California Assembly Bill 1825 became law January 1, 2005, and required California employers with 50 or more employees to provide two hours of sexual harassment prevention training to supervisory-level employees every two years. The final regulations, which became effective August 17, 2007, include very specific guidelines regarding course content, training method, and trainer qualifications. (FEHC final regulations.) Employers should proceed with compliance training cautiously, no longer resting on the protection of an interim "good faith effort" provision. While many employers anticipated or hoped for an official waiver of training due to the present state of the economy, no such pardon arrived. Consequently, 2009 is anticipated to be another significant compliance period.
To help employers meet their training requirements during these difficult financial times, Basham Parker LLP has developed a variety of training solutions designed to provide quality training at reasonable costs, including reduced-fee attorney training, qualified non-attorney training, web-based training through a no-commission relationship with Workplace Answers, Inc., and scheduled webinars. For more information regarding these training options, please contact our Client Services Department.
Thursday, April 02, 2009
COBRA NOTICES
As Basham Parker LLP reported in its March 2009 newsletter, the U.S. Department of Labor has issued preliminary direction on how the COBRA subsidy, recently passed by Congress as part of the economic stimulus package (the American Recovery and Reinvestment Act of 2009 [ARRA]), should be handled by employers. ARRA mandates that plans notify certain current and former participants and beneficiaries about the premium reduction. The Department has created model notices to help employers and plan administrators comply with these requirements. The model notices may be downloaded in modifiable format.
SAN FRANCISCO HEALTH CARE PROGRAM STILL BREATHING
On March 31, 2009, the U.S. Supreme Court refused yet another emergency motion to stop San Francisco's controversial program requiring employers to spend specified funding on employees' health care - the second refusal in the continuing battle between the city and the Golden Gate Restaurant Association. The ordinance has been in effect since January 2008, when the U.S. Court of Appeals for the Ninth Circuit issued a stay of judgment allowing San Francisco to extend health coverage to its uninsured residents by freezing a district court's earlier ruling that the landmark employer-funded health care program was preempted by the Employee Retirement Income Security Act (ERISA).
The Association plans to file a petition for certiorari review, and remains optimistic the Supreme Court will eventually agree to hear the merits of their dispute. The Association requested the stay in order to both "spare our membership what we consider to be the illegal cost of the mandate" during the possible 15 months before the Supreme Court would actually rule on the case - if it elects to hear the matter, and to avoid "inconsistent legal decisions" that could encourage other municipalities to pass similar legislation. The city of San Mateo, California, has created a task force to consider the program, and similar legislation has been introduced in New Jersey and Connecticut.
The Association plans to file a petition for certiorari review, and remains optimistic the Supreme Court will eventually agree to hear the merits of their dispute. The Association requested the stay in order to both "spare our membership what we consider to be the illegal cost of the mandate" during the possible 15 months before the Supreme Court would actually rule on the case - if it elects to hear the matter, and to avoid "inconsistent legal decisions" that could encourage other municipalities to pass similar legislation. The city of San Mateo, California, has created a task force to consider the program, and similar legislation has been introduced in New Jersey and Connecticut.
MUST A PLAINTIFF PRESENT DIRECT EVIDENCE OF DISCRIMINATION IN ORDER TO OBTAIN A MIXED-MOTIVE INSTRUCTION IN A NON-TITLE VII DISCRIMINATION CASE?
Potentially one of the most significant pending employment law matters in recent history reached the U.S. Supreme Court for oral argument on March 31, 2009: Gross v. FBL Financial Services, Inc., where the Court considered the issue of burden of proof in "mixed motive" cases under the Age Discrimination in Employment Act (ADEA). The High Court granted certiorari on the question, "must a plaintiff present direct evidence of discrimination in order to obtain a mixed-motive instruction in a non-Title VII discrimination case?" One of the most noteworthy issues to have arisen during the briefing in this case, is whether the Court should limit itself to that question or decide, instead, a much broader question of much greater importance - namely, whether to overrule its decision in Price Waterhouse v. Hopkins, and hold instead that the plaintiff must always bear the burden of proof in mixed motive cases.
Petitioner Jack Gross sued his employer for age discrimination in violation of the ADEA, alleging he was demoted because of his age. The employer both denied that age was a factor in its decision-making and further argued that even if it had been, it also had a legitimate reason for demoting Gross. The question then arises: if the employer would have taken the same action anyway, regardless of its discriminatory motive, should it be held liable for intentional discrimination because it also had an illegal motive? And if not, who should bear the burden of proving what the employer would have done absent the discriminatory motive?
The Supreme Court set the rules for such "mixed motive" cases under Title VII in Price Waterhouse. It held that the answer to the first question is "no" - the employer is not liable if it would have taken the same action anyway, despite the discriminatory motive. A majority of the Justices further agreed (albeit in fractured opinions) that upon an appropriate showing by the plaintiff, the burden should shift to the defendant to prove that it would have taken the same action anyway. Congress overruled Price Waterhouse to the extent it held that an employer who makes the required showing is not liable at all for the discrimination. Instead, the 1991 Civil Rights Act Amendments provide that the employer is liable, but is subject to reduced employee remedies. However, Congress did not apply this new provision to the ADEA.
In this case, the district court instructed the jury that if the plaintiff proved by a preponderance of the evidence, direct or otherwise, that age was a motivating factor in the decision to demote him, then the burden of persuasion shifted to the defendant to prove it would have taken the same action absent the prohibited consideration of age.
On appeal, the Eighth Circuit reversed, holding that the burden of persuasion should shift to the defendant only if the plaintiff proved that age was a motivating factor by presenting direct evidence of age bias. When the plaintiff relies on circumstantial evidence, the court held, the burden of proof remains on the plaintiff, who must demonstrate that the employer would not have demoted him but for his age. Gross petitioned for certiorari, asking the Court to decide whether the burden of proof in mixed motive cases shifts to the employer only when direct evidence of bias is presented, or whether it shifts in all cases, regardless of the type of evidence. Respondents' brief in opposition focused on disputing that there was a circuit split on the question, or whether this case was an appropriate vehicle to resolve the asserted split. The Court eventually granted certiorari.
A copy of the oral argument transcript is available for download and viewing. A decision is expected before the Supreme Court completes its term this year. This case is worth watching closely, particularly for employers who often find themselves in Federal Court.
Petitioner Jack Gross sued his employer for age discrimination in violation of the ADEA, alleging he was demoted because of his age. The employer both denied that age was a factor in its decision-making and further argued that even if it had been, it also had a legitimate reason for demoting Gross. The question then arises: if the employer would have taken the same action anyway, regardless of its discriminatory motive, should it be held liable for intentional discrimination because it also had an illegal motive? And if not, who should bear the burden of proving what the employer would have done absent the discriminatory motive?
The Supreme Court set the rules for such "mixed motive" cases under Title VII in Price Waterhouse. It held that the answer to the first question is "no" - the employer is not liable if it would have taken the same action anyway, despite the discriminatory motive. A majority of the Justices further agreed (albeit in fractured opinions) that upon an appropriate showing by the plaintiff, the burden should shift to the defendant to prove that it would have taken the same action anyway. Congress overruled Price Waterhouse to the extent it held that an employer who makes the required showing is not liable at all for the discrimination. Instead, the 1991 Civil Rights Act Amendments provide that the employer is liable, but is subject to reduced employee remedies. However, Congress did not apply this new provision to the ADEA.
In this case, the district court instructed the jury that if the plaintiff proved by a preponderance of the evidence, direct or otherwise, that age was a motivating factor in the decision to demote him, then the burden of persuasion shifted to the defendant to prove it would have taken the same action absent the prohibited consideration of age.
On appeal, the Eighth Circuit reversed, holding that the burden of persuasion should shift to the defendant only if the plaintiff proved that age was a motivating factor by presenting direct evidence of age bias. When the plaintiff relies on circumstantial evidence, the court held, the burden of proof remains on the plaintiff, who must demonstrate that the employer would not have demoted him but for his age. Gross petitioned for certiorari, asking the Court to decide whether the burden of proof in mixed motive cases shifts to the employer only when direct evidence of bias is presented, or whether it shifts in all cases, regardless of the type of evidence. Respondents' brief in opposition focused on disputing that there was a circuit split on the question, or whether this case was an appropriate vehicle to resolve the asserted split. The Court eventually granted certiorari.
A copy of the oral argument transcript is available for download and viewing. A decision is expected before the Supreme Court completes its term this year. This case is worth watching closely, particularly for employers who often find themselves in Federal Court.
PARTICIPANTS IN A TIP POOL NEED NOT BE RESTRICTED TO STAFF WHO PROVIDED DIRECT TABLE SERVICE TO PATRONS
On March 27, 2009, the Second Appellate District, California Court of Appeal, affirmed a ruling in favor of Reins International California Inc., holding participants in tip pooling need not be restricted to staff who provide direct table service to patrons.
The Los Angeles County Superior Court case was filed in 2007 by waiter Brad Etheridge on behalf of a class of similar Reins' servers. Etheridge alleged the restaurant's tip-pooling practice violated the California Labor Code and constituted an unfair business practice because it requiresd waiters to give a portion of guest tips to bartenders, dishwashers, and other kitchen staff, who provide no direct table service to customers. Reins, which operates several restaurants in California, won dismissal of the suit after arguing to the trial court that state law did not limit tip sharing to workers who provide direct table service and that a tip pool could include any number of employees, so long as the tips are not shared with management. Etheridge appealed, arguing the appellate court's 1990 Leighton v. Old Heidelberg Ltd. ruling foreclosed a tip pool that included employees not providing "direct table service."
The appeals court majority found Etheridge's reading of Leighton as "too narrow," holding, "[t]he Leighton court concluded that a mandatory tip pool is supported by 'common sense and fairness and protects the public, the employees, and the restaurant employer.' These policy reasons extend to mandatory tip pools which include employees who do not provide direct table service, but participate in the chain of service."
The court's opinion was not unanimous, with one dissenting judge holding that any employer-mandated tip-sharing policy directly violated California's labor laws, finding, "[b]ecause Section 351 (of the Labor Code) guarantees that the gratuity is the 'sole' property of the employee or employees for whom it was left, Section 351 clearly prohibits the employer from appropriating any portion of the server's gratuity and diverting it to other employees." Judge P.J. Klein said he could not agree with the majority in their decision, stating that, "[t]he instant majority's extension of Leighton to include in the tip pool any employees who 'contribute to a patron's service' or who 'participate in the chain of service' is unwarranted and simply compounds the error made by the Leighton majority in the first instance," and added that the state's Supreme Court should weigh in on the matter and clarify the issue.
The Los Angeles County Superior Court case was filed in 2007 by waiter Brad Etheridge on behalf of a class of similar Reins' servers. Etheridge alleged the restaurant's tip-pooling practice violated the California Labor Code and constituted an unfair business practice because it requiresd waiters to give a portion of guest tips to bartenders, dishwashers, and other kitchen staff, who provide no direct table service to customers. Reins, which operates several restaurants in California, won dismissal of the suit after arguing to the trial court that state law did not limit tip sharing to workers who provide direct table service and that a tip pool could include any number of employees, so long as the tips are not shared with management. Etheridge appealed, arguing the appellate court's 1990 Leighton v. Old Heidelberg Ltd. ruling foreclosed a tip pool that included employees not providing "direct table service."
The appeals court majority found Etheridge's reading of Leighton as "too narrow," holding, "[t]he Leighton court concluded that a mandatory tip pool is supported by 'common sense and fairness and protects the public, the employees, and the restaurant employer.' These policy reasons extend to mandatory tip pools which include employees who do not provide direct table service, but participate in the chain of service."
The court's opinion was not unanimous, with one dissenting judge holding that any employer-mandated tip-sharing policy directly violated California's labor laws, finding, "[b]ecause Section 351 (of the Labor Code) guarantees that the gratuity is the 'sole' property of the employee or employees for whom it was left, Section 351 clearly prohibits the employer from appropriating any portion of the server's gratuity and diverting it to other employees." Judge P.J. Klein said he could not agree with the majority in their decision, stating that, "[t]he instant majority's extension of Leighton to include in the tip pool any employees who 'contribute to a patron's service' or who 'participate in the chain of service' is unwarranted and simply compounds the error made by the Leighton majority in the first instance," and added that the state's Supreme Court should weigh in on the matter and clarify the issue.
SCORE ONE FOR EMPLOYERS: ARBITRATION OF ADEA CLAIMS ENFORCEABLE UNDER COLLECTIVE BARGAINING AGREEMENTS
The Supreme Court has upheld the enforceability of arbitration provisions in collective bargaining agreements which require employees to arbitrate claims under federal antidiscrimination laws. The ruling in 14 Penn Plaza v. Pyett is welcome news to employers, as mandatory arbitration of employment discrimination claims will help lessen the risk of outrageous plaintiffs' verdicts so frequently associated with trial before a jury.
Petitioner 14 Penn Plaza LLC owns and operates the New York City office building where Respondents worked as night lobby watchmen and other similar capacities pursuant to a collective bargaining agreement (CAB) which provided that all claims made under Title VII, the Americans with Disabilities Act (ADA), and the Age Discrimination in Employment Act (ADEA) were subject to binding arbitration. After 14 Penn Plaza, with the Union's consent, engaged licensed security guards for the building, Respondents were reassigned to jobs as porters and cleaners. Arguing the reassignments led to a loss in income, other damages, and were otherwise less desirable than their former positions, Respondents asked their Union to file grievances alleging, among other things, that 14 Penn Plaza violated the CBA's ban on workplace discrimination by reassigning Respondents on the basis of their age in violation of Age Discrimination in Employment Act of 1967. The Union requested arbitration under the CBA, but withdrew the age-discrimination claims on the ground that its consent to the new security contract precluded it from objecting to Respondents' reassignments as discriminatory. Following a four-day hearing, the arbitrator denied all of the remaining claims.
The employees then filed a lawsuit in federal district court alleging that their reassignment violated the ADEA. Believing the issue had already been resolved by arbitration, 14 Penn Plaza asked the court to dismiss the lawsuit or, in the alternative, to refer the case back to arbitration to resolve the federal claims of age discrimination. The court did neither, but rather held the CBA arbitration provision violated Respondents' rights to pursue their claims in a federal courtroom. On appeal, the U.S. Court of Appeals for the Second Circuit agreed, holding, "[a] union negotiated mandatory arbitration agreement purporting to waive a covered worker's right to a federal forum with respect to statutory rights is unenforceable."
Existing precedent includes a 1974 case, Alexander v. Gardner-Denver, where the Supreme Court held that union-negotiated arbitration agreements regarding federal rights are unenforceable. Thereafter, in Gilmer v. Interstate/Johnson Lane, the court held that individual arbitration agreements are enforceable as long as their terms are "clear and unmistakable." The Supreme Court's uncertainty on this issue has caused a great deal of confusion among lower courts.
On April 1, 2009, in a 5-4 decision, the Supreme Court reversed the Second Circuit and held that a collective bargaining agreement that requires employees to arbitrate discrimination claims is enforceable. The High Court found, "[a]s in any contractual negotiation, a union may agree to the inclusion of an arbitration provision in a collective bargaining agreement in return for other concessions from the employer. . . . [c]ourts generally may not interfere in this bargained for exchange." The Court further held, in response to Respondents' reliance on Gardner-Denver, that although Title VII, the ADA, and the ADEA protect important substantive rights, they do not prohibit employees from pursuing these rights in arbitration. Consequently, a union may agree to submit employees' discrimination claims to binding arbitration.
Petitioner 14 Penn Plaza LLC owns and operates the New York City office building where Respondents worked as night lobby watchmen and other similar capacities pursuant to a collective bargaining agreement (CAB) which provided that all claims made under Title VII, the Americans with Disabilities Act (ADA), and the Age Discrimination in Employment Act (ADEA) were subject to binding arbitration. After 14 Penn Plaza, with the Union's consent, engaged licensed security guards for the building, Respondents were reassigned to jobs as porters and cleaners. Arguing the reassignments led to a loss in income, other damages, and were otherwise less desirable than their former positions, Respondents asked their Union to file grievances alleging, among other things, that 14 Penn Plaza violated the CBA's ban on workplace discrimination by reassigning Respondents on the basis of their age in violation of Age Discrimination in Employment Act of 1967. The Union requested arbitration under the CBA, but withdrew the age-discrimination claims on the ground that its consent to the new security contract precluded it from objecting to Respondents' reassignments as discriminatory. Following a four-day hearing, the arbitrator denied all of the remaining claims.
The employees then filed a lawsuit in federal district court alleging that their reassignment violated the ADEA. Believing the issue had already been resolved by arbitration, 14 Penn Plaza asked the court to dismiss the lawsuit or, in the alternative, to refer the case back to arbitration to resolve the federal claims of age discrimination. The court did neither, but rather held the CBA arbitration provision violated Respondents' rights to pursue their claims in a federal courtroom. On appeal, the U.S. Court of Appeals for the Second Circuit agreed, holding, "[a] union negotiated mandatory arbitration agreement purporting to waive a covered worker's right to a federal forum with respect to statutory rights is unenforceable."
Existing precedent includes a 1974 case, Alexander v. Gardner-Denver, where the Supreme Court held that union-negotiated arbitration agreements regarding federal rights are unenforceable. Thereafter, in Gilmer v. Interstate/Johnson Lane, the court held that individual arbitration agreements are enforceable as long as their terms are "clear and unmistakable." The Supreme Court's uncertainty on this issue has caused a great deal of confusion among lower courts.
On April 1, 2009, in a 5-4 decision, the Supreme Court reversed the Second Circuit and held that a collective bargaining agreement that requires employees to arbitrate discrimination claims is enforceable. The High Court found, "[a]s in any contractual negotiation, a union may agree to the inclusion of an arbitration provision in a collective bargaining agreement in return for other concessions from the employer. . . . [c]ourts generally may not interfere in this bargained for exchange." The Court further held, in response to Respondents' reliance on Gardner-Denver, that although Title VII, the ADA, and the ADEA protect important substantive rights, they do not prohibit employees from pursuing these rights in arbitration. Consequently, a union may agree to submit employees' discrimination claims to binding arbitration.
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