More Than $372 Million Recovered In Workplace Discrimination Claims

Despite staffing cuts, hiring freezes and sequestration woes, the U.S. Equal Employment Opportunity Commission (EEOC) recovered a record $372.1 million for its private sector workplace discrimination charges — $6.7 million more than it recovered the year prior.

The EEOC enforces federal anti-discrimination in employment laws. According to the EEOC’s Fiscal Year 2013 Performance and Accountability Report (PAR), the EEOC received a 93,727 private sector discrimination charges. Although some 6,000 less than the prior three years, it still ranks among the agency’s top five.

The EEOC has continued to focus on systemic enforcement, targeting unlawful patterns, practices or policies which broadly impact an industry, profession, company or geographic area. Systemic practices include discriminatory barriers in recruitment and hiring; discriminatory restricted access to management training programs and to high level jobs; exclusion of qualified women from traditionally male dominated fields of work; unlawful pre-employment inquiries aimed at detecting disabilities; and age discrimination by reductions in a workforce.

The EEOC reports 300 systemic investigations in fiscal 2013 resulting in 63 settlements or conciliation agreements totaling some $40 million. Agency lawsuits filed for systemic enforcement represented over 20 percent of all active suits in that 2013, the largest proportion since tracking started in 2006. The EEOC also obtained more than $160.9 million in monetary benefits for complaining employees through mediation resolutions, the second highest level in the agency’s history.

If you as employer don’t wish to contribute to any further groundbreaking statistics, we can help. For more information concerning California or federal employment laws, contact one of our attorneys Tim Bowles or Cindy Bamforth.

Constructive Remedy or a Job-Killer?

The California Assembly passed earlier this year the “Healthy Workplaces, Healthy Families Act of 2014” (Assembly Bill [AB] 1522), sending it over to the Senate for consideration. If passed into law, the measure would mandate all employers to provide at least three paid sick days per calendar year to all workers who qualify. There is currently no sick pay requirement under federal or California law. See our article, Don’t get Sick of Sick Pay – An Overview of California Paid Sick Leave.

This is the Legislature’s third attempt to enact such a law (previously in 2008 and 2011). In its current form, AB 1522 would direct that eligible workers earn (accrue) at least one hour of paid sick leave for every 30 hours worked and may start using such benefits after three months of employment.

The California Labor Federation, AFL-CIO supports AB 1522 contending it will guarantee “every California worker paid time off to recover from illness, care for a sick family member, or bond with a new baby. AB 1522 also protects workers claiming this benefit from employer retaliation.” While observing that many employers already voluntarily offer non-accruing sick leave to full-time workers, the California Chamber of Commerce’s objects to the bill for its creating a “huge burden” on employers through required expansion of benefits to temporary, seasonal, and part-time employees.

Connecticut is currently the only state that requires paid sick day benefits. Several cities, including New York, Washington, D.C., Portland, Seattle and San Francisco, mandate such benefits.

Classifying Workers Correctly is a Case-by-Case Challenge

There are economic risks for an employer who misclassifies a worker who should be employed 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.

California placed greater deterrents on the practice in 2012. Labor Code sections 226.8 and 2753 permit certain officials or a court to impose civil penalties between $5,000 and $25,000 for each instance of willful misclassification against both employers and any individual adviser (other than a lawyer) who “knowingly advises an employer to treat an individual as an independent contractor to avoid employee status”.

The agency or court directing such payment must also direct the business or person to post a notice on its website for one year, specifying that the company has violated the law, has had to change its business practices in order to cease doing so, and that employees who believe they were also misclassified may contact the Labor and Workforce Development Agency. See also, “Personal Liability and Mandatory On-Line Flogging for Misclassifying Employees as Independent Contractors.”

Boiled down, employers can impose their oversight and control over an employee’s daily production while independent contractors are, well, independent, free to provide services to the hiring party by any means the contractor chooses. However, there are never any absolutes. Determination of “employed” or “contracted” status is an exercise in comparing and balancing many factors, sometimes conflicting, on the degree and manner of control. Two recent California appeals court decisions illustrate how this is always a case-by-case proposition.

In Bain v. Tax Reducers, Inc. (2013) 219 Cal.App.4th 110, the California Court of Appeal found that an accountant working for a tax preparation and bookkeeping firm was an employee and not an independent contractor as the company had classed him. The court noted the firm required the accountant to:

• attend staff meetings;
• have his work reviewed before it went to clients;
• do administrative functions and fill out time sheets like employees did;
• do work the firm assigned to him; and
• work the hours the company established.

The court also pointed out that:

• the accountant had no other clients,
• he primarily used supplies and equipment provided by the company,
• the company marketed him as its worker and he did not market himself,
• he was at-will,
• he performed a function central to the firm’s services to the public,
• the firm reimbursed his expenses,
• he did not invoice the company,
• he did not use subcontractors or his own employees to do any of the work.

In contrast, in Beaumont-Jacques v. Farmers Group, Inc. (2013) 217 Cal.App.4th 1138, another California Court of Appeal panel found that a district manager for a group of related insurance companies was an independent contractor. The manager hired agents, who had to be approved by the company, and she trained and motivated the agents to sell the company’s products. Most importantly, the court found that even though she had to follow the company’s “‘normal business practice’ and ‘goals and objectives,’” the company did not control “to any meaningful degree the means by which [she] performed and accomplished her duties as a district manager.”

The court also observed that the manager:

• determined her own schedule, including hours, breaks, and vacations;
• hired and supervised her own staff and withheld taxes for them;
• she did administrative functions in her own office; and
• paid her own costs, such as a lease, telephone and office supplies, and deducted them on her tax return, which she filed as an independent contractor.

The court found her properly classified as an independent contractor even though she was required to and did prepare reports and attend meetings of district managers.

As a relatively few pennies of prevention is clearly more sensible than the many thousands that it may cost to resolve a classification gone wrong, businesses should confirm any contractor relationship is soundly defined and justified as independent in practice. For assistance, please contact attorneys Tim Bowles, Cindy Bamforth or Helena Kobrin.

See also, “Independent Contractors and Employees Avoiding Misclassification of Hired Workers in California.”

What Is Copyright Infringement?

Copyright infringement has two sides: a) protecting your own copyrighted material and b) avoiding violations of another’s copyrighted work.

The U.S. Copyright Act, section 106, gives a copyright owner exclusive rights to the control of an original work, including reproducing it, publicly displaying it, publicly performing it, making derivative works, and selling, leasing or licensing it to others. Infringement occurs when someone uses another’s work or part of it in these and other ways without the owner’s permission.

To prove copyright infringement, in the simplest terms, the owner must show that he or she owns the copyright to the work in question and that the infringing item is a copy of the original. Copy does not necessarily mean an exact duplicate. The owner can prove this element by showing that the “copy” is substantially similar to the owner’s original and that the infringer had access to the original. If the alleged infringer came up with the same idea independently and created a similar work without any access to that original, there may not be an infringement.

Sometimes the analysis is simple. For example, if you wrote a book, another’s publication of the identical text under a different name and cover would clearly be copyright infringement. Unauthorized use of another’s original photo for the cover of a music album or a secret video recording from the audience of a first run movie for production of pirated DVDs are also examples.

The situation may be less than clear-cut if, for instance, you and another happen to each write original music which sounds similar for a few notes or bars. Two individuals painting the same landscape with similarities in treatment may also be possible trouble, but then again, may not. For some real-life close-calls, see the blog “5 famous copyright infringement cases (and what you can learn).”

The livelihoods of copyright lawyers depend on accurately analyzing such scenarios. However, while an experienced practitioner can and will offer his or her perception of whether similar works present a potential infringement, experts inevitably will differ in more complex cases.

If is of course far preferable to consult a copyright attorney over potential infringements before any “cease and desist” letter or, worse, a lawsuit arises from another copyright holder. If you need help with such issues, you can contact our Of Counsel attorney, Helena Kobrin.

Related articles: The Annals of Copyright Number 1, When in Doubt, Choose Contract Over Lunch (on the importance of written agreements for the use of copyrighted material) and The Annals of Copyright Number 2, You May Have a Copyrighted Work and Don’t Know It (on the definition of a copyrighted work).

Have you ever created anything? Invented something? Designed something? Created a logo or a name that identifies your products or services? Written a song? Painted a picture? Taken a photograph? Perhaps you are a sculptor or a songwriter or you write blogs or screenplays. If you’ve done any of these things, then you have owned intellectual property.

Okay, so what, then, is intellectual property? It consists of things that you create through use of your intellect – your mind. There are several kinds of intellectual property. You may not be aware of all of them or you may have some of them confused with others. The most common ones are copyrights, trademarks (or service marks), patents, and trade secrets. They are different from one another, but they sometimes provide overlapping protections for various different rights that you claim in your own personal products or services or those of your company. For example, the Walt Disney Company claims both trademark and copyright protection for its numerous animated characters.

In many instances, your company’s intellectual properties are its most valuable asset, and it is penny wise and pound foolish not to hire an attorney to help you protect those properties.

We will be doing more blogs on these subjects. If there is anything you particularly would like to hear about, we welcome your feedback. If you need help with your intellectual property, please contact our Of Counsel attorney, Helena Kobrin.

You May Have a Copyrighted Work and Don’t Know It

If you have ever written a story, poem, novel, essay, research paper, or song, taken a photograph or video, performed music, or been in a play or a film, you were at some point a copyright owner. However, you may not still own those rights if you have sold, assigned or otherwise given those rights away. Loss of rights might be by a formal agreement, for example through an entertainment, publishing or music industry contract, or by some other means. If you were an employee in the U.S. when you made your creation, your employer owns the copyrights, based on U.S. law and the concept of “work-made-for-hire.”

A copyright is an owner’s exclusive right to do certain things with an original work and to prevent others from doing so without permission. For example, under U.S. law, the owner is entitled to protect an original work from being copied by others in whole or in part, whether by photocopy or by audio or video copy. Copyright also protects the right to publicly perform or display an original work, to make derivative works from it, and to sell, lease or license copies of it to others. Copyright protects your tangible, specific expressions of your creation, but not the idea or concept behind it.

If you – or one of your employees while on the job – create a written work, sound recording, musical composition, graphic design, architectural plan, photograph, or many other creative works, that creation is copyrighted even if you never take any action to protect it legally.

Nevertheless, there are good reasons why you should protect your copyrighted works by registering them with the U.S. Copyright Office. Registration carries the right to file suit if an infringement occurs, as well as the rights to collect so-called “statutory damages,” set amounts that do not require proof of actual money loss, as well as attorney fees. Especially if you publish or broadcast your copyrighted work in a manner that it could easily be infringed, it is better to file for a registration early on than to have to scramble to register after an infringement occurs, incurring higher expedite fees in the process and missing out on some of the remedies available to a registered copyright owner.

There is of course much more to the process. If you need help with your copyrights, please contact our Of Counsel attorney, Helena Kobrin.

Should Employers Ban E-Cigarettes in the Workplace?

Given the widespread popularity of electronic cigarettes, more cities and states are passing legislation to address their use in the workplace. Electronic cigarettes, or e-cigarettes, are battery-powered and tobacco free. They vaporize a liquid nicotine solution that users inhale and then puff out (i.e., “vaping”). The exhaled water vapor appears similar to traditional tobacco smoke but without the odor.

Three states, New Jersey, North Dakota, and Utah, have enacted bans against e-cigarettes in the workplace. Multiple cities have followed suit, including Seattle, Boston, New York City and Chicago. Surprisingly, California, usually in the forefront of such legislation, has yet to expand its workplace smoking bans to encompass e-cigarettes. Absent a state-wide ban, some California counties and cities have prohibited e-cigarettes on their own, including Marin County, Santa Clara County, and the City of Los Angeles.

Employers with multi-city or multi-state operations should consider instituting a uniform ban on e-cigarettes to ensure compliance as such prohibitions continue to spread. Even in jurisdictions with no restrictions on workplace vaping, employers may wish to ban the practice outright for several reasons, such as to prevent co-worker and customer complaints and to avoid triggering indoor smoke detectors. Some employees have reportedly misused e-cigarettes or “vape pens” to smoke marijuana in their workplaces. That practice may be difficult to detect because the vapor does not have a discernible odor.

Where lawful, some employers view vaping as a means to increase productivity and decrease absenteeism since such users need not leave the building for multiple cigarette breaks beyond the minimum required rest periods. If an employer permits vaping, however, it should explicitly ban marijuana or other drug use in vape pens and reserve the right to inspect such devices for such illicit substances.

For assistance creating complete and comprehensive workplace policies, contact one of our attorneys Tim Bowles, Cindy Bamforth or Helena Kobrin.

Fair Use Definition and Defense

“Fair Use” is the most prevalent defense against copyright infringement and possibly the most misunderstood. It is a subject all in itself.

Simply stated, if a use is “fair use,” it allows you to use someone else’s creation in a particular way without liability for copyright infringement. However, there is no shortage of misconceptions on when fair use applies. Even a long-time copyright lawyer will not always be able to make a definite determination.

The Copyright Act (section 107 of title 17 United States Code) states that: “the fair use of a copyrighted work . . . for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright.” It prescribes four principal elements that courts analyze in determining whether a fair use defense is valid or not:

“(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;

(2) the nature of the copyrighted work [including such issues as whether it is published or unpublished and whether it is creative or factual];

(3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and

(4) the effect of the use upon the potential market for or value of the copyrighted work.”

While these criteria may sound pretty straightforward, application is far from simple except in a truly obvious case. Courts have engaged in much discussion of what these factors mean and how they are to be interpreted. For example, the distinction between commercial and non-profit use is not clear-cut. Commercial use is not always “unfair” and non-profit use not always “fair.” The federal Ninth Circuit Court of Appeals once decided that an educational (classroom) use by one teacher of multiple pages from a cake decorating booklet created by another teacher for her classroom was not fair use. See Marcus v. Rowley, 695 F.2d 1171 (9th Cir. 1983). The Fifth Circuit Court of Appeals found that copying of articles from scientific journals for scholarly use by Texaco’s scientists also was not fair use, in American Geophysical Union V. Texaco Inc., 60 F.3d 913 (2nd Cir. 1994). In contrast, when 2 Live Crew took Roy Orbison’s famous song, “Pretty Woman,” changing the words and recording it as rap music – an undisputed commercial use – it was fair use as a parody. See Campbell v. Acuff-Rose Music (92-1292), 510 U.S. 569 (1994).

Unfortunately, some people decide they are engaged in fair use when they do not really know what it is. For example, one composer mistakenly thought it was fair use if you did not use more than four measures of music by someone else. This is why, in most instances, creative people are best off when they stick with what they know best – creation – and leave it to the legal experts to determine if they are on safe ground when they want to make use of someone else’s creation in their own. A copyright attorney can advise whether: (a) you are taking a large or small risk that you will receive a cease and desist letter from the copyright holder; (b) a fair use defense will or will not be viable; (c) you should forget the idea altogether; or (d) you should apply to the content owner for a license. On the other hand, if you think someone has infringed your copyright by using a portion in his or her own material, a copyright lawyer can tell you if you have a case or need to step back and take a deep breath.

For assistance with fair use analysis or other issues of copyright law, contact our Of Counsel attorney, Helena Kobrin.

Selecting a Trademark Part 2 Distinctiveness

In our last trademark blog, we described steps for a prudent business owner to take in choosing a mark that will avoid conflict with existing marks. The second critical consideration is choosing a mark sufficiently “distinctive” from your product or service to permit its registration or protection.

An understandable tendency is to prefer a mark that will describe the nature or quality of that product or service. However, the closer a mark is to an actual description, i.e., the more indistinguishable it is from the product or service, the less likely it is to be accepted for registration or recognized as legally enforceable. While perhaps counterintuitive, a stronger, legally viable mark is one not ordinarily associated with the product or service you are going to provide, i.e., clearly distinct from that item.

Practitioners, as well as federal and state regulatory agencies, scale the degree of “distinctiveness” by categories:

Arbitrary and Fanciful Marks

The best marks are arbitrary or fanciful.

An “arbitrary” mark is a real word used to describe something that is normally unrelated to that word. A prominent example is the use of a fruit – Apple – to identify a company that makes computers and other electronics. Almost certainly, that company would not have been able to register its name as a sufficiently distinct trademark if its founders had called it “Computers, Inc.”

A “fanciful” mark is a made-up word or expression that does not have any actual previous meaning. They can also easily be registered and protected most of the time. EXXON and XEROX are famous examples, created words that have become widely associated with the products they brand. The danger is a unique mark that becomes so tightly associated as to become synonymous with the product. When XEROX used to describe only photocopiers, it came perilously close to being declared generic and thus unprotected (see below) because the public widely regarded the term for any brand of photocopier or even for just the act of making a photocopy. Xerox Corporation has had to take strong measures to prevent this, promoting the term for a host of other products as well.

Suggestive Marks

Suggestive marks reside lower down the scale. These are words or expressions that, when you hear or see them, suggest, in an indirect way, some quality or attribute of the product or service in question. Q-tips (for cotton swabs) and Greyhound (for bus transportation) are suggestive.

Descriptive Marks

A term that too directly portrays a quality of what you are attempting to identify becomes “descriptive” and thus further down the strong-to-weak scale. For example, “Chewy” would be descriptive of caramel candies. Federal or state trademark agencies would be unlikely to accept it for registration as a mark for use in branding caramel candies unless the applicant could show it was already using that name for some time and a significant portion of the public currently identified “Chewy” as a distinct brand of such candies.

Generic Marks

Generic terms are the lowest on the scale, carrying virtually no distinction from the products or services they identify. No applicant could likely register “CAR” as a trademark for an automobile manufacturer.

Thus, while a first instinct might well be choosing a mark that will swiftly identify or characterize a product or service, the law more readily recognizes and better protects marks with no or little logical connection to the item in question.

Our Of Counsel attorney, Helena Kobrin can help in the often high stakes process of choosing or defending a protectable mark.