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Vacation Pay for California Employees

Blog - 2010 blogs
     There is no California or federal law, which requires employers to provide employees with vacation time.  Nonetheless, if the employer does provide vacation time, certain provisions of the California Labor Code must be followed.

     Vacation time is treated as deferred wages and accrues and vests proportionately as time worked.  Therefore, California employers cannot have a “use it or lose it” policy by which earned vacation expires.  Employers may, however, put reasonable caps on accrued vacation, provided those caps were disclosed to the employee beforehand (e.g. in the employee handbook, offer letter, or the employment agreement).  A vacation pay policy will likely violate state law if the cap on accrual is so small that it is, in practice, a “use it or lose it” policy.

     An employer’s policy generally controls how much vacation time an employee earns, and different amounts of vacation time may be given to different employees if the policy is clear. Employers are generally permitted to exclude certain employees from the vacation time policy for a certain amount of time at the beginning of employment (e.g. during a probationary period). Also, the employer is free to control when vacation is taken and how much vacation is taken at any one time.

     Generally, all accrued vacation is due upon termination, layoff or quit, and an employment contract cannot force an employee to forfeit earned vacation.

     The statute of limitations to bring a claim for unpaid vacation is three years from the date the employee is terminated or resigns. This statute of limitations begins to run when employment ends, not when the employee’s vacation accrued. Thus, an employee can recover any vacation that vested during the employment relationship, even if it accrued long before the filing of the claim.

FMLA and CFRA Require Reinstatement to the Same or Comparable Employment Position

Blog 2010 blogs
     One of the key provisions of FMLA/CFRA leave is the right to reinstatement to the same or comparable position after the leave.  

     A “comparable position” is defined as a position which is “virtually identical to the employee's original position in terms of pay, benefits, and working conditions, including privileges, perquisites and status.  It must involve the same or substantially similar duties and responsibilities, which must entail substantially equivalent skill, effort, responsibility, and authority.   It must be performed at the same or geographically proximate worksite from where the employee was previously employed.  It ordinarily means the same shift or the same or an equivalent work schedule.”

     The employer is not required to reinstate an employee if the employee’s position has been eliminated for legitimate business reasons unrelated to the leave.  For example, a company downsizing or reorganization may be considered legitimate business reasons.  Also if the employer has legitimate reasons to terminate the employee, then reinstatement is not required.  The employer has the burden of proof to show that the employee would not have been reinstated for a legitimate business reason.

     Also, there is no undue burden or undue hardship defense to FMLA/CFRA leave (in contrast to reasonable accommodation requests).  An employer cannot deny FMLA/CFRA leave to an eligible employee simply because they think that the employee’s absence will cause an economic hardship or will be difficult to fill the employee’s job duties.

     Key employees.  Certain employees, known as “key” employees, may be denied reinstatement.  To be categorized as “key,” the employee must be in the top ten percent of their pay scale for all employees within 75 miles of their worksite.  The employer must also establish that reinstatement would cause significant economic injury to the operations of the employer.  However, prior to taking leave, the employer must notify the employee of this “key” designation and the possibility that the employee will be denied reinstatement.  Nonetheless, the employer still must provide 12 weeks of leave with full health coverage even if a key employee is denied reinstatement.  And if the “key” employee is out on leave, the employer must give the employee a reasonable opportunity to return to work.

Family Medical Leave for California Employees – A Basic Overview

Blog 2010 blogs

For California employees, both the federal Family and Medical Leave Act (FMLA) and the California Family Rights Act (CFRA) provide up to 12 weeks per year of job-protected, unpaid leave because of:

  • (1) the employee’s serious health condition, or
  • (2) to care for an immediate family member (spouse, child, parent, or, in California, domestic partner) who has a serious health condition, or
  • (3) for the birth or adoption of a child or for the foster care placement of a child; or
  • (4) certain situations for active duty military members and their immediate family members

“Serious Health Condition“

One of the key phrases in FMLA or CFRA leave is that the leave time must be taken to treat a “serious health condition.” Serious health conditions include:

  • An overnight stay in a hospital
  • Being incapacitated for 3 or more consecutive days, and (i) receiving two or more treatments by a health care provider within 30 days, or (ii) continuing treatment under the supervision of a health care provider
  • Taking time to treat a chronic health condition such as asthma, diabetes or epilepsy which requires periodic treatments for an extended period of time
  • Conditions which require multiple treatments such as cancer treatments (e.g. chemotherapy or radiation), severe arthritis, kidney dialysis, or restorative surgery
  • Pregnancy. Under the FMLA, pregnancy is a serious health condition if the employee is unable to work. However, in California, the right pregnancy leave, even if the woman is able to work, is protected under the Pregnancy Disability Leave Law.

It is important to note that many routine illnesses are not “serious health conditions.” For example, ordinarily, unless complications arise, the common cold, the flu, ear aches, upset stomach, minor ulcers, headaches other than migraine, and routine dental problems or diseases do not meet the definition of a serious health condition and do not qualify for protected medical leave.

The "Privilege" Defense to Defamation Claims

Blog 2010 blogs

    There are four common defenses to defamation claims: privilege, consent, truth and opinion.  This entry will discuss the most widely employed defense to workplace defamation claims – absolute and qualified privileges.

    Absolute Privilege. An absolute privilege relieves the defendant or employer of any liability or responsibility for defamatory statements, even if the statements were published with malice.  For example,

     •  statements made by an employer in the course of “official proceedings” such as unemployment hearings, wage claims, or discrimination investigations, where the statements are related to such proceedings

     •    statements made in an arbitration under a collective bargaining agreement that are not published to persons lacking a legitimate interest in the proceedings

     •    statements made during a legally required background inspection of a potential employee

     •    statements made during any governmental or quasi-judicial proceedings (which include statements made to the police as part of an investigation into criminal activity)

    
    Qualified Privilege.  A qualified privilege, on the other hand, would relieve the defendant or employer of liability or responsibility if the statement was made without malice.  “Malice” requires showing that the defendant harbored ill will toward the plaintiff or that the defendant lacked reasonable grounds for belief of the statement or publication.  For example, qualified privilege has been found to apply in certain circumstances:

     •    Statements made in employee evaluations, performance reviews, or appraisals. Unless the evaluation falsely accuses an employee of criminal conduct, lack of integrity, dishonesty, incompetence or reprehensible personal characteristics or behavior, a bad performance review will not be the basis of a libel suit.  The qualified privilege has been held to apply even when the employer’s evaluation was objectively wrong and could not be “supported by reference to concrete provable facts”

     •    Statements made by an employer in employment references.  Section 47(c) of the California Civil Code allows an employer to disclose certain information about a person's employment to interested parties including a potential new employer.  For example, references and any other information a previous employer communicates, upon a potential employer's request, that relate to the employee's “job performance or qualifications” and whether the former employer would rehire the employee

     •    Co-Workers. In general, employees may not sue co-workers for defamation based on their conduct relating to “personnel actions” such as terminations, performance evaluations or work assignments

     •    Discussions about employee grievances and resolving the grievance

     •    Discipline or discharge letters

     More information on consent, truth and opinion defenses can be found here.

Defamation Per Se -- Presumption of Harm

Blog 2010 blogs
     In the realm of workplace defamation claims, the aggrieved employee (or plaintiff) needs to show that the slanderous (spoken) or libelous (written) comments harmed the reputation of the employee.  There are five basic elements to a defamation claim - defamatory content, publication, the statements refer to the plaintiff, with intent, and harm.  

     However, some statements, because they are so naturally and obviously harmful, are considered per se defamatory.  In defamation per se claims the plaintiff does not have to prove actual injury to reputation because the harm to the plaintiff is presumed.  The plaintiff still has the burden to establish the other four elements even if he does not need to prove harm or damages.  In California, there are four recognized categories of defamation per se statements:

•    the plaintiff committed a crime
•    the plaintiff has an infectious, contagious, or loathsome disease
•    the plaintiff is impotent or “want of chastity”
•    statements which imply that the plaintiff is unqualified to his engage in his profession, trade or business

     Many employment defamation cases fall into the last category – statements about the employee’s professional reputation, job performance, or competence.  For example, defamation per se may arise if an employer made statements to individuals, whether inside and outside of the employment setting, that the employee was “incompetent,” “lacking ability” or any statement which implies that the plaintiff cannot perform his employment occupation.  Nonetheless, defamation per se only eliminates the plaintiff’s obligation to prove damages, the other defenses and qualifications to defamation claims still apply.

Workplace Defamation - A Basic Overview

Blog 2010 blogs

     Since many terminated and current employees ask about it, I thought I might dive into the treacherous waters of defamation in the workplace.  Defamatory conduct in the workplace may occur, for example, when a discharged employee is removed from an employer's premises by security personnel, creating the false impression that the employee had committed a crime.  Other times, a terminated employee may find out that a former employer is making, what the employee feels, are false statements about how the employment relationship ended or how the employee performed.  

     Let’s start with some basics - defamation is the unprivileged publication of a false statement tending to harm the reputation of another person.  The elements necessary to prove defamation are:

  • First, the content of the communication must be false, must contain an assertion of fact, not an opinion; and must reasonably be understood as negative.
  • Second, the communication must be “published” which essentially means that the statement was: (a) written (libel) or spoken (slander), (b) by the employer or its agent(s), (c) to at least one other person (not the plaintiff), and (d) the recipient understood the statement.

          Publication occurs when a statement is communicated to any person other than the party defamed.  Publication may occur when one supervisor makes a false statement about the employee to another supervisor (e.g., a statement made by an employee's former supervisor to his current supervisor that plaintiff had “misused company funds” was found to satisfy the publication requirement.)

  • Third, the employee must show that the statement or conduct referred to him or herself. There is no requirement that the statement refer to the person by name.  A statement “refers" to an employee even if the recipient of the communication mistakenly, but reasonably, understands that the statement was intended to refer to the defamed party.
  • Fourth, intent or “malice” may be required to overcome many of the qualified privileges granted to employers.
  • Finally, the employee must prove that injury occurred because of the communication. Since defamation involves injury to reputation, the employee must show that actual damage has occurred to the esteem that the employee enjoys in his or her community. The one exception is defamation per se where no special damages need be proved.

     Asserting and winning a defamation claim from conduct related to the workplace can be quite difficult given numerous privileges and qualifications.

Pregnancy Discrimination Under Federal Title VII

Blog 2010 blogs

     Title VII of the Civil Rights Act was amended in 1978 to include the Pregnancy Discrimination Act (“PDA”).  The PDA protects pregnant persons from being discriminated against by their employers because of their pregnancy, childbirth or related medical conditions. 

     The Equal Benefits Clause of the PDA requires that persons affected by pregnancy, childbirth, or related medical conditions be treated the same for employment purposes.  This protects employees or potential employees from discrimination in hiring, pregnancy or maternity leave, health insurance plans, and fringe benefits:
     •    Hiring: it is a violation of the PDA to refuse to hire or to fire a person because that person is pregnant or has delivered a child. Further, aborting a pregnancy is considered a related medical condition and therefore falls within the purview of the PDA.  Accordingly, an employer may not refuse to hire or fire an employee for having procured an abortion.

     •    Pregnancy/Maternity Leave: if a pregnant person is temporarily unable to perform their essential job duties because of their pregnancy or related medical conditions, that employee must be treated in the same manner as all other employees who suffer from a temporary disability. An employer must hold the employee’s position open for the same length of time for which the employer holds open jobs for employees on sick leave or disability leave. Further, if an employee claims that they are unable to work due to their pregnancy, the employer is prohibited from subjecting the employee to alternate or additional procedures to determine their capacity to work that exceed those to which employees that assert a temporary disability are subjected. 

     •    Health Insurance Plans: an employer is not obligated to offer pregnancy benefits.  If the employer does so, the plan must treat pregnancy, childbirth and related conditions in the same manner as all other conditions covered by the plan.  However, it is not sex discrimination where the employer does not provide health insurance that covers abortions except where the life of the pregnant person is endangered.  Additionally, the plan may not differentiate between married and unmarried pregnant employees.  

     •    Fringe Benefits: pregnancy-related benefits cannot be limited to married persons but must also be offered to unmarried persons. If the employer provides any benefits to workers on leave, the same benefits must be offered to those who take leave because of their pregnancy.

     In addition, it is unlawful for an employer to retaliate against any employee – whether pregnant or non-pregnant – for opposing employment practices that discriminate on the basis of pregnancy.

Severance Agreements and Release of Age Discrimination Claims

Blog 2010 blogs
     When an employer offers a dismissed employee a severance agreement, the payment of money, continued benefits or some other consideration is almost always conditioned on the employee “giving up” certain rights.  The release or waiver of potential or existing claims (e.g. claims for discrimination, wrongful termination, breach of contract, etc.) will generally be held valid and enforceable in court.  

     However, in order to waive the protections of the Age Discrimination in Employment Act (“ADEA”) the release agreement must meet the specific requirements to ensure that older workers are not unduly pressured into waiving their ADEA rights.

     The burden is on the employer to draft a valid release.  If the release fails to meet any of the following requirements, the release will be void, entitling the employee to sue the employer, without having to return the consideration (usually the severance payment) given for the release. A valid waiver:

     •    Must be written in a manner calculated to be understood by the average individual

     •    Must specifically refer to rights being waived under the ADEA

     •    Must not attempt to waive claims arising after the signing of the release

     •    The consideration or payment for the waiver must be more that what the employee is entitled to under existing pension or compensation schemes

     •    Must advised the employee in writing to consult an attorney

     •    Must give the employee at least 21 days to consider the agreement, or 45 days if the waiver is requested in conjunction with an exit incentive

     •    Must give the employee seven days to revoke, and

     •    If the waiver is part of an reduction in force ("RIF") or termination to a group or class of employees, the employer must provide the ages and titles of the other employee's in the group or class, in writing.

     If you feel that the severance agreement presented to you by your employer does not meet these requirements, we urge you to contact an attorney before signing.

Severance Agreements and Release of Claims – What Can or Should You “Give Up”?

Blog 2010 blogs
     In a prior article, we discussed some concerns that employees may have with collecting unemployment benefits after receiving a severance offer.  In this article, we will focus on the types of claims that may be released, and those that cannot, in a severance agreement.

     Generally, for a severance agreement to be enforceable, the contract must offer an employee something to which she was not already entitled.  For example, the severance agreement would not be enforceable if the amount offered was payment for hours already worked, wages earned, benefits accrued, or in exchange for receiving the employee’s final paycheck.

     An employee may lawfully release (or “waive”) statutory claims such as discrimination claims, tort claims, or contract claims.  However, certain claims can never be waived by the employee and if contained in the severance agreement, they would be void and unenforceable.  For example,

  • An employer cannot put any conditions on the payment of undisputed wages that are due to an employee, including minimum wage and overtime pay.  On the other hand, an employee may release a claim for wages that were subject to a bona fide dispute between the parties over whether or not such wages were owed.
  • An employer cannot ask an employee to waive her unemployment insurance claims in a severance contract.
  • An employer cannot require an employee to waive the right to bring a discrimination claim to the EEOC (but as noted above, can require the employee not to bring a lawsuit in court for discrimination claims).
  • A workers’ compensation claim cannot be waived in a severance contract.  However, a workers’ compensation claim can be settled in a separate “Compromise and Release” agreement, which requires approval from the Workers’ Compensation Appeals Board.


     Finally, certain procedures must be met before an employee can waive her rights to the protections of the Age Discrimination in Employment Act (“ADEA”) which is discussed here.  

     If you feel that the severance agreement presented to you by your employer asks you to waive “unwaivable” claims, we urge you to contact an attorney before signing.

The "Administrative" Exemption for California Employees

Blog 2010 blogs

     In prior articles, I discussed the “professional” and “executive” exemptions to California’s wage and hour laws, and this article will focus on the “administrative” exemption.  In general, exempt employees are not entitled to overtime pay, reporting time pay, nor are they provided with meal and rest break periods.

     The administrative exemption requires an employer to establish that the employee meets all of the following factors:

  • The employee’s duties involve office or non-manual work directly related to the management or general business operations of the employer.  For example, developing or executing financial, marketing or sales strategies would be considered “administrative” tasks.  On the other hand, making or selling the company’s products or services is considered “production” work.
  • The employee’s duties must be of “substantial importance to the management or operation of the business.” For example, routine clerical work performed by bookkeepers, secretaries, bank tellers, or clerks is not of substantial importance.
  • The employee’s duties fit into one of three categories:
    • The employee regularly and directly assists the business owner or another exempt executive administrator.  For example, an “executive assistant” or “assistant manager,” are considered to fall within this job duty category; or 
    • The employee performs, under minimal supervision, specialized or technical work that requires special training, experience or knowledge;  or 
    • The employee executes special assignments and tasks under only general supervision. The phrase “special assignments and tasks” is not defined but would include such job duties as movie location managers, account executives in advertising films, or brokers in stock exchange firms. 
  • The employee customarily and regularly exercises discretion and independent judgment over significant matters.
  • The employee spends more than half of her work time performing exempt administrative tasks (the “50% rule”).
     If you believe that you are misclassified as an exempt administrative employee, but do not meet the above test, we urge you to contact an attorney to discuss your situation as soon as possible.

The “Professional” Exemption in California

Blog 2010 blogs
     As discussed in a prior posting, California’s wage and hour law makes a distinction between “exempt” and “non-exempt” employees, not salaried versus hourly employees.  Exempt employees are not entitled to overtime pay, reporting time pay, nor are they provided meal and rest break periods.  The second largest category of exempt employees, after the executive exemption, are the so-called “professional” exemptions.

     The professional exemption applies to employees who work in one of eight specified professions, or who work in a “learned or artistic profession.”  The eight specified professions are law, medicine, dentistry, optometry, architecture, engineering, teaching, and accounting.  

     The “learned professional” group of employees perform advanced work in technical fields, using skills acquired through a prolonged course of specialized intellectual instruction, and the employee must have an advanced academic degree.  For example, licensed social workers, a social worker with a master’s degree in social, and scientists would be considered learned professionals.

     The artistic professional performs original or creative work in a recognized field of artistic endeavor such as music, writing, theater and the graphic arts.  To qualify as artistic, an employee’s work must depend primarily on her invention, imagination or talent.

     Similar to the executive exemption, the employee must customarily and regularly exercise discretion and independent judgment in performing the job duties and  the employee spends more than half of her work time practicing in the profession.

     If you believe that you are misclassified as an exempt employee, but do not meet the above test, I would urge you to contact an attorney to discuss your situation as soon as possible.
 
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