Overview of Critical 2010 Developments Squire, Sanders & Dempsey L.L.P. Brian E. Shield Casey J.T. McCoy Stacie D. Yee [email protected] [email protected] [email protected] Squire, Sanders & Dempsey L.L.P. | www.ssd.com Wage and Hour/Class Action Updates Casey J.T. McCoy Squire, Sanders & Dempsey L.L.P. Squire, Sanders & Dempsey L.L.P. | www.ssd.com Tips on Tips • Cumbie v. Woody Woo held that mandatory tip pools did not violate the FLSA so long as no tip credit is taken by the employer. • Lu v. Hawaiian Gardens Casino held employees do not have a private right of action under Labor Code § 351 but observed that tort remedies such as conversion may be available. • Stay tuned for a lot more claims related to how money is calculated and paid as the number of exemption-based wage and hour cases starts to diminish. Squire, Sanders & Dempsey L.L.P. | www.ssd.com Off Site Work and Data Transmission • Rutti v. Lojack – Technician sued for payment for travel time and time spent before and after driving to his jobs. The Court found the driving time was not compensable, nor time spent mapping out each days’ route but did say the employer might be liable for time spent at the end of the day transmitting reports because it may have taken more than 10 minutes per day. Squire, Sanders & Dempsey L.L.P. | www.ssd.com A Meal is a Meal • McFarland v. Guardsmark – Employee sued for unprovided duty free second meal breaks arguing that if the first meal break is an on-duty break, that is akin to a waived meal break so the employer cannot get employee waiver of the second break. This interpretation was supported by the DLSE Manual. The Court rejected this argument and rejected the Manual on the ground that it is a “void regulation.” • BE WARY OF THE DLSE MANUAL. Squire, Sanders & Dempsey L.L.P. | www.ssd.com Individuals May Be Liable Under the FLSA • Boucher v. Shaw – Chairman/CEO, CFO and Head of HR could be “employers” within the meaning of the FLSA and therefore liable for unpaid wages. • Under FLSA, “[w]here individual exercises control over the nature and structure of the employment relationship . that individual is an employer within the meaning of the Act, and is subject to liability.” Squire, Sanders & Dempsey L.L.P. | www.ssd.com Most Ridiculous Case of the Year • Morgan v. United Retail – Employee sued because wage statements issued by the employer listed the total number of regular hours and OT hours separately and did not provide their sum as a separate line item. Court rejected the argument finding that employer complied with Labor Code Section 226’s requirements showing actual hours worked by employee. • See Kirby v. Immoos – Employer may recover its attorney’s fees for successful defense of claim for failure to provide rest periods as required under wage orders Squire, Sanders & Dempsey L.L.P. | www.ssd.com Class Action Developments • Faulikenbury v. Boyd & Assoc., Inc. - Appellate Court partially reverses certification of OT and Meal/Rest Period Class on the ground that while common issues predominated OT issue, individual issues predominated break claims. • Vinole v. Countrywide Home Loans, Inc. – Appellate Court affirms denial of class certification on motion filed by defendant prior to discovery cut-off and before plaintiffs filed their class certification motion Squire, Sanders & Dempsey L.L.P. | www.ssd.com Class Action Developments (cont.) • Clark v. American Residential Servs. – Strict scrutiny of class action settlements; court must have sufficient information to make an informed evaluation of the fairness of the settlement Squire, Sanders & Dempsey L.L.P. | www.ssd.com Discrimination/Harassment Updates Stacie D. Yee Squire, Sanders & Dempsey L.L.P. Squire, Sanders & Dempsey L.L.P. | www.ssd.com Discrimination/Harassment Updates • Nov.’09 to April ’10: 60% INCREASE in discrimination claims filed – WHY? Squire, Sanders & Dempsey L.L.P. | www.ssd.com Age Discrimination – RFOA Test • New proposed EEOC definition of what “reasonable factors other than age” means for purposes of disparate impact cases. • New rule will emphasize a case-by-case approach to determining reasonableness of practice. • “Objectively reasonable when viewed from the position of a reasonable employer under like circumstances, both in its design and the way it is administered.” Squire, Sanders & Dempsey L.L.P. | www.ssd.com RFOA Test: “Prudent Employer” Standard • Common business practice • Related to stated business goal • Defined accurately and applied fairly • Assessed adverse impact on older workers • Severity of harm (number affected, degree of injury) versus corrective steps • Failure to pursue other available options • Extent supervisors had unchecked discretion to assess employees subjectively • Extent supervisors were to evaluate employees based on factors known to be subject to age-based stereotypes • Extent supervisors were given guidance or training on how to apply factors and avoid discrimination Squire, Sanders & Dempsey L.L.P. | www.ssd.com Expanded EEOC Enforcement of ADA • New EEOC cases target alleged discrimination against individuals with diabetes, cancer and severe arthritis. – Employer took stool away from arthritic cashier – Two employees selected for RIF after completing health survey identifying themselves as diabetic and hypertensive – Employee being treated for cancer asked to work part-time and was fired because he had exhausted his permitted leave time • HIV positive status qualifies as a disability under broader ADA standards • 9th Circuit: duty to accommodate employee’s limitations in getting to and from work Squire, Sanders & Dempsey L.L.P. | www.ssd.com New GINA Regulations • Effective January 8, 2011 • All requests for medical information should now include the following: The Genetic Information Nondiscrimination Act of 2008 (GINA) prohibits employers and other entities covered by GINA Title II from requesting or requiring genetic information of an individual or family member of the individual, except as specifically allowed by this law. To comply with this law, we are asking that you not provide any genetic information when responding to this request for medical information. "Genetic information" as defined by GINA, includes an individual's family medical history, the results of an individual's or family member's genetic tests, the fact that an individual or an individual's family member sought or received genetic services, and genetic information of a fetus carried by an individual or an individual's family member or an embryo lawfully held by an individual or family member receiving assistive reproductive services. Squire, Sanders & Dempsey L.L.P. | www.ssd.com Supreme Court to Review “Cat’s Paw” Theory • Referring to 17th century French fable, theory applies when a biased party uses an unbiased party to perpetrate discrimination under the disguise of a neutral decision or policy. • U.S. Supreme Court to review the theory arising from a Seventh Circuit decision granting summary judgment to an employer. • Justice Kagan recused so 8 justices to hear this case. Squire, Sanders & Dempsey L.L.P. | www.ssd.com Supreme Court to Review Third Party Retaliation Theory • Woman complains of harassment; her fiancée is fired and he sues for retaliation. • District Court grants summary judgment on basis that statute does not protect people merely associated with a whistleblower. • Sixth Circuit reversed • En banc panel reinstated summary judgment for the employer. Squire, Sanders & Dempsey L.L.P. | www.ssd.com Supreme Court to Review Whether Oral Complaint is Protect Activity for Retaliation • Employee complains to supervisors that placement of employer’s time clocks violated FLSA • District Court granted summary judgment for employer • 7th Circuit held an employee does not “file” a complaint when he submits a complaint in purely unwritten form, and denied rehearing en banc Squire, Sanders & Dempsey L.L.P. | www.ssd.com Supreme Court Slams Door on Another Employee Challenge to Arbitration • Court reviewed agreement that stated the arbitrator was to decide “gateway” issues of enforceability. • Supreme Court held that to be two agreements to arbitrate – one to arbitrate gateway issues and one to arbitrate the substantive claims. • Supreme Court held District Court to decide “gateway” issues such as unconscionability only when the issue goes to the parties specific agreement to arbitrate gateway issues. Squire, Sanders & Dempsey L.L.P. | www.ssd.com Some Sins May Never Go Away • Supreme Court held that each time an employer acted based on an old practice that had a discriminatory disparate impact, there was a new violation that triggered a 300-day window to file a charge. • 1995 civil service test having a disparate impact on African Americans gave rise to a claim in 2006 and later, each time the City referred back to 1995 test results in its hiring. Squire, Sanders & Dempsey L.L.P. | www.ssd.com Courts Officially Rejecting Equal Opportunity Harasser Defense • Managers sued for making harassing slurs against women could not defend themselves on the basis that they would make slurs against anybody, at any time. Squire, Sanders & Dempsey L.L.P. | www.ssd.com Good Faith Mistake About Request for OT Pay May Insulate Employee From Termination • Employee received complaints that he and his co- workers were shorted two hours of OT. • The Employee reported this to management so the group was paid. • Employer later learned from security tapes that the employees were wrong and fired the spokesperson for falsifying records (despite fact he offered to pay back the money). • Appellate Court reversed summary judgment on the ground that the whistle blower’s good faith mistaken belief is protected from employer retaliation. Squire, Sanders & Dempsey L.L.P. | www.ssd.com Darned if you do and darned if you don’t! • Employer got a letter from a competitor notifying it that a new hire was bound by a non-compete agreement.