Pay Final Wages On Time

A recent $18.5 million settlement points up the potential liability for employers who do not promptly pay departing employees all wages owed. The settlement with the corporate owner of Albertson's, Lucky Stores and Sav-on Drugs, allocates $15 million for compensation of approximately 200,000 class members and $3.5 million for attorney's fees and costs. Ward v. Albertson's, Inc., Case No. BC237646 (Apr 14, 2008).

Liability hinged on Labor Code section 203, which provides that all final wages are due on an employee’s last day of work, except that if the employee quit with less than 72 hours notice before their last day of work, all final wages are due within 72 hours of the employee giving notice. Failure to pay on time results in a penalty of an additional day's pay at the regular rate of pay for every day the employee had to wait. In addition, section 227.3 provides that an employer who offers paid vacations must pay all vested vacation at the departing employee's final rate, if there is no collective bargaining agreement.

The notice of intended settlement, which describes the details of the settlement, is available here.

Meal Periods Mandatory?

One of the California Courts of Appeal has rejected the common wisdom about the meal period rule. While other courts and the Labor Commissioner have ruled that employers must ensure (that is, force) employees to take their 30-minute meal periods, the San Diego Division of the Fourth District has ruled it sufficient for employers to make meal periods available. There is no need to police employee compliance. Brinker Restaurant Corp. v. Superior Court, 165 Cal.App.4th 25 (2008) (ruling on a class certification motion by restaurant workers).

The Law

California Labor Code section 512 bars employers from having an employee work more than five hours without providing the employee with a meal period of not less than 30 minutes. The wage orders promulgated by the Industrial Welfare Commission mimic that provision. See, for example, IWC Order No. 5, page 7, section 11, which was applicable in this case. The statute and the wage orders also provide that the meal period may be waived by mutual consent of the employer and the employee if the work period is less than six hours.

Earlier Interpretations

The limitation of the express waiver provision to work periods of less than six hours had led the Labor Commissioner and at least one Court of Appeal to conclude that employers had an obligation to police the meal period provision. In a January 2002 opinion letter, the Labor Commissioner stated that employers had an "affirmative obligation" to ensure that employees were relieved of all duty. In Cicairos v. Summit Logistics, Inc., 133 Cal.App.4th 949 (2005), the Third District Court of Appeal in Sacramento quoted the language from the opinion letter. As a result, many lawyers have advised their employer clients to "ensure" that their employees take meal periods.

The Brinker Case

The Brinker court, relying on recent decisions from federal district courts in California, rejected the common wisdom, and ruled that there was no duty to ensure that employees take meal periods. It looked to the Merriam-Webster Collegiate Dictionary definition of "provide" to conclude that it is sufficient for employers to make meal periods "available."

UPDATE > While the Brinker case is good news for employers, it will not be the final word. The California Supreme Court granted review of the decision on October 22, 2008. That depublished the opinion from the official reports, and makes it no longer citable. It may take up to two years to get a final decision from the Supreme Court.

The Department of Labor Standards Enforcement has revised its Enforcement Manual (see Section 45-2-1 on page 45-4) to account for the Brinker decision. This should still be persuasive while we await final word from the Supreme Court.

Disability Pitfalls for Employers

A recent decision from the California Court of Appeal in San Francisco demonstrates how hard employers must work to avoid liability under the disability discrimination laws. The Court ruled that the plaintiff employee was entitled to a trial on her disability claims because there was some evidence that the employer had not tried hard enough to accommodate her disability. Nadaf-Rahrov v. Neiman Marcus Group, Inc., Case No. A114016 (Cal. Ct. App. 9/10/2008).


Facts


Forough Nadaf-Rahrov was a clothes fitter for Neiman Marcus. She developed carpal tunnel syndrome in both hands and osteoarthritis in her fingers. Her doctor certified that she was unable to perform work of any kind, and she went out on Family and Medical Leave Act leave. After she exhausted her FMLA entitlement, Neiman Marcus extended her leave, and asked her to call when she was released to return to work. That would permit Neiman Marcus could look for alternative vacant positions in the San Francisco store where she worked.

On June 28, 2004, Nadaf-Rahrov's doctor wrote that she "may be able to return to work on 8/19/04 but not in her previous position." On July 14, 2004, Neiman Marcus terminated her employment. The human resources manager noted that Nadaf-Rahrov did not have a release from her doctor to perform work of any kind, and believed that the employee's condition was unlikely to change in the near future.


Analysis


The trial court granted summary judgment dismissing Nadaf-Rahrov's claims for (1) disability discrimination, (2) failure to accommodate and (3) failure to engage in an interactive process, but the Court of Appeal reversed.


1. The disability discrimination laws prohibit an employer from discharging a disabled employee who is able to perform the essential functions of her existing position, or of any vacant position for which she is qualified. There was a disputed issue of fact because the employee's doctor said his initial certification only meant that she could not do her existing job, and was not meant to foreclose all work. There was evidence of vacant positions that only required office work.


2. With respect to accommodation, the Court adopted the federal rule that Nadaf-Rahrov had the burden of proving that she could perform the essential functions of an available job with accommodation. It disagreed with a contrary rule adopted in Bagatti v. Department of Rehabilitation, 97 Cal. App. 4th 344 (2002).


3. The Court also adopted the federal rule on the interactive process claim, which requires the employee to prove that the employer did not interact in good faith and that a reasonable accommodation was available. There was evidence from which a jury could conclude that Neiman Marcus caused a breakdown in the interactive process by refusing to provide information about available positions that might have assisted Nadaf-Rahrov in preparing a list of her work-related medical restrictions.


What The Case Means For Employers

This case highlights the importance of care and precise documentation when dealing with disability issues. Employers should

1. Make sure that there is an up-to-date written job description for every position.

2. When an employee says that a physical or mental condition is making it difficult to perform his or her job, provide as much information as possible about vacant positions.

3. Insist on precise medical opinion about the employee's ability to perform the essential functions of vacant positions.

4. Rather than discharge an employee who has been out on medical leave for an extended period of time, let the employee remain in a leave status, and address the issue of whether there is a job available when a doctor certifies the employee's ability to return to work.

Whistleblower Protection for Consumer Product Complaints

A federal statute that became law on August 14 provides remedies against employers for employees who suffer adverse employment action for having complained about unsafe consumer products made or sold by their employer. The Consumer Product Safety Improvement Act of 2008 establishes an administrative complaint procedure backed by the possibility of a civil lawsuit if the agency does not act.

The protection is limited to employees of manufacturers, private labelers, distributors and retailers. It prohibits such employers from discharging or otherwise discriminating against employees who provide the federal government or a state attorney general with information about a violation of any law enforced by the federal Consumer Product Safety Commission, or who participate in a proceeding concerning such a violation, or who objected or refused to participate in any activity that the employee reasonably believes is a violation.

The Commission is concerned with "consumer" products, which means products (i) for sale to a consumer for use in or around a permanent or temporary household or residence, a school, in recreation, or otherwise, or (ii) for the personal use, consumption or enjoyment of a consumer in or around a permanent or temporary household or residence, a school, in recreation, or otherwise, but does not include on-road motor vehicles, boats, aircraft, food, drugs, cosmetics, pesticides, alcohol, tobacco, firearms, and medical devices.

According to the Department of Labor, the enforcement agency for the whistle blower provision, "otherwise" discriminating includes laying off, blacklisting, demoting, denying overtime or promotion, disciplining, denying benefits, failing to hire or rehire, intimidation, reassignment affecting promotion prospects and reducing pay or hours.

A person who believes that his or her employer has violated the new whistle blower provision may file a complaint within 180 days with the closest OSHA office (the responsible bureau within the Department of Labor). If the OSHA office determines that there was a violation it may order reinstatement with the same seniority and benefits, payment of back pay with interest, and compensatory damages, including compensation for special damages, expert witness fees, and reasonable attorney's fees. The losing party may seek a hearing before an administrative law judge, from which there is one administrative appeal.

A party dissatisfied with the final result may obtain review of the Department's decision in the United States Court of Appeals for the circuit in which the violation occurred. The employee may file a civil action in federal district court if the Department does not issue a final order within 210 days from the filing of the complaint, or within 90 days after issuance of a written determination by the OSHA office.

Although the statute does not say so directly, the administrative enforcement procedure appears to be the exclusive means for a private party to seek relief for a whistle blower violation.

The full text of the new statute is available at the Consumer Product Safety Commission website. Further information about enforcement is available at OSHA's Office of the Whistleblower Protection Program.