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SEPTEMBER 2003 I. LEGISLATIVE/REGULATORY
UPDATE Pending California Legislation Six lawmakers were appointed to serve on a conference committee that will be drafting a proposal for employer-paid health insurance. All of the bills being debated in the committee thus far are variations of a “play or pay” system, under which employers would be required to provide health care for their employees and their dependents, or pay into a state-run system. The bills in the conference committee are: SB 2 (Burton/Speier): SB 2 would require employers to provide health insurance to every employee in California and their dependents or pay a health care coverage tax into a state fund. Under the latest draft of SB 2, employers with at least 20 employees would be required to either cover at least 80% of their employees’ health insurance costs or pay a fee to a state fund that would obtain the coverage. Employers with at least 200 employees would also have to cover an employee’s dependents. These mandates would begin on January 1, 2005 for employers with at least 200 employees and on January 1, 2006 for companies with 20 to 199 employees. AB 1527 (Frommer): AB 1527 would require employers with 51 or more employees to provide health insurance to employees and their dependents, or pay a health care coverage tax into a state fund. AB 1528 (Cohn): AB 1528 would require employers to pay 80% of the health care costs for their employees and the employees’ dependents. The health care conference committee members are: Senator John Burton (D-San Francisco); Senator Jackie Speier (D-San Francisco/San Mateo); Senator Sam Aanestad (R-Grass Valley); Assemblyman Dario Frommer (D-Glendale); Assemblywoman Rebecca Cohn (D-Saratoga); and Assemblyman Bob Pacheco (R-Walnut). A joint conference on workers’ compensation has also been named that will examine and make final recommendations on the approximately 20 bills dealing with workers’ compensation sent from the Assembly and the Senate. The committee members are: Senator John Burton (D-San Francisco); Senator Richard Alarcon (D-San Fernando Valley); Senator Charles Poochigian (R-Fresno); Assemblyman Juan Vargas (D-Chula Vista); Assemblyman Fabian Nunez (D-Los Angeles); and Assemblyman Ken Maddox (R-Garden City). Other pending pieces of legislation that may impact California employers include: AB 76 (Corbett) would hold employers liable for the harassment of any employee by any person, including clients, customers, delivery personnel, or other service providers. AB 76 specifically rejects the holding of Salazar v. Diversified Paratransit, a case currently under review by the California Supreme Court. AB 76 passed both the Assembly and the Senate and is awaiting Assembly concurrence in Senate amendments. AB 274 (Koretz) would create a rebuttable presumption that an adverse employment action, taken within 60 days after an employee exercises his or her employment rights pursuant to the Labor Code, is retaliatory, unless there is clear and convincing evidence that the employee made up the claim in order to prevent the employer from taking adverse employment action. AB 274 has passed the Assembly and is currently before the Senate. AB 331 (Kehoe) would waive the one-week waiting period for the payment of unemployment compensation benefits for any individual who is unemployed due to a lockout related to a labor dispute. AB 1093 (Lieber) would enact provisions known as the California Living Wage Act. The bill would require the state, and any qualified contractor and subcontractor for a state agency, to pay not less than a living wage to each of its employees. AB 1093 has passed the Assembly and is currently before the Senate. SB 478 (Dunn) would establish a new, unlimited right to workplace leave for crime victims and family members. SB 478 passed both the Senate and Assembly and is awaiting Senate concurrence before being enrolled to the Governor.
AB 196 (Leno) was signed into law by Governor Davis. It will be codified in California Government Code sections 12926 and 12949, and takes effect January 1, 2004. California’s Fair Employment and Housing Act (“FEHA”) already sets forth 15 characteristics that specifically may not be the basis for employment-related decisions. They include the standard protected characteristics (i.e., race, sex, national origin, and disability) and some that neither federal law nor many states include (i.e., medical condition, marital status, and genetic characteristics). AB 196 was crafted to expand the definition of sex discrimination to include discrimination based on a person’s “gender.” Since many have used gender discrimination and sex discrimination as interchangeable terms, that does not seem to be a significant development. In fact,
the amendments to the statute implemented as a result of AB 196 never
mention transsexuals or transgendered individuals. However, to learn
the definition of “gender,” pursuant to AB 196, one must
look to a provision set forth in California’s Penal Code that
deals with hate crimes. The Penal Code provision, which will be incorporated
into FEHA, protects transsexuals and transgendered individuals and
generally prohibits bias based on perceptions of an individual’s
identity. Not only does the new law expand the basis for FEHA litigation,
but it creates confusion. The law simply does not state that an employer “may
not discriminate against transsexuals or transgendered individuals.” Rather,
it bars treating someone in a different fashion because he or she
acts differently from what an employer considers to be “traditionally
associated with the employee’s sex at birth.” This language
stands to allow a wide range of claims that may not have been originally
envisioned when the statute was drafted. A new provision does state:
Governor Davis has signed additional legislation into law, including: SB 873 (McPherson) will be codified at Penal Code section 11105.3 and Welfare and Institutions Code section 828. This law will provide employers greater access to criminal records of applicants who would work with children, the elderly, or the mentally impaired. AB 176 (Johnson) will be codified at Insurance Code section 11752.9 and will require notification to policyholders when their workers’ compensation ratings have changed. AB 330 (Parra) will be codified at Labor Code section 512 and will provide a meal period exemption for employees in the wholesale baking industry who are covered by a valid collective bargaining agreement which provides for a 35-hour workweek consisting of five seven-hour days, payment of 1.5 times the regular rate of pay for time worked in excess of seven hours per day, and a rest period of not less than 10 minutes every two hours.
On September 23, 2002, Governor Davis signed legislation to provide disability compensation benefits to cover individuals who take time off from work to care for a seriously ill child, spouse, parent, or domestic partner, or to bond with a new child. The law establishes the paid family leave program, also known as the family temporary disability insurance (“FTDI”) program. The California Employment Development Department (“EDD”) has issued information about FTDI. The EDD notes that FTDI benefits will be administered by the state disability insurance program (“SDI”). FTDI payroll deductions will become mandatory on January 1, 2004. On that date, employers will be required to deduct the paid family leave contributions from the wages of covered employees. For calendar years 2004 and 2005, the EDD stated that the paid family leave contribution rate will be .08% of the taxable wage limit. The taxable wage limit in 2004 will be $68,829. Therefore, the maximum contribution in 2004 will be $55.06, in addition to the SDI contribution. The taxable wage limit in 2005 will be $79,418. Therefore, the maximum contribution in 2005 is projected to be $63.53, again, in addition to the SDI contribution. Earnings beyond the maximum taxable wage limit are not subject to contributions. Benefits will be payable to eligible individuals for periods of paid family leave commencing on or after July 1, 2004. A seven-day, nonpayable waiting period exists at the beginning of the paid family leave claim period. As a result, eligible individuals must be off work at least eight calendar days to receive paid family leave benefits. An employee’s weekly benefit amount will be calculated on the calendar quarter with the highest earnings during the base period. An employee must have accrued at least $300 in wages during the base period. The amount of benefits available depends upon when a paid family leave occurs. For paid family leave claims beginning July 1, 2004 to December 31, 2004, weekly benefits will range from $50 to $728. To qualify for the minimum weekly amount ($50), an individual must have at least $300 in wages in the base period. To qualify for the maximum weekly benefit amount ($728), an individual must earn at least $17,183.65 in a calendar quarter during the base period. For paid family leave claims beginning January 1, 2005 through December 31, 2005, weekly benefits will range from $50 to $840. The same minimum qualification applies. To qualify for the maximum weekly benefit amount ($840), an individual must earn at least $19,830.92 in a calendar quarter during the base period. Some employers maintain voluntary plans for SDI benefits. Employees who are covered by their employer’s voluntary plans are covered by those plans for paid family leave benefits. Employers are required to include paid family leave in their voluntary plans.
II. JUDICIAL UPDATE
In Brown v. City of Tucson, the Ninth U.S. Circuit Court of Appeals held that a police supervisor’s demands that a detective with depression either stop taking her medications and be available for night-time callout or otherwise face demotion or forced retirement amounted to threats that -- if proven -- would violate the Americans with Disabilities Act’s (“ADA”) anti-interference provision. In so ruling, the Ninth Circuit applied a broad analysis of the ADA’s section 503(b) anti-interference provision that does not require the Title VII-style burden-shifting analysis typically applied under the section 503(a) anti-retaliation provision. Brenda Brown (“the Employee”), a detective for the City of Tucson, became severely depressed in 1997 and took several weeks of medical leave. When the Employee returned to work, she asked to be excused from call-out duty, a circumstance in which detectives could be called into work at any hour of the night, if needed. After the requested accommodation was granted, the Employee’s supervisor made a series of inquiries about the Employee’s ability to perform call-out duty, asking her why she could not perform the duty and whether she could stop taking her medication to accept a call-out duty assignment. The supervisor also told the Employee that if she did not accept call-out duty, she would be transferred, demoted, or required to retire. At about the same time, the Employee failed to file certain paperwork on time for a criminal matter to which she had been assigned. After an investigation, the Employee was disciplined and suspended. She then left her employment, suing the City of Tucson (“the Employer”) for both retaliation and interference with her rights under the ADA. The Employer moved for summary judgment on the ground that the Employee had not offered proof that the asserted legitimate reason for the action taken against her was a pretext for retaliation. The trial court analyzed both the Employee’s retaliation claim and her interference claim under the burden-shifting analysis, and dismissed both claims. On appeal, the Ninth Circuit upheld dismissal of the retaliation claim, but sent the interference claim back for trial. Section 503(a) prohibits employers from discriminating against an employee because that individual opposed any act or practice made unlawful under the ADA, or participated in any manner in an investigation, proceeding, or hearing under the statute. Section 503(b) makes it illegal for an employer to “coerce, intimidate, threaten, or interfere with any individual” who has exercised rights under the ADA, or who has “aided or encouraged any other individual” in the exercise of those rights. Typically, courts analyze retaliation claims under the burden-shifting analysis. In those cases, an employee must first present a prima facie case, establishing involvement in an ADA-protected activity, an adverse employment action, and a causal link between the two. At that point, the burden then shifts to the employer to show a legitimate business reason for the alleged adverse employment action. Once a legitimate business reason is established, the burden shifts back to the employee to show that the proffered reason is simply a pretext for discrimination. The Ninth Circuit specifically held that section 503(b) does not require a burden-shifting analysis. Section 503(b) should be “broadly applied to reach all practices which have the effect of interfering” with an individual’s rights, the court held. The threats of transfer, demotion, or forced retirement met that standard, the court opined. Whether other courts adopt the Ninth Circuit’s analysis remains to be seen. Nevertheless, employers must be conscious, when taking disciplinary or adverse employment actions against protected employees, that their actions are not only supported by legitimate business reasons but also are not calculated to interfere with the employee’s exercise of ADA rights. While the court cited examples from the Employee’s case of what would and would not amount to a “threat,” it did not elaborate on the types of actions that might constitute interference, coercion, or intimidation for purposes of Section 503(b).
In Reynolds v. Bement, a California court of appeal ruled that officers and directors of an employer cannot themselves be required to pay unpaid wages and overtime to misclassified exempt employees. The court of appeal held that the Labor Code and Wage Orders did not include individual officers or directors within the meaning of the word “employer.” Although some Labor Code sections impose civil or criminal penalties for non-compliance, they did not impose personal responsibility for unpaid wages. The California Supreme Court has decided to review the case, effectively suspending the court of appeal’s decision. Until the Supreme Court issues its decision, California employers face uncertainty about individual liability under the state’s wage and hour statutes.
In Garrett v. Young, a California court of appeal addressed an invasion of privacy claim against a doctor who shared an employee’s medical information with her employer. Eufaula Garrett (“the Employee”) worked for Magic Johnson Theatres (“the Employer”) as director of marketing. She complained that her supervisor, Kenneth Lombard (“the Supervisor”), was harassing her and treating her unfairly. At approximately the same time, the Employee developed a rash. The Supervisor believed she was experiencing an allergic reaction to a plant in her office, and recommended that she see his physician, Dr. William Young. During her visit to Dr. Young, the Employee told him that she suffered from various other problems and that her work was causing her stress. Dr. Young recommended that she discuss the issue with the Supervisor, but the Employee told him that the Supervisor was part of the problem. The Employee also asked Dr. Young not to discuss the problem with the Employer. Shortly after that, the Employee saw a document with her name on the desk of the Supervisor’s assistant. The document, which appeared to be a termination notice, stated that the Supervisor had spoken with Dr. Young about the Employee’s condition. Thereafter, the Employee submitted her resignation. The Employee then sued Dr. Young, alleging invasion of privacy and violation of the Confidentiality of Medical Information Act (“CMIA”). The trial judge dismissed the Employee’s lawsuit, finding that Dr. Young’s conversation with the Supervisor fell within an exception to the CMIA’s prohibition against disclosing medical information to outsiders. The trial judge also held that the Employee failed to present sufficient evidence to support her invasion of privacy claim. The Employee appealed. The court of appeal affirmed the trial court’s decision. Specifically, the appellate court held that the information constituted an exception to the general rule that health care providers cannot disclose medical information about a patient to third parties without first obtaining an authorization. The court held that the information Dr. Young disclosed (the Employee was suffering from itching and stress, and could not return to work) constituted a general description of the nature of her injury or condition; thus, the disclosure did not violate the CMIA. The court also held that since the Employee failed to instruct Dr. Young in writing not to discuss her condition with the Employer, the statutory exception applied. The court of appeal also rejected the Employee’s invasion of privacy claim, finding that the Employee had no reasonable expectation of privacy in the information conveyed to the Supervisor. This is a positive ruling for employers because it allows physicians to disclose certain aspects of an employee’s injury or illness without the risk of liability. The Legislature’s intent in enacting CMIA was “to permit disclosure of general information without imposing burdensome paperwork or administrative requirements on medical providers which could too easily lead to technical violation [of CMIA] and litigation over inconsequential disclosures.” It is important to note, however, that there are other state and federal laws that protect an employee’s privacy rights with respect to his or her medical information.
In USS-POSCO Industries v. Edwards, a California court of appeal upheld an employer’s ability to obtain injunctive relief against an employee who makes generalized threats of workplace violence, pursuant to the procedures in California Code of Civil Procedure section 527.8. Ezell Edwards (“the Employee”) was reported in making threats toward his department manager, and other threats of violence. The labor relations manager at USS-POSCO (“the Employer”) investigated the allegations and filed a petition on behalf of the department manager for a protective order requiring the Employee to stay away from the Employer’s premises. The court granted a temporary restraining order. The labor relations manager continued to investigate, and learned of other threats of violence made by the Employee. The Employee’s employment was terminated. Thereafter, the trial court issued a three-year injunction, finding clear and convincing evidence of credible threats of violence by the Employee. On appeal, the Employee argued that because he made no threat directed specifically at the department manager, the law did not authorize the issuance of an injunction. The Employee emphasized the statutory language providing that: “[a]ny employer, whose employee has suffered unlawful violence or a credible threat of violence may seek . . . an injunction on behalf of the employee.” The court of appeal disagreed with the Employee and held that an employer may seek relief on behalf of any employee who is credibly threatened with unlawful violence, whether or not that employee is identified.
If you would like to discuss these or
any other employment law matters, please do not hesitate to contact
any member
of Klinedinst's Employment Law
Department.
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