Friday, August 15, 2014

California Employers Must Pay Employees for Required Use of Personal Cell Phones

According to a recent Court of Appeal decision, Labor Code section 2802 requires employers to reimburse employees who must use their personal cell phones for work-related calls. Cochran v. Schwan's Home Service, Inc., Case No. B247160 (Aug. 12, 2014).

Section 2802 provides: "An employer shall indemnify his or her employee for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties, or of his or her obedience to the directions of the employer, even though unlawful, unless the employee, at the time of obeying the directions, believed them to be unlawful." Labor Code section 2804 makes any agreement by which an employee purports to give up the right to indemnification null and void.

Prachasaisoradej v. Ralph's Grocery Co., 42 Cal.4th 217 (2007) illustrates the outer boundaries of the requirement. The plaintiff in that case challenged a profit sharing plan that provided employees with additional compensation based on a store's profits after deducting operating expenses. The Supreme Court upheld the plan against the argument that employee pay was being reduced by expenditures that were the employer's responsibility. "The Plan was not illegal, we conclude, simply because, pursuant to normal concepts of profitability, ordinary business expenses, such as storewide workers' compensation costs, and storewide cash and merchandise losses, were figured in, along with such other store expenses as the electric bill and the cost of goods sold, to determine the store's profit, upon which the supplementary incentive compensation payments were calculated. By doing so, Ralphs did not illegally shift those costs to employees. After fully absorbing the expenses at issue, Ralphs simply determined what remained as profits to share with its eligible employees in addition to their normal wages."

In the Cochran case, the Court of Appeal explained that the test for determining whether the employer must reimburse is not whether the employee incurred an added expense, but whether the employer, in the absence of reimbursement, "would receive a windfall because it would be passing its operating expenses onto the employee." Even though employees might have cell phone plans that did not require them to pay for the minutes of usage devoted to the employer's purpose, the employer was not entitled to the "windfall" of not paying for those minutes on its own.

Monday, August 4, 2014

Are Franchisors Joint Employers With Their Franchisees

The recent announcement by the NLRB's Office of the General Counsel that it has authorized complaints against McDonald's USA for NLRA violations allegedly committed at franchised restaurants raises the general issue of potential franchisor liability for labor and employment violations by their franchisees. Reported decisions on the subject are scarce. In two cases decided over 45 years ago, the NLRB refused to find that a franchisor was a joint employer. Speedee 7-Eleven, 170 N.L.R.B. 1332 (1968) and S.G. Tilden, Inc., 172 N.L.R.B. 752 (1968). If any of the current complaints proceed to adjudication, the NLRB, and then the federal courts, will determine whether the NLRA's definition of employer includes franchisors.

The issue has arisen under . For example, the California Supreme Court has under review a Court of Appeal decision holding that Domino's could be held liable for sexual harassment by one of its franchisee's employees. The case was argued in June 2014. A decision is due by the end of September. Patterson v. Domino's Pizza, LLC, Case No. S204543.

Employees have also sought to hold franchisors liable for wage and hour violations by franchisees. For example, earlier this year, class action lawyers in California, New York and Michigan filed lawsuits claiming that McDonald's was responsible for wage and hour violations by its franchisees.

For a newspaper columnist's view on the issue, see the LA Times Michael Hiltzik's column "The NLRB-McDonald's ruling could be the beginning of a franchise war."

Tuesday, July 29, 2014

Pregnancy-Related Conditions As Disablities

Recent developments in California and federal law make clear that employers are going to have to consider reasonable accommodations under the disability laws for pregnant women who have impairments related to their pregnancies. Such accommodations may include unpaid time off or assignment to a light duty position while the pregnant employee is unable to perform her usual job duties.

In the not too distant past, the common wisdom was that pregnancy was not considered a disability. See, for example, Gorman v. Wells Mfg. Corp., 209 F. Supp. 2d 970 (S.D. Iowa 2002), aff'd, 340 F.3d 543 (8th Cir. 2003) (periodic nausea, vomiting, dizziness, severe headaches, and fatigue were not disabilities within the meaning of the ADA because they are "part and parcel of a normal pregnancy" and are "short-term").

More recently, federal and state law have moved toward recognition of impairing conditions caused by pregnancy as disability. At the federal level, the amendment of the Americans with Disabilities Act to make clear that temporary conditions may be disabilities has led the EEOC and several courts to conclude that temporary limitations caused by pregnancy are disabilities requiring accommodations. See EEOC Enforcement Guidance on Pregnancy Discrimination and Related Issues (July 14, 2014) and the cases cited at footnotes 149 and 150 through 154.

In California, the Department of Fair Employment and Housing's regulations state that a woman who has a disability resulting from pregnancy may be entitled to leave under the disability provisions of the Fair Employment and Housing Act. 2 CCR § 11047. Last year, the Second District Court of Appeal in Los Angeles ruled that a pregnant woman who had exhausted her four-month leave entitlement under the Pregnancy Disability Leave Law could nonetheless pursue a claim under the Fair Employment and Housing Act for failure to accommodate. Sanchez v. Swissport, Inc., 213 Cal. App. 4th 1331 (2013).

A right to unpaid leave as a reasonable accommodation would be in addition to the leave rights that pregnant women already have under the federal Family and Medical Leave Act (up to 12 weeks) and the California Pregnancy Disability Leave Law (up to four months while disabled by pregnancy).

Monday, July 21, 2014

California court confirms employers may deduct from exempt employee leave banks

The San Diego division of the Court of Appeal has confirmed that California employers may deduct from exempt employee leave banks for partial-day absences, without destroying the employee's exemption.

General Atomics provided its employees with a set amount of paid annual leave determined by the employee's length of service. Employees could draw upon the paid leave for absences caused by illness, vacation, and personal and family obligations. The company deducted from the accumulated leave for any partial-day absences. Lori Rhea filed a lawsuit challenging the company's practice as a violation of the salary-basis requirement for several recognized exemptions from the wage and hour laws. The Court of Appeal rejected her argument. Rhea v. General Atomics, Case No. D064517 (Jul. 21, 2014).

It is a requirement of many of the exemptions under federal and state law that the employee earn a salary, which means the receipt of a pre-determined amount per pay period that "is not subject to reduction because of variations in the quality or quantity of the work performed." Kettenring v. Los Angeles Unified School District, 167 Cal.App.4th 207 (2008). Rhea argued that her employer's practice resulted in her not receiving a salary, because unauthorized deductions from her leave bank for partial-day absences constituted a forfeiture of wages that she had earned. The Court of Appeal rejected the argument, because the employer was not taking away something that Rhea had earned. It was just applying the rules it had established for how Rhea could enjoy the fruits of what she earned.

The Court of Appeal in San Francisco reached the same result in Conley v. Pacific Gas & Elec. Co., 131 Cal.App.4th 260 (2005). Rhea sought to distinguish that case because PG&E had only deducted for partial-day absences that exceeded four hours. The Rhea Court could see no basis in California law for distinguishing among partial-day absences based on the length of the absence.

The California rule stated in Conley and Rhea matches the interpretation of federal law that the Department of Labor stated in a January 19, 2009 opinion letter, and the interpretation of California law that the Labor Commissioner stated in a November 23, 2009 opinion letter.

Tuesday, July 15, 2014

Minimum Wage On The Rise

Pressure is mounting at the national, state and local levels to boost the minimum wage. There is pressure on the Los Angeles City Council to raise the minimum for the City to $15. On July 14, 2014, the San Diego City Council took the first step toward raising the minimum to $11.50 by January 2017.

The federal minimum wage establishes a floor for the entire United States of of $7.25 per hour, but each state may establish its own minimum wage, as many have done. At the end of April 2014, sponsors of a bill to raise the federal minimum wage to $10.10 failed to obtain the votes necessary to allow the Senate to consider it.

The California minimum wage was raised to $9.00 per hour on July 1, 2014, and is scheduled to go to $10.00 per hour on January 1, 2016. California law allows local municipalities to set their own minimum wages. San Francisco has adopted a minimum wage ($10.74 per hour for 2014) that adjusts annually based on the regional consumer price index. San Jose has a similar ordinance, and a current minimum wage of $10.15 per hour. Because others will certainly follow, employers must monitor local legislative activity wherever they have employees to ensure that their wages meet local requirements.

A May 2012 post explored some of the details of the minimum wage.