Labor and Employment

Disagreeing with the California Labor Commission, a California Court of Appeal upheld the trial court’s decision that explicit mutual wage agreements which include straight time and overtime components are enforceable under California law. The Court affirmed that Labor Code section 515(d) does not outlaw explicit mutual wage agreements of this kind. In Arechiga v. Dolores Press, Inc., a janitor sued his former employer for overtime wages. The trial court dismissed the claim, finding that an explicit mutual wage agreement existed between the employee and the employer under which the employee’s fixed salary of $880 lawfully compensated him for both his regular and overtime work based on a regular hourly wage of $11.14 and an overtime wage of $16.71. Following his termination, Arechiga claimed that Labor Code section 515 governed his employment agreement. Citing subdivision (d) of the statute, Arechiga asserted that the Court must find that his salary of $880 compensated him only for 40 regular hours per week thus making his regular rate of pay $22 per hour and his overtime rate $33 per hour. He then argued that his employer owed him overtime at $33 per hour for his regularly scheduled 26 hours of overtime worked each week. Arechiga pointed to the express language of section 515(d) to support his argument. Subdivision (d) states: “For the purpose of computing the overtime rate of compensation required to be paid to the non-exempt full-time salaried employee, the employee’s regular hourly rate shall be 1/40th of the employee’s weekly salary.”

In reaching its decision, the Court of Appeal rejected earlier case law and Labor Commissioner guidance which disallowed such explicit mutual wage agreements. The Court explicitly rejected reliance on the Labor Commissioner’s Enforcement Policies and Interpretations Manual of the Division of Labor Standards Enforcement because that enforcement manual was not properly adopted and thus is nonbinding on California Courts. It is also found that section 515(d)’s language did not preclude such agreements.

Caution: The Arechiga case also lays out specific elements that such an express mutual wage agreement must contain in order to make them enforceable.

Take Away: This is an important decision for California employers. It establishes Court of Appeal precedent that the Labor Commissioner’s longstanding interpretation of 5.15(d) and its repudiation of such express mutual wage agreement are no longer controlling. However, to ensure an agreement is enforceable, employers should work with their employment counsel before entering into one with their employees.

Taking the next step to implement the federal Americans with Disabilities Amendments Act of 2008 (“ADAAA”), the U.S. Equal Employment Opportunity Commission (“EEOC”) published its long-awaited final regulations on March 24, 2011. However, it is widely believed that the ADAAA and the recently published regulations will not greatly impact employers in California who are already covered by the state’s Fair Employment and Housing Act.

The ADAAA overturned a number of decisions from the United States Supreme Court that had interpreted the definition of “disability” rather narrowly. By expanding that definition, the ADAAA has made it less difficult for employees to qualify for disability protection under federal law. The EEOC’s expressed aim in publishing these regulations is to make it easier to determine who qualifies for such protection under the new law.

For example, the ADAAA and the related regulations have relaxed certain provisions so that an employee is not required to prove that a given condition “significantly” or “severely” restricts his or her ability to perform a major life activity. Meanwhile, comparably low thresholds have existed under California law for a number of years. Still, employers in the Golden State are well advised to take heed of these developments – particularly those with multi-state operations and those who are more prone to be sued under federal law for various reasons.

A copy of the EEOC’s new regulations may be accessed at this link. The EEOC also posted a “Questions and Answers” document (at this link) and a “Fact Sheet” (at this link) to help employers understand the impact of the ADAAA and the related regulations. Attorneys at Weintraub Genshlea Chediak have reviewed these regulations and related materials carefully. They are prepared to provide guidance to employers who wish to give greater consideration to these developments.

On September 30, 2010, Governor Schwarzenegger signed into law the “Michelle Maykin Memorial Donation Protection Act” which adds another statutory leave entitlement to the California Labor Code.

The new organ and bone marrow donation leave law provides for the following:

• The law applies to employers (persons, partnerships, corporations, associations, or other business entities) that employ 15 or more employees.
• Employees who are donating an organ to another person may take a leave of absence not exceeding 30 days (and which may be taken in one or more periods) in any one-year. Employees who are donating their bone marrow to another person may take a leave of absence not exceeding 5 days (and which may be taken in one or more periods) in any one year.
• In order to receive a leave of absence under the new law, an employee must provide a written verification to the employer that shows that the employee is an organ or bone marrow donor and that there is a medical necessity for the donation. Note: the statute does not define “written verification” or provide any explanation of what will satisfy this requirement. However, it is reasonable to assume that a medical certification from a health care provider containing the necessary information will be sufficient.
• Employers may require that as a condition of an employee’s initial receipt of bone marrow or organ donation leave, that an employee use up to 5 days of earned but unused sick or vacation leave (if any) for bone marrow donation, and up to 2 weeks of earned but unused sick or vacation leave (if any) for organ donation. However, the leave is paid leave and thus, the employer has an obligation to pay the employee for all time off while on leave under this new law
• The leave taken for organ or bone marrow donation does not run concurrently with any leave taken under FMLA/CFRA.
• The leave taken for organ or bone marrow donation does not cause a break in the employee’s continuous service for purposes of seniority or benefit entitlements like sick leave and vacation accrual.
• An employee returning from organ or bone marrow donation leave shall be restored to the position he or she held when the leave began or to an equivalent position.
• Employers shall not interfere with, restrain, or deny the exercise or the attempt to exercise the right of an employee to take organ or bone marrow donation leave, and may not discharge, fine, suspend, expel, discipline, or in any other way discriminate against an employee who exercises their right to such leave or opposes a practice made unlawful under the new law.
• An employee has a private right of action in superior court to enforce the new law and a court has the jurisdiction to enjoin an employer from any act or practice that violates the new law.

What Should Affected Employers Do?

• Update your leave policies (handbook) to include this new statutory leave and distribute a memo to employees advising them of the new organ and bone marrow donation leave.
• Train your managers and supervisors regarding this new statutory leave.
• Properly and consistently administer this statutory leave entitlement like all other statutory leave entitlements.

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Lizbeth “Beth” West is a shareholder in the Labor and Employment Law Section and Disputes, Trials & Appeals Section at Weintraub Genshlea Chediak. Beth’s practice focuses on counseling employers in all areas of employment law, and defending employers in state and federal court, as well as before administrative agencies. She has extensive experience in defending wage and hour claims, and complex whistle-blowing and retaliation claims. She also provides training services on various employment issues, such as sexual harassment and violence in the workplace. If you have any questions about this Legal Alert or other employment law related questions, please feel free to contact Beth West at (916) 558-6082. For additional articles on employment law issues, please visit Weintraub’s employment law blog at www.thelelawblog.com.

Pursuant to California Division of Workers’ Compensation (DWC) regulations, employers must post the new DWC 7 Notice adopted effective June 2010, no later than October 8, 2010. The DWC 7 form is the “Notice to Employees – Injuries Caused by Work.” This Notice provides employees with information on workers’ compensation coverage and where to get medical care for work injuries. The Notice must be posted in English and Spanish at each California work site in a conspicuous location frequented by employees during the hours of the work day.

Usually the DWC 7 form is included in an employer’s complete California and Federal Employment Poster that is updated each year. However, if employers wait to post the new DWC 7 form when they update their Poster at the beginning of 2011, they run the risk of penalties. California law provides that failure to provide employees with this Notice is a misdemeanor that can result in a civil penalty of up to $7,000 per violation.

Employers can obtain a copy of the new DWC 7 (6/10) Notice by going to: www.dir.ca.gov/dwc/forms/DWCForm7_2010.pdf

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Lizbeth “Beth” West is a shareholder in the Labor and Employment Law Section and Disputes, Trials & Appeals Section at Weintraub Genshlea Chediak. Beth’s practice focuses on counseling employers in all areas of employment law, and defending employers in state and federal court, as well as before administrative agencies. She has extensive experience in defending wage and hour claims, and complex whistle-blowing and retaliation claims. She also provides training services on various employment issues, such as sexual harassment and violence in the workplace. If you have any questions about this Legal Alert or other employment law related questions, please feel free to contact Beth West at (916) 558-6082. For additional articles on employment law issues, please visit Weintraub’s employment law blog at www.thelelawblog.com.

A recent opinion from a federal appellate court serves as yet another cautionary tale for employers in the area of disability accommodations. The Ninth U.S. Circuit Court of Appeals’ decision in EEOC v. UPS Supply Chain Solutions suggests that employers must take proactive steps to ensure that accommodations being provided to a given disabled employee are not only reasonable but effective. The outcome in this case also underscores the need to commence and continue the interactive process and to consult with legal counsel promptly when confronted with disability-accommodation requests or issues.

Mauricio Centeno, who was deaf since birth, worked as a junior clerk in the accounting department at a UPS facility in California. He was able to perform his job duties without a sign-language interpreter. However, he sent a number of email messages to his supervisors between 2002 and 2005 requesting a sign-language interpreter to assist him in department meetings. UPS agreed to provide an interpreter at monthly meetings but not weekly ones. Additionally, UPS arranged to provide Centeno with notes or other summaries of discussions at the weekly meetings. UPS also urged him to refer to a dictionary to learn the meaning of any words in those notes or summaries that he did not understand, even though he reported that he did not comprehend some written communication.

At one point in April 2005, Centeno “said an inappropriate word and made an inappropriate gesture” to some coworkers who had angered him. UPS provided a sign-language interpreter upon meeting with Centeno to discuss the incident, and also during a subsequent meeting to explain terms that Centeno did not understand in a written warning given to him. However, UPS did not provide a sign-language interpreter in a later meeting to explain terms that Centeno did not comprehend in the company’s sexual-harassment policy and in a quiz concerning the application of that policy.

In performance reviews between 2002 and 2006, supervisors repeatedly criticized Centeno for failing to obtain training on an Excel spreadsheet program. However, Centeno could not understand the written materials regarding use of the Excel spreadsheet. After setting a December 2007 deadline for Centeno to complete such training, UPS ultimately provided a sign-language interpreter to assist him – but not until September 2007.

Although there is no indication that UPS ever disciplined Centeno inappropriately, the EEOC filed a lawsuit in federal court alleging that UPS had failed to reasonably accommodate Centeno’s disability. The lower court dismissed the case without a trial, ruling that UPS was not required to provide a sign-language interpreter to accompany Centeno during regular staff meetings, routine disciplinary sessions, or training seminars. However, the appellate court ruled that a jury trial was needed to decide whether UPS had provided reasonable accommodations.

In particular, the Ninth Circuit was persuaded by the fact that Centeno “did not have an opportunity to express his questions . . . or share his ideas with the rest of the department” at the weekly meetings. Thus, the Court of Appeals ruled that a jury should determine “whether the agendas, contemporaneous notes, and written summaries contained information sufficient to enable a [hearing-impaired] person reading those documents to enjoy the same benefits and privileges of attending and participating in the weekly meetings [sessions and seminars] as other employees.”

Likewise, regarding the Excel training, the appellate court said a jury would have to weigh the facts to decide whether UPS improperly delayed in terms of providing Centeno “with the accommodation he needed in order to receive the training.” Finally, the Ninth Circuit opined that reasonable jurors “could conclude that . . . UPS was aware or should have been aware that Centeno needed an . . . interpreter to understand the Anti-Harassment Policy” even if he did not expressly request such an interpreter at that time. Although “an employer has discretion to choose among effective modifications, and need not provide the employee with the accommodation he or she requests or prefers,” the appellate court concluded that “an employer cannot satisfy its obligations under the ADA by providing an ineffective modification.”

While this case involved a deaf employee, the decision should not be viewed as applying only to accommodations for hearing impairments. On the contrary, the opinion highlights the importance of monitoring accommodations provided to an employee to make sure that they are enabling the employee to realize all the benefits and privileges of employment. Similarly, it is vital for employers to make sure that a disabled employee is given all reasonable tools that are needed to understand workplace policies and procedures. It is not sufficient that the accommodations merely enable the employee to avoid discipline.

This decision also reinforces the need to engage the interactive process right away, to monitor periodically the effectiveness of any accommodation provided, and to consult with legal counsel regarding what may or may not constitute a reasonable and effective accommodation. Taking such steps may seem onerous, but they often help employers to reduce their exposure to disability-discrimination claims. At the same time, such precautions are usually economical by comparison to the costs associated with litigation.

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Brendan J. Begley is an associate at Weintraub Genshlea Chediak and spearheads the firm’s Appeals and Writs group and is a member of the firm’s Labor and Employment and Litigation groups. He represents management in workplace law and litigation, and he is an Appellate Law Specialist certified by the State Bar of California Board of Legal Specialization.If you have any questions about this Legal Alert or other employment law related questions, please feel free to contact Brendan J. Begley at (916) 558-6024. For additional articles on employment law issues, please visit Weintraub’s law blog at www.thelelawblog.com.

President Obama signed H.R. 4851 into law on April 15, 2010. The new law amends the American Recovery and Reinvestment Act of 2009 (“ARRA”) yet again to extend the 65% COBRA premium assistance through May 31, 2010.

The COBRA subsidy was originally provided as part of the ARRA in 2009. If an employee is involuntarily terminated on or before May 31, 2010 and is otherwise eligible for COBRA, he or she is eligible to receive a 65% subsidy in his or her COBRA premiums. This means the former employer pays 65% of the health insurance premium under COBRA and the employee pays the remaining 35%. Employers can then apply for a tax credit for the portion of the COBRA premium they pay.

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Lizbeth “Beth” West is a shareholder in the Labor and Employment Law Section and Disputes, Trials & Appeals Section at Weintraub Genshlea Chediak. Beth’s practice focuses on counseling employers in all areas of employment law, and defending employers in state and federal court, as well as before administrative agencies. She has extensive experience in defending wage and hour claims, and complex whistle-blowing and retaliation claims. She also provides training services on various employment issues, such as sexual harassment and violence in the workplace. If you have any questions about this Legal Alert or other employment law related questions, please feel free to contact Beth West at (916) 558-6082. For additional articles on employment law issues, please visit Weintraub’s employment law blog at www.thelelawblog.com.

On March 2, 2010, President Obama signed the Temporary Extension Act of 2010 (H.R. 4691) that, among other things, extends the eligibility period for the COBRA subsidy provided in the American Recovery and Reinvestment Act (ARRA) for an additional 30 days.

The new legislation extends the eligibility date for the COBRA subsidy from February 28, 2010 to March 31, 2010.

The COBRA subsidy provisions under the ARRA provide that eligible employees (those who are “involuntarily terminated” within the stated period) pay 35% of the premium costs and employers pay the other 65%. The employer can then file for a federal tax credit for the premium subsidy it pays.

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Lizbeth “Beth” West is a shareholder in the Labor and Employment Law Section and Disputes, Trials & Appeals Section at Weintraub Genshlea Chediak. Beth’s practice focuses on counseling employers in all areas of employment law, and defending employers in state and federal court, as well as before administrative agencies. She has extensive experience in defending wage and hour claims, and complex whistle-blowing and retaliation claims. She also provides training services on various employment issues, such as sexual harassment and violence in the workplace. If you have any questions about this Legal Alert or other employment law related questions, please feel free to contact Beth West at (916) 558-6082. For additional articles on employment law issues, please visit Weintraub’s employment law blog at www.thelelawblog.com.