bingli136

Wednesday, 3 October 2007

California Court of Appeal Limits Administrative Exemption

Insurance claims adjusters were ruled "non-exempt" under the administrative exemption in what is known as the Bell cases. See Bell v. Farmers Ins. Exchange (2001) 87 Cal.App.4th 805; Bell v. Farmers Ins. Exchange (2004) 115 Cal.App.4th 715. So, in Harris v. Superior Court, the Court of Appeal found that Liberty Mutual claims adjusters likewise were non-exempt.

The headline here, though, is that the Court thoroughly analyzed the administrative test, and explained the limited applicability of the administrative test in California (although the court claimed it was relying on federal regulations). The two key points are these:

- exempt administrative work must involve policy making, higher level, office work. The court sets a high bar here, rendering lower level employees in traditionally administrative

- "production" work - by definition not administrative - does not have to involve actually producing the product or service that the employer sells. Rather, even office work is "production" when it is simply carrying out policies.

This decision should be closely examined when classifying employees in back-office departments such as MIS, accounting, and maybe even HR. The exemption may be tougher to prove for lower-level administrative jobs in the more vertical, larger organizations.

DGV

Supplemental Disability Pay Does Not Affect Salary Basis Test

Generous employers sometimes supplement California's state disability insurance coverage with salary continuation programs. No good deed goes unpunished? Not this time. Employees brought a class action alleging unpaid overtime. They claimed they were misclassified as "exempt" because the employer's salary replacement program resulted in impermissible "deductions" from their salary during the initial week of "disability." The complaints were that the salary continuation program did not fully replace salary, that payments were delayed because the employer required the employee to present the SDI check so the payments could be coordinated, and other perceived flaws. The legal issue was whether the salaries could be reduced under the "bona fide" disability plan exception to the salary basis required.
The Court of Appeal turned back all of the plaintiffs' arguments. The Court also rejected the DLSE's enforcement position that reliance on SDI was improper under the "bona fide" plan exception.
The case is Sumuel v. ADVO, Inc. and the opinion is here.

Saturday, 22 September 2007

Applicant Waives ADA claim in Employment Application

Christine Nilsson applied for a job as a police officer in Mesa, Arizona. As part of the application process, she had to undergo a detailed background investigation. she signed a waiver regarding this investigation:

Nilsson agreed to “waive all [her] legal rights and causes of action to the extent that the Mesa, Arizona, Police Department investigation (for purposes of evaluating [her] suitability or application for employment) . . . violate[d] or infringe[d] upon . . . [her] legal rights and causes of action . . .” In addition, Nilsson: [A]gree[d] to hold harmless and release from liability under any and all possible causes of legal action the City of Mesa, Arizona Police Department, their officers, agents, and employees for any statements, acts, or omissions in the course of the investigation into [her] background, employment history, health, family, personal habits and reputation.

Ultimately, Nilsson was denied employment allegedly based on a negative psychological evaluation. She sued under the ADA, Title VII (for retaliation) and state law.

The Court of Appeals held that the ADA claim, based on denial of employment due to a mental disability, was barred by the release. However, the court said that the Title VII claim was different. The release covered the entire background and investigation process, but did not cover the interview. Nilsson claims Mesa asked improper questions about a prior EEOC proceeding. That claim was permitted to proceed to the merits. (The Ninth Circuit then said summary judgment was properly granted).

Of note, the opinion does not discuss the Fair Credit Reporting Act and its potential effect on the case. In addition, the Court first analyzed whether Nilsson knowingly and voluntarily released the claims. The Court found Nilsson had the necessary education and experience to sign the release. The release also advised her to consult with counsel if she did not understand it.

So, at least where the employee is sufficiently sophisticated to understand a release, a relatively simple release in an application bars claims based on pre-hire background checks, medical examinations, etc.

The case is Nilsson v. City of Mesa.

DGV

Sunday, 16 September 2007

California Court: Alleged Independent Contractor Drivers Are Employees

In Estrada v. Fedex Ground Package System, Inc., the Court of Appeal upheld the trial court's determination that certain FedEx drivers were mis-classified as independent contractors.

There's a lot more to the court's analysis, but this pretty much sums up the court's discussion of the independent contractor issue:

FedEx’s control over every exquisite detail of the drivers’ performance, including the color of their socks and the style of their hair, supports the trial court’s onclusion that the drivers are employees, not independent contractors.

The Court of Appeal also denied FedEx's appeal of the class certification order. The Court concisely summarized the requirements:

A class action requires an ascertainable class with a well-defined community of
interest among its members. Community of interest, in turn, requires that common questions of law or fact predominate, and that class representatives (who must be able to adequately represent the class) have claims typical of the class. The class is ascertainable if it identifies a group of unnamed plaintiffs by describing a set of common characteristics sufficient to allow a member of that group to identify himself as having a right to recover based on the description.

Finally, the Court of Appeal ruled once and for all that employers may require employees to use their own vehicles as part of the job. (Of course, the employee must be reimbursed for the expenses associated with using the vehicle).

DGV

Saturday, 15 September 2007

Settlement of Wage Claim under FLSA

The Fair Labor Standards Act permits settlements of claims for unpaid wages under the supervision of the Secretary of Labor. The Secretary has a form, under which employees acknowledge receipt of all wages due them and release all claims under the Fair Labor Standards Act arising from the failure to pay those wages.

In Dent v. Cox Communications Las Vegas, Inc., the employees signed U.S. DOL approved releases. Then Dent sued for more unpaid wages, but for a time period preceding the dates included in the DOL release. The Ninth Circuit held that the release covered only the payroll periods expressly covered in the DOL release and Dent was free to pursue earlier claims.

WARN Act Inapplicable to Remote Employees

The WARN Act normally applies to layoffs or plant closings at "single" sites of employment. There are detailed regulations on what constitutes a "single site." These regulations extend the "single site" concept to mobile workers (such as traveling salespersons), who receive work assignments and report to management at a "headquarters." These mobile employees may be covered by WARN under those special circumstances.

In Bader v. Northern Line Layers Inc., the workers were at construction sites in several states. Headquarters was in Billings, MT. The workers argued that because the construction assignments were temporary, and the Billings office handled all accounting, billing, payroll, and other administrative functions, they were actually employed in Billings for WARN purposes. The Ninth Circuit disagreed. The court noted that work assignments were made locally. Most of the employees were not Montana residents. The supervision was located locally, not in Montana, etc.

WARN is tricky and each layoff or shutdown needs to be closely examined in light of the applicable regulations and case law.

Pending California Bills