This week the Ninth Circuit held that where attendance is an essential function of the job (isn't it always?), an employer's enforcement of its attendance points policy as to a disabled employee does not constitute a failure to reasonably accommodate under the ADA. In this particular case, the employee was a neonatal intensive care nurse who had an abominable attendance record due to a multitude of stated reasons, ranging from fibromyalgia to personal life issues. Even though she worked part-time and only a couple of shifts per week, she was continually absent. She also took a variety of leaves of absence, all accommodated by her employer. The employer had an attendance policy that allowed up to five unplanned absences in a rolling 12 month period. This employee regularly exceeded the limit and had a history of performance discipline for her unexcused absences. The employer quite reasonably tried to work with the employee to save her, allowed several exceptions from the policy for her, and gave her numerous chances to improve her attendance and escape termination. The employee nonetheless did not improve her attendance and admittedly continued to exceed the allowed unplanned absences under the attendance policy (she was even absent for a planned meeting to discuss her attendance). She requested that her employer except her from the attendance policy and essentially allow her uncapped unplanned absences, apparently as a "reasonable accommodation" for some sort of disability. The employer did not agree. She was ultimately terminated (duh). Not to be deterred, she filed a lawsuit claiming the employer violated her ADA rights by not excepting her from the attendance policy as a reasonable accommodation under the ADA.
In the lawsuit, the employer did not dispute that the employee was disabled. The dispute focused instead on whether the employer had a duty to except the employee from the attendance policy as a reasonable accommodation. The trial court said no and granted the employer summary judgment. The employee appealed to the Ninth Circuit, which agreed with the trial court. The Ninth Circuit held that the employer had adequately established that regular attendance is an essential function of the position of a neonatal ICU nurse and that an employer is not required by the ADA to relieve a disabled employee from essential functions as an accommodation. The case is Samper v. Providence St. Vincent and the decision is here.
This week, a California court held that an employment arbitration agreement was unenforceable based on a provision in the agreement giving the employer the right to modify or revoke the agreement on 30 days' notice to the employee. The court held that the termination right rendered the agreement illusory and lacking sufficient "mutual" agreement to arbitrate. In Peleg v. Neiman Marcus, the employer's arbitration agreement provided that Neiman Marcus could modify or revoke the agreement on 30 days' notice to employees and that claims not "filed" with AAA by the end of 30 day period would not be subject to the agreement. Thus, the agreement did place some limit on Neiman Marcus' ability to selectively avoid arbitration of claims. Nonetheless, the court held that the notice provision was insufficient to save the agreement from being illusory. The court held that a provision allowing the employer to modify/revoke the agreement must make clear that it applies prospectively only, and does not apply to claims that are "accrued" and/or "known" prior to the date of the change. In the case of Neiman Marcus' agreement, the requirement that claims be "filed" within 30 days of notice of the change in order to be covered by the agreement to arbitrate impermissibly shortened the statute of limitations applicable to pursuing claims.
Neiman Marcus' arbitration agreement had a provision in it stating that it was governed by Texas law. The California court applied the choice of law provision (and Texas law) in holding that the modification provision rendered the agreement illusory and unenforceable. However, the court held that application of California law would essentially lead to the same result. The only difference is that under California law, if a modification provision is silent on whether it applies prospectively only, the court could "imply" or read into it that it operates prospectively only and thereby avoid a finding that it renders the agreement illusory.
Many employers' arbitration agreements contain clauses expressly giving the employer the right to make changes to the agreement, or to revoke it entirely. In order to avoid a finding that this clause renders the agreement illusory and unenforceable, employers should review their clauses and revise, as appropriate, to make clear that any changes will be made with reasonable notice to employees, will operate prospectively only, and will not apply to claims arising prior to the date of the change.
As we reported yesterday, a South Carolina District Court ruled that the NLRB did not have authority to mandate the Employee Rights Poster. The ruling is in conflict with the only other court to rule on the issue thus far--the District Court for the District of Columbia--and that decision is on appeal. Well, this morning the D.C. Circuit Court of Appeal granted the National Association of Manufacturers' request for a temporary injunction enjoining the NLRB's posting requirement pending appeal. The court reasoned that the uncertainty regarding enforceability of the posting requirement counsels in favor of temporarily preserving the status quo pending appeal. The NLRB has not yet affirmatively postponed its April 30 effective date for employer compliance, but with this ruling it appears employers will not need to comply effective April 30 and will instead need to stay tuned for developments in the ongoing legislation. The D.C. Circuit Court of Appeal's decision is here.
Last week, a federal District Court in South Carolina ruled that the NLRB does not have the authority to require employers to post its Employee Rights Poster. The ruling was issued in a lawsuit brought by the U.S. Chamber of Commerce challenging the validity of the posting requirement. The judge held that the NLRA does not require any type of notice posting and that the NLRB's actions in requiring the posting were, therefore, not necessary to carry out the Act. The judge also reasoned that the NLRB's role is intended to be a "reactive" one, responding to unfair labor practice charges, petitions and the like. In requiring employers to post an employee rights notice, the NLRB is attempting to act in a "proactive" role and not in its intended reactive role. While this ruling is good news for employers, it is not the final word on the validity of the notice. Employers may recall that recently, another federal district court judge (District of Columbia) ruled that the notice was lawful. That decision is currently on appeal before the Eleventh Circuit Court of Appeals, and it is likely that the NLRB will appeal the South Carolina District Court's adverse ruling. With the newly issued adverse ruling, it is possible that the NLRB will again delay the effective date for the posting--which is currently April 30. Employers should stay tuned for further developments on this issue.
California employers trying to comply with the recently enacted Wage Theft Protection Act should take note that the Labor Commissioner has again modified the notice template, effective April 12, 2012. The new law, which went into effect January 1, 2012, requires California employers to provide non-exempt new hires with written notice of wage and related information. Most of the information required to be provided is set forth in the statute itself. However, the Labor Commissioner has authority to prescribe additional categories of information to be provided in the notice. Given that authority, the Labor Commissioner was also tasked with publishing a template that employers can use to satisfy their notice obligations. Causing challenge to employers is the fact that the Labor Commissioner waited until close to January 1 to publish any template and then prescribed additional content beyond that set forth in the text of the statute. If that is not confusing enough, the Labor Commissioner's office cannot seem to make up its mind about the contents of the template or the requirements of the Act. The Labor Commissioner has at least twice revised the FAQ on the Act's notice requirements, and has now issued a revised template. Employers who downloaded the original template will want to review the newly published template and newly revised FAQ. Most of the changes are fairly minor, but the newly revised template has different language on the subject of whether there is a written or oral employment agreement. It appears that this was in response to concern from employers that checking one of these boxes suggests the employee actually has some sort of employment agreement, weakening the at-will nature of the employment relationship. The new template (and FAQ) are revised to make clear that all this is referring to is whether the rate of pay is set forth in writing or was communicated only verbally. The revisions also make clear that the acknowledgement of receipt portion is optional, not mandatory. The new template and revised FAQ are available here and here. Employers will want to review these forms to ensure compliance. Unfortunately, there is no practical way for employers to stay apprised of continued changes by the Labor Commissioner going forward other than to periodically check the Labor Commissioner's website. We will of course try to report on changes on this blog.
Today the California Supreme Court issued its long-awaited decision in Brinker v. Superior Court, laying to rest some greatly litigated issues surrounding California’s meal break requirements. The biggest issue on which employers were awaiting guidance is whether employers are required to provide non-exempt employees the opportunity to take a 30-minute meal break, or whether employers must ensure that employees comply and perform no work for a full 30 minute period. On this issue, the Court held favorably for employers. The Court held that an employer satisfies its obligations if it “relieves its employees of all duty, relinquishes control over their activities and permits them a reasonable opportunity to take an uninterrupted 30-minute break, and does not impede or discourage them from doing so.” The Court specifically held that the law does NOT require employers to ensure no work is performed during the break, so long as the employer provided the break. The employer will not be liable to an employee who voluntarily chooses to perform work during his or her break or who chooses not to take a full 30 minute break. However, if an employer encourages the employee to do work during the meal break or otherwise effectively precludes the employee from taking a 30 minute meal break, the employer may then be liable for failing to provide required breaks.
The Court also addressed the issue of WHEN meal breaks must be provided. The Court made clear that California law requires a meal break to be provided at or before the end of the fifth hour of work (unless the employee’s shift is no more than 6 hours and the employee has waived the meal break). The Court rejected the plaintiff’s argument that employees are entitled to a second 30 minute meal break for every additional five hours worked. The plaintiff had argued that if an employee takes an early lunch (e.g. after 2 hours of work) and then works five more hours, the employee would be entitled to a second 30 minute meal break. The Court held that there is no such “rolling” five hour requirement for providing additional meal breaks. (Employers should note, of course, that if an employee works a shift in excess of 10 hours, the employee is entitled to a second 30 minute meal break.)
In addition to addressing these meal break issues, the Court also addressed California’s rest break requirements. In a somewhat surprising ruling, the Court interpreted California’s rest break requirements in a highly technical manner to require more than just the provision of a 10 minute rest break for every four hours worked (which is many employers’ understanding of the general rule). The Court essentially held that employees are entitled to a rest break of at least 10 minutes for every four hours worked, or major fraction thereof (meaning more than 2 hours). The exception is if the employees’ shift is not more than three and one-half hours, in which case no rest break need be provided. This does not raise any big issue for the typical eight hour employee shift, where the employee is provided two ten minute rest breaks. Where it gets complicated is a situation where an employee works, for example, six and one-half hours. According to the Court’s interpretation of the rest break rules, the employee should be provided two 10 minute rest breaks in that situation because the employee is working one four hour shift and then a “major fraction” of another four hour shift. In the words of the Court: “Employees are entitled to 10 minutes rest for shifts from three and one-half to six hours in length, 20 minutes for shifts of more than six hours up to 10 hours, 30 minutes for shifts of more than 10 hours up to 14 hours, and so on.”
In the specific case before the Court, Brinker had a rest break policy stating as follows: “If I work over 3.5 hours during my shift, I understand that I am eligible for one ten minute rest break for each four hours that I work.” The Court held that the plaintiff could establish this policy violated California law and denied a class of employees required rest breaks if “for example, Brinker under this uniform policy refused to authorize and permit a second rest break for employees working shifts longer than six, but shorter than eight, hours.”
As for general timing of rest breaks, the Court held that the only requirement for timing of rest breaks is that they be authorized and permitted to be taken as close to the middle of a four hour work period as is practicable. The Court rejected a strict rule that a rest break occur before a meal break.
Based on the Court’s rulings on meal and rest break requirements, California employers will want to review their policies and practices to ensure compliance, with particular attention to ensuring rest break policy language comports with the Court’s interpretation of the requirements. The Brinker decision is available here.
The California Supreme Court is expected to issue its long-awaited decision in Brinker v. Superior Court (Hohnbaum) by April 12, 2012. This decision is expected to finally answer the much litigated question of what it means to "provide" a meal break under California law.
Must employers ensure that non-exempt employees take full 30 minute meal breaks, or must they merely provide employees the opportunity to take such breaks? The Court's decision will also address whether a meal break is required to be provided every five hours on a rolling basis. These important issues have been the subject of numerous class action lawsuits against California employers and have left employers with uncertainty on how best to administer and enforce meal break requirements to avoid such litigation.
Please join us for a one time complimentary webinar on April 18, 2012 from 10:30-11:45 a.m. PDT during which we will discuss the Brinker decision, how it impacts meal break policies and practices for California employers going forward, and what employers should do in its wake. To register, click here.
This is a reminder that all employers covered by the National Labor Relations Act, which includes union and non-union employers, must post the 11" x 17" National Labor Relations Board's Employee Rights Poster at their workplace on or before April 30, 2012. If you have questions about the poster and the posting requirements, the NLRB has a wealth of information available on its website (including copies of the poster in multiple languages) here. There are still lawsuits pending trying to stop the implementation of the rules related to this poster, but the NLRB has stated that it is not going to further delay implementation.
As most California employers are aware, mandatory employment arbitration agreements have taken a lot of hits in California courts. It seems that many (but certainly not all) judges will find any reason they can to refuse enforcement of the agreement. In most cases where enforcement is denied, it is on the basis of a finding that the agreement is unconscionable—meaning that the employee has no meaningful choice but to sign the agreement and the agreement contains terms that are unfair to the employee in some way. Most recently, courts began grappling with the inclusion of “class action waivers” in these agreements, often finding such waiver provisions unconscionable. A class action waiver is a provision in the agreement that makes clear that the employee will be required to arbitrate any individual claims he or she may have against the employer, but will not be permitted to pursue any type of classwide or representative relief in the arbitration. These class action waivers were, and are, common in both employment arbitration agreements and in consumer arbitration agreements. The California Supreme Court issued a decision that became known as the Discover Bank rule, providing grounds to find most class waivers in consumer contracts unconscionable. The California Supreme Court then issued a decision in a case called Gentry, which provided similarly reasoned grounds for finding class waivers in employment arbitration agreements unconscionable. Because the rules were not “bright-line” prohibitions on such waiver provision, these provisions came to be analyzed on a case-by-case basis with some being enforced and some being found unconscionable and unenforceable.
The United States Supreme Court then provided what appears to be bright line guidance on this issue in AT&T Mobility v. Concepcion, in which the Court held that the Federal Arbitration Act preempts California’s Discover Bank rule and permits class action waivers in consumer arbitration agreements. To be clear, the Court acknowledged that arbitration agreements may be found unenforceable on grounds that would apply to the enforceability of any contract (e.g. fraud, duress, unconscionability). However, the Court emphasized that these doctrines may not be used to apply special standards simply due to the fact that an arbitration agreement is at issue.
In the wake of Concepcion, there are unanswered questions about its scope and whether its reasoning applies with equal force to class action waivers in employment arbitration agreements. In other words, is Gentry still good law? There is not yet any published California state court opinion holding that Gentry has been effectively overruled by Concepcion, and many trial courts continue to apply the Gentry criteria to determine whether to enforce a class action waiver in an employment arbitration agreement.
Are employers going to get some guidance on the California Supreme Court’s take on the scope of Concepcion? Perhaps. The California Supreme Court has two cases before it that should require some guidance: Sonic Calabasas v. Moreno, and Sanchez v. Valencia Holding Co.
The Sonic Calabasas case is an interesting one because it is an employment case in which the California Supreme Court held that an arbitration agreement foreclosing an employee’s right to pursue administrative relief for unpaid wages before the DLSE, was unconscionable and unenforceable. Sonic Calabasas petitioned for review by the United Stated Supreme Court, which in turn remanded the case to the California Supreme Court with specific (and interesting) direction to reconsider its decision in light of Concepcion. As a result, the California Supreme Court will have to determine the proper application of Concepcion in this employment context.
Also relating to Concepcion, the California Supreme Court just granted review in Sanchez v. Valencia Holding Co., which involves a class action waiver in a consumer arbitration agreement (similar to the Concepcion case). In Sanchez, the trial court held that the class action waiver was unconscionable and unenforceable, notwithstanding Concepcion. The court of appeal chose a different route and dodged the issue of Concepcion by finding the arbitration agreement as a whole unconscionable, without reaching the propriety of the class action waiver. The court basically reasoned that many other terms (beyond the class waiver) were unconscionable under California state law and that this precluded enforcement of the agreement to arbitrate, even if the class waiver itself passed muster under Concepcion. The California Supreme Court granted review and may provide guidance on its interpretation of the scope of Concepcion and the extent to which it believes California unconscionability law is (or is not) preempted.
California employers should stay tuned for further developments in this important area of evolving law.
There have been many changes to leave laws in recent years, both under the FMLA and under California’s CFRA. Proposed legislation recently has been introduced in California to further expand employees’ leave entitlements under CFRA. CFRA currently allows eligible employees to take up to 12 weeks of leave in a year as needed for the birth or placement of a child, or to care for their own serious health condition or that of a child (up to 18 years of age or an adult dependent), parent (which includes a step parent and/or person who stands in loco parentis to the child), or spouse/domestic partner. AB 2039 seeks to expand CFRA leave to allow employees to take such leave to care for siblings, parents in law, grandparents, and adult children. If enacted, AB 2039 will obviously increase employee leaves, resulting in additional burden to California employers. This is particularly true because California employers covered by CFRA are typically also covered by FMLA, meaning they have to comply with both laws and their employees are entitled to leave under the terms of both laws. Because FMLA does not provide for leave to care for parents in law, siblings, and grandparents, an employee who uses leave for that purpose under CFRA will not have exhausted their FMLA leave because the CFRA leave could not be concurrently counted as FMLA leave. In other words, the employee could theoretically take 12 weeks of leave under CFRA for a parent-in-law, grandparent or sibling, and then still be entitled to an additional 12 weeks of leave under FMLA for a spouse or child. This very scenario already exists in California where leave is taken for disability caused by pregnancy or to care for a domestic partner. Differences between CFRA and FMLA on these two categories result in leave not running concurrently under these two laws in these situations. AB 2039 would add further differences between CFRA and FMLA, making leave tracking even more complicated for California employers.
The full text of AB 2039 is available here. We will keep you posted on the status of this and other pertinent employment-related legislation pending in California.