Tag: Employment Law

Employee Wins Federal Appeal Involving Commonly-used Defenses in Employment Discrimination Cases

The U.S. Court of Appeals for the Fourth Circuit issued a decision (Haynes v. Waste Connections, Inc.) this week that reversed in the employee’s favor.  The opinion tackles many commonly-used defenses by employers in employment discrimination and retaliation cases.  In particular, the Fourth Circuit analyzed whether:

  • the employee had identified a valid comparator (aka a similarly situated employee);
  • established that he was performing his job satisfactorily when the employer fired him; and
  • produced any evidence of pretext, which looks to whether the employee can show that the employer’s stated reason for the adverse employment action (termination, demotion, etc.) was meant to disguise a discriminatory intent.

Ultimately, the court found in favor of the employee and sent the case back down to the trial court.

Background

Jimmy Haynes, who is African-American, claimed that his former employer, Waste Connections, Inc. (WCI), discriminated and retaliated against him when it fired him.  Haynes alleged that WCI violated Title VII of the 1964 Civil Rights Act and 42 U.S.C. §1981 (Section 1981) as a result.  Notably, while Title VII and Section 1981 have many similarities in terms of prohibiting race discrimination in employment, a number of significant differences exist that can impact how a court reviews these claims, as discussed here.

The key facts had to do with Haynes reporting to work one evening and then leaving the job site.  According to Haynes, he left work due to a stomach virus and told his supervisor about this.  WCI, on the other hand, claimed that Haynes walked off the job because he was frustrated that his normal truck was not ready.  Two days later, WCI fired Haynes for job abandonment.  WCI did not mention any other reason for terminating Haynes’ employment at the time.  During the course of his lawsuit though, WCI claimed that Haynes had also committed other violations during June and August 2015.

After Haynes filed his lawsuit in court and the parties exchanged information during the discovery process, WCI filed a motion for summary judgment arguing that no disputed material facts existed and thus a jury trial was unnecessary.  The trial court granted summary judgment to the WCI and dismissed Haynes’ lawsuit.  Haynes then appealed this decision and the appellate court reversed the trial court’s decision.

The Fourth Circuit’s findings

Valid comparator/similarly situated employee

The Fourth Circuit first analyzed whether Haynes had established a proper comparator who was not African-American and was treated better than him.  Noting that comparing similar employees will never involve exactly the same offenses occurring over the same time period with the same set of facts, the court explained that showing someone is a valid comparator involves:

  • evidence that the employee and the comparator dealt with the same supervisor;
  • were subject to the same standards; and
  • engaged in the same conduct without such differentiating circumstances that would distinguish their conduct or the employer’s treatment of them

Haynes v. Waste Connections, Inc., Case No. 17-2431 at p. 8, (4th Cir. April 23, 2019).  The appellate court found that a white employee, who had the same supervisor as Haynes, had several workplace violations.  These violations included twice using a cellphone while driving, driving while distracted, and responding to a traffic situation late.  Id.  It also appeared that this white employee had yelled at the supervisor before quitting his job.  Yet the white employee was allowed to return to work and Haynes, who had not yelled at his supervisor and had fewer infractions, was fired.

Because both employees had the same supervisor, were subject to the same standards, and engaged in similar conduct, the court found the white employee to be a valid comparator.  In making this decision, the appellate court rejected WCI’s argument that the white employee’s infractions did not cause any damages whereas Haynes’ violations did.  It also turned away WCI’s claim that the white employee had notified the employer that he was resigning while Haynes simply walked off the job.

Was Haynes performing his job satisfactorily

WCI also argued that Haynes had not demonstrated that he was performing his job satisfactorily at the time WCI fired him.  The Fourth Circuit pointed out that Haynes was not required “to show that he was a perfect or model employee;” rather, he need only show that he was qualified for the position and meeting WCI’s legitimate expectations.  To support his contention that he was satisfactorily performing his job, Haynes produced evidence that:

  • his supervisor told him the month before Haynes was terminated that “everything looks good” and “nothing to worry about” in terms of his upcoming job performance evaluation; and
  • Haynes received bonuses during the relevant time period

The court thus ruled that Haynes had presented enough evidence to demonstrate satisfactory job performance.

Evidence of pretext

To show pretext, “a plaintiff may show that an employer’s proffered non-discriminatory reasons for the termination are inconsistent over time, false, or based on mistakes of fact.”  Haynes, Case No. 17-2431 at 12.  If the employee does so, then summary judgment should be denied and the case should proceed to trial.

The most important factor to the Fourth Circuit was that WCI came up with a new reason why it claims it terminated Haynes’ employment:  his poor attitude.  The only reason given at the time of Haynes’ termination, however, was job abandonment.  Further, the company policy on job abandonment defines it as three days with no call or no show, yet Haynes had called and texted within one day.  Ultimately, the Fourth Circuit found too many inconsistencies with WCI’s purported reasons for firing Haynes and thus ordered that a jury should decide whose version is correct.

Key takeaways

Some important factors can be gleaned from the Fourth Circuit’s decision here:

  • For the comparator/similarly situated analysis, you’re more likely to meet this test if you and the other employee(s) you’re comparing yourself to:
    • share the same supervisor;
    • perform very similar job tasks and responsibilities (both the number and weight) as the other person;
    • if the case involves discipline, then the number and severity of the infractions should be relatively similar;
    • have similar job performance evaluations and disciplinary history; and
    • your experience level (including supervisory experience) the same as the other person
  • To demonstrate that you were performing your job satisfactorily, evidence that you received bonuses, awards, and/or average (or higher) job performance ratings will be important;
  • Regarding pretext, the more inconsistencies you can show the employer’s reasons for firing you, the better off you will be.

© 2019 Zuckerman Law
This post was written by Eric Bachman of Zuckerman Law.

Compliance with the New Proposed DOL Salary Threshold May Create Challenges for Many Employers

As we wrote in this space just last week, the U.S. Department of Labor (“DOL”) has proposed a new salary threshold for most “white collar” exemptions.  The new rule would increase the minimum salary to $35,308 per year ($679 per week) – nearly the exact midpoint between the longtime $23,600 salary threshold and the $47,476 threshold that had been proposed by the Obama Administration.  The threshold for “highly compensated” employees would also increase — from $100,000 to $147,414 per year.

Should the proposed rule go into effect – and there is every reason to believe it will – it would be effective on January 1, 2020.  That gives employers plenty of time to consider their options and make necessary changes.

On first glance, dealing with the increase in the minimum salaries for white-collar exemptions would not appear to create much of a challenge for employers—they must decide whether to increase employees’ salaries or convert them to non-exempt status. Many employers that reviewed the issue and its repercussions back in 2016, when it was expected that the Obama Administration’s rules would go into effect, would likely disagree with the assessment that this is a simple task. The decisions not only impact the affected employees, but they also affect the employers’ budgets and compensation structures, potentially creating unwanted salary compressions or forcing employers to adjust the salaries of other employees.

In addition, converting employees to non-exempt status requires an employer to set new hourly rates for the employees. If that is not done carefully, it could result in employees receiving unanticipated increases in compensation—perhaps huge ones— or unexpected decreases in annual compensation.

The Impact on Compensation Structures

For otherwise exempt employees whose compensation already satisfies the new minimum salaries, nothing would need be done to comply with the new DOL rule. But that does not mean that those employees will not be affected by the new rule. Employers that raise the salaries of other employees to comply with the new thresholds could create operational or morale issues for those whose salaries are not being adjusted. It is not difficult to conceive of situations where complying with the rule by only addressing the compensation of those who fall below the threshold would result in a lower-level employee leapfrogging over a higher-level employee in terms of compensation, or where it results in unwanted salary compression.

Salary shifts could also affect any analysis of whether the new compensation structure adversely affects individuals in protected categories. A female senior manager who is now being paid only several hundred dollars per year more than the lower-level male manager might well raise a concern about gender discrimination if her salary is not also adjusted.

The Impact of Increasing Salaries

For otherwise exempt employees who currently do not earn enough to satisfy the new minimum salary thresholds, employers would have two choices: increase the salary to satisfy the new threshold or convert the employee to non-exempt status. Converting employees to non-exempt status can create challenges in attempting to set their hourly rates (addressed separately below).

If, for example, an otherwise exempt employee currently earns a salary of $35,000 per year, the employer may have an easy decision to give the employee a raise of at least $308 to satisfy the new threshold. But many decisions would not be so simple, particularly once they are viewed outside of a vacuum. What about the employee who is earning $30,000 per year? Should that employee be given a raise of more than $5,000 or should she be converted to non-exempt status? It is not difficult to see how one employer would choose to give an employee a $5,000 raise while another would choose to convert that employee to non-exempt status.

What if the amount of an increase seems small, but it would have a large impact because of the number of employees affected? A salary increase of $5,000 for a single employee to meet the new salary threshold may not have a substantial impact upon many employers. But what if the employer would need to give that $5,000 increase to 500 employees across the country to maintain their exempt status? Suddenly, maintaining the exemption would carry a $2,500,000 price tag. And that is not a one-time cost; it is an annual one that would likely increase as those employees received subsequent raises.

The Impact of Reclassifying an Employee as Non-Exempt

If an employer decides to convert an employee to non-exempt status, it faces a new challenge—setting the employee’s hourly rate. Doing that requires much more thought than punching numbers into a calculator.

If the employer “reverse engineers” an hourly rate by just taking the employee’s salary and assuming the employee works 52 weeks a year and 40 hours each week, it will result in the employee earning the same amount as before so long as she does not work any overtime at all during the year. The employee will earn more than she did previously if she works any overtime at all. And if she works a significant amount of overtime, the reclassification to non-exempt status could result in the employee earning significantly more than she earned before as an exempt employee. If she worked 10 hours of overtime a week, she would effectively receive a 37 percent increase in compensation.  And, depending on the hourly rate and the number of overtime hours she actually works, she could end up making more as a non-exempt employee than the $35,308 exemption threshold.

But calculating the employee’s new hourly rate based on an expectation that she will work more overtime than is realistic would result in the employee earning less than she did before. If, for instance, the employer calculated an hourly rate by assuming that the employee would work 10 hours of overtime each week, and if she worked less than that, she would earn less than she did before—perhaps significantly less. That, of course, could lead to a severe morale issue—or to the unwanted departure of a valued employee.

 

©2019 Epstein Becker & Green, P.C. All rights reserved.
This post was written by Michael S. Kun of Epstein Becker & Green, P.C. 

Is Paris Burning? France Considers Whether Damages for Employee Dismissals Should Be Capped

The latest version of Article L. 1235-3 of the French Labor Code, based on the “Macron Ordinances,” has recently been the subject of major dispute, with several labor tribunals issuing conflicting decisions.

The article limits a judge’s ability to determine compensation for an employee whose dismissal has been recognized as having no “real and serious” cause. It caps the damages awarded at an amount between 0.5 months’ salary (for an employee with less than one year of continuous service) and 20 months’ salary (for an employee with more than 29 years of continuous service).

However, this system is not applicable in a number of cases, particularly where the dismissal is declared null and void because, for example, of a “violation of a basic human right,” an “act of harassment,” or its “discriminatory” nature.

By introducing this new system, the government intended to “remove uncertainty” about the “cost of a termination” by allowing the employer to anticipate the risk incurred if the dismissal was found to be without real and serious cause (Report to the President of the Republic on Order No. 2017-1387 of 22 September 2017 on the predictability and security of labor relations).

However, in a series of decisions issued in December 2018 and January 2019, labor courts have ruled that this system conflicts with several international conventions applicable in France.

Even if the Constitutional Council had approved, both in principle (C.C., 2017-751 DC of 7 September 2017) and in its implementation (C.C., 2018-761 DC of 21 March 2018), the concept of a cap on compensation for damage caused by the fault of an employer, it is not up to the Council to ensure compliance of this system with the international agreements ratified by France.

It is judges who are responsible for checking that the system established by the labor tribunal complies with the international conventions applicable in France.

However, Article 10 of Convention 158 of the International Labour Organization stipulates that a judge who finds that a dismissal is unjustified, but does not propose reinstatement of the employee to his or her original position, must be able to order the “payment of adequate compensation or such other relief as may be deemed appropriate.” Similarly, Article 24 of the European Social Charter provides for the “the right of workers whose employment is terminated without a valid reason to adequate compensation or other appropriate relief.”

Considering these stipulations, two labor tribunals (Le Mans and Caen, the latter being ruled by a professional judge) adopted the applicable scale, considering that it provided for “appropriate” compensation for damages.

By contrast, the labor tribunals of Troyes, Amiens, Lyon, Grenoble, and Angers decided, in highly publicized decisions, not to apply the mandatory scale stipulated by Article L. 1235-3. As a result, they granted compensation in excess of the legal maximum. None of these five cases fell into the provided categories allowing a judge to exceed this maximum.

At present, while other councils could follow this reasoning, the impact remains limited. The Administrative Supreme Court has already been called upon in urgent situations to rule on the validity of these measures. It considered that because of the possibility of deviation from the scale when the dismissal is deemed null and void, so that the scale is compliant with the stipulations of the conventions (CE, 7 December 2017, CGT, N° 415243).

It will be up to the Courts of Appeal and then to the Court of Cassation, France’s Supreme Court, to decide whether it is appropriate to continue to apply this system or whether the international conventions ratified by France require that it be overruled.

Pending these decisions, the possibility that the scale is inapplicable may divide the courts and create judicial uncertainty in labor tribunal disputes. The underlying objective of legal certainty is therefore, at least temporarily, severely compromised: neither employees nor employers can use this scale to assess with certainty the chances of profit or the risks involved when making a decision on any given dismissal.

A rapid resolution would be desirable. To this end, referral to the Court of Cassation for a legal opinion in accordance with the provisions of Article L. 441-1 of the Code of Judicial Organization and Article 1031-1 of the Code of Civil Procedure (referral for an opinion) might have seemed particularly appropriate if the Court of Cassation had not recently refused to grant such an opinion regarding the compliance to conventional rules of another legal text (Cass, avis, 12 juillet 2017, 17-70.009).

Thus, it can only be hoped that a litigant whose rights are “imperiled” by a ruling requests that a Court of Appeals set a day for a priority hearing (Article 917 of the Code of Civil Procedure). Such proceedings would reduce the delay before the appeal hearing and would provide a finer outlook on the future of the mandatory scale.

© 2019, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., All Rights Reserved.
This post was written by Jean-Marc Albiol and Thibaud Lauxerois of Ogletree, Deakins, Nash, Smoak & Stewart, P.C.

Sex Education for Minors?

As we previously reported, this past fall, Governor Jerry Brown signed into law AB 2338, which includes a provision requiring minors 14-17 years of age and their parents/guardians to receive sexual harassment prevention training prior to the issuance of an entertainment work permit by the California Labor Commissioner.  Earlier this week, the Department of Labor Standards Enforcement (“DLSE”) published its guidance regarding AB 2338 on its website.  The DLSE’s very brief guidance does answer some questions regarding the new law, yet leaves some unanswered.

First, the DLSE’s guidance notes that applicants for 10-day temporary entertainment work permits are exempt from the training requirement.

Second, it provides two options for 13-year-old minors who will reach their 14th birthday during the period of a six-month entertainment work permit: (1) apply for a permit which will expire on the minor’s 14th birthday; or (2) the Labor Commissioner will issue permits to minors at least 13 years and six months of age, who provide satisfactory proof of sexual harassment prevention training as an age-eligible minor.

Third, the DLSE’s guidance specifies that the sexual harassment prevention training must at a minimum include the components specified in the Department of Fair Employment and Housing’s form, DFEH Form 185.  This form includes general information regarding sexual harassment as well as employers’ responsibilities related to sexual harassment. The training must be administered by a third-party vendor and may be provided electronically or on site, in a language the participants understand.

Although AB 2338 went into effect on January 1, 2019, the DLSE has stated that, due to the “unavailability of third-party vendors and applicable materials at this time,” the Labor Commissioner will not enforce the new law until June 30, 2019.  Even following the DLSE’s guidance, questions remain regarding the new law, such as the required length of the trainings and which vendors will be deemed acceptable.  MSK will continue to monitor this area and will provide an update via its blog upon any further developments.

 

© 2019 Mitchell Silberberg & Knupp LLP.

Partial Government Shutdown Causes Full-Blown Headache for Employers Using E-Verify

If you are an employer that is obligated to or has chosen to use E-Verify, then you have probably already received this message from the E-Verify website: “NOTICE: Due to the lapse in federal funding, this website will not be actively managed. This website was last updated on December 21, 2018, and will not be updated until after funding is enacted. As such, information on this website may not be up to date. Transactions submitted via this website might not be processed, and we will not be able to respond to inquiries until after appropriations are enacted.”

But what does this notice actually mean for your business? As long as the shutdown remains in effect, you will not be able to:

  • enroll in the program

  • access your E-Verify account

  • create a case in E-Verify

  • take action on a case you previously submitted

  • add, delete, or edit accounts

  • terminate accounts

  • run reports

Also during this time, your employees will not be able to resolve any E-Verify Tentative Nonconfirmations (TNCs) they received prior to the shutdown. Indeed, the number of days E-Verify is not available will not count toward the days employees have to begin the process of resolving their TNCs.

So, what should you do with your new hires given that you cannot create a case in E-Verify within the three business days required?

  • Make sure you are still completing I-9s in a timely manner. The shutdown does not affect the three business days you have to obtain and verify documentation in Section 2 or any other I-9 obligations.

  • Do not take any adverse action against employees who have open cases in E-Verify.

  • Create a list of all employees hired during the time period E-Verify has been inoperable, and make a notation that the reason the employees were not run through E-Verify is due to the government shutdown.

  • Take the time now to establish a system for running these employees through E-Verify once the system becomes available. Absent other instructions from USCIS, you will most likely be choosing the “other” drop-down field when asked why the case was not created within three days and typing in “government shutdown.”

  • If you’re a federal contractor with a Federal Acquisition Regulation E-Verify clause, think about getting confirmation in writing from your contracting officer that the E-Verify deadlines are extended. Or, if the officer is not available, at least create documentation that you have inquired about this.

© 2019 Jones Walker LLP
This post was written by Laurie M. Riley and Mary Ellen Jordan of Jones Walker LLP.

The E-2 Visa: A Potentially Useful Tool in Cross-Border M&As

Changes to corporate structure, including mergers and acquisitions, can have enormous implications for the U.S. immigration status of key workers and potential new hires. When a U.S. company is acquired or formed because of a merger, and is majority-owned by a foreign entity or foreign national from an E-2 country, the E-2 Investor Visa may be available. In addition, the E-2 visa provides protections to cross-border investment between the two countries and the option to resolve investment disputes through international arbitration.

Who Can Use the E-2 Visa?

Typically, the E-2 visa is available to the principal investor as well as managerial, executive, or essential-skilled employees with the same nationality as the E-2 country, and the nationality of the majority owners of the E-2 company. To qualify, E-2 applicants must show they are actively investing or have invested a substantial amount of capital in a bona fide enterprise. An E-2 visa, issued for five years at the U.S. consulate overseas, allows an E-2 spouse to work and any E-2 children under 21 to study in the United States.

What Must the E-2 Visa Applicant Show?

The E-2 applicant, who submits the application directly to the E-2 visa offices at the pertinent U.S. consulate overseas, must include evidence of: 1) ownership; 2) nationality; 3) the substantial investment at risk explaining the path of the E-2 investment funds; 4) the corporate documentation of the E-2 company — in the cross border M&A transaction, this includes the purchase of the acquisition or the formation of the newly-merged company, evidencing 50 percent or more ownership by treaty national or nationals; 5) the applicant’s qualifications to direct and operate the E-2 company; 6) a detailed and complete business plan if the newly-formed U.S. company has existed for less than a year; and any other evidence the U.S. consulate requires.

How Does the U.S. Government Determine an Investment Is ‘At Risk’?

General E-2 visa processing considerations for founders, principal investors, or employees (those to be transferred from overseas or new hires) are to ensure that the substantial investment be one that is “at risk.” This means the capital must be subject to partial or total loss if investment fortunes reverse. Further, the E-2 applicant must show irrevocable commitment of funds to the U.S. E-2 company. The U.S. immigration rules allow the placement of funds in escrow pending approval of the E-2 visa with a legal mechanism that irrevocably commits funds but also protects investors if the E-2 application is denied. Commercial investments must be active (not passive), entrepreneurial, and cannot be made in nonprofit institutions.

What Constitutes a ‘Substantial’ Investment?

To establish that an investment is substantial, the U.S. Department of State uses a relative proportionality test that considers the amount of qualifying capital invested weighed against the total cost of purchasing or creating the E-2 company; the amount of capital normally considered sufficient to ensure the investor’s financial commitment to the success of the E-2 company; and the magnitude of investment to support the likelihood that the investor will successfully develop and/or direct the E-2 company. Thus, the lower the cost of the E-2 company, the higher, proportionally, the investment must be to be considered “substantial.” The E-2 investment cannot be marginal to only support the E-2 principal. The January 2017 Buy American, Hire American executive order is now an oft-cited requirement in E-2 investment applications. The E-2 investment must show the potential for hiring Americans and inducing economic growth in the area of the E-2 investment.

Conclusion

The U.S. government is more closely vetting immigration applications, and work visas like the E-2 in particular. To determine whether the E-2 visa may be the right option in light of a cross-border M&A, it is critical that foreign nationals consult with their immigration counsel.

©2011-2018 Carlton Fields Jorden Burt, P.A.

BOLI Issues Final Rules on Oregon’s Equal Pay Law

On November 19, 2018, the Oregon Bureau of Labor and Industries (BOLI) issued its final administrative rules relating to the state’s Equal Pay Law, which prohibits pay discrimination on the basis of protected class, as well as screening job applicants based on current or past compensation.

The rules establish definitions for several key words in the law, provide more concrete guidance on how to meet the law’s posting requirements, and seek to clarify certain provisions of the law related to screening job applicants based on salary history, determining whether employees perform work of comparable character, establishing bona fide factors that may justify paying employees performing work of comparable character at different compensation levels, explaining benefits as a component of compensation, and “red-circling” or freezing employee compensation in order to bring the pay of employees performing work of comparable character into alignment. Finally, the rules establish that an employer commits an unlawful compensation practice each time an employee is paid in violation of the Equal Pay Law.

Key Takeaways

  • Oregon Administrative Rule (OAR) 839-008-0005 provides that the Equal Pay Law’s prohibition on screening job applicants based on current or past compensation includes a prohibition on using anyinformation about an applicant’s past compensation, regardless of how the information was obtained, to determine a job applicant’s suitability or eligibility for employment. However, unsolicited disclosure of a job applicant’s past compensation (whether by the applicant or former employer) does not constitute a violation of the law, so long as the information is not considered by the employer making the hiring decision.

  • OAR 839-008-0010 expands upon the Equal Pay Law’s criteria for evaluating whether employees perform “work of comparable character” and thus should be paid the same absent the existence of one or more bona fide factors justifying any disparity. The rule provides that “work of comparable character” means work requiring substantially similar knowledge, skill, effort, responsibility, and working conditions in the performance of work, regardless of job description or title. BOLI’s new rule provides non-exhaustive lists of factors that may be considered in determining whether employees have substantially similar knowledge, skill, effort, responsibility, or working conditions. For example, the rule provides that “skill” considerations “may include, but are not limited to, ability, agility, coordination, creativity, efficiency, experience, or precision.”

  • OAR 839-008-0015 establishes criteria that may be used to evaluate whether bona fide factors explain pay differentials that would otherwise violate the Equal Pay Law. The law already broadly delineates what constitutes a “bona fide factor” (i.e., a seniority system; a merit system; a system measuring earnings by quantity or quality of production; differing workplace locations, travel, education, training, experience, or any combination of those factors). While the rule seeks to further explain and provide examples of those factors. For example, the rule provides that education considerations “may include, but are not limited to, substantive knowledge acquired through relevant coursework, as well as any completed certificate or degree program.” Training considerations “may include, but are not limited to, on-the-job training acquired in current or past positions as well as training acquired through a formal training program.”

  • OAR 839-008-0020 seeks to clarify benefits as a component of compensation under the Equal Pay Law. Specifically, the rule provides that (1) employees performing work of comparable character may be provided different benefits so long as the same benefit options are offered to all employees performing work of comparable character; and (2) if an employee declines a benefit, the full cost of the benefit offered to the employee may be used to calculate the total amount of compensation paid to the employee under the Equal Pay Law.

  • OAR 839-008-0025 clarifies that “red circling,” freezing, or otherwise holding an employee’s pay constant as other employees performing work of comparable character are brought into alignment is not considered a reduction in pay for the employee whose pay is frozen.

Questions Remain Unanswered

While the rules clarify some aspects of the Equal Pay Law, many questions remain unanswered for employers. This is particularly true when it comes to performing an equal pay analysis to (1) determine and rectify any pay disparities among comparable employees and (2) take advantage of the law’s affirmative defense to compensatory and punitive damages. No guidance is given, for example, as to how to account for the protected classes that are not self-evident or self-reported. And, while the rules provide some information as to what amounts to a “bona fide factor” justifying a pay disparity, the list remains exclusive and vaguely defined at best.

Next Steps for Employers

Oregon employers that have not yet done so may want to perform equal pay analyses of their workforces as soon as possible. While the Equal Pay Law has been in effect since October 2017, employees will be able to bring claims beginning January 1, 2019, which carry the possibility of economic, compensatory, and punitive damages, as well as attorneys’ fees.

 

© 2018, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., All Rights Reserved.

Do Your Employees Use Cell Phones for Work While Driving?

Many employers have policies regarding the use of cell phones while driving, including the requirement to use the car’s hands-free, Bluetooth phone system, and abide by all applicable laws. But what happens when an employee still abides by the employer’s policy, is involved in a car accident, and causes injuries to a third party? Can the employer be held liable under the theory of respondeat superior?

Well, it depends on the facts and circumstances of the case. By way of background, respondeat superior means that an employer is vicariously liable for the torts of its employees when these employees commit the wrongful acts within the scope of their employment. California courts have held that the determination of whether an employee has acted within the scope of employment is a question of fact, but it also can be a question of law in circumstances where the facts cannot be disputed and there can be no conflicting inferences possible.

The California Court of Appeal in Ayon v. Esquire Deposition Solutions (decided on Sept. 21, 2018) was faced with this issue and held that under the facts presented the employer was not liable for the actions of its employee because there was no evidence that the employee in question was acting within the scope of her employment at the time of the accident.

In Ayon, the plaintiff’s car was struck by Brittini Zuppardo (“Zuppardo”), the scheduling manager of defendant Esquire Deposition Solutions (“Esquire”) while Zuppardo was driving. At the time of the accident, Zuppardo was on the phone with one of Esquire’s court reporters using her car’s hands-free Bluetooth phone system. This phone call (and hence the accident) occurred after normal business hours.

The plaintiff filed suit against Esquire and Zuppardo for personal injuries.  Esquire filed a motion for summary judgment on the ground that the plaintiff could not establish Esquire was vicariously liable for any damages its employee caused. The trial court agreed with Esquire, and the plaintiff appealed.

On appeal, the Court found that, based on the evidence presented, Zuppardo was not acting within the course and scope of her employment, particularly since (a) the phone call in question was after-hours, (b) Zuppardo was not on a work errand, but rather was coming home from a social engagement, and (c) although the phone call was with one of Esquire’s court reporters, Zuppardo and the court reporter were also friends and the conversation was not about work matters, but rather personal in nature. In sum, the trial court concluded that there was no evidence that Zuppardo talked about work matters at the time of the accident.

In Ayon, the Court found convincing the testimony of the Esquire employees who denied that they were discussing anything concerning work. And, their testimony was supported by undisputed evidence that (a) Zuppardo only made after-hours work calls on rare occasions, (b) it was not within her usual job duties, and (c) the two were friends. Accordingly, the Court of Appeal agreed with the trial court’s findings in favor of Esquire.

While it is unclear from Ayon whether the employee’s use of her cell phone (albeit hands-free) was a contributing factor to the accident, the employer was successful in avoiding liability in this case. Nevertheless, the outcome of this case may have been different if the employee was not using a hands-free device at the time of the accident. As such, enforcing policies can reduce the risk of claims.

 

©2018 Drinker Biddle & Reath LLP. All Rights Reserved.
This post was written by Pascal Benyamini of Drinker Biddle & Reath LLP.

New Wave of Employment Bills Signed into Law by California Governor

On Sunday, September 30, 2018, Governor Jerry Brown signed into law a number of bills that will have a significant impact on litigation and legal counseling in the employment context. Many of the new laws are a response to the traction gained by the “me-too” movement and are summarized herein.

NEW LAWS

AB 3109 – Banning Waiver of Rights to Testify

This new law nullifies any term in a contract or settlement agreement that waives a party’s right to testify in an administrative, legislative or judicial proceeding concerning alleged criminal conduct or sexual harassment. This would apply where the party has been required or requested to attend a proceeding pursuant to a court order, subpoena, or written request from an administrative agency or the legislature.

SB 820 – Settlement Agreements: Confidentiality

The passage of SB 820 prohibits and makes void any provision that prevents the disclosure of information related to civil or administrative complaints of sexual assault, sexual harassment, and workplace harassment or discrimination based on sex. SB 820 authorizes settlement agreement provisions that (1) preclude the disclosure of the amount paid in settlement, and (2) protect the claimant’s identity and any fact that could reveal the identity, so long as the claimant has requested anonymity and the opposing party is not a government agency or public official. SB 820 only impacts settlement agreements entered into after January 1, 2019.

SB 1300 – Unlawful Employment Practices: Discrimination and Harassment

SB 1300 makes it unlawful “for an employer, in exchange for a raise or bonus, or as a condition of employment or continued employment” to “require an employee to sign a release of claim or right.”

The bill also prohibits non-disparagements or other agreements that would “deny the employee the right to disclose information about unlawful acts in the workplace, including, but not limited to, sexual harassment.”

Notably, under this bill, these restrictions would not apply to “a negotiated settlement agreement to resolve an underlying claim . . . that has been filed by an employee in court, before an administrative agency, alternative dispute resolution forum, or through an employer’s internal complaint process,” so long as such agreement is voluntary and involves valuable consideration.

The bill also provides that a prevailing defendant is prohibited from being awarded fees and costs unless the court finds the action was frivolous, unreasonable, or groundless when brought or that the plaintiff continued to litigate after it clearly became so.

Significantly, this new law also expressly affirms or rejects specified judicial decisions, with the impact of making it increasingly difficult for employers to defeat harassment claims on summary judgment. The new law addresses the following judicial decisions:

  • Harris v. Forklift Systems, 510 U.S. 17 (1993): The Legislature affirms of the holding in Harris, which found that in a workplace harassment suit “the plaintiff need not prove that his or her tangible productivity has declined as a result of the harassment. It suffices to prove that a reasonable person subjected to the discriminatory conduct would find, as the plaintiff did, that the harassment so altered working conditions as to make it more difficult to do the job.”

  • Brooks v. City of San Mateo, 229 F.3d 917 (2000): The Legislature prohibits reliance on this opinion to determine what conduct is sufficiently severe or pervasive to constitute actionable harassment under the FEHA.

  • Reid v. Google, Inc., 50 Cal.4th 512 (2010): The Legislature affirmed reliance on the “stray remarks” standard articulated in Reid. Specifically, the California Supreme Court held that the existence of a hostile work environment depends upon the totality of the circumstances and a discriminatory remark, even if not made directly in the context of an employment decision or uttered by a nondecisionmaker, may be relevant, circumstantial evidence of discrimination.

  • Kelley v. Conco Cos., 196 Cal.App.4th 191 (2011): The Legislature explained that the legal standard for sexual harassment should not vary by type of workplace. Further, the Legislature found that it is irrelevant that an occupation may have been characterized by a greater frequency of sexually related commentary or conduct in the past. In determining whether or not a hostile environment existed, the Legislature holds that courts should only consider the nature of the workplace when engaging in or witnessing prurient conduct and commentary is integral to the performance of the job duties.  To that end, the Legislature prohibits reliance on any language in Kelley, which conflicts with these principles.

  • Nazir v. United Airlines, Inc., 178 Cal.App.4th 243 (2009): The Legislature affirmed the decision in Nazir, which observed that hostile working environment cases involve issues “not determinable on paper.” Specifically, SB 1300 states that “Harassment cases are rarely appropriate for disposition on summary judgment.”

SB 1412 – Applicants for Employment: Criminal History

Under existing law, employers, whether a public agency or private individual or corporation, are prohibited from (1) asking an applicant for employment to disclose, (2) seeking from any source, or (3) utilizing as a factor in determining employment, information concerning an applicant’s participation in a pretrial or posttrial diversion program or concerning a conviction that has been judicially dismissed or ordered sealed. It is a crime to intentionally violate these provisions. However, under existing laws, employers are not prohibited from asking an applicant about a criminal conviction or performing a background check regarding a criminal conviction to be considered in determining any condition of employment, so long as (1) the employer is required to obtain information regarding a conviction of an applicant, (2) the applicant would be required to possess or use a firearm in the course of his or her employment, (3) an individual who has been convicted of a crime is prohibited by law from holding the position sought, regardless of whether the conviction has been expunged, judicially ordered sealed, statutorily eradicated, or judicially dismissed following probation, or (4) the employer is prohibited by law from hiring an applicant who has been convicted of a crime.

Under the new law, employers can conduct background checks for employees under certain narrow exceptions. Specifically, under the new law, an employer, whether a public agency or private individual or corporation, cannot seek information regarding an applicant’s arrest or detention that did not result in conviction or occurred while the applicant was subject to the jurisdiction of the juvenile court. Nor can an employer seek information concerning a referral to, and participation in, any pretrial or posttrial diversion program, or concerning a conviction that has been judicially dismissed or ordered sealed pursuant to law. An employer may not consider such information when determining any condition of employment. However, under the new law, an employer may conduct a background check under narrow circumstances where: (1) the employer is a health facility as defined under Section 1250 of the Health and Safety Code; (2) an applicant’s juvenile arrest or detention resulted in a felony or misdemeanor conviction that occurred within five years preceding the application for employment; (3) the employer is required to obtain information regarding a conviction of an applicant; (4) the applicant would be required to possess or use a firearm in the course of his or her employment; (5) an individual who has been convicted of a crime is prohibited by law from holding the position sought, regardless of whether the conviction has been expunged, judicially ordered sealed, statutorily eradicated, or judicially dismissed following probation; or (6) the employer is prohibited by law from hiring an applicant who has been convicted of a crime.

AB 1976 – Lactation Accommodation

Existing law requires employers to provide a reasonable amount of break time to accommodate employees who are breastfeeding and requires an employer to make reasonable efforts to provide the employee with the use of a room or other location, other than a toilet stall, in close proximity to the employee’s work area, for the employee to breastfeed privately.

This new law clarifies what it means to make reasonable efforts to provide the employee with the use of a room or other location, other than a bathroom, in close proximity to the employee’s work area, for the employee to breastfeed privately. An employer is deemed to have complied with the law if it makes a temporary lactation location available to an employee, so long as: (1) the employer is unable to provide a permanent lactation location because of operational, financial, or space limitations; (2) the temporary lactation location is private and free from intrusion while an employee expresses milk; (3) the temporary lactation location is used only for lactation purposes while an employee expresses milk; (4) the temporary lactation location otherwise meets the requirements of state law concerning lactation accommodation. If the employer can demonstrate to the Department of Industrial Relations that this requirement would impose an undue hardship, the new law requires the employer to make reasonable efforts to provide a room or location for expressing milk that is not a toilet stall.

SB 1343 – Employers: Sexual Harassment Training Requirements

The new law requires employers with five or more employees, including temporary or seasonable employees, to provide at least 2 hours of sexual harassment training to all supervisors and at least one hour of sexual harassment training to all nonsupervisory employees by January 1, 2020, and one every 2 years thereafter.

AB 2079 – Janitorial Workers: Sexual Violence and Harassment Prevention Training

Introduced as the bill to empower janitors to prevent rape on the night shift, this new law bolsters existing sexual harassment and violence prevention training and prevention measures. The new law establishes the following requirements:

  • Effective January 1, 2020, all employers applying for new or renewed registration must demonstrate completion of sexual harassment violence prevention requirements and provide an attestation to the Labor Commissioner.

  • The Department of Industrial Relations (“DIR”) must convene an advisory committee by July 1, 2019 to develop requirements for qualified organizations and peer-trainers for employers to use in providing training. The DIR must maintain a list of qualified organizations and qualified peer-trainers.

  • Employers, upon request, must provide an employee a copy of all training materials.

AB 2079 would also prohibit the Labor Commissioner from approving a janitorial service employer’s request for registration or for renewal if the employer has not fully satisfied a final judgment to a current or former employee for a violation of the FEHA.

AB 3082 – Training for In-Home Supportive Services

The new law requires the In-Home Supportive Services (“IHSS”) program, administered by the State Department of Social Services and counties, to develop or otherwise identify standard educational material about sexual harassment and the prevention thereof to be made available to IHSS providers and recipients and a proposed method for uniform data collection to identify the prevalence of sexual harassment in the IHSS program. The bill requires the IHSS, on or before September 30, 2019, to provide a copy of the educational material and a description of the proposed method for uniform data collection to the relevant budget and policy committees of the Legislature.

AB 2338 – Talent Agencies: Education and Training

The law requires a talent agency to provide educational materials on sexual harassment prevention, retaliation, and reporting resources and nutrition and eating disorders to its artists. This law would require those educational materials to be in a language the artist understands, and would require the licensee, as part of the application for license renewal, to confirm with the commissioner that it has and will continue to provide the relevant educational materials.

Further, the new law requires that, prior to the issuance of a permit to employ a minor in the entertainment industry, that an age-eligible minor and the minor’s parent or legal guardian receive and complete training in sexual harassment prevention, retaliation, and reporting resources. The bill would further require a talent agency to request and retain a copy of the minor’s entertainment work permit prior to representing or sending a minor artist on an audition, meeting, or interview for engagement of the minor’s services.

To the extent these laws are violated, the commissioner is authorized to assess civil penalties of $100 for each violation, as prescribed.

SB 224 – Person Rights: Civil Liability and Enforcement

The new law provides additional examples of professional relationships where liability for claims of sexual harassment may arise.

VETOED BILLS

Several bills, which Governor Brown vetoed, are also notable because of the major impact they would have had on the employment context, had they been signed into law.

AB 1870 – Employment Discrimination: Limitation of Actions

Currently, under the existing laws, individuals have one year to file an administrative complaint with the Department of Fair Employment and Housing to enforce a FEHA claim. AB 1870 would have amended this deadline, extending it to three years to file a FEHA complaint from the date of the unlawful conduct. The bill would also add a 90-day extension to the filing deadline, which would apply if the aggrieved individual “first obtained knowledge of the facts of the alleged unlawful practice during the 90 days following the expiration of the applicable filing deadline.”

By vetoing this bill, the Governor has curbed the potential for frivolous FEHA lawsuits and the risk of lawsuits where memories of the circumstances giving rise to the claims have faded.

AB 3080 – Employment Discrimination: Enforcement

Governor Brown vetoed AB 3080, which would have prohibited employers from entering into arbitration agreements with employees. The passage of this bill would have directly conflicted with the U.S. Supreme Court’s May 2018 ruling in Epic Systems Corp., v. Lewis, 148 S. Ct. 1612 (2018), which affirmed employment arbitration agreements and class action waivers.

AB 3080 included four key provisions, including: (1) prohibiting arbitration agreements for wage and hour claims and discrimination, harassment and retaliation claims under the Fair Employment and Housing Act; (2) prohibiting employers from taking any employment action against employees who refuse to enter into arbitration agreements; (3) barring confidential agreements regarding harassment (possibly in the context of a settlement as well although the proposed text was not clear as to the scope of the prohibition); and (4) opening the possibility for individual liability for anyone that violates the provisions of the bill.

AB 3081 – Employment: Sexual Harassment

Governor Brown vetoed AB 3081, which broadly attempted to address workplace harassment by issuing three major prohibitions:

  • First, employers and labor contractors would be jointly liable for all civil liability for sexual harassment, including harassment on the basis of pregnancy, childbirth or related conditions. They would be forbidden from retaliating against employees who file claims.

  • Second, AB 3081 would have amended the California Labor Code to prohibit employers from discriminating or retaliating against an employee because of his/her status as a victim of sexual harassment.

  • Third, the bill would create a rebuttable presumption of unlawful retaliation if an employer “discharges, threatens to discharge, demotes, suspends, or in any manner discriminates against” an employee within 30 days after the employer has acquired actual knowledge of the employee’s status as a sexual harassment victim.

The fact that Governor Brown vetoed this bill is not particularly surprising given that he has expressed reluctance to expand concepts of joint liability in the past. However, this decision is still notable given the momentum of the #me-too movement.

TAKEAWAYS

California employers should consider these new laws when negotiating settlement agreements and engaging in litigation.  These laws serve as reminder of how important it is for all employers to review and revise where necessary their anti-harassment, discrimination, and retaliation policies on a more frequent and consistent basis. Importantly, employers may continue using arbitration agreements with class action waivers.

 

Copyright © 2018, Sheppard Mullin Richter & Hampton LLP.

Equal Pay Act Claim Requires Show of Pay Disparity “Based on Sex” as Part of Prima Facie Case, Court Holds

Departing from other federal appeals courts, the U.S. Court of Appeals for the Federal Circuit has held that Equal Pay Act plaintiffs must establish that the pay differential between similarly situated employees is “historically or presently based on sex” to make out a prima facie case.

In Gordon v. U.S., No. 17-1845 (Fed. Cir. Sept. 7, 2018), two female emergency room physicians employed by a Veterans Administration hospital alleged they were underpaid compared to male emergency room physicians. Their pay discrimination claim related primarily to one male physician who was hired at the same time they were hired at the same pay rate in the same position, but he received a pay increase one year after they were hired that the female plaintiffs did not receive.

To state a claim of an EPA violation, an employee must show the employer:

  • Paid employees of opposite sexes different wages;

  • For substantially equal work;

  • In jobs that require substantially equal skill, effort, and responsibility; and

  • That are performed under similar working conditions.

If an employee provides evidence establishing each of these elements, the burden shifts to the employer to prove the pay disparity is justified under one of four affirmative defenses: (1) a seniority system; (2) a merit system; (3) a pay system based on quantity or quality of output; or (4) any factor other than sex.

Here, the employer argued that the plaintiffs had not established a prima facie case and that, even if they had, the pay differential was justified under the “factor other than sex” affirmative defense. The Court, which hears appeals involving federal employee EPA claims, held that the plaintiff doctors must meet an additional requirement to establish their prima facie EPA violation:

To make their prima facie case, however, [the doctors] must also establish that the pay differential between the similarly situated employees is “historically or presently based on sex.”

Id. at 9-10. The Court held that the plaintiffs could not make this showing and that the employer was entitled to summary judgment on this basis alone. Notably, the Court held the employer had not introduced sufficient evidence to establish the “factor other than sex” affirmative defense. Id. at 10 n. 4.

The holding was based on a prior ruling, Yant v. United States, 588 F.3d 1369 (Fed. Cir. 2009). Judge Reyna wrote the panel decision, but also wrote separately to express the view that Yant should be overturned because the additional requirement improperly shifts the burden of proof in a manner inconsistent with the text of the EPA and Supreme Court precedent. Judge Reyna also notes that no other Circuit Court of Appeals requires this additional showing as part of the prima facie case. Id. at 17.

 

Jackson Lewis P.C. © 2018
This post was written by F. Christopher Chrisbens of Jackson Lewis P.C.