Issue 3 - 2008

Federal Minimum Wage: Federal minimum wage is $6.55 per hour beginning July 24, 2008; and $7.25 per hour beginning July 24, 2009. (Bear in mind that employees in California are due the higher state minimum wage.

"Servicemember Leave" Under Federal Family and Medical Leave Act ("FMLA"): An employee who is otherwise eligible for FMLA leave who is the spouse, son, daughter, parent, or next of kin (nearest blood relative) of a "covered servicemember" is entitled to a total of 26 weeks of FMLA leave to care for the servicemember. A "covered servicemember" is a member of Armed Forces (including the National Guard or Reserves) who is undergoing medical treatment, recuperation, or therapy, or otherwise in outpatient status or on temporary disability retired list, for a "serious injury or illness". A "serious injury or illness" for the purposes of servicemember leave is an injury or illness incurred in the line of active duty that may render the member medically unfit to perform the duties of the member's office, grade, rank, or rating.

"Qualifying Exigency" Leave Under FMLA: An eligible employee may take up to 12 weeks of FML for any "qualifying exigency" arising out of the fact that the spouse, son, daughter, or parent of the employee is on active duty (or has been notified of an impending call or order to active duty) in the Armed Forces in support of a contingency operation. A "contingency operation" is defined as military actions, operations, or hostilities against an enemy of the U.S. or against an opposing military force, or results in the call or order to active duty during a war or national emergency. However, a "qualifying exigency" has not been defined yet, and the new provision providing leave for any qualifying exigency will not be effective until final regulations are issued defining the term "qualifying exigency."

American Disabilities Act ("ADA") Amendments Effective Jan. 1, 2009: The American with Disabilities Act Amendments Act of 2008 makes several changes to the definition of "disability" under the ADA. Although "disability" will still be defined as an impairment that substantially limits one or more major life activities, a record of such impairment, or being regarded as having such an impairment, the Act changes the way the terms should be interpreted. For example, the Act expands the definition of "major life activities" by adding activities (e.g., reading, bending and communicating), states that mitigating measures other than "ordinary eyeglasses or contact lenses" shall not be considered in assessing whether a person has a disability, and provides that an impairment that is episodic or in remission is a disability if it would substantially limit a major life activity when active.

Federal Contractors Required to Use E-Verify: Effective in January of 2009, federal contractors must use E-Verify, an internet based system rung by the U.S. Citizenship and Immigration Services, to verify the employment eligibility of all new hires and all persons performing working within the U.S. on the federal contract. E-Verify provides an automated link to federal databases to help determine eligibility and verify Social Security numbers.

New Form of Identification Accepted for I-9: The Departments of State and Homeland Security will be issuing "passport cards" which may be used as a "List A" document (documents to prove both identity and work authorization) to verify employment eligibility on the I-9 form.

DHS Publishes Final No-Match Rule - August 2007 Rule Not Substantively Changed.
In June 2006 DHS proposed a method for employers to limit the risk of being found to have knowingly employed unauthorized aliens after receiving a letter from the SSA-known as a "no-match letter''-notifying them of mismatches between names and social security numbers provided by their employees and the information in SSA's database, or after receiving a letter from DHS--called a "notice of suspect document"-that casts doubt on their employees' eligibility to work.

DHS published a final rule on August 15, 2007, setting out safe harbor procedures for employers that receive SSA no-match letters or DHS notices. Thereafter, various parties filed suit seeking to enjoin implementation of the August 2007 Final Rule in the United States District Court for the Northern District of California. The District Court issued a preliminary injunction and then stayed proceedings in the litigation pending the DHS addressing specific issues.

DHS published a supplemental notice of proposed rulemaking in March 2008 to address the specific issues raised by the court in the preliminary injunction order. After considering the full record, including the comments received in response to the supplemental notice of proposed rulemaking, DHS has made adjustments to the cost calculations in the Initial Regulatory Flexibility Analysis (IRFA) and prepared a Final Regulatory Flexibility Analysis (FRFA), finalized the additional legal analysis set out in the supplemental notice of proposed rulemaking, and determined that the rule should issue without change. Therefore this final rule republishes the text of the August 2007 Final Rule without substantive change. We cannot predict whether the new rule will survive the legal challenges in the pending District Court case.

DOL Issues New Final Regulations for FMLA
On November 17, 2008, the United States Department of Labor issued a new set of Final Regulations updating its Family and Medical Leave Act ("FMLA") Regulations. The new regulations become effective January 16, 2009; they regulations total over 700 pages, but some items are worthy of note:

1. Military Related FMLA Leave
   The new regulations interpret provisions of the recent amendments to the FMLA statute providing for certain military related leave, addressing what constitutes a "qualifying exigency leave". "Exigency" includes: short-notice deployment; military events and related activities; child care and school activities; financial and legal arrangements; counseling; rest and recuperation; post-deployment activities; and additional activities agreed to by the employer and employee.
2. Definitions of "Serious Health Condition"
   The new regulation does not change the same definition of "serious health condition" but provides additional guidance. For example, the definition of "serious health condition" requires an employee to be incapacitated for more than three calendar days plus "two visits to a health care provider." The two visits must occur within thirty days of the beginning of the period of incapacity and the first visit to a healthcare provider must occur within seven days of the first day of incapacity.

   The regulations also clarify the definitions of "serious health condition" -- requiring incapacity of more than three calendar days and continuing treatment by a healthcare provider. Under the new regulations, the employee's first visit to a healthcare provider must occur within seven days of the first day of incapacity. Additionally, for chronic serious health conditions, the employee must visit a healthcare provider at least twice per year.

3. Employer Notice
   Under the new regulations employers must provide employees with a general notice about the FMLA, an eligibility notice, a "rights and responsibilities" notice, and a designation notice.
4. Employee Notice
   Employees must give notice of unanticipated FMLA leave according to their employer's customary notice procedures, unless there are unusual circumstances. (Generally then, employees must report an absence before the start of their shift, if the employer has a policy requiring that.)
5. Medical Certification
   The regulations limit which persons from the employer may have contact with an employee's healthcare provider; the employee's direct supervisor may not ever make such contact. If an employer believes the medical certification incomplete or insufficient, it must specifically designate in writing what information is missing and give the employee seven days to cure the deficiency. The new regulations also provide that employers may request a new medical certification each leave year for conditions that last longer than a year.
6. Fitness for Duty
   The new regulations expand the information that an employer may require in a fitness for duty certification to address whether the employee can perform the essential functions of his or her job. Also, if an employer has reasonable concerns about an employee's ability to safely perform a job, the employer can require an employee to provide a fitness for duty certification before the employee may return to work from an absence while on intermittent leave.

State/San Francisco Minimum Wage: The San Francisco Minimum Wage will be $9.79 per hour as of Jan. 1, 2009, and state minimum wage was $8.00 hour as of January 1, 2008; there is no change to state minimum wage for January 1, 2009.

Changes to Computer Professionals Exemption (AB 10) (Amends Labor Code Section 515.5). Exempt computer professionals may now be paid an hourly rate of $36 per hour or an annual salary of $75,000, and the need for timekeeping has been eliminated if the employee is paid an annual salary. Employers paying their exempt computer professionals on an hourly basis must continue keeping track of their time. The changes have already gone into effect; however, the hourly rate and annual salary will increase with the Consumer Price Index on January 1, 2009.

Releasing Wage Claims or Rights (AB 2075)(Amends Labor Code Section 206.5): Employers may not require an employee to execute a statement of the hours he or she worked during the pay period which the employer knows to be false as a condition of being paid his or her wages.

Payment of Temporary Employees (SB 940) (Adds new Labor Code Section 201.3): Temporary staffing agencies may pay employees on a weekly basis, regardless of when the temporary assignment ends. Temporary employees must be paid daily, however, if they work on a day-to-day basis or if they are providing services for a client engaged in a trade dispute. A temporary employee's final wages must be paid according to existing law.

Prevailing Wage Rates: Wage and Penalty (SB 1352): Allows contractors and subcontractors who have received a wage and penalty assessment under public works law - as an alternative to becoming automatically liable for liquidated damages in specified circumstances - to establish an escrow account into which they may deposit amounts allegedly due workers.

No Texting While Driving (SB 28): Persons may not text, e-mail, or instant message while driving. A first offense will be a $20 fine and $50 fine for subsequent violations.

Benefits for San Francisco Commuters: A new law requires San Francisco employers with 20 or more employees to provide commuter benefits to employees who work 10 or more hours per workweek in San Francisco. Commuter benefits will include offering employees at least one of the following transportation benefits: (1) pre-tax election of a maximum of $110 per month, consistent with current federal law; (2) an employer-provided transportation pass (or reimbursement for one) equal in value to $45 (or more) per month; or (3) employer provided transportation at no cost to employees.

SF Health Care Security Ordinance (HCSO): The amount of required health care expenditures employers must provide to their employees working in San Francisco will increase as of January 1, 2009:

Heat Illness Prevention Regulation: Under Ca-OSHA heat illness prevention regulations, employers are required to take certain steps to prevent heat illness at all outdoor worksites, including providing heat illness training to all employees. The Department of Industrial Relations ("DIR") has issued a free guide to assist employers in training their supervisors and outdoor workers titled "The Hazards in Agriculture, A Guide for Employers", currently available in English and Spanish. Employers can download the booklet at the DIR Web site at http://www.dir.ca.gov under "What's New" or they can call (510) 622-3959 to have a copy mailed to them.

Evolving Law on Meal and Rest Periods
In July 2008, a Court of Appeal held in Brinker v. Restaurant Corp. that employers are not required to schedule an employee's meal period within the first five hours of their shift or before the employee's first rest period, are not required to provide a meal period after every five consecutive hours worked, and that, although employers are required to provide meal and rest periods and cannot prevent or impede employees from taking meal breaks, employers are not required to ensure that employees take them. The Brinker decision has been appealed and will be reviewed by the California Supreme Court.

In October 23, 2008, the California Labor Commissioner issued some guidance regarding meal and rest periods. The Labor Commissioner states the following: (1) employers must provide meal periods to employees but do not need to ensure that they are taken; (2) an employer's duty to provide meal periods is not satisfied merely by assuming meal periods have been taken (i.e., employer must facilitate employee meal breaks); and (3) meal periods must be provided within the first five hours of shift.

In October 29, 2008, another Court of Appeal held in Brinkley v. Public Storage that: (1) an employer cannot be liable for misstatements on paystubs unless it knowingly and intentionally makes such misstatements and employee suffer injury as a result; (2) that meal periods do not need to be provided within the first five hours of the shift; and (3) employers must provide meal periods but do not need to ensure that they are actually taken. Brinkley, however, may also be appealed.

City's "Living Wage" Enforceable Outside of City: In Amaral v. Cintas Corporation No. 2, a California Court of Appeal upheld Hayward's Living Wage Ordinance, which required city contractors to pay the living wage to employees who lived or worked outside of the city, and held the contractor (a laundry service) had breached its contract with city by failing to pay employees who performed some work under the city contract the higher wage.

Tip Pooling: In Chou v. Starbucks Corp., a California court awarded $105 million in damages to Starbucks' baristas because Starbucks' supervisors received part of their tips in violation of Labor Code Section 351 (prohibiting employers or agents of the employer from receiving any part of tips). An "agent" under Labor Code Section 351 includes "every person other than the employer having the authority to hire or discharge any employee or supervise, direct, or control the acts of employees." In addition, the DLSE clarifies that an employer or agent/supervisor cannot share in the tip pool, even if the employer or agent/supervisor provides direct service to a patron.

On Call Time as Work Time? In Isner v. Falkenberg/Gilliam & Associates, Inc., the Court held that resident employees were not owed compensation for time spent "on call", confined to certain areas of the employer's premises, that they were able to attend to personal matters while remaining available to emergency calls. The resident employees were entitled to compensation for time spent carrying out their assigned duties, such as responding to emergency calls.

No Personal Liability for Unpaid Wages: In Bradstreet v. Wong, the Court held that the individual owners of a corporation that declared bankruptcy, and failed to pay earned wages and accrued but unused vacation pay to its employees prior to filing bankruptcy, could not be held personally liable for the payment of wages. The Court noted that there was no evidence employees performed any services for the individual defendants personally or that the defendants misappropriated corporate assets.

Proximity In Time Between Complaint and Termination Alone Did Not Prove Retaliation: In Arteaga v. Brink's, the Court held that the employer did not discriminate or retaliate against an employee with an alleged disability when the employer fired the employee a few days after the employee first notified his employer that he was suffering from a work-related injury. The employee was terminated as a result of an investigation into misconduct that had begun before the employee complained about any alleged injury or disability.

"Preemptive" Retaliation: In Steele v. Youthful Offender Parole Board, the Court held the employer retaliated against a potential witness in a sexual harassment complaint by disciplining her, detrimentally changing her working hours, and suggesting that she resign rather than face further discipline and termination. The Court held the employer had retaliated against the employee in anticipation the employee would support the sexual harassment complaint, even though the employee had not yet provided any information in support of the complaint. In Steele, there was additional evidence supporting the plaintiff's claims that her discipline and change in her hours was improperly motivated-e.g., she was asked to sign a statement supporting the employer's defense to the sexual harassment prior to her resignation that contradicted what she had told the co-worker bringing the complaint.

CFRA - Second Job OK While On Leave!: In Lonicki v. Sutter Health Central, the Court found in favor of nurse who claimed her employer violated the California Family Rights Act when it demanded she return to work from her stress leave, and terminated her employment when she refused. The Court found that the fact the nurse was working as a nurse for a different hospital while she was on stress leave did not permit her employer to demand she return to work from her medical leave.

No Individual Liability for Retaliation: In Jones v. The Lodge at Torrey Pines Partnership, the Court held that supervisors cannot be held personally liable under the Fair Employment and Housing Act for retaliation based on discrimination.

Subjective Reasons for Termination Okay: In Hicks v. KNTV Television, Inc., a Caucasian news anchor sued for racial discrimination and wrongful termination when he was terminated and replaced by an African-American. The Court held the employer had presented sufficient evidence that the news anchor was terminated for his "aloof and distant style" rather than his race.

"Association With" Discrimination: In Setencich v. The American Red Cross, the Court denied a motion to dismiss a claim of discrimination based on the plaintiff's association with a disabled Red Cross employee that plaintiff alleged the Red Cross was attempting to "force out." The Court held that fact that the plaintiff had worked with the disabled Red Cross employee in the 1990's and occasionally interacted with him socially was sufficient to show "association with" for the purposes of a discrimination claim under FEHA.

Non-Compete Agreements Not Enforceable: In Edwards v. Arthur Andersen LLP, the court held that non-compete agreements that even partially or narrowly restrict an employee's ability to practice his or her trade or profession (e.g., prohibiting an employee from performing the same type of professional services for 18 months after the end of his employment) are prohibited under California law--the only enforceable noncompetition agreements are those that fall within a statutory exception (such as transactions involving the sale of a business).

Privacy in Text Messages? The court held in Quon v. Arch Wireless Operating Company that employees may have a privacy interest in their text messages (sent on company-provided cellular telephones) when company's policy regarding monitoring e-mails did not explicitly cover text messages and there was evidence that text messages were not monitored unless the employee refused to pay for "excessive" personal use. As employees had a reasonable expectation of privacy in their text messages, the Company could not review them without the employee's authorization.

Medical Marijuana Use- Not Protected: In Ross v. Ragingwire Tel., the California Supreme Court held that the employer did not discriminate against an employee on the basis of disability by terminating him for medical marijuana use.