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Time to revise those handbooks!

The turkey is done, the tree is up, the lights are hung. Time to turn to that other year-end festivity: revising your employee handbooks to track new laws. And the stockings are pretty full for California employers this year. So pull the policies off the shelf, dust them off, and get them updated. Pronto.

Here’s the rundown:

Most of these changes are effective January 1, 2012. Some have already happened. The clock is ticking, and I’m not talking about the ball dropping in Times Square.

While you’re doing all these revisions, give some serious thought to training, too. A handbook or procedure manual is useless if your supervisors and HR personnel don’t know what’s in it and how to apply it properly. In fact, one of the things the plaintiffs’ bar likes best is pointing out how the real-world practice in the workplace differs from the policies the employer has imposed. An investment in an annual refresher course would be money well spent. Or better yet, hire someone (like, ahem, your humble author), who includes a training session with each handbook or policy revision project. Heck, while we’re plugging, might as well point out the risk management benefits of an annual employment practices audit, to confirm what you’ve got right and improve what you could do better — hopefully before the class action gets filed and you’ve got two sets of lawyers (yours and the plaintiffs’) to pay.

Give your business the year-end gift that keeps on giving — employment liability mitigation. (Sure, jewelry sounds better, but believe me, the exposure is much more expensive if you don’t keep a lid on it.) Get your policies updated, and your managers trained on the changes, as soon as possible.

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California employers — Get those commission agreements in writing!

AB 1396, one of many new employment laws approved last month by Governor Jerry Brown, imposes a new requirement on employers paying commissions — get it in writing!

The law, which by its terms becomes effective on January 1, 2013, states “whenever an employer enters into a contract of employment with an employee for services to be rendered within this state and the contemplated method of payment of the employee involves commissions, the contract shall be in writing and shall set forth the method by which the commissions shall be computed and paid.” An executed copy of the agreement must be provided to each affected employee, and the employer must get a signed receipt from the employee. “Commission” is broadly defined as “compensation paid to any person for services rendered in the sale of such employer’s property or services and based proportionately upon the amount or value thereof.”

What happens to employers who don’t comply? No penalties are specified in the law for violations. But not so fast. Labor Code violations can result in penalties under California’s Private Attorneys General Act (PAGA, aka “Sue Your Boss Act”). They may also constitute unfair business practices. Either way, a non-compliant employer can be looking down a pretty unattractive road.

For most cautious employers, complying with AB 1396 should be relatively easy. That’s because most cautious employers’ even more cautious employment counsel have been telling them to use written commission agreements for years. This is a law most likely to trip up smaller or mid-sized businesses without dedicated HR staff. In other words, the ones least likely to be able to afford a regulatory audit or a class action from the plaintiff’s bar.

So make your first New Years resolution for 2013 today. Get those commission agreements in writing.

Employment Law Blog Carnival — Thanksgiving edition

Just in time for Thanksgiving, here comes the latest smorgasbord of entertaining, informative, insightful, and densely nutritious tidbits from the best er, cooks in the employment law blogosphere. And best of all, it’s all pot luck, so the only thing your humble host has to do is line ‘em up on the buffet and ring the dinner bell. Come on in, pull up your chair, crack open your favorite beverage, unbutton your pants, and dig right in! (Don’t forget to save room for pie.)

Appetizers, to whet the appetite. Go on, take a few!

From Robert Fitzpatrick, Fitzpatrick on Employment Law, a delicious morsel on why an NLRB ALJ can conclude evidence is not privileged, but only a real judge can order it produced.

A tasty reality check on sexual harassment (yes, Virginia, there is — oh, wait, that story is for next month), courtesy of Donna Ballman at Screw You Guys, I’m Going Home.

Andrea Paris, of Andrea Paris Law, serves up some unpaid internship do’s and don’ts for the California employer crowd. Good stuff!

Turkey, ham, tofurkey, turducken — whatever is your pleasure — and all the trimmings. Mom says you have to try at least a bit of everything.

Robin Shea, of Employment and Labor Insider, dishes on some common, and big, problems with sexual harassment suits.

Eric Meyer, of The Employer Handbook, brings a steaming plate of hostile work environment gospel — it ain’t all about motive — get it while it’s hot!

From Heather Travar, a spicy melange of American Jobs Act legislative info. Try it all together, or piece by piece, like they do it in DC.

This year’s newest recipe, from George Lenard at George’s Employment Blawg: All about the Occupy movement through the labor law lens. Bound to be a new fave!

Grab a slice or two of this delicious number on firing shareholder/employees — it’s not as easy as you think, prepared by Adam Whitney, of Damned If. Don’t miss the gravy.

And Heather Bussing of HRExaminer reminds us that it just wouldn’t be Thanksgiving without a little bit of family (or employee) drama.

Did I mention pie?

A sweet entry from Jon Hyman, of Ohio Employer’s Law Blog, about the fine legal distinction between a “d*ck” and a “f***tard.” I’d say don’t forget the whipped cream, but I’m already worried what the search engines are going to do with that one.

From Daniel Schwartz, the Connecticut Employment Law Blog, get some how anger spices up employment suits. Prepared without power, no less! That’s some good cookin’, folks!

Ari Rosenstein of CPEhr’s Small Biz HR Blog serves up this fresh dish on California’s crackdown on fake independent contractors – with a graham cracker crust, natch.

Man, I’m stuffed! Nap time. Who’s doing the dishes?

California court: No individual liability for discrimination against service members

A little-known statute in California, Military and Veterans Code section 394, prohibits employers from discriminating against members of the armed forces in employment settings. That’s not news to California employers (or at least it shouldn’t be). What is news, however, is that for the first time a California court has held that only employers are liable for that kind of discrimination. As is the case in other types of discrimination, individual supervisors doing the discriminating face no personal liability. (Which isn’t to say that supervisors should rush out and do it, of course.)

The case is Haligowski v. Superior Court. Lieutenant Mario Pantuso was employed by Safway Services when he was called to active duty with the Navy. When he returned from his six-month tour of duty, he asked Safway for his job back. The employer’s response, communicated by Pantuso’s supervisor Mike Haligowski and regional manager Greg Chomenko, seemed to imply that Lt. Pantuso should go pound some of the sand he saw while serving in Iraq. Pantuso sued Safway, Haligowski, and Chomenko for discrimination and retaliation under section 394. The individuals argued the case should be dismissed as against them because section 394 proivded no basis for individual — as opposed to employer — liability

Here’s what section 394 says:

No person shall discriminate against any officer, warrant officer or enlisted member of the military or naval forces of the state or of the United States because of that membership. No member of the military forces shall be prejudiced or injured by any person, employer, or officer or agent of any corporation, company, or firm with respect to that member’s employment, position or status or be denied or disqualified for employment by virtue of membership or service in the military forces of this state or of the United States. . . .

No employer or officer or agent of any corporation, company, or firm, or other person, shall discharge any person from employment because of the performance of any ordered military duty or training or by reason of being an officer, warrant officer, or enlisted member of the military or naval forces of this state. . . .

The trial court judge, a literalist, held that “based on the plain language of California Military and Veterans’ Code [section] 394, the individual defendants are subject to liability” because “person means person.”

The slightly more nuanced court of appeal disagreed.

[W]e perceive two possible constructions of the use of the words “person” and “agent” in section 394. The first, as Pantuso argues and as the trial court ruled, is that the Legislature intended to hold individual supervisors personally liable for discrimination under this statute. The second possible construction is that, as is generally accepted in other employment discrimination contexts such as the FEHA, that the use of the word “agent” and “other person” was “ ‘intended only to ensure that employers will be held liable if their supervisory employees take actions later found discriminatory, and that employers cannot avoid liability by arguing that a supervisor failed to follow instructions or deviated from the employer’s policy.’” (Reno v. Baird (1998) 18 Cal.4th 640, 647 (Reno), quoting Janken v. GM Hughes Electronics (1996) 46 Cal.App.4th 55, 66 (Janken).)

The court went on to hold that “person” does not mean “individually liable person” within the meaning of section 394. Strongly supporting the court’s holding were the California Supreme Court’s pair of decisions interpreting similar statutory language from FEHA, and holding individual supervisors were not liable for discrimination or retaliation. (The cases are Reno v. Baird and Jones v. Torrey Pines Partnership.) In addition, the court noted that, because discrimination claims often arise from “necessary personnel management duties,”

holding a supervisor individually liable for personnel management decisions which are facially common and unremarkable, but which may in hindsight be considered discriminatory would place a supervisory employee in a direct conflict of interest with his or her employer every time that supervisory employee was faced with a personnel decision. The [supervisor] would be placed in the position of choosing between loyalty to the employer’s lawful interests at severe risk to his or her own interests and family, versus abandoning the employer’s lawful interests and protecting his or her own personal interests. We believe that if the Legislature intended to place all supervisory employees in California in such a conflict of interest, the Legislature would have done so by language much clearer than that used here.

Supervisors and HR personnel can breathe a small sigh of relief with this decision — but even so, as the Haligowski court noted, supervisors may be personally liable for discrimination against military personnel under federal law. Employers, however, remain “the plaintiff employee’s target” (as the Haligowski court put it) for discrimination and retaliation. Employers should be aware of section 394, and USERRA and other protections for military personnel, and the potential liability for stiffing returning service members.

Sharpen your blue pencils — changes coming to California employment laws

The California legislative calendar is officially closed for 2011. And just as predicted, it was an active one, with both houses of the legislature and the Governor’s office controlled by Democrats. I wrote about some of the earlier-approved new laws here. Here’s the lowdown on the rest of the bills that made it all the way through the sausage maker, and what they mean for California employers.

Credit reports:  AB 22 prohibits employers from using employee or applicant credit reports for most purposes. Exceptions apply to certain jobs, generally limited to those which (1) are managers; (2) have access to the employer’s or clients’ money; (3) have access to personal information of others; or (4) have access to proprietary information. The law specifies that employers who request credit reports must tell the candidate or employee the specific reason the report was requested. Employers who rely on credit inquiries in hiring or promotion will need to revise their policies accordingly.

Wage order compliance, penalties, and information for employees:  AB 469, aka the Wage Theft Prevention Act of 2011, does a number of things, none pleasant for employers. First, it imposes a restitution obligation on an employer (in addition to already existing civil penalties) who pays less than required under any commission order, and criminalizes (as a misdemeanor) willful violation of the commissioner’s orders. Second, it extends from one year to three years the statute of limitations on claims by the Labor Commissioner for statutory penalties. (Can a similar extension of private litigants’ claims be far behind?) Third, it requires employers to provide specific wage-related information to non-exempt employees at the time of hire, including the rate and the basis (i.e., hourly, salary, commission, piecework, etc.) of the employee’s wages, and to provide written notice of any changes to that information within 7 days of the change occurring. Employers will need to work fast to come up with new procedures to comply with these notice requirements for new hires as well as existing hourly employees whose rates change.

Gender expression a protected class:  AB 887 expands the definition of “gender” in California’s anti-discrimination laws to include “gender expression,” a person’s gender-related appearance and behavior whether or not stereotypically associated with the person’s assigned sex at birth. This new law adds to the already long list of protected classes under California law, and expands the potential victims of unlawful discrimination and harassment accordingly. Employers will need to include this new class in anti-discrimination and anti-harassment policies, and train supervisors and HR accordingly.

No mandatory E-Verify:  AB 1236 prohibits the state or any city or county from mandating use of federal E-Verify program, except when federal law requires its use.  California employers may still use E-Verify voluntarily.

Benefits during pregnancy leave:  SB 299 requires employers to maintain health plan coverage for an employee who takes pregnancy disability leave.  Women disabled as a result of pregnancy are entitled to up to four months of unpaid leave. (It’s California; we do things different here.) The new law makes clear employers will need to keep paying premiums during this period. Employers will need to amend their policies to include this new provision in their handbooks’ (mandatory) description of pregnancy disability leave, and ensure compliance through appropriate internal procedures.

Misclassification of employees as independent contractors:  SB 459 prohibits willful misclassification (“avoiding employee status . . . by voluntarily and knowingly misclassifying [an] individual as an independent contractor” — not much help in that definition) of individuals as independent contractors (ICs). It also prohibits deducting from a misclassified individual’s compensation deductions that couldn’t be taken from an employee’s wages. The law authorizes civil penalties between $10,000 and $25,000 for each violation. Finally, it imposes joint and several liability with the employer of anyone who knowingly advises the employer to misclassify an employee as an IC. (Wait a minute — what?! Oh, whew, lawyers are exempt.) Call it another reason for employers — and now their payroll and HR consultants — to err on the side of caution in the IC/employee debate.

The governor did nix a few troublesome bills (including one attempting to mandate bereavement leave described here), but by and large this session was a pretty employee- and labor-friendly affair.

All of these laws become effective on January 1, 2012. That’s a lot of handbook revision, policy and procedure review, and training in the next two and a half months. And with Harris v. Superior Court under submission and Brinker Restaurant Corp. v. Superior Court set for hearing in early November, it’s going to be Easter before anyone in HR or the employment bar gets any rest.

California Supreme Court clearing the employment law backlog

In September, we got news that the now fully-staffed California Supreme Court had finally got around to putting Harris v. Superior Court on the hearing calendar. Now it’s Brinker Restaurant Corp. v. Superior Court, the case that launched a million “when are they going to…” complaints by employment lawyers on both sides of the aisle. The Supreme Court has announced that it will hear Brinker on November 8, 2011.

So mark your calendars — B-day (get it?) is January 8, 2012, just about the time that all those new employment laws (part 1, part 2) take effect. That’s the last day by which the opinion should be filed. But then again, I guess another delay wouldn’t be too surprising, would it?

California Supreme Court sets hearing in exemption case

The California Supreme Court has finally got around to setting a date for oral argument in a long-pending wage and hour case. No, not that one. In Harris v. Superior Court, the court will be looking at the administrative exemption under California law, and especially whether the “administrative/production worker dichotomy” has any continuing vitality under California law.

The specific question presented in Harris is whether insurance claims adjusters are exempt from overtime requirements under the administrative exemption. The administrative exemption generally applies to employees who perform “non-manual work directly related to management policies or general business operations” of the employer or the employer’s customers. The court of appeal held that that claims adjusters did not perform “general business operations,” but instead did the “production” work involved in running an insurance company:

[W]ork performed at the level of policy or general operations can qualify as “directly related to management policies or general business operations.” In contrast, work that merely carries out the particular, day-to-day operations of the business is production, not administrative, work. That is the administrative/production worker dichotomy, properly understood. . . .

The undisputed facts show that plaintiffs are primarily engaged in work that falls on the production side of the dichotomy, namely, the day-to-day tasks involved in adjusting individual claims. They investigate and estimate claims, make coverage determinations, set reserves, negotiate settlements, make settlement recommendations for claims beyond their settlement authority, identify potential fraud, and so forth. None of that work is carried on at the level of management policy or general operations. Rather, it is  all part of the day-to-day operation of defendants’ business.

Since the Supreme Court granted review of that decision, there have been additional cases addressing the administrative exemption, and the administrative/production worker dichotomy. Some of these cases stepped back from the rigid position the court of appeal took in Harris.

Oral argument in Harris is going forward on October 3. So soon, after a four year wait, we will know at last what the Supreme Court’s take on the subject is — and perhaps where the emerging Cantil-Sakauye Supreme Court stands on employment issues. (See here and here for other thoughts on where the Court seems to be going with employment cases.)

Hey, it’s not Brinker, but at least it’s something!


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