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Last September, California’s previous governor (the “Governator;” oops I mean Governor Schwarzenegger) signed into law a new statutory leave entitlement for certain employees who are going to donate their bone marrow or an organ to another.

The law was codified in Labor Code section 1510 and provided that an employer must grant a paid leave of absence to an employee who is an organ donor or a bone marrow donor. The leave of absence to an organ donor is up to 30 days in a one-year period. The leave of absence for a bone marrow donor is up to 5 days in a one-year period. The leave of absence for either donor is not a break in his or her continuous service for the purpose of his or her right to salary adjustments, sick leave, vacation, annual leave, or seniority. As a condition of an employee’s initial receipt of the leave of absence, an employer may require the employee to take a specified number of days of earned but unused sick or vacation leave, unless that would violate provisions of an applicable collective bargaining agreement.

California’s current Governor Brown signed Senate Bill 272 on August 1, 2011 in order to clarify certain provisions in Labor Code section 1510.

Those clarifications are:

1. The days of leave are business days rather than calendar days;

2. The one-year period is measured from the date the employee’s leave begins and consists of 12 consecutive months, and thus is not based on a calendar year;

3. The leave of absence is not a break in the employee’s continuous service for the purpose of his or her right to salary adjustments, sick leave, vacation, paid time off, annual leave, or seniority;

4. An employer may require, as a condition of an employee’s initial receipt of bone marrow or organ donation leave, that an employee take up to five days of earned but unused sick leave, vacation, or paid time off for bone marrow donation and up to two weeks of earned but unused sick leave, vacation, or paid time off for organ donation, unless doing so would violate the provisions of any applicable collective bargaining agreement.

Some important provisions from the original law for employers to remember are:

A. The law makes clear that organ and bone marrow donation leave is separate from an employee’s leave entitlement under the Family and Medical Leave Act (FMLA) and California Family Rights Act (CFRA). Thus, it does not run concurrently with FMLA or CFRA and an eligible employee could potentially be eligible for leave under Labor Code section 1510 and under FMLA and/or CFRA for a serious medical condition related to the bone marrow or organ donation.

B. The leave is paid leave. While Labor Code section 1510 permits an employer to require an eligible employee to use accrued and unused personal time off (PTO), vacation, or sick leave, it is important to remember that if the employee does not have any accrued and unused PTO, vacation, or sick leave, the employer must still grant an eligible employee paid leave under the statute.

C. Organ or bone marrow donor leave does not have to be taken all at once within the relevant 12 month period. Instead, an employee is entitled to the respective cumulative amount of leave (30 days for organ donation and 5 days for bone marrow donation) within the 12 month period that starts on their first day of such leave.

D. If the employee is covered by the employer’s group health insurance, the employer must maintain such coverage during the leave period pursuant to the same terms and conditions as when the employee is working.

E. Employers must reinstate employees returning from bone marrow or organ donation leave to the same position or a position with equivalent status, pay and benefits.

F. Employers must not retaliate against an employee for taking organ or bone marrow donation leave or for opposing an unlawful employment practice related to organ or bone marrow donation leave. If an employee believes they have been retaliated against for exercising their rights under Labor Code section 1510, he/she may sue to enforce his or her rights under the law.

The Third Appellate District for the California Court of Appeals recently issued a decision that provides hope for those employers who unknowingly hire undocumented workers throughout California. In Salas v. Sierra Chemical Co., the court used the after-acquired evidence and unclean hands doctrines to bar Salas’ Complaint, ruling that undocumented workers are not entitled to recourse on a wrongful failure to hire claim, where they misrepresent their lawful ability to work in the first place.

Relevant Facts:

Vicente Salas was a seasonal worker at Sierra Chemical, a swimming pool chemical business. In 2006, he injured his back while working. After returning to work for a short time on modified duty, he reinjured his back when he was re-assigned to his regular duties. Following this injury, he brought a workers’ compensation claim against the company. In December 2006, Salas was laid off as part of Sierra Chemical’s annual reduction. In 2007 Sierra Chemical contacted Salas, informing him that he could return to work, provided he could establish he had received a medical release. Salas could not produce such a release and was precluded from returning pursuant to Sierra Chemical’s policies.

Salas filed a civil complaint against Sierra Chemical for disability discrimination in violation of the FEHA and denial of employment in violation of public policy. Specially, Salas alleged: (1) Sierra Chemical failed to reasonably accommodate his disability; (2) Sierra Chemical failed to engage in the interactive process; and (3) he was denied employment as punishment for filing a claim for workers’ compensation benefits.

After filing his case, Salas filed a in limine motion with the trial court asserting his Fifth Amendment right against self-incrimination in response to any inquiry into his immigration status. Sierra Chemical then discovered the Social Security number provided by Salas to secure his employment belonged to a man in North Carolina. Sierra Chemical filed for summary judgment, arguing the after-acquired evidence and unclean hands doctrines barred Salas’s causes of action as a matter of law. Sierra Chemical argued that had they known Salas was ineligible to work in the United States, he would not have been hired, and as such, the company could not be held liable for failing to rehire him. Though originally denying the motion, the court ultimately agreed with Sierra Chemical. Salas appealed that decision.

Courts Holding:

The Court of Appeals found for Sierra Chemical, holding Salas’s lawsuit was barred on two grounds. First, under the after-acquired evidence doctrine, Salas could not bring a wrongful refusal to hire complaint where he had no right to be rehired given the company policy of refusing to hire applicants who submit a false Social Security number.

The court also found the suit was barred under the unclean hands’ doctrine. In making their determination, the court considered the nature of Salas’s misrepresentation that he was legally capable of working in the United States, the fact that the misrepresentation exposed Sierra Chemical to federal penalties for submitting false information, and the fact that Salas was disqualified from employment by means of governmental requirements. Ultimately, the court held “[b]ecause Salas was not lawfully qualified for the job, he cannot be heard to complain that he was not hired.”

Finally, Salas argued that Senate Bill 1818, a 2002 California law, precluded application of after-acquired evidence and unclean hands doctrines based on his immigration status. This argument, however, was rejected by the Court of Appeals. The court found that while current California law provides undocumented workers “all protections, rights, and remedies available under state law”, it does not expand the law to allow undocumented immigrants to maintain failure to hire claims. Rather, immigration status does not matter where any employee is prohibited from maintaining a claim for wrongful termination/failure to hire where he/she misrepresents a federally imposed job qualification.

The Effect of Salas on California Employers:

It should be noted that the Salas decision is not without limits. First, the decision explicitly precludes the use of the doctrines where pervasive discriminatory conduct harms an employee. Moreover, it is imperative the employer first establish that it is their settled policy to discharge/refuse to hire undocumented workers. This underscores the importance of employers maintaining strict policies with respect to hiring undocumented workers. However, where this can be proven, Salas helps protect employers who unknowingly hire undocumented workers.

The California Supreme Court Confirms that Companies May Delegate Some Workplace Safety Obligations to Independent Contractors

On August 22, 2011, the California Supreme Court issued its decision in Seabright Insurance Company v. US Airways, Inc. The issue before the Court was whether the Privette rule applies when the party that hired an independent contractor (the “Hirer” or “Principal”) failed to comply with workplace safety requirements concerning the precise subject matter of the contract, and the injury is alleged to have occurred as a consequence of that failure. The Privette rule essentially provides that when employees of independent contractors are injured in the workplace, they cannot sue the party that hired the contractor to do the work. (Privette v. Superior Court (1993) 5 Cal.4th 689.)

Relevant Facts from the Seabright Case.

US Airways uses a conveyor to move luggage at San Francisco International Airport. The airport is the actual owner of the conveyor, but US Airways uses it under a permit and has responsibility for its maintenance. US Airways hired an independent contractor, Lloyd W. Aubry Co. (“Aubry”), to maintain and repair the conveyor. US Airways neither directed nor had its employees participate in Aubry‘s work.

The conveyor lacked certain safety guards required by applicable Cal-OSHA regulations. An Aubry employee, Anthony Verdon Lujan (“Verdon”), was inspecting the conveyor when his arm got caught in its moving parts and he suffered severe injuries. SeaBright, as Aubry’s workers‘ compensation insurer, paid Verdon benefits based on the injury and then sued US Airways in a civil action, claiming the airline caused Verdon‘s injury and seeking to recover what it paid in workers’ compensation benefits. Verdon intervened as a plaintiff in the civil action, alleging causes of action for negligence and premises liability.

Legal History Below.

Defendant US Airways sought summary judgment based on the Privette case as well as Hooker v. Department of Transportation (2002) 27 Cal.4th 198 (Hooker). In Hooker, the California Supreme Court held that despite the Privette rule, the hirer of an independent contractor can be liable for a workplace injury of the contractor‘s employee if the hirer retained control over the contractor‘s work and exercised that control in a way that affirmatively contributed to the employee‘s workplace injury. (Hooker, at p. 213). US Airways argued that it did not “affirmatively contribute” to Verdon‘s injury and thus summary judgment was appropriate.

SeaBright and Verdon countered with a declaration by an accident reconstruction expert, who stated that the lack of safety guards at the “nip points” on the conveyor violated Cal-OSHA laws (Lab. Code § 6300 et seq. and 8 CCR §§ 3999 and 4002 [regulations governing conveyor safety]) and that the safety guards would have prevented Verdon‘s injury.

The trial court struck the plaintiffs‘ declaration insofar as it discussed causation. It found no evidence that US Airways “affirmatively contributed” to Verdon’s injury and granted summary judgment.

SeaBright and Verdon appealed. The Court of Appeal reversed the trial court holding that, under Cal-OSHA, US Airways had a nondelegable duty to ensure that the conveyor had safety guards, and that the question of whether the airline‘s failure to perform this duty “affirmatively contributed” to Verdon’s injury under the principles in Hooker was one for the jury and thus precluded summary judgment. The Court of Appeal also found that US Airways could not delegate to Aubry the tort law duty US Airlines owed to Aubry‘s employees to ensure that the conveyor met Cal-OSHA safety standards. In support of its finding, the Court of Appeal quoted a comment from a California Supreme Court decision issued some 25 years before Privette, which did not involve workplace safety. US Airways and Verdon then petition the California Supreme Court for review.

California Supreme Court’s Decision.

Whether Cal-OSHA imposes on an employer like US Airways a tort law duty of care that extends to the employees of other parties such as independent contractors is a question that remains unsettled. However, assuming that Cal-OSHA regulations do impose such a duty, the issue before the Court was whether US Airways could and did delegate to Aubry any duty it owed to Aubry‘s employees to comply with the safety requirements of Cal-OSHA, or whether such duty is nondelegable.

In analyzing this issue, the Court examined its prior cases, including the 1993 seminal Privette case. In Privette, the Court explained: “At common law, a person who hired an independent contractor generally was not liable to third parties for injuries caused by the contractor‘s negligence in performing the work. [Citations.] Central to this rule of nonliability was the recognition that a person who hired an independent contractor had ‘no right of control as to the mode of doing the work contracted for.‘” (Id. at p. 693.)[1] In light of the limitation on the independent contractor‘s liability to its injured employee under the workers’ compensation system, the Court concluded in Privette that it would be unfair to permit the injured employee to obtain full tort damages from the hirer of the independent contractor.

In analyzing this issue, the Court examined its prior cases, including the 1993 seminal Privette case. In Privette, the Court explained: “At common law, a person who hired an independent contractor generally was not liable to third parties for injuries caused by the contractor‘s negligence in performing the work. [Citations.] Central to this rule of nonliability was the recognition that a person who hired an independent contractor had ‘no right of control as to the mode of doing the work contracted for.‘” (Id. at p. 693.) In light of the limitation on the independent contractor‘s liability to its injured employee under the workers’ compensation system, the Court concluded in Privette that it would be unfair to permit the injured employee to obtain full tort damages from the hirer of the independent contractor.

In 1998 the Court decided Toland v. Sunland Housing Group, Inc. (1998) 18 Cal.4th 253 (“Toland”). The Court reviewed its holding in Privette as it related to the question of whether a hirer of an independent contractor has an obligation to specify, as part of its contract with the contractor, that the contractor should take special precautions to avert a peculiar risk. The Court noted that the hirer “has no obligation to specify the precautions an independent contractor should take for the safety of the contractor’s employees” and “[a]bsent an obligation, there can be no liability in tort.” (Toland, at p. 267.) The Court also said that subjecting those who hire contractors to peculiar risk liability in such circumstances would negate the hirer’s “right to delegate to independent contractors the responsibility of ensuring the safety of their own workers.” (Id. at p. 269.) Thus, in Toland, the Court recognized the principle of delegation of duty as a rationale for its decision.

Then in 2002, the Court refined the principles from Privette and Toland in the Hooker case, holding that an independent contractor‘s employee can sometimes recover in tort from the contractor‘s hirer if the hirer retained control of the contracted work and “fail[ed] to exercise his control with reasonable care . . . .” (Hooker at p. 206.) The Court noted that its prior holding in Privette was based on the principle that the hirer of an independent contractor generally has “no right of control as to the mode of doing the work contracted for . . . .” (Hooker, at p. 213.)

Finally, in 2005, the Court issued its decision in Kinsman v. Unocal Corp. (2005) 37 Cal.4th 659 (Kinsman).) In that case, the Court stressed the “framework of delegation” to explain its holdings in Privette, Toland, and Hooker. According to the Court, those decisions were grounded on a common law principle “that when a hirer delegated a task to an independent contractor, it in effect delegated responsibility for performing that task safely, and assignment of liability to the contractor followed that delegation.” (Kinsman, at p. 671.)

In the present case, the Court concluded that the Privette line of decisions discussed above established that an independent contractor‘s hirer presumptively delegates to that contractor its tort law duty to provide a safe workplace for the contractor‘s employees. However, one question remained: is the duty, if any, to comply with Cal-OSHA and its regulations for the benefit of an independent contractor‘s employees nondelegable? The nondelegable duties doctrine applies when the duty preexists and does not arise from the contract with the independent contractor. (See Eli v. Murphy (1952) 39 Cal.2d 598, 600 and Knell v. Morris (1952) 12 39 Cal.2d 450, 456.)

The Court noted that several courts of appeal have concluded that a hirer‘s statutory or regulatory duties constitute retained control if those duties are nondelegable. The courts disagree, however, about the effect of a breach. Some courts, like the Court of Appeal in this case, have held that the breach of a nondelegable statutory or regulatory duty can, by itself, create a triable issue as to whether the hirer “affirmatively contributed” to the injury of the independent contractor‘s employee. Other courts have held that if the breach is merely an omission, that breach alone cannot qualify as the “affirmative contribution” required for liability under Hooker.

The California Supreme Court ultimately held that the conflict between the courts of appeal is of no moment. It found that US Airways presumptively delegated to Aubry any tort law duty of care the airline had (or may have had) under Cal-OSHA regulations to ensure workplace safety for the benefit of Aubry‘s employees. According to the Court, the delegation which is “implied as an incident of an independent contractor‘s hiring” includes a duty to identify the absence of the safety guards required by Cal-OSHA regulations and to take reasonable steps to address that hazard.
Thus, the Court ultimately found that the Privette rule did apply to the circumstances presented in this case and held that neither SeaBright nor Verdon could recover in tort from US Airways on a theory that Verdon‘s workplace injury resulted from US Airway’s breach of what they claimed to be a nondelegable duty under Cal-OSHA regulations to provide safety guards on the conveyor. Hence, the Court reversed the Court of Appeal decision finding it erred in reversing the trial court, which had granted summary judgment for US Airways.

1 In Privette, a property owner hired a roofing company to install a new roof, and an employee of the roofing company was burned when attempting to carry a bucket of hot tar up a ladder. At issue was the “peculiar risk” exception to the general rule of nonliability. The peculiar risk exception allows lawsuits against those who hire contractors, if the work is “likely to create . . . a peculiar risk of physical harm to others unless special precautions are taken . . . .” (Rest.2d Torts, § 416.)

As the California Legislature reconvenes this week from its summer recess, it will be poised to advance bills that could, if enacted, impact the workplace. Among them is AB 22, which would prohibit employers, except certain financial institutions, from obtaining a consumer credit report for employment purposes. If AB 22 becomes law, employers would be able to obtain such reports only if the information sought is substantially job-related and pertains to a managerial or other sensitive position.

Under AB 22, information would be substantially job-related if the person for whom the report is sought would have access to the employer’s confidential information, money, or assets. Likewise, the position would be a sensitive one if the information contained in the report is required by law to be disclosed or to be obtained by the employer.

This is not the first time California has considered passing such legislation. In late September 2010, then-Gov. Arnold Schwarzenegger vetoed AB 482, which was nearly identical to AB 22. In his veto message, Gov. Schwarzenegger explained that he had rejected similar legislation in 2008 and 2009. That veto message also noted that AB 482 would “significantly increase the exposure for potential litigation over the use of credit checks.”

Gov. Schwarzenegger said he disfavored AB 482 because “California’s employers and businesses have inherent needs to obtain information about applicants for employment and existing law already provides protections for employees from improper use of credit reports.” Indeed, employers in the Golden State who wish to conduct background checks on prospective or existing employees must comply with the federal Fair Credit Reporting Act (“FCRA”), the California Investigative Consumer Reporting Agencies Act (“ICRAA”), and the California Consumer Credit Reporting Agencies Act (“CCRAA”). Each of these laws imposes different requirements.

For example, the FCRA applies when an employer engages an outside screening company to prepare a credit-check report concerning an individual for purposes of “hiring, promotion, retention, or reassignment of employees.” The FCRA requires, among other things, that the employer give notice and obtain written permission from the person whose credit is to be checked. The employer must also provide that person with a “pre-adverse action notice” and a copy of the background report before taking an adverse action (e.g., declining to hire the person). Under the FCRA, employers also must provide a second notice after taking an adverse action, which tells the individual how to dispute inaccurate or incomplete information.

California law is broader than the FCRA in a number of ways. For instance, the ICRAA covers employers who conduct background checks themselves and governs inquiries into a person’s “character, general reputation, personal characteristics, or mode of living” obtained through “any means.” Meanwhile, under the CCRAA, an employer may obtain a copy of a person’s credit report with that person’s written permission; however, employers may find themselves in trouble in terms of anti-discrimination laws if the report contains information about the person’s protected characteristics (e.g., the person’s age, marital status, race, or religion).

Many California employers retain the services of background screening agencies to conduct such credit or background checks. Employers should confirm that the agency they select for such tasks is familiar with both federal and California laws and up to date in terms of the status of AB 22.

The California Assembly passed AB 22 in May 2011, and the Senate Appropriations Committee is scheduled to consider the bill this week. If AB 22 passes out of committee, the full state Senate soon may be asked to send the bill to the governor’s desk. Should AB 22 advance to that stage, Gov. Jerry Brown will decide whether to veto or enact it.

Almost every employer offers some form of vacation leave to its employees. Some employers, following the lead of academia, also offer long-term employees sabbatical leaves so that they can “recharge their batteries” and hopefully return to work more productive and creative.

Employers must ensure that they have proper policies in place in characterizing sabbatical leave to avoid it from being considered as vacation leave. The difference is important: Vacation leave that has been earned but not used must be paid out at the time the employee’s employment ends; whereas, sabbatical leave does not.

In Paton v. Advanced Micro Devices, Inc., the plaintiff sued his former employer claiming that the eight weeks of sabbatical leave that he had accrued was actually vacation time that needed to be paid out to him when his employment ended. Plaintiff argued that the sabbatical program was essentially extra vacation leave and that, under section 227.3 of the Labor Code, his employer could not require him to forfeit such pay.

Although the trial court granted the former employer’s motion for summary adjudication, the California Court of Appeals reversed and adopted a four-part test for determining whether leave should be considered sabbatical leave or vacation leave. The four factors adopted by the Court are:

(1) Whether the leave is granted infrequently. This tends to support the assertion that the leave is sabbatical in nature and intended to retain experienced employees who have devoted a significant period of service to the employer. The Court recognized that offering sabbatical leave every seven years would appear to be an appropriate starting point for assessing corporate sabbaticals;

(2) Whether the length of the leave is adequate to achieve the employer’s purpose, which typically requires that the length of leave be longer than that “normally” offered as vacation leave;

(3) Whether the sabbatical leave is offered in addition to regular vacation leave; and

(4) Whether a sabbatical program incorporates some feature demonstrating the employer’s intent that the employee is expected to return to work after the sabbatical is over.

The Court made clear that no single factor would be dispositive. Rather, the court emphasized that it was important to determine whether the sabbatical leave was intended as an incentive to induce experienced employees to continue working for defendant and increase the productivity or creativity upon their return to work as opposed to merely providing additional vacation for longer-term employees.

Employers who offer or intend to offer sabbatical leaves to their employees should review such plans with legal counsel to avoid incurring additional, unintended liabilities.

abor Code section 2810 was enacted by the California Legislature in 2004. The primary provision of section 2810 prohibits a party such as an employer from contracting for certain types of services, including construction services if that party knows or should know the contract “does not include funds sufficient to allow the contractor to comply with all applicable local, state and federal laws or regulations governing the labor or services to be provided.” It also provides a private cause of action in favor of employees “aggrieved” by any violations.

Section 2810 was enacted to address “wide spread subminimum wages and working conditions” that existed primarily in construction, janitorial, security and garment industries at the time. In Castillo v. Toll Bros., Inc. (decided July 28, 2011), a California appellate court addressed the provisions of section 2810 for apparently the first time. Toll Bros. was the general contractor on several construction projects and was later sued by employees of subcontractors alleging violations of wage and hour laws, including section 2810. The employees argued that Toll Bros., in bidding the projects, did not include sufficient funds to the subcontractors that resulted in the claimed wage and hour violations.

Toll Bros. moved for summary judgment in both class actions arguing that under section 2810, it only had to ensure that the employees of the subcontractors were being paid a minimum wage. The plaintiff employees on the other hand, argued that, because employees in construction services are typically paid at rates higher than minimum wage, the contracts entered into by Toll Bros. should have included funds sufficient to pay the local prevailing wages for this labor.

In affirming summary judgment in Toll Bros.’ favor on some of the claims, the California appellate court held that the clear language of section 2810 “unambiguously requires the sufficiency of a contract challenged under section 2810 to be measured by the minimum wage cost for the work anticipated.” The Court found it significant that there was “no general law requiring an employer to pay its workers the average local wage for a particular skill or trade if that average wage is higher than the legal minimum.” “Merely to pay less than the prevailing wage therefore violates no law” and could not form the basis for a section 2810 violation.

Thus, the Court held that a contract violates section 2810 only if the funds paid will not allow the subcontractor to comply with applicable laws or regulations in performing the contract, one of those applicable laws being the minimum wage law. The Court also rejected the plaintiffs’ argument that they should be treated differently given that the construction industry regularly pays higher wages than the legal minimum wage. The Court found that the California legislature did not express an intent to distinguish between the various industries in enacting section 2810.

Therefore, employers who are entering into contracts with subcontractors should analyze whether the contract for services allows the subcontractor to pay its employees at least minimum wages for the work anticipated to avoid a possible violation of section 2810.