Recent Developments In Employment Law

Dated: September 19, 2001

We are pleased to provide the following information to our clients and friends regarding recent legal developments affecting employers.

1. Legislation.
   The California legislature was very active in 2001, passing a number of new laws of great significance to employers. The most broadly applicable of those new laws are as follows:

   1. Domestic Partners.
      Domestic partners in California, defined as same-sex couples over the age of 18, and heterosexual couples where one partner is over the age of 62, who have registered with the California Secretary of State's office, now have a number of new employment-related rights, such as the right to collect unemployment insurance if they leave a job to relocate with a domestic partner. Also, health and disability insurers must offer employers the opportunity to offer their employees coverage for domestic partners that is equivalent to coverage provided to dependents. However, the new law does not require employers to actually offer health and disability insurance coverage for domestic partners of their employees. Domestic partners also have the right to use kin care (sick leave) to care for the other partner or the other partner's child. Thus, employers should amend their leave policies accordingly.

   2. English-only Policies.
      This new law limits an employer's ability to adopt or enforce a policy requiring employees to speak only English in the workplace, and provides employees with a new basis to sue employers for discrimination. An amendment to the California Fair Employment and Housing Act, the state law which bars employment discrimination based on various protected categories, makes it illegal for an employer to have a policy which limits or prohibits the use of "any language in the workplace." There is a limited exception to this rule, which applies if the language restriction is justified by a "business necessity," and the employer has notified its employees of the circumstances and the time when the language restriction must be observed, and of the consequences for violating the restriction. Business necessity means "an overriding legitimate business purpose" such that (i) the language restriction is necessary to the safe and efficient operation of the business; (ii) the language restriction effectively fulfills the business purpose it is supposed to serve; and (iii) there is no alternative practice that would accomplish the business purpose equally well with a lesser discriminatory impact. As you can see, this exception will apply in very few situations. Thus, employers should carefully review any policy limiting the use of any language in the workplace.

   3. Lactation Accommodation.
      The first law in California on this subject requires employers to reasonably accommodate female employees who wish to express breast milk at work. All employers now must provide a reasonable amount of break time to employees desiring to express breast milk for the employee's infant child, and make reasonable efforts to provide the use of an appropriate room or other location, other than a toilet stall, for the employee to do so. The break time can run concurrently with any break time already provided to the employee. If additional break time is needed, the additional time is unpaid. An employer is not required to provide such break time if to do so would seriously disrupt the operations of the employer. A violation of this new requirement is a misdemeanor, and can also result in a civil fine of $100 for each violation

   4. Lawful Conduct During Nonworking Hours.
      Many employers have rules that limit an employee's off-duty conduct, such as a rule against having a second job. Now, an employee or job applicant can sue an employer who discriminates against an employee or applicant for engaging in otherwise lawful conduct during nonworking hours away from the employer's premises. This new law does not, however, limit an employer's right to protect itself against any off-duty conduct that is actually in direct conflict with the employer's essential enterprise-related interests, and which would disrupt the employer's operation. Of course, being able to make the fine distinctions as to when the law applies will not be an easy task. Suffice it to say, individualized determinations will have to be made on a case-by-case basis.

2. Court Decisions.

   1. Verbal Criticism of a Male for Not Meeting Gender Stereotype Is Sexual Harassment.
      There are those who believe that sexual harassment is the current number one personnel risk in the workplace. Supporting that view are a number of recent cases concerning sexual harassment issues. For instance, in one case the court held that a man can claim gender discrimination based upon sexual harassment, if other men discriminated against him because he did not meet stereotyped expectations of masculinity. The court held that verbal abuse directed at the man reflecting a belief that he did not act "like a man," was harassment because of sex. The verbal abuse included a campaign of taunts, designed to humiliate and anger the man. When the man complained to his supervisor, also a male, the supervisor failed to take the matter seriously enough. Had the supervisor responded as he would have if the victim was a woman, the employer might have escaped liability altogether. This case reminds us that employers must be vigilant against all forms of sexual harassment, even same-sex sexual harassment which is only based upon verbal conduct. Employers should ensure that all employees, but especially supervisors, receive regular training regarding recognizing and preventing sexual harassment in the workplace.

   2. Staring at a Co-worker May Constitute Sexual Harassment and Retaliation.
      Another recent case reminds us that sexual harassment can take many forms. In that case a female employee worked on an assembly line. A forklift driver who delivered parts to the assembly line asked her for a date a number of times. Each time she declined, telling him she did not want to go out with him. The forklift driver also told her he was having sexual fantasies about her. She complained about him to her supervisor. After the complaint, the forklift driver stopped speaking to the assembly line worker. However, over the next six months he drove his forklift to her work station several times a day, stared directly at her for several seconds, and then left. He also parked his forklift near her several times a day, and sat there for 5 to 10 minutes, staring at her the entire time. There was nothing sexually suggestive about the way the forklift driver looked at her. Nonetheless, the assembly line worker filed suit, alleging sexual harassment, and retaliation for reporting the sexual harassment. The employer argued that the staring wasn't sexual in nature, and was not pervasive or severe enough to amount to sexual harassment. The court ruled otherwise, holding that the totality of the conduct, including what occurred before the woman complained, and the fact that the staring was apparently a response to the woman's complaint, meant that the woman could maintain both a sexual harassment claim, and a claim for retaliation. This case reminds us that conduct that is not directly sexual in nature can be illegal harassment. Employers need to be ever vigilant to comply with their legal duty to prevent sexual harassment in the workplace.

   3. Federal Defenses Don't Apply in California to Sexual Harassment Claims.
      Under federal sexual harassment law, employers can avoid liability for sexual harassment committed by a supervisor if the employer did not take any tangible, adverse job action (such as termination or demotion) against the employee, the employer exercised reasonable care to prevent harassment and to correct harassment when it occurred, and the victim unreasonably failed to take advantage of the employer's policies (such as failing to file a complaint under company policy). Because California's sexual harassment law is modeled on the federal sexual harassment law, it was widely felt that this defense might also apply to claims of sexual harassment under California law. However, in a blow to employers, a court of appeal recently held that this defense is not available to employers sued for sexual harassment under California law. The court based its decision upon certain differences between the two laws, chiefly the fact that California law clearly holds employers strictly liable for the harassing conduct of supervisors, even though the employer did not know, and had no reason to know of the supervisor's conduct, and even though the employer had adequate policies in place. This is yet another area where California law gives greater protections to employees than federal law gives to employees.

   4. Employers Must Clearly Notify Employees Which 12-Month Period for Calculating Leave Eligibility Under the Family and Medical Leave Applies.
      The federal Family and Medical Leave Act ("FMLA"), and the similar California Family Rights Act ("CFRA"), allow certain eligible employees of covered employers to take up to 12 weeks of unpaid leave in a 12-month period. The regulations under both of those acts require that employers advise employees in writing how that 12-month period is calculated. There are a number of ways it could be calculated, e.g., calendar year, anniversary year, fiscal year, or a variety of rolling periods. A recent case warns employers that if they fail to adequately notify their employees how the period is calculated, the courts will select the period giving the most favorable outcome to employees, which could result in an employee receiving far more than 12 consecutive weeks of leave. In that case, the employer's handbook did not provide adequate notice of the rolling period method it had chosen. Thus, the court ruled that the employer had failed to comply with the regulations. Because the employee had taken 24 consecutive weeks of medical leave, during the last three months of one calendar year, through the first three months of the next calendar year, the court applied the calendar year method of calculation, which meant that all 24 weeks of the leave were considered protected leave, and the employer was required to reinstate the employee to his old job, or a comparable job. Had the employer adequately described its rolling 12-month period of calculation, the employer would not have been required to reinstate the employee, and could have terminated the employee's employment when the employee exceeded 12 weeks of leave. This case emphasizes the need for employers to review all leave-related policies and documents, to ensure that they have actually selected a calculation method, and that the calculation method selected is properly and adequately described.

   5. Unlawful Handbook Policies Can Subject Nonunion Employers to Unfair Labor Practice Liability.
      Nonunion employers rarely think about the impact their policies may have under the National Labor Relations Act ("NLRA"), the federal law that governs union activity by employees. However, a recent decision by a federal appellate court illustrates how even nonunion employees can violate the NLRA. In that case, a nonunion employer had an employee handbook which contained provisions regarding off-duty conduct, confidentiality, and false statements. A union filed an unfair labor practice charge against the employer based upon those policies. The National Labor Relations Board exercised its authority to hear the charge, even though the employer was nonunion, on the grounds that the employer's handbook policies had a possible chilling effect on the employees' protected right under the NLRA to engage in protected concerted activities. As an aside, many California employers do not realize that it is against California law for an employer to have any policy which discourages or prevents an employee from discussing with other employees the amount of his or her wages. Thus, employers must ensure that their policies have been reviewed by employment counsel to ensure that traps for the unwary are not hidden in those policies.

   6. Employee Who Was Terminated for Refusing to Sign a Non-compete Agreement Awarded $1.26 Million in Damages.
      A California Court of Appeal recently upheld a $1.26 million jury award for an account manager who was terminated for refusing to sign a non?compete agreement. In that case, Aetna U.S. Healthcare demanded that the manager sign an agreement barring her from working for any competitor engaged in the business of health care in California for six months after leaving the company. While non-compete agreements are valid in many other states, they are illegal in California, with very few exceptions, none of which applied here. Since the non-compete agreement was illegal, Aetna's termination of the manager for refusing to sign the agreement violated California's public policy, and was seen by the court as willful and oppressive, thus warranting punitive damages. Indeed, of the $1.26 million in damages, the punitive damages were $1,080,000. Employers who want to avoid the risk of a substantial damages award should ensure that all offers of employment, employment agreements, handbooks, and policies are free from any language that could be interpreted to constitute an illegal non?compete provision.

3. Miscellaneous.

   1. Confirmation That California Law Is Different.
      California law is unique. Take for example the following protections granted to California employees, which by and large do not exist in most other states: (1) daily overtime; (2) four months of leave for disability caused by pregnancy, childbirth or a related medical condition; (3) convictions for use of small amounts of marijuana that are more than two years old may not be used as a basis for employment decisions; (4) employees must be given up to two hours off with pay to vote in any statewide election if they do not have sufficient time to vote during non-work hours; (5) employees must be allowed to use one-half of their paid sick leave time to care for certain family members and domestic partners; (6) employees who are involuntarily terminated must be paid all wages due no later than the last day of employment; (7) employers may not have a "use-it-or-lose-it" vacation policy; (8) employees must be given a state-prepared sexual harassment pamphlet or its equivalent at the time of hire.

   2. More Reasons Why Lawyers Should Not Take Themselves Too Seriously.
      Lawyers and computers have been proliferating since 1970. Unfortunately, lawyers, unlike computers, have not gotten twice as smart and half as expensive every eighteen months.

      An anonymous person (probably someone involved in a lawsuit) described a lawyer as an individual whose principal role is to protect his clients from others of his profession.
      And Will Rogers opined that the minute you read something you don't understand, you can be almost sure it was drawn up by a lawyer.

Cohen & Goldfried
Attorneys at Law
A Professional Corporation
9595 Wilshire Blvd., Suite 201
Beverly Hills, CA 90212
Telephone: (323) 930-0933
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Email: rgoldfried@cogolaw.com

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