Summary of New Employment Laws for 2010:
STATE STATUTES AND REGULATIONS
FEDERAL STATUTES AND REGULATION
- American Recovery and Reinvestment Act of 2009
- Americans with Disabilities
Amendments Act Regulations - Family Medical Leave Act Regulations (FMLA)
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In 2009 there were some significant changes in California’s employment laws resulting from legislative action and important court decisions. In preparing for the New Year, it is important for employers to be aware of these changes and their ramifications. Below please find a summary of some of the most significant changes, which may require employers to revise their personnel policies, employee handbooks, and other employment documents.
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The federal government recently updated two employment related forms. First, the I-9 form was updated in August 2009 to change the list of acceptable documents. The new I-9 form states that acceptable documents must not be expired. The form is available at http://www.uscis.gov/files/form/i-9.pdf. Second, there is a new W-4 form for 2010, which is available at http://www.irs.gov/pub/irs-pdf/fw4.pdf.
The employment provisions of the Genetic Information Nondiscrimination Act (“GINA”) law went into effect on November 21, 2009. This new law prohibits discrimination against individuals based on genetic information. In order to effectively give employees notice of their rights under GINA, employers must post information on GINA. To comply with the law, employers may post the EEOC’s November 2009 version of the “EEO is the Law” poster, or, in the alternative, post the “EEO is the Law” supplement next to their current poster. Both documents are available at http://www1.eeoc.gov/employers/poster.cfm.
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CASE LAW AND AGENCY GUIDANCE
Employee Privacy and Technology Use
Employee_MySpace_Page_Protected_From_Employer_Viewing. Employers who access a restricted social networking site without proper authorization can face potentially significant exposure under federal laws intended to protect personal privacy. A Houston’s restaurant employee established a MySpace page devoted to “venting” about work “without any outside eyes spying in on us.” On the site, the employee and his coworkers made sexual remarks about Houston's management and customers, jokes about Houston's standards for customer service and quality, and references to violence and illegal drug use. One of the female employees subsequently showed the site to a Houston’s manager, and when asked, provided her password so management could access the site. The employee who started the site and a co-worker were terminated and sued. The jury returned a verdict, including an award of attorneys’ fees, against Houston's under the federal Stored Communications Act and the employee’s invasion of privacy claim, finding that Houston’s management did not have authorization to access the site, which was for members only and was password-protected. (Pietrylo v. Hillstone Restaurant Group d/b/a Houston’s)
Employer_Permitted_to Install Surveillance Cameras. The employer was a nonprofit home for abused children. It installed a surveillance camera after discovering that an unidentified employee was viewing pornography online. The employer did not tell the employees about the camera, but no employees were actually videotaped. After balancing the employer’s responsibility to protect the children in the home against the employees’ privacy rights, the California Supreme Court ruled in favor of the employer. However, the facts of this case are very specific, and employers must continue to exercise great caution before installing such cameras in the workplace. (Hernandez v. Hillsides)
Text_Messages_May_be_Protected_From_Employer_Discovery Even When Employer Pays for Cell Phone. The Police Department in Ontario, California issued two-way alphanumeric pagers to some of its employees. The Department had a written policy prohibiting the use of the pagers for personal matters, and reserving the right to monitor the text messages. In practice, the Department did not review text messages on the employer issued pagers as long as the employees stayed below a specific level of use, or paid for any use overages. The Department decided to audit the messages, and requested the records from Arch Wireless, the company that provided the text messaging service. One officer, Sgt. Quon, sued alleging that the review of text messages violated his constitutional right to privacy.
The Court held that Sgt. Quon had a reasonable expectation of privacy in the content of the text messages he sent and received because of the Department’s informal policy that allowed employees to avoid an audit of their text messages if they paid for text messages in excess of the number allowed by the Department’s plan. This case is up on appeal to the California Supreme Court. This case highlights the importance of having and consistently following a policy regarding the use and monitoring of cellular phones, text messages, computer use, and other electronic communications. (Quon v. Arch Wireless)
Employer’s_Opinion_That_Pregnant_Employee_Could_Not_Safely Perform_Her_Job_Resulted_in_Liability_for_Discrimination Based on Sex. The employer maintained a 70-foot yacht to entertain customers and business associates. An employee, who was the assistant captain in training, notified her employer that she was pregnant. The employer terminated the employee, citing budget reasons. However, the employee’s supervisor admitted she was laid off because of concerns about her ability to work safely on the boat while pregnant. The employer was found liable for sex discrimination based on the employee’s pregnancy. This case demonstrates that employers’ opinions or stereotypes with regard to what pregnant women can and cannot do on the job cannot be used as a basis for employment decisions. (SASCO Electric v. Fair Employment & Housing Commission)
Inflexible_Return_to_Work_Policies_Violate_Disability Discrimination_Laws. In two separate cases, employers, following their written policies that provided for 12 months of medical leave, terminated employees who could not return to work after that leave expired. Both cases were settled after the Equal Employment Opportunity Commission sued, alleging the employers failed to engage in the interactive process to determine if reasonable accommodation, including additional leave, would allow the employees to return to work. (EEOC V. UPS; EEOC v. Sears)
Employer_Sued_for_Religious_Based_Hostile_Work_Environment After_Co-Worker_Repeatedly_Tells_Employee_to_“Find_God”_or He_Will_“Go_To_Hell.” An employee was allowed to proceed with his religion based hostile work environment claim based on evidence his co-worker informed him she could speak to the dead, and that the employee’s deceased brother was suffering in hell. The co-worker repeatedly urged the employee to “find God” so he would not go to hell. The employee reported the harassment to his supervisor, who told him to take the co-worker’s advice. Although the comments decreased after the report to the supervisor, the employee was allowed to proceed with his religious hostile work environment claim. (Winspear v. Community Development Inc.)
EEOC_Guidance_Warns_of_Risk_of_Discrimination_Claims_by Employees_With_Caregiving_Responsibilities. In April 2009, the EEOC issued Enforcement Guidance: Unlawful Disparate Treatment of Workers with Caregiving Responsibilities. Although the federal Equal Employment Opportunity laws do not prohibit discrimination against caregivers per se, there are circumstances in which discrimination against caregivers might constitute unlawful disparate treatment. The most common “caregiver discrimination” claims are based on sex, race, and disability. The EEOC guidance was issued to assist employees and employers in assessing whether a particular employment decision affecting a caregiver might unlawfully discriminate on the basis of prohibited characteristics. (http://www.eeoc.gov/policy/docs/caregiving.html)
At_Will_Employment_Agreement_That_Was_Not_Signed_By_The Employer_Allowed_Employee_to_Sue_For_Breach_of_Implied Contract. The employee entered into a written, at will employment agreement, which, by its terms, required the employer’s signature in order for the agreement to be valid. The employer neglected to sign the agreement. After the employee was fired, he sued, alleging he could only be terminated for cause. The jury held that the at will employment agreement was valid, but that the employee could only be fired for cause. Both sides appealed this inconsistent verdict. The Court of Appeal ordered a new trial. (Stillwell v. Salvation Army)
“Waiting_Period”_in_Employer’s_Vacation_Policy_Upheld.
The employer’s written policy provided that employees did not begin to earn vacation until completion of six months of employment. The employee was laid off after 5 months of employment and sued, claiming that she should be entitled to vacation accrual from the first date of employment. The court disagreed, holding that state law does not dictate when an employer must begin to provide vacation benefits, and a “waiting period” is permissible. (Owen v. Macy’s)
Meal_Period_Case_Still_Pending_Before_the_California_Supreme Court. Employers are anxiously waiting for the California Supreme Court’s decision in Brinker Restaurant Corp. v. Superior Court of San Diego County (Hohnbaum). The Court is expected to decide whether California law imposes an affirmative duty on employers to ensure that employees actually take the statutorily required meal period, or whether instead the employer must make that meal period available to the employee and afford the employee the opportunity to take the meal period. While waiting for the decision, we recommend making sure that your employees take their full minimum 30 minute meal period before completing the fifth hour of work, provide a second meal period if they work more than ten hours, and keep records of the beginning and end time of the meal period each work day.
Employers_May_Temporarily Reduce the Work Schedule and Salary of_Exempt_Employees. The Division of Labor Standards Enforcement issued an opinion letter stating, due to economic conditions, and employer may temporarily reduce the workweek and salary of exempt employees without jeopardizing the employee’s exempt status.
Tips_That_Are_Left_In_a_Collective_Tip_Jar For A Team Of Servers May_Be_Shared_With_Supervisors_Who_Are_Part_Of_The_Service Team. California law generally states that when tips are left for an individual employee, they may not be shared with the agents of the employer (usually supervisors and managers.) The Court of Appeal reversed an 86.7 million dollar judgment against Starbucks, holding that in the fact specific case when tips are left in a collective jar for the entire service team, and the shift supervisors perform the same service tasks as non-supervisors, the shift supervisors may share in the tips. (Chau v. Starbucks)
Unlicensed_Accounting_Associates_Were_Not_Exempt_Professional, Executive,_Or_Administrative_Employees. Accounting associates who were classified as exempt employees filed a class action lawsuit for overtime, waiting time penalties, and punitive damages. The Court determined that the accounting associates were not exempt because they did not spend more than 50% of their time performing exempt duties, and they did not exercise independent judgment and discretion. (Campbell v. PriceWaterhouseCoopers)
Increase_In_State_Withholding_Rates. ABX4-17 became effective November 1, 2009, creating a new state income tax withholding table that must be used. It contains a 10% increase in the amount of income taxes withheld based on existing claimed exemptions. ABX4-17 also increases the rate on withholdings for supplemental wages as well as other types of payments such as exercised stock options and bonuses. Furthermore, effective January 1, 2010, a companion bill, ABX4-18X, imposes 7% back-up withholding for certain payments to non-employees (i.e. independent contractors) where back-up withholding is otherwise generally required under the Internal Revenue Code.
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STATE STATUTES AND REGULATIONS
Civil Air Patrol Leave.
AB 485 amends the California Labor Code to include a new type of leave for employees who are volunteer members of the Civil Air Patrol (the civilian auxiliary of the United States Air Force). Employers who employ more than 15 employees must provide at least ten days of unpaid leave per year to eligible employees, in addition to any leave benefits the employee is entitled to. Such employees must provide the employer as much notice as possible of the intended dates upon which the leave will begin and end. Employees taking this new type of leave are not required to first exhaust vacation or other types of leave. This new law went into effect on January 1, 2010.
Alternative Workweek Schedules.
Minor changes were made to the law governing alternative workweek schedules. Previously, employers were permitted to propose a single work schedule that would be the standard for all workers in a work unit, or, in the alternative, a menu of work schedule options for each worker to chose from. If an employer proposed a menu of work schedule options to their employees, an eight-hour shift could not be an option, and employees could not regularly adjust their option selections. However, effective May 1, 2009, the Labor Code now allows the eight-hour shift option, and with the employer’s consent, allows employees to move from one alternative workweek schedule to another on a weekly basis. In addition, this new law defines the term “work unit.”
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FEDERAL STATUTES ANDREGULATIONS
American Recovery and Reinvestment Act of 2009.
The American Recovery and Reinvestment Act of 2009 (ARRA) contains significant employment law provisions requiring compliance in the new year. First, the COBRA (Consolidated Omnibus Budget Reconciliation Act) subsidy, which was set to expire on December 31, 2009, was extended at President Obama’s request for an additional two months. The new legislation extends the subsidy to individuals who are involuntarily terminated between January 1, 2010 and February 28, 2010, as well as their spouses and dependents. Specifically, the COBRA subsidy is available to “assistance-eligible individuals” (AEI’s). An AEI is now defined as any COBRA-qualified beneficiary who elects COBRA coverage and: (1) had a loss of group health coverage as a result of an involuntary termination of employment (other than for gross misconduct); and (2) had a “qualifying event” between September 1, 2008, and February 28, 2010, and was otherwise eligible for COBRA coverage during that period. The maximum amount of time an AEI can receive the subsidy has increased from 9 to 15 months. In addition, the extended subsidy allows certain individuals whose subsidy periods have ended, and who have failed to pay their full unsubsidized premiums, to pay them retroactively. Certain AEI’s will be entitled to reimbursement and/or credit for time periods during which they paid the entire premium amount. Lastly, this new law requires employers to send out a revised notice to all affected individuals explaining the above-mentioned changes.
In addition, provisions of the ARRA expanded the Health Insurance Portability and Accountability Act (HIPAA) privacy and security requirements to “business associates” of covered entities. “Business associates” include people and entities that perform or assist covered entities in performing a function or activity involving protected health information, as well as people and entities that provide certain services to or for a covered entity which require disclosure of protected health information.
As a result of this new law, business associates must train their employees regarding compliance, designate a privacy officer, and establish numerous policies, safeguards, and procedures addressing the new requirements. Previously, business associates only had to comply with their contracts with covered entities. ARRA requires business associate contracts to be amended. Further, the law now requires that covered entities and business associates thereof notify individuals whose health information has been disclosed in violation of HIPAA’s privacy protections. The privacy provisions for business associates become effective on February 17, 2010, and the security provisions become effective 30 days after the date the Department of Health and Human Services issues the corresponding regulations.
Americans with Disabilities Amendments Act Regulations.
Last year, the Equal Employment Opportunity Commission (EEOC) proposed new regulations to correspond with the Americans with Disabilities Amendments Act (ADAAA). While the ADAAA broadened the ADA to protect a greater number of individuals, most of those broader protections were already provided to California employees under the Fair Employment and Housing Act (FEHA). For example, the ADAAA now requires that impairments be evaluated in their unmitigated state to determine if an individual is substantially limited in a major life activity, which was already the law in California. The proposed regulations explain the expansion of the definition of “major life activities,” the protection provided for individuals regarded as disabled, and that under the ADAAA, there is not a viable claim for reverse discrimination.
Family Medical Leave Act Regulations (FMLA).
As you may know, the new FMLA regulations went into effect January 16, 2009. The new regulations added two types of leave related to military service (service member caregiver family leave and qualifying exigency leave). In October 2009, as part of the 2010 National Defense Authorization Act (NDAA), the FMLA was amended to expand those two types of leave. The NDAA now allows the parent, child, or spouse of an individual on active duty to take qualifying exigency leave. In addition, the service member caregiver family leave portion of the law is clarified to allow for leave to care for an employee’s qualifying family member who is undergoing medical treatment, recuperation or therapy for a serious illness or injury that occurred during the five years preceding the date of treatment.
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If you have any questions about any of the above information, please do not hesitate to contact any member of our employment group, Christopher E. Panetta, Sara B. Boyns, Sharilyn R. Payne, Amber Passno, Ian E. Young, or Jacqueline McManus.