Court of Appeal Upholds Release of Overtime Claims

Labor Code section 206.5 invalidates releases of wage claims. But when there is a bona fide dispute over whether wages are due, releases are valid. That's what the court of appeal held in Chindarah v. Pick Up Stix.

This was an overtime class action that went to mediation but did not settle. The employer did an "end run" and settled out about 200 employees with individual releases. Employees challenged the validity of the releases under Labor Code section 206.5. But the court of appeal, agreeing with the trial court, held:

The releases here settled a dispute over whether Stix had violated wage and hour laws in the past; they did not purport to exonerate it from future violations. Neither did the releases condition the payment of wages concededly due on their executions. The trial court correctly found the releases barred the Chindarah plaintiffs from proceeding with the lawsuit against Stix.

If this case is not taken up by the Supreme Court for review, it will clarify a longstanding unresolved issue in California law regarding when settlements of wage claims will be enforced.
Employers will be able to settle claims involving uncertain liability, such as for certain meal period claims, or misclassification issues when the factual issues are in dispute.

Read the opinion here.

California Supreme Court Addresses State Employees' Whistleblower Protections

Before a state employee can bring suit under the California Whistleblower law, he or she must seek relief before the State Personnel Board. When the SPB issues "findings," or even when the SPB fails to do so in the time allowed,the law says that the employee may sue in Superior Court. But the court of appeal held that when, as in the present case, an employee receives adverse findings from the SPB, the employee must seek to overturn those findings before going to court.

The Supreme Court reversed that decision, 7-0. The high court held that an employee may proceed to court when the SPB issues or fails to issue findings within the prescribed time, and the employee need not seek a writ or a hearing before an administrative law judge first.

The case is State Bd. of Chiropractic v. Superior Court and the opinion is here.

California Amends Alternative Workweek Law

As part of California's recent budget compromise, the Legislature made welcome revisions / clarifications to the law governing "alternative workweek arrangements." These arrangements are the authorized exemptions to "daily overtime" law.

The bill, AB 5, amends Labor Code section 511. Presumably, the DLSE will revise its manual and the IWC will issue revised wage orders.

First, the law defines what counts as a "work unit" for having the vote for the alternative workweek arrangement:

For purposes of this section, “work unit” includes a division, a department, a job classification, a shift, a separate physical location, or a recognized subdivision thereof. A work unit may consist of an individual employee as long as the criteria for an identifiable work unit in this section is met.

The new law also expressly allows employers to give employees the right to vote on a "menu of options" that includes not only "alternative workweek" schedules (such as 4/10 hour days) but also an eight hour per day option. That will likely result in a lot more votes for passage.

The law also permits employees to move from one option to another weekly. That will give employees the option of working 4/10 one week and then 5/8 the next week if the employer consents.

Here is the statute.

DGV

President Obama Issues Pro-Labor Executive Order No. 4

The President signed a new executive order authorizing "project labor agreements" in certain "large scale" federal construction contracts. The order, signed Feb. 6, 2009, takes effect immediately. Basically, the order authorizes contracting agencies to require private-sector contractors to sign on to a union contract for the life of the project:

The term "project labor agreement" as used in this order means a pre-hire
collective bargaining agreement with one or more labor organizations that establishes the terms and conditions of employment for a specific construction project and is an agreement described in 29 U.S.C. 158(f).

The order applies only to construction projects worth more than $25 million. You can view it here.

Did You Read the "Stimulus" Bill?

What employment law changes are included in the stimulus bill? Law firms are starting to pick over the new law, signed on February 17, 2009.

A number of employment law firms' newsletters report there is a big change to COBRA. To summarize, under the new law, certain employees fired / laid off employees from September 2008 until December 2009 will pay a discounted COBRA premium, which employers apparently will recover as a tax credit. The provision is available only to individuals earning less than $125,000 and married couples with incomes under $250,000. So, that will be easy for employers to administer. Not. I smell full employment for benefits administrators. See? Job creation!

What else is in the "American Recovery and Reinvestment Act" to stimulate employers? We'll find out in the coming days. If you can't wait, or you want to help your representative or Senator understand what s/he voted for, you can read the entire new law here. Just hit "control-F" and search for "COBRA" or "Title III," addressing the COBRA premium discount.

DGV

Ninth Circuit Withdraws "Flyover" Wage and Hour Case

We posted about Sullivan v. Oracle here, and blew a weekend on an article (you don't have to read) here. That's the case where the court of appeals held that an out of state resident is covered by California's wage and hour laws even when he or she works only briefly in California.

The Ninth Circuit decided to withdraw the opinion, here. Instead, the court certified three questions to the California Supreme Court:

First, does the California Labor Code apply to overtime work performed in California for a California-based employer by out-of-state plaintiffs in the circumstances of this case, such that overtime pay is required for work in excess of eight hours per day or in excess of forty hours per week?

Second, does § 17200 apply to the overtime work described in question one?

Third, does § 17200 apply to overtime work performed outside California for a California-based employer by out-of-state plaintiffs in the circumstances of this case if the employer failed to comply with the overtime provisions of the FLSA

So, the California Supreme Court, if it accepts the Ninth Circuit's invitation, will give its input and then the Ninth Circuit presumably will re-issue its opinion with the benefit of California's high court's analysis. Stay tuned.

Ninth Circuit Holds Type 2 Diabetic Was Qualified Individual

The Ninth Circuit avoided deciding whether the ADAAA amendments to the ADA are retroactive by holding that a type-2 diabetic had a disability and was a qualified individual under the original ADA.

Larry Rohr was a welder metallurgy specialist for Salt River Project Ag. Improvement and Power District, a political subdivision of the Arizona state government. He developed type-2 diabetes. His doctors imposed a number of restrictions on his diet and prescribed medication. The timing and management of his blood sugar testing, eating, and administration of medication resulted in a number of restrictions. Additionally, because of his medical condition, he was susceptible to a number of symptoms.

At times, Rohr was assigned to work in the field and out of town trips. His doctors, and the company's imposed a number of restrictions on his work, which included extended travel. Ultimately, the company concluded he could not perform his essential job functions and gave him the opportunity to transfer to another job or take early retirement. He sued for disability discrimination under the ADA. The district court granted summary judgment, holding he was not an individual with a "disability" and that he was not "qualified"

The Ninth Circuit disagreed. The opinion discusses at length the limitations on Rohr's ability to eat, including scheduling his meals, eating at certain times, and adjusting medication for food, testing and exercise. The court said not all diabetics are substantially limited, but that Rohr had a number of challenges that seem common to many with the condition. So, particularly under the new ADAAA amendments, it will be nearly impossible to argue diabetes is not a disability after this opinion.

The court then tackled whether Rohr was "qualified" in that he could perform his essential job functions with or without accommodation. Salt River argued Rohr could not pass a respirator test per OSHA standards. The court found a triable issue of fact because: the test was not required by OSHA, Salt River did not consider other testing methods, and the use of a respirator may not have been "necessary" to the job.

The court rather summarily found the parties' disputed whether aspects of Rohr's job were "essential" including the need to travel extensively.

The court also decided that the ADAAA amendments would have lent further support to the conclusion that summary judgment should be reversed. However, the court declined to rule that the amendments applied to Rohr's case, which was filed long before the president signed the 2008 amendments into law. The court's comments on the ADAAA, all dicta, portend tough sledding for employers seeking to challenge whether someone has a "disability" under the new framework.

The deicsion is Rohr v. Salt River Project and the opinion is here.

Ninth Circuit Grants En Banc Review in Dukes v. Walmart

Almost two years ago, the Ninth Circuit upheld class certification in one of the largest employment class actions ever: Dukes v. Walmart. The complaint alleges company-wide sex discrimination in promotions and other job decisions. We posted on the initial order here.

The Ninth Circuit has now agreed to hear the case "en banc," meaning by a panel of 15 judges rather than three. The original opinion's panel no longer is citable. It probably will be some time until the en banc decision comes out, which could provide significant guidance on class certification in the federal courts within the Ninth Circuit.

California Supreme Court: Public Employee May Be Disciplined for Refusing to Cooperate in Investigation

The California Supreme Court held that a deputy public defender was properly discharged when he refused to answer questions during an internal investigation. He argued that he could not be compelled to answer because he invoked his Fifth Amendment right to refuse to answer questions on the grounds they might incriminate him.

But the investigator, a supervisor attorney at the public defender's office, had informed him that his cooperation in the investigation would not be used against him in criminal proceedings. Was his refusal to testify protected conduct? The court unanimously said "no":

a public employee may be compelled, by threat of job discipline, to answer questions about the employee’s job performance, so long as the employee is not required, on pain of dismissal, to waive the constitutional protection against criminal use of those answers. Here, plaintiff was not ordered to choose between his constitutional rights and his job. On the contrary, he was truthfully told that, in fact, no criminal use could be made of any answers he gave under compulsion by the employer. In the context of a noncriminal public employment investigation, the employer was not further required to seek, obtain, and confer a formal guarantee of immunity before requiring its employee to answer questions related to that investigation.

The case is Spielbauer v. County of Santa Clara and the opinion is here.

Stanford GSB, Entry 18: Mid-terms, Sticky Ideas, and Governor Meg Whitman?

Mid-Terms and Socializing

On Thursday of this week I lifted up my backpack and found that it was lighter than it had been in a long time. What was missing?

It was “Libby, Libby, Short”. Or to be more precise, it was our 800-page accounting textbook, written by the accountants who bore these three odd-sounding names.

Yes, we had our accounting midterm on Wednesday, and after carrying the very thick textbook around campus with me for the last week, I was glad to finally have “Libby, Libby, Short” off of my back! Literally!

This was our first and only midterm of the quarter for the required Core Classes in the Sloan program (there are two required classes – Accounting and Marketing). Since I had skipped more than one accounting class (surprise, surprise, given that this is my 8 am class!), I figured I had better study hard and do well on the exam to make up for my morning somnambulism (that's a word I learned for my GMAT when applying to business school, hopefully I used it correctly!).

How did I do? Read more...

I’m not sure – the results will be handed back on Monday, but we received an email from the professor that the average score was something like 26 out of 30, which is pretty good. That's great news for the class ("All for one, and one for all") but I’m still trying to figure out whether that’s a good or a bad thing for any if us personally, given that we’re all graded on a curve?

Unfortunately, I have one more midterm coming up. My next mid-term is called something like “International Financial Management” – but I just call it my “currency trading class” because that’s what it’s effectively about.

Along with mid-terms, the busy Sloan social calendar marches on. Last night (Friday) we had one of our first international parties – this one was themed on India. Many classmates bought Indian outfits and there was Indian food as well as Indian dancing and culture. I ended up not going (No, not because I’m Pakistani and there are India-Pak tensions in the air these days LOL), but because of family and other commitments. I’m looking forward to the next international party, though.

Making Ideas Stick

At some point this quarter, I’d like to write about each of my classes so you can get a sense of what they’re about. One of my more fun classes is called “How to Make Ideas Stick” and it’s taught by Chip Heath, one of the authors of the book, “Making Ideas Stick: Why some Ideas survive and Others Die” ( the other author is his brother, Dan Heath).

The basic premise of the class (and the book) is that in the human world, some ideas are memorable and persist on their own, whether they are true or not, while others do not. For example, urban myths persist on their own – you only have to hear them once and then don’t have to worry that you’ll forget them. Not only are they easily remembered, but they are repeated again and again virally, with no effort from the people that started the myths (if we could even track down).

Some ideas have persisted across cultures – for example the saying “An apple a day keeps the doctor away” is not only repeated here in the US, but as a quick survey of our very international class of Sloans and MBAs found, has its equivalent in many, many other cultures, ranging from Japan to South America to Europe. Whether the idea is true or not seems to have very little to do with whether it survives in people's minds.

The idea of the class is that brilliant marketers, speakers, and writers use this knowledge of how and why some ideas “stick” to their advantage – either knowingly or unknowingly. And that many of us, who will have to make pitches or market products in the business world should have practice in making ideas more memorable, likely to be repeated - i.e. to “sticky”.

The formula the brothers Heath have found for these ideas is abbreviated SUCCES – Simplicity, Unexpectedness, Concreteness, Credibility, Emotional, and Stories.

The way to learn to do this is to practice it, which we do in almost every one of our classes, focusing on a different aspect of this formula. As an example, this week our group had to come up with an example or pitch that would make sense out of whether the following was possible or not: In 2002, Venture Capitalists raised something like $204 billion of capital. In order to justify an 18% return (which is a historical benchmark for VC’s) they would have to return some $1.3 trillion in market value over 10 years.

Our intuition was that this wasn’t very likely. But our group (and others) struggled with a way to make these big numbers (Particularly the $1.3 trillion) “sticky” to an audience of financial investors, etc. Finally I remembered from my Entrepreneurship and VC classes that there were something like an average of 100 IPO’s per year during the height of the go-go 90’s. And in 2008 there were less than 7 total IPO’s, and in the last few quarters of 2008 there were exactly zero.

I also vaguely recalled that there was something like $100 million returned per successful IPO (we looked it up and Google told us it was something like $120 milion returned per IPO).

So we came up with the idea: For this to be possible, there would need to be 3 IPO’s per day, on average, every single day for the next 10 years for the VC’s to return this kind of result! How likely is that given the IPO rates we’ve seen in the past (even in the best VC years there were 100 or so IPO's per year)? Not very likely.

We took a big number, made it concrete, unexpected, and compared it with a yardstick (the 1990’s) that they would all know, and this was a good way to “present” this idea. The class is really about how to “present” ideas to make them more sticky. You can see why it’s fun too!

Meg Whitman – the next governor of California?

One of the entrepreneurship classes at the GSB had a very well known visitor this week – Meg Whitman, the former CEO of eBay. Meg spoke to the class and then stayed afterwards while the students had lunch for an informal Q&A. Even though I wasn’t in the class, I was able (with the professor’s permission) to slip into the class to hear the end of her talk.

During the Q&A session, she not only talked about her experiences at eBay, but also her future career plans. There has been a lot of speculation (on and off what the republicans call the Internets) that Meg Whitman will be running for Governor of California in the upcoming campaign as a republican. She did after all spend most of the last year working on John McCain’s campaign.

Well, in front of a group of Stanford GSB students, she told us definitely whether she will be running for governor or not, even though a formal announcement has not yet been made. She also said that an announcement would be made formally on Monday, so far be it for me to spill the beans on my little Stanford GSB blog, but it’s kind of fun to at Stanford and at least in this case, to be “in the know”.

Check out www.megwhitman.com on Monday and you’ll be in the know too!

President Obama Issues Three Pro-Labor Executive Orders

The President issued three "executive orders" affecting certain federal contractors:

1. Requires contractors to post a poster explaining employees' rights to join or not join unions. View here.

2. Denies federal funds to pay for contractors' activities related to "persuading" employees to join or not join unions. View here.

3. Requires contractors to retain predecessor companies' qualified employees rather than laying them off and hiring their own workers. View here.

I-9 Form Changes

The USCIS has delayed implementation of a new I-9 form containing new employment eligibility documentation requirements. The January 30, 2009 announcement is here. Under the current schedule, a new I-9 form will be required on April 3, 2009. The Jan. 30 order extends the comment period for proposed regulations issued in November 2008.
You can see the new proposed regulations and the sample new I-9 form and instructions here.