Labor and Employment

Download: A Disability Access Claim under the Unruh Act.pdf

The California Supreme Court has finally settled the troubling issue of whether intentional discrimination must be shown to prove a disability access claim under the California Unruh Act. In Munson v. Del Taco, Inc., the Court decided the issue after it was certified to the California Supreme Court from the U.S. Court of Appeal for the Ninth Circuit because of the conflicting decisions in federal and state courts.

Plaintiff, Munson, was a disabled person who claimed that when he visited Del Taco in San Bernardino, he encountered numerous architectural barriers that prevented his equal access. He sued Del Taco under the federal ADA and the California Unruh Act. The Unruh Act prohibits discrimination by business establishments in California on the basis of age, ancestry, color, disability, national origin, race, religion, sex, and sexual orientation.

After summary judgment proceedings, Del Taco appealed arguing that the Unruh Act requires a showing of intent. The Court of Appeal certified the following issue to the California Supreme Court: “Must a plaintiff who seeks damages under California Civil Code § 52, claiming the denial of full and equal treatment on the basis of disability in violation of the Unruh Act, prove intentional discrimination?”

In answering the question, the California Supreme Court examined the original language and history of the Unruh Act and the various cases interpreting it. It noted that in 2001, it ruled in Harris v. Capital Growth Investors XIV, that proof of intentional discrimination was necessary to establish a violation of the Act. However, it went on to explain that in 2002, the state Legislature amended the Act to include ADA violations as violations of the Unruh Act. Under the ADA, there is no requirement that intentional discrimination be shown to establish a violation of the Act. Therefore, the California Supreme Court held that proof of intentional discrimination was not necessary to establish a violation of the Unruh Act based on the public accommodation provision of the ADA.

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 law blog at www.thelelawblog.com.

In Johnson v. United Cerebral Palsy/Spastic Children’s Foundation of Los Angeles and Ventura Counties, a California Court of Appeal has held that an employee can prove a case of discrimination by putting on evidence from other employees that claim that they too were subject to discrimination by the employer (“me too” evidence).

In Johnson, Plaintiff claimed she was terminated after taking sick leave related to her pregnancy. The employer filed a summary judgment motion claiming that Plaintiff was terminated because she falsified her timesheets when she said she had worked at home when she had not. The Plaintiff submitted various pieces of evidence in opposition to the summary judgment motion to try and prove that the employer’s stated reason for termination was pretext, including declarations from other employees who believed that they had been subjected to discrimination by the employer but had never taken any action against the employer for such alleged discrimination.

One employee said in her declaration that when she attended a meeting with managers involved in Plaintiff’s case, they discussed their desire to fire a pregnant employee because “they were worried about being liable in case she was injured, but they could not do that because it was illegal.” According to the declaring employee, the managers then discussed what reasons they could use to fire the employee. Another employee declared that one of the managers fired her and told her it was because she was pregnant; and yet another declared that she was terminated without any reason within weeks after revealing she was pregnant.

The trial court held that the declarations were inadmissible and ruled in favor of the employer on the summary judgment. Plaintiff appealed and the Court of Appeal held that the “me too” evidence in the declarations was per se admissible and was substantial evidence that the employer’s stated reason for terminating Plaintiff was pretext for discrimination. The court said that this evidence of the managers’ prior treatment of pregnant women showed intent or discriminatory animus.

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 law blog at www.thelelawblog.com.

The Federal Trade Commission (FTC) has just announced that it will delay enforcement of the identity theft “Red Flags Rule” (Rule) until August 1, 2009. The Rule was discussed previously in Weintraub Genshlea Chediak’s Law Alert Article: Deadline to Have Identity Theft Prevention program Prepared and Implemented is May 1, dated April 15, 2009.

The Rule was adopted by the FTC after the Fair and Accurate Credit Transactions Act of 2003 (FACTA) directed financial regulatory agencies, including the FTC, to promulgate rules requiring “creditors” and “financial institutions” with covered accounts to implement programs to identify, detect, and respond to patterns, practices, or specific activities that could indicate identity theft. FACTA’s definition of “creditor” applies to any entity that regularly extends or renews credit – or arranges for others to do so – and includes all entities that regularly permit deferred payments for goods or services. Accepting credit cards as a form of payment does not, by itself, make an entity a creditor. According to the FTC, some examples of creditors are finance companies; automobile dealers that provide or arrange financing; mortgage brokers; utility companies; telecommunications companies; non-profit and government entities that defer payment for goods or services; and businesses that provide services and bill later, including many lawyers, doctors, and other professionals. “Financial institutions” include entities that offer accounts that enable consumers to write checks or make payments to third parties through other means, such as other negotiable instruments or telephone transfers.

The express purpose of the extension is to provide more time to entities that may be covered by the Rule to create and implement written identity theft prevention programs. The FTC’s announcement of the extension also indicates that it plans to publish a template to help entitles with a low risk of identity theft to comply with the Rule.

The FTC’s announcement can be found at: http://ftc.gov/opa/2009/04/redflagsrule.shtm.

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 law blog at www.thelelawblog.com.

On January 6, 2009 the Department of Labor (DOL) issued Opinion Letter FMLA2009-1-A to respond to a request for clarification regarding employee notification procedures under the Family and Medical Leave Act (FMLA) as discussed in the DOL’s previous Wage and Hour Opinion Letter FMLA-101 (January 15, 1999). The DOL indicated that it was brought to its attention that some employers had interpreted Opinion Letter FMLA-101 to stand for the proposition that under the FMLA, employers were not permitted to apply their internal call-in policies or discipline employees under their no call/no show policies, provided the employees provide notice within two (2) business days that the leave was FMLA-qualifying, regardless of whether the employee could have practicably provided notice sooner.

The FMLA requires employees to provide notice of the need for leave due to the birth or placement of a child, or for their own serious health condition, or to care for a covered family member with a serious health condition, 30 days before the leave is to begin where possible. (See 29 U.S.C. § 2612(e).) Where it is not possible to provide 30 days notice of the need for such leave, employees must provide “such notice as is practicable.” (Id.)

On January 16, 2009, the DOL’s final updated FMLA regulations (Final Rule) went into effect. (73 Fed. Reg. 67934 (11/17/08).) In the Final Rule, the DOL adopted the proposed revisions regarding the timing of employee notice of the need for FMLA leave with some minor modifications. The DOL noted that the “one to two business days” time frame set forth in the 1995 regulations had been misinterpreted as permitting “employees two business days from learning of their need for leave to provide notice to their employers regardless of whether it would have been practicable to provide notice more quickly.” (73 Fed. Reg. 68003.) In discussing the proposed changes to § 825.302, the DOL stressed that

“both current and proposed § 825.302(b) defined ‘as soon as practicable’ as ‘as soon as both possible and practical, taking into account all the facts and circumstances of the individual case.’ The deletion of the ‘two-day rule’ does not change the fact that whether notice is given as soon as practicable will be determined based upon the particular facts and circumstances of the employee’s situation.” (73 Fed. Reg. 68003.)

Thus, the final § 825.302(b) states that

“[w]hen an employee becomes aware of a need for FMLA leave less than 30 days in advance, it should be practicable for the employee to provide notice of the need for leave either the same day or the next business day. In all cases, however, the determination of when an employee could practicably provide notice must take into account the individual facts and circumstances.” (73 Fed. Reg. 68098.)

Also, the final § 825.303(a), which addresses the timing of notice for unforeseeable FMLA leave, similarly states that an employee must provide notice to the employer as soon as practicable under the facts and circumstances of the particular case. Specifically, “[i]t generally should be practicable for the employee to provide notice of leave that is unforeseeable within the time prescribed by the employer’s usual and customary notice requirements applicable to such leave.” (73 Fed. Reg. 68099.) According to the DOL’s Opinion Letter FMLA2009-1-A, in both situations, employees must comply with their employer’s usual and customary notice and procedural requirements for requesting leave, absent unusual circumstances. (See 73 Fed. Reg. 68099 (setting forth § 825.302(d) (“Complying with employer policy”) of the Final Rule); 73 Fed. Reg. 68100 (setting forth section § 825.303(c) (“Complying with employer policy”) of the Final Rule).)

The Final Rule replaces the statement that employees will be expected to give notice to their employers “promptly” with the statement that “it generally should be practicable for the employee to provide notice of leave that is unforeseeable within the time prescribed by the employer’s usual and customary notice requirements applicable to such leave.” Therefore, according to the DOL, where an employer’s usual and customary notice and procedural requirements for requesting leave are consistent with what is practicable given the particular circumstances of the employee’s need for leave, the employer’s notice requirements can be enforced. The DOL concluded that to the extent that Opinion Letter FMLA-101 has been interpreted to create a flat “two-day rule,” the Department is hereby rescinding it.

To clarify its interpretation of the Final Rule, the DOL applied it to the following example: if an employer has a policy requiring employees to call in one hour prior to their shift to report absences and an employee who is absent on Tuesday and Wednesday, but does not call in on either day and instead provides notice of his need for FMLA leave when he returns to work on Thursday, it is the DOL’s opinion that unless unusual circumstances prevented the employee from providing notice consistent with the employer’s policy, the employer may deny FMLA leave for the absence.

The DOL’s FMLA2009-1-1 Opinion Letter can be obtained at: www.dol.gov/esa/WHD/opinion/opinion.htm.

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 law blog at www.thelelawblog.com.

Download: Legal Alert.pdf

Pursuant to the Federal Trade Commission’s (“FTC”) Identity Theft Prevention Red Flags Rule (16 .C.F.R. § 681.2) which went into effect on January 1, 2008, all financial institutions and creditors must prepare and implement a written “Red Flags” Program by May 1, 2009. The determination of whether a business or organization is covered by the Red Flags Rule is not based on a particular industry or sector, but rather on whether the activities of the business or organization fall within the relevant definitions.

What Businesses are Covered?

“Financial institutions” are defined as a state or national bank, a state or federal savings and loan association, a mutual savings bank, a state or federal credit union, or any other person that, directly or indirectly, holds a transaction account belonging to a consumer.

The definition of “creditor” under the Red Flags Rule is broad and includes businesses or organizations that regularly defer payment for goods or services or provide goods or services and bill customers later. According to the FTC, this can include a wide variety of businesses from utility companies to health care providers.

Only financial institutions and creditors with “covered accounts” must implement a Red Flags Program. There are two types of “covered accounts”:

1. “Consumer accounts” which are those offered to customers primarily for personal, family, or household purposes that involves or is designed to permit multiple payments or transactions (e.g. credit card accounts, mortgage loans, automobile loans, cell phone accounts, and checking accounts); and
2. Any other account that a financial institution or creditor offers or maintains for which there is a reasonably foreseeable risk to customers or to the safety and soundness of the financial institution or creditor from identity theft, including financial, operational, compliance, reputation, or litigation risks. The FTC advises that in determining if accounts are covered under this second category, businesses should consider how they are opened and accessed. For example, there may be a reasonably foreseeable risk of identity theft in connection with business accounts that can be accessed remotely (e.g. through the Internet or by telephone).

Requirements for an Effective “Red Flags” Program.

Financial institutions and creditors must develop, implement, and administer an Identity Theft Prevention Program, which must include four basic elements.

1. Identification of Red Flags. The Program must include reasonable policies and procedures to identity the “red flags” of identity theft they are likely to come across in their business. “Red flags” are potential patterns, practices, or specific activities indicating the possibility of identity theft. Some examples are alerts or notices from credit reporting agencies, certain suspicious documents, suspicious personal identification information, and suspicious account activity. Some red flags may also be relevant to the particular business or organization.
2. Detect Red Flags. The Program must be designed to detect the “red flags” that have been identified. The financial institution or creditor must lay out procedures for detecting them in the day-to-day operation of the business. In creating the procedures, the business needs to consider how detection may differ depending on whether an identity verification is taking place in person or at a distance (e.g. by telephone, mail, Internet, etc.).
3. Prevention and Mitigation. The Program must spell out appropriate actions the financial institution or creditor will take when it detects “red flags.” The procedures for responding to a “red flag” will depend upon the degree of risk posed. A business must be mindful to accommodate and/or comply with other legal obligations (e.g. privacy laws and other laws impacting the medical profession) when taking action.
4. Continued Evaluation. The Program must be re-evaluated and updated periodically due to the ever-changing threats associated with identity theft. According to the FTC, as technology changes or identity thieves change their tactics, financial institutions and creditors will need to update their Programs to ensure they keep current with the risks.

Administering Your “Red Flags” Program.

1. Approval. Pursuant to the FTC, if a financial institution or creditor is a corporation, its Red Flags Programs must be approved by the Board of Directors or a committee of the Board. If the business is not a corporation, the Program must be approved by someone in a senior management position.
2. Administration. The financial institution or creditor must appoint a designated individual(s) to serve as the Administrator of the Program. The Administrator will be responsible for implementing the Program, training personnel on the Program, reviewing documents and information for compliance with the Program, re-evaluating and updating the Program, and reporting to the Board or senior management annually regarding the Program.
3. Training. The Rule requires that financial institutions and creditors train relevant staff on the policies and procedures under the Red Flags Program.
4. Third-Party Providers. If a financial institution or creditor contracts with other service providers and any activity by the service providers implicates the Red Flags Rule, they should seek confirmation that the service providers have an appropriate Red Flags Program in place.

Conclusion.

Compliance with the Red Flags Rule is mandatory for all financial institutions and creditors with “covered accounts.” There is no one-size-fits-all Program and each business or organization should evaluate its “covered accounts” and the various activities or transactions related to those accounts that could give rise to identity theft.

Weintraub Genshlea Chediak can provide assistance not only with the preparation of written Identity Theft Prevention (Red Flags) Programs, but also with training your employees under the Program. For more information or assistance please contact Lizbeth V. West, Esq. at (916) 558-6082.

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 law blog at www.thelelawblog.com.

Download: Legal Alert and Notice 2009-27.pdf

The IRS has issued Notice 2009-27 which provides a thorough interpretation of Section 2001 of the American Recovery and Reinvestment Act of 2009 (“ARRA”) relating to premium assistance for COBRA continuation coverage.

Notice 2009-27 provides information in a question and answer format regarding various parts of the ARRA like:

1. What does “involuntary termination” mean?
2. Who is an “assistance eligible” individual?
3. How are premium reductions (or subsidies) calculated?
4. What plans are subject to the COBRA subsidy?
5. When does the premium reduction/subsidy apply?
6. How does the “extended” (or “second chance”) election opportunity work?

While lengthy, Notice 2009-27 provides helpful guidance and examples for employers trying to understand and comply with this new COBRA subsidy obligation. We are attaching a copy of the Notice and recommend that employers read it and contact their legal counsel with any questions.

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 law blog at www.thelelawblog.com.

Download: Law Alert – DOL Model COBRA Subsidy Notices (1111263).PDF

On March 19, 2009, the DOL released the following model notices in connection with the COBRA subsidy outlined in the American Recovery and Reinvestment Act of 2009 (“ARRA”):

1. General Notice (Full Version). This General Notice is to be sent to all qualified beneficiaries who experienced a qualifying event at any time from September 1, 2008 through December 31, 2009, regardless of the type of qualifying event. This full version includes information on the COBRA subsidy (or premium reduction) as well as information required in a standard COBRA election form.

2. General Notice (Abbreviated Form). The abbreviated version of the General Notice includes the same information as the full version regarding the availability of the COBRA subsidy (or premium reduction) and other rights under the ARRA, but does not include the COBRA coverage election information. Pursuant to the DOL, it may be sent in lieu of the full version of the General Notice to individuals who experienced a qualifying event during, on, or after September 1, 2008, who have already elected COBRA coverage and still have it.

3. Alternative Notice. Insurers that provide group health insurance coverage must send the Alternative Notice to persons who became eligible for continuation coverage under a State law. As the DOL indicates, continuation coverage requirements vary among States and insurers should modify the model Alternative Notice as necessary to conform their notice to the applicable State law.

4. Notice in Connection with Extended Election Periods. This Notice must be sent to any assistance eligible individual (or any individual who would be an assistance eligible individual if a COBRA continuation election was in effect) who:

a. had a qualifying event at any time from September 1, 2008 through February 16, 2009; and

b. either did not elect COBRA continuation coverage, or who elected it but subsequently discontinued COBRA.

This Notice includes information on ARRA’s additional election opportunity, as well as information regarding the COBRA subsidy (premium reduction). This Notice must be provided by April 18, 2009.

More information and the model notices listed above can be found at the DOL’s website at: www.dol.gov/ebsa/COBRAmodelnotice.html.

Lizbeth “Beth” West is a shareholder in the Disputes, Trials & Appeals Section, and the Labor and Employment Law 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 law blog at www.thelelawblog.com.

Download: March 12, 2009 Legal Alert (1106739).PDF

On February 17, 2009 President Obama signed the American Recovery and Reinvestment Act of 2009 (“ARRA” or “Recovery Act”) which contains a number of entitlements and obligations affecting the workplace. In order to comply with their new obligations and understand the benefits available to employees or former employees, employers should familiarize themselves with the ARRA promptly. Below is a summary of some of the various employment-related provisions from the ARRA.

1. COBRA Subsidy.

a. What is it?

The ARRA provides for a 65% COBRA premium subsidy for certain “assistance eligible individuals.” An “assistance eligible individual” is a COBRA “qualified beneficiary” who meets all of the following requirements:

a. Is eligible for COBRA continuation coverage at any time during the period between September 1, 2008 and December 31, 2009;

b. Elects COBRA coverage (when first offered or during the additional election period provided for under the ARRA); and

c. Has a qualifying event for COBRA coverage that is the employee’s involuntary termination during the period of September 1, 2008 and December 31, 2009.

The premium subsidy (or premium reduction) applies to periods of health coverage beginning on or after February 17, 2009 and lasts for up to 9 months. Individuals who are eligible for other group health coverage (e.g. under a spouse’s plan) or Medicare are not eligible for the premium subsidy. The subsidy also is not available to employees (or their dependents) who have an adjusted gross income of more than $125,000 ($250,000 for joint filers) in the year in which they would receive a subsidy.

As a result of the subsidy, eligible individuals pay only 35% of their COBRA premiums and the remaining 65% is paid by the former employer who then has the right to seek reimbursement through a tax credit.

b. What if a previously terminated employee didn’t elect COBRA?

The ARRA provides for a special 60-day election period for those eligible individuals who previously lost coverage and did not elect COBRA. The 60-day period begins on the date that notice is provided to the eligible individual about the special election period. The special election period does not extend the period of COBRA continuation coverage beyond the original maximum required period and, in most cases, COBRA continuation coverage elected pursuant to the special election period begins on the first period of coverage following the date the ARRA was enacted (i.e. March 1, 2009).

c. How are eligible individuals notified?

Employers have 60 days from the date the ARRA passed to notify affected former employees and their eligible dependents that they have a right to elect COBRA and receive the subsidy. In addition to a regular COBRA notice, a supplemental notice is required to be given to affected employees to provide information about the subsidy. The DOL is preparing a model of such supplemental notice.

d. How do employers get reimbursed for the subsidy?

Employers are permitted to claim the COBRA subsidy on line 12a of their IRS Form 941 (the quarterly employment tax return). Employers are not required to file any other documents or information with the Form 941 but must maintain separate supporting documents to justify the claimed credit (e.g. information regarding receipt of the assistance eligible individual’s 35% share of the premium, copies of invoices from the insurance carrier and proof of timely payment of the full premium, attestation of involuntary termination, including the date of such termination for each covered employee whose involuntary termination is the basis for eligibility of the subsidy, proof of eligibility for COBRA coverage during the 9/1/08 – 12/31/09 period, records of the SSN’s of all covered employees and the amount of the subsidy reimbursed for each, and any other relevant documents). The IRS has issued information notices to explain how employers can seek reimbursement and such notices can be obtained on the IRS website.

2. Unemployment Benefits.

The ARRA extends the Emergency Unemployment Compensation Act of 2008 (EUC) which was set to expire on March 31, 2009. The EUC will now be in place through December 31, 2009. The EUC went into effect last June and provided for an additional 13 weeks of federally-funded unemployment benefits to eligible unemployed individuals nationwide who had already collected all regular state benefits for which they were eligible. In November 2008, the EUC was expanded to 20 weeks of benefits, and was also amended to provide for a second tier of 13 additional weeks of benefits for individuals in states with high unemployment rates. Additionally, benefit payments are increased by $25 per week through December 31, 2009 for individuals receiving regular unemployment compensation, extended benefits, or benefits under the EUC. The ARRA also provides for a temporary suspension of taxation on the first $2,400 of unemployment benefits in 2009.

Finally, the ARRA contains a number of provisions to assist states in administering their unemployment programs. It provides that: (1) the extended unemployment benefits will be 100% federally funded through January 1, 2010; (2) states can get a waiver of interest due on loans received by state unemployment trust funds through December 31, 2010; and (3) that states can obtain federal funds to help them administer their unemployment programs and reform such programs to provide greater coverage (e.g. to cover part-time employees).

3. Work Opportunity Tax Credit (WOTC).

The WOTC is a program designed to help move people from welfare into gainful employment and obtain on-the-job experience. It provides a tax credit to employers who hire members of targeted groups. The ARRA added unemployed veterans and disconnected youth who begin work in 2009 and 2010 to the targeted groups covered under the WOTC. Other targeted groups already recognized under the WOTC include: long-term TANF (Temporary Assistance and Needy Families) recipients; qualified food stamp recipients; residents of a federally designated empowerment zone, enterprise community, or renewal community, vocational rehabilitation referrals, a qualified ex-felon, and an SSI recipient.

In order to obtain a tax credit under the WOTC program, employers must obtain a certification that a new employee qualifies the employer for the tax credit. Certain IRS forms must be completed at the time the job offer is made and after the individual is hired. The forms and guidelines on their completion can be obtained from the IRS website.

4. Other Funding for Various Programs Administered by the DOL.

The ARRA also provides almost $4 billion dollars for various programs administered by the DOL, including adult employment and training activities, youth activities including summer jobs, dislocated worker activities, grant programs for worker training and placement in high growth and emerging industry sectors, employment opportunities for low income seniors, and employment service grants to states.

5. Whistleblower Protections Under the ARRA.

The ARRA contains whistleblower protections that apply to non-federal employers (“Covered Entities”) who receive funds under the ARRA. The provision appears to also cover private employers if they contract with entities receiving funds under the ARRA. Also, supervisors, managers, and agents of an employer appear to be at risk of individual liability under the language of the provision.

The whistleblower protections prohibit a Covered Entity from discharging, demoting, or otherwise discriminating against an employee for his or her disclosure to the Recovery Act Accountability and Transparency Board (RAAT Board), an inspector general at the Interior Department, another governmental agency, a grand jury, or a court, any of the following which the employee reasonably believes has or is taking place:

a. Gross mismanagement of any agency contract or grant relating to covered funds;

b. A gross waste of covered funds;

c. A substantial and specific danger to public health or safety related to the implementation or use of covered funds;

d. An abuse of authority related to the implementation or use of covered funds; or

e. A violation of law, rule or regulation related to an agency contract (including the competition for or negotiation of a contract) or grant awarded or issued relating to covered funds.

Employers who receive covered funds are required to post notices in the workplace to apprise employees of their rights under the new law.

An employee who believes he/she has been retaliated against may submit a complaint to the appropriate inspector general at the RAAT Board. There is no statute of limitations in the ARRA for making such complaint and the employee’s burden of proof is relatively low. The employee must only show that the protected activity he/she engaged in was a “contributing factor” (not the “motivating factor”) for the employer’s retaliation. The inspector general shall investigate within 180 days from receipt of the complaint (unless extended) and either: 1) issue a report of his/her findings to the complainant, the employer, and the head of the appropriate agency; or 2) make a determination that the complaint is frivolous and/or does not relate to covered funds. The agency head will determine whether there is a sufficient basis to conclude that the employer has violated the Act by retaliating against the employee. If there is a sufficient basis, the head of the agency can take one or more of the following actions: 1) order the employer to take affirmative action to abate the reprisal; 2) order the employer to reinstate the employee to the position that he/she held before the reprisal (along with back pay, compensatory damages, and employment benefits); or 3) order the employer to pay the complainant an amount equal to the aggregate amount of all costs and expenses (including attorneys fee and witness fees) that were incurred by the complainant for bringing the complaint.

Upon exhausting his/her administrative remedies, an employee also has the right to bring a civil action against a Covered Entity.

Finally, the ARRA expressly provides that waivers and releases of the rights and remedies provided for by the whistleblowing provisions are not permitted in any agreement, including pre-dispute arbitration agreements (unless contained in a collective bargaining agreement). The language of the provision also suggests that an employer may not be able to obtain such a waiver or release in a separation or settlement agreement. However, it is unknown whether the language would prohibit a voluntary agreement to arbitrate a whistleblower claim under the ARRA if both parties agree to do so after the claim has been made and a dispute exists.

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Lizbeth “Beth” West is a shareholder in the Disputes, Trials & Appeals Section, and the Labor and Employment Law 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 law blog at www.thelelawblog.com.

In Edwards v. Arthur Andersen, LLP, Case No. BC294853 (August 7, 2008) the California Supreme Court holds that non-solicitation of customer agreements are per se unenforceable unless they fall within the statutory or other exception permitted under the law. California law has long protected the rights of employees to lawfully pursue any trade or profession. For more than 100 years California law has invalidated any agreement between an employer and an employee which purports to limit or restrict an employee’s ability to work in their trade or profession following the employment. Many other states permit such “non-compete” agreements between employers and employees as long as the restraints on competition are reasonable. In the Arthur Andersen case, the California high court rejected arguments that more narrow agreements – those that limit a former employee’s ability to solicit the former employer’s customers for some specified period of time – did not run afoul of Business and Professions Code §16600 and thus, were valid.

California’s Business and Professions Code §16600 provides that “every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void, except as provided in this Chapter [§§16600-16602.5].”

Arthur Andersen argued that such a restraint should not be invalid because it did not limit the former employee’s ability to practice their profession but instead only limited their ability to practice that profession in regard to specific Arthur Andersen customers. The high court rejected that notion and rejected the “narrow restraint” rule adopted by some federal courts considering the enforceability of such non-solicitation agreements under California law, including the Ninth Circuit, the federal district that covers California.

Arthur Andersen argued that a non-solicitation agreement does not violate §16600 if it imposes a limited restriction and “leaves a substantial portion of the market available to the employee.” The California Supreme Court resolved the dispute between federal and state courts and rejected this “narrow restraint” doctrine. In doing so, the California Supreme Court reaffirmed California’s fundamental public policy that is expressed in Business and Professions Code §16600. The Court declared “Section 16600 is unambiguous, and if the legislature intended the statute to apply only to restraints that were unreasonable or overbroad, it could have included language to that effect.” Because the decision was from the California Supreme Court, federal courts considering the question under California law are now obligated to follow the California Supreme Court interpretation.

The California Supreme Court decided another issue in the Arthur Andersen case as well. It examined the scope of a release of claims that a former employee had been required to execute and it concluded that such releases, regardless of the broad scope of their language, do not include a release of rights and claims that are statutorily unwaivable. Specifically, the California Supreme Court concluded that a release of claims which purported to release “any and all” claims arising from or related to employment did not purport to release claims for indemnity under California Labor Code §2802. The same rationale would apply to any other claim which, as a matter of statute, cannot be waived by the employee.

For more information regarding the contents of this article, please feel free to contact any of the employment lawyers at Weintraub Genshlea Chediak: Lizbeth West, Charles Post, or Anthony Daye.