Court Ruling Could Effect Employers’ Ability to Obtain Employee Waivers of Right to Sue Under FMLA

The United States Court of Appeal for the Fourth Circuit recently ruled that the right to assert a claim based upon a past violation of the Family and Medical Rights Act of 1993 ("FMLA") may not be waived.In a divided opinion, a panel for the Fourth Circuit rejected the Department of Labor's interpretation of its own regulation, which would have allowed parties to waive the right to assert a claim based upon a past violation of the FMLA.Taylor v. Progress Energy Inc., ___ F.3d ___ (4th Cir. 2007).The regulation stated that "employees cannot waive, nor may employers induce employees to waive their rights under FMLA."29 C.F.R. 825.220(d).

The Fourth Circuit found the Department of Labor's interpretation of its own regulation was plainly erroneous because the DOL had previously presented differing interpretations of the regulation and because the regulation did not specifically exclude remedial rights --such as the right to assert a claim-- from the scope of the regulation.Thus, the court found that, like proscriptive and substantive rights under the FMLA, remedial rights were not able to be waived.

While this ruling of the Fourth Circuit, which covers West Virginia, Virginia, Maryland, North Carolina, and South Carolina is not controlling in the California-based Ninth Circuit, the decision reflects reasoning that may be considered in the Ninth Circuit should the issue arise.Were the Ninth Circuit to adopt the Fourth Circuit's reasoning,employers' ability to obtaineffective employee waivers of the right to sue under the FMLA in severance agreements and other settlement documents could be substantiallyhindered.For a link to the text of the Fourth Circuit's opinion in Taylor v. Progress Energy Inc., ___ F.3d ___ (4th Cir. 2007), click here.

Senate Blocks Passage of Employee Free Choice Act of 2007

Earlier today the Senate essentially thwarted the passage of the Employee Free Choice Act of 2007 (the "Act") with a final vote of 51 -- 48 against moving the Act to the Senate floor for debate (60 votes were needed to ensure that the Act could overcome a threatened filibuster by Republican senators).

As discussed in a previous entry on this blog, the Act -- which was largely opposed by business organizations and employers -- had three major components:The first would have outlawed secret ballot elections by employees who were deciding whether or not to be represented by a labor union, instead allowing unions to obtain signed authorization cards from employees through which they could simply agree to labor representation. The Act would also have instituted new mediation and arbitration processes for first-contract disputes. Additionally, the Act would have increased penalties against employers for various labor law violations, requiring payment of three times the amount of wages lost by employees and imposing civil fines of up to $20,000 per violation.

For specific questions regarding the implications of the Senate's vote, please contact us directly.

Employee Free Choice Act of 2007 Sent to Senate

The Employee Free Choice Act of 2007 (the "Act") is currently wielding its way through the Senate after having passed the House of Representatives. The Act's stated purpose is to "amend the National Labor Relations Act to establish an efficient system to enable employees to form, join, or assist labor organizations and to provide for mandatory injunctions for unfair labor practices during organizing efforts, and for other purposes." As is evident from this preamble, because of the subject areas touched on the Act will potentially affect the overwhelming majority of American employees who are not currently members of a union.

Specifically, the Act has three main components. The first would outlaw secret ballot elections by employees who are deciding whether or not to be represented by a labor union, instead allowing unions to obtain signed authorization cards from employees through which they could simply agree to labor representation. The Act would also institute new mediation and arbitration processes for first-contract disputes. Additionally, the Act would increase penalties against employers for various labor law violations, requiring payment of three times the amount of wages lost by employees and imposing civil fines of up to $20,000 per violation.

For specific questions regarding the Act's applicability to your workplace, please contact us directly.

Ninth Circuit refuses to enforce law-firm’s arbitration agreement with its employee.

The Ninth Circuit Court of Appeals recently refused to enforce an arbitration agreement between a paralegal and her law firm employer. In rejecting the firm's attempt to compel arbitration of the employee's claim for overtime compensation and denial of meal and rest periods, the court ruled that the arbitration agreement was both procedurally and substantively unconscionable, and thus unenforceable.

Specifically, the arbitration agreement at issue in Davis v. O'Melveny & Myers was deemed procedurally unconscionable because it was imposed on the employee as a condition of employment, with no opportunity to negotiate. The court also found that the agreement was substantively unconscionable because it:(1) shortened the statute of limitations applicable to the employee's claim; (2) contained an overbroad confidentiality provision which, among other things, limited the employee's ability to contact potential witnesses); (3) allowed the law firm, but not the employee, to seek certain injunctive relief in court; and, (4) prohibited the employee from filing claims with the federal Department of Labor or the California Labor Commissioner. Because these provisions could not be stricken without gutting the agreement, the entire agreement was deemed void and unenforceable.

For specific questions regarding the enforceability of arbitration agreements you may be using in the workplace, please contact us directly.

Court Issues Ruling Narrowly Interpreting Administrative Exemption.

On June 12, 2007, the Third District Court of Appeal further narrowed the administrative exemption that employers may use to exempt certain employees from California overtime requirements.In Eicher v. Advanced Business Integrators, Inc., (2007) ____ Cal. App. 4th ______, the plaintiff provided customer service and training concerning the defendant employer's software.The defendant classified the plaintiff as exempt under the administrative exemption. The Court of Appeal sustained the superior court's ruling that the plaintiff did not meet the requirements of the administrative exemption.

To qualify for the administrative exemption, an employee must, among other things, perform "office or non-manual work directly related to management policies or general business operations" of the employer or its customers.In Eicher, the court narrowly interpreted this requirement to insist that the employee have "personal effect on the policy or general business operations" of the employer.In Eicher, theplaintiff's primary responsibilities consisted of implementing and troubleshooting his employer's software at customer venues, as well as providingon-site and off-site customer support.The court opined that the plaintiff was more akin to a production worker previously found not to qualify for the administrative exemption because he was simply "engaged in the core day-to-day business" of the defendant.Because the plaintiff had nopersonal effect on policy or general business operations,the court found that the requirementwas not satisfied and, therefore, the administrative exemption did not apply.For more information concerning Eicher v. Advanced Business Integrators, Inc., click here.

Bradstreet Appointed California Labor Commissioner

On June 8, 2007, Gov. Arnold Schwarzenegger appointed Angela Bradstreet to serve as labor commissioner for the California Department of Industrial Relations.Bradstreet, a Democrat, must be confirmed by the state Senate.As labor commissioner, Bradstreet will have significant influence over California wage laws and enforcement policies.Bradstreet previously served as managing partner for a Bay Area law firm.For a link to Governor Schwarzenegger's official announcement, click here.

Federal Minimum Wage to Increase in July 2007

President Bush recently signed into law the Fair Minimum Wage Act of 2007. This legislation is designed to increase the federal minimum wage in three increments over the next two years. The first increase will be from the current rate of $5.15 to $5.85 per hour beginning July 24, 2007. The minimum wage will then increase to $6.55 per hour beginning July 24, 2008, and $7.25 per hour effective July 24, 2009. Employers should ensure that their mandatory postings reflect the newly adjusted minimum wages.

Note that this increase in the federal minimum wage will not affect the wages earned by California employees, who are currently entitled to the higher minimum wage of $7.50 per hour ($8.00 per hour effective January 1, 2008). Additionally, San Francisco employers must pay their employees the city's current minimum wage of $9.14 per hour.

United States Supreme Court Decides Key Equal Pay Case in Favor of Employers

On May 29, 2007, the United States Supreme Court decided Ledbetter v. Goodyear Tire & Rubber Co., Inc., a case involving a Title VII claim for sex discrimination. Lilly Ledbetter worked for Goodyear for 19 years and claimed that her past performance evaluations were discriminatory based on her sex because they caused her to be earning significantly less than her male counterparts at the time of her retirement in 1998. Ledbetter filed a EEOC questionnaire in March 1998. Relying on the "paycheck accrual rule," she claimed that the paychecks she received up to the date of her retirement were unlawful because they would have been larger is she had been evaluated in a non-discriminatory way prior to the EEOC charging period (180 days prior to her filing her EEOC questionnaire).

A split (5-4) U.S. Supreme Court held that because Ledbetter did not assert that any of the pay decisions made within 180 days of her filing of her EEOC questionnaire were discriminatory, her claims were time-barred. The Supreme Court held that "the EEOC charging period is triggered when a discrete unlawful practice takes place. A new violation does not occur, and a new charging period does not commence upon the occurrence of subsequent non-discriminatory acts that entail adverse effects resulting from past discrimination. But of course, if an employer engages in a series of acts, each of which is intentionally discriminatory, then a fresh violation takes place when each act is committed."

This decision is helpful to employers as it helps define how statutes of limitations will be analyzed in discrimination cases where continuous violations are alleged. In addition, it will likely help eliminate employees from bringing stale claims back to life simply by adding continuous violations type allegations that are not supported with real evidence. However, this decision may have the practical effect of prompting employees to file Title VII charges more quickly because of the Supreme Court's strict statute of limitations ruling. It should be noted that this case is limited to Title VII pay claims and it is unclear whether the reasoning of Ledbetter will be adopted in other contexts. In addition, employees may still make disparate pay claims under other federal and state laws which may have different statute of limitations and administrative exhaustion requirements.

Carothers DiSante & Freudenberger LLP Attorneys To Speak on Privacy Issues in the Workplace

On July 24, 2007, Vanessa W. Whang and Jennifer D. Barrera will conduct a seminar for California employers on workplace privacy issues.The seminar will take place in Stockton, California and will cover a variety of topics, including: pre-employment screening, drug testing, monitoring the electric workplace, identity theft, and protecting trade secrets.For more information or to register click here.

Court Issues Opinion Focusing on CFRA Notice/Reasonable Accommodation

Earlier this month, the California Court of Appeal issued its decision in Faust v. California Portland Cement Company, reversing a grant of summary judgment for the employer due to the Company's failure to give proper CFRA leave notice to an eligible employee on a medical leave of absence. The court criticized the Company for failing to engage in the interactive process concerning any reasonable accommodations which may have existed prior to terminating the employee.

Importantly, the court highlighted the fact that an employee need not specifically mention the CFRA (or the FMLA for that matter) to trigger their right to CFRA leave. The court found that the burden rests with the employer to make that determination, and, if appropriate, provide the employee with CFRA benefits. This case underscores the importance of ensuring proper CFRA/FMLA notice is provided to eligible employees and reminds employers that their supervisors and HR personnel must be trained to know what circumstances trigger the right to these leaves. Further, since virtually all employees who are unfit to return to work following a 12 week FMLA/CFRA leave have a protected disability under California law, this case also highlights the importance of ensuring "reasonable accommodations" are considered prior to terminating an employee who cannot timely return from a FMLA/CFRA leave of absence due to their own medical condition.

For a copy of the full opinion click here.