Medical Marijuana Use: Employers Caught Between "A Rock And A Hard Place"
“Medical marijuana” refers to the use of marijuana as a physician-recommended form of treatment or therapy, often for pain management or to treat nausea caused by chemotherapy. Numerous states, including California (pursuant to the Compassionate Use Act) have legalized the use of marijuana for medicinal purposes. Of these states, California was the first state to legalize medical marijuana, and as a result since 2004, thousands of marijuana cards have been authorized. However, under federal law, specifically, the Controlled Substances Act, marijuana use is illegal, even for medicinal purposes. This has created a dilemma for employers trying to enforce workplace polices that prohibit illegal drug use, especially since medical marijuana users are not technically a protected class, although obviously the issue raises disability discrimination considerations. Thus, the question is, if an employer has a zero-tolerance policy on drug use, can an employee be terminated for using medical marijuana?
The California Supreme Court, in Ross v. Ragwire Telecommunications (2008) 42 Cal.4th 920, provided guidance for employers on this point by holding that an employer could terminate an employee who tested positive for marijuana even though the employee’s physician had prescribed the marijuana to treat the employee’s chronic back pain. The employee argued that he had a disability pursuant to the Fair Employment and Housing Act (FEHA). However, the Court disagreed, finding that employers do not have to accommodate an employee who is using marijuana for medicinal purposes. Specifically, the court noted that “Plaintiffs position might have merit if the Compassionate Use Act gave marijuana the same status as any legal prescription drug. But the Act's effect is not so broad. No state law could completely legalize marijuana for medical purposes because the drug remains illegal under federal law (21 U.S.C. §§ 812, 844(a)), even for medical users. . . Instead of attempting the impossible, as we shall explain, California's voters merely exempted medical users and their primary caregivers from criminal liability under two specifically designated state statutes. Nothing in the text or history of the Compassionate Use Act suggests the voters intended the measure to address the respective rights and obligations of employers and employees.” This decision was a victory for employers who understandably had concerns about medical marijuana users performing their jobs safely while impaired by drugs.
However, the issue continues to plague employers as evidenced by the recent lawsuit filed by the American Civil Liberties Union (ACLU) against Wal-Mart. The lawsuit involves Wal-Mart’s termination of a Michigan (which permits the use of medical marijuana) employee whose physician certified that his illness qualified for medical marijuana use. In spite of this, Wal-Mart terminated the employee after he failed an on-the-job injury-related drug test. The employee suffers from a rare form of cancer in his nasal cavity and brain, and he uses medical marijuana to alleviate the daily pain. According to Scott Michelman, staff attorney with the ACLU, "Medical marijuana has had a life-changing positive effect for Joseph, but Wal-Mart made him pay a stiff and unfair price for his medicine. . .No patient should be forced to choose between adequate pain relief and gainful employment, and no employer should be allowed to intrude upon private medical choices made by employees in consultation with their doctors." Alternatively, as reported by CNN, Wal-Mart’s director of media relations, Lorenzo Lopez, asserted that "As more states allow this treatment, employers are left without any guidelines except the federal standard. . .In these cases, until further guidance is available, we will always default to what we believe is the safest environment for our associates and customers."
For California employers, although Ross v. Ragwire Telecommunications provides important guidance, the possibility of a claim for disability discrimination still lurks in the background. Perhaps the U.S. Supreme Court will have the final say.
BOBrien
Wednesday, October 5, 2011
Monday, May 23, 2011
The Impact of a WC Disability Rating on an Employer’s FEHA Obligations
The recent California appellate court decision, Cuiellette v. City of Los Angeles, No. B224303 (Cal. Ct. App. Apr. 22, 2011) is an important case for employers because it highlights the fact that a workers’ compensation permanent disability rating (even one as high as 100%) does not mean that an employee cannot work in terms of an employer’s obligations under the Fair Employment and Housing Act (FEHA)/Americans with Disabilities Act (ADA). Significantly, under the workers' compensation system, the focus is on whether the employee can perform the usual and customary duties of the "job of injury." However, pursuant to the FEHA and ADA, the focus is on what the employee can do in terms of their original job, or any other vacant, alternative position. In essence, workers’ compensation looks at what the employee can no longer do while FEHA/ADA analyze what the employee can still do. Therefore, employers must exercise caution when considering return to work requests from injured workers, and avoid summarily denying the request based upon the disability alleged in the workers’ compensation case. For example, some employers believe that if an employee claims a substantial injury in the workers’ compensation case (which occurred in the Cuiellette case), and subsequently receives a high disability rating, the employer is justified in refusing reinstatement, particularly if the employee has a 100% disability rating. However, the court in the Cuiellette case delivered a strong message to employers that the standard for a permanent disability rating in workers’ compensation is different than the FEHA/ADA standard for determining whether a disabled employee is able to perform the essential functions of the job, with or without an accommodation. Therefore, best practices (and the lawful course) is for employers to conduct an interactive process with an employee who is requesting to return to work as opposed to denying that request solely based on the workers’ compensation disability rating. The following is an analysis of the Cuiellette decision.
Facts
Officer Rory Cuiellette worked for the City of Los Angeles (the City) as a field officer for several years, until he sustained an industrial injury for which he filed a workers’ compensation claim. Ultimately, he was found to be 100% disabled pursuant to the workers’ compensation rating system, and his workers’ compensation case was subsequently resolved.
Cuiellette then requested to return to work with the fugitive warrants unit and he provided a note from his treating physician (as requested by the detective in charge of the unit) which authorized Cuiellette to perform “permanent light duty – administrative work only.” In May 2003, the City accepted Cuiellette’s request and returned him to work at a desk job for the fugitive warrants unit, which is one of the City’s light duty jobs for injured field officers who want to continue working.
The City had a longstanding policy and practice of allowing field officers to perform light duty assignments which did not require them to do many of the essential job functions of a field officer. According to the officer in charge of the Medical Liaison Unit, he had placed hundreds of officers in light duty assignments during his 12 years in that position, and his orders were to accommodate disabled officers by placing them in assignments that did not required arrests, field work or dangerous driving. Another officer had reassigned at least 25 diabled officers to the fugitive warrants unit.
However, after five days of working in the new position, the City realized, with input from the workers’ compensation third party administrator, that Cuiellette had received a 100% disability rating in the workers’ compensation case, and on that basis Cuiellette’s supervisor advised him that he could not work and he was sent home. There was no evidence suggesting that Cuiellette could not perform the essential functions of the light duty position and in fact at trial there was evidence presented to the contrary, specifically that Cuiellette was able to perform the desk job duties.
Procedural History
This case involved multiple appeals on different issues. The most significant issue centered on whether a finding of 100% disability in a workers’ compensation claim precludes an employee from pursuing a claim under the Fair Employment and Housing Act (FEHA) for disability discrimination. The court determined that a “rating received in the workers’ compensation proceeding was not, as a matter of law, a legitimate, nondiscriminatory reason for an employer’s adverse employment action.” [Emphasis added] As discussed above, this means that even if an employee has a 100% disability rating in a workers’ compensation case, the employer must still engage in the Interactive Process if the employee requests to return to work, to review whether the employee can still perform the essential functions of their job, with or without a reasonable accommodation, in addition to reviewing whether there are any other jobs that the employee might be able to perform, if the employee is unable to perform the essential functions of his or her prior position. The court essentially found that the rating in a workers’ compensation case does not provide an employer with a way around an employee’s rights under the FEHA.
Court Analysis
In this case, the court considered which essential functions Cuiellette was required to prove that he could perform, with or without a reasonable accommodation, in order for the City to be liable for disability discrimination and/or a failure to accommodate. The City argued that even if Cuiellette could work the light duty desk job, he still had to prove that he could perform the essential functions of a peace officer (his former position) because the light duty position was never meant to be permanent. However, the court was not persuaded by the City’s argument that the light duty position was temporary. Instead, the court focused on evidence suggesting that the City’s long standing practice was to make light duty positions available to disabled peace officers as permanent assignments.
The court also reviewed whether Cuiellette had to prove that he was able to perform the essential functions of the light duty position or his former position. On this point, the court ultimately determined that in order to prove a failure to reasonably accommodate a disability, the plaintiff must prove that he or she can perform the essential functions of the position to which the employee has been reassigned, if that has occurred, rather than the essential functions of the employee’s prior position. The court also observed that in this case the evidence indicated that it was not the policy and practice of the City to require sworn peace officers who had been reassigned to light duty positions to be able to perform the essential functions of their prior positions. On this point, one of the City’s own officers testified that “his marching orders” were to reasonably accommodate any disabled officer by essentially eliminating the more strenuous essential functions of the job. Based upon this, the court found that Cuiellette only needed to prove that he was capable of performing the essential functions of the light duty job to which he had been reassigned. The court then found sufficient evidence to establish that Cuiellette could perform the essential functions of the light duty desk position, and concluded that he had done so without a problem for five days before being terminated.
What Does the Cuiellette Case Mean for Employers?
Employers must understand that when they have an employee who is injured on the job, the workers’ compensation laws are not the only laws that they must follow. Significantly, workers’ compensation laws do not eliminate or supersede other California and federal laws involving disabled employees. Thus, it is important for employers to understand that industrially injured employees, no matter how their workers’ compensation claim is resolved, have additional rights under the FEHA and under certain federal laws, such as the ADA. Moreover, these laws run concurrently with workers’ compensation laws. Therefore, when responding to a disabled employee’s request for reinstatement, including those employee’s injured while at work, the employer must engage in an interactive process to determine if the employee can perform the essential functions of his or her “current” position, and if not, to consider whether there are available alternative vacant positions, and whether the employee can perform the essential functions of such positions.
Employers must also exercise caution in creating and implementing light duty positions, if it is the employer’s policy to offer such jobs. In this case, the court was not convinced by the employer’s argument that the City intended the light duty position to be temporary. Instead, the court looked at the employer’s past practices regarding the light duty positions and concluded that the City had treated the positions as permanent. Thus, if employees are allowed to remain in light duty positions for extended periods of time, but the employer intends that these positions are only temporary in nature, employers must recognize that a court might conclude that such positions have become permanent based on the employer’s practices. However, because it can be beneficial in some cases to have temporary light duty positions available, employers may want to consider: (1) advising employees in writing that the light duty positions are temporary; (2) setting time limits for the light duty positions; and, (3) setting limits on the number of light duty positions available depending on the business needs of the employer.
What probably happened in this case is that when the City discovered Cuiellette had a 100% disability rating in the workers’ compensation case, the City believed the rating meant that Cuiellette could not perform any job duties, particularly since the employee had recently claimed a significant injury as part of the workers’ compensation case. However, the court held that the City’s failure to return the employee to work constituted a FEHA violation because FEHA requires that the employer conduct an interactive process to examine whether the employee can perform the essential functions of his or her job and if not to look at whether there is an available accommodation that the employer can offer. Further, as this case demonstrates, employers must also consider alternative vacant positions or light duty assignments if available, and if appropriate, consider whether a reasonable accommodation would enable the employee to perform the essential functions of the alternative or light duty position. The 100% permanent disability rating in the workers’ compensation case should not have been a factor in the FEHA analysis. Moreover, for employers who face the possibility of a disability discrimination lawsuit, the potential for a $1.5 million dollar judgment for failure to comply with FEHA does not even take into account defense costs and the immense time spent by employers in defending such matters. Best practices in these situations is for employers to conduct a thorough interactive process with the employee to determine the best course of action when considering reinstatement. And, of course to document that effort.
BOBrien and DSkeren
Copyright 2011: FSK Publishing all Rights Reserved DISCLAIMER: The information contained in this document is for general information purposes only and should not be construed to be formal legal advice nor should it be construed to create a lawyer/client relationship between the authors of any information on the document and any individual who chooses to use this document. Anyone using this document should seek independent counsel for any desired legal advice to ensure that the form is appropriate for their business purposes.
Facts
Officer Rory Cuiellette worked for the City of Los Angeles (the City) as a field officer for several years, until he sustained an industrial injury for which he filed a workers’ compensation claim. Ultimately, he was found to be 100% disabled pursuant to the workers’ compensation rating system, and his workers’ compensation case was subsequently resolved.
Cuiellette then requested to return to work with the fugitive warrants unit and he provided a note from his treating physician (as requested by the detective in charge of the unit) which authorized Cuiellette to perform “permanent light duty – administrative work only.” In May 2003, the City accepted Cuiellette’s request and returned him to work at a desk job for the fugitive warrants unit, which is one of the City’s light duty jobs for injured field officers who want to continue working.
The City had a longstanding policy and practice of allowing field officers to perform light duty assignments which did not require them to do many of the essential job functions of a field officer. According to the officer in charge of the Medical Liaison Unit, he had placed hundreds of officers in light duty assignments during his 12 years in that position, and his orders were to accommodate disabled officers by placing them in assignments that did not required arrests, field work or dangerous driving. Another officer had reassigned at least 25 diabled officers to the fugitive warrants unit.
However, after five days of working in the new position, the City realized, with input from the workers’ compensation third party administrator, that Cuiellette had received a 100% disability rating in the workers’ compensation case, and on that basis Cuiellette’s supervisor advised him that he could not work and he was sent home. There was no evidence suggesting that Cuiellette could not perform the essential functions of the light duty position and in fact at trial there was evidence presented to the contrary, specifically that Cuiellette was able to perform the desk job duties.
Procedural History
This case involved multiple appeals on different issues. The most significant issue centered on whether a finding of 100% disability in a workers’ compensation claim precludes an employee from pursuing a claim under the Fair Employment and Housing Act (FEHA) for disability discrimination. The court determined that a “rating received in the workers’ compensation proceeding was not, as a matter of law, a legitimate, nondiscriminatory reason for an employer’s adverse employment action.” [Emphasis added] As discussed above, this means that even if an employee has a 100% disability rating in a workers’ compensation case, the employer must still engage in the Interactive Process if the employee requests to return to work, to review whether the employee can still perform the essential functions of their job, with or without a reasonable accommodation, in addition to reviewing whether there are any other jobs that the employee might be able to perform, if the employee is unable to perform the essential functions of his or her prior position. The court essentially found that the rating in a workers’ compensation case does not provide an employer with a way around an employee’s rights under the FEHA.
Court Analysis
In this case, the court considered which essential functions Cuiellette was required to prove that he could perform, with or without a reasonable accommodation, in order for the City to be liable for disability discrimination and/or a failure to accommodate. The City argued that even if Cuiellette could work the light duty desk job, he still had to prove that he could perform the essential functions of a peace officer (his former position) because the light duty position was never meant to be permanent. However, the court was not persuaded by the City’s argument that the light duty position was temporary. Instead, the court focused on evidence suggesting that the City’s long standing practice was to make light duty positions available to disabled peace officers as permanent assignments.
The court also reviewed whether Cuiellette had to prove that he was able to perform the essential functions of the light duty position or his former position. On this point, the court ultimately determined that in order to prove a failure to reasonably accommodate a disability, the plaintiff must prove that he or she can perform the essential functions of the position to which the employee has been reassigned, if that has occurred, rather than the essential functions of the employee’s prior position. The court also observed that in this case the evidence indicated that it was not the policy and practice of the City to require sworn peace officers who had been reassigned to light duty positions to be able to perform the essential functions of their prior positions. On this point, one of the City’s own officers testified that “his marching orders” were to reasonably accommodate any disabled officer by essentially eliminating the more strenuous essential functions of the job. Based upon this, the court found that Cuiellette only needed to prove that he was capable of performing the essential functions of the light duty job to which he had been reassigned. The court then found sufficient evidence to establish that Cuiellette could perform the essential functions of the light duty desk position, and concluded that he had done so without a problem for five days before being terminated.
What Does the Cuiellette Case Mean for Employers?
Employers must understand that when they have an employee who is injured on the job, the workers’ compensation laws are not the only laws that they must follow. Significantly, workers’ compensation laws do not eliminate or supersede other California and federal laws involving disabled employees. Thus, it is important for employers to understand that industrially injured employees, no matter how their workers’ compensation claim is resolved, have additional rights under the FEHA and under certain federal laws, such as the ADA. Moreover, these laws run concurrently with workers’ compensation laws. Therefore, when responding to a disabled employee’s request for reinstatement, including those employee’s injured while at work, the employer must engage in an interactive process to determine if the employee can perform the essential functions of his or her “current” position, and if not, to consider whether there are available alternative vacant positions, and whether the employee can perform the essential functions of such positions.
Employers must also exercise caution in creating and implementing light duty positions, if it is the employer’s policy to offer such jobs. In this case, the court was not convinced by the employer’s argument that the City intended the light duty position to be temporary. Instead, the court looked at the employer’s past practices regarding the light duty positions and concluded that the City had treated the positions as permanent. Thus, if employees are allowed to remain in light duty positions for extended periods of time, but the employer intends that these positions are only temporary in nature, employers must recognize that a court might conclude that such positions have become permanent based on the employer’s practices. However, because it can be beneficial in some cases to have temporary light duty positions available, employers may want to consider: (1) advising employees in writing that the light duty positions are temporary; (2) setting time limits for the light duty positions; and, (3) setting limits on the number of light duty positions available depending on the business needs of the employer.
What probably happened in this case is that when the City discovered Cuiellette had a 100% disability rating in the workers’ compensation case, the City believed the rating meant that Cuiellette could not perform any job duties, particularly since the employee had recently claimed a significant injury as part of the workers’ compensation case. However, the court held that the City’s failure to return the employee to work constituted a FEHA violation because FEHA requires that the employer conduct an interactive process to examine whether the employee can perform the essential functions of his or her job and if not to look at whether there is an available accommodation that the employer can offer. Further, as this case demonstrates, employers must also consider alternative vacant positions or light duty assignments if available, and if appropriate, consider whether a reasonable accommodation would enable the employee to perform the essential functions of the alternative or light duty position. The 100% permanent disability rating in the workers’ compensation case should not have been a factor in the FEHA analysis. Moreover, for employers who face the possibility of a disability discrimination lawsuit, the potential for a $1.5 million dollar judgment for failure to comply with FEHA does not even take into account defense costs and the immense time spent by employers in defending such matters. Best practices in these situations is for employers to conduct a thorough interactive process with the employee to determine the best course of action when considering reinstatement. And, of course to document that effort.
BOBrien and DSkeren
Copyright 2011: FSK Publishing all Rights Reserved DISCLAIMER: The information contained in this document is for general information purposes only and should not be construed to be formal legal advice nor should it be construed to create a lawyer/client relationship between the authors of any information on the document and any individual who chooses to use this document. Anyone using this document should seek independent counsel for any desired legal advice to ensure that the form is appropriate for their business purposes.
Monday, May 9, 2011
Disciplining Employees Who Suffer From Mental Disabilities
A growing number of employees suffer from mental disabilities such as anxiety, panic disorder and depression. Employers often struggle with how to discipline such employees for misconduct, especially when the misconduct involved arises from the disability itself. A recent case, Wills v. The Superior Court of Orange County, which sheds light on this complicated issue, is particularly insightful because it involves the added component of misconduct based on threats of violence.
Linda Wills was diagnosed with bipolar disorder in 1997, which is a mental disability characterized by mood swings ranging from depression to manic episodes. In 1999, Ms. Wills began working for the Superior Court of Orange County (the OC Court) as a court processing specialist; she later became a court clerk. Although Ms. Wills took several medical leaves of absence while employed with the OC Court, she never advised the OC Court of her bipolar disorder. However, Ms. Wills did mention to some of her supervisors that she suffered from depression.
In July 2007, OC Court assigned Ms. Wills to the Anaheim Police Department’s lockup facility to help arraign criminal suspects by video. On July 3, 2007, Ms. Wills reported for work and rang the buzzer to be admitted, as it was a secure facility. To her dismay, she had to wait several minutes outside before being admitted. When she was final admitted, Wills swore and yelled at the Anaheim Police Department employees, accusing them of intentionally leaving her outside in the summer heat. Ms. Wills then told one officer that she added him and another police department employee to her “Kill Bill” list (a reference to the movie in which the main character put people on a list that she intended to kill). Many employees within the facility witnessed her outburst and viewed it as threatening. Ms. Wills disputed that these comments were meant to be threatening, and claimed that she was joking and that the other employee laughed at her comment. The police department reported the incident to the OC Court and demanded that Ms. Wills not be assigned to its facility again; the OC Court agreed.
This particular situation occurred at the start of a severe manic episode, of which Ms. Wills was as yet unaware. A few days later, Ms. Wills’ doctor placed her on medical leave to treat her manic episode.
While on medical leave, Ms. Wills sent an offensive and threatening ringtone to a co-worker, among other people. The co-worker testified that she felt the threats were directed to her because she had an “uneasy” relationship with Wills. Ms. Wills also sent numerous e-mail messages to several co-workers, as well as other people, with “topics ranging from her conversations with God to trips she planned to take.” Ms. Wills acknowledged that these e-mails sometimes had a “disturbing and threatening tone, but explained everything nonetheless needed to be said.” One of the co-workers reported the e-mails to the OC Court and claimed that Wills’ angry and irrational tone and the references to violence alarmed her.
Several weeks later, Ms. Wills’ doctor released her to return to work without restrictions. However, on the day she was scheduled to return to work, the OC Court placed her on paid administrative leave, in order to conduct an investigation into the incident at the Anaheim Police Department and the other complaints. At this point, Ms. Wills’ physician submitted a letter to the OC Court advising that Ms. Wills suffered from bipolar disorder and that the disorder had caused the behavior they were investigating.
The investigation confirmed the incidents, and thus, in October 2007, the OC Court terminated Ms. Wills, stating the following reasons: “’1. Threatening a peace officer and other Anaheim Police Department personnel with physical harm while conducting official Court business. 2. Threatening and inappropriate communications with co-workers. 3. Misuse of Court Resources. 4. Poor Judgment.’” The OC Court emphasized that Ms. Wills‘ conduct violated its employee handbook provisions prohibiting verbal threats, threatening behavior, and violence. The OC Court also concluded that Wills‘ behavior and her efforts to minimize her conduct as a joke demonstrated poor judgment.
Ms. Wills responded to her termination by asserting that the OC Court had unlawfully discriminated against her because of her mental disability. She also alleged that a group of co-workers had harassed her, that she had reported the harassment to management, and that the OC Court was terminating her in retaliation for reporting the harassment. The OC Court delayed her termination to investigate further. After investigating the alleged harassment, the investigator concluded that the comments by coworkers “did not amount to a credible threat of physical harm, but nonetheless was offensive and inappropriate.” After considering this information, the OC Court, in January 2008, terminated Ms. Wills’ employment.
Ultimately, Wills filed a claim with the Department of Fair Employment and Housing (DFEH), alleging discrimination in violation of the Fair Employment and Housing Act (FEHA) and she obtained a right to sue letter.
Procedural Background
OC Court filed a motion for summary judgment claiming that Ms. Wills had failed to exhaust her administrative remedies because the complaint that Ms. Wills filed with the Department of Fair Employment and Housing (DFEH) did not mention disability discrimination, retaliation, harassment, or failure to accommodate a disability. The DFEH complaint also did not mention her termination. Ms. Wills’ only marked the box on the DFEH complaint that said discrimination based on “denial of family/medical leave.” The trial court thus agreed that Ms. Wills failed to exhaust her administrative remedies and in addition, the court found that Ms. Wills’ FEHA claims “failed as a matter of law because the OC Court terminated her employment for a legitimate, nondiscriminatory reason- Wills violated the OC Court’s written policies prohibiting threats and violence in the workplace.” The Court of Appeals affirmed the trial court’s decision, concluding that Ms. Wills did not establish a prima facie case for disability discrimination.
Court Analysis
The primary issue the court had to resolve was whether disability-caused misconduct is treated under FEHA as part of the disability thereby making an “adverse employment action” based upon the conduct discriminatory, or whether it can be separated from the disability thereby making a legitimate adverse employment action based upon the disability-caused misconduct nondiscriminatory.
This was a case of first impression for California courts, and thus the court reviewed federal case law for guidance. The court found that several courts acknowledged a general rule that an employer may hold disabled employees to the same standard of conduct as nondisabled employees, if the performance standards are job-related and consistent with business necessity. Further, the court noted that federal courts acknowledge that certain levels of disability-caused conduct need not be tolerated or accommodated by employers. However, the court did note that some courts have held that there is no distinction between the disability itself and the disability-caused conduct.
The court also reviewed the Equal Employment Opportunity Commission’s (EEOC) interpretation of the Americans with Disabilities Act (ADA) in regards to this issue and found that the EEOC has provided guidance stating that an employer may discipline a disabled person for violating workplace conduct standards. Specifically, the EEOC states that “nothing in the ADA prevents an employer from maintaining a workplace free of violence or threats of violence, or from disciplining an employee who steals or destroys property.”
However, in its analysis, the court found one situation in which all the cases and the EEOC agree: an employer may distinguish between disability-caused misconduct and the disability itself when the misconduct includes threats or violence against coworkers. The court found this to be a necessary distinction for employers because they would otherwise be “caught on the horns of a dilemma.” The dilemma would require an employer to choose which law it should violate: the law against discrimination based on a disability or the law requiring employers to provide all of its employees with a safe place to work, free from threats and violence. However, the court held that its decision was purposely narrow in an effort to seek an acceptable balance between protecting employees from disability discrimination and “allowing employers to protect their employees from threats of violence and the fear that a hostile or potentially violent employee will act on those threats.”
What Does This Case Mean For Employers?
The court emphasized the limited scope of its holding noting that it only covers situations in which there are threats of violence or actual violence against coworkers. Specifically, the court concluded that the “FEHA does not prohibit an employer from distinguishing between disability-caused misconduct and the disability itself when the misconduct involves threats or violence against coworkers” (emphasis added). For employers, one of the significant aspects of this case is that OC Court had a written policy against workplace threats and violence and apparently conducted a fairly thorough investigation regarding the harassment allegations, including interviewing numerous witnesses, before terminating Wills. This helped to convince the trial court that the termination was based on a legitimate nondiscriminatory reason. The bottom line for employers is that well drafted and implemented workplace policies are essential. Moreover, employers may distinguish between a disability-caused misconduct and the disability itself, provided the misconduct involves threats or violence against coworkers. However, the employer must have the proper documentation and other supporting evidence to establish that the discipline is based on nondiscriminatory reasons. The court did not consider the effect of other forms of misconduct that arise from a disability, although the EEOC has emphasized that employers may discipline disabled employees, provided such discipline is not based on discriminatory intent/motives.
DSkeren and BOBrien
Copyright 2011: FSK Publishing all Rights Reserved DISCLAIMER: The information on this blog is for general information purposes only and should not be construed to be formal legal advice nor should it be construed to create a lawyer/client relationship between the authors of any information on the blog and any individual who chooses to view this blog. Anyone accessing this blog is encouraged to seek independent counsel for any desired legal advice
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Employers Continue to Face Difficult and Costly Litigation
FSKEmployment Law Editor - Wednesday, April 20, 2011
Recent cases, involving both jury trials and settlements, demonstrate that employers continue to face difficult and costly litigation in employment law disputes. Fortunately, in two of the cases described in this article, the employers obtained a defense verdict, although most likely still incurred significant defense costs. The defense costs of a single plaintiff case, taken through trial, are estimated by some to be in the $300,000 range, for reputable defense firms. Moreover, the significant amount of actual defense costs does not begin to address the immense time commitment these cases require from an employer in preparing a defense. For example, the typical production of documents in a wage and hour case often involves compiling volumes of payroll records that cover significant periods of time. In addition, the depositions of supervisors, managers, human resources personnel, co-workers and many others may be required as part of the lawsuit. Thus, because of the substantial amount of time and expenses associated with employment law litigation, and because of the continuing barrage of these types of case, employers must understand and follow the law, properly train their staff, and document as needed, particularly in regards to personnel matters. Employers should also consider “Employers Practices Liability Coverage” (EPLI). This is a type of insurance which provides coverage for many employment related matters. Some policies even cover wage and hour disputes, which employers must increasingly contend with, particularly in regards to misclassification of employees and overtime compensation claims. The following cases, which involve age discrimination, harassment, sexual orientation discrimination, exempt/overtime claims and failure to accommodate disputes are only a small sampling of the employment law cases that continue to plague employers.
Discrimination/Failure to Accommodate/Sexual Harassment--Carmen Hunt v El Camino Community College District This case involved a jury trial in downtown Los Angeles, a venue where plaintiffs typically are very successful as Los Angeles juries are notorious for favoring plaintiffs. The case involved Carmen Hunt, a professor at El Camino College. Ms. Hunt alleged she was harassed and discriminated against by her superiors at the college. According to Ms. Hunt, the college tried to force her out because of her extended leaves of absence due to Post Traumatic Stress Disorder (PTSD). The leaves of absence occurred when she collapsed on campus in 2002, took a leave of absence until 2005, then returned on a part-time basis. Ms. Hunt also claimed that the college and the district did not accommodate her PTSD and that her superiors collected secret personnel files on her, which were defamatory. Further, she claimed she was sexually harassed and exposed to a hostile work environment all in violation of Education Code §87031. The college denied all accusations. After a week of trial, and only 50 minutes of deliberation, the jury returned a 12 – 0 verdict in favor of the defendant. This case demonstrates that employers can sometimes “fight city hall and still win.”
Sexual Orientation Discrimination--Parks v City of Oakland
Sherry Parks, a lesbian, was the only female plumber on the Port of Oakland (the Port) staff. She complained that she was harassed regularly because of her sexual orientation, that she was given unfair job assignments, and that she was subjected to a hostile work environment. The Port alleged that every job assignment and disciplinary action taken against Parks was for a legitimate business reason. After a 6 week trial the jury returned a 12 – 0 defense verdict in one day of deliberation. Parks was represented by Jean Hyams a graduate of Wellesley and UC Berkeley School of Law ( Boalt Hall) who was admitted to practice in 1989 and is a member of the State Bar’s employment law section. The Port of Oakland was represented by Edwin J Wilson, Jr., who graduated from UC Berkeley and UC Berkeley School of Law and was admitted to the practice of law in 1971. Mr. Wilson is a specialist in employment cases. This was obviously a significant victory for employers.
Wage and Hour/Overtime--Hilda Solis U.S. Secretary of Labor v Poetry Corporation
Don & J Inc., Nu Plus USA, Inc and A-do Fashion Inc., sewing contractors, produced goods for Poetry Corp, a garment manufacturer of women’s clothing from 2009 to 2010. The Department of Labor (DOL) filed suit against Poetry Corp alleging violations of the Fair Labor Standards Act (FLSA) regarding employees who worked for the sewing contractors. The DOL alleged that the contractors failed to pay its employees the federal minimum wage and also failed to pay overtime hours. Poetry Corp was also accused of transporting, delivering and selling products it knew were made by employees who were not lawfully compensated. According to the DOL, this was a sweatshop type case. The DOL sought to prevent future practices and also sought restitution for the employees – back pay and overtime. The case settled for $53,956 without admission of liability by the defendant. While we can be sure this cost the defendant a considerable amount in attorney fees and litigation costs, in our opinion the defense won this one because of the significant nature of the allegations and the relatively small size of the settlement.
Age Discrimination/Harassment--Judee Welch v Ivy Hill Corporation
This case was also a jury trial in downtown Los Angeles, which, as noted above, is a very “plaintiff friendly” venue. A defense verdict was reached on March 8, 2011, before the Honorable Richard Fruin, who is one of the most highly rated judges in downtown Los Angeles. In the case, Judee Welch alleged that she worked for Ivy Corporation from 1987 through March 2009, as a saleswoman, selling print to the music industry. During the last 4 ½ years of her employment a new vice president was brought in to supervise her and the rest of the sales staff. Welch alleges that during that time, the vice president/supervisor allegedly made comments about Welch’s age and allegedly showed preference for younger people in hiring and promotion. When the company was purchased in 2009, Welch was part of a layoff. She then filed a lawsuit alleging age harassment and age discrimination and prevailed. At the end of the 11 day trial the jury, in a 12 – 0 verdict, after 5 hours of deliberation, awarded Welch $213,000 loss of earnings and $731,000 in future loss of earnings. Her lawyer intends to move for attorney fees under the Fair Employment and Housing Act (FEHA). Welch’s lawyer, Carney Shegerian, was admitted to the practice of law after an undergraduate degree from Hofstra University and a law degree from Loyola University in Los Angeles. Defense counsel, Kelly O Scott, was admitted to the practice of law in 1987 after an undergraduate degree at UCLA and a law degree at USC.
NBoxley
Copyright 2011: FSK Publishing all Rights Reserved DISCLAIMER: The information on this blog is for general information purposes only and should not be construed to be formal legal advice nor should it be construed to create a lawyer/client relationship between the authors of any information on the blog and any individual who chooses to view this blog. Anyone accessing this blog is encouraged to seek independent counsel for any desired legal advice.
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Why Do Employers Lose So Many “Discharge For Misconduct” Cases
FSKEmployment Law Editor - Wednesday, April 13, 2011
Employers often lose “discharge for misconduct” cases at the Employment Development Department (EDD) and at the California Unemployment Insurance Appeals Board (CUIAB). The following is a discussion of the steps an employer can take to increase the chances of prevailing in these types of cases.
What is at Stake?
An employer’s EDD tax rate can vary from 1.2 to 6.2%, depending upon the number of employees and the number of claims paid from the employer’s reserve account in Sacramento. Therefore, doing a good job in defeating an unemployment insurance claim can save a company a lot of money, in the long run.
How Does the Law Define Employee “Misconduct”?
Misconduct connected with an employee's work consists of four elements:
• A material duty owed by the claimant/employee to the employer in the employment contract, whether oral or written;
• A substantial breach of that duty;
• A willful or wanton breach or disregard of that duty; and
• A “disregard of employer's interests”; i.e., that which tends to injure the employer's interests.
Thus, actions which do not violate such a duty are not misconduct. See Precedent Board Decision P-B-3
Let's consider an employee’s breach of a company policy or procedure. Violations of an employer’s policies and procedures may be valid reasons to discipline an employee, including termination, if repeated violations occur. Further, some violations may justify an immediate termination. However, unemployment insurance law does not allow an employee to be discharged without consequences to the employer’s EDD tax rate, for breach of an unwritten or undefined rule, except for such things as stealing company property, gross negligence, gross insubordination, fighting on job, sexual assault, etc. Therefore, the key to success at the Employment Development Department (EDD) and at the California Unemployment Insurance Appeals Board (CUIAB) is adequate documentation and the appropriate workplace policies and procedures.
Absent extraordinary circumstances, such as referenced above, the EDD and the Administrative Law Judges expect to see a copy of the employer’s policy/procedures, proof that the employee was aware of the policy/procedures, proof as to how the policy/procedures were breached, evidence of any performance warnings issued, and evidence as to how the breach of the policy/procedures injured company interests.
It is important for employers to understand that if the breach of a company policy or procedure is not documented in the employee’s personnel file, courts may hold that “it did not happen.” Therefore, it is essential to properly document.
The following are examples of common problems faced by employers that lead to employers losing “discharge for misconduct” cases at the EDD and CUIAB:
• No proof employee knew of employer’s policy/workplace rule.
Employers must have written documentation that proves the employee “knew” of the policy/rule. The easiest way is to have a signed acknowledgement of receipt of the policy/rule (such as a signed employee handbook which contains the policy/rule) by the employee, in the personnel file;
• The employer fails to offer evidence that the employee’s duty, required by the policy/rule, was “material” (i.e. important to the company).
• There is insufficient proof that the employee “substantially breached” the policy/rule.
Employers must present evidence of a “substantial breach” of the employer’s policy/workplace rule. Examples of sufficient evidence: Company records, sworn witness statements, drawings, photographs, police reports, etc;
• The employee proves the employer’s policy/rule was inconsistently enforced.
Employers must be sure their company rules are equally enforced. For example: If an employer tolerates numerous tardiness in an month from some employees, the employer cannot then hold another employee to one tardy a month;
• The employer condones a breach of the policy/rule.
Employers wait too long to take disciplinary action following a substantial, willful breach of duty.
• Progressive discipline was not established, in the workplace.
The EDD and the CUIAB judges expect employers to show that they made a reasonable effort to change an employee's bad behavior, before discharging the employee;
• The employer fails to show how the breach harms (injures) its interests.
The employer must present evidence as to how the breach harmed the company;
• The employer cannot prove the last breach was “willful” or not for good cause.
This is a huge problem and probably a major reason that employers lose misconduct cases at the EDD.
Finally, employers should do the following:
• Send copies of their documents to the EDD as soon as an employee makes a claim for unemployment benefits;
• Immediately return all EDD telephone calls;
• Be sure to timely appeal (20 days) an adverse EDD determination;
• Attend CUIAB hearings with their witness and original documents;
• Be present at the hearing location at least 15 minutes before the hearing commences;
• Cite Precedent Board (PB) decisions supporting their case to both the EDD (when objecting to the claim), and when appealing to an administrative law judge; and,
• Ask the judge, after all evidence is in, and the judge states “anything further”, for the opportunity to make a “brief” closing statement. Do not take more than a minute or so.
David W. O'Brien, Esq
Floyd, Skeren & Kelly, LLP
A Former Administrative Law Judge with the CUIAB
Linda Wills was diagnosed with bipolar disorder in 1997, which is a mental disability characterized by mood swings ranging from depression to manic episodes. In 1999, Ms. Wills began working for the Superior Court of Orange County (the OC Court) as a court processing specialist; she later became a court clerk. Although Ms. Wills took several medical leaves of absence while employed with the OC Court, she never advised the OC Court of her bipolar disorder. However, Ms. Wills did mention to some of her supervisors that she suffered from depression.
In July 2007, OC Court assigned Ms. Wills to the Anaheim Police Department’s lockup facility to help arraign criminal suspects by video. On July 3, 2007, Ms. Wills reported for work and rang the buzzer to be admitted, as it was a secure facility. To her dismay, she had to wait several minutes outside before being admitted. When she was final admitted, Wills swore and yelled at the Anaheim Police Department employees, accusing them of intentionally leaving her outside in the summer heat. Ms. Wills then told one officer that she added him and another police department employee to her “Kill Bill” list (a reference to the movie in which the main character put people on a list that she intended to kill). Many employees within the facility witnessed her outburst and viewed it as threatening. Ms. Wills disputed that these comments were meant to be threatening, and claimed that she was joking and that the other employee laughed at her comment. The police department reported the incident to the OC Court and demanded that Ms. Wills not be assigned to its facility again; the OC Court agreed.
This particular situation occurred at the start of a severe manic episode, of which Ms. Wills was as yet unaware. A few days later, Ms. Wills’ doctor placed her on medical leave to treat her manic episode.
While on medical leave, Ms. Wills sent an offensive and threatening ringtone to a co-worker, among other people. The co-worker testified that she felt the threats were directed to her because she had an “uneasy” relationship with Wills. Ms. Wills also sent numerous e-mail messages to several co-workers, as well as other people, with “topics ranging from her conversations with God to trips she planned to take.” Ms. Wills acknowledged that these e-mails sometimes had a “disturbing and threatening tone, but explained everything nonetheless needed to be said.” One of the co-workers reported the e-mails to the OC Court and claimed that Wills’ angry and irrational tone and the references to violence alarmed her.
Several weeks later, Ms. Wills’ doctor released her to return to work without restrictions. However, on the day she was scheduled to return to work, the OC Court placed her on paid administrative leave, in order to conduct an investigation into the incident at the Anaheim Police Department and the other complaints. At this point, Ms. Wills’ physician submitted a letter to the OC Court advising that Ms. Wills suffered from bipolar disorder and that the disorder had caused the behavior they were investigating.
The investigation confirmed the incidents, and thus, in October 2007, the OC Court terminated Ms. Wills, stating the following reasons: “’1. Threatening a peace officer and other Anaheim Police Department personnel with physical harm while conducting official Court business. 2. Threatening and inappropriate communications with co-workers. 3. Misuse of Court Resources. 4. Poor Judgment.’” The OC Court emphasized that Ms. Wills‘ conduct violated its employee handbook provisions prohibiting verbal threats, threatening behavior, and violence. The OC Court also concluded that Wills‘ behavior and her efforts to minimize her conduct as a joke demonstrated poor judgment.
Ms. Wills responded to her termination by asserting that the OC Court had unlawfully discriminated against her because of her mental disability. She also alleged that a group of co-workers had harassed her, that she had reported the harassment to management, and that the OC Court was terminating her in retaliation for reporting the harassment. The OC Court delayed her termination to investigate further. After investigating the alleged harassment, the investigator concluded that the comments by coworkers “did not amount to a credible threat of physical harm, but nonetheless was offensive and inappropriate.” After considering this information, the OC Court, in January 2008, terminated Ms. Wills’ employment.
Ultimately, Wills filed a claim with the Department of Fair Employment and Housing (DFEH), alleging discrimination in violation of the Fair Employment and Housing Act (FEHA) and she obtained a right to sue letter.
Procedural Background
OC Court filed a motion for summary judgment claiming that Ms. Wills had failed to exhaust her administrative remedies because the complaint that Ms. Wills filed with the Department of Fair Employment and Housing (DFEH) did not mention disability discrimination, retaliation, harassment, or failure to accommodate a disability. The DFEH complaint also did not mention her termination. Ms. Wills’ only marked the box on the DFEH complaint that said discrimination based on “denial of family/medical leave.” The trial court thus agreed that Ms. Wills failed to exhaust her administrative remedies and in addition, the court found that Ms. Wills’ FEHA claims “failed as a matter of law because the OC Court terminated her employment for a legitimate, nondiscriminatory reason- Wills violated the OC Court’s written policies prohibiting threats and violence in the workplace.” The Court of Appeals affirmed the trial court’s decision, concluding that Ms. Wills did not establish a prima facie case for disability discrimination.
Court Analysis
The primary issue the court had to resolve was whether disability-caused misconduct is treated under FEHA as part of the disability thereby making an “adverse employment action” based upon the conduct discriminatory, or whether it can be separated from the disability thereby making a legitimate adverse employment action based upon the disability-caused misconduct nondiscriminatory.
This was a case of first impression for California courts, and thus the court reviewed federal case law for guidance. The court found that several courts acknowledged a general rule that an employer may hold disabled employees to the same standard of conduct as nondisabled employees, if the performance standards are job-related and consistent with business necessity. Further, the court noted that federal courts acknowledge that certain levels of disability-caused conduct need not be tolerated or accommodated by employers. However, the court did note that some courts have held that there is no distinction between the disability itself and the disability-caused conduct.
The court also reviewed the Equal Employment Opportunity Commission’s (EEOC) interpretation of the Americans with Disabilities Act (ADA) in regards to this issue and found that the EEOC has provided guidance stating that an employer may discipline a disabled person for violating workplace conduct standards. Specifically, the EEOC states that “nothing in the ADA prevents an employer from maintaining a workplace free of violence or threats of violence, or from disciplining an employee who steals or destroys property.”
However, in its analysis, the court found one situation in which all the cases and the EEOC agree: an employer may distinguish between disability-caused misconduct and the disability itself when the misconduct includes threats or violence against coworkers. The court found this to be a necessary distinction for employers because they would otherwise be “caught on the horns of a dilemma.” The dilemma would require an employer to choose which law it should violate: the law against discrimination based on a disability or the law requiring employers to provide all of its employees with a safe place to work, free from threats and violence. However, the court held that its decision was purposely narrow in an effort to seek an acceptable balance between protecting employees from disability discrimination and “allowing employers to protect their employees from threats of violence and the fear that a hostile or potentially violent employee will act on those threats.”
What Does This Case Mean For Employers?
The court emphasized the limited scope of its holding noting that it only covers situations in which there are threats of violence or actual violence against coworkers. Specifically, the court concluded that the “FEHA does not prohibit an employer from distinguishing between disability-caused misconduct and the disability itself when the misconduct involves threats or violence against coworkers” (emphasis added). For employers, one of the significant aspects of this case is that OC Court had a written policy against workplace threats and violence and apparently conducted a fairly thorough investigation regarding the harassment allegations, including interviewing numerous witnesses, before terminating Wills. This helped to convince the trial court that the termination was based on a legitimate nondiscriminatory reason. The bottom line for employers is that well drafted and implemented workplace policies are essential. Moreover, employers may distinguish between a disability-caused misconduct and the disability itself, provided the misconduct involves threats or violence against coworkers. However, the employer must have the proper documentation and other supporting evidence to establish that the discipline is based on nondiscriminatory reasons. The court did not consider the effect of other forms of misconduct that arise from a disability, although the EEOC has emphasized that employers may discipline disabled employees, provided such discipline is not based on discriminatory intent/motives.
DSkeren and BOBrien
Copyright 2011: FSK Publishing all Rights Reserved DISCLAIMER: The information on this blog is for general information purposes only and should not be construed to be formal legal advice nor should it be construed to create a lawyer/client relationship between the authors of any information on the blog and any individual who chooses to view this blog. Anyone accessing this blog is encouraged to seek independent counsel for any desired legal advice
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Employers Continue to Face Difficult and Costly Litigation
FSKEmployment Law Editor - Wednesday, April 20, 2011
Recent cases, involving both jury trials and settlements, demonstrate that employers continue to face difficult and costly litigation in employment law disputes. Fortunately, in two of the cases described in this article, the employers obtained a defense verdict, although most likely still incurred significant defense costs. The defense costs of a single plaintiff case, taken through trial, are estimated by some to be in the $300,000 range, for reputable defense firms. Moreover, the significant amount of actual defense costs does not begin to address the immense time commitment these cases require from an employer in preparing a defense. For example, the typical production of documents in a wage and hour case often involves compiling volumes of payroll records that cover significant periods of time. In addition, the depositions of supervisors, managers, human resources personnel, co-workers and many others may be required as part of the lawsuit. Thus, because of the substantial amount of time and expenses associated with employment law litigation, and because of the continuing barrage of these types of case, employers must understand and follow the law, properly train their staff, and document as needed, particularly in regards to personnel matters. Employers should also consider “Employers Practices Liability Coverage” (EPLI). This is a type of insurance which provides coverage for many employment related matters. Some policies even cover wage and hour disputes, which employers must increasingly contend with, particularly in regards to misclassification of employees and overtime compensation claims. The following cases, which involve age discrimination, harassment, sexual orientation discrimination, exempt/overtime claims and failure to accommodate disputes are only a small sampling of the employment law cases that continue to plague employers.
Discrimination/Failure to Accommodate/Sexual Harassment--Carmen Hunt v El Camino Community College District This case involved a jury trial in downtown Los Angeles, a venue where plaintiffs typically are very successful as Los Angeles juries are notorious for favoring plaintiffs. The case involved Carmen Hunt, a professor at El Camino College. Ms. Hunt alleged she was harassed and discriminated against by her superiors at the college. According to Ms. Hunt, the college tried to force her out because of her extended leaves of absence due to Post Traumatic Stress Disorder (PTSD). The leaves of absence occurred when she collapsed on campus in 2002, took a leave of absence until 2005, then returned on a part-time basis. Ms. Hunt also claimed that the college and the district did not accommodate her PTSD and that her superiors collected secret personnel files on her, which were defamatory. Further, she claimed she was sexually harassed and exposed to a hostile work environment all in violation of Education Code §87031. The college denied all accusations. After a week of trial, and only 50 minutes of deliberation, the jury returned a 12 – 0 verdict in favor of the defendant. This case demonstrates that employers can sometimes “fight city hall and still win.”
Sexual Orientation Discrimination--Parks v City of Oakland
Sherry Parks, a lesbian, was the only female plumber on the Port of Oakland (the Port) staff. She complained that she was harassed regularly because of her sexual orientation, that she was given unfair job assignments, and that she was subjected to a hostile work environment. The Port alleged that every job assignment and disciplinary action taken against Parks was for a legitimate business reason. After a 6 week trial the jury returned a 12 – 0 defense verdict in one day of deliberation. Parks was represented by Jean Hyams a graduate of Wellesley and UC Berkeley School of Law ( Boalt Hall) who was admitted to practice in 1989 and is a member of the State Bar’s employment law section. The Port of Oakland was represented by Edwin J Wilson, Jr., who graduated from UC Berkeley and UC Berkeley School of Law and was admitted to the practice of law in 1971. Mr. Wilson is a specialist in employment cases. This was obviously a significant victory for employers.
Wage and Hour/Overtime--Hilda Solis U.S. Secretary of Labor v Poetry Corporation
Don & J Inc., Nu Plus USA, Inc and A-do Fashion Inc., sewing contractors, produced goods for Poetry Corp, a garment manufacturer of women’s clothing from 2009 to 2010. The Department of Labor (DOL) filed suit against Poetry Corp alleging violations of the Fair Labor Standards Act (FLSA) regarding employees who worked for the sewing contractors. The DOL alleged that the contractors failed to pay its employees the federal minimum wage and also failed to pay overtime hours. Poetry Corp was also accused of transporting, delivering and selling products it knew were made by employees who were not lawfully compensated. According to the DOL, this was a sweatshop type case. The DOL sought to prevent future practices and also sought restitution for the employees – back pay and overtime. The case settled for $53,956 without admission of liability by the defendant. While we can be sure this cost the defendant a considerable amount in attorney fees and litigation costs, in our opinion the defense won this one because of the significant nature of the allegations and the relatively small size of the settlement.
Age Discrimination/Harassment--Judee Welch v Ivy Hill Corporation
This case was also a jury trial in downtown Los Angeles, which, as noted above, is a very “plaintiff friendly” venue. A defense verdict was reached on March 8, 2011, before the Honorable Richard Fruin, who is one of the most highly rated judges in downtown Los Angeles. In the case, Judee Welch alleged that she worked for Ivy Corporation from 1987 through March 2009, as a saleswoman, selling print to the music industry. During the last 4 ½ years of her employment a new vice president was brought in to supervise her and the rest of the sales staff. Welch alleges that during that time, the vice president/supervisor allegedly made comments about Welch’s age and allegedly showed preference for younger people in hiring and promotion. When the company was purchased in 2009, Welch was part of a layoff. She then filed a lawsuit alleging age harassment and age discrimination and prevailed. At the end of the 11 day trial the jury, in a 12 – 0 verdict, after 5 hours of deliberation, awarded Welch $213,000 loss of earnings and $731,000 in future loss of earnings. Her lawyer intends to move for attorney fees under the Fair Employment and Housing Act (FEHA). Welch’s lawyer, Carney Shegerian, was admitted to the practice of law after an undergraduate degree from Hofstra University and a law degree from Loyola University in Los Angeles. Defense counsel, Kelly O Scott, was admitted to the practice of law in 1987 after an undergraduate degree at UCLA and a law degree at USC.
NBoxley
Copyright 2011: FSK Publishing all Rights Reserved DISCLAIMER: The information on this blog is for general information purposes only and should not be construed to be formal legal advice nor should it be construed to create a lawyer/client relationship between the authors of any information on the blog and any individual who chooses to view this blog. Anyone accessing this blog is encouraged to seek independent counsel for any desired legal advice.
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Why Do Employers Lose So Many “Discharge For Misconduct” Cases
FSKEmployment Law Editor - Wednesday, April 13, 2011
Employers often lose “discharge for misconduct” cases at the Employment Development Department (EDD) and at the California Unemployment Insurance Appeals Board (CUIAB). The following is a discussion of the steps an employer can take to increase the chances of prevailing in these types of cases.
What is at Stake?
An employer’s EDD tax rate can vary from 1.2 to 6.2%, depending upon the number of employees and the number of claims paid from the employer’s reserve account in Sacramento. Therefore, doing a good job in defeating an unemployment insurance claim can save a company a lot of money, in the long run.
How Does the Law Define Employee “Misconduct”?
Misconduct connected with an employee's work consists of four elements:
• A material duty owed by the claimant/employee to the employer in the employment contract, whether oral or written;
• A substantial breach of that duty;
• A willful or wanton breach or disregard of that duty; and
• A “disregard of employer's interests”; i.e., that which tends to injure the employer's interests.
Thus, actions which do not violate such a duty are not misconduct. See Precedent Board Decision P-B-3
Let's consider an employee’s breach of a company policy or procedure. Violations of an employer’s policies and procedures may be valid reasons to discipline an employee, including termination, if repeated violations occur. Further, some violations may justify an immediate termination. However, unemployment insurance law does not allow an employee to be discharged without consequences to the employer’s EDD tax rate, for breach of an unwritten or undefined rule, except for such things as stealing company property, gross negligence, gross insubordination, fighting on job, sexual assault, etc. Therefore, the key to success at the Employment Development Department (EDD) and at the California Unemployment Insurance Appeals Board (CUIAB) is adequate documentation and the appropriate workplace policies and procedures.
Absent extraordinary circumstances, such as referenced above, the EDD and the Administrative Law Judges expect to see a copy of the employer’s policy/procedures, proof that the employee was aware of the policy/procedures, proof as to how the policy/procedures were breached, evidence of any performance warnings issued, and evidence as to how the breach of the policy/procedures injured company interests.
It is important for employers to understand that if the breach of a company policy or procedure is not documented in the employee’s personnel file, courts may hold that “it did not happen.” Therefore, it is essential to properly document.
The following are examples of common problems faced by employers that lead to employers losing “discharge for misconduct” cases at the EDD and CUIAB:
• No proof employee knew of employer’s policy/workplace rule.
Employers must have written documentation that proves the employee “knew” of the policy/rule. The easiest way is to have a signed acknowledgement of receipt of the policy/rule (such as a signed employee handbook which contains the policy/rule) by the employee, in the personnel file;
• The employer fails to offer evidence that the employee’s duty, required by the policy/rule, was “material” (i.e. important to the company).
• There is insufficient proof that the employee “substantially breached” the policy/rule.
Employers must present evidence of a “substantial breach” of the employer’s policy/workplace rule. Examples of sufficient evidence: Company records, sworn witness statements, drawings, photographs, police reports, etc;
• The employee proves the employer’s policy/rule was inconsistently enforced.
Employers must be sure their company rules are equally enforced. For example: If an employer tolerates numerous tardiness in an month from some employees, the employer cannot then hold another employee to one tardy a month;
• The employer condones a breach of the policy/rule.
Employers wait too long to take disciplinary action following a substantial, willful breach of duty.
• Progressive discipline was not established, in the workplace.
The EDD and the CUIAB judges expect employers to show that they made a reasonable effort to change an employee's bad behavior, before discharging the employee;
• The employer fails to show how the breach harms (injures) its interests.
The employer must present evidence as to how the breach harmed the company;
• The employer cannot prove the last breach was “willful” or not for good cause.
This is a huge problem and probably a major reason that employers lose misconduct cases at the EDD.
Finally, employers should do the following:
• Send copies of their documents to the EDD as soon as an employee makes a claim for unemployment benefits;
• Immediately return all EDD telephone calls;
• Be sure to timely appeal (20 days) an adverse EDD determination;
• Attend CUIAB hearings with their witness and original documents;
• Be present at the hearing location at least 15 minutes before the hearing commences;
• Cite Precedent Board (PB) decisions supporting their case to both the EDD (when objecting to the claim), and when appealing to an administrative law judge; and,
• Ask the judge, after all evidence is in, and the judge states “anything further”, for the opportunity to make a “brief” closing statement. Do not take more than a minute or so.
David W. O'Brien, Esq
Floyd, Skeren & Kelly, LLP
A Former Administrative Law Judge with the CUIAB
Sunday, May 1, 2011
Weekly Calls to Employee on FMLA Leave May Constitute “Interference”
The United States District Court, W.D. Arkansas, Texarkana Division, has found that weekly calls to an employee on medical leave, from the employee’s supervisor, inquiring as to when the employee would return to work were sufficiently “discouraging or chilling” of the employee’s exercise of rights under the Family and Medical Leave Act (FMLA), that the calls interfered with the employee’s FMLA rights.
The employee alleged that the weekly calls from her immediate supervisor inquiring as to when she would return to work made her feel pressured to return to work while on FMLA leave. The employee qualified for FMLA leave, and the time off had been granted by the employer. Although the employee asked at one point if her job was in jeopardy, apparently the only response that the supervisor provided was that the employee should return to work as soon as possible.
The employer argued that because the employee did not return to work on the date specified by her physician, the employer was justified in making the inquiries, and thus the employee failed to establish her FMLA interference claim. However, the court disagreed with the employer, noting that "interference" includes not only refusing to authorize leave, "but discouraging an employee from using such leave." 29 CFR 825.220(b).
It is interesting to note that the court did not discuss 29 CFR 825.311(a), which specifically allows an employer to request periodic status updates while an employee is out on leave. In pertinent part it states: “An employer may require an employee on FMLA leave to report periodically on the employee's status and intent to return to work. The employer's policy regarding such reports may not be discriminatory and must take into account all of the relevant facts and circumstances related to the individual employee's leave situation.” It seems that the court determined, without analyzing further, either that the weekly telephone calls were too frequent or that the employer’s policy did not allow for such weekly telephone calls based upon the particular facts and circumstances of the case. In this regard, although the facts state that the employee was out for back surgery, it is unclear if there was a medical certification from the physician specifying how long the employee would be out on FMLA leave. Without knowing such details, it is difficult to determine whether the court found that weekly telephone calls requesting a status report were per se unreasonable and discouraging to an employee’s right to take leave, or if it was a particular factual situation present in the case. Since this was an appeal from a motion for summary judgment, the court may have only addressed the issue upon which the trial court found; additional facts may have been introduced at trial regarding the interference claim.
What should employers do based upon this case? It is recommended that employers obtain as much information as possible regarding the duration and timing of the FMLA leave prior to the leave being taken, and request that employees provide medical updates and status reports regarding their anticipated return to work date. One approach, if appropriate, is to require such updates every thirty days, although every two weeks, or even more often might be necessary in certain situations. Even if the leave is “open ended,” an employer should regularly follow-up and require updates as to the employee’s anticipated return to work date.
It is also recommended that employers not designate immediate supervisors as the contact person when an employee is out on leave. This should be left to the employer’s Human Resources representative. A supervisor, particularly one who works closely with the employee, may unwittingly cause an employee more concern about his/her job than a more neutral person with whom the employee does not have a daily working relationship. Furthermore, in California, an employer is only entitled to limited medical information about an employee on FMLA, and an untrained supervisor might obtain medical information that the employer is not entitled to have.
Thus, employers should::
1. Be careful about how frequently and under what circumstances contact is made with employees who are on FMLA; further, employers should base the frequency of such contact on what is reasonably appropriate under the circumstances;
2. Have carefully drafted FMLA policies that advise employees of their rights and obligations under FMLA, including specifying how often employees need to report to the employer regarding their anticipated return to work date when on FMLA leave; and,
3. Designate their Human Resources representative as the one responsible for contacting employees on FMLA leave for status updates.
DSkeren
Notes:
Terwilliger v. HOWARD MEMORIAL HOSPITAL, Dist. Court, WD Arkansas 201, Case No. 09-CV-4055, January 27, 2011
http://scholar.google.com/scholar_case?case=12749087681111817538&hl=en&as_sdt=2&as_vis=1&oi=scholarr
Copyright 2011: FSK Publishing all Rights Reserved DISCLAIMER: The information on this blog is for general information purposes only and should not be construed to be formal legal advice nor should it be construed to create a lawyer/client relationship between the authors of any information on the blog and any individual who chooses to view this blog. Anyone accessing this blog is encouraged to seek independent counsel for any desired legal advice.
The employee alleged that the weekly calls from her immediate supervisor inquiring as to when she would return to work made her feel pressured to return to work while on FMLA leave. The employee qualified for FMLA leave, and the time off had been granted by the employer. Although the employee asked at one point if her job was in jeopardy, apparently the only response that the supervisor provided was that the employee should return to work as soon as possible.
The employer argued that because the employee did not return to work on the date specified by her physician, the employer was justified in making the inquiries, and thus the employee failed to establish her FMLA interference claim. However, the court disagreed with the employer, noting that "interference" includes not only refusing to authorize leave, "but discouraging an employee from using such leave." 29 CFR 825.220(b).
It is interesting to note that the court did not discuss 29 CFR 825.311(a), which specifically allows an employer to request periodic status updates while an employee is out on leave. In pertinent part it states: “An employer may require an employee on FMLA leave to report periodically on the employee's status and intent to return to work. The employer's policy regarding such reports may not be discriminatory and must take into account all of the relevant facts and circumstances related to the individual employee's leave situation.” It seems that the court determined, without analyzing further, either that the weekly telephone calls were too frequent or that the employer’s policy did not allow for such weekly telephone calls based upon the particular facts and circumstances of the case. In this regard, although the facts state that the employee was out for back surgery, it is unclear if there was a medical certification from the physician specifying how long the employee would be out on FMLA leave. Without knowing such details, it is difficult to determine whether the court found that weekly telephone calls requesting a status report were per se unreasonable and discouraging to an employee’s right to take leave, or if it was a particular factual situation present in the case. Since this was an appeal from a motion for summary judgment, the court may have only addressed the issue upon which the trial court found; additional facts may have been introduced at trial regarding the interference claim.
What should employers do based upon this case? It is recommended that employers obtain as much information as possible regarding the duration and timing of the FMLA leave prior to the leave being taken, and request that employees provide medical updates and status reports regarding their anticipated return to work date. One approach, if appropriate, is to require such updates every thirty days, although every two weeks, or even more often might be necessary in certain situations. Even if the leave is “open ended,” an employer should regularly follow-up and require updates as to the employee’s anticipated return to work date.
It is also recommended that employers not designate immediate supervisors as the contact person when an employee is out on leave. This should be left to the employer’s Human Resources representative. A supervisor, particularly one who works closely with the employee, may unwittingly cause an employee more concern about his/her job than a more neutral person with whom the employee does not have a daily working relationship. Furthermore, in California, an employer is only entitled to limited medical information about an employee on FMLA, and an untrained supervisor might obtain medical information that the employer is not entitled to have.
Thus, employers should::
1. Be careful about how frequently and under what circumstances contact is made with employees who are on FMLA; further, employers should base the frequency of such contact on what is reasonably appropriate under the circumstances;
2. Have carefully drafted FMLA policies that advise employees of their rights and obligations under FMLA, including specifying how often employees need to report to the employer regarding their anticipated return to work date when on FMLA leave; and,
3. Designate their Human Resources representative as the one responsible for contacting employees on FMLA leave for status updates.
DSkeren
Notes:
Terwilliger v. HOWARD MEMORIAL HOSPITAL, Dist. Court, WD Arkansas 201, Case No. 09-CV-4055, January 27, 2011
http://scholar.google.com/scholar_case?case=12749087681111817538&hl=en&as_sdt=2&as_vis=1&oi=scholarr
Copyright 2011: FSK Publishing all Rights Reserved DISCLAIMER: The information on this blog is for general information purposes only and should not be construed to be formal legal advice nor should it be construed to create a lawyer/client relationship between the authors of any information on the blog and any individual who chooses to view this blog. Anyone accessing this blog is encouraged to seek independent counsel for any desired legal advice.
Wednesday, April 20, 2011
Employers Continue to Face Difficult and Costly Litigation
Recent cases, involving both jury trials and settlements, demonstrate that employers continue to face difficult and costly litigation in employment law disputes. Fortunately, in two of the cases described in this article, the employers obtained a defense verdict, although most likely still incurred significant defense costs. The defense costs of a single plaintiff case, taken through trial, are estimated by some to be in the $300,000 range, for reputable defense firms. Moreover, the significant amount of actual defense costs does not begin to address the immense time commitment these cases require from an employer in preparing a defense. For example, the typical production of documents in a wage and hour case often involves compiling volumes of payroll records that cover significant periods of time. In addition, the depositions of supervisors, managers, human resources personnel, co-workers and many others may be required as part of the lawsuit. Thus, because of the substantial amount of time and expenses associated with employment law litigation, and because of the continuing barrage of these types of case, employers must understand and follow the law, properly train their staff, and document as needed, particularly in regards to personnel matters. Employers should also consider “Employers Practices Liability Coverage” (EPLI). This is a type of insurance which provides coverage for many employment related matters. Some policies even cover wage and hour disputes, which employers must increasingly contend with, particularly in regards to misclassification of employees and overtime compensation claims. The following cases, which involve age discrimination, harassment, sexual orientation discrimination, exempt/overtime claims and failure to accommodate disputes are only a small sampling of the employment law cases that continue to plague employers.
Discrimination/Failure to Accommodate/Sexual Harassment--Carmen Hunt v El Camino Community College District This case involved a jury trial in downtown Los Angeles, a venue where plaintiffs typically are very successful as Los Angeles juries are notorious for favoring plaintiffs. The case involved Carmen Hunt, a professor at El Camino College. Ms. Hunt alleged she was harassed and discriminated against by her superiors at the college. According to Ms. Hunt, the college tried to force her out because of her extended leaves of absence due to Post Traumatic Stress Disorder (PTSD). The leaves of absence occurred when she collapsed on campus in 2002, took a leave of absence until 2005, then returned on a part-time basis. Ms. Hunt also claimed that the college and the district did not accommodate her PTSD and that her superiors collected secret personnel files on her, which were defamatory. Further, she claimed she was sexually harassed and exposed to a hostile work environment all in violation of Education Code §87031. The college denied all accusations. After a week of trial, and only 50 minutes of deliberation, the jury returned a 12 – 0 verdict in favor of the defendant. This case demonstrates that employers can sometimes “fight city hall and still win.”
Sexual Orientation Discrimination--Parks v City of Oakland
Sherry Parks, a lesbian, was the only female plumber on the Port of Oakland (the Port) staff. She complained that she was harassed regularly because of her sexual orientation, that she was given unfair job assignments, and that she was subjected to a hostile work environment. The Port alleged that every job assignment and disciplinary action taken against Parks was for a legitimate business reason. After a 6 week trial the jury returned a 12 – 0 defense verdict in one day of deliberation. Parks was represented by Jean Hyams a graduate of Wellesley and UC Berkeley School of Law ( Boalt Hall) who was admitted to practice in 1989 and is a member of the State Bar’s employment law section. The Port of Oakland was represented by Edwin J Wilson, Jr., who graduated from UC Berkeley and UC Berkeley School of Law and was admitted to the practice of law in 1971. Mr. Wilson is a specialist in employment cases. This was obviously a significant victory for employers.
Wage and Hour/Overtime--Hilda Solis U.S. Secretary of Labor v Poetry Corporation
Don & J Inc., Nu Plus USA, Inc and A-do Fashion Inc., sewing contractors, produced goods for Poetry Corp, a garment manufacturer of women’s clothing from 2009 to 2010. The Department of Labor (DOL) filed suit against Poetry Corp alleging violations of the Fair Labor Standards Act (FLSA) regarding employees who worked for the sewing contractors. The DOL alleged that the contractors failed to pay its employees the federal minimum wage and also failed to pay overtime hours. Poetry Corp was also accused of transporting, delivering and selling products it knew were made by employees who were not lawfully compensated. According to the DOL, this was a sweatshop type case. The DOL sought to prevent future practices and also sought restitution for the employees – back pay and overtime. The case settled for $53,956 without admission of liability by the defendant. While we can be sure this cost the defendant a considerable amount in attorney fees and litigation costs, in our opinion the defense won this one because of the significant nature of the allegations and the relatively small size of the settlement.
Age Discrimination/Harassment--Judee Welch v Ivy Hill Corporation
This case was also a jury trial in downtown Los Angeles, which, as noted above, is a very “plaintiff friendly” venue. A defense verdict was reached on March 8, 2011, before the Honorable Richard Fruin, who is one of the most highly rated judges in downtown Los Angeles. In the case, Judee Welch alleged that she worked for Ivy Corporation from 1987 through March 2009, as a saleswoman, selling print to the music industry. During the last 4 ½ years of her employment a new vice president was brought in to supervise her and the rest of the sales staff. Welch alleges that during that time, the vice president/supervisor allegedly made comments about Welch’s age and allegedly showed preference for younger people in hiring and promotion. When the company was purchased in 2009, Welch was part of a layoff. She then filed a lawsuit alleging age harassment and age discrimination and prevailed. At the end of the 11 day trial the jury, in a 12 – 0 verdict, after 5 hours of deliberation, awarded Welch $213,000 loss of earnings and $731,000 in future loss of earnings. Her lawyer intends to move for attorney fees under the Fair Employment and Housing Act (FEHA). Welch’s lawyer, Carney Shegerian, was admitted to the practice of law after an undergraduate degree from Hofstra University and a law degree from Loyola University in Los Angeles. Defense counsel, Kelly O Scott, was admitted to the practice of law in 1987 after an undergraduate degree at UCLA and a law degree at USC.
NBoxley
Discrimination/Failure to Accommodate/Sexual Harassment--Carmen Hunt v El Camino Community College District This case involved a jury trial in downtown Los Angeles, a venue where plaintiffs typically are very successful as Los Angeles juries are notorious for favoring plaintiffs. The case involved Carmen Hunt, a professor at El Camino College. Ms. Hunt alleged she was harassed and discriminated against by her superiors at the college. According to Ms. Hunt, the college tried to force her out because of her extended leaves of absence due to Post Traumatic Stress Disorder (PTSD). The leaves of absence occurred when she collapsed on campus in 2002, took a leave of absence until 2005, then returned on a part-time basis. Ms. Hunt also claimed that the college and the district did not accommodate her PTSD and that her superiors collected secret personnel files on her, which were defamatory. Further, she claimed she was sexually harassed and exposed to a hostile work environment all in violation of Education Code §87031. The college denied all accusations. After a week of trial, and only 50 minutes of deliberation, the jury returned a 12 – 0 verdict in favor of the defendant. This case demonstrates that employers can sometimes “fight city hall and still win.”
Sexual Orientation Discrimination--Parks v City of Oakland
Sherry Parks, a lesbian, was the only female plumber on the Port of Oakland (the Port) staff. She complained that she was harassed regularly because of her sexual orientation, that she was given unfair job assignments, and that she was subjected to a hostile work environment. The Port alleged that every job assignment and disciplinary action taken against Parks was for a legitimate business reason. After a 6 week trial the jury returned a 12 – 0 defense verdict in one day of deliberation. Parks was represented by Jean Hyams a graduate of Wellesley and UC Berkeley School of Law ( Boalt Hall) who was admitted to practice in 1989 and is a member of the State Bar’s employment law section. The Port of Oakland was represented by Edwin J Wilson, Jr., who graduated from UC Berkeley and UC Berkeley School of Law and was admitted to the practice of law in 1971. Mr. Wilson is a specialist in employment cases. This was obviously a significant victory for employers.
Wage and Hour/Overtime--Hilda Solis U.S. Secretary of Labor v Poetry Corporation
Don & J Inc., Nu Plus USA, Inc and A-do Fashion Inc., sewing contractors, produced goods for Poetry Corp, a garment manufacturer of women’s clothing from 2009 to 2010. The Department of Labor (DOL) filed suit against Poetry Corp alleging violations of the Fair Labor Standards Act (FLSA) regarding employees who worked for the sewing contractors. The DOL alleged that the contractors failed to pay its employees the federal minimum wage and also failed to pay overtime hours. Poetry Corp was also accused of transporting, delivering and selling products it knew were made by employees who were not lawfully compensated. According to the DOL, this was a sweatshop type case. The DOL sought to prevent future practices and also sought restitution for the employees – back pay and overtime. The case settled for $53,956 without admission of liability by the defendant. While we can be sure this cost the defendant a considerable amount in attorney fees and litigation costs, in our opinion the defense won this one because of the significant nature of the allegations and the relatively small size of the settlement.
Age Discrimination/Harassment--Judee Welch v Ivy Hill Corporation
This case was also a jury trial in downtown Los Angeles, which, as noted above, is a very “plaintiff friendly” venue. A defense verdict was reached on March 8, 2011, before the Honorable Richard Fruin, who is one of the most highly rated judges in downtown Los Angeles. In the case, Judee Welch alleged that she worked for Ivy Corporation from 1987 through March 2009, as a saleswoman, selling print to the music industry. During the last 4 ½ years of her employment a new vice president was brought in to supervise her and the rest of the sales staff. Welch alleges that during that time, the vice president/supervisor allegedly made comments about Welch’s age and allegedly showed preference for younger people in hiring and promotion. When the company was purchased in 2009, Welch was part of a layoff. She then filed a lawsuit alleging age harassment and age discrimination and prevailed. At the end of the 11 day trial the jury, in a 12 – 0 verdict, after 5 hours of deliberation, awarded Welch $213,000 loss of earnings and $731,000 in future loss of earnings. Her lawyer intends to move for attorney fees under the Fair Employment and Housing Act (FEHA). Welch’s lawyer, Carney Shegerian, was admitted to the practice of law after an undergraduate degree from Hofstra University and a law degree from Loyola University in Los Angeles. Defense counsel, Kelly O Scott, was admitted to the practice of law in 1987 after an undergraduate degree at UCLA and a law degree at USC.
NBoxley
Friday, April 1, 2011
Why Do Employers Lose So Many “Discharge For Misconduct” Cases
Employers often lose “discharge for misconduct” cases at the Employment Development Department (EDD) and at the California Unemployment Insurance Appeals Board (CUIAB). The following is a discussion of the steps an employer can take to increase the chances of prevailing in these types of cases.
What is at Stake?
An employer’s EDD tax rate can vary from 1.2 to 6.2%, depending upon the number of employees and the number of claims paid from the employer’s reserve account in Sacramento. Therefore, doing a good job in defeating an unemployment insurance claim can save a company a lot of money, in the long run.
How Does the Law Define Employee “Misconduct”?
Misconduct connected with an employee's work consists of four elements:
• A material duty owed by the claimant/employee to the employer in the employment contract, whether oral or written;
• A substantial breach of that duty;
• A willful or wanton breach or disregard of that duty; and
• A “disregard of employer's interests”; i.e., that which tends to injure the employer's interests.
Thus, actions which do not violate such a duty are not misconduct. See Precedent Board Decision P-B-3
Let's consider an employee’s breach of a company policy or procedure. Violations of an employer’s policies and procedures may be valid reasons to discipline an employee, including termination, if repeated violations occur. Further, some violations may justify an immediate termination. However, unemployment insurance law does not allow an employee to be discharged without consequences to the employer’s EDD tax rate, for breach of an unwritten or undefined rule, except for such things as stealing company property, gross negligence, gross insubordination, fighting on job, sexual assault, etc. Therefore, the key to success at the Employment Development Department (EDD) and at the California Unemployment Insurance Appeals Board (CUIAB) is adequate documentation and the appropriate workplace policies and procedures.
Absent extraordinary circumstances, such as referenced above, the EDD and the Administrative Law Judges expect to see a copy of the employer’s policy/procedures, proof that the employee was aware of the policy/procedures, proof as to how the policy/procedures were breached, evidence of any performance warnings issued, and evidence as to how the breach of the policy/procedures injured company interests.
It is important for employers to understand that if the breach of a company policy or procedure is not documented in the employee’s personnel file, courts may hold that “it did not happen.” Therefore, it is essential to properly document.
The following are examples of common problems faced by employers that lead to employers losing “discharge for misconduct” cases at the EDD and CUIAB:
• No proof employee knew of employer’s policy/workplace rule.
Employers must have written documentation that proves the employee “knew” of the policy/rule. The easiest way is to have a signed acknowledgement of receipt of the policy/rule (such as a signed employee handbook which contains the policy/rule) by the employee, in the personnel file;
• The employer fails to offer evidence that the employee’s duty, required by the policy/rule, was “material” (i.e. important to the company).
• There is insufficient proof that the employee “substantially breached” the policy/rule.
Employers must present evidence of a “substantial breach” of the employer’s policy/workplace rule. Examples of sufficient evidence: Company records, sworn witness statements, drawings, photographs, police reports, etc;
• The employee proves the employer’s policy/rule was inconsistently enforced.
Employers must be sure their company rules are equally enforced. For example: If an employer tolerates numerous tardiness in an month from some employees, the employer cannot then hold another employee to one tardy a month;
• The employer condones a breach of the policy/rule.
Employers wait too long to take disciplinary action following a substantial, willful breach of duty.
• Progressive discipline was not established, in the workplace.
The EDD and the CUIAB judges expect employers to show that they made a reasonable effort to change an employee's bad behavior, before discharging the employee;
• The employer fails to show how the breach harms (injures) its interests.
The employer must present evidence as to how the breach harmed the company;
• The employer cannot prove the last breach was “willful” or not for good cause.
This is a huge problem and probably a major reason that employers lose misconduct cases at the EDD.
Finally, employers should do the following:
• Send copies of their documents to the EDD as soon as an employee makes a claim for unemployment benefits;
• Immediately return all EDD telephone calls;
• Be sure to timely appeal (20 days) an adverse EDD determination;
• Attend CUIAB hearings with their witness and original documents;
• Be present at the hearing location at least 15 minutes before the hearing commences;
• Cite Precedent Board (PB) decisions supporting their case to both the EDD (when objecting to the claim), and when appealing to an administrative law judge; and,
• Ask the judge, after all evidence is in, and the judge states “anything further”, for the opportunity to make a “brief” closing statement. Do not take more than a minute or so.
David W. O'Brien, Esq
Floyd, Skeren & Kelly, LLP
A Former Administrative Law Judge with the CUIAB
Wednesday, February 9, 2011
Court Holds WC Claims Adjusters Are Exempt Employees
A recently released but (as of yet) unpublished California Appellate decision upheld a trial court finding that workers’ compensation claims adjusters are exempt employees, and therefore not entitled to overtime.
In Hodge v. Aon Insurance Services (Second Appellate District, 2/2/11), the appellate court differentiated the jobs performed by adjusters working for Cambridge Integrated Services Group from those performed by Farmers Insurance. In doing so, the court determined that the job duties of the Cambridge adjusters meet the requirements for the administrative exception as detailed in Wage Order 4 (available online athttp://www.dir.ca.gov/IWC/IWCArticle4.pdf). The upshot for employers is that the job title alone is insufficient to determine whether someone qualifies as an administrative employee. Instead, the court took a close look at the adjusters’ actual job duties and how they related to the general business operations of both Cambridge and Cambridge’s clients in making their determination that the Cambridge adjusters were found to be exempt from the various overtime laws.
There are several requirements that must be met in order to properly classify an employee as exempt under the administrative exemption. The requirement at issue in Hodge was whether the duties involved the “performance of office or non-manual work directly related to management policies or general business operations of his/her employer or his/her employer’s customers.” There are several ways to evaluate this. The plaintiff argued for application of the “administrative/production worker dichotomy” as espoused in Bell v. Farmers Ins. Exhchange (2001 87 Cal.App.4th 805 (Bell II). Bell II was a class-action suit brought by the claims representatives for Farmers Insurance. In analyzing the job duties, the court in Bell II determined that the claim representatives’ responsibilities were restricted to “the routine and unimportant.” They dealt with routine handling of mostly small value claims. For more important or complex matters, the claims representatives served as a conduit for information to supervisors, who made the decisions, something that was found to be a “routine and unimportant” role. In this instance, it was determined that the claims representatives were production, not administrative, employees.
The administrative/production dichotomy looks at whether an employee is involved in the everyday production aspect of a company, or alternatively, serves as a more important administrative employee doing work directly related to management policies or general business operations. For example, a production worker for, say, K-Mart, would perform work related to selling consumer goods. An employee involved in selecting which goods to carry, and in what amounts, would likely not be a production worker.
As described on pages 15-16 of Hodge,
Former 29 Code of Federal Regulations part 541.205(c) also provides illustrations of the types of work satisfying the “substantial importance” requirement. For example, the “cashier” of a bank is exempt, but a “teller” of the bank is not. Bookkeepers, secretaries, and “clerks of various kinds hold[ing] the run-of-the-mine [sic] positions in any ordinary business” are not exempt. A “tax consultant” for a company or for a “firm of consultants” is exempt. A “messenger boy,” even when he or she is “entrusted with carrying large sums of money,” is not exempt. A person “operating very expensive equipment” is not exempt. An “inspector,” including an “inspector for an insurance company,” is not exempt. A “statistician” who merely “tabulate[s] data” is not exempt, but a person who tabulates and “makes analyses of data and draws conclusions” that are “important” to a business is exempt. A “buyer” of equipment for an industrial plant or a retail establishment is exempt. (Former 29 C.F.R. § 541.205(c)(1), (2), (3), effective as of January 2001.)
In the end, “[t]he test of [the phrase] ‘directly related to management policies or general business operations’ is also met by many persons employed [in positions] as advisory specialists and consultants of various kinds, [including] credit managers, safety directors, claim agents and adjusters, wage-rate analysts, tax experts, account executives of advertising agencies, customers’ brokers in stock exchange firms, promotion men, and many others.” (Former 29 C.F.R. § 541.205(c)(5), effective as of January 2001.)
In Hodge, it was noted that the Cambridge claims adjusters’ duties and responsibilities in handling a claim from start to finish, overseeing discovery, retaining and overseeing outside counsel, determining and implementing litigation strategies, negotiating settlements, and setting reserves that averaged about $75,000 per case constituted activities “of substantial importance to the general business operations of the insurance-related entities.” The court really focused on the claims adjusters’ ability to set reserves, noting that one five-person unit handled cases with aggregate reserves of $60 to $70 million. The court noted testimony that the “adjusters’ decisions in setting reserves affect the finances of a client ‘dollar for dollar’ and affect a client’s business operations insofar as ‘committing of cash to one function takes it away from another.’ In short, the adjusters’ authority to set reserves is essentially equivalent to the authority to allocate and spend a company’s funds.” (Hodge, p. 13)
Applying the language of Wage Order No. 4, the court found that “the claims adjusters were performing ‘office or non-manual work directly related to management policies or general business operations of his/her employer or his employer’s customers.’ The evidence developed at trial belies a conclusion that the adjusters’ duties and responsibilities are ‘restricted to the routine and unimportant’ as in Bell II.” The appellate court agreed “with the trial court’s conclusion that the adjusters’ duties and responsibilities in setting reserves is of substantial importance to the general business operations of the insurance-related entities. The court concluded that just because the plaintiffs might label themselves as working in unimportant roles does not necessarily mean that is so. (Hodge, p. 18) Once again, this case demonstrates how important proper classification of employees is for employers. Further, in determining whether or not an employee is exempt, the courts will focus on the duties actually performed by the employee; job titles are essentially inconsequential in deciding whether or not an employee is exempt.
JAllan
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