Ledbetter v.Goodyear Tire & Rubber

At issue in the case of Ledbetter v. Goodyear Tire & Rubber, was whether Ledbetter had filed her employment discrimination case (alleging she was paid less than male coworkers) with the EEOC within 180 days "after the alleged unlawful employment practice occurred” as required by Federal law. The Court, in a 5-4 ruling held that Ledbetter had not filed the complaint with the EEOC in a timely manner, therefore barring her claim. 

As Orin Kerr notes at the Volokh Conspiracy, “Ledbetter worked for Goodyear for about ten years, and after she retired in 1998 she sued Goodyear for giving her low raises on account of her gender throughout the term of her employment. Goodyear responded that under federal law she could only sue for any discrimination within the last 180 days, and that no discrimination occurred within the 180-day window.” 

Ledbetter argued that the Court should apply a type of continuing violations doctrine to her situation. Under such a theory, Ledbetter argued that the first discriminatory act (receiving a lower than deserved raise because of her gender) continued with each additional pay raise because pay raises are cumulative over time. Therefore, she alleged that even though she had no evidence that her pay raises during the applicable 180 day time period to file a suit were discriminatory, the original discrimination continued into this time period.  

The Court disagreed with Ledbetter’s argument and held that employees must bring a claim within 180 days of the actual discriminatory act, which in this case was the actual discriminatory pay raise. The dissenting Justices argued that often times employees do not know other employees pay rates, and employees discriminated against may not discover this information until well after the discrimination, therefore it would be unfair to apply the strict 180 day filing period to these types of cases.

While the dissenting Justices relied on fairness to support an alternative holding than the majority, it would likewise not be fair to employers to force them to defend cases regarding acts that may have occurred ten or more years earlier. Statutes of limitations requiring plaintiffs to file lawsuits within a given timeframe are intended to promote justice because evidence goes stale, witnesses go missing, and memories fade over time. 

Technology Creating Overtime Concerns

Adjunct Law Prof Blog discusses an interesting article about the "novel issue of whether employee time spent away from the office using technology such as Black Berry devices, cell phones and lap tops could lead to claims that such employees are entitled to overtime pay under the Fair Labor Standards Act of 1938."

It has been our experience that these types of claims in California are not so "novel" and that employers definitely need to have a policy addressing the issue of non-exempt employees utilizing such technology while they are off the clock or away from company premises.  Given the recent increase in the Federal minimum wage, it is likely that employment litigators outside of California will soon become all too familiar with these issues.

Federal Minimum Wage Increases to $7.25 Per Hour Over Next Two Years

Congress passed a bill and presented it to the President today that would increase the Federal minimum wage.  The President is expected to sign the bill into law. 

Workers subject to the Federal minimum wage now make $5.15 an hour.  This amount will increase 70 cents per hour before the end of the summer and another 70 cents will be added next year.   By summer 2009, all minimum-wage jobs will pay no less than $7.25 an hour.

This does not affect California employers as the state minimum wage is currently $7.50 per hour and set to increase to $8.00 per hour on January 1, 2008.

Vacation Time, Sick Pay, Severance Pay, and Other Benefits

Some of the most frequently asked questions by clients are about benefits for employees under California law: Do employer's have to provide vacation to employees?  Can employers have a use-it-or-lose-it vacation policy?  Do employers have to give employees severance pay?  Below is the Division of Labor Standards Enforcement's (DLSE) explanation of employer's obligations regarding these issues.


        VACATION: Paid vacations are not required under California law. If an employer has an oral or written vacation policy, such vacation benefits are considered wages and are earned by the employee on a pro rata basis for each day of work. Because vacation is a form of deferred wages and vests as it is earned, vacation wages cannot be forfeited (or in other words, an employer cannot have a use-it-or-lose-it vacation policy) (Suastez v. Plastic Dress Up (1982) 31 Cal.3d 774) An employer can place a reasonable cap on vacation benefits that prevents an employee from earning vacation over a certain amount of hours. (Boothby v. Atlas Mechanical (1992) 6 Cal.App.4th 1595). When an employment relationship ends all vacation earned but not yet taken by the employee must be paid at the time of termination. (Labor Code §227.3). If employees are subject to a collective bargaining agreement, the provisions pertaining to vacation benefits in the collective bargaining agreement will apply. (Labor Code §227.3)


        SICK PAY:There is no state legal requirement under California law for employers to provide paid sick leave. Employers with a presence in San Francisco should note that the city does require employers to provide sick pay accrued at a rate of one hour of sick time for every thirty hours worked.  For these workers in San Francisco, the sick pay is capped at 72 hours for large businesses that have10 or more employees and at 40 hours for small businesses that have less than 10 employees.

Employees should refer to their employer’s policy with respect to paid sick leave. However, most employers participate in the State Disability Insurance Plan (SDI), which they pay for through payroll deductions. (Unemployment Insurance Code §2601, et seq.) Employers are required to give newly hired employees and employees leaving work due to pregnancy or non-occupational sickness or injury a copy of a notice of their disability insurance rights and benefits due to sickness, injury or pregnancy. (Unemployment Insurance Code §2613) Additional information concerning disability insurance can be obtained from your local office of the Employment Development Department (EDD).

If an employer has a sick leave policy, the employer must permit an employee to use in any calendar year, the employee’s accrued and available sick leave, in an amount not less than the sick leave that would be accrued during 6 months at the employee’s current rate of sick leave, to attend to an illness of a child, parent, domestic partner, or spouse of the employee. (Labor Code §233)


        SEVERANCE PAY:There is no legal requirement under California law that employers provide severance pay to an employee upon termination of employment. Employees should refer to their employer’s policy with respect to severance pay. Severance pay plans provided by an employer pursuant to the Employee Retirement Income Security Act of 1974, 29 U.S.C. §1001 et seq. (ERISA), are subject to federal law. More information about ERISA can be found at the U.S. Department of Labor's website. In certain limited situations, California laws may apply. However, a thorough review of the facts is necessary before a determination can be made.

Increased Immigration Enforcement In California

Employers in California and across the country are realizing the increased enforcement of the immigration laws. As this Los Angeles Times article notes that the number of employees arrested for workforce violations has increased to 3,667 in 2006 from 485 in 2002, according to U.S. Immigration and Customs Enforcement.

“This year, federal immigration officials raided restaurants in California and 16 other states and arrested nearly 200 illegal immigrants working for a janitorial company. That followed similar high-profile raids in Maryland, Indiana and Kentucky that amounted to some of the largest and harshest penalties against employers in history.” The article also mentions that two executives of Golden State Fence Co. based in Riverside were found guilty of violating the Immigration Reform and Control Act of 1986 (IRCA) and were sentenced to six months of home confinement and fined a combined $300,000 for employing scores of illegal workers. In addition, the company was also required to pay a $4.7 million penalty.

With nearly 90% of illegal immigrants using fraudulent documents, employers are placed in a very difficult situation. Employers must accept the documents presented by the employee to verify employment eligibility if they reasonably appear to be genuine and relate to the employee who presents them. However, refusing to accept reasonable documents is discrimination and also violates the anti-discrimination provisions of IRCA.

IRCA requires that employers verify an employee’s eligibility to work, which includes having every employee fill out the Form I-9. The Form I-9 must be kept for 3 years after hire date or 1 year after termination, whichever is longer. The I-9 must be completed on the employee’s first day of work and the employer must complete section two of the form no later than the employee’s third day. 

Enterprise Zone Seminar for Pasadena Business Owners

KBKG, Inc. is sponsoring a Enterprise Zone seminar for Pasadena business owners on May 31, 2007 from 9:00 am - 11:00 am.  It will take place at Barn Burner Barbecue, 1000 South Fair Oaks Ave, Pasadena.

Here is some information about the seminar:

Established by the California Trade & Commerce Agency, Enterprise Zone credits are tax incentives designed to stimulate growth and development in selected areas within California. Recent changes in the Pasadena Enterprise Zone program now allow more businesses to take advantage of these lucrative tax savings. This seminar is focused on providing you with the most recent updates and pertinent information that every Pasadena business owner needs to know.

What you will learn:

  • How your business can benefit from the Enterprise Zone program
  • How recent changes have enabled more businesses to qualify
  • How the Hiring Credit can generate up to $36,660 per employee in tax credits
  • How to make your machinery and technology purchases tax-free

For additional information, download the seminar registration here.

California Supreme Court To Hear Arguments In Landmark Arbitration Case and Bonus Plan Case

The California Supreme Court is scheduled to hear oral arguments in two cases that will have large ramifications for California employers. 

On Tuesday, June 5, 2007 the Supreme Court will hear oral arguments in GENTRY v. SUPERIOR COURT (CIRCUIT CITY STORES).

The issue being heard by the Court in Gentry is:

This case presents issues regarding the enforceability of an arbitration provision that prohibits employee class actions in litigation concerning alleged violations of California's wage and hour laws.

On Wednesday, June 6, 2007, the Supreme Court will hear oral arguments in PRACHASAISORADEJ v. RALPHS GROCERYThe issue being heard by the Court in Ralph’s is:

Does an employee bonus plan based on a profit figure that is reduced by a store's expenses, including the cost of workers compensation insurance and cash and inventory losses, violate (a) Business and Professions Code section 17200, (b) Labor Code sections 221, 400 through 410, or 3751, or (c) California Code of Regulations, title 8, section 11070?

The Supreme Court will have a written opinion within 90 days after the oral arguments. I plan on attending the oral arguments for Gentry, and will provide more analysis about the cases within the next few weeks leading up to and immediately after the oral arguments. 

Big Firms Raise Lawyer Salaries Again

Last week, it was reported that big law firms are once again raising salaries up to $160,000 for first year lawyers and $280,000 for eighth year lawyers. Understandably, this made many in-house counsel and clients that utilize these firms a bit nervous. As one of the quotes in the articles states, the attorneys who received the $10,000 raises did not become any more talented as a lawyer the day after they received the raises.

This is good news for firms like ours. Clients eventually realize that they are not receiving any better service at the big firms than they receive from boutique firms like ours – but the only constant they do receive is a large bill. Plus, our clients always have a direct line to speak with the actual attorney completing work on their case.

It is also interesting to note that the big firms cite attracting the best talent for the increase in wages. While this may be true for attracting lawyers fresh out of law school, but it only takes one or two years of billing 2,200 + hours per year to realize that there are better alternatives. Many lawyers at the big firm are also realizing that they can and usually do receive better work assignments and develop more quickly as lawyers at smaller firms – which will pay off in the long run.

Overtime Calculator Unveiled by Department of Labor

The Department of Labor rolled out an Overtime Calculator on its website this week. The calculator is designed to help employers and workers understand and calculate overtime pay under the Fair Labor Standards Act (FLSA). Warning for all California employers: the calculator does not explain an employer’s obligations under California’s more strict employment laws, such as calculate the overtime due for all work beyond eight hours a day. This basically makes the calculator useless for anyone employing workers or working in California.

While I have not had much time to dig into the calculator yet, my initial impression is that unless you have some background in wage and hour issues, and are very careful about the information you input in the calculator, it could be easy to miscalculate what is actually due in wages. However, if you are looking to educate yourself on FLSA wage issues, it is interesting to run different scenarios through.

Confidentiality in Sexual Harassment Investigations

This Business Week article about the human resources so-called confidentiality guideline known as the "Need to Know" standard raises a great point many companies could benefit from. The main topic of the article is how HR professionals may inadvertently (or no so inadvertently) disclose information that they said they would only disclose to people who “need to know.”

However, from a legal perspective, and my mantra during sexual harassment prevention training, is that when an employee complains that they or a co-worker is “uncomfortable” with another employee’s behavior or may be a victim of harassment, the HR professional (or supervisor) cannot and should not promise absolute confidentiality. A company has a duty to investigate any potential harassment, and this duty usually falls upon the HR manager. A proper investigation requires speaking to the victim, witnesses, and usually the alleged harasser as well. This probably also requires the disclosure of information reported to the company by the alleged victim. This is not to say that the company can and should not closely guard the facts of the allegation, but promising confidentiality up front can put the company and HR professional in an awkward position because absolute confidentiality cannot always be maintained.

California Department of Industrial Relations Posting Requirements

California employers are required by the Department of Industrial Relations (DIR) to post information related to wages, hours and working conditions in an area frequented by employees where it may be easily read during the workday. 

Below is a list of postings required by the DIR published on its website.  For more information, follow the links provided below, or click here for the DIR frequently asked questions.  It is important to note that this list is not inclusive, and other state and federal regulations may apply.



Posting

Additional information and quantity needed

Who must post

Industrial Welfare Commission (IWC) wage orders

IWC wage orders regulate wages, hours and working conditions and are numbered by industry or occupation group. Not sure which order you need? Use the alphabetical index of businesses and occupations to make that determination.

Which wage order(s) do you need? A maximum five copies of two different orders is allowed per business.

Labor Code section 1183(d)

All employers

Minimum wage (state)

Sets forth California’s minimum wage and can be downloaded in English and Spanish.

All employers

Payday notice

Must specify the regular paydays and the time and place of payment. An employer-developed notice is permitted.

Labor Code section 207

All employers

Safety and health protection on the job

Contains pertinent information regarding safety rules and regulations. Available in English and Spanish.

Labor Code section 6328

All employers

Emergency phone numbers

Lists emergency responders' phone numbers.

Title 8, California Code of Regulations, Construction Safety Orders section 1512 (e)

All employers

Access to medical and exposure records

Provides information about rights of employees working with hazardous/toxic substances. Available in English and Spanish.

Title 8, California Code of Regulations, General Industry Safety Order section 3204

All employers using hazardous or toxic substances

Operating Rules for Industrial Trucks

Employers using industrial trucks shall post and enforce a set of operating rules. Available in English and Spanish.

Employers operating forklifts and other types of industrial trucks or tow tractors

Notice to employees--injuries caused by work

Advises employees of workers' compensation benefits. Claims administrators and employers need to revise the notice they are currently using and send it to the DWC administrative director for review and approval or they may download and use this version. NOTE: Employers may obtain professionally printed copies of the poster and workers’ comp claim form from their claims administrator.

Title 8, California Code of Regulations, Division of Workers’ Compensation section 9810

All employers

Notice of workers' compensation carrier and coverage

States the name of the employer's current compensation insurance carrier, or the fact that the employer is self-insured. Obtained from the employer's workers' compensation insurance carrier.

Labor Code section 3550

All employers

Whistleblower protections

Must be prominently displayed in lettering larger than size 14 type and include a list of employee rights and responsibilities under the whistleblower laws, including the telephone number of the whistleblower hotline maintained by the office of the California Attorney General.

Labor Code section 1102.8

All employers

No smoking signage

Signage must be posted designating where smoking is prohibited/permitted in a place of employment. This law is enforced by local law enforcement agencies.

Labor Code section 6404.5(c)(1)

All employers

Log and summary of occupational injuries and illnesses




(Cal/OSHA form 300)

Form 300 is for logging recordable injuries, form 301 is for collecting details and form 300A is the annual summary form. All three forms are available in various downloadable formats with instructions on the Cal/OSHA publications page.

Title 8, California Code of Regulations, Division of Labor Statistics and Research sections 14300 et seq.

Employers with 11 or more employees in the previous year

Farm labor contractor statement of pay rates

Reference DLSE poster 445. Must be displayed prominently where work is to be performed and on all vehicles used by the licensee for transportation of employees. Must be at least 12 inches high and 10 inches wide.

The downloaded version of this posting may not comply with the law as it may not be at least 12 inches high and 10 inches wide.

Labor Code section 1695(7)

Farm labor contractors licensed by the Division of Labor Standards Enforcement (DLSE)

Prevailing wage rate determinations

The body awarding any contract for public work or otherwise undertaking any public work shall cause a copy of the prevailing wage determination for each craft, classification or type of worker needed to execute the contract to be posted at each job site.

Labor Code section 1773.2

Public works awarding bodies and contractors


Start-up: To Do's Before Hiring First Employee

Q:  We are a start-up company - what steps should be taken prior to hiring the first employee?

A:  The California Division of Labor Standards and Enforcement advises start-up companies to comply with the following:

A CALIFORNIA EMPLOYER IDENTIFICATION NUMBER
An employer who becomes subject to the employment tax laws, is required to register with the Employment Development Department (EDD) to obtain an identification number, which is the state equivalent of the federal identification number. (Unemployment Insurance Code § 1086) This number can be obtained by filing a DE-1 Registration Form with the EDD. Once an employer receives the identification number it will also receive information concerning all state required employment taxes and reporting requirements. (Unemployment Insurance Code § 1089)

Additional information can be obtained by writing to the Employment Development Department, Box 826880, Sacramento, California 94280-0001 or by contacting the local Employment Tax District Office listed in the State Government section of the white pages of the telephone directory under Employment Development Department or through their website at www.edd.ca.gov. For information concerning the federal identification number contact the Internal Revenue Service at www.irs.gov or check the white pages of the telephone directory under Federal Government.

WORKERS’ COMPENSATION INSURANCE COVERAGE
All employers are required to have workers’ compensation insurance or receive state approval to self-insure the required benefits. There are significant criminal and civil penalties for employers that do not have workers’ compensation insurance or that are not authorized to be self-insured. (Labor Code § 3700, et seq.) A large number of insurance companies offer plans for these benefits. In addition, the State Compensation Insurance Fund makes available such benefits to all employers.

REQUIRED REGISTRATION, CERTIFICATION OR LICENSING FOR CERTAIN INDUSTRIES
Certain businesses must be registered, certified or licensed prior to operating the business. While there are several state agencies that license or register businesses, the Division of Labor Standards Enforcement provides licensing or registration for the following types of businesses:

  • Farm Labor Contractors
  • Garment Manufacturers
  • Talent Agents
  • Employers of Industrial Homeworkers
  • Sheltered Workshops
  • Studio Teachers
  • Car washes

DOL On-Line Self Assessment For Restaurateurs Employing Minors

The U. S. Department of Labor’s Wage and Hour Division website provides a self assessment tool for restaurants that employ minors. The assessment covers common violations of the Fair Labor Standards Act (FLSA ). Restaurant owners should note that this assessment does not cover California state law items. The assessment covers items that the DOL found in the past to be some of the most common problems encountered in restaurants, and therefore, are likely issues a DOL investigator will look for in a restaurant.

Here is a list of a few of the items covered in the assessment:

Do any workers under 18 years of age do the following:
1. Operate or clean power-driven meat slicers or other meat processing machines?

2. Operate or clean any power-driven dough mixer or other bakery machines?

3. Operate, load, or unload scrap papers baler or paper box compactors?

4. Drive a motor-vehicle on the job?


Do any workers under 16 years of age do the following:
5. Cook?

6. Bake?

7. Clean cooking equipment or handle hot oil or grease?

8. Load or unload goods from a truck or conveyor?

9. Work inside a freezer or meat cooler?

10. Operate power-driven bread slicers or bagel slicers?

11. Operate any power-driven equipment?

12. Work from ladders?

13. Work during school hours?

14. Work before 7:00 a.m. on any day?

15. Work past 7:00 p.m. between Labor Day and June 1?

16. Work past 9:00 p.m. between June 1 and Labor Day?

17. Work more than 3 hours on a school day, including Fridays?

18. Work more than 8 hours on any day?

19. Work more than 18 hours in any week when school was in session?

20. Work more than 40 hours in any week when school was not in session?

21. Do you employ any workers who are less than 14 years of age?

22. Do you fail to maintain in your records a date of birth for every employee under 19 years of age?

Click here to take the entire assessment. At the end of the assessment, there is a rules summary that explains an employer’s responsibility under the FLSA for the issues on the assessment.


How to Avoid a California EDD Tax Assesment For Misclassifying Independent Contractors

Independent contractors are the most common category of workers that are audited for back payroll taxes by the EDD.  We have also noticed that the EDD will target certain industries that it believes commonly misclassifies employees as independent contractors (delivery drivers for Federal Express and other delivery companies have recently been targeted).

In making a determination whether a worker is properly classified as an independent contractor, the EDD will examine the employer's right to control the worker, whether or not exercised, as one of the most important factors in determining the relationship. The right to discharge a worker at will and without cause is strong evidence of the right of direction and control. The following factors are also taken into consideration:
  • Whether or not the one performing the services is engaged in a separately established occupation or business.
  • The kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of a principal without supervision.
  • The skill required in performing the services and accomplishing the desired result.
  • Whether the principal or the person providing the services supplies the tools, equipment, and place of work for the person doing the work.
  • The length of time for which the services are performed to determine whether the performance is an isolated event or continuous in nature.
  • The method of payment, whether by time, a piece rate, or by the job.
  • Whether or not the work is part of the regular business of the principal.
  • Whether or not the parties believe they are creating the relationship of employer and employee.
  • The extent of actual control exercised by the principal over the manner and means of performing the services.
  • Whether the principal is or is not engaged in a business enterprise or whether the services being performed are for the benefit or convenience of the principal as an individual.
  • Whether the worker can make business decisions that would enable him or her to earn a profit or incur a financial loss. Investment of the worker's time is not sufficient to show a risk of loss.
A written contract which claims to create the relationship of principal and independent contractor is not controlling if the practice of the parties shows that the principal retains the right of control under the common law test.