wrong. Here, Barbosa gave evidence showing he had a reasonable good faith belief he was entitled to the two hours’ of overtime. The previous time clock system was known to be faulty, the new system had been installed less than a month prior to this incident, his co-workers convinced him the overtime was due and unpaid, and he in turn convinced his supervisor. Barbosa also testified he was confused.

IMPCO argued Barbosa was terminated for misrepresenting that he worked overtime and cheating his employer. The appellate court concluded IMPCO “misses the point” because if Barbosa proves to the jury he had a reasonable good faith belief in his right to overtime, then it’s impossible to also conclude he attempted to cheat IMPCO. Thus, the case should have been submitted to the jury for deliberation.

According to this holding, public policy requires that employees should be able to openly question their employer regarding pay-related matters without fear of retaliation, even if the employee’s pay concerns are ultimately incorrect.

If you have any questions, please contact me or any of our other employment law attorneys. Best, Cindy Bamforth, Esq.

November 21, 2009

The Equal Employment Opportunity Commission (EEOC) has revised its “Equal Employment Opportunity is the Law” poster to address two new federal employment discrimination laws:

• The Americans with Disabilities Act Amendments Act of 2008 (ADAAA); and
• The Genetic Information Nondiscrimination Act of 2008 (GINA)

Employers covered by federal Title VII and ADA anti-discrimination laws (typically 15 or more employees) will need to update their employee notice posters to reflect these new laws by November 21, 2009.

For private employers:

• The Disability section is revised as follows:

DISABILITY

Title I and Title V of the Americans with Disabilities Act of 1990, as amended, protect qualified individuals from discrimination on the basis of disability in hiring, promotion, discharge, pay, fringe benefits, job training, classification, referral, and other aspects of employment. Disability discrimination includes not making reasonable accommodation to the known physical or mental limitations of an otherwise qualified individual with a disability who is an applicant or employee, barring undue hardship.

• The following section is added:

GENETICS

Title II of the Genetic Information Nondiscrimination Act of 2008 protects applicants and employees from discrimination based on genetic information in hiring, promotion, discharge, pay, fringe benefits, job training, classification, referral, and other aspects of employment. GINA also restricts employers’ acquisition of genetic information and strictly limits disclosure of genetic information. Genetic information includes information about genetic tests of applicants, employees, or their family members; the manifestation of diseases or disorders in family members (family medical history); and requests for or receipt of genetic services by applicants, employees, or their family members.

The EEOC Poster Request Form is available on-line at EEOC, and provides several ways for employers to comply with the law:

1. Print the supplement below and post it alongside EEOC’s September 2002 “EEO is the Law” poster.

• “EEO is the Law”

1. Print and post the EEOC’s November 2009 version of the “EEO is the Law” poster.

1. Order a new poster through the EEOC Clearinghouse at the address provided at www.eeoc.gov The new poster will also be available in Spanish, Chinese and Arabic before the GINA statute becomes effective on November 21, 2009.

Again, the new posting is mandatory effective November 21, 2009. In addition, employers can order the new 2010 California and federal labor law poster from the California Chamber of Commerce online. The EEOC is in the process of revising its EEOC regulations and accompanying interpretive guidance in order to implement the ADA Amendments Act of 2008 (ADAAA) and include the Genetic Information Nondiscrimination Act of 2008 (GINA) (http://archive.eeoc.gov/policy/regs/index.html).

If you have any questions on these or any other employment laws, please contact me or any of our other employment law attorneys. Best, Bob Edwards

A November, 2009 California Supreme Court ruling affirmed that an incentive stock option plan which had not fully vested upon plaintiff employee’s resignation did not constitute earned but unpaid wages and the employer could lawfully require the employee to forfeit the stock and the salary used to purchase the stock. Schachter v. Citigroup, Inc. (2009) 47 California Reports 4^th 610.

Plaintiff David Schachter worked as a stockbroker for Citigroup from April 28, 1992 to March 29, 1996. He voluntarily chose to participate in a company-offered incentive compensation plan which provided employees with shares of restricted stock options at a reduced price in lieu of a portion of that employee’s annual cash compensation. Per this compensation policy, employees could elect to receive anywhere from 5% up to 25% of their total compensation in the form of restricted stock.

Restricted stock could not be sold, transferred, pledged or assigned for a two-year period; however, participating employees had the right to vote and receive regular dividends on such shares during the restricted period.

If an employee remained with the company for the two years following the purchase of the restricted stock, the title to the shares vested fully without restriction. However, if an employee quit or was terminated for cause before the end of the two-year period, the employee was forced to forfeit his or her restricted stock as well as the percentage of annual income allocated for purchase of the restricted stock. If an employee was involuntarily terminated without cause, the employee forfeited his or her restricted stock, but received a cash payment equivalent to the portion of annual compensation which had been paid in the form of such forfeited restricted stock.

Schachter elected to receive 5% of his total compensation in restricted stock during 1995 and early 1996. He then resigned from Citigroup in March, 1996. Because his resignation occurred within the two-year vesting period, he forfeited all his shares of stock and did not receive a cash payment equal to the 5% compensation used to purchase those shares.

In May, 1998, Schachter filed a class action lawsuit against Citigroup alleging that the restricted stock purchase plan (the Plan) violated California Labor Code sections 201 and 202 which require the employer to promptly pay all earned wages upon termination or resignation. He also alleged the Plan’s forfeiture provision violated Labor Code section 221, which prohibits an employee from returning wages to an employer.

After eleven years of protracted litigation, the California Supreme Court (the Court) ruled that the Plan’s forfeiture provision did not violate California labor law.

First, the Court discussed the term “wages,” which it broadly construed to include not only monetary compensation but also other benefits to which an employee is entitled as part of his or her overall compensation. This can include accrued vacation pay which “vests” throughout a given year as well as bonuses and profit-sharing plans.

The Court then concluded the restricted stock constituted a “wage” under California law. However, when Schachter voluntarily signed the Plan election forms he understood that the restricted stock would not fully vest for two years. He chose not to remain with the company for the two year period and thus the Court ruled he did not earn and had no right to receive either the restricted stock or the compensation used to acquire it. According to the terms of the Plan, no earned, unpaid wages remain outstanding upon voluntary resignation. In other words, the only thing the company hadn’t paid to Schacter was something he never earned, i.e. fully vested company stock.

The Court quoted the colorful truism, “He who shakes the tree is the one to gather the fruit” and concluded Schachter was not entitled to “gather the fruit” since he failed to perform the condition necessary to do so – i.e. remain employed with the company for two years after the stock purchase.

Further recommendations: Companies that offer their employees incentives such as incentive stock options, commissions and bonuses should consult legal counsel to ensure these plans are properly structured and documented.

If you have any questions on these or any other employment laws, please contact me or any of our other employment law attorneys. Best, Cindy Bamforth