Employment Law Observer

Insight & Commentary on Employment & Agency Issues

Same Sex Harassment Is Actionable, California Court of Appeal Affirms

Posted in California Court of Appeal, Case Updates, Fair Employment and Housing Act, Hostile Work Environment, Retaliation, sexual harassment

In Lewis v. City of Benicia, the First Appellate District affirmed once again that in California, same-sex harassment is actionable.

Brian Lewis, a volunteer and later paid intern at the City of Benecia’s water treatment plan, claimed he was sexually harassed by two male supervisors (Hickman and Lantrip) in violation of the California Fair Employment and Housing Act (FEHA), that he was subject to retaliation when he complained of the harassment, and that the City was liable for failing to prevent sexual harassment.

Among other rulings challenged on appeal, the trial court granted summary judgment in favor of Hickman and Lantrip, and granted the City’s motion for judgment on the pleadings.  Lewis challenged these and other rulings.

First, the Court of Appeal reversed the trial court’s granting of Hickman’s motion for summary judgment.  As the Court of Appeal explained,

sexual harassment can occur between members of the same gender as long as the plaintiff can establish the harassment amounted to discrimination because of sex.”

California appellate districts had been divided as to the meaning of the term “because of sex,” with some courts ruling that the plaintiff needed to show evidence that the alleged harasser was acting out of genuine sexual interest, and others ruling that same-gender harassment could also consist of comments amongst heterosexuals designed to humiliate the plaintiff and challenge his gender identity.

In 2013, the California Legislature resolved this split among appellate courts by amending the FEHA to clarify that “[s]exually harassing conduct need not be motivated by sexual desire.”  However, as the Court ruled, there was no need to address the effect of this amendment on the present case (i.e., whether the 2013 amendment could operate retroactively as to events that occurred in 2008 and 2009), because “the present case allows an inference that Hickman was motivated by sexual interest.”

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Watch Out Employers: Changing Benefits During a Union Election Carries Risks

Posted in NLRB

by Ali Reza Mokhtari Fox

In Woodcrest Health Care Center and 119 SEIU, United Healthcare Workers Eastt, the NLRB ruled that an employer violated federal labor laws by improving health care benefits for some employees while declining to extend such improvements to those employees eligible to vote in a union election.

The decision shows how cautious employers must be when changing benefits during a union election period. It also provides a roadmap for how employers can avoid the appearance of impropriety. Continue Reading

Compliance: Employers closely watching Supreme Court’s ruling in Canning

Posted in NLRB, Opinion, United States Supreme Court

The Court’s ruling will likely define the scope of the president’s recess appointments power for future administrations.

It’s easy to identify recess in an elementary school day: The bell rings, the kids tumble out of class and the yard fills with playful shrieks and laughter.

Not so with Congress. The U.S. Senate’s chambers may be dark, official business on hold, the senators all home on vacation, and yet the legislative body may still be in session.

The issue of defining “recess” for the Senate lies at the center of NLRB v. Canning, a case currently before the U.S. Supreme Court. The outcome could have a significant impact on employers. At stake is the status of hundreds of National Labor Relations Board (NLRB) rulings on issues ranging from employee social media policies to the legally permissible scope of workplace rules relating to employer confidentiality, employee discipline and off-duty employee access to the workplace.

More broadly, the Court’s ruling will likely define the scope of the president’s recess appointments power for future administrations. Presidents must normally obtain Senate consent to fill federal agency board positions. The Constitution permits Presidents to unilaterally fill agency vacancies when the Senate is in recess, an anachronism to the days when Congress recessed for months at a time.

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This article first appeared in InsideCounsel.

Obama Administration Delays Another Provision of Affordable Care Act

Posted in Affordable Care Act

The Obama administration will allow health insurers to continuing offering plans that fail to meet the Affordable Care Act’s (ACA) minimum requirements for another two years.

The extension, widely viewed as a political move to assist Democrats in the upcoming mid-term elections, applies to policies issued up to October 1, 2016.

Significantly, the change likely will not affect the estimated 900,000 Californians whose plans were cancelled under the ACA.  That’s because Insurance Commissioner Dave Jones declined to accept the President’s invitation last fall to allow insurers to continuing offering non-compliant policies through 2014.

The issue arose after it became apparent that approximately 4.7 million Americans would lose their insurance plans because they fell short of the ACA’s coverage mandates.  This created a public relations nightmare for President Obama, who had repeatedly promised that consumers could keep their exiting policies.

To stanch the damage, the administration allowed insurance companies to extend cancelled policies for one year, provided insurance commissioners and state regulators were on board.

In addition to California, states refusing to implement the president’s “fix” include New York, Massachusetts, Arizona, Colorado, Virginia, West Virginia, Oregon and Minnesota, as well as Washington, D.C.

Fewer Class Actions Remanded To State Court

Posted in 9th Circuit Court of Appeals, Case Updates, Class Actions, Wage & Hour

By Ali Reza Mokhtari Fox

The Daily Journal reported last week that new standards established by the Ninth Circuit in the 2013 case Rodriguez v. AT&T Mobility Services LLC have resulted in fewer wage and hour class action cases being remanded to state court.

Previously, under Lowdermilk v. United States Bank National Association, employer defendants were required to prove with “legal certainty” that there was at least $5 million at stake before the case could qualify for federal jurisdiction under the Class Action Fairness Act.  In Rodriguez the court reduced the standard to a simple preponderance of evidence.

As the Daily Journal reported, under the old standard many wage and hours cases were remanded to state court, but now the trend is toward cases staying in the federal court system.  The article quotes attorney Ken Sulzer as saying, “In the past, approximately 90% of these cases were remanded. . . .  The upshot is more of these cases will be kept in federal court.”  Sulzer is currently working on Woodward v. Healthcare Services Group Inc., in which the Ninth Circuit ordered U.S. District Judge Margaret M. Morrow to reconsider her decision to remand to state court because of the new standards.

Defense attorneys in general welcome the change because prior to Rodriguez, cases could be remanded for numerous, sometimes seemingly minor reasons.  Now in light of Rodriguez many observers think the game has been brought to a more level playing field, the Daily Journal reported.

While plaintiff’s attorneys would like to downplay the trend Rodriguez is creating, it appears at least for now that defense attorneys in wage and hour litigation have gained some ground in the ongoing struggle between removal and remand in class actions.

Obama Administration Relaxes Employer Mandate

Posted in Affordable Care Act

The moving target that is the Affordable Care Act’s employer mandate keeps on moving.

The Treasury Department today issued a rule relaxing important employer requirements under the ACA, foremost among them to postpone the mandate for businesses with between 50 and 99 employees until 2016.

This is the second major postponement of the ACA’s employer mandate:  Last summer, the Obama Administration delayed implementation for all qualifying businesses from January 2014 to January 2015.

In addition, the administration today reduced the percentage of employees large employers will have cover from 96 percent to 70 percent until 2016.  It also clarified that volunteers will not be counted as full-time employees under the ACA.

We will report more about these changes in the coming weeks.  For now, click here for a rundown of today’s rule from the Washington Post’s Wonkblog.

Compliance: Making sense of the myriad tests for independent contractor v. employment status

Posted in Affordable Care Act, Independent Contractor v. Employee

The question of whether a worker is an employee or an independent contractor can have very important consequences, as the two categories receive very different treatment under the law.

To name only a few differences, there are no federal or state income tax withholding obligations for independent contractors; wage and hour laws do not apply to independent contractors; most anti-discrimination laws do not apply to independent contractors. And, of course, the employer mandate under the Affordable Care Act does not apply in the case of independent contractors. There is a lot riding on the question.

It can sometimes be difficult to predict whether a worker will be deemed an employee or an independent contractor, but there are multiple tests depending upon which area of law is implicated.

For example, where a worker is claiming to be an employee and is seeking remedies under California law (for example, state wage and hour or state discrimination claims), the primary test of employment relationship is whether the principal has the right to control not just the means, but also the manner in which the results are achieved. Added to this are a series of “secondary factors,” such as whether the worker is engaged in a distinct occupation, whether the worker supplies the tools and instrumentalities for the job, the method of payment, whether the worker has a substantial investment in the business, whether the worker hires employees to assist him, whether the parties believe they are creating an employer-employee relationship, and the degree of permanence of the relationship.

Read more at InsideCounsel.

Obama Administration Bends Individual Mandate Rules

Posted in Affordable Care Act

With the deadline to select health coverage just days away, the Obama administration has given an early Christmas present to individuals whose policies were cancelled because of the Affordable Care Act (“ACA”).

Those individuals will be temporarily “exempted” from the ACA’s individual mandate, according to a bulletin issued late Thursday from the Department of Health and Human Services.  The rule change was spearheaded by a group of Democratic senators, many of whom face tough re-elections battles next year.

The ACA includes a hardship exemption for people who have undergone “an unexpected natural or human-caused event.”  The administration’s rule change places having your health plan cancelled under that definition.

This is the second unilateral revision the Obama administration has made to the ACA in response to public outrage over cancelled policies.  Last month the administration allowed insurers to continue offering health plans that fell short of the ACA’s mandates for another year – though individual states were left to decide whether to green light the extension.

The newest change effectively undercuts the individual mandate, a central feature of the ACA, which was schedule to take effect on January 1.  Individuals who qualify for the exemption can now either opt out of coverage, purchase bare bones “catastrophic” coverage, or sign up for a plan under an ACA exchange.

The revision raises numerous thorny questions, including the fairness of exempting individuals simply because their former plans failed qualify under the federal health law.

In addition, fewer young, healthy individuals will be signing up on the exchanges, exacerbating concerns about the fundamental economic viability of the ACA.  As Karen Ignagni, president of America’s Health Insurance Plans, told the Washington Post:

This latest rule change could cause significant instability in the marketplace and lead to further confusion and disruption for consumers.

Most employers will not be affected by exemption, as it primarily applies to individual and small group plans.  However, changes in the marketplace now could impact premiums and other aspects of coverage of 2015.

We will keep you posted of significant developments.

California Restaurant Managers Get Second Chance at Class Action

Posted in California Court of Appeal, Case Updates, Class Actions, Exempt Status, Wage & Hour

In Martinez v. Joe’s Crab Shack Holdings, the California Court of Appeal for the Second Appellate District reversed an order denying class certification to a group of managerial restaurant employees allegedly misclassified as exempt.

The case was brought by lower-level managers at Joe’s Crab Shack restaurants throughout California who complained that they performed many of the same tasks as hourly employees but did not qualify for overtime pay due to their managerial status.

In support of their case, Plaintiffs filed declarations from 22 managers who reported routinely working up to 70 hours per week, often filling in where needed as cooks, servers, bussers, hosts, stockers, bartenders, and kitchen staff.  The declarants reported that they received no overtime for working these positions that were normally staffed by hourly employees.

The question at issue was whether the managers met the requirements for class certification.  Under California law, class treatment is appropriate where:

  1. common questions of law or fact predominate;
  2. class representatives have claims or defenses typical of the class; and
  3. the class representatives can adequately represent the class.

The application of these factors is not always simple.

The trial court denied class certification, holding that Plaintiffs failed to establish that their claims were typical of the class and that common questions predominated.  The Second Appellate District reversed.

In so holding, the court criticized the lower court for focusing on the plaintiffs’ varying damages rather than on common issues of liability.  Thus, the court noted that plaintiffs may have satisfied the “typicality” requirement because they all claimed (1) their tasks did not change once they became managers and (2) they were not paid overtime for performing utility functions normally reserved for hourly employees.  The fact that the managers alleged varying degrees of damages should not defeat class certification, the court held.

[T]he fact finder here will ultimately have to decide whether [the employer] properly classified the members of the class as exempt from overtime requirements,” the court stated.

Accordingly, the court remanded the case for a new determination on class certification.

Employee classification can present challenging questions for employers.  Barger & Wolen attorneys are available to answer any questions you may have.

Evidence of Employee Disqualification Is Relevant Regardless of When It Was Learned

Posted in Fair Employment and Housing Act

In Horne v. International Union of Painters and Allied Trades District Counsel, 16, Plaintiff Raymond Horne, an African American male, applied for organizer positions within the union of which he was a member on two occasions.  Defendant union hired white males in each case, and Horne sued the union, alleging that he had not been hired due to racial discrimination, in violation of Government Code section 12940, subd. (a) of the Fair Employment and Housing Act (“FEHA”).

In discovery, it was revealed that Horne had served a prison term years earlier in connection with a conviction for possession of narcotics.  Due to his conviction, he would have been barred, under federal law, from employment as an organizer.  The trial court granted summary judgment in the union’s favor, finding that Horne was unable to establish a prima facie case of discrimination because he did not show that he was qualified for the job for which he applied.

The First Appellate District affirmed.

As the Court explained, California has adopted the three-stage burden-shifting approach for trying discrimination claims. Under this approach, the plaintiff bears the initial burden to prove a prima facie case of discrimination by a preponderance of the evidence. If he does so, then the burden shifts to the defendant to offer any legitimate, non-discriminatory reasons for failing to hire him. The trial court then assesses whether the proffered reasons might be pretextual.

Before getting to the issue of the defendant’s motive, the plaintiff must first establish his prima facie case.  In order to show this, he must show that he was qualified for the position.  Here, the Court ruled, because Horne could not establish that he was qualified for the position, he could not establish a prima facie case.

Horne argued that the “after-acquired evidence doctrine” prohibited the union, and the Court, from considering evidence of disqualification made after the decision not to hire him.  As the Court explained, “the after-acquired evidence doctrine precludes consideration of evidence bearing on the employer’s motive that was unknown to the employer before the decision not to hire was made.”

Here, the Court explained, while such evidence would be inadmissible with respect to the second part of the burden-shifting analysis (i.e., employee motive), it is indeed relevant to the first part of the analysis (i.e., prima facie case):

When the issue before the trial court is not employer motive but applicant qualification, evidence that the applicant was disqualified as a matter of law at the time of the employment decision is relevant, whenever the employer acquired that information.

Please contact the author if you have any questions regarding this matter, or employee discrimination claims.