California DLSE Reverses Itself Regarding Schedule and Salary Reductions for Exempt Employees
The California Department of Labor Standards Enforcement (DLSE) has issued an opinion letter in which it concludes that California law does not prohibit an employer from temporarily reducing the work schedule of an exempt employee from five days a week to four days a week, and correspondingly reducing the employee's salary by 20 percent. The employer in question was experiencing significant economic difficulty and wanted to temporarily reduce the schedules and salaries of exempt employees to avoid or limit the need for layoffs. The DLSE concluded that this practice does not violate the salary basis test and the affected employees would not lose their exempt status.
Although this conclusion is consistent with well-settled principles of federal law, it represents a reversal of the DLSE's opinion. The DLSE reached the opposite conclusion -- that an employer cannot reduce the salary of an exempt employee during a period in which the company operates a shortened workweek due to economic conditions -- in a 2002 opinion letter. The 2002 opinion letter relied on a federal court decision that the DLSE now characterizes as "not well-reasoned and misguided."
Although DLSE opinion letters are not binding authority, California courts usually give them a great deal of weight. Additionally, DLSE opinion letters provide insight into how the DLSE will interpret the law in cases it pursues as California's wage and hour enforcement agency.
Washington Supreme Court Upholds Employer's Right to Fire Workers who Protest Bad Boss
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Sometimes the Washington Supreme Court pleasantly surprises employers. Today is one of those days. The Court issued its decision today in Briggs v. Nova Services. The plaintiffs in this case were eight employees of Nova Services, a non-profit social services organization in Washington. The employees apparently had major problems with the executive director who was appointed by the board, Linda Brennan. They sent a letter to the board expressing their disapproval with Ms. Brennan’s job performance. They explained that she “left managers to do work in isolation, failed to delegate authority well, did not hire needed staff, failed to foster open communication, and was poor at managing finances.” The board hired a lawyer who confirmed that regardless of whether Ms. Brennan was a decent manager, she had done nothing illegal. He suggested that the board either fire Ms. Brennan or the two employees who were the ringleaders of the disgruntled group, Ken Briggs and Judy Robertson, because their animosity clearly ran too deep to foster a positive working environment. The board decided to let Ms. Brennan stay. After an unsuccessful attempt to mediate their dispute, Ms. Brennan ultimately fired Briggs and Robertson. The other six employees responded by writing another letter to the board protesting the firing of Briggs and Robertson and threatening, in essence, unless Brennan is fired and Briggs and Robertson are reinstated, we quit. The employees gave the board one day to respond and stated that the deal was “non-negotiable.” The board did not respond and the employees did not report to work.
The at-will employees sued for wrongful discharge in violation of public policy. This cause of action is a narrow exception to the at-will employment doctrine. It only applies where an employee is fired for something like refusing to engage in an illegal act, performing a public obligation like jury duty, exercising a legal right like voting, or in retaliation for reporting employer misconduct (whistle blowing). Relying on RCW 49.32.020, the employees argued that Washington law, like the federal labor laws, protects employees’ rights to engage in concerted activities. In essence, this law protects non-union employees who work together to complain/negotiate/bargain with their employers over terms and conditions of employment. The Court determined that RCW 49.32.020 was not meant to apply to this context of a protest walk out over the firing of two employees and the retention of a disliked boss. The Court focused on the idea that “working conditions includes things like better wages, improved medical coverage, better treatment from supervisors, lunch and rest breaks, layoffs and recalls, production quotas, work rules, on the job harassment, and even food prices at in-plant dining rooms.” The Court determined that management decisions which “lie at the heart of entrepreneurial control” are not terms and conditions of employment. Thus Nova’s decision to replace the employees who walked out in protest was not a wrongful termination in violation of public policy. There was a dissent which focused more on federal labor laws as persuasive. Under federal law, this case might have come out differently. There were also two concurring opinions. Justice Madsen’s opinion focused on the fact that the plaintiffs never raised the RCW 49.32.020 issue until the appeal, which is arguably way too late to bring it up. Justice Johnson’s opinion was a bit more complicated but essentially argued that the Court mixed up two completely separate issues, the wrongful discharge tort and the protected concerted activity statute. He agreed that complaining about a bad boss is not protected.
The bottom line for employers is that in Washington, it is not necessarily “protected concerted activity” (and that is a legal term of art to be discussed with your labor lawyer when necessary) for employees to protest everything in the workplace. There are still going to be some workplace issues that are clearly terms and conditions of employment. Employees can band together to complain about these issues. Other workplace concerns may not be safe for at-will employees to protest. One such concern is clearly who’s the boss. With support from today’s decision, there will be others. Before taking any action in response to employees who act collectively, however, it would be very prudent to consult an experienced labor lawyer.
Oregon Supreme Court Allows Workers' Comp Coverage for Gastric Bypass
This morning, in SAIF Corp. v. Sprague, the Oregon Supreme Court upheld the workers' compensation claim of an employee who sought coverage for gastric bypass surgery, on the grounds that the surgery was necessary to treat a decades-old on-the-job knee injury.
Sprague injured his knee on the job in 1976, filed a workers' comp claim, and sought treatment. In 1999, he reinjured his knee and filed a new workers' comp claim with a new employer. He also was successful in expanding his original claim to include a new condition, consequential arthritis in the knee. In 2000, his knee had deteriorated and his doctor recommended a knee replacement. However, plaintiff (who weighed over 300 pounds) needed to lose weight to be eligible for the knee surgery and to relieve pressure on the injured knee. His doctor recommended gastric bypass surgery, but both workers' comp insurers (for his new and old employers) refused to pay for it. The insurers argued that the gastric bypass was not covered because it was directed at Sprague's obesity, which had existed before the original 1976 injury.
The Oregon Supreme Court disagreed. The insurers did not dispute that the current knee problems were compensable, because they were related to the original on the job injuries. The only relevant issue was whether the gastric bypass surgery was "directed to" the knee injury. The court ruled that it was, because the medical evidence was undisputed that the weight loss was necessary to the success of the surgery. It was irrelevant that the Sprague would also obtain free surgery that had substantial cosmetic benefits (as Al Roker, John Popper, Roseanne Barr, Star Jones, Randy Jackson, and others can attest).
As Stoel Rives World of Employment pointed out earlier, this doesn't mean that all gastric bypasses will now be covered by workers' comp. However, the statute that mandated this decision just doesn't strike the balance that the workers' comp system promised. The system was created as a compromise between employers and employees. Employees received a defined benefit for any on-the-job injury regardless of fault. Employers received protection from high punitive damage awards and the knowledge that their costs would be controlled. While the system often works well, decisions like this show that it doesn't always. According to some experts, gastric bypass surgery costs between $20,000-and $25,000. That's a cost that these employers might not have had to pay absent the workers' comp system.
Professional Fibbers Unmasked! Fake Job Reference Sites Are Real, But What is the Cost?
Last week The Stoel Rives World of Employment posted about fake job reference site Alibi HQ and provided some pointers for employers on how to verify the legitimacy of job references provided by job applicants. Given that the site has numerous broken internal links, we speculated that it may be a joke. It's not. Picking up on our blog post, ABC News investigated Alibi HQ and competitor CareerExcuse.com (a site that also purports to provide fake job references) to determine whether the services provided are real, and sought comment from us regarding the legality of lying on employment applications.
The results of their investigation are fascinating.
CareerExcuse.com's founder, William Schmidt, confirmed for ABC News that his service is real, and that it has "helped at least 20 people find work" by providing false job references. Alibi HQ boasted that business has quadrupled in the current recession, but was somewhat more circumspect about the details of the company (they also provide fake landlord references and fake doctor's notes), refusing to identify the company's location because to do so "poses a security risk." Both companies appear aware that their services tread on shaky legal ground. Each purports to take steps to avoid liability such as not providing references to government job applicants. That's wise because lying to the government runs afoul of federal criminal law, and can carry with it up to 5 years in prison.
But what about lying to private employers? Are the lies promulgated by these companies somehow protected because the target of the lie is a private, rather than a public, entity? As I stated in the ABC News article, I think not. If a company relies on the misrepresentation of an applicant and is later damaged by that misrepresentation, it very well may constitute actionable fraud.
The companies acknowledge that their services are based on "fibbing" and that they have some "moral issues." They argue, however, that the means are justified by the end--finding someone a new job. Some commentators take the same position, arguing that these services level the playing field between the jobless and the "evil" employers. It's not that simple. Putting aside the obvious moral and ethical issues related to lying, there is a social and economic cost. These services don't just put someone in a new job; they falsely puff up an applicant's experience to help get her get a job for which she is not qualified. That's bad for the applicant who is ultimately found to be unqualified for the job, and costly for the duped employer. Far from leveling the playing field, it creates an unfair advantage over the honest applicants with actual experience who get passed over for a position because of someone who lied.
Our advice to employees: These are tough times and we know that finding a job is hard. Still, maintain your integrity and steer clear of services like these and overt resume puffery. Hang in there!
Our advice to employers: As noted in our prior post, when considering an applicant, take the time to diligently review prior job references and history to verify that the applicant has the experience he or she has advertised.
Oregon Supreme Court Denies Employee's Wrongful Discharge Claim for Reporting Unlawful Trade Practices
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The Oregon Supreme Court has denied a car salesman's wrongful discharge claim. In Lamson v. Crater Lake Motors, Inc., the salesman, Kevin Lamson, claimed he was terminated for complaining to his employer that an outside entity managing sales on his employer's car lot was engaging in unlawful trade practices. Lamson refused to participate in special promotional events run by the outside company, because he believed company was engaging in sales tactics that were unethical and unlawful.
As the Stoel Rives World of Employment has discussed earlier, wrongful discharge is a common law remedy. One way a plaintiff may assert the claim is by arguing that the employer terminated him for fulfilling an "important societal obligation." Oregon courts determine what obligations qualify by reviewing state statutes and the state constitution.
In this case, the Oregon Supreme Court ruled that plaintiff would have had a wrongful discharge claim if he had been terminated for refusing to engage in illegal practices prohibited by Oregon's Uniform Trade Practices Act.. However, the court determined that plaintiff's evidence did not meet that burden. Plaintiff had not complained that he was being forced to act illegally; he had complained only that the outside company was acting illegally and urged his employer not to do business with that company. The court also held that plaintiff would have had a viable claim if he had been terminated for reporting the outside company's illegal practices to a government agency that could have taken legal action about the outside company. Reporting the allegedly illegal practices to his employer, the court ruled, was insufficient to trigger the common-law remedy.
Lamson does not signal an entirely new direction in the law of wrongful discharge; employers have known for some time that they may be held liable for terminating employees for performing public duties such as jury service or even arresting lawbreakers. However, Lamson is a valuable precedent for employers because it shows that Oregon courts are not willing to extend a wrongful discharge remedy for every act that a discharged employee can relate (however tangentially) to an Oregon statute. Plaintiffs asserting wrongful discharge must show how their complaint directly relates to the furtherance of a public policy
New proposed rule from Homeland Security will rescind the controversial no-match rule
One of G.W. Bush’s controversial acts as president was issuing the no-match rule. When employers pay social security taxes, the Social Security Administration (SSA) allocates a certain amount to each employee based on that employee’s social security number. All is well and good when the employer provided numbers match the numbers on file with the SSA. When the numbers don’t match, the SSA sends an aptly named no-match letter. The Bush administration’s no-match rule would have required theDepartment of Homeland Security (DHS) to send its own letter to employers along with the no-match letters from the SSA. The DHS letters, rather than simply stating that the numbers didn’t match, would contain a threat to fix the problem or face liability. As a practical matter, most employers receiving such a letter would opt to terminate the employee at issue rather than face liability.
The real problem with this rule is that just because an employee’s social security number, provided on an I-9 card for example, does not match the number on file with the SSA does not mean the employee is an illegal alien. The SSA’s record keeping is not perfect and the no-match might not be the employee’s fault. Moreover, typos are not uncommon in this context and many no-match situations are the result of accidentally switching a single number. In other words, a no-match does not equal an illegal worker. Terminating employment solely on the basis of receiving a no-match letter could expose employers to liability for wrongful termination.
The DHS has a deadline of September 30, 2009 to rescind the no-match rule. If it rescinds the rule before that date it will not run afoul of the bill recently passed in the Senate prohibiting using any part of next year’s appropriated homeland security funds to rescind the rule. The DHS has indicated that it intends to rescind the rule and focus on assuring employer compliance through programs such as E-Verify.
The bottom line for employers - compliance with immigration laws is just as important as ever, but if the rule is rescinded a no-match letter from the SSA should result in a discussion with the employee, perhaps obtaining another copy of their social security card and checking their I-9 form.
Fake Job Reference Site Highlights Importance of Verifying Applicant References
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As if navigating the world of employment issues was not hard enough already, today's Consumerist highlighted a new service that purports to provide, among other things, fake job references. While I have not formed a conclusion as to whether the site is real or a sham (many of the internal links on the site don't work, but there is an actual recording identifying the company when you call the number), such services--the sole function of which is to perpetrate a fraud--highlight the importance of verifying the authenticity and experience of applicant references.
If you are suspicious about an applicant's job history or references, there are several steps you can take decrease your chances of being duped.
- First, if the company name is unfamiliar to you, look it up online. Is there a website? Can you find a phone number? If so, call it and ask to speak to someone who covers the human resources function. It is, of course, possible to fake all of these things (and a service like the one linked to above is paid to cover them), but chances are that someone who is lazy enough to fake a job reference isn't going to cover all of his or her bases.
- Second, don't rely on the information provided. If the applicant states that he or she worked at a major corporation and provides the number for someone to contact at the corporation, don't call the number. Instead, go to the website, call the main number, and ask to speak to the person in the reference. If that person doesn't exist, it's a good sign that the reference is not legitimate.
- Third, as the Consumerist post notes, make use of services provided by the phone company such as reverse lookup. The number may not show up for a legitimate reason (such as it's a direct dial line), but the failure to authenticate should still be considered a reason to proceed with caution.
- Fourth, if you are instructed to contact a reference at home that's fine, but try to otherwise authenticate the reference as discussed above.
- Fifth, you may want to include a policy in your handbook indicating that subsequent discovery of false information on an employee's application is grounds for immediate termination.
Once you verify that the reference is legitimate, be mindful that all references were not created equal. Make sure to establish that the reference interacted with the applicant in significant ways or over a substantial period of time. Many applicants provide otherwise legitimate references who, for example, left the prior employment long before the applicant did. Those references are less likely to have any useful information, and won't be able to discuss why the applicant left the prior employer.
Many employers don’t check references at all, or just do a cursory review. The lesson here is that due diligence checking references can go a long way toward avoiding significant problems down the road.
Oregon Court of Appeals Rejects Wrongful Discharge Claims for Health and Safety Retaliation
This morning the Oregon Court of Appeals rejected a plaintiff's common-law wrongful discharge claim that she was terminated for reporting a health and safety violation. The Court ruled that the state and federal statutory remedies were adequate, and that she should have filed a statutory claim instead.
Plaintiff Andrea Deatherage was an employee of Super 8 Inn when she filed a health and safety complaint against her employer with Oregon OSHA. Deatherage was terminated the next day. She sued for the common-law tort of wrongful discharge, claiming she was terminated in retaliation for filing the complaint.
In Oregon, wrongful discharge is a "gap filling" remedy that is available only when there is no adequate remedy by statute. In Walsh v. Consolidated Freightways, 278 Or 347, 563 P2d 1205 (1977), the Oregon Supreme Court ruled that the state and federal statutory remedies for health and safety complaint retaliation were sufficient to preclude a common-law remedy. Citing Walsh, the trial court dismissed plaintiff's claim.
So why the fuss at the Court of Appeals? Plaintiff claimed that a federal case issued since Walsh had cast doubt on whether the statutory remedies were actually adequate. The Court of Appeals rejected the invitation to ignore an Oregon Supreme Court case, and adhered to Walsh, agreeing with the trial court. (Oddly, the court declined to fill a gap in Oregon law by explaining exactly what remedies are available for an Oregon statutory health and safety reporting claim under ORS 654.062.)
So why is this case important? At this point, it creates a difference in how these kinds of wrongful discharge cases will be treated in state courts as opposed to federal courts. The Stoel Rives World of Employment will be watching future developments, as the Oregon Supreme Court may have an opportunity to weigh in on this issue.
E-Verify Implementation on Track for September 8, 2009
Starting September 8, 2009, employers receiving federal contracts will be required to use the new E-Verify system to check their employees' authorization to work in the United States. This announcement comes after several delayed attempts by the Bush and Obama administrations to implement the E-Verify rule; however, their efforts were thwarted by a stay issued as part of a lawsuit blocking implementation of the E-Verify rule. However, the stay has been lifted, the Obama administration has announced its support for the rule, and it appears that it really will go into effect this time. Really. We're not kidding.
Employers take note: the new E-Verify rule will only affect federal contractors and subcontractors who are awarded a new government contract after September 8, 2009 and that includes E-Verify clause. Federal contractors may NOT use E-Verify to verify current employees until they receive a contract with the E-Verify clause.
For more information on E-Verify, click here to visit the U.S. Citizenship and Immigration Service's E-Verify Website.
Employer Did Not Violate Title VII By Firing Employee For Wearing a Nose Ring
A Federal court in Florida has ruled that a Subway restaurant did not violate Title VII by firing an employee because she wore a nose ring, rejecting a claim by the Equal Employment Opportunity Commission (EEOC) for injunctive relief and punitive damages. Click here to read the court's decision in EEOC v. Papin Enters. Inc.
Subway has a policy prohibiting employees from wearing facial jewelry, but this particular employee refused to remove her nose ring on the grounds that wearing it was part of her Nuwaubian religion. In April this year, a jury found that Subway did not have to accommodate the employee's nose ring, as she did not have a sincerely held religious belief requiring her to wear it. Last week, the court declined the EEOC's request for injunctive relief and punitive damages (notwithstanding the jury verdict) as there was no basis for such relief absent any discrimination.
The Papin case demonstrates an important legal principle: although employers are required to reasonably accommodate employees' religious practices (which may include allowing employees to deviate from a dress code), employers are only required to accommodate sincerely held religious beliefs. (So much for my idea of converting to Pastafarianism so I could claim a religious right to wear jeans on Friday). For more information on what constitutes a "religion" for Title VII purposes, check out these Frequently Asked Questions on Religious Discrimination from the EEOC.
California Supreme Court: No Privacy Violation for Employer's Placement of Video Camera in Employees' Office
The California Supreme Court has issued its decision in Hernandez v. Hillsides, Inc., finding that an employer's placement of a hidden camera in an office used by two employees did not violate the employees' right to privacy. This case has been closely watched (OK, pun intended) as it worked its way through the appellate courts. Like all workplace privacy cases in California, the case is highly fact-specific and should not be interpreted as encouraging employers to conduct clandestine surveillance of employees.
Hillsides operated a residential facility for neglected and abused children. Plaintiffs Hernandez and Lopez were employees of Hillsides who shared an enclosed office and performed clerical work during daytime business hours. Hillsides learned that late at night, after the plaintiffs had left the premises, an unknown person repeatedly used a computer in the plaintiffs' office to access and view pornographic web sites. Concerned that the culprit might be a staff member who worked with the children who resided there, Hillsides set up the hidden camera, which could be operated from a remote location at any time. Neither of the plaintiffs was suspected of being the culprit, and the employer only activated the camera after hours when the plaintiffs were gone. The plaintiffs' activities were never viewed or recorded by means of the surveillance system.
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