Oregon Legislature Bans Mandatory Meetings
A new Oregon bill will prohibit employers from requiring employees to attend mandatory or "captive audience" meetings on, among other topics, labor unions. Governor Ted Kulongoski is expected to sign the bill, which would them become law effective January 1, 2010. Click here to read SB 519.
SB 519 prohibits an employer from taking action against an employee who refuses to participate in communications concerning the employer’s opinions on religious or political matters. Religious or political matters is defined broadly and includes communications to employees about unionization. An employee who suffers economic loss (through termination or suspension) as a result of the bill can sue his or her employer and recover treble damages. The bill also allows employees to obtain an injunction prohibiting additional "captive audience" meetings.
This law might not be long-lived: the U.S. Supreme Court found a similar California law to be preempted by federal labor law. Click here to read that opinion in Chamber of Commerce v. Brown. Even if a court finds Oregon's statute to be similarly preempted (and we believe a court will), the law could still apply to employers that are not covered by federal labor law - namely, Oregon public and agricultural employers. Also, the word from Salem is that the legislature will still revise the law to provide additional protections for religious employers (such as churches and some hospitals) who hold religious meetings, so keep an eye out for those changes in the next week or so.
Extension of Federal Benefits to Same-Sex Partners Falls Short of Goals
The memorandum issued by President Obama yesterday extends some benefits to the same-sex partners of federal employees, including access to a government insurance program that pays for long-term conditions such as Alzheimer's disease, and to sick leave to care for a sick same-sex partner or a non-biological child. However, the extension did not provide eligibility for health care to same-sex partners, drawing protest from gay activists.
Why did President Obama stop short? The Defense of Marriage Act (DOMA), the 1996 federal law that, among other things, defines marriage as a legal union exclusively between one man and one woman. According to President Obama's press statement, the White House determined that DOMA prevented an extension of all benefits to same-sex partners, including health care. In the statement, President Obama called on Congress to repeal DOMA and signaled an intend to extend all benefits to same-sex partners if and when that happens.
President Obama's actions will clearly impact Federal agencies and their employees, but what effect does it have on private employers? For now, none - the memorandum only applies to the federal government. However, it does signal a growing trend in mandating the extension of employee benefits to same-sex partners. States that recognize same-sex marriage generally require private employers to extend benefits to same-sex spouses; other states that do not recognize same-sex marriages but do recognize same-sex partnerships (such as Oregon, Washington and California) may require private employers to extend benefits to same-sex partners under certain circumstances. Private employers should consult legal counsel about their possible obligation to provide such benefits.
Former Employee Wins $4.1 Billion, Dr. Evil Award
An arbitrator recently awarded $4.1 billion in favor of the former chief marketing officer of iFreedom Communications Inc., finding that iFreedom breached his employment contract by firing him without cause. You read that right: $4.1 billion, with a "b." U.S. Dollars, not Zimbabwean. Don't believe us? You can read the opinion yourself: Chester v. iFreedom Communications Inc.
$4.1 billion dollars. That's a ton of money. Boatloads of money. In fact, that's so much money, we are awarding Mr. Chester our First Annual Dr. Evil Award! Congratulations!
So, how did Chester rack up $4.1 billion in damages? The employment agreement guaranteed him a salary of $12,000 a month plus commissions of 5 percent of gross sales; if he was fired without cause, he would continue to receive commissions. iFreedom also was supposed to provide Chester with 1.1 million shares of common stock upon hiring and another 600,000 shares if he met certain sales targets . Apparently, iFreedom did really, really well. Sales, stock and interest added up, and in a big way.
How can employers avoid owing an ex-employee billions? First, be careful drafting employment agreements! A carefully drafted agreement could have avoided this massive liability. Second, if the agreement requires "cause" for termination, make sure such cause actually exists before pulling the trigger on someone. Finally, if you get sued and the other side is seeking billions of dollars, hire a decent lawyer and don't try to represent yourself. It turns out the founder of iFreedom (a non-lawyer) represented the company by himself. Oops.
Starbucks Obtains Reversal of $105 Million "Tip Sharing" Case
Just over a year ago, we reported about a $105 million California verdict in favor of Starbucks baristas who were required to pool their tips with supervisors. As you might expect, Starbucks appealed that decision. Yesterday, a California Court reversed the decision. Click here to read the decision in Chau v. Starbucks.
The 4th District Court of Appeal in San Diego ruled Tuesday that supervisors "essentially perform the same job as baristas," so they should get their fair share of the collective tips. (We wonder what that says about the supervisors' exempt status?) Attorneys for the baristas have indicated they will appeal to the California Supreme Court, and the World of Work will be watching, its $3.50 latte in hand.
Ninth Circuit Declines to Reconsider Ruling on SF Health Care Ordinance
Back in October 2008, the Ninth Circuit Court of Appeals upheld a San Francisco city ordinance that requires many employers to either contribute a specified amount toward their employees' health care costs on a regular basis or pay into a city health care fund for San Francisco residents. Earlier this week, the Ninth Circuit denied a petition for rehearing en banc, meaning that the law will continue to be in effect--until or unless the Supreme Court decides to hear an appeal.
The San Francisco Health Care Security Ordinance went into effect on January 9, 2008. It is a "pay or play" health care plan, as it requires employers either to "pay" for health care or "play" by the rules of the city health care fund. The ordinance applies to for-profit employers with at least 20 employees and non-profit employers with at least 50 employees. For more information on the ordinance, including compliance information, click here.
In the underlying lawsuit, Golden Gate Restaurant Association v. San Francisco, a group of employers brought a lawsuit seeking the federal court to declare that the San Francisco ordinance is preempted by the federal Employee Retirement Income Security Act of 1974 (ERISA). The Ninth Circuit disagreed, and the ordinance will continue to be in effect. This decision may pave the way for other state and local governments to pass similar "pay or play" health care laws, knowing that they will likely withstand a legal challenge.
Starbucks Wins Round in Class Action over Applications' Marijuana Questions
Earlier this month, Starbucks scored an important procedural victory from the California Court of Appeals, which ruled that a class of employees lacked standing to sue over questions the coffee chain asked on its employment applications about prior marijuana convictions. Click here to read the opinion in Starbucks v. Superior Court.
Despite the apparent victory, this case teaches an important lesson for California employers: make sure your employment applications do not inquire about minor marijuana possession convictions that are more than two years old. Such questions violate California Labor Code Sections 432.7 and 432.8. In the Starbucks case, even though the court held that the applications violated the statute, there was no evidence that any of the class members had been harmed; the outcome would have been different had the class consisted of employees who were denied employment based on their answers to the question, or employees who disclosed that information in response to the unlawful question.
California Overtime Laws Cover Nonresidents Who Work in California
Do California wage and hour laws - including their daily and weekly overtime provisions - apply to non-residents who occasionally perform work in California? Yes, according to a decision from the Ninth Circuit Court of Appeals earlier this month. Click here to read the court's decision in Sullivan v. Oracle Corp.
In Sullivan, Oracle sent employees who regularly lived and worked in Arizona and Colorado to California on temporary assignments to train Oracle's customers on the use of its software products. The plaintiffs sued under California law for daily and weekly overtime when they worked in California. Oracle argued that Arizona and Colorado law should apply because the employees regularly work and live in those states. (Of course, the plaintiffs would not have been entitled to any overtime pay under Arizona or Colorado law). A district court sided with Oracle and granted its motion for summary judgment. However, the Ninth Circuit overturned that decision and held that “California's employment laws govern all work performed in the state, regardless of the residence or domicile of the worker.”
What does this mean for employers? If you have non-California employees working in California, even on temporary assignment, make sure that you comply with California's unique wage and hour and overtime laws. For more information on California law, including its daily and weekly overtime provisions, check out this helpful FAQ from the California Labor Board.
California Supreme Court to Review Rest and Meal Break Case
Back in August, we reported a California Court of Appeals decision that employers must provide rest and meal breaks, but are not required to control that the breaks were taken. Last week, the California Supreme Court granted review of that case - it might uphold the decision, but it might also overturn it.
The grant of review means the lower court case has no effect until the Supreme Court rules. California employers should return to policing meal and rest breaks to make sure employees take them, at least until a new decision comes from the California Supreme Court, probably early next year. Watch the World of Work for updates!
Fourteen Million Reasons Not to Misclassify Employees as Independent Contractors
A class of current and former FedEx Ground drivers misclassified as "independent contractors" will receive an additional $9 million in reimbursements for employment-related expenses, an appointed referee ruled October 20. This award will be combined with a previous award of $5.3 million the drivers received in 2006. The award will reimburse the drivers for such expenses as truck maintenance and registration, uniforms, fuel, and liability insurance. For more information on the drivers' lawsuit, click here.
As this case shows, employers run a substantial risk by misclassifying its employees as "independent contractors." Not only can the misclassified employees bring lawsuits (for any number of reasons, such as unpaid overtime, minimum wage violations, family and medical leave issues, and more), but state and federal tax agencies can bring collection actions seeking unpaid payroll taxes, unemployment taxes and penalties.
Concerned that your independent contractor might be a misclassified employee? The IRS has this handy information on how to determine whether the employee is correctly classified. There is even an IRS form (Form SS-8) that you can file to seek the Service's help in determining if your employee is correctly classified. Of course, if you believe that you have misclassified employees working as contractors, it might be a good time to contact your labor and employment attorney.
Ninth Circuit Upholds San Francisco Health Care Ordinance
The Ninth Circuit Court of Appeals recently upheld a San Francisco city ordinance that requires many employers to either contribute a specified amount toward their employees' health care costs on a regular basis or pay into a city health care fund for San Francisco residents.
The San Francisco Health Care Security Ordinance went into effect on January 9, 2008. It is a "pay or play" health care plan, as it requires employers either to "pay" for health care or "play" by the rules of the city health care fund. The ordinance applies to for-profit employers with at least 20 employees and non-profit employers with at least 50 employees. For more information on the ordinance, including compliance information, click here.
In Golden Gate Restaurant Association v. San Francisco, a group of employers brought a lawsuit seeking the federal court to declare that the San Francisco ordinance is preempted by the federal Employee Retirement Income Security Act of 1974 (ERISA). The Ninth Circuit disagreed, and the ordinance will continue to be in effect. This decision may pave the way for other state and local governments to pass similar "pay or play" health care laws, knowing that they will likely withstand a legal challenge.
Free Lunch Seminar on California Law for Oregon Employers October 30
Do you have an office or a facility in California? Do you have any employees who work in California? If you've had to confront the challenges of complying with California's unique employment laws and regulations, you'll want to join us.
We will have a lively discussion led by Tony DeCristoforo, a labor and employment law specialist based in our Sacramento office, and Victor Kisch, a Portland based attorney who practiced in California for about a decade. They will summarize the important differences between Oregon and California employment laws.
- Where? Stoel Rives' Portland Office
- When? 11:30 a.m., October 30, 2008
- Cost? Free! As Tom Peterson would say, "Free is a very good price!"
For registration information, click here.
Governor Schwarzenegger Signs Two New Employment Laws, Vetoes Many Others
California employers take note: late last month, the Governator signed a few new employment laws, but vetoed many others.
Two bills are now law in California:
- A.B. 10, which immediately exempts from state hourly overtime pay requirements computer professionals earning more than $75,000 a year .
- A.B. 2001, which gives local governments authority to establish whistleblower hotlines, and requires cities and counties to protect the confidentiality of whistleblowers.
The bills that Governor Schwarzenegger vetoed include:
- A.B. 2279, which would have prohibited employers from discriminating in hiring, termination, or employment conditions based on the use of medical marijuana.
- A.B. 437, which would have reversed (for state law purposes only) the "paycheck rule" on equal pay claims as set forth in the U.S. Supreme Court's 2007 decision in Ledbetter v. Goodyear Tire & Rubber Co.
- A.B. 2386, which would have changed the rules for farmworkers' union elections, providing for either secret mail-in ballots or a traditional ballot box election.
- A.B. 3063, which would have prohibited employers from asking job applicants about arrests or detentions that did not result in convictions, or about participation in pre-trial or post-trial diversion programs.
- S.B. 1717, which would have doubled the amount of weeks a worker could receive disability pay.
Governor Schwarzenegger Vetoes SB 1583
As previously reported in the World of Work, the California Assembly passed Senate Bill 1583, which would have made paid consultants who advise employers to treat workers as independent contractors to avoid employee status jointly and severally liable with the employer if it is determined the workers are not independent contractors. The Governator vetoed (terminated?) the bill on September 28. It does not appear likely that there is enough support in the Assembly to override the veto.
California Bans Texting While Driving
Add "texting" to the list of things you may not do in California while driving. As previously reported in the World of Work, on July 1 this year, California banned talking on a cell phone while driving (although talking on a hands-free device is still okay). However, the California legislature forgot to add texting to that ban.
Senate Bill 28, signed by the Governator on September 24, 2008, fixed the loophole. It reads: “A person shall not drive a motor vehicle while using an electronic wireless communications device to write, send, or read a text-based communication.” The bill took effect immediately.
Employers in all states should consider amending their employee handbooks to discourage texting, cell phone use, computer use, or other distracting habits while employees drive on company business. In the event of an accident during work time, an employer risks significant liability if it is found the accident was caused by a distracted employee. If you don't believe the World of Work, perhaps you will believe Katie Couric:
California Assembly Passes Four Employment-Related Laws
California employers take note: The California State Assembly recently passed four significant employment-related bills that you should pay close attention to:
- Medical Marijuana: A.B. 2279 would prohibit discrimination against an employee based on marijuana use, as long as the use was for medical reasons and did not occur at the workplace or during the hours of employment.
- Equal Pay: A.B. 437 would reject the "paycheck rule" established in the U.S. Supreme Court's decision in Ledbetter v. Goodyear Tire & Rubber Co., 127 S. Ct. 2162 (2007). Under the new bill, the statute of limitations for pay claims under the state Fair Employment and Housing Act would toll with each discriminatory paycheck an employee receives.
- Independent Contractors: S.B. 1583 would make paid consultants who advise employers to treat workers as independent contractors to avoid employee status jointly and severally liable with the employer if it is determined the workers are not independent contractors.
- Arrest Records: A.B. 3063 would prohibit employers from asking applicants about arrests that did not result in convictions, or about participation in pre-trial or post-trial diversion programs.
Will the Governator sign the bills? Right now, he and the state assembly are deadlocked over the state budget, and Schwarzenegger has said he will not sign any new bills unless and until a new budget is agreed on. However, if he does not sign the bills within 30 days of their passage, they automatically become law. Stay tuned to the World of Work for more updates!
California Drywall Contractor Settles Meal Break Case for $1.4 Million
California employers beware: the state Attorney General is enforcing meal breaks and overtime laws. This week, an Orange County drywall contractor agreed to pay $1.4 million in damages to employees who did not receive their legally required meal breaks or who did not recieve overtime. To read the settlement in the case, California v. Interwall Dev. Sys. Inc., click here. To read the Attorney General's press release, click here.
The defendant also agreed to pay the state up to $131,000 in payroll taxes it should have paid if it had adequately compensated its employees, civil fines totaling $200,000, $70,000 in attorneys' fees and costs, and $26,000 to cover the cost of a "restitution administrator." Ouch.
So remember: under California law, employees are entitled to a ten-minute break every four hours and to overtime pay for working more than eight hours per day or forty hours per week. If you don't follow the law, you might get a visit from the Governator.
California Court Upholds One Year Statute of Limitation to Arbitrate FEHA Claim
If you've followed the development of California law on the enforceability of arbitration agreements in the last few years, you know it's complex. And last week, it just got a little more so, although in a way that might be good for employers. In Pearson Dental v. Superior Court, the California Court of Appeal (Second District) enforced an arbitration agreement requiring the employee to bring any claims within one year, despite the "hybrid" two year statute of limitations in California's Fair Employment and Housing Act (FEHA).
The employee sued the employer for violation of FEHA alleging age discrimination and other claims. The employer successfully moved to compel arbitration, and the arbitrator granted the employer's motion for summary judgment on the grounds that arbitration was not requested within one year as required by the arbitration agreement. The trial court vacated the arbitration award, but the Court of Appeal reversed, holding that the one-year statute of limitations did not "unreasonably restrict plaintiff's ability to vindicate his rights under the FEHA." The court noted that the FEHA does not have a "true" two-year statute of limitations, but rather a "hybrid" period, in which the employee must file an administrative complaint within the first year. Thus, the arbitration agreement's one-year limitations period was comparable to the FEHA's one-year administrative complaint deadline.
Does this mean that California courts will be more likely to enforce arbitration agreements? Don't count on it. The court did not spend significant time analyzing the agreement for evidence of either substantive and procedural unconscionability - which are the bases on which many California courts have invalidated arbitration agreements. Nevertheless, the case does give employers some comfort in knowing that a shorter limitations period sometimes may be enforceable. If you want to read up on the complex history of employment arbitration agreements in California, here's what the Attorney General has to say on the topic.
California Employers Required To Offer, But Not Police, Meal and Rest Breaks
California employers scored a major victory regarding meal and rest periods as the result of a new California Court of Appeals decision, Brinker Restaurant Corp. v. Superior Court. Under the ruling, employers must provide meal periods by making them available, but need not ensure that they are taken. To read Stoel Rives' detailed synopsis of the case, click here.
California Paid Sick Leave Bill Dies in Committee
A California bill to provide universal paid sick leave died in committee last week, following intensive lobbying efforts from small businesses and their lobbyists. The bill would have granted employees of small companies in California up to five days of paid sick leave each year, while workers at larger companies could take up to nine days a year. To read more, check out this article from the L.A. Times.
The bill was scuttled primarily due to the cost of implementation and enforcement in a year in which the state faces a $15 billion deficit. Even if it had passed, the bill faced a likely veto from Governor Arnold Schwarzenegger. The bill's sponsor, Fiona Ma (D-San Francisco), vowed to reintroduce a similar measure next year.
If passed, the law would have made California the first state to have a mandatory paid sick leave program. However, the program is not entirely unprecedented: employees is San Francisco already have a paid sick leave program. Further, since January 1, 2004, California has offered wage replacement benefits for employees who take time off from their jobs in order to care for a family member or child with a serious health condition. Want to learn more about the legislative process? Watch this.
California Supreme Court Confirms Noncompetes Are Invalid
In a 7-0 decision yesterday, the California Supreme Court held that a noncompetition agreement signed by a former Arthur Andersen CPA was invalid under California law. In Edwards v. Arthur Andersen LLP, the court reminded us that noncompetition agreements are invalid under California's Business and Professions Code section 16600, even if they are written narrowly enough not to deprive persons of their right to pursue their profession. The court specifically rejected the "narrow restraint" exception to section 16600 that had previously been adopted by the Ninth Circuit, under which employers could enforce noncompetes that did not "entirely preclude" an employee from practicing his or her trade. Hang Up and Drive! Washington and California Ban Cell Phone Use While Driving
Last night I was riding home and was almost run off the street by a woman reading a novel while driving, when I remembered: Effective July 1, 2008, new laws in California and Washington prohibit the use of hand-held cell phones while driving. Drivers may, however, use a cell phone if the communication is made using hands-free device such as a bluetooth headset or wired headset. Earlier this year, another Washington law went into effect banning text messaging while driving. In Washington, both the cell phone and the text messaging laws are "secondary enforcement " laws, meaning that offenders will only receive a ticket if pulled over for another traffic violation such as speeding or running a stop sign. California law enforcement, however, is authorized to ticket drivers only for cell phone use. As far as I know, Oregon does not yet prohibit reading while driving (but it should!)
Want more information? The California DMV has a great Q&A site on its new law. Don't live in Washington or California but want to know what the law is in your state? Check out this handy chart of state cell phone laws from the Governor's Highway Safety Association.
Employers should alert their employees who may drive in California or Washington as part of their job duties. And employers in all states might consider implementing a cell phone policy that restricts the use of cell phones while driving. Recent years have seen a large upswing in lawsuits against employers who supply their employees with cell phones, if the employee is then in an accident while using the phone.
Big Day at the Supreme Court: Four New L&E Decisions
Today the U.S. Supreme Court issued four labor and employment-related decisions; none, however, were big surprises or substantial changes in the law.First, in Meacham v. Knolls Atomic Power Laboratory, the Court held 8-0 that an employer defending an Age Discrimination in Employment Act case bears the burden of proving a "reasonable factors other than age" or "RFOA" affirmative defense. Truth be told, most defense lawyers have assumed that it was the employer's burden to prove the affirmative defense; this decision simply confirms that assumption. Continue Reading...
