Resources

‘Twas the week before Christmas

And all through the land

Holiday parties served up claims

Fist over hand

The averments were stated

In legal pleadings with care

In hopes that generous jurors

Soon would be there

The lawyers were nestled

Smugly in stuffed chairs

With clients alleging

Unwelcomed gropes and stares

Okay, this blog update is not penned by Ebenezer Scrooge, nor is it meant to be construed as “The [F]right Before Christmas.” Nonetheless, it is common knowledge that workplace holiday parties often are adorned with things that, like reindeer pulling a sled, can haul employers before courts in the New Year.

Festive outfits, bouncy music, tasty treats, and flowing libations all packed into an informal and playfully decorated setting are aimed at promoting cheer and good will. But such circumstances also can lead to inhibition and generate well-meaning but potentially offensive comments (e.g., those concerning the physical appearances of attendees), along with misconstrued flirtations or invitations. Such parties also may stir the occasional unwanted touching of coworkers – especially those who say they were unaware that they were standing under the mistletoe.

Indeed, over just the past five years, at least ten California civil appeals have involved alleged misconduct at a holiday party that played a role in spurring the lawsuit. Allegations in those cases ranged from seemingly mild comments about a person’s perceived weight loss to more problematic recommendations that an employee wear tighter clothes. They also included holiday costumes depicting offensive words, holiday skits laced with racial stereotypes, holiday gift exchanges involving presents rife with sexual overtones, and provocative invitations or requests to sit on Santa’s lap, not to mention other suggestive innuendo. Oh, and then there’s the would-be Grinch who instructed a subordinate, allegedly on the basis of a protected characteristic, to answer company phones while the other employees frolicked and played in the Eskimo way.

So in this joyous season, we do not mean to haunt you with the ghosts of lawsuits past or present, nor do we aim to cleanse your workplace of future holiday parties or to replace laughter and good cheer with bah-humbug grumbles. We merely encourage employers to celebrate responsibly and to take reasonable steps to make such events enjoyable for everyone. At the same time, we wish all of our subscribers a wonderful holiday season and a happy and prosperous 2012!

On August 30, 2011, the National Labor Relations Board (“NLRB”) adopted a rule that would require certain employers, including non-union employers to post a notice to employees explaining their rights under the National Labor Relations Act (“NLRA”). The implementation date was originally set for November 14, 2011. However, due to a number of lawsuits challenging the rule, the implementation date was delayed and the NLRB announced that the rule would not go into effect until January 31, 2012.

While it is still an open question as to whether any of the pending legal challenges to the rule will block the NLRB from implementing the rule starting January 31, 2012, employers should be aware of what is required under the rule and whether they are obligated to comply.

What is Required to be Posted?

The NLRB has created an 11” x 17” notice that informs employees that the NLRA protects their right to organize a union; form, join, or assist a union; bargain collectively; discuss wages, benefits, and other conditions of employment; raise complaints; strike and picket; or choose not to do any of these activities. The notice also outlines certain conduct by employers and unions that is prohibited by the NLRA and informs employees what to do if they believe their rights have been violated under the NLRA (“Notice”).

Where Can Employers Obtain a Copy of the Notice?

The NLRB says that the easiest way to obtain the Notice is to download it from its website – www.nlrb.gov/poster and print it on a single 11-by-17 paper or two 8-by-11 papers taped together. Free copies of the Notice are also available upon request at any NLRB regional office. Employers who purchase commercially produced comprehensive employment law posters that contain various required notices, will just need to make sure that their new 2012 comprehensive poster includes the new NLRB Notice.

What Employers are Required to Post?

With some limited exceptions, most private sector employers (union and/or non-union) are likely required to post the new Notice, regardless of size or industry. For the most part the rule exempts just a few industries: agricultural, railroad, airlines, and very small employers that have just a slight effect on interstate commerce (e.g. non-retail employers with annual gross volume of less than $50,000, and retail employers with an annual gross volume of less than $500,000).

Where Should the Notice be Posted?

The Notice should be posted in a conspicuous place, where other workplace rights notices and company notices concerning personnel rules or policies are customarily posted. Reasonable steps should be taken to ensure the Notice is not altered, defaced, or covered by any other material, or otherwise rendered unreadable. Employers with remote worksites should post the Notice at those locations to ensure that all employees are notified of their rights. Employers with operations both within and outside the U.S. are required to post notices at workplaces in the U.S. and its territories, but not at any workplaces in foreign countries. Employers who typically post personnel rules and policies on an internet or intranet site should also post the Notice of NLRA rights there, in addition to a physical posting. Employers are not required to distribute the posting by email, Twitter or other electronic means.

Are there any Penalties for Non-Compliance?

The NLRB cannot penalize employers merely for failing to post the new Notice. However, whether the employer did or did not post the new Notice will likely be considered by the NLRB in any unfair labor practices case. Therefore, failure to post the Notice could have negative consequences for an employer who is otherwise trying to defend against allegations of violations of the NLRA. Moreover, if an employer does not post the Notice, the NLRB may also extend an employee’s six (6) month statute of limitations for filing an unfair labor practices claim against an employer.

Recommendations.

Unless and until either the courts or new legislation declares that the NLRB does not have the authority to require employers to post the new Notice, all employers subject to the NLRB’s jurisdiction are well advised to comply with the new rule and post the Notice by January 31, 2012 so as to avoid any potential exposure related to non-compliance.

Most employers are aware of the federal law known as the Uniformed Services Employment and Reemployment Rights Act of 1994 (“USERRA”) which is designed to protect those who serve in the armed forces from discrimination and retaliation. However, many California employers are unaware that section 394 of the California Military and Veterans Code also prohibits employers from discriminating against members of the armed forces (“Section 394”). Therefore, an employee who believes he/she has been discriminated against based on his/her military status has the right to pursue a claim under one or both laws.

However, a recent case has declared that who the plaintiff-employee can sue is different under federal and state law. In Haligowski v. Superior Court (Mario Pantuso, real party in interest) (11/10/11), Plaintiff Mario Pantuso was called to active duty with the Navy while he was employed by Safway Services, LLC (“Safway”). When Pantuso returned from his six-month deployment in Iraq and asked for his job back, his immediate supervisor at Safway, Mike Haligowski, and the regional manager, Greg Chomenko, informed Pantuso that he was terminated from his employment with Safway. Pantuso sued Safway, Haligowski, and Chomenko for discrimination and retaliation in violation of Section 394, and Safway for wrongful termination in violation of public policy. He claimed that because of his membership in the Navy, the defendants discriminated against him by: 1) giving him negative performance evaluations after he informed his supervisors that he would be deployed; 2) terminating his employment; 3) refusing to re-employ him; and 4) failing to pay him an allegedly earned bonus.

The two individual defendants demurred to the complaint on the grounds that as supervisors, they cannot be held individually liable under Section 394 for employment-related decisions. The trial court overruled the demurrer based on the plain language of Section 394 and the individual defendants petitioned for a writ of mandate to the court of appeal. The court of appeal looked at the plain language of Section 394 to determine if it supported the trial court’s decision. The relevant parts of Section 394 read as follows:

Section 394(a): “No person shall discriminate against any officer, warrant officer, or enlisted member of the military or naval forces of the state or of the United States because of that membership.”

Section 394(d): “No employer or officer or agent of any corporation, company or firm, or other person, shall discharge any person from employment because of the performance of any ordered military duty or training or by reason of being an officer, warrant officer, or enlisted member of the military or naval forces of this state… .”

The appellate court said it could perceive two possible constructions of the use of the words “person” and “agent” in Section 394. First, as Pantuso argues and the trial court ruled, it could be determined that the Legislature intended to hold individual supervisors personally liable for discrimination under the statute. Second, and consistent with the California Supreme Court’s interpretation of other employment discrimination laws like California’s Fair Employment and Housing Act (“FEHA”), it could be determined that the use of the words “agent” and “other person” was “intended only to ensure that employers will be held liable if their supervisory employees take actions later found discriminatory, and that employers cannot avoid liability by arguing that a supervisor failed to follow instructions or deviated from the employer’s policy.” (Citing the California Supreme Court’s 1998 decision in Reno v. Baird, wherein the Court analyzed the words “any person” in the FEHA and concluded that individuals who do not themselves qualify as employers may not be sued under the FEHA for alleged discriminatory acts.)

The Haligowski court said that the language of Section 394 is parallel to that used in the FEHA and, given the similarity in the language of, and goals behind, these employment discrimination statutes, “…it would be illogical and incongruous to hold that the word “person” in Section 394 subjects supervisory employees to personal liability whenever they engage in a discriminatory act against a member of the military forces when they are not otherwise personally at risk for managerial acts that discriminate on the basis of race, gender, age, or disability.”

The court rejected Pantuso’s argument that the courts must import the USERRA definition of “employer” into Section 394. The court pointed out that USERRA was not analogous to Section 394, in that it’s definition of “employer” was much broader and clearly spelled out Congress’ intent to hold a supervisor personally liable. Therefore, the court ruled that there is no personal liability under Section 394.

Because employers and employees have the right to reach agreement as to the terms, conditions and nature of the work, many employers believe that anything they can get an employee to agree to is legal and permissible. This notion can lead an employer into a violation of law. Some obligations, however, such as the obligation to pay overtime to non-exempt workers, the provision of worker’s compensation, and the obligation to provide a safe work environment (to name just a few) cannot be bargained away. An employee’s agreement to surrender these statutory protections is void, and can also constitute a violation of criminal law.

An employee’s right to receive earned wages also belongs on this list. Once earned, wages are held in trust by the employer until paid to the employee. Employers may not treat an unpaid wage as their own property. They cannot require an employee to surrender his or her claim to it, nor can the employer (except in a few statutorily defined exceptions) deduct from it, attach it, or otherwise treat it as their own property. In general terms, all an employer can do with an unpaid wage is pay it. In fact, it is a crime for an employer to require an employee to execute a release of earned wages, and all such releases are invalid.

So, do you know what constitutes an impermissible release? Well, a document that says: “I release any and all claims to the wages I earned,” is pretty clearly prohibited, but what about a time record? In 2009, the statute prohibiting wage releases was amended so as to render void (and to make a misdemeanor) efforts by an employer to have an employee execute or ratify time records which the employer knows to be false. Employers in California should exercise real care to ensure that disputes over what time was worked (and consequently, what wages are due) are not resolved solely at the employer’s insistence. Wage disputes resolved in that way may set the employer up for a claim that it has violated the law.

As a practical matter, employees and employers compromise and resolve disputes over wages due all the time. These compromises and resolutions sometimes occur with the aid of the Labor Commissioner or the Courts but are often resolved outside of these administrative or legal proceedings. Bona fide disputes over wages due can be resolved by compromise, but it is important that documents reflecting that resolution demonstrate a lawful compromise and not an illegal release.

Labor Code section 206.5 states:

(a) An employer should not require the execution of a release of a claim or right on account of wages due, or to become due, or made as an advance on wages to be earned, unless payment of those wages has been made. A release required or executed in violation of the provisions of this section shall be null and void is between the employer and the employee. Violation of this section by the employer is a misdemeanor.

(b) For purposes of this section, “execution of a release” includes requiring an employee, as a condition of being paid, to execute a statement of the hours he or she worked during a pay period which the employer knows to be false.

Lawyer Answer: It depends.

Here, that answer is not simply a dodge but is instead a reflection of what can be some complicated legal terrain. The question of advanced training costs arises in a number of situations: (1) where an employer advances costs for training to obtain a license or certification that is required by an ordinance or statute; (2) where such certification or licensure is not required by statute or ordinance but the employer requires it as a condition of employment; and (3) where the training is neither a requirement of statute, ordinance or by the employer, but reimbursement or supplement of such training costs or tuition is provided as a benefit.

The answer to the question involves a number of laws, including the provisions of the Fair Labor Standards Act and the California Labor Code. Depending on the nature of the reimbursement or repayment obligation, tax laws and wage deduction rules may also be involved. The short answer is that employers can sometimes permissibly seek reimbursement of advanced costs for licensure or certifications required by law, can generally not seek reimbursement for training that the employer imposes as a requirement of employment and may seek reimbursement of a tuition or training cost benefit on terms agreed to in advance. This is a fact specific inquiry and employers are well advised to talk to counsel about any reimbursement, loan forgiveness or deduction program for such advances and costs.

Many employers also complain that they invest in training of an employee only to lose that employee to a competitor once most of that training has been completed, but before the training employer has recovered the costs of the training. Employers often seek to restrict or limit an employee’s ability to seek employment elsewhere (for a period sufficient for the employer to reap the benefit of the training they provided) and/or to require an employee to reimburse the employer for the cost of training if they leave employment prior to the expiration of that period. Improperly drafted agreements of this kind can constitute contracts for a specified term (the polar opposite of at will employment) and may violate some Labor Code violations. Where repayment of such costs is permitted, the employer must also consider the tax effect of incremental loan or cost advance forgiveness. Tax advice should be sought in structuring such a program.

Finally, if early termination repayment is permitted, the employer must exercise care to ensure that any deduction of wages is permitted under California law.