Employment Law Newsletter: April 2013

by Low, Ball & Lynch

In this issue:

Employment and Labor Law Update

By Steven D. Werth

Post-Brinker Meal Break Decisions on Class Certification De-Published by California Supreme Court           

We have previously reported on the California Supreme Court’s decision in Brinker Restaurant Corp. v. Superior Court, which addressed employer obligations relating to meal breaks employees are entitled to take under Labor Code § 512 and Wage Order No. 5.  In Brinker, the Court held that while employers were responsible for making such breaks available, they do not have a duty to ensure their employees take such breaks or that no work is performed by the employee during the break period.            

Since Brinker, two courts have denied class certification in meal break cases, concluding that common issues do not predominate because of the need to consider the individual circumstances of each employee.  However, the decisions in both post-Brinker cases (Hernandez v. Chipotle Mexican Grill and Lamps Plus Overtime Cases v. Lamps Plus) have now been de-published by the California Supreme Court.  Even though the Supreme Court denied a review, the Court’s de-publication of these decisions suggests that the Court disagrees with the rationale used for denying class certification.  De-publication of these opinions adds uncertainty on the issue of class certification in meal and rest break cases in this post-Brinker environment.          

Wrongful Termination Claim Based Upon Workers’ Compensation Filing Properly Dismissed

Dutra v. Mercy Med. Ctr. Mt. Shasta, (2012) 209 Cal.App.4th 750       

Plaintiff sued Mercy Medical Center for wrongful termination in violation of public policy based on California Labor Code § 132(a), which prohibits discrimination against an employee who has filed a workers’ comp compensation claim.  Ultimately, the trial court granted Mercy’s motion to dismiss on the ground that the WCAB had exclusive jurisdiction to adjudicate claims under §132(a).  The court of appeal affirmed the trial court’s dismissal concluding that §132(a) does not provide a basis for a common law wrongful termination claim because “allowing plaintiff to pursue a tort cause of action based on a violation of section 132(a) would impermissibly give her broader remedies and procedures than that provided by statute.”            

Kronos Time-Rounding System Consistent with Sate and Federal Law

See’s Candy Shops, Inc. v. Superior Court, (2012) 210 Cal.App.4th 889          

In this case See’s Candy sought to defend its right to round employees time punches to the nearest tenth of an hour.  See’s utilized the Kronos timekeeping software system.  It’s policy rounded employees' time punches to the nearest tenth of an hour (i.e., a 7:50 a.m. punch in is rounded to 8:00 a.m., and a 8:02 a.m. punch in is rounded down to 8:00 a.m.)  The court noted that the Department of Labor regulations permit employers to use a rounding policy for recording and compensating employee time as long as the policy does not “consistently result in a failure to pay employees for time worked.”  The Court found this policy consistent with California’s employee-protective policies, which include that if a rounding policy is neutral over a period of time, both facially and as applied, the practice is proper under California law because its net effect is to permit employers to efficiently calculate hours worked without imposing any burden on employees.  The Court noted that such practices are allowed so long as they will not result, over a period of time, in failure to compensate the employees properly for all the time they have actually worked.      

Blanket Instruction to Employee Not to Discuss Investigation With Others Held Unlawful

Banner Health Sys. dba Banner Estrella Med. Ctr. and James A. Navarro, 358 N.L.R.B. No. 93 (July 30, 2012)         

In a 2-1 decision, the NLRB held that the employer had violated § 8(a)(1) of the National Labor Relations Act by routinely asking employees making a complaint not to discuss the matter with co-workers while an investigation was ongoing.  At issue was a provision in the employer’s complaint form.  The form contained a general instruction not to discuss the subject of the complaint with co-workers while its investigation was ongoing.  At the NLRB hearing, the employer’s Human Resources Consultant testified that she routinely asked employees not to discuss a matter with co-workers while her investigation was ongoing.          

A divided Board found that the employer’s generalized concern with protecting the integrity of its investigation was insufficient to outweigh the employees’ § 7 rights (regarding “protected concerted activity”).  The Board found that it is the employer’s burden to “first determine whether in any give[n] investigation witnesses need[ed] protection, evidence [was] in danger of being destroyed, testimony [was] in danger of being fabricated, or there [was] a need to prevent a cover-up.”  The Board found that the employer’s “blanket approach” did not meet this burden.  The dissent noted that the employer’s instruction was not an actual rule, but rather a mere suggestion to employees.  The dissent also noted that no threats of discipline were made to the employee, and no threat of discharge was made to any employee for failure to adhere to the employer’s suggestion.         

Employer Does Not Commit Disability Discrimination by Firing Boutique Manager who Could not Perform Essential Duties Because Injury Placed her on Extended Leave

Lawler v. Mount Blanc North America, LLC 704 F.3d 1235 (9th Cir. 2013)

In June, 2009, plaintiff was employed by Mount Blanc North America (Mount Blanc”), was diagnosed with psoriatic arthritis and her treating health care practitioner recommended that she work less hours.  In August, 2009, plaintiff injured her foot and was placed on disability leave.  In September, 2009, plaintiff’s treating health care practitioner recommended that plaintiff remain on disability leave until January, 2010.  A month later, Mount Blanc terminated plaintiff’s employment, explaining that her injury would prevent her from managing her boutique for too long.  Plaintiff sued, allegedly discrimination under California’s Fair Employment and Housing Act (“FEHA”).  The District Court granted summary judgment for Mount Blanc, and the Court of Appeal affirmed the trial court’s decision.  The Court found that an employer may discharge an employee who is unable to perform her essential duties even with reasonable accommodations.  Here, plaintiff could not establish a prima facie case of disability discrimination because she was not competently performing her position as store manager.  The essential duties of a boutique manager were supervising sales staff, developing customer relations, administering inventory, cleaning, creating store displays and preparing sales reports.  Plaintiff’s disability made it impossible for her to fulfill the duties of her position.  (Plaintiff admitted that her disability made it impossible for her to fulfill the duties of her position and that she had been unemployed since October, 2009, had not applied for any positions, had made no effort to secure employment, and had exhausted her disability benefits.)

Social Media (Web 2.0) and Employee Misconduct

By J. Stephanie Krmpotic

Web 2.0 generally describes the next generation of websites allowing users to interact and collaborate with each other in a social media dialogue with a potentially unlimited audience. Social media has become the parallel universe to the traditional means by which employees interact in the work place, and socialize in their personal lives. The number of people now using social media sites to interact with friends, family and co-workers has grown at an incredible pace, leaving employers with the challenge of developing social media policies and practices to keep up with the rapidly evolving legal landscape.

All employers now are advised to have a social media policy tailored to their business characteristics and anticipated activities of their employees. For example, use of social media has become an integral tool for sales where a presence on Facebook, Twitter and YouTube are part of the business. Other companies have a greater need to protect proprietary and confidential information. Regardless of the business an employer is in, any social media policy should have guidelines that define inappropriate communication or depictions and the employer’s ability to monitor and obtain content from the employee’s social media sites. Establishing guidelines requires a balancing act between privacy rights and protected activity of the employee versus the employer’s independent responsibilities to protect against employee misconduct.

A well-drafted social media policy, combined with active and regular training is “an ounce of prevention,” preventing problems from arising. However, when the inevitable occurs, that an employee is suspected of publishing inappropriate content, an employer has a duty to act. Below are practice pointers for evaluating the employee’s use of social media, and appropriate steps that may be taken by the employer.

Potential Types of Misuse

An employer has a duty to take action to prevent or eliminate harassment, protect against inappropriate disclosure of confidential information, defamatory or disparaging remarks, discriminatory statements; and disclosure of statements that are not representative of the employer’s views or policies.

Some courts have applied a “knew or should have known” standard for employer’s duty to take action. An actual or constructive knowledge standard was addressed in Blakey v. Continental Airlines, Inc. 751 A.2d 538 (N.J. 2000). The Court held that even though Continental Airlines did not have physical control of the web-based bulletin board used by pilots and crew, it “derived a substantial work place benefit,” requiring it to take action where it had constructive notice of derogatory statements concerning a female pilot.

Where is the Line Drawn Between an Employer’s Ability to Access Social Media Content and the Privacy Rights of the Employee?

So far, a case-by-case analysis has been used to balance the rights of the employee against the employer’s obligation and need to monitor and regulate social media content. In the California case of Moreno v. Hanford Sentinel, Inc. (2009) 172 Cal.App.4th 1125, the California Appellate Court applied a “reasonable expectation of privacy” test in upholding the right of a local newspaper to publish from a college student’s post on MySpace, even though the post had been removed. The Court held that since it had been publicly available before its removal, there was no invasion of privacy. Generally, if an employee restricts access to a social networking site using privacy controls or password-protection, an employer is not allowed to access the information without permission. Also, an employer is not able to gain access through a pretext or other unethical means.

For example, consider the case of an employee who had a password-protected restricted Facebook page who was “friends” with other co-workers. Does the employer have the right to obtain access to the Facebook site through the co-worker “friend?” The answer is it depends on the circumstances. An employer may not coerce or obtain access under false pretenses. If the co-worker voluntarily provided the employer with the offending Facebook content, the employer must still proceed with caution. In Konop v. Hawaiian Airlines, Inc. 302 F.3d 868 (9th Cir. 2002), cert. denied, 537 U.S. 1193 (2003), two pilots voluntarily provided the Hawaiian Airline’s Vice-President permission to use their log-in information to access a website in which the employee posted critical comments of his employer. The Court held that this violated the SCA because there was no evidence that either of the authorized employees had ever accessed the site themselves and were not deemed “users” who could authorize Hawaiian Airline’s access to the site.

By the same token, where the communications involve harm to a third party or a legitimate business justification, employers will likely be given more leeway in monitoring and accessing social network activities. Where the information obtained is used by an employer as a defensive shield, to refute claims such as sexual harassment or wrongful termination, the courts will probably view access to such social networking sites with greater scrutiny.

A Michigan Federal District Court judge relied on the “honest belief” doctrine to an employer who believed that an employee lied and misused her FMLA leave based on Facebook postings provided to the employer by co-workers. The Court dismissed the employee’s suit for retaliation and interference with FMLA rights. Probably influencing the Court was the fact that the employee was clearly dishonest and falsified information to her employer. Lineberry v. Detroit Medical Center, et al. No. 11-13752 (E.D. Mich. February 5, 2013).

The Punishment Should Fit the Crime

Once an employer has determined that an employee has violated the social media policy, an employer has the right to discipline the employee in a fair and consistent manner, and with regard for the confidentiality of all parties concerned.

If an employer knows or has reason to know that inappropriate content has been placed on a social networking site, the employer should ask two key questions before accessing the employee’s social media content: (1) does the employee have a reasonable expectation of privacy due to privacy settings and password-protected sites; and (2) what is the relationship between the conduct and the work place? There will inevitably be gray areas because the law is still evolving; however, an employer who is protecting third parties or another important business justification will likely to be given more leeway in balancing out the interests of the parties as opposed to social network “fishing” on topics not directly in issue.

Accommodating Pregnancy May Require More Than Four Months Leave

By Christine B. Reed

Employers should not rule out the possibility of additional leave time for an employee who has exhausted pregnancy disability leave (PDL) but is still unable to work. In a recent case, a California court of appeal concluded that an employee who used her entire four months of PDL may still be entitled to additional leave under the Fair Employment and Housing Act’s (FEHA) separate provisions requiring reasonable accommodation of disabilities and protection from pregnancy discrimination. Sanchez v. Swissport, Inc., 2013 WL 635266 (2013) 

Recently enacted PDL regulations also specifically address this issue and mandate the same conclusion.

Case Facts

Ana Fuentes was employed by Swissport as a cleaning agent. In February 2009, Fuentes’ physician determined that she had a high-risk pregnancy requiring bed rest for the entire duration of the pregnancy. The baby was due sometime in October.  Under California’s PDL law, an employee disabled by pregnancy is entitled to four months of leave, regardless of any hardship on the employer created by the use of the leave. (Govt. Code sec. 12945(a)) 

Fuentes took the entire amount of PDL allowed by law, her available leave under the California Family Rights Act (CFRA) and accrued vacation. After using all this time, she still had approximately three months until the anticipated October delivery. 

Swissport terminated her in July. Fuentes filed a lawsuit against the company, alleging pregnancy discrimination and failure to accommodate. Fuentes claimed that Swissport did not contact her or try to engage in a good faith interactive process to determine whether there were any available accommodations for her continuing disability, including extension of her leave.  The trial court dismissed the case, noting that Fuentes had been given her statutory entitlement to PDL. The court of appeal reversed.

Duty to Accommodate  

The court of appeal ruled that an employee who is disabled by pregnancy is entitled to the four-month PDL leave entitlement in addition to other rights afforded by FEHA, including the right to a reasonable accommodation of her disability so long as the reasonable accommodation does not impose an undue hardship on her employer. This reasonable accommodation may include an extended leave of absence beyond PDL.  (To clarify, in this matter, Sanchez did not bring a claim alleging a violation of the PDL in which an “undue hardship” defense is unavailable.) 

The court also noted that Fuentes is entitled to FEHA’s protections against discrimination. California law prohibits employment discrimination on the basis of sex, including pregnancy, childbirth, breastfeeding and related medical conditions. 

This decision is in harmony with California’s new pregnancy disability regulations, which took effect on December 30, 2012. The new regulations specifically provide that the right to four months of pregnancy disability leave is “separate and distinct” from the right to take a leave of absence as a form of reasonable accommodation for a disability. (2 CCR sec. 7291.14) 

“At the end or depletion of an employee’s pregnancy disability leave, an employee who has a physical or mental disability (which may or may not be due to pregnancy, childbirth, or related medical conditions) may be entitled to reasonable accommodation under Government Code section 12940.” The duty to accommodate an employee and provide additional leave under FEHA needs to be determined on a “case-by-case basis” and “is not diminished by the employee’s exercise of her right to pregnancy disability leave.” (2 CCR sec. 7291.14)

Best Practices

It is crucial that employers engage in the interactive process with employees who are nearing the end of PDL but are still unable to return to work.  Part of this process should be to assess what accommodations might work.  It is reasonable to request medical certification to substantiate the need for reasonable accommodations.  It is also recommended that legal counsel be sought before deciding to terminate an employee in similar circumstances. 

Related Cases & News

  • Accommodating Pregnancy May Require More Than Four Months' Leave, March 7, 2013
  • California Amends Pregnancy Regulations, December 6, 2012
  • Q&A: California's New PDL Laws and Your Insurance Obligations

How Soon is Soon Enough? How Employers Can Enforce Arbitration Agreements

By Many Arjmand

Inherent in the enforcement of an agreement to arbitrate is the necessity to seek enforcement of the agreement as soon as possible in the litigation process. Preferably, an employer who is sued by an employee in California will assert a pre-answer petition to compel arbitration and stay the proceedings. However, in some cases, the arbitration agreement is either not discovered by a defendant-employer in the answer stage, and enforcement is sought after some litigation has taken place. 

The main objective for an employer seeking to enforce arbitration at any stage is to attempt to minimize litigation costs to all parties during the period of enforcement. Once a motion to compel arbitration and stay proceedings is filed, and a matter is stayed, pursuant to California Code of Civil Procedure 1281.4, a party is not placed in the unfortunate position of facing aggressive attempts to engage in costly litigation by the party who opposed enforcing arbitration. See also Cardiff Equities, Inc. v. Superior Court (2008) 83 Cal.Rptr.3d 699. 

It is important for employers in California to understand that Courts favor arbitration, and thus, there is no black-and-white recipe for enforcing these agreements. While sooner is “better,” engaging in some discovery and even motion practice does not render hopeless an attempt to enforce an arbitration agreement. The primary inquiry that courts will make concerns intent, and a close analysis of the party’s behavior who is seeking enforcement. Did the party display an attempt to minimize litigation costs? Were communications regarding the agreement diligently preserved? And most importantly, did the party invite opposing counsel to engage in the arbitral forum? As stated in Christensen v. Dewor Developments, (1985) 33 Cal.3d 778, “given the overriding policy favoring arbitration, mere delay in seeking a stay of proceedings without some resultant prejudice to a party cannot carry the day…waiver does not occur by mere participation in litigation.” Courts will want to prevent parties from incurring significant litigation costs, then face attempts to maneuver the matter to an arbitral forum. 

An example of engaging in substantial litigation such to infer prejudice to an opposing party is evident in Zamora v. Lehman, (2010) 186 Cal.App.4th 1. The Court examined a scenario that involved a defendant that propounded 236 special interrogatories, produced over 60,000 documents, and waited to seek enforcement of arbitration until four months prior to the trial date. The Court found defendant had waived their right to arbitration given these actions, and had not acted within a “reasonable” timeframe for enforcing the agreement. 

The second line of scrutiny by Courts involves examination of the procedural and substantive elements of the arbitration agreement. In Armendariz v. Foundation Health Psychare Services, Inc., (2000) 24 Cal. 4th 82, the Supreme Court of California, set the arbiter of determining what type of arbitration agreement passes muster. Arbitration agreements that are mutual and reciprocal, and stated that California law favors enforcement of valid arbitration agreements, save upon such grounds as exist for the revocation of any contract.

The recent case of Samaniego v. Empire Today LLC (2012) 140 Cal.Rptr.3d 492 highlighted the important factors that impact a decision regarding conscionability, which include:

  • Was the agreement presented to the employee on a take it or leave it basis?
  • Was a request by the employee to obtain the agreement in another language heeded by the employer?
  • Is the arbitration clause conspicuous and highlighted if part of a longer employment contract?
  • Does the agreement shorten the applicable statute of limitations governing an employee’s claims?
  • Are the terms of the agreement reciprocal? An example of non-reciprocal terms would be when an employee is required to pay all arbitration costs, regardless of finding of fault.

If a Court finds that an employer acted in the affirmative with any of the above-mentioned unconscionability triggers, the arbitration agreement may be rendered unenforceable. Employers should still note, however, that the Court’s inquiry is a fact-based analysis that considers the totality of the circumstances surrounding an employee’s execution of an arbitration agreement.

Class Action Waivers

The seminal 2007 case of Gentry v. Superior Court, (2007) 42 Cal.4th 443, had the practical effect of invalidation class action waivers in employment arbitration agreements. However, in 2011, the United States Supreme Court issued its decision in AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740 (2011). The Concepcion case held that the Federal Arbitration Act (FAA) preempts state laws or policies that deem arbitration agreements unconscionable and unenforceable on the basis that they preclude class actions, annulling the public policy favored in Gentry. Although a party can still assert general contract-based defenses, a state cannot, by judicial mandate, condition the enforceability of an arbitration agreement on whether a class action is allowed or precluded by the terms of the agreement.

Checklist to Employers for Crafting an Arbitration Agreement:

  • Provide any applicable arbitration rules to the employee at the time the agreement is presented or at least direct the employee to where to find the specific rules.
  • Make sure fee provisions do not contradict California law.
  • Avoid any provision limiting the employee’s remedies, or preserving judicial remedies just for the employer.
  • Ensure the arbitration agreement clearly states that it is mutual and applies to claims either party may have against each other.
  • Do not delay in moving to compel arbitration after a lawsuit has been filed.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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