Marie DiSante Participated In A Roundtable Discussion On Recent Employment Cases & Their Impact On The Law - Article Appeared In The August 2006 Issue Of California Lawyer

Marie D. DiSante, founding partner of Carothers DiSante & Freudenberger LLP, recently participated in a roundtable discussion on several employment cases and their impact on the law. This roundtable appeared in the August 2006 issue of the California Lawyer.

Roundtable discussion focuses on two recent disability accommodation decisions Raine v. City of Burbank; a case of first impression Gelfo v. Lockheed [click here for related article]; two sexual harassment decisions Lyle v. Warner Brothers Television [click here for related article], a California Supreme Court case, and EEOC v. National Education Association of Alaska, a Ninth Circuit Court decision; and the closely followed meal and rest break case Murphy v. Kenneth Cole Prod. [click here for related articles] pending before the state supreme court.

Further Revisions To California’s Required Sexual Harassment Training

Today, the Fair Employment & Housing Commission posted on its website the revised sexual harassment training and education regulations that it adopted in its August 29, 2006 meeting.

On August 29, 2006, the Commission adopted modified proposed regulations on Harassment Training and Education, interpreting Government Code section 12950.1 [A.B. 1825], which requires harassment training for supervisors of employers with 50 or more employees. The August 29, 2006, regulations modify earlier June 20, 2006 regulations, which this blog commented about here. The August revisions can be viewed at the Commission's website here.

The August revisions clarify the issues about who is qualified to design and teach the sexual harassment training, the frequency of training required for supervisors, and whether the sexual harassment training requirement applies to supervisors outside of California. The major revision made in the August proposed regulations clarify that supervisors who are located outside of California and supervise employees within California are not covered by the regulations. Therefore, supervisors located outside of California are not subject to the sexual harassment training requirements under the proposed regulations.

The other clarification made in June 2006 regarding which employees are counted within a company in order to determine whether a company has 50 employees remained unchanged. The proposed regulations state that for the purposes of counting the 50 employees, employees both inside and outside California should be counted.

Additionally, the language added in June that harassment training for an employee does not create an inference that that employee is a supervisor also remained in the proposed regulations. Furthermore, at the August 29th meeting, the Commission added language that a contractor who attends sexual harassment training will also not be inferred to be an "employee or a supervisor" for the employer providing the training. The Commission previously stated that it "does not want to discourage employers from offering two hours of harassment training to a variety of non-supervisory employees for fear that these employees might be construed to be supervisors on the sole basis that they had received harassment training."

On October 2, 2006,the Commission will decide whether to adopt the August 29, 2006, modified regulations or make further changes to its proposed regulations. Anyone interested may submit their comments about the proposed regulations by 5 p.m. on September 15, 2006. Comments can be submitted to:

Ann M. Noel
Executive and Legal Affairs Secretary
Fair Employment and Housing Commission
455 Golden Gate Avenue, Suite 10600
San Francisco, CA 94102

Carothers DiSante & Freudenberger LLP offers training conducted by its attorneys that fully complies with the requirements of California Government Code Section 12950.1 (AB 1825) and is actively monitoring the proposed regulations discussed above to ensure compliance. For more information about CDF's training classes, click here.

Free Seminar On Document Retention Policies - September 19th

The paperless office remains a dream for many companies. Records accumulate in drawers, file cabinets, and computers.

On September 19, 2006, CDF attorneys will conduct an informative Roundtable discussion about what documents employers are required to keep, how long they must keep them, and why it is important.

Attendees will receive valuable information on both state and federal requirements, and a summary chart to guide them through the paper maze.

There is no charge for attendance. Click here to register, and provide your name, your company's name, and the location of the HR Roundable you would like to attend.

Locations & Times:

Los Angeles
11:30 a.m. to 1:00 p.m. Lunch provided.
707 Wilshire Blvd., Suite 5150
Los Angeles, CA 90017
(213) 612-6300

Orange County
7:30 a.m. to 9:00 a.m. Continental breakfast provided.
2600 Michelson Drive, Suite 800
Irvine, CA 92612
(949) 622-1661

San Diego
7:30 a.m. to 9:00 a.m. Continental breakfast provided.
4510 Executive Drive, Suite 300
San Diego, CA 92121
(858) 646-0007

San Francisco
7:30 a.m. to 9:00 a.m. Continental breakfast provided.
260 California Street, Suite 500
San Francisco, CA 94111
(415) 981-3233

California Likely to Increase Minimum Wage To Highest In Country

As chronicled on this blog (here, here, and here), Governor Schwarzenegger and the state legislature have been in an embroiled dispute over increasing California's minimum wage for over one year. The major area of disagreement between the Governor and the legislature was whether the state's minimum wage would be indexed for inflation so that the minimum wage would automatically increase each year. Last year the Governor vetoed a bill requiring this automatic increase each year.

It appears that there has been an agreement reached. Initial reports are that the agreement between the state legislature and the Governor calls for an increase the state's minimum wage by $1.25 over the next year and a half to $8 per hour. The agreement specifies that the minimum wage will increase by 75 cents per hour next January, increase again by 50 cents per hour the following January, and there will be no automatic increases each year due to inflation. Currently, the California minimum wage is $6.75 per hour.

Amended Standing Provisions of Proposition 64 Relate To Pending Cases

Californians for Disability Rights v. Mervyn's, 2006 DJDAR 9607 (Cal. July 24, 2006)

The California Supreme Court held that the amended standing provisions of Business and Professions Code section 17200 that were approved by Proposition 64 apply to cases already pending when Proposition 64 took effect.

Californians for Disability Rights (CDR), a nonprofit corporation, filed a lawsuit against Mervyn's alleging that Mervyn's failed to provide adequate pathway space for persons with mobility disabilities. CDR did not claim to have suffered any harm as a result of Mervyn's conduct but instead purported to sue on behalf of the general public. A trial court entered a judgment in favor of Mervyn's on February 2, 2004. CDR appealed. While the appeal was pending, Californian voters passed Proposition 64 on November 2, 2004, which limited private enforcement of unfair business competition laws to people who have suffered an injury and who have lost money or property. Mervyn's moved to dismiss CDR's appeal, arguing that Proposition 64 eliminated CDR's standing to prosecute the action. The court of appeal denied the motion, holding that the standing provisions did not apply to cases pending when Proposition 64 took effect.

The California Supreme Court reversed and remanded. Before Proposition 64, anybody acting in the interest of itself, its members, or the general public could bring suit under California's unfair competition laws. Proposition 64 changed the standing requirements, thereby limiting private enforcement actions. In deciding whether a law is prospective or retroactive, function is examined, not form. The law's effect on a party's rights and liabilities is considered. Proposition 64 did not change the substantive rules governing business and competitive conduct, nor did it eliminate any right to recover. Rather, it only limited standing to those persons who have suffered injury. To apply Proposition 64's standing provisions to this case and other pending cases is not to apply them "retroactively" as the Court has defined that term "because the measure does not change the legal consequences of past conduct by imposing new or different liabilities based on such conduct."

Amended Standing Provisions of Proposition 64, Applying to Pending Cases, Do Not Expressly Or Implicitly Forbid Amendment Of Complaints To Substitute New Plaintiffs

Branick v. Downey Savings and Loan Association, 2006 DJDAR 9612 (Cal. July 24, 2006)

The California Supreme Court held that Proposition 64 does not affect the ordinary rules governing the amendment of complaints and their relation back and that courts could permit a plaintiff to amend a complaint to satisfy Proposition 64's standing requirements. However, whether Plaintiffs in this case can amend cannot be determined because they have not yet filed a motion for leave to amend, identified any person who might be named as a plaintiff, or described the claims such a person might assert.

Plaintiffs sued Downey Savings and Loan Association, alleging violations of Business and Professions Code sections 17200 and 17500. They brought the action on behalf of the general public. The trial court entered judgment against plaintiffs, finding the claims were pre-empted by the federal Home Owners' Loan Act. After an appeal was filed, Proposition 64 passed, which amended the statutes to give standing only to those plaintiffs who have suffered injury in fact and lost money or property. The court of appeal found Proposition 64 applied to this case and remanded to the lower court to determine whether this case warranted granting leave to amend.

The California Supreme Court affirmed. The companion case of Californians for Disability Rights v. Mervyn's (for related article click here) confirms that the amended standing provisions of Proposition 64 apply to cases pending when the proposition took effect. The proposition does not expressly or implicitly forbid the amendment of complaints to substitute new plaintiffs. A rule barring amendments to comply with Proposition 64 would not rationally further any goal articulated by the voters. Whether Plaintiffs in this case may amend cannot be determined yet, as they have not filed a motion for leave to amend, identified a substitute plaintiff or described the claims a new plaintiff may assert. If a motion to amend is filed, the trial court should decide the motion by applying established rules governing leave to amend and the relation back of amended complaints.

Dave Carothers of CDF Presents Ethics Training To Over 250 Cubic Corporation Employees

More than 250 San Diego-based defense, transportation and corporate employees attended training meetings this summer as part of the annual Ethics Training that Cubic Corp. has offered for more than 20 years.

The key message of the training was that employees must avoid even the appearance of impropriety in their business practices, because even if they have committed no crime, it could still cost Cubic hundreds of thousands of dollars to explain that in court.

Employees attending the Aug. 3 ethics session were joined by four members of the Cubic Corporation Board of Directors, who attended to show their commitment to Cubic's standards of ethical business conduct. The session was videotaped for eventual distribution to other Cubic sites.

"What we hope to do in these sessions is to sensitize you to the gray areas," said Dan Jacobsen, vice president and chief compliance officer for Cubic Corporation. "We assume that the employees know right from wrong, or we wouldn't have hired them. We want to instill in them a desire to call and ask for help."

Presenting the Aug. 3 seminar were two trial lawyers: Carolyn Oliver, a former Assistant U.S. Attorney who now heads The Alliance, a legal practice that handles business contracts, negotiations and complex federal criminal defense cases; and Dave Carothers, managing partner of Carothers DiSante & Freudenberger LLP, whose areas of practice include labor and contractual litigation.

Carothers, who has a military background as well as extensive legal experience, outlined some of the ethics problems that most concern government regulators: antitrust violations, price-fixing, bribes to foreign nationals, insider trading and conflicts of interest. He said companies that break these laws can pay fines from $5,000 to $75 million, depending on size of the company and the nature of the violation.

If Cubic was only a U.S. corporation, complying with these laws alone would be a challenge. However, as Jacobsen stated, "the sun never sets on Cubic." The company must also comply with the national laws of all the countries where it does business.

General guidelines for all employees worldwide are described in the Ethics, Standards of Conduct and Compliance section of Cubic's Employee Handbook, which along with other ethics information is also posted on the Corporate Intranet. Jacobsen emphasized that even though not all employees worldwide are covered by U.S. laws, they must still adhere to Cubic's employee policies.

Carothers observed that while many companies have ethics policies, those policies don't hold much weight in a court of law unless the companies take "affirmative, proactive steps" to make sure employees are aware of and adhere to them. "They have to be used, they have to be part of your cultural blood. They have to be reinforced ...; revamped, revised and debated within a company," Carothers said. "You can't just put policies on the shelf and bring them out when a lawsuit's filed. They've got to be a regular part of your work life."

If an employee believes that an ethical principle or law is being violated, they should first raise the issue with their manager. If the manager does not address the issue, or if the employee is not comfortable discussing the issue with their manager, or is not satisfied with the manager's response, they should contact Legal, Human Resources, Jacobsen or use the anonymous Ethics Hotline.

In addition to the annual ethics training, Jacobsen and the Corporate Legal Department are planning future workshops on international antitrust issues and the U.S. Foreign Corrupt Practices Act and similar laws of foreign countries.

Here are a few examples that highlight some of the "gray" ethical dilemmas Cubic employees may face:

Situation: You are a Cubic employee whose brother is the program manager for a prime contractor which has just awarded a subcontract to Cubic. The prime contractor is sometimes also a competitor to Cubic. While you have limited interaction with the subcontract in your job at Cubic, you do have some insight into the program. You attend a birthday party for your brother's son and present him with the latest Buzz Lightyear action figure toy. While at the birthday party, your brother asks you if you have heard anything new about his program, and if you can explain why Cubic raised its price on a particular product used in the program.

Potential issue: Conflict of interest; giving a gift to a customer, or in this case, his family; discussing company-sensitive information with a competitor.

Situation: You are at a bar with two other engineers who are your friends. All three of you work for separate companies that design widgets. The widgets are different designs, but somewhat similar. During the course of the evening, the three of you discuss the different widget designs and devise a business plan to design and manufacture fidgets, a smaller but integral component of the larger widgets, at a substantially lower costs than the current vendors that you know of.

Potential issue: Conflict of interest; discussing company-sensitive information with competitors; violating Cubic's secrecy and invention agreement.

Situation: You do business with General Gibson through your employment at Cubic. You also live near him and occasionally see him at neighborhood parties. The general's teenage daughter sometimes baby-sits your children. One day, your brother-in-law offers you four free tickets to a baseball game. General Gibson is a baseball fan. Do you invite him to the game?

Potential issue: The general is an Executive Branch employee, governed by dollar limits on the value of gifts that he can receive from a single source. Even if the value of the tickets does not exceed the $20 U.S. limit, giving them to the general may place him in a compromising position.

Situation: You have a good friend and golf buddy who works for a competitor. You and your friend are both privy to confidential pricing information in your jobs. You and your friend regularly exchange emails not only at work, but in home email accounts. One day your friend sends a file to your personal account named "Prices_06.doc."

Potential issue: Pricing is company-proprietary information, and sharing it with a competitor is a violation of the employee's duty of confidentiality and a possible violation of U.S. trade secret laws.

Defense Verdict Upheld In Layoff Case

Seever v. Copley Press, Inc., (Cal. Ct. App. Aug. 15, 2006)

The Court of Appeal (Second District, Division Seven) upheld a jury verdict in favor of Defendant where Plaintiff Seever contended at trial that the termination of his employment of 18 years was motivated by age, disability, and medical leave discrimination, and Copley defended that Seever's termination, along with 17 other people, was dictated by business necessity.

The court held substantial evidence supported the jury verdict. In 2001, the Daily Breeze eliminated 18 positions, including Seever's job as building superintendent. Contrary to a projected loss of $2 million for the year, the company showed a loss of $4.3 million for the year. Uncontradicted evidence was introduced at trial that the Daily Breeze was suffering hard times financially and laid people off for financial reasons. Further, before Seever was laid off, his supervisor had to write a business justification for the layoff recommendation, which included his belief that the department could operate capably without Seever as it had for four months when he had been out on leave.
The trial court made a notable ruling on Seever's trial subpoena on Copley for every single financial document relating to Copley and its divisions over the preceding five years. On a motion to quash by Copley, the trial court limited the subpoena to the profit and loss statements and balance sheets for the two years prior to Seever's termination, and any financial documents on which Copley planned to rely at the time of trial. The Court of Appeal said that was not reversible error.

Denial Of Class Certification In Executive Exemption Case Upheld

Dunbar v. Albertson's, Inc., _ Cal. Rptr. 3d _, 2006 WL 2025013 (Cal. App. 1st Dist. July 20, 2006)

The Court of Appeal (First Appellate District, Division One) affirmed the trial court's order denying class certification in an exemption case involving grocery managers (second in command at each store) at Albertson's. The appellate court "read the court's decision . . . to conclude[] that 900 individual inquiries -- one for each grocery manager -- would be required, because findings as to one manager could not 'reasonably [be] extrapolate[d]' to others given the significant variation in the work performed by grocery managers from store to store and week to week, as shown by defendant's evidence," which included 79 declarations of grocery managers, deposition excerpts, a chart outlining how the deposition testimony and Defendant's counter-declarations differed from Plaintiff's declarations, and statistics on varying amounts of time that grocery managers spent working cash registers over a year-long period.

Notably, Plaintiff urged on appeal that the trial court ignored its evidence and argument that individual issues could be effectively managed with the use of exemplar plaintiffs, survey results, subclassing, mini-trials, or special masters. The appellate court found that the record did not show that the trial court failed to consider these proposed methods but rather that the trial court rejected them in concluding that findings as to one grocery manager could not be extrapolated to others given the variations in their work. Although the trial court has an obligation to consider the use of "innovative procedural tools proposed by a party to certify a manageable class," the party seeking class certification "must explain how the procedure will effectively manage the issues in question," which the Plaintiff failed to do.

California’s Unruh Act And Disabled Persons Act Do Not Incorporate Title I Of ADA And Cannot Be Used To Enforce ADA’s Employment Protections

Bass v. The County of Butte, 2006 DJDAR 10757 (9th Cir. Aug. 15, 2006)

The Ninth Circuit upheld the Eastern District of California's dismissal at summary judgment of Plaintiffs' claims under California's Unruh Act and Disabled Persons Act ("DPA") on the grounds that those statutes do not incorporate Title I of the Americans with Disabilities Act and cannot be used to enforce the Americans with Disabilities Act's employment protections.
Plaintiffs Allison Bass and two other County of Butte employees asserted employment discrimination claims under the Unruh Act and the DPA based on the county's alleged failure to accommodate work-related injuries. The plaintiffs claimed that the Unruh Act and DPA incorporated Title I of the Americans with Disabilities Act and could be used to enforce the ADA's employment protections. A district court held in favor of the county, ruling that neither state statute provided a cause of action for employment discrimination.

The Ninth Circuit affirmed. Title I of the ADA prohibits employment discrimination against qualified persons with disabilities by public and private employers. The Unruh Act and DPA focus on ensuring that people with disabilities have equal access to public businesses, facilities, and other accommodations. California courts have historically been reluctant to expand the scope of the Unruh Act or DPA to include employment claims. Amendments to the Unruh Act and DPA (e.g., that a violation of the right of any individual under the ADA shall also constitute a violation of the Unruh Act) do not change matters because the plain meaning of the amendments does not require incorporation of the ADA, in its entirety, into the Unruh Act and DPA. Such a reading would broaden the reach of the state statutes from public accommodations to employment discrimination, which is "incompatible with the state's statutory scheme as a whole and is unsupported by the legislative history of the amendments" to the Unruh Act and DPA. Expanding the scope of these statutes (which do not have an administrative scheme requiring exhaustion) would also create an end-run around the administrative procedures of the FEHA solely for disability discrimination claimants.

Cal Labor Law

Robin E. Largent is a Partner in CDF’s Sacramento office and may be reached at 916.361.0991 or BIO »


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