Sure You Can Require Employees to Arbitrate Claims, But Should You?

California currently permits employers to require workers to submit claims arising from their employment to binding arbitration. Excluded are workers’ compensation controversies or disputes relating to employee benefit plans; but most other disputes, including claims of discrimination, harassment, retaliation and wage-hour violations may be arbitrated, outside of court. Before taking the arbitration plunge, however, I urge my clients to give careful consideration to the following points before requiring their employees to submit to mandatory arbitration.

 

Pros of Mandatory Arbitration

Arbitrator, Not Jury, Decides the Case

The biggest advantage of arbitration for business defendants is the fact that both liability (i.e., whether you did anything wrong) and damages (what is the employee owed) are decided by a single (usually) arbitrator rather than a panel of jurors who are generally relative strangers to the legal process and who invariably bring their own experiences into the decision-making process. Some jurors have concealed bitterness toward institutions in general and employers in particular. They bring this into the deliberations and it injects uncertainty and risk for the employer defendant.

If the claim is submitted arbitration, the parties generally, though not always, agree upon an arbitrator. If the parties cannot agree, there are mechanisms available for the court or an Alternative Dispute Resolution provider to select the specific arbitrator. Any arbitrator I agree upon will be a retired judge with demonstrated expertise in employment law. I spend time researching potential arbitrators and this often includes informal input from other employment lawyers on their experience with the arbitrator.

Arbitrators are typically less likely to inject huge bias against the employer and can be skeptical of an employee’s claims, particularly if they strain credibility. If the arbitrator is a retired judge, he/she will have seen literally thousands of witnesses on the stand demonstrating various degrees of (dis)honesty and will have a much better handle on this than an average juror. Arbitrators are far less likely to award punitive damages and the damages award in general may be more carefully tailored to the facts of the case. Put another way: some jurors don’t know the value of a buck.

Confidentiality

As a general matter, employers tend to prefer not to air dirty laundry in public. Arbitration creates an avenue for private resolution of disputes without making the evidence or outcome public. Sealing testimony, documents or rulings in the civil court system is extraordinarily difficult if a case proceeds through trial to verdict or appeal.

Predictability

When a court schedules a case for trial, this almost always represents the court’s best estimate when it can try the case. It is never set in stone and, as a consequence, a trial can be continued multiple times resulting in duplicative last-minute preparation, increased cost and witness unavailability. Additionally, even when a trial commences, there are long hours where the parties and their attorneys sit in the hallway waiting for the court to attend to unrelated emergency matters, late jurors, late witnesses or other issues.

When an arbitration is scheduled, it is considered a firm date. Not to say that continuances never occur, but it is generally not for the convenience of the arbitrator. Judges are chiefly concerned with the welfare of the jurors; arbitrators are concerned about the convenience of the parties and lawyers, since they rely on lawyers for their reputation and repeat business. Additionally, arbitration hearings can be scheduled as long as the parties are comfortable, generally between 8 or 9:00 a.m. and 5:00 p.m. on successive days, which results in an overall shorter hearing than a trial with continuous interruptions.

Ability to Preclude Class Actions

It is legal to preclude arbitration of class actions. This can be a huge positive for large-scale employers, such as chain retailers, because it prevents employees from banding together and multiplying their claims under a single action. Lawyers interested in pursuing class-action lawsuits are far less interested in pursuing a single plaintiff lawsuit with the same allegations because the upside attorney fee potential is minimal. For most smaller employers, 100 employees or less, this is not as important since meaningful class actions are less common.

No Right of Appeal

As demonstrated below, this is either a pro or con depending on how the arbitration hearing is conducted and the award. However, there are extremely limited bases to seek review of an arbitrator’s ruling or award. This can cut off the right of an employee who is unsatisfied with the award to drag the process (and costs) on and on with one or more appeals.

Cons of Mandatory Arbitration

Cost

Arbitration is incredibly expensive for employers. This is primarily because, under California law, the employer must pay 100% of the arbitrator’s fee. To better understand this burden, consider a recent case in which I spent hours trying to hunt down a high quality, but reasonably-priced, arbitrator for an employment lawsuit involving discrimination and wage-hour claims. I could not find a retired judge below $700/hour and most were higher, with at least one charging $1,200/hour. For a 5-day arbitration hearing—which is not overly long if there are witnesses—my client was required to deposit approximately $50,000 three months before the arbitration hearing date. This is money that, regardless how well my client did at the hearing itself, it would never see again. Arbitrators cannot order a losing employee to pay any part of the arbitration fees to the employer. In my humble view, this cost can amount to denial of due process.

Study Suggests Employees Actually Do Better in Arbitration

Notwithstanding my suggestion that arbitrators tend to be more conservative than jurors, a 2019 study by the U.S. Chamber Institute for Legal Reform found that employees actually do better in binding arbitration.

No Right of Appeal

If the arbitrator makes a ruling that is against the applicable law, and it harms the employer’s case, there is no way to challenge the ruling.

Inability to Control Admission of Certain Evidence

This factor may or may not be important. However, if there is a very bad piece of evidence for the employer, such as an email or a hearsay statement that would not, under proper application of the rules of evidence, be seen or heard by the trier of fact (i.e., the jury), it is effectively impossible to prevent the arbitrator from knowing about it, since he/she must know about it to decide whether it is admissible. If he/she excludes it as evidence, while he/she should not consider it, as a practical matter there is no way to “un-ring the bell.”

Loose Application of the Rules of Evidence

Some arbitrators do not rigidly apply the rules of evidence. This injects uncertainty into the hearing and outcome, which is not usually good for employers.

Conclusion

On balance, I believe arbitration is a fantastic way to resolve disputes rapidly, particularly for large-scale employers where cost is less of a factor, preventing class actions is a major concern or where confidentiality is important. For employers that do not strictly fit this description, however, I cannot recommend mandatory arbitration because even the smallest dispute is likely to cost tens of thousands of dollars in arbitrator’s fees. As a consequence, an employer can be forced to settle a defensible case because it will cost more to pay for the arbitration.

Employers wishing to further explore this question should contact their experienced employment law counsel or [email protected]

 

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No One You Know Should Be Sued For Disability Discrimination

Counseling clients to avoid exposure for disability discrimination can be a prickly business. Consider the following scenario.

Your client operates a small manufacturing concern. Every worker at the widget factory, from the owner to the janitor, takes lunch together at noon, every day. It has been that way every day since your client’s father opened the doors 45 years ago. This is because the factory operates as an assembly line, and it requires everyone’s simultaneous involvement.

One day, an employee, “Sam,” shares that he saw his doctor for vision problems and learned he has Type 2 Diabetes. Your client mutters some sympathetic words (not entirely sure about Diabetes or its different types), and the worker goes on to say that, owing to his Diabetes, he must eat more frequently. He wonders if, perhaps, he could break for lunch at 11 o’clock rather than noon.

Your client knows this is an absurd proposition, given the assembly line. Nonetheless, he says he’ll consider the request and they wander back to the factory floor. A week passes. Two. Sam continues to join everyone for lunch at noon. He does not raise the need to eat early again. However, his diabetic symptoms remind him daily that he needs to break and eat earlier. He gets shaky and light-headed. Not only is he physically uncomfortable, he is growing resentful. Each day that passes is a day closer to when he quits (or is “constructively terminated”) because he needs to eat earlier and your client has forgotten his request.

This describes an actionable case of “disability discrimination” or, at the very least a case of “failure to engage in the interactive process” (yes, that is a separate cause of action). What happens next is anyone’s guess, but it probably doesn’t end well for your client. If he had asked your advice, would you have known what to say? If not, read on.

Duties in this area are triggered when your client learns an employee has a “disability.” California’s Fair Employment and Housing Act (FEHA) defines disability to include a physical or mental disability, or medical condition. While “medical condition” encompasses a limited list of conditions, “physical disability” is read expansively, to include any condition that “limits a major life activity.”

While “mild” conditions, such as a common cold, non-migraine headaches and nonchronic gastrointestinal disorders do not meet the standard, the case law makes clear that FEHA has no durational requirement and even a passing condition may qualify. Employers tempted to define disability too narrowly must know that it has even been found to include uncorrected severe myopia (nearsightedness) and monocular vision.

Back to the widget factory. Sam was diagnosed with Type 2 Diabetes. A disability? Some would argue his condition affects the digestive, hemic and endocrine systems and, because eating is a “major life activity,” Type 2 Diabetes limits a major life activity and thus qualifies as a disability.
Assuming Sam has a disability, this knowledge triggered a duty by your client to “engage in the interactive process” in order to reasonably accommodate Sam if he could perform the essential function of his job with an accommodation.

What does the interactive process look like? It is a “discussion about an applicant’s or employee’s disability — the applicant or employee, health care provider and employer each share information about the nature of the disability and the limitations that may affect his or her ability to perform the essential job duties.”

The best practices for the interactive process include the following:

• Review the accommodation request;
• Obtain written medical release(s) or permission from the employee to obtain records and communicate with providers;
• Request the employee provide documentation from the his/her/their health care or rehabilitation professional regarding the nature of the impairment, its severity, the duration, the activities limited by the impairment(s) and the extent to which the impairment(s) limits the employee’s ability to perform the job’s essential duties/functions.

At the widget factory your client didn’t do any of this. This failure to engage in the process by itself supports an action and damages under FEHA.
Imagine if your client had engaged in the interactive process with Sam. They would have explored whether it was possible to “accommodate” Sam’s disability. The California Government Code and regulations provide guidance on reasonable accommodation. These include:

• Making facilities readily accessible to and usable by disabled individuals (e.g., providing accessible break rooms, restrooms or reserved parking places, etc.);
• Job restructuring;
• Offering modified work schedules;
• Reassigning to a vacant position;
• Acquiring or modifying equipment or devices;
• Adjusting or modifying examinations, training materials or policies;
• Providing qualified readers or interpreters;
• Allowing assistive animals on the worksite;
• Altering when and/or how an essential function is performed;
• Modifying supervisory methods;
• Providing additional training;
• Permitting an employee to work from home; and
• Providing paid or unpaid leave for treatment and recovery.

But, there are limits to this duty. FEHA does not obligate an employer to choose the best accommodation or the specific accommodation an employee or applicant seeks. They are not required to accommodate a worker’s medical marijuana use. Moreover, they are not required to provide an accommodation that causes the business to suffer “undue hardship,” defined as an action requiring “significant difficulty or expense” when considered in light of at least the following factors:

• Nature and cost of the accommodation weighed against tax credits, deductions or outside funding; and
• Nature, size and resources of business and accommodation’s impact on other employees.

At the widget factory, Sam’s desired accommodation was to break an hour earlier for lunch so that he would not feel shaky from a drop in blood sugar. On its face, this was not unreasonable, particularly given that a “shaky,” “light-headed” factory worker can endanger himself or others. Unfortunately, your client did not give this much thought. He clearly did not engage with Sam to explore potential (alternative) accommodations.

To be clear, it may be that your client cannot accommodate Sam. His proposal to allow him an early break might have proven unreasonable, given how the assembly line operates. If all possible accommodations would cause your client undue prejudice (applying the factors above), then it is unfortunate but Sam will need to find other work. Included in this equation is the principle that employers need not create a new position to accommodate a disabled applicant or employee. Thus, your client need not create a job for Sam in Accounting, where he can break early to eat without disrupting the assembly line. But the interactive process must be thorough and well-documented before this conclusion is reached without exposing your client to possible liability.

This law is nuanced. Unless your client has an experienced human resource professional, it might be a good idea to involve employment counsel, at least at the outset. The concepts and obligations may be unfamiliar, and the stakes are high. At least you can now rest easy knowing that you have some basic understanding of the risks in this area, and you can help your clients avoid disability discrimination liability. (This article originally appeared in the April, 2021 issue of the Santa Barbara Lawyer.)

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July 1st Minimum Wage Hikes in Several California Locales

Certain California cities and counties are increasing the minimum hourly wage for nonexempt employees effective July 1st! Please see the list below to determine if your business or California-situated employees are affected. Many regulations differentiate between businesses with 25 or fewer employees and those with 26 or more employees.

Location                          25 or fewer employees    26 or more employees

California statewide

(no change)                      $11.00                               $12.00

Los Angeles city              $13.25                               $14.25

Los Angeles county         $13.25                               $14.25

Malibu city                      $13.25                               $14.25

Pasadena city                   $13.25                               $14.25

San Diego (no change)    $12.00                               $12.00

San Francisco                  $15.59                               $15.59

Santa Monica                   $13.25                               $14.25

Palo Alto                          $15.00                               $15.00

What Employers Should Do

  • Make sure that, by July 1st, your nonexempt employees are paid at least the minimum wage applicable to your California city or county.
  • Make sure that any employees you classify as “exempt” are properly classified, based on the applicable state and federal criteria. If in doubt, consult with your qualified employment law counsel.
  • Be aware that, out-of-state employers with in-state employees must comply with California state, as well as any applicable county or city laws for those in-state employees.
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New Law Clarifies Wage Statement Requirements for Exempt Employees

California Assembly Bill 2535, signed on July 22, 2016 by Governor Brown, amends California Labor Code Section 226. Prior to this amendment, employers were required to track and record hours worked for exempt outside sales persons and executives who are not paid solely by salary. This meant that such tracking was required, even where an employee was not compensated for hours worked, but received commissions, bonuses or stock options.

AB 2535 amends Labor Code Section 226 to eliminate this anomaly. Employers are no longer required to record hours for employees exempt from payment of minimum wage and overtime. Specifically, the law adds section (j) to Section 226, which, effective January 1, 2017, will provide:

“(j) An itemized wage statement furnished by an employer pursuant to subdivision (a) shall not be required to show total hours worked by the employee if any of the following apply:

(1) The employee’s compensation is solely based on salary and the employee is exempt from payment of overtime under subdivision (a) of Section 515 or any applicable order of the Industrial Welfare Commission.

(2) The employee is exempt from the payment of minimum wage and overtime under any of the following:

(A) The exemption for persons employed in an executive, administrative, or professional capacity provided in any applicable order of the Industrial Welfare Commission.

(B) The exemption for outside salespersons provided in any applicable order of the Industrial Welfare Commission.

(C) The overtime exemption for computer software professionals paid on a salaried basis provided in Section 515.5.

(D) The exemption for individuals who are the parent, spouse, child, or legally adopted child of the employer provided in any applicable order of the Industrial Welfare Commission.

(E) The exemption for participants, director, and staff of a live-in alternative to incarceration rehabilitation program with special focus on substance abusers provided in Section 8002 of the Penal Code.

(F) The exemption for any crew member employed on a commercial passenger fishing boat licensed pursuant to Article 5 (commencing with Section 7920) of Chapter 1 of Part 3 of Division 6 of the Fish and Game Code provided in any applicable order of the Industrial Welfare Commission.

(G) The exemption for any individual participating in a national service program provided in any applicable order of the Industrial Welfare Commission.”

Employers with any questions about wage statement requirements are encouraged to contact their experienced employment law counsel. We’re here to help.

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California Employers Have Duty to Accommodate Disability of Employee’s Family Member

In Castro-Ramirez v. Dependable Highway Express, the California Court of Appeal for 2nd Appellate District, which includes the Los Angeles Superior Courts, held for the first time that an employer has a duty to reasonably accommodate an applicant or employee who is related or associated with a disabled person who needs the applicant/employee’s assistance.

The facts underlying the case are interesting. Luis Castro-Ramirez was a driver for Dependable Highway Express (DHE). His son required dialysis. Before accepting DHE’s job offer, Castro- Ramirez explained that he would need to leave work early enough to go home and operate his son’s dialysis machine. Although DHE initially accommodated this request, scheduling early routes, a new supervisor refused and warned Castro-Ramirez that if he did not take a later route he would be fired. Castro-Ramirez refused and was fired.

The trial court ruled in favor of DHE, reasoning that Castro-Ramirez could not show that the termination was motivated by his association with his disabled son. The Court of Appeal reversed, holding that California’s Fair Employment and Housing Act (FEHA) creates a duty on the part of employers to accommodate employees who are associated with a disabled person.

At this juncture, Castro-Ramirez is only binding in the 2nd Appellate District. It is likely DHE will seek review of the decision by the California Supreme Court, which could result in a reversal. However, until such review, if it occurs, other appellate courts throughout California could find the court’s reasoning persuasive and follow it.

What Employers Should Do Given This Ruling

Disability discrimination, including claims of failure to reasonably accommodate a known or perceived disability, is a particularly thorny area for California employers. Castro-Ramirez further complicates matters. Employers must take care whenever a request is made for accommodation of a disability or medical condition. When in doubt, it is wise to seek the advice of employment law counsel.

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OSHA Fines Set to Climb By As Much As 80% by August, 2016 — Is Your Business At Risk?

The new federal budget signed into law on November 2, 2015, requires the federal Occupational Safety and Health Administration (OSHA) to increase its penalties for the first time since 1990.

What is OSHA and why is this important?

OSHA is a federal agency (part of the Department of Labor) that ensures safe and healthy working conditions for Americans by enforcing standards and providing workplace safety training. OSHA is empowered to enforce its regulations by imposing penalties that most employers feel are already steep.

From 1990 through 2015, OSHA was one of only three federal agencies that were exempt from a law requiring such agencies to raise fines to keep pace with inflation. A section of the 2015 budget bill–the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (no that’s not a typo!)–eliminated this exemption.

The budget bill further requires OSHA to make a one-time “catch-up” increase, which cannot exceed the inflation rate from 1990 through 2015 as measured by the Consumer Price Index (CPI). Based on the recent CPI, the maximum increase is expected to be in the range of 75-80%. Further, given consistent comments by OSHA leadership about the benefits of imposing stiffer regulatory punishments, it is believed that OSHA will implement most, if not all, of the increase.

To illustrate the impact of this increase, an 80% increase in the current schedule of maximum penalties would result in the following fines:

  • Other than Serious Violations: $12,600
  • Serious Violations: $12,600
  • Willful Violations: $126,000
  • Repeat Violations: $126,000

Cal/OSHA

California is among several states that have a State Plan: an OSHA-approved job safety and health program that is operated by an individual state instead of federal OSHA. Federal OSHA still provides up to 50 percent of the funding for these programs and the State Plan must be “at least as effective” as federal OSHA.

Cal/OSHA has recently hit employers with staggering penalties. Since June, 2015, Cal/OSHA imposed penalties against a meat byproducts processing company, a door manufacturer, a refinery and two construction firms amounting to $1.6 million.

Who is at risk?

Any employer that does not fully comply with OSHA safety standards is at risk for penalties. Unfortunately, many employers in industries that do not typically focus heavily on safety standards are equally at risk, not only for accidents and injuries, but also for stiff OSHA penalties. For example, retail businesses have been heavily penalized for such violations as blocked exits, fire extinguishers and similar non-obvious safety risks. Often ownership and management of such “white collar” businesses are unsophisticated about safety issues.

What should employers do?

Fortunately, employers have several months to take steps to avoid OSHA penalties. These should include making safety and compliance with applicable OSHA standards a priority. Where there is doubt about the specifics of a safety standard, employers should consult with their employment counsel, who may also recommend or involve safety specialists to ensure full compliance.

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US DOL Issues Guidance That Most Workers Are Employees, Not Independent Contractors

On July 15, 2015, the United States Department of Labor (DOL) issued a guidance memorandum (Administrator’s Interpretation No. 2015-1) clarifying whether workers can properly be characterized as Independent Contractors, rather than employees. This Bulletin explains this development and its implications for employers who treat any workers as Independent Contractors.

What is The DOL and Why is This Important?

The DOL is the federal agency charged with enforcing laws and regulations enacted to protect employees. The DOL’s Administrator periodically issues “guidance” memoranda interpreting a law or regulation. While these memoranda are neither law nor legally binding, they are frequently cited and given weight by courts when interpreting law in a particular case. They may also be considered in the legislative process, as federal and state laws are enacted which directly impact employers.

This guidance is also important because it provides clarity and may help employers avoid misclassifying workers as Independent Contractors. Employers who misclassify risk a costly claim or civil lawsuit by the worker claiming she did not receive overtime or rest and meal periods as a result of the misclassification.

The “Economic Realities” Test

Determination whether an employer can properly treat a worker as an Independent Contractor has long required application of the “economic realities” test. This test asks the following questions about a worker classified as an Independent Contractor:

Is the work performed by the individual an “integral part of the employer’s business”?

Does the individual’s “managerial skill” affect his or her opportunity for profit or loss?

How does the worker’s investment compare with that of the company?

Does the work performed require special skill and initiative?

Is the relationship between the worker and the company permanent or indefinite?

What is the nature and degree of the employer’s control?

What Does the DOL Guidance Add?

The DOL guidance memorandum adopts the economic realities test. But the agency makes clear that the test must be applied in the context of the definition, from the federal Fair Labor Standards Act (FLSA), of “employ,” as “suffer or to permit to work.” An individual who is “economically dependent on an employer is suffered or permitted to work by the employer,” and thus cannot be properly classified as an Independent Contractor (emphasis added).

In other words, only a worker who is financially independent of the employer can properly be classified as an Independent Contractor. In one telling sentence, the memorandum says that “Only carpenters, construction workers, electricians, and other workers who operate as independent businesses, as opposed to being economically dependent on their employer, are independent contractors.”

The guidance also clarifies that work away from the employer’s premises does not necessarily support Independent Contractor classification, since that work can still be integral to the employer’s business.

What Should Employers Do?

The issuance of this guidance is an excellent reminder for employers to work with their employment law counsel to evaluate whether they are properly classifying any worker who is treated as an Independent Contractor.

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New Cal/OSHA Regulations Address Heat Illness Prevention

The Division of Occupational Safety and Health (DOSH), better known as CalOSHA, protects workers from health and safety hazards in almost every workplace in California. The amendments to certain CalOSHA regulations, effective May 1, 2015, will impact any business that includes an “outdoor place of employment.” The amendments require action by employers, including (1) revision of written policies covering heat illness prevention; (2) updates to training protocols and materials; and (3) adoption of expanded workplace procedures, practices and protections to better prevent heat illness from occurring.

A key amendment relates to the temperature at which shade must be provided. Previously, the regulation required a shaded area when the temperature reached 85 degrees. The threshold is now 80 degrees.

Certain industries, including agriculture, construction, landscaping, oil and gas extraction, and transportation or delivery of agricultural, construction or other heavy materials, face an even heavier burden when the temperature reaches 95 degrees. These include (1) conducting paid pre-shift safety meetings to go over the company’s high-heat procedures; and (2) implementing effective heat illness monitoring, defined as having a supervisor assigned to observe 20 or fewer employees, a mandatory buddy system, regular communication with each employee, and a designated person at the worksite authorized to call emergency services in the event of a heat illness.

Employers must also provide adequate fresh, pure and suitably cool water, at no cost, located as close as practicable to the areas where employees are working. Employers must encourage employees to take cool-down periods of at least five minutes (10 minutes every 2 hours for agricultural workers at 95 degrees).

Finally, employers must establish a written heat illness prevention plan in English and any other languages that will be understood by employees. This plan must be made available at the worksite.

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California Agency Issues Amendments to CFRA Regs

The California Family Rights Act (CFRA) was established to ensure secure workplace leave rights for the birth of a child, for purposes of bonding, placement of a child in the employee’s family for adoption or foster care, for the serious health condition of the employee’s child, parent or spouse, or for the employee’s own serious health condition.

Importantly, the CFRA applies only to employers who employ 50 or more employees within a 75-mile radius. This is not new. However, the amended regulations clarify how to determine if this threshold is met for employees with no fixed worksite (i.e., work from home, etc.). The regulations now provide that such employees’ worksite is the location (1) to which they are assigned as their home base; (2) from which their work is assigned; or (3) to which they report.

CFRA leave is only available to employees who have been employed for at least 12 months and at least 1,250 hours during the preceding 12 months period. The amended regulations provide that employees who are not eligible for CFRA leave at the start of a leave because they did not meet this requirement, may become eligible for protected CFRA leave during their non-CFRA leave because their continued employment during such leave counts toward the 12 month threshold.

Formerly, employers could require an employee using CFRA leave to obtain a second opinion of the employee’s “serious health condition” if the employer had “reason” to doubt the validity of the first medical certification. This regulation has been amended to allow an employer to require a second opinion only where it has a “good faith, objective reason” to doubt the certification. Employers are also now prohibited from contacting health care providers except to authenticate a medical certification.

As amended, the regulations now provide that an employee who fraudulently uses CFRA leave is not protected for purposes of job restoration (at conclusion of leave) or health benefits.

Finally, the amended regulations require employers to post a notice explaining the CFRA and how to file a complaint with the Department of Fair Employment and Housing (DFEH).

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California Case Clarifies Obligation to Provide Reasonable Accommodation for Disabled Employee

The California Court of Appeal, in Nealy v. City of Santa Monica, recently provided insight about the extent of an employer’s obligation to provide reasonable accommodation to a disabled employee. Specifically, the Court addressed whether an employer is required to remove an “essential job function” as a reasonable accommodation.

Factual Background

The employee, Tony Nealy, worked for the City as a “solid waste equipment operator.” He suffered two work-related injuries, leaving him partially disabled. When the agreed medical examiner ultimately approved Nealy’s return to work, he stipulated that Nealy should be precluded from “kneeling, bending, stooping, squatting, walking over uneven terrain, running, and prolonged standing relative to the right knee, as well as climbing and heavy lifting.”

Nealy’s pre-injury job as a “solid waste equipment operator” requires workers be able to operate at least four different types of refuse collection vehicles, as well as refuse and recyclable collection/disposal duties, heavy lifting and equipment maintenance/inspection.

Nealy took the position that, even with his work restrictions, he could still work as a “solid waste equipment operator” if the job duties were altered in his case to limit his responsibility to a single refuse collection vehicle (automated side loader). When the City refused this suggestion, he sued, claiming disability discrimination and other theories.

Essential Function and Reasonable Accommodation

California law imposes on employers the obligation to make “reasonable accommodations” for known disabilities. “Reasonable accommodation” has been defined as “a modification or adjustment to the work environment that enables the employee to perform the essential functions of the job.” (Nadaf-Rahrov v. Neiman Marcus Grp., Inc., 166 Cal.App.4th 952, 974 (2008).)

An “essential function” of a given position has been defined as “the fundamental job duties of the employment position the individual with a disability holds or desires.” (Cal. Gov. Code §12926(f).) The City argued that the ability to operate multiple different refuse collection vehicles was an essential function of the job of “solid waste equipment operator” because (1) employees could be required to “fill-in” for one another, operating different vehicles, in the event of an absence; and (2) a natural disaster may dictate that larger vehicles than the automated side loader would be required to adequately clear debris.

Among the questions presented to the Court was whether the City’s duty to accommodate Nealy’s disability required it to eliminate an essential job function of a “solid waste equipment operator,” so that he would be required only to operate the automated side loader and not perform any of the other duties that fell outside his restrictions. Citing authorities, including Lui v. City and County of San Francisco, 211 Cal.App.4th 962, 985 (2012), and Dark v. Curry County, 451 F3d.1078, 1089 (9th Cir. 2006), the Court said no. Elimination of an essential function is not a reasonable accommodation of an employee’s disability.

Summary

Nealy v. City of Santa Monica is an unpublished opinion, which means it cannot be cited to a court as authority. However, it provides valuable insight into the extent of an employer’s obligation to provide reasonable accommodation to a disabled worker. Specifically, the case suggests reasonable accommodation does not require the elimination of an essential job function.

Employers facing questions of reasonable accommodation of an employee’s known disability would be wise to consult with their employment law counsel, to help reduce the likelihood of a violation of state and/or federal law.

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Supreme Court Will Decide When A Prevailing Employer Can Recover Its Litigation Costs

Many employers are familiar with the fact that an employee who brings and wins a discrimination case will recover his or her attorney’s fees. In order for a winning employer to recover its attorney’s fees, by contrast, the employer is required to show that the employee’s claims were frivolous, unreasonable or groundless, which is an extremely difficult standard to meet. The policy underlying this distinction is not to discourage employees from bringing discrimination lawsuits out of fear they will, if they lose, be “on the hook” for thousands of dollars in attorney’s fees.

Notwithstanding this limitation on a prevailing employer’s ability to recover attorney’s fees, winning employers have historically been able to claim and obtain a judgment for out-of-pocket litigation costs, without a showing the claims were frivolous, unreasonable and groundless. These costs include filing fees, deposition and court transcript fees and certain witness expenses.

A case now pending before the California Supreme Court, Williams v. Chino Valley Independent Fire District, will resolve a split of authority among California appellate courts whether prevailing employers in discrimination cases will continue to be able to claim litigation costs without being required to meet the frivolous, unreasonable or groundless standard. The plaintiff bar is urging the Supreme Court to resolve the split of authority by holding that prevailing employers seeking to recover attorney’s fees or costs must prove the claim was frivolous, unreasonable or groundless.

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California Supreme Court Addresses Sleep Time

The California Supreme Court has ruled that “hours worked” under the California Labor Code and Industrial Wage Commission (“IWC”) Wage Order No. 4-2001 includes all time spent at an employer’s workplace and under the employer’s control, including sleep time.

In Mendiola v. CPS Security Solutions, Inc. (Jan. 8, 2015), a trailer guard required to spend his night at assigned jobsites in residential trailers sued because the employer’s on-call agreement only compensated guards for on-call time spent actually responding to alarms and investigations. The Guard argued that this policy violated IWC Wage Order No. 4-2001, which requires that employers “pay to each employee . . . not less than the applicable minimum wage for all hours worked in the payroll period.”

While the trial and appellate courts agreed with the security guards with respect to weekday on-call, the California Court of Appeal held that weekend on-call time constituted non-compensable sleep time.

The California Supreme Court reversed the holding of the Court of Appeal. It held the trailer guards’ on-call time constituted compensable “hours worked” under the Wage Order because the employer exercised significant control over the guards’ activities. This included the requirement that they live onsite and they were expected to respond promptly, in uniform, to alarms. Additionally, although the guards were allowed to engage in personal activities, including sleeping and watching television, the Court found it significant that the “guards’ mere presence [at the jobsite] was integral” to the employer’s business.

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