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ANGER MANAGEMENT

The ability of employers to follow the law – and of judges to enforce it – depends on clearly defined standards of responsibility and conduct. Vaguely or otherwise poorly stated rules can lead to inconsistent outcomes in very similar factual situations. This danger of arbitrary, unpredictable consequences is perhaps no better illustrated than in the recent struggles of three appeals judges to define the terms of the federalAmericans with Disabilities Act(ADA) inWeaving v. City of Hillsboro(9th C

August 15, 2014

Jerks, Introverts and the Americans with Disabilities Act, Weaving v. City of Hillsboro

The ability of employers to follow the law – and of judges to enforce it – depends on clearly defined standards of responsibility and conduct. Vaguely or otherwise poorly stated rules can lead to inconsistent outcomes in very similar factual situations. This danger of arbitrary, unpredictable consequences is perhaps no better illustrated than in the recent struggles of three appeals judges to define the terms of the federal Americans with Disabilities Act (ADA) in Weaving v. City of Hillsboro (9th Circuit, D.C. No. 3:10-cv-01432-HZ, August 15, 2014).

The ADA forbids workplace discrimination against a “qualified individual on the basis of disability.” “Qualified individual” means a person who, with or without reasonable accommodation, can perform the essential functions of the employment position that such individual holds or desires. Under the ADA, a “disability” is “a physical or mental impairment that substantially limits one or more major life activities,” with “a record of such an impairment,” or who is “regarded as having such an impairment.” The ADA provides examples of such major life activities, including “caring for oneself, performing manual tasks, seeing, hearing, eating, sleeping, walking, standing, lifting, bending, speaking, breathing, learning, reading, concentrating, thinking, communicating and working.”

The challenge in the Weaving case appeal was whether the ADA’s protections should extend to an individual terminated over recurring interpersonal problems with co-workers that he and testifying mental health practitioners attributed to so-called attention deficit hyperactivity disorder (ADHD). Two of the three appeals judges concluded that Officer Weaving’s sometimes gruff, offensive manner – even if the supposed result of a purported ADHD condition – did not deserve ADA protection because his behavior evidenced only an inability “to get along with others,” not a major life activity. The third judge disagreed, contending that Weaving’s periodically boorish behavior amounted to a substantial impairment of the ADA-protected major life activity of “interacting with others.”

While employers might take heart in the immediate result of the Weaving case, that (to use the court’s term) “jerks” do not deserve ADA protection, the decision really should give neither workers nor managers comfort since it leaves the dividing line about as clear as mud between: a) disruptive conduct from which an employer can protect its workforce by suspension or termination of the perpetrator; and b) perhaps offensive but protected behavior stemming from a disability that a business must seek to reasonably accommodate.

The City of Hillsboro, Oregon terminated Matthew Weaving from its police force in late 2009, in part based on the report of his superior that Weaving had created a hostile work environment for his junior officers and peers for actions described as “tyrannical, unapproachable, non-communicative, belittling, demeaning, threatening, intimidating, arrogant, and vindictive.” Weaving at page 10.

Officer Weaving then sued the City for ADA discrimination, alleging that he deserved protection because his diagnosed ADHD condition substantially limited his major life activity of “interacting with others.” The City appealed after a jury awarded Officer Weaving well over $600,000 in damages and over $139,000 in attorney fees. Weaving at page 11.

Weaving contended his situation was similar to the systems analyst who was able to maintain an ADA case in McAlindin v. County of San Diego (9th Cir., 1999) 192 F.3d 1226. There, Mr. McAlindin was able to convince two out of three appeals judges that his claimed panic attacks, “fear reaction,” and “communicative paralysis” created a substantial limitation on his major life activity of interacting with others. 192 F.3d at 1235-1236. Weaving also argued he was entitled to ADA protection just as an equipment operator had been in Head v. Glacier Northwest (9th Cir., 2005) 413 F.3d 1053. There, Mr. Head convinced the appeals court that the ADA could protect him from discrimination since his avoidance of crowds and large family gatherings, and his shutting himself away in his house for weeks – all purportedly the result of a diagnosed “bipolar” mental disorder – constituted a substantial limitation on his major life activity of interacting with others. 413 F.3d at 1060-1061.

Yet, two of the three of the judges in Officer Weaving’s appeal found his situation more akin to another “bipolar”-afflicted employee, this time an electric-guitar assembler in Jacques v. DiMarzio, Inc. (2nd Cir. 2004) 386 F.3d 192. According to the lower court’s record, Ms. Jacques was a “problem employee,” prone to confrontations with co-workers, intolerance of ethnic minorities in the production department, and emotional problems dealing with supervisory staff. Ms. Jacques’s supervisors had found her the “most confrontational person we ever employed,” with supervisors and coworkers regarding her as “intimidating and mercurial” and feeling obliged to treat her with “kid gloves.” 386 F.3d at 197-198.

Taking the cue from the Jacques case, the majority in Weaving found the officer was not eligible for ADA protection for being a cantankerous person with mere trouble getting along with coworkers. In contrast to the plaintiffs in the McAlindin and Head cases, Officer Weaving did not shut himself away, unable at times to interact with others at all. While able to engage in normal social interactions, “his interpersonal problems existed almost exclusively in his interactions with his peers and subordinates.” Weaving at page 17. “One who is able to communicate with others, though his communications may at times be offensive, ‘inappropriate, ineffective, or unsuccessful,’ is not substantially limited in his ability to interact with others within the meaning of the ADA. To hold otherwise would be to expose to potential ADA liability employers who take adverse employment actions against ill-tempered employees who create a hostile workplace environment for their colleagues.” Weaving at page 18.

Circuit Judge Callahan, the third judge in Weaving, disagreed sharply with the other two. Citing the report of the treating psychologist, she emphasized that Officer Weaving was apparently unable to “self-regulate” certain symptoms of his supposed ADHD condition, including impulsiveness, “not seeming to listen when spoken to, … interrupting others, … difficulty waiting his turn, blurting out comments without having emotional intelligence, [and lack of] awareness of the effect that that communication would have on his other workers at the police department.” Weaving at page 23. Judge Callahan thus contended that Officer Weaving “was well beyond being merely cantankerous or troublesome. To the contrary, he had problems in his interactions with just about everyone throughout his career in law enforcement.” Judge Callahan thus reasoned that Weaving was substantially limited in his ability to interact with others and was not just a cranky, defiant bully undeserving of ADA protection. Weaving at page 32.

The Weaving decision demonstrates the highly subjective element that can drive the discussion on what is and what is not a protectable mental disability under the ADA. In the face of disruptive conduct as displayed by Officer Weaving, management must base any disciplinary decisions on the observable and documented negative effects that such angry, demeaning and bullying behavior has on the morale and productivity of the workers on the receiving end of such conduct. Job descriptions that establish the abilities to engage in effective, constructive communication and to work in efficient coordination with supervisors, coworkers and juniors will also promote the proper objective expectations for a worker at every company position.

For further information and assistance on workplace disability issues, contact any of our office’s attorneys, Tim Bowles, Cindy Bamforth or Helena Kobrin.
Additional references:
Disability and Leave of Absence Policies, Keeping Up with Changing Employment Laws”

Say “ADAAAAHHH” – More People to be Protected Under Federal Workplace Disability Law”

Disability Employment, Employing Big Eaters, High Rollers and Voyeurs, Unusual Mental Disability Claims on the Horizon?

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BANNED BOX AND BEYOND

Joining a growing movement of 12 states and more than 60 cities with “ban the box” laws, i.e., deleting the typical criminal history check box often seen on employment applications,San Francisco’s Fair Chance Ordinance(FCO) goes into effect August 13, 2014.

August 13, 2014

San Francisco Employers Must Give Former Convicts a Fighting Chance

Joining a growing movement of 12 states and more than 60 cities with “ban the box” laws, i.e., deleting the typical criminal history check box often seen on employment applications, San Francisco’s Fair Chance Ordinance (FCO) goes into effect August 13, 2014.

Arguably the strictest “ban the box” legislation in the nation, the FCO requires covered private employers, city contractors, and housing providers to limit timing and use of criminal background checks and take the following steps:

• State in all job postings – and to conspicuously display an FCO notice — that qualified applicants with arrest and conviction records will be considered for the position in accordance with the FCO;
• Refrain from asking about an applicant’s conviction history or unresolved arrests at the start of the hiring process, such as on a job application form or through informal conversation;
• Wait until after conducting a live interview or making a conditional employment offer before asking about unresolved (i.e., pending) arrests and conviction history (except for any off-limits matters, such as arrests that did not lead to a conviction, misdemeanors, or convictions more than seven years old);
• Consider only those convictions and unresolved arrests that directly relate to the applicant’s ability to do the job (for example, an embezzlement conviction is likely relevant for a finance position); and
• Before denying an applicant a job due to a conviction, give the individual an opportunity to establish that the criminal background information obtained is inaccurate, he/she has been rehabilitated, or other mitigating factors such as physical or emotional abuse, coercion, or untreated abuse/mental illness that led to the conviction.

The FCO applies to employers located in or doing business in the city and county of San Francisco who have 20 or more employees (regardless of the employees’ location). It covers job applicants and employees who would be or are performing work in whole or substantial part in the city of San Francisco. Affected employers should promptly review and comply with the FCO in its entirety, including appropriate changes to job postings, employee applications, and interviewing protocol. All other employers should consider reviewing their hiring forms and policies to ensure lawful inquiry into an applicant’s criminal history, particularly if located in another “ban the box” jurisdiction.

For more information, contact one of our attorneys, Timothy Bowles, Cindy Bamforth or Helena Kobrin.

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BANNED BOX AND BEYOND

Joining a growing movement of 12 states and more than 60 cities with “ban the box” laws, i.e., deleting the typical criminal history check box often seen on employment applications,San Francisco’s Fair Chance Ordinance(FCO) goes into effect August 13, 2014.

August 13, 2014

San Francisco Employers Must Give Former Convicts a Fighting Chance

Joining a growing movement of 12 states and more than 60 cities with “ban the box” laws, i.e., deleting the typical criminal history check box often seen on employment applications, San Francisco’s Fair Chance Ordinance (FCO) goes into effect August 13, 2014.

Arguably the strictest “ban the box” legislation in the nation, the FCO requires covered private employers, city contractors, and housing providers to limit timing and use of criminal background checks and take the following steps:

• State in all job postings – and to conspicuously display an FCO notice — that qualified applicants with arrest and conviction records will be considered for the position in accordance with the FCO;
• Refrain from asking about an applicant’s conviction history or unresolved arrests at the start of the hiring process, such as on a job application form or through informal conversation;
• Wait until after conducting a live interview or making a conditional employment offer before asking about unresolved (i.e., pending) arrests and conviction history (except for any off-limits matters, such as arrests that did not lead to a conviction, misdemeanors, or convictions more than seven years old);
• Consider only those convictions and unresolved arrests that directly relate to the applicant’s ability to do the job (for example, an embezzlement conviction is likely relevant for a finance position); and
• Before denying an applicant a job due to a conviction, give the individual an opportunity to establish that the criminal background information obtained is inaccurate, he/she has been rehabilitated, or other mitigating factors such as physical or emotional abuse, coercion, or untreated abuse/mental illness that led to the conviction.

The FCO applies to employers located in or doing business in the city and county of San Francisco who have 20 or more employees (regardless of the employees’ location). It covers job applicants and employees who would be or are performing work in whole or substantial part in the city of San Francisco. Affected employers should promptly review and comply with the FCO in its entirety, including appropriate changes to job postings, employee applications, and interviewing protocol. All other employers should consider reviewing their hiring forms and policies to ensure lawful inquiry into an applicant’s criminal history, particularly if located in another “ban the box” jurisdiction.

For more information, contact one of our attorneys, Timothy Bowles, Cindy Bamforth or Helena Kobrin.

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AIN’S NO SUCH THING AS “FREE CALL”

The California Court of Appeal has ruled in favor of employee Colin Cochran on hisclass action lawsuiton behalf of 1,500 customer service managers against Schwan Home Service for reimbursement for work-related use of personal cell phones.Cochran v. Schwan’s Home Service, Inc. (August 12, 2014). Cochran alleged the company violatedCalifornia Labor Code Section 2802, which provides:

August 12, 2014

Employer Must Pay Portion of Employee’s Unlimited Data Plan for Work-Related Calls

The California Court of Appeal has ruled in favor of employee Colin Cochran on his class action lawsuit on behalf of 1,500 customer service managers against Schwan Home Service for reimbursement for work-related use of personal cell phones. Cochran v. Schwan’s Home Service, Inc. (August 12, 2014). Cochran alleged the company violated California Labor Code Section 2802, which provides:

“An employer shall indemnify [reimburse] his or her employee for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties, or of his or her obedience to the directions of the employer….”

Schwan’s Home Service had convinced the trial judge that class members had no claim for reimbursement under section 2802 if the workers had plans for their personal phones providing unlimited minutes for a flat rate or if someone other than the employee paid the bill. (In Mr. Cochran’s particular case, it was unclear whether he or his girl friend had actually paid the bill.)

The Court of Appeal disagreed, ruling that an employer must reimburse the reasonable expense of the mandatory use of a personal cell phone regardless of whether the employee actually incurred extra expense for such calls or not: “To show liability under section 2802, an employee need only show that he or she was required to use a personal cell phone to make work-related calls, and he or she was not reimbursed.” Otherwise, the court reasoned, the employer would receive a windfall from passing its operating expenses onto the employee.

Thus, to be in compliance with section 2802, the employer must pay some reasonable percentage of the employee’s cell phone bill for all types of cell phone plans and even if someone else pays the bill. The court did not discuss how to calculate that percentage.

California employers should promptly consult with competent legal counsel regarding their reimbursement obligations. For more information, contact one of our attorneys, Timothy Bowles, Cindy Bamforth or Helena Kobrin.

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AIN’S NO SUCH THING AS “FREE CALL”

The California Court of Appeal has ruled in favor of employee Colin Cochran on hisclass action lawsuiton behalf of 1,500 customer service managers against Schwan Home Service for reimbursement for work-related use of personal cell phones.Cochran v. Schwan’s Home Service, Inc. (August 12, 2014). Cochran alleged the company violatedCalifornia Labor Code Section 2802, which provides:

August 12, 2014

Employer Must Pay Portion of Employee’s Unlimited Data Plan for Work-Related Calls

The California Court of Appeal has ruled in favor of employee Colin Cochran on his class action lawsuit on behalf of 1,500 customer service managers against Schwan Home Service for reimbursement for work-related use of personal cell phones. Cochran v. Schwan’s Home Service, Inc. (August 12, 2014). Cochran alleged the company violated California Labor Code Section 2802, which provides:

“An employer shall indemnify [reimburse] his or her employee for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties, or of his or her obedience to the directions of the employer….”

Schwan’s Home Service had convinced the trial judge that class members had no claim for reimbursement under section 2802 if the workers had plans for their personal phones providing unlimited minutes for a flat rate or if someone other than the employee paid the bill. (In Mr. Cochran’s particular case, it was unclear whether he or his girl friend had actually paid the bill.)

The Court of Appeal disagreed, ruling that an employer must reimburse the reasonable expense of the mandatory use of a personal cell phone regardless of whether the employee actually incurred extra expense for such calls or not: “To show liability under section 2802, an employee need only show that he or she was required to use a personal cell phone to make work-related calls, and he or she was not reimbursed.” Otherwise, the court reasoned, the employer would receive a windfall from passing its operating expenses onto the employee.

Thus, to be in compliance with section 2802, the employer must pay some reasonable percentage of the employee’s cell phone bill for all types of cell phone plans and even if someone else pays the bill. The court did not discuss how to calculate that percentage.

California employers should promptly consult with competent legal counsel regarding their reimbursement obligations. For more information, contact one of our attorneys, Timothy Bowles, Cindy Bamforth or Helena Kobrin.

READ MORE

BRINKER CASE SETTLES FOR $56 MILLION

After waging a 10-year legal battle, Brinker Restaurant Corp., the parent company for Chili’s and Maggiano’s restaurant chains, has settled its wage and hour class action lawsuit. On August 6, 2014, the parties reached a preliminary agreement to resolve all 120,000 class members’ claims in exchange for a maximum settlement payment of $56.5 million. The settlement terms remain subject to court approval.

August 6, 2014

California Restaurant Workers Settle High Profile Wage and Hour Class Action Lawsuit

After waging a 10-year legal battle, Brinker Restaurant Corp., the parent company for Chili’s and Maggiano’s restaurant chains, has settled its wage and hour class action lawsuit. On August 6, 2014, the parties reached a preliminary agreement to resolve all 120,000 class members’ claims in exchange for a maximum settlement payment of $56.5 million. The settlement terms remain subject to court approval.

This highly publicized case, which wound its way up to the California Supreme Court two years ago, affects all California employers. In its much-anticipated 2012 ruling, the high court held businesses must provide uninterrupted 30-minute meal breaks to their workers but are not obligated to ensure that no work is done during any such break. The Court cautioned that employers must not “impede or discourage” employees from taking that uninterrupted time off.

The Court also clarified California’s workplace rest period laws, ruling that employers must provide their hourly employees with one paid 10-minute rest break for every four hours worked or every “major fraction thereof.”

Brinker’s $56 million settlement serves as an important reminder for management to revisit meal and rest break policies. Among other things, workplace policy should clearly specify:

  • the minimum daily working hours that trigger one or more unpaid 30 minute meal breaks;
  • the minimum working shift hours that trigger each paid 10 minute rest period;
  • employee obligations to accurately record working periods, including the entries that will frame unpaid, off-work meal breaks;
  • management’s commitment to scheduling meal and rest break periods and to fielding any employee concerns over such matters;
  • procedure for employee complaints over meal and rest break practices or incidents and their resolution; and
  • forms for employees to periodically confirm (or contest) that any and all skipped breaks in a given recent period have been voluntary.

Of course, employers must always pay employees for all time worked including any meal breaks skipped at a worker’s option.

We’ve covered earlier rulings in past blogs, “Brinkers New Rules for Meal and Rest breaks”, “Brinker: Employees May Skip Breaks”, “Brinker: Clocking In on Employee Timekeeping”, “Brinker Decision and Rest Periods” and “Brinker: California’s Meal Break Breakthrough“. For information concerning meal and rest periods and related workplace practices, as well as model employee policies and forms, contact one of our attorneys Tim Bowles, Cindy Bamforth or Helena Kobrin.

READ MORE

BRINKER CASE SETTLES FOR $56 MILLION

After waging a 10-year legal battle, Brinker Restaurant Corp., the parent company for Chili’s and Maggiano’s restaurant chains, has settled its wage and hour class action lawsuit. On August 6, 2014, the parties reached a preliminary agreement to resolve all 120,000 class members’ claims in exchange for a maximum settlement payment of $56.5 million. The settlement terms remain subject to court approval.

August 6, 2014

California Restaurant Workers Settle High Profile Wage and Hour Class Action Lawsuit

After waging a 10-year legal battle, Brinker Restaurant Corp., the parent company for Chili’s and Maggiano’s restaurant chains, has settled its wage and hour class action lawsuit. On August 6, 2014, the parties reached a preliminary agreement to resolve all 120,000 class members’ claims in exchange for a maximum settlement payment of $56.5 million. The settlement terms remain subject to court approval.

This highly publicized case, which wound its way up to the California Supreme Court two years ago, affects all California employers. In its much-anticipated 2012 ruling, the high court held businesses must provide uninterrupted 30-minute meal breaks to their workers but are not obligated to ensure that no work is done during any such break. The Court cautioned that employers must not “impede or discourage” employees from taking that uninterrupted time off.

The Court also clarified California’s workplace rest period laws, ruling that employers must provide their hourly employees with one paid 10-minute rest break for every four hours worked or every “major fraction thereof.”

Brinker’s $56 million settlement serves as an important reminder for management to revisit meal and rest break policies. Among other things, workplace policy should clearly specify:

  • the minimum daily working hours that trigger one or more unpaid 30 minute meal breaks;
  • the minimum working shift hours that trigger each paid 10 minute rest period;
  • employee obligations to accurately record working periods, including the entries that will frame unpaid, off-work meal breaks;
  • management’s commitment to scheduling meal and rest break periods and to fielding any employee concerns over such matters;
  • procedure for employee complaints over meal and rest break practices or incidents and their resolution; and
  • forms for employees to periodically confirm (or contest) that any and all skipped breaks in a given recent period have been voluntary.

Of course, employers must always pay employees for all time worked including any meal breaks skipped at a worker’s option.

We’ve covered earlier rulings in past blogs, “Brinkers New Rules for Meal and Rest breaks”, “Brinker: Employees May Skip Breaks”, “Brinker: Clocking In on Employee Timekeeping”, “Brinker Decision and Rest Periods” and “Brinker: California’s Meal Break Breakthrough“. For information concerning meal and rest periods and related workplace practices, as well as model employee policies and forms, contact one of our attorneys Tim Bowles, Cindy Bamforth or Helena Kobrin.

READ MORE

FEDERAL AGENCY WEIGHS IN ON PREGNANCY DISCRIMINATION

On July 14, 2014, the U.S. Equal Employment Opportunity Commission (EEOC) published its first“guidance” on pregnancy discriminationsince 1983.  EEOC enforcement guidances are the agency’s interpretations of law.  This set offers EEOC views on what constitutes unlawful pregnancy-based discrimination under the federalCivil Rights Act of 1964(“Title VII”), as amended by thePregnancy Discrimination Act of 1978(PDA). The guidance also covers how theAmericans with Disabilities Act(ADA) — as amended in

July 1, 2014

EEOC Publishes Controversial Enforcement Guidelines

On July 14, 2014, the U.S. Equal Employment Opportunity Commission (EEOC) published its first “guidance” on pregnancy discrimination since 1983. EEOC enforcement guidances are the agency’s interpretations of law. This set offers EEOC views on what constitutes unlawful pregnancy-based discrimination under the federal Civil Rights Act of 1964 (“Title VII”), as amended by the Pregnancy Discrimination Act of 1978 (PDA). The guidance also covers how the Americans with Disabilities Act (ADA) — as amended in 2008 to broaden the definition of disability — applies to pregnancy-related impairments. These guidelines include covered employer obligations to provide pregnant employees equal access to employment benefits, such as leave, light duty, and health coverage.

The EEOC also published a “Fact Sheet for Small Business” for covered employers (essentially those with 15 or more persons on payroll), explaining when and how PDA and ADA requirements apply.

EEOC commissioner Victoria Lipnic has criticized the updated guidance for directing employers to modify job requirements for pregnant and lactating workers experiencing no complications and thus not disabled under the ADA. Ms. Lipnic contends the guidance embraces “the novel position that under the language of the PDA, [any] pregnant worker is, as a practical matter, entitled to ‘reasonable accommodation’…. No federal Court of Appeals has adopted this position; indeed, those which have addressed the question have rejected it.”

Ms. Lipnic also questioned the timing of the EEOC’s publication: “The most significant questions addressed in the Pregnancy Guidance are pending before … the U.S. Supreme Court for review and decision. See Young v. United Parcel Services, Inc…. (U.S. July 1, 2014)…. the credibility of the Commission is done no favor by issuing any guidance on these points while these critical questions are pending – particularly if the Court adopts a position which directly contravenes that taken in the Guidance….”

As always, employers should proceed deliberately in assessing how to accommodate workers with pregnancy-related limitations, including under possibly more stringent state laws such as California’s.

For more information, contact one of our attorneys, Timothy Bowles, Cindy Bamforth or Helena Kobrin.

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WAKE-UP CALL ON INSIDE SALESPERSONS

California employers may qualify commissionedinside salespersonsas exempt from overtime if they earn at least 1.5 times the state minimum wage for each hour worked with more than fifty percent of that total from commissions.  Some employers have considered an employee eligible if he or she met these requirements on average over several pay periods.  However, the California Supreme Court has recently ruled that the calculation must be made – and qualification determined – on what is earned and pa

July 1, 2014

California Supreme Court Narrows Eligibility for the Commissioned Salesperson Exemption

California employers may qualify commissioned inside salespersons as exempt from overtime if they earn at least 1.5 times the state minimum wage for each hour worked with more than fifty percent of that total from commissions. Some employers have considered an employee eligible if he or she met these requirements on average over several pay periods. However, the California Supreme Court has recently ruled that the calculation must be made – and qualification determined – on what is earned and paid during each pay period. Peabody v. Time Warner Cable, Inc. (July 14, 2014). This may significantly lower the number of employers claiming this exemption for their workers.

Time Warner Cable classified its account executive Susan Peabody as an exempt commissioned inside salesperson. For her sales of TV advertising, Time Warner paid Peabody regular wages on a biweekly basis (calculated per hour on a presumed 40 hour week). The company also paid her monthly on commissions earned. This meant that Peabody received at least one check per month for hourly pay only and at less than 1.5 times the minimum wage for all hours worked.

On Peabody’s lawsuit for unpaid overtime (including the claim that she usually worked 45 hours weekly), Time Warner argued the exemption applied by averaging her compensation over a month or more, i.e., that it should be permitted to apply portions of the monthly commission payments back to earlier pay periods where Peabody had originally received lower than the minimums required to qualify.

The California Supreme Court disagreed, unanimously ruling: “[A]n employer satisfies the minimum earnings prong of the commissioned employee exemption only in those pay periods in which it actually pays the required minimum earnings. An employer may not satisfy the prong by reassigning wages from a different pay period.” Peabody v. Time Warner Cable, Inc.

The Court explained: “Making employees actually pay the required minimum amount of wages in each pay period mitigates the burden imposed by exempting employees from receiving overtime. The purpose would be defeated if an employer could simply pay the minimum wage for all work performed, including excess labor, and then reassign commission wages paid weeks or months later in order to satisfy the exemption’s minimum earnings prong.” Peabody v. Time Warner Cable, Inc.

Two important lessons arise from the decision:

• Qualification for California’s inside sales exemption requires employee receipt of at least 1.5x minimum wage for every hour worked in the pay period. With the July 1, 2014 increase of minimum wage to $9.00/hour, the minimum qualifying rate is thus currently $13.50 per hour; and

• To qualify a worker for the exemption, an employer may not attribute commissions paid in one period to other pay periods.

For more information, contact one of our attorneys, Timothy Bowles, Cindy Bamforth or Helena Kobrin.

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