Vol. 33, No. 11, November 2004
In This Issue
Some Deductions
Void Exempt-Employee Salary Basis
Controlled Standby is Hours Worked
Standby Time (first sample policy)
Standby Time (second sample policy)
New Law Requires Supervisor
Harassment Training
Retiree Healthcare Benefits: Goodwill
Becoming Liability?
Ouster of ALRB Member Sought
ALRB Voids Election to Decertify UFW at
Gallo Unit
Minimum-Wage Hike Vetoed
Hand-Tool Selection Guide
Supreme Court Expands Class-Action Lawsuits
Court: Co-Worker Harassment Liability Law
Not Retroactive
Bill Requiring Notice of Electronic
Monitoring Vetoed
Leave Chart and Sample Paid Family Leave
Policy
Sample Paid Family Leave Policy
Bounty-Hunter Law Revised
Labor Code Section 132a Bans Workers' Comp
Discrimination
Hourly-Pay Plus Piece-Rate Bonus Systems
Some Deductions Void Exempt-Employee Salary Basis
Certain executive, administrative and professional employees are exempt from several employment-law requirements. The most significant is overtime pay. However, employers must be careful to protect their ability to apply exempt status to this class of employees.
To be exempt, an employee must meet two important tests: a duties test and a salary test. For a review of these requirements, see the Aug. 2004 FELS Newsletter article titled "Exempt-Status Checklist" at http://www.fels.org/news/ News0408.htm#_1_1.
A key aspect of the salary test is that generally, the employee must receive his full salary for any workweek in which he performs any work, no matter the number of days or hours worked. Conversely, an employee need not be paid his salary for any workweek in which he performs no work.
This means that in most instances, when an employee works any amount of time in a workweek, the employee must receive his or her full salary for that week. No deduction may be made from the employee's wage for not working on a given day.
There are a few exceptions to this rule. Under federal law, an employer may deduct from an employee's salary for the loss of a full (not partial) day's work.
Under California law, however, the ability to deduct for a full day's loss of work without destroying the employee's salary basis is more restricted. The state distinguishes three general types of absences: (1) sickness or accident; (2) vacation or personal time off; and (3) absences out of the employee's control, such as jury duty, military duty, court appearances, and shutdown of business by the employer.
Sickness or Accident: Deductions may be made from the salary of an exempt employee without defeating the salary basis for absences in increments of full working days occasioned by sickness or disability (including work-related accidents) if both of these conditions exist: (1) the deduction is made in accordance with a bona fide plan, policy or practice of providing full compensation for loss of salary occasioned by both sickness and disability and (2) the employee has exhausted his or her leave under that plan, policy or practice.
According to at least one representative of the Division of Labor Standards Enforcement (DLSE), a bona fide plan can encompass a wide range of benefits and provisions. For example, a plan may be bona fide even if it provides employees with only one paid sick day each calendar year and does not allow paid sick days to accumulate over the years. Under this plan, the employer pays for the employee's first day of absence due to illness or disability. Thereafter during that calendar year, for each additional full day the employee does not work due to illness or disability, the employer may deduct a full day's pay from the employee's salary without defeating the salary basis.
Vacation or Personal Time Off: If an exempt salaried employee absents himself for a full day or more on personal business, the employer may deduct wages for that absence on a pro rata basis from the salary owed. A deduction in this situation does not defeat the employee's salary basis.
If, while on vacation, an exempt employee performs any work during the workday, no deduction may be made from the employee's salary because it would be for a "partial day absence." This enforcement policy is consistent with that of the U.S. Department of Labor.
Absences Beyond the Employee's Control: If the employee is ready, willing and able to work, deductions may not be made for time when work is not available or the employee must serve on jury or as a witness or take temporary military leave.
To ensure that California law protects employee interests at least as much as the federal law on which it is patterned, the DLSE follows the provisions of the federal regulations on salary basis insofar as those regulations are compatible with California law. Consequently, deductions may not be made from an exempt employee's salary for absences caused by jury duty, attendance as a witness, or temporary military leave for periods of less than a full workweek.
The same rule applies where an employer has chosen to close his business or otherwise failed to provide an exempt employee work for a full workweek. There, an exempt employee who performs any work during that workweek is entitled to his full salary for that workweek.
Under the DLSE enforcement policy, the rule that an employee must receive his full salary is, as with the federal regulation, subject to the caveat that an employee need not be paid for any workweek in which he performs no work. Thus, an employee who performs no work during the week is not entitled to a continuation of his salary even if the time lost is due to jury duty, attendance as a witness, temporary military leave or any other reason.
Also, the salary of an exempt employee may be prorated for a partial workweek worked upon starting or ending employment with an employer.
Controlled Standby is Hours Worked
In agriculture, it is common for an employer to ask an employee to be "on-call" to handle an emergency that may arise, such as to repair equipment or to perform frost-protection activities. This is called "Standby Time."
The Labor Commissioner views standby as either controlled or uncontrolled.
Controlled is where the employer tells the employee to stay at a specific place, such as in the employee's home, so that he can be called to work.
Uncontrolled is where the employer tells the employee to be available to return to work, but the employee has the freedom to go where he wants. In an uncontrolled condition, the employer may give the employee a pager or wireless phone so he can be alerted to the need for him to return to work.
The big difference between controlled and uncontrolled standby time is the employer must pay the employee for controlled standby time.
An employer may pay an employee on controlled standby at less than the employee's usual pay rate (but not at less than the minimum-wage rate, of course) as long as the employer informed the employee of that before his standby time started. Unless the employer specifies the lower pay rate in advance, controlled standby time is payable at the employee's regular pay rate.
Here are two sample Standby Time handbook policies (the first sample policy appeared in a similar article in the Jan. 2004 issue of FELS Newsletter).
Standby Time (first sample policy)
Standby is where an employee must be on call and ready to report for work should the company desire the employee's services at an unspecified time. The degree of freedom that the employee has to pursue the employee's own interests determines whether the company must treat the standby time as hours worked. Generally, whether standby time must be counted as hours worked depends on whether it is controlled or uncontrolled.
Controlled Standby: Standby time is controlled where the company requires an employee during a specific time period to be close to the work place at a location where the employee can be reached if needed. Generally, the time "on call" of an employee whose movements are so restricted by the company's requirements that he cannot use the time effectively for his own purposes is deemed hours worked. In the case of frost control, an employee is informed of the time of day when controlled standby time starts. The rate of pay for controlled standby time is the minimum wage, and controlled standby time is separately recorded as such. Because controlled standby time is hours worked, it also counts for the purpose of overtime pay.
Uncontrolled Standby: Standby time is uncontrolled where the employee may leave the workplace, is required merely to inform the company of where the employee may be contacted, and is allowed sufficient time to pursue his or her own activities. The company does not count uncontrolled standby time as hours worked.
Standby Time (second sample policy)
Sometimes certain employees are placed on standby. The Company expects an employee on standby to return to work within a reasonable time, generally within 30 minutes of the call to return to work.
The Company informs the standby employee when the standby time begins. For example, in the case of an employee who is on frost-protection duty, the standby time may begin at 3 a.m. based on weather conditions.
The Company might provide the standby employee with a telecommunication device, such as a pager or wireless telephone, by which the employee is alerted to the need to return to work. Or, the employee may be told to listen to a radio for reports of weather conditions. In these situations, an employee is not paid for the time waiting for a return-to-work call.
An employee required by the Company to stand by at a specific location is paid at the state minimum wage for the standby time specified by the Company.
New Law Requires Supervisor Harassment Training
On Sept. 30, Gov. Arnold Schwarzenegger signed AB 1825, codified as Government Code section 12950.1. This legislation requires:
1. By Jan. 1, 2006, a covered employer (i.e., one with 50 or more employees) must provide at least two hours of classroom or other effective interactive training and education on sexual harassment to all supervisory employees who are employed as of July 1, 2005, and to all new supervisory employees within six months of their assumption of a supervisory position. Exception: An employer that has provided this training and education to a supervisory employee after Jan. 1, 2003, need not provide this training by Jan. 1, 2006.
2. After Jan. 1, 2006, a covered employer must provide sexual harassment training and education to supervisory employees at least once every two years.
The training and education must be given by an instructor with knowledge and expertise in the prevention of harassment, discrimination, and retaliation and must, at a minimum, include:
1. Information and practical guidance on the federal and state laws prohibiting sexual harassment, laws requiring prevention against sexual harassment, and laws requiring correction of sexual harassment;
2. Remedies available to victims of sexual harassment; and
3. Practical examples aimed at instructing supervisors in the prevention of harassment, discrimination, and retaliation.
Compliance with this new law will not insulate employers from liability. The violation of this statute can lead to a citation from the Department of Fair Employment and Housing. However, an employer will be able to use the fact that it provided the requisite training as further evidence that it took reasonable measures to prevent sexual harassment.
Section 12950.1 provides that a violation does not in and of itself lead to civil liability. However, plaintiff attorneys will likely argue that an employer's failure to comply with this statute means it failed to take reasonable measures to prevent sexual harassment. This could potentially lead to increased claims of compensatory and punitive damages. Furthermore, disgruntled employees may complain they suffered retaliation after requesting that such training be provided.
(Source: Berger Kahn Labor & Employment Group, Wayne Hersh, 949-474-1880. The Berger Kahn Labor & Employment Group publishes e-Alerts on timely labor and employment issues.)
Retiree Healthcare Benefits: Goodwill Becoming Liability?
(This is part two of a two-part article relating to healthcare benefits. In the first part published in last month's FELS Newsletter, discrimination and breach of contract liabilities regarding healthcare benefits were examined. This part covers other important aspects of the issue.)
Employers Should Reserve Their Right to Amend Retiree Health and Welfare Benefits: The lesson to be learned is that it is essential to reserve the right to amend or terminate the company's retiree welfare benefit plans. Specifically, the company's benefits plan administrator should take the following steps.
If a company's benefits plan documentation does not currently provide an explicit reservation of rights, the company should consider amendments to the documents to include such reservation and request that the reservation be reiterated in various documents, as to continually reinforce the company's position.
Consider educating staff to ensure that the contact person comprehends the importance of the company's reservation of rights and is trained to avoid asserting contrary or conflicting communications.
Give advance notice to current employees and retirees of any plan changes or newly reserved rights to amend or terminate the benefits plan.
In addition, in order to avoid fiduciary liability, employers should provide comprehensive plan documentation that clearly communicates the benefits' requirements and the company's reserved right to amend or terminate the plan in the future. If an employee or retiree personally requests plan information, the employer's duty is heightened. Not only must the employer provide full and accurate information, it may also be required to disclose information not specifically requested to enable employees or retirees to make educated decisions in reliance on the employer's communications.
While it is unclear as to whether these steps will preclude lawsuits by current retirees, it will likely shelter the company from lawsuits initiated by current employees. Although the Ninth Circuit has substantially addressed fiduciary breaches in this context, it has yet to fully address other potential liability theories such as breach of contract and promissory estoppel. Until the Ninth Circuit speaks to these issues, employers should keep abreast of current developments in this area of the law.
(James T. Cahalan is a labor and employment law attorney with Hanson Bridgett's Sacramento office, (916) 551-2926 or jcahalan@hansonbridgett.com.)
A Reedley grower is calling for the removal of an Agricultural Labor Relations Board member, alleging the official broke state law by consulting for the No on Prop. 67 campaign.
In a letter sent to several state officials, Dan Gerawan accused ALRB member Daniel Zingale of violating Labor Code section 1150 that states: "Each member of the board shall not engage in any other business, vocation or employment."
Records show that Zingale in 2004 earned $50,000 as a campaign consultant for Stop the Phone Tax - No on 67. Rejected by voters earlier this month, the ballot measure would have raised $500 million a year for hospitals, clinics and emergency medical services through a surcharge on wireless telephone service.
Gerawan's claim shows how a law, seemingly written in clear and concise language, can be interpreted in vastly different ways. The law apparently has never been tested in court, but a 1997 state attorney general opinion said it doesn't violate the state constitution.
Zingale and several state officials say he has done nothing wrong. They point to a different legal opinion written in 1999 by the Legislature's lawyers.
But Gerawan and a political expert say the law is clear that ALRB members can't moonlight.
"They're expected to be impartial, so they're not supposed to take any outside income," said Gerawan, who runs a large tree-fruit farm.
The ALRB decides unfair labor practice cases and conducts elections to determine whether agricultural employees want to be represented by labor organizations.
Gov. Schwarzenegger's aides reviewed the matter and decided against taking steps to remove Zingale from the ALRB, said Margita Thompson, a spokeswoman for the governor.
Grawan then asked Attorney General Bill Lockyer for permission to sue Zingale in a quo warranto action, used to remove a person from public office.The attorney general must approve all quo warranto actions filed by private individuals to protect public officers from frivolous lawsuits. A Latin term, quo warranto means "by what authority."
"What we're determining is if there is a significant question of law here that's worthy of some court's time and attention," said Nathan Barankin, a spokesman for Lockyer. A decision probably will be made early next year, after Lockyer reviews responses from Zingale and Gerawan.
ALRB Voids Election to Decertify UFW at Gallo Unit
In a victory for the United Farm Workers, the state Agricultural Labor Relations Board threw out election results that would have decertified the union as the bargaining agent for employees at a unit of E.&J. Gallo Winery, the state's largest vintner.
The decision upheld a finding by an administrative law judge that supervisors at the company's upscale Gallo of Sonoma unit had illegally assisted workers who were circulating petitions requesting an election to decertify the UFW.
The ruling leaves uncounted the ballots cast in the March 13, 2003, decertification contest.
The company said it would ask the state Court of Appeal to reverse the ALRB decision. In filings with the ALRB, Gallo argued that any alleged involvement of company supervisors with the decertification petition had been on a small scale and could not have affected the outcome of the vote.
The UFW won the right to organize Gallo's Sonoma Valley operations in 1994 but didn't secure a three-year contract with the company until 2000. Talks for a new contract, held sporadically since August, have bogged down over the union's demand that employees of labor contractors get the same benefits as workers on Gallo's payroll.
The battle over decertification underscores the difficulty that the UFW has encountered in trying to win significant wage gains for farm workers in California, said Phil Martin, an agricultural economist at the University of California at Davis. "If the union could win larger wage increases, I suspect there may have been less support for decertification," he said.
(By Marc Lifsher and Jerry Hirsch, Los Angeles Times Staff Writers)
On Sept. 18, Gov. Arnold Schwarzenegger vetoed Assembly Bill 2832, which would have raised the California minimum wage (now $6.75 per hour) to the highest level in the nation.
Under the proposal by Assemblywoman Sally Lieber, D-San Jose, AB 2832 would have raised California's minimum wage in two stages to $7.75. That would have raised California's minimum wage well above levels in neighboring states, including $7.15 per hour in Alaska and Oregon, and $7.16 per hour in Washington.
The federal minimum wage is $5.15 per hour, meaning California's minimum wage is already 31 percent higher than the national minimum.
In his veto address, Governor Schwarzenegger stated:
"Now is not the time to create barriers to our economic recovery or reverse the momentum we have generated. I want to create more jobs and make every California job more secure."
Schwarzenegger contended the minimum-wage boost would have increased costs to California employers by as much as $4.4 billion.
Easy-to-use guidance for evaluating and selecting ergonomically designed, non-powered hand tools to reduce risks of injuries from repetitive movements is provided in a new publication jointly issued by the National Institute of Occupational Safety and Health (NIOSH) and the Cal/OSHA (California Occupational Safety and Health Administration) Consultation Service, Easy Ergonomics: A Guide to Selecting Non-Powered Hand Tools.
The guide includes user-friendly, illustrated discussions and a checklist for deciding whether to stay with traditional tool designs, evaluating the effectiveness of different designs for reducing risks of musculoskeletal injuries while accomplishing a given task, and choosing a tool of the right size and shape for the task and the user. The guide, DHHS (NIOSH) Publication No. 2004-164, is available at http://www.cdc.gov/ niosh/docs/2004-164/.
Supreme Court Expands Class-Action Lawsuits
(By Patrick Moody, Attorney, Barsamian, Saqui & Moody.* Barsamian, Saqui & Moody is one of two law firms contracted by Farm Employers Labor Service to provide legal help to FELS subscribers under the FELS Group Legal Services Plan. Visit the firm's Web site at http://www.theemployerslawfirm.com/firm/)
A recent California Supreme Court decision is almost certain to result in even more wage-and-hour class-action lawsuits against employers, a trend that has been on the upswing for the past several years.
The decision in Sav-On Drug Stores, Inc. v. Superior Court approved a lawsuit for non-payment of overtime pay on behalf of an entire class of operating managers and assistant managers employed by the drug store chain in California.
The Sav-On managers claimed they were entitled to recover unpaid overtime for the period they were misclassified as exempt employees, and requested that their claims be ruled a class action. The claims were brought under the Labor Code, and under the Business & Professions Code on behalf of the general public, on the theory that Sav-On's failing to properly classify the managers, amounted to unfair competition with other employers. This is an allegation that many employers have faced recently.
Sav-On contended that whether an employee was properly classified as exempt could not be determined on a class-wide basis. Rather, it argued that each individual employee's actual work must be reviewed because of differences in store size, volume and organization, and differences in work performed. Sav-On relied upon prior Supreme Court cases that had held that individual analysis was required.
This case did not address the merits of the managers' claims, but solely addressed whether such a wage an hour claim could be maintained as a class action. In approving the class action, the state Supreme Court relied upon substantial evidence showing that:
1. Sav-On had a policy and practice of deliberately misclassifying employees as exempt;
2. Sav-On's operational standardzation made the managers' jobs very similar from store to store; and
3. The exempt classification was based strictly upon Sav-On's job descriptions, rather than on the actual duties of individual managers.
Sav-On's arguments relied heavily upon an earlier California Supreme Court case which held that examining what an employee actually does during his or her work time is necessary to determine whether the employee is exempt. This time, however, the Court concluded that Sav-On's policies, practices and insistence upon common operational methods could override the need to review the actual duties and overtime hours of individual employees.
The Supreme Court observed that California has a public policy encouraging the use of the class action device. Without a class in this case, each manager would present essentially the same arguments and evidence in separate cases, leading to multiple trials conducted at enormous expense to both the judicial system and the participants. Therefore, the class was appropriate.
What This Means for Employers: This case reinforces the fact that employers need to carefully evaluate the exempt/non-exempt classifications of their employees. This are of the law has been a growth industry for plaintiffs' attorneys, employee advocacy groups, and even individual employees, all of whom seem to bring their claims on behalf to the general public under the Business & Professions Code. Defending such litigation can be very expensive and time consuming, making the extra effort of properly analyzing the jobs beforehand well worth the effort.
(*The goal of this article is to provide employers with current information on labor and employment laws. Its contents should neither be interpreted nor construed as legal advice or opinion. The reader should consult with Barsamian, Saqui & Moody at (559) 248-2360 in Fresno, (916) 782-8555 in Sacramento, or toll-free at (888) 322-2573, for individual responses to questions or concerns about any given situation.)
Court: Co-Worker Harassment Liability Law Not Retroactive
Legislation imposing liability on employees who harass their fellow employees on the basis of the victim's race or gender changed the law and cannot be applied retroactively to conduct occurring before the new law took effect, the California Supreme Court ruled Nov. 4.
In a 6-1 decision, McClung v. EDD, the justices reversed a decision of the First District Court of Appeal allowing Lesli Ann McClung to sue Manuel Lopez, with whom she had worked at the state Employment Development Department, for creating a hostile work environment.
The Supreme Court previously held that the Fair Employment and Housing Act does not impose on non-supervisory coworkers personal liability for harassment. The Legislature later amended Government Code section 12940, effective Jan.1, 2001, to impose such personal liability.
The Court concluded that the amendment did change existing law because it applied liability where before there was none.
Bill Requiring Notice of Electronic Monitoring Vetoed
On Sept. 29, Gov. Arnold Schwarzenegger vetoed a measure that would have required employers to give notice to employees before engaging in electronic monitoring activities.
Senate Bill S.B. 1841 (Bowen, D-Redondo Beach), entitled "Personal Information: Security," would have added to California Labor Code section 436 a mandate that employers not electronically monitor its employees without first providing notice. The notice would have had to:
1. Provide "clear and conspicuous notice to each employee";
2. Be given electronically or in writing;
3. Describe the form of communication or other activity that will be monitored; and
4. Describe the type of information that will be obtained from the monitoring.
Under the bill, the posting of signs in the workplace would by itself have not sufficed.
Nonetheless, it would have let employers conduct monitoring in compliance with Labor Code section 435 and Penal Code section 653, subdivision (n), to the extent that:
1. a particular employee is engaged in unlawful conduct; and
2. the electronic monitoring will produce evidence of unlawful conduct.
The bill's author asserted it was needed because "just because the employer owns the computers and pays for the Internet services does not mean the employer may spy on its employees."
While recognizing that "employees should have reasonable privacy protections in the workplace" Gov. Schwarzenegger in his veto message noted: "The notice requirements in this bill are too broad and do not define what constitutes proper notice, which I cannot support when an employer that fails to issue a notice or that issues a deficient notice faces the possibility of a misdemeanor conviction and civil lawsuits."
Leave Chart and Sample Paid Family Leave Policy
Jennifer Brown Shaw, Esq., partner of Jackson Lewis LLP, has provided FELS with a chart comparing federal and California leave-of-absence laws. The chart can be accessed by going to the FELS Web site. After logging in as a FELS subscriber, look in "Labor Resources" - "Laws and Regulations" and then click on "Leave of Absence Chart - Jackson Lewis-Shaw."
Also, Ms. Shaw has a link to an article on her firm's Web site that provides more information on California's paid family leave program. Visit http://www.jackson lewis.com/legalupdates/article.cfm?aid=624
The leave-comparison chart should be used as a guide only. The laws in this area can change quickly! Employers need to check the currency of the information in the chart before relying on it.
Ms. Shaw developed the sample policy for paid family leaves that appears below. An employer must revise the sample policy to conform with its own practices and procedures.
Sample Paid Family Leave Policy
PAID FAMILY LEAVE BENEFITS
An employee who is off work to care for a child, spouse, parent, or registered domestic partner with a serious health condition, or to bond with a new child, may be eligible to receive benefits through California's Paid Family Leave (PFL) program, administered by the Employment Development Department (EDD).
These benefits solely are financed through employee contributions to the PFL program. That program is solely responsible for determining if an employee is eligible for such benefits. There generally is a waiting period during which time no PFL benefits are available. The EDD can provide additional information about any applicable waiting period.
If you need to take time off work to care for a child, spouse, parent, or registered domestic partner with a serious health condition or to bond with a new child please advise [title], and you will be given information about the EDD's PFL program and how to apply for benefits. Employees also may contact their local Employment Development Department office for more information. You should maintain regular contact with [title] while you are off work so we may monitor your return-to-work status. Further, contact [title] when you are ready to return to work so we may determine what positions, if any, are open to you.
When an employee applies for PFL benefits, the Human Resources Department will determine if the employee has any accrued but unused vacation [PTO] time available. If the employee has accrued but unused vacation time [PTO] available, then the employee will be required to use up to two (2) weeks of such time before becoming eligible for PFL benefits.
Please note, employees taking time off work to care for a child, spouse, parent, or domestic partner with a serious health condition or to bond with a new child are not guaranteed job reinstatement unless they qualify for such reinstatement under federal or state family and medical leave laws. Any time off for PFL purposes will run concurrently with other leaves of absence [,such as Family and Medical Leave,] if applicable. [Please see the "Family and Medical Leave" policy in this Handbook for eligibility requirements].
(Source: Jennifer Brown Shaw, Esq.. partner, Jackson
Lewis LLP, 1215 K Street, Suite 1800, Sacramento, CA 95814, 916-341-0404)
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Gov. Arnold Schwarzenegger signed legislation blunting the effects of the controversial "bounty hunter law." In the short time since taking effect on Jan. 1, 2004, the Labor Code Private Attorneys General Act of 2004 (commonly referred to as "the bounty hunter law") quickly established itself as one of the most onerous pieces of legislation to face employers with operations in California. Here's a link to an article by Jennifer Brown Shaw, Esq.. partner, Jackson Lewis LLP, detailing the revisions: http://www.jacksonlewis.com/legalupdates/article.cfm?aid=620. Of course, you'll still need to comply with applicable wage-hour laws.
Equally as significant, the voters also passed an initiative reducing the scope of California's infamous "unfair competition" law, Bus. and Prof. Code section 17200. This is the law individuals can use to sue for vague "unfair business practices," even if they didn't have an injury caused by the business practice. While the "unfair competition law" remains, the new initiative does the following:
1. Limits individual's right to sue by allowing private enforcement of unfair business competition laws only if that individual was actually injured by, and suffered financial/property loss because of, an unfair business practice.
2. Requires private representative claims to comply with procedural requirements applicable to class action lawsuits.
3. Authorizes only the California Attorney General or local government prosecutors to sue on behalf of general public to enforce unfair business competition laws.
4. Limits use of monetary penalties recovered by Attorney General or local government prosecutors to enforcement of consumer protection laws.
(Source: Jennifer Brown Shaw, Esq.. Partner Jackson Lewis LLP, 1215 K Street, Suite 1800, Sacramento, CA 95814, 916-341-0404)
Labor Code Section 132a Bans Workers' Comp Discrimination
An employer might find itself faced with defending a claim by an employee for discrimination based upon a work-related injury, also known as a Labor Code section 132a claim, filed with the Workers' Compensation Appeals Board.
An employee has up to one year from the date of the alleged discriminatory act or the date of termination to file a section 132a claim. Based upon this author's experience, the frequency of these claims does not suggest that employers are wantonly discriminating against industrially injured employees. Rather, Section 132a claims are often filed concurrently with a claim for workers' compensation benefits by attorneys representing injured employees as a virtual knee-jerk reaction. Unlike a claim for workers' compensation benefits, however, section 132a claims are not covered by workers' compensation insurance. Therefore, employers must retain and pay out of their own pockets for legal counsel to defend them against section 132a claims.
Labor Code section 132a codifies the policy of the State of California prohibiting discrimination against employees who are injured in the scope of their employment. Specifically, the statute provides that any employer who discharges, or threatens to discharge, or in any manner discriminates against any employee because the employee has filed or made known his or her intention to file a claim for compensation with the employer or an application for adjudication, or because the employee has received a rating, award, or settlement, is guilty of a misdemeanor, and the employee's compensation may be increased by 50 percent, up to $10,000, together with costs and expenses of up to $250.
The statute subjects insurers to the same penalties and damages for directing or threatening an insured with cancellation or a raise in premium unless the insured discharges an employee who has filed or made known his or her intention to file a workers' compensation claim, or has received a rating, award or workers' compensation settlement.
An employee who wins a section 132a claim is also entitled to reinstatement and reimbursement for lost wages and work benefits caused by the employer's discriminatory acts, along with prejudgment interest on damages awarded. To be entitled to reimbursement for lost wages and benefits, the employer must make at least a prima facie showing that the loss was due to the employer's act. This generally requires the employee to prove that, during any period for which lost wages and benefits are sought, the employee was ready, willing and able to perform the duties of his or her position.
Section 132a has been liberally construed by the Workers' Compensation Appeals Board and California courts. Specifically, unlike California's primary employment discrimination law, the Fair Employment and Housing Act, an employee bringing a claim under Labor Code section 132a need not prove the employer intentionally discriminated against the employee. Instead, the critical question is whether the employer's action caused detriment to the employee who has suffered a work-related injury.
For example, a California court has held that an employer's policy of terminating all employees who have been off work for four months for any medical reason, though applied to all disabilities, industrial and nonindustrial alike, constitutes discrimination against industrially injured employees. Therefore, any act by the employer that causes detriment to the employee and that would not have been taken but for the employee's injury potentially could violate section 132a.
If the employer and legal counsel determine to seek settlement of the section 132a claim as opposed to a trial before the Workers' Compensation Appeals Board, the employer benefits to the extent the section 132a claim can be settled along with the underlying workers' compensation case and without any out-of-pocket cost to the employer. Therefore, where settlement is the goal, the employer should request that counsel defending the section 132a claim immediately contact counsel representing it on the underlying workers' compensation case to coordinate resolving the cases together and the section 132a claim with little or no out-of-pocket cost to the employer.
For more information about this topic, contact Meriam Hamilton at mhamilton @pkh-law.com or (916) 442-3552.
Hourly-Pay Plus Piece-Rate Bonus Systems
(By Gregory Encina Billikopf*, University of California)
Some decisions require a degree of boldness. There are no compromises.
Those who watched the equestrian events at the Olympic Games could not help but note the required coordination between horse and rider to clear the jumps. The obstacles had to be taken without hesitation. Lack of unity between horse and rider--or not permitting the horse the right number of strides before a jump--can lead to potentially disastrous consequences, the most serious of which is lack of confidence or trust in each other.
There are similarities in terms of how crew workers are paid.
Growers agree that when workers are paid by the hour, the fastest crew worker tends to work at the speed of the slowest one.
Farmers also agree that one of the dangers inherent in piece-rate pay is the potential for poor quality. Research has shown, however, that piece rate does not automatically result in poorer quality than work paid by the hour. Furthermore, specific steps can be taken to safeguard quality while paying by the piece.
Over the years, I have worked with numerous farm employers who have implemented an hourly-pay system plus a piece-rate bonus. The idea in each case was that of safeguarding quality while motivating employees to work faster. The long-term results tend to be disastrous.
A California farmer shared with me a letter he received from employees that essentially stated, "Please remove the weight from off our shoulders and change the way you pay." The letter was signed by all employees. This grower kindly permitted me to share some of the details of his pay system.
The base pay at the time was $7.25 an hour for up to 75 pounds of produce handled per hour. The bonus was 5½ cents per pound for every pound over this 75-pound base.
Table 1 shows that workers who process 130 pounds per hour earn $10.28 per hour in contrast to, say, someone earning $7.25 and handling 50 pounds. What may not be immediately evident in these numbers, however, is that the pay per effort (pounds processed) diminishes with increasing performance levels.
Figure 1 represents dollars earned per effort (pound processed) shown in the Y axis, and pounds processed in the X axis.
This is a graphic representation of the diminishing earnings per effort made.
Most farm workers do not need to pull out their calculators or computer spreadsheets to intuitively realize that added effort is not compensated evenly. A straight piece rate is much more motivating to workers.
For more information on how to design a piece-rate pay approach that will benefit farm employers and farm workers in the long run, contact the author at gebillikopf @ucdavis.edu or download the book Labor Management in Agriculture: Cultivating Personnel Productivity, available as a public service of the University of California on the World Wide Web, at www.cnr.berkeley.edu/ucce50/ag-labor/
(*Gregory Encina Billikopf, Farm Advisor, Labor Management, gebillikopf@uc davis.edu,http://www.cnr.berkeley.edu/ucce50/ag-labor/, (209) 525-6800)Table 1
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