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DECEMBER 2003 I. LEGISLATIVE/REGULATORY
UPDATE Paid Family Leave Deductions to Commence Beginning in January 2004, the State of California will begin to collect increased State Disability Insurance (“SDI”) contributions from employees in order to fund Paid Family Leave benefits (“Paid Family Leave”). Such benefits are a component of SDI and will be administered by the California Employment Development Department. For 2004 and 2005, each employee’s SDI contribution will be increased by .08%. Contributions for 2006 and thereafter will be determined at a later date. The taxable wage limit for 2004 will be $68,829; the limit for 2005 will be $79,418. (Earnings over these amounts are not subject to Paid Family Leave or other SDI withholdings / taxes.) Benefits are payable for claims that begin on or after July 1, 2004. Weekly benefits will range from $50 to $728. Benefit determinations are subject to modification by the State. The maximum claim benefit is six times the weekly benefit amount. No more than six weeks of Paid Family Leave benefits may be received by any employee during any 12-month period. Employees are eligible to file claims for Paid Family Leave for the following reasons:
There is a 7-day waiting period before benefits are paid. Thus, an employee will not receive Paid Family Leave benefits during the first seven days of the leave. Employers may require that the employee use up to two weeks of vacation benefits prior to receiving Paid Family Leave benefits. The first week of the vacation would be applied to the 7-day waiting period. Individuals cannot receive Paid Family Leave while concurrently receiving SDI, unemployment insurance, or workers’ compensation benefits. Moreover, an individual who is entitled to leave under FMLA and/or the CFRA must take Paid Family Leave concurrent with leave taken under those acts. II. JUDICIAL UPDATE
On November 24, 2003, the California Supreme Court issued a ruling confirming that California employers are strictly liable for the sexually harassing conduct of their supervisors, but adding that an employee may not recover damages for conduct that he or she “could have avoided with reasonable effort and without undue risk, expense, or humiliation.” State Department of Health Services v. Superior Court involved claims of sexual harassment brought by Theresa McGinnis, an employee of the California Department of Health Services (“the Department”). McGinnis claimed that she was subjected to sexual conduct over a 2-year period of employment. After she complained about the conduct, the Department investigated the claim, found that the accused had violated its ban against sexual harassment, and forced him to retire. McGinnis nevertheless sued the Department. Citing two 1998 federal Supreme Court cases (Burlington Industries, Inc. v. Ellerth and Faragher v. City of Boca Raton), the Department argued that since no adverse employment action had been taken against McGinnis, and that because she unreasonably failed to avail herself of the Department’s grievance and reporting procedures for almost two years, the Department should not be held liable for the harasser’s conduct. Both the trial court and the California Court of Appeal rejected this argument, asserting that the Faragher and Ellerth cases are applicable only to federal (Title VII) claims, and do not apply to claims under California’s Fair Employment and Housing Act (“FEHA”). The California Supreme Court held that under FEHA, an employer is strictly liable for all acts of sexual harassment by a supervisor. The Court added, however, that “strict liability” is not “absolute liability” in the sense that it precludes all defenses, holding that:
The Court emphasized that the defense affects damages, but not liability. Thus, even if the employer establishes that the employee, by taking reasonable steps to utilize employer-provided complaint procedures, could have avoided additional harassment, the employer will nonetheless remain liable for any compensable harm the employee suffered before the time at which the harassment would have been ceased, and the employer would avoid liability only for the harm the employee incurred thereafter. This defense, while consistent with FEHA’s overriding goal to encourage employers to take all reasonable steps necessary to prevent harassment from occurring, raises some challenging issues. In discussing how an employer could avail itself of the defense, the Court opined that the employer should be prepared to establish that it adopted and implemented appropriate anti-harassment policies, properly communicated essential information about the policies to the employees, and consistently applied the policies. In determining these factors, a court may consider, among other things, “whether the employer consistently and firmly enforced the policy.” In cases where an employer historically failed to properly investigate complaints and/or retaliated against complainants, the employer would not be able to avail itself of the defense. If such issues are raised, employers will find themselves in the unenviable position of having to disclose other employees’ unrelated claims of sexual harassment, and then justify/litigate the appropriateness of its investigations of, and responses to, such complaints. Such inquiries will certainly raise privacy concerns with respect to those individuals whose harassment claims are being disclosed, and will substantially broaden the scope of litigation and increase the associated costs. The Supreme Court’s ruling in State Department of Health Services v. Superior Court is binding upon all courts of the state. Therefore, unless the California Legislature overturns the ruling through future legislation, California employers will remain strictly liable for the sexually harassing conduct of their supervisors. Employers may limit their liability, however, in situations where they can prove that they had implemented and communicated appropriate anti-harassment policies and reporting procedures, and that the harassment victim unreasonably failed to avail him or herself of the protections provided by such policies. All employers are therefore strongly encouraged to review their current policies, ensure that all employees and managers have not only received the policies, but also have been appropriately trained as to how sexual harassment claims can and should be reported. Moreover, employees should be strongly encouraged to report all inappropriate harassing conduct as it occurs, while being assured that the company will not permit any retaliation in response to such complaints.
In Allen v. Pacific Bell, et al., the Ninth Circuit Court of Appeals considered whether an employer may be held liable for disability discrimination and wrongful termination where the disabled employee’s own refusal to cooperate in the interactive process rendered the employer unable to appropriately accommodate the employee. Plaintiff Clarence Allen (“Allen”) worked as a service technician for Pacific Bell. His primary job duties were to connect phone service for Pacific Bell customers, and to repair phone service when problems arose. He was required to climb up telephone poles, and described his daily activities as “climbing, lifting, and crawling.” In May 1999, Allen was hospitalized for 22 days as a result of internal bleeding and liver damage “caused by his excessive drinking.” Allen exhausted his short term medical benefits approximately one year later. Both Allen’s physician and an independent medical examiner provided documents stating that due to his “substantial liver disease,” Allen was only “capable of sedentary work, mainly sitting, with minimal walking.” Allen claimed that the only accommodation he needed to return to his previous position was a special assignment to tasks that did not require climbing poles and ladders. Given the doctors’ recommendations, however, Pacific Bell believed that Allen was still not qualified to perform the essential functions of the Service Technician job. Therefore, Pacific Bell initiated a search for an appropriate position for Allen that accorded with both physicians’ determination that he was qualified only for a sedentary desk job. Allen responded by again requesting that he be reinstated to his position as a Service Technician, causing Pacific Bell to request that Allen submit medical documentation to support his contention that his physical condition had improved. Allen failed to submit any such evidence. Allen thereafter refused to test for other positions, and was discharged. The Ninth Circuit Court of Appeals held that “because Allen was requested, but failed, to submit additional medical evidence that would serve to modify his doctors’ prior reports, Pacific Bell’s determination that he was qualified only for desk work was appropriate. Pacific Bell did not have a duty under the ADA or California law to engage in further interactive processes with respect to the Service Technician position in the absence of any such information.” The court held that the determination was appropriate and dismissed the claim.
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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