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Labor and Employment Law Newsletter: September 2009

January 1, 0001

Contents


United States Supreme Court Holds Age Must Be "But-For" Cause in ADEA Claims

In Gross v. FBL Financial Services, Inc., 129 S. Ct. 2343 (2009), a divided (5-4) United States Supreme Court held that an employee must prove that age was the “but-for cause” of an adverse employment action in order to recover under the Age Discrimination in Employment Act of 1967 (the “ADEA”). Employee proof that age was a “motivating factor” in the employer’s decision is insufficient to shift the burden of persuasion to the employer.

Plaintiff Jack Gross was a 54-year-old “claims administration director” for FBL Financial Group, Inc. (“FBL”). FBL reassigned Gross to the position of “claims project coordinator.” At the same time, FBL created a new claims administration manager position, and filled it with one of Gross’ former subordinates, a woman in her early forties. FBL reallocated many of Gross’ former job duties as a claims administration director to Gross’ subordinate in her new position. While Gross and his former subordinate earned the same compensation in their new positions, Gross considered his reassignment a demotion because FBL transferred away many of his job duties.

The District Court instructed the jury that it could find for Gross if it determined Gross’ age to be a motivating factor in FBL’s decision to demote him. The jury could only find for FBL, the court instructed, if it found FBL would have demoted Gross regardless of his age. The jury found in favor of Gross and awarded him $46,945 in lost compensation.

FBL successfully appealed. The Eighth Circuit Court held that the trial court’s “mixed motives” instructions were improper under Price Waterhouse v. Hopkins, 490 U.S. 228 (1989). It concluded that Price Waterhouse applied to require direct evidence that age was a substantial factor in the employer’s decision before the burden of persuasion can shift to the employer. The Eighth Circuit Court held that the trial court’s instructions improperly failed to require such direct evidence before shifting the burden to FBL to prove that FBL’s decision to transfer Gross would have been the same without consideration of Gross’ age.

The Supreme Court took a different approach. It held, contrary to the Eighth Circuit Court, that the Price Waterhouse analysis does not apply to ADEA claims. The Court concluded that the Price Waterhouse rubric is limited to mixed-motive Title VII claims — and cast doubt upon the continuing vitality of Price Waterhouse even in that context: “It is far from clear that the Court would have the same approach were it to consider the question today in the first instance. Whatever Price Waterhouse’s deficiencies in retrospect, it has become evident in the years since that case was decided that its burden-shifting framework is difficult to apply. The problems associated with its application have eliminated any perceivable benefit to extending its framework to ADEA claims.”

The Court observed that Congress amended Title VII after the Price Waterhouse decision to authorize discrimination claims “in which an improper consideration was ‘a motivating factor’” in the adverse employment action. Congress made no such changes to the ADEA, however. The Court “cannot ignore Congress’ decision to amend Title VII’s relevant provisions but not make similar changes to the ADEA.” As a result, the Court held, mixed-motive claims, which shift the burden of persuasion to the employer, are not authorized under the ADEA.

Gross could help an employer defend against an ADEA claim by showing that age was not the factor motivating its employment decision, even if it was a factor in the employer’s consideration. While the implications of the Court’s apparently-soured view of Price Waterhouse remain to be seen, employers may at a minimum take comfort in the Court’s reticence to extend mixed-motive burden shifting beyond its current boundaries.

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United States Supreme Court Permits Waiver of Judicial Forum in CBA

In 14 Penn Plaza, LLC v. Pyett, 129 S. Ct. 1456 (2009), a 5-4 majority of the United States Supreme Court held that a clear and unmistakable waiver in a collective bargaining agreement (a “CBA”) of union members’ right to a judicial forum to hear their statutory discrimination claims was enforceable. The decision resolved a split in the circuit courts on this issue.

The union and employer were parties to a CBA that required union members to arbitrate all employment discrimination claims pursuant to the CBA. After 14 Penn Plaza LLC reassigned union members to new positions, the union filed grievances on behalf of its members and requested arbitration of their claims for age discrimination, violation of seniority rules, and improper rotation of overtime. The union later dropped the age discrimination claims and, upon receipt of notification of their right to sue from the Equal Employment Opportunity Commission, the union members filed civil claims against the employer under the Age Discrimination in Employment Act (the “ADEA”) and state and local discrimination laws. The employer responded by asserting that the CBA precluded plaintiffs’ civil claims. The issue wound its way to the Second Circuit Court, which disagreed with the employer’s position. The U.S. Supreme Court reversed.

The Court first concluded that arbitration of employment discrimination claims was a “freely negotiated term” subject to mandatory bargaining under the National Labor Relations Act. In a rebuke to the dissent, the majority noted that bargaining regarding arbitration of statutory claims “does not deny those statutory antidiscrimination rights the full protection they are due,” and stated that courts generally cannot interfere with this kind of arm's-length, negotiated exchange.

Next, the Court affirmed that the ADEA itself does not preclude arbitration of claims under the statute and declared that its prior interpretation of the ADEA in Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (1991), also applies in the CBA context. In particular, the Court asserted that “[n]othing in the law suggests a distinction between the status of arbitration agreements signed by an individual employee and those agreed to by a union representative. This Court has required only that an agreement to arbitrate statutory antidiscrimination claims be ‘explicitly stated’ in the collective-bargaining agreement.” In addition, the Court noted that waiver of judicial forum is not considered waiver of a “substantive right” under the ADEA.

The majority addressed the Gardner-Denver line of CBA arbitration cases, finding they did not control the 14 Penn Plaza situation. According to the Court, those cases addressed only the preclusive effect of the arbitration of contractual claims on judicial resolution of statutory claims. These cases were distinguishable because, unlike the scenario here, the employees had not agreed to arbitrate statutory claims and the arbitrators were not authorized to resolve them. The Court acknowledged that the Gardner-Denver line of cases contained “broad dicta” that strongly disapproved of arbitration of statutory claims, but dismissed it as a “misconceived view of arbitration.”

Finally, the Court declined to decide two additional issues raised for the first time in the Supreme Court. The majority refused to evaluate whether the CBA’s arbitration provision was appropriately “clear and unmistakable,” deferring to the lower courts’ conclusions on that issue. The Court also declined to decide whether the CBA was “a substantive waiver” of ADEA rights because it allegedly allowed a union to “block” arbitration of the employees’ ADEA claims.

The majority decision sparked two vigorous dissents. Both attacked the opinion for its apparent “subversion of precedent” and failure to adhere to the doctrine of stare decisis.

Employers should expect the lower courts to continue to flesh out the issues remaining after the 14 Penn Plaza decision and to define its boundaries, including the consequences of a union refusing to arbitrate statutory claims. In Kravar v. Triangle Services Inc., No. 06-CV-07858, 2009 WL 1392595 (S.D.N.Y. May 19, 2009), for example, the court refused to compel arbitration where the union prevented the plaintiff from arbitrating her disability discrimination claims. The Court’s ruling in 14 Penn Plaza LLC should give employers some reassurance in negotiating for an arbitration provision covering statutory claims as long as the agreement to arbitrate clearly and unmistakably waives the right to a judicial forum. Note, however, that certain Senators have indicated their distaste for this decision by introducing a bill that would prohibit arbitration agreements covering constitutional or statutory civil rights claims.

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United States Supreme Court Issues Opinion in Ricci v. DeStefano

On June 29, 2009, the United States Supreme Court issued its opinion in Ricci v. DeStefano, 557 U.S. ___ (2009). The 5-4 majority concluded that an employer’s decision to discard the results of a promotional examination based on concerns about its disparate impact was a “race-based action” that was “impermissible under Title VII unless the employer can demonstrate a strong basis in evidence that, had it not taken the action, it would have been liable under the disparate-impact statute.” The Court held that the defendant, the City of New Haven (the “City”), could not meet that standard and, thus, found a violation of Title VII of the Civil Rights Act of 1964 (“Title VII”). The Court’s holding applies equally to public and private employers.

In 2003, the City held a promotional examination to determine which firefighters would be eligible for certain promotions. An outside company specializing in the design of police and firefighter entry and promotional examinations designed the test, taking affirmative steps intended to avoid unintentionally favoring white candidates. Nonetheless, when the test was administered, white candidates significantly outperformed minority candidates and no African-Americans were eligible for immediate promotion based on the test results. The New Haven Civil Service Board later voted not to certify the examination results, so firefighters who passed it did not receive a promotion. In doing so, the Board expressed concern about a potential discrimination suit by minority firefighters based upon the disparate examination results.

Successful firefighter examinees sued, arguing that, by failing to certify the results, the City violated the Fourteenth Amendment’s Equal Protection Clause and Title VII’s disparate-treatment prohibition. The lower courts granted summary judgment for the employer.

The Supreme Court reversed. The majority first evaluated whether the City’s refusal to certify the results was intentional discrimination in violation of Title VII. The Court accepted the “premise” that the “City’s actions would violate the disparate-treatment prohibition of Title VII absent some valid defense.” The Court observed that “[a]ll the evidence demonstrates that the City chose not to certify the examination results because of the statistical disparity based on race.” It concluded that “this express, race-based decisionmaking violates Title VII’s command that employers cannot take adverse employment actions because of an individual’s race.”

The Court then considered “whether the City had a lawful justification for its race-based action.” The Court rejected the firefighters’ positions – that avoiding a disparate impact never justifies discarding test results, or that an employer must in fact be in violation of Title VII in order to do so. It also rejected the City’s theory that an employer’s good-faith belief that its actions are necessary to comply with Title VII justifies the conduct. Instead, the Court held that an employer can discard test results only if it has a “strong basis in evidence” that doing so was necessary to avoid violating Title VII’s disparate impact provisions. The Court borrowed this standard from affirmative action cases interpreting the Equal Protection Clause.

Rather than remand for the district court to apply the new standard, the Court itself held that the City could not meet it. The Court acknowledged that “[t]he racial adverse impact” of the City’s promotion tests “was significant” and that “the City was faced with a prima facie case of disparate-impact liability.” But, the Court explained, “a prima facie case of disparate-impact liability” was “far from a strong basis in evidence” because in responding to such a case, the City would have had strong claims that: (1) the examination was “job related and consistent with business necessity;” and (2) there was no “equally valid, less-discriminatory alternative.”

Four Justices dissented, challenging the majority’s portrayal of the facts and explaining that they would have adopted a more lenient standard.

The Court offered no guidance on how the new “strong basis in evidence” standard should be applied. That said, the Court’s application of the test in this case demonstrates that a “strong basis in evidence” of a prima facie case is insufficient; rather the employer apparently must also have a strong basis in evidence that the test is not job related and consistent with business necessity and that an equally valid, less-discriminatory alternative exists.

The Court also did not address whether a disparate impact action that satisfied the strong-basis-in-evidence standard would also satisfy the Equal Protection Clause. Justice Scalia’s concurrence specifically raised the question of whether Title VII’s disparate impact provisions violate the Equal Protection Clause. As a result, future constitutional challenges may be aimed directly at limiting or eliminating Title VII’s disparate impact protections.

The Court’s decision portends potentially wide-reaching implications for employers as they develop employment-related selection criteria. Although the holding only applied directly to a promotional examination, the reasoning appears equally applicable to other selection devices, including those for hiring, reductions in force, performance evaluations, and compensation decisions. Under the Court’s reasoning, once an employer establishes and announces selection criteria, it cannot discard the results based on the racial outcome without satisfying the strong-basis-in-evidence standard. As a result, the Court’s decision potentially places increased pressure on employers to work with sophisticated testing experts to develop state-of-the-art selection devices.

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Wage and Hour Class Actions: In re Wells Fargo Home Mortgage and Vinole v. Countrywide Home Loans

The Ninth Circuit Court recently issued two employer-friendly decisions in wage and hour putative class actions: In re Wells Fargo Home Mortgage, No. 08-15355, 2009 U.S. App. LEXIS 14864 (July 7, 2009), and Vinole v. Countrywide Home Loans, No. 08-55223, 2009 U.S. App. LEXIS 14771 (July 7, 2009). In both actions, plaintiff-employees sought to certify a class under Federal Rule of Civil Procedure 23 based upon evidence that the employer had a common practice in treating the employees as exempt from wage and hour requirements. Plaintiffs’ arguments failed both times.

In In re Wells Fargo Home Mortgage, the employer challenged a decision certifying a class of current and former home mortgage consultants (“HMCs”) employed in California and treated as exempt employees by Wells Fargo Home Mortgage (“Wells Fargo”). The Ninth Circuit Court reversed the certification order, holding that the district court had focused too heavily upon the employer’s “common policy” of treating all HMCs as exempt in finding commonality of the facts. The Court concluded that, in so doing, the district court failed to give adequate consideration to “serious issues regarding individual variations that were not susceptible to common proof.” It then held that “[w]hile such uniform exemption policies are relevant to the Rule 23(b)(3) analysis, . . . it is an abuse of discretion to rely on such policies to the near exclusion of other relevant factors touching on predominance.” Specifically, a court may not “presum[e] that class certification is proper when an employer’s internal exemption policies are applied uniformly to the employees,” in the face of contrary evidence calling for individual inquiries.

In certifying the class, the district court primarily relied upon Wang v. Chinese Daily News, Inc., 231 F.R.D. 602, 612-13 (C.D. Cal. 2005), which found that common issues predominated based upon the employer’s policy of treating all employees in the job position as exempt. The Ninth Circuit Court concluded that “[v]iewed in light of these principles [guiding Rule 23], the rule espoused in Wang has little justification. Wang essentially creates a presumption that class certification is proper when an employer’s internal exemption policies are applied uniformly to the employees. Such an approach, however, disregards the existence of other potential individual issues that may make class treatment difficult if not impossible.”

The Ninth Circuit Court considered similar issues and reached a similar result in the concurrently-issued decision in Vinole v. Countrywide Home Loans, Inc. In Vinole, the Court affirmed an order denying class certification. Referring to its opinion in In re Wells Fargo, the Court held that “focusing on a uniform exemption policy alone does little to further the purpose of Rule 23(b)(3)’s predominance inquiry . . . . Instead of adopting what would essentially be a bright-line presumption in favor of class certification, we favor an approach that takes into consideration all factors that militate in favor of, or against, class certification.” The Court approved of the district court’s finding that “in cases where exempt status depends upon an individualized determination of an employee’s work, and where plaintiffs allege no standard policy governing how employees spend their time, common issues of law and fact may not predominate.” The Court also opined that the use of “‘innovative procedural tools’ such as questionnaires, statistical or sampling evidence, representative testimony, separate judicial or administrative mini-proceedings, [and] expert testimony” could not sufficiently improve judicial economy to render class certification appropriate.

Under the Ninth Circuit Court’s decisions, plaintiffs will be required to develop through discovery significant evidence of common job duties performed by the would-be class members. Plaintiffs may no longer bypass that burden by relying solely on an employer’s “common practice” of treating employees in a given job position as exempt.

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California Supreme Court Limits Unfair Competition Law and Expands Private Attorneys General Act

On June 30, 2009, the California Supreme Court issued a decision holding that representative actions for alleged violations of the California Labor Code brought by employees under the unfair competition law, Cal. Bus. & Prof. Code §§ 17200 et seq. (the “UCL”), must be certified as class actions, but that representative actions by employees under the Labor Code Private Attorneys General Act of 2004, Cal. Lab. Code §§ 2698 et seq. (“PAGA”), may proceed without such certification. See Arias v. Superior Court, S155965 (June 29, 2009). This will likely encourage many more plaintiffs and their counsel to pursue PAGA claims. In a companion case, the California Supreme Court held that neither UCL actions nor PAGA actions may be assigned, and that unions lack standing to pursue such actions on behalf of employees. See Amalgamated Transit Union, Local 1756, AFL-CIO v. Superior Court, S151615 (June 29, 2009).

In Arias, the Court held that Proposition 64, by which California voters amended the UCL, requires that representative UCL actions satisfy class action requirements. The Court rejected the plaintiffs’ argument that the language of Proposition 64, which requires plaintiffs to comply “with Section 382 of the Code of Civil Procedure,” did not impose a requirement that actions be brought as class actions. The Court held that a thorough review of the Voter Information Guide for Proposition 64, including the official title prepared by the Attorney General, the ballot measure summary prepared by the Secretary of State and the analysis prepared by the Legislative Analyst, left “no doubt” that voters intended to impose class action requirements on representative actions brought under the UCL.

The Court also held, however, that the same requirement does not apply in actions brought under PAGA. The Court noted that PAGA allows an “aggrieved employee” to bring a civil action on behalf of other current or former employees to recover penalties for Labor Code violations. The Court rejected the defendants’ argument that class action requirements apply generally to any form of representative action unless the Legislature affirmatively precludes their application. The Court also found nothing in PAGA’s legislative history to indicate an intent to require compliance with class action procedures. Finally, the Court rejected the defendants’ argument that their due process rights would be violated through the resulting problem of “one-way intervention,” which refers to the following dilemma: If an employee prevails in a non-class representative action, the judgment is binding on the employer as to other employees, but if the employer prevails in the action, the judgment is not binding on other employees. The Court acknowledged this problem, but held that, “[t]he potential for nonparty aggrieved employees to benefit from a favorable judgment under the act without being bound by an adverse judgment, however, is not unique to” PAGA.

In Amalgamated Transit, the Court held that the plaintiff-union lacked standing to pursue representative claims under either the UCL or PAGA on behalf of employees. First, the Court held that UCL and PAGA claims are not assignable (and, therefore, that the union lacked standing pursuant to the purported assignment of claims to it). The Court noted that, following the enactment of Proposition 64, UCL claims may only be brought by persons suffering “actual injury.” As the Court held, that requirement would be nullified if a person who suffered an injury could assign a claim to a person who did not. The Court held that, because claims for statutory penalties are not assignable, a cause of action under PAGA may not be assigned. Second, the Court held that the union did not have “associational standing” to pursue claims on behalf of its members under either the UCL or PAGA. The Court held that unions did not suffer “actual injury” as required by the UCL and that they were not “aggrieved employees” as required by PAGA.

The Court’s decisions will have a significant impact on the numerous wage and hour cases currently pending and yet to be filed in California courts. The requirement that representative UCL actions be certified as class actions should slow the growth of such suits against employers, but the absence of any similar requirement under PAGA might entice plaintiffs and their counsel to proliferate such litigation.

O’Melveny & Myers, together with co-counsel, filed amicus briefs in the Arias and Amalgamated Transit cases on behalf of the Employers Group, the California Employment Law Council, the Chamber of Commerce of the United States of America, and the California Chamber of Commerce.

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California Courts Issue Multiple Decisions on Tip Pooling

California’s appellate courts have been very active in addressing employer tip policies this year, issuing five separate decisions[1] in the first half of 2009 that address Labor Code Section 351[2] and the propriety of pooling or apportioning tips. The California Supreme Court has granted a petition to review at least one of the major issues addressed by the courts.

One rule has remained constant since Leighton v. Old Heidelberg, Ltd., 219 Cal. App. 3d 1062 (1990) (“Leighton”): Tip pooling is legal under Section 351. Later, a limit on tip pool distribution was established; a court held that a restaurant’s floor managers were “agents” under Labor Code Section 350 and were, therefore, prohibited from sharing in the tip pool.

The latest tips cases reinforce and expand points made earlier, and attempt to lay out some additional guidelines for employers. A few themes emerge.

Two of the decisions deal with tip pooling at casinos. These decisions make clear — one explicitly — that the permissibility of tip pools is not limited to restaurants or to Leighton’s facts. As the Lu court stated, “Leighton’s holding is broad and applicable to employer-mandated tip pooling in general.”

The decisions also discuss who can share in a permissible tip pool. For example, the cases have generally reinforced the prohibition on agents and employers sharing in a tip pool and show the kind of analysis necessary to determine whether someone is an “agent.” In addition, some of the decisions address whether a tip pool can be limited to employees who provide “direct service” to a table; the general consensus is that they cannot be.

There is at least one major issue that remains unresolved: Whether an employee has a private right of action under Section 351. Two of the recent decisions reach divergent answers to that question. The Lu court found no private right of action, determining that, in context, the Legislature intended that only the state could enforce the provision. On the other hand, the Grodensky court came to the opposite conclusion, holding Section 351 did allow an employee to sue directly. The court found particularly persuasive the idea that it would be illogical for the Legislature to provide an employee a property right to the tips but not allow the employee a way to enforce the right. The Supreme Court has granted review on this question.

Finally, one decision indicates that tip pooling may be different from tip apportionment. In Chau, customers left tips intended for an entire service team, including shift supervisors, in a tip jar. The court allowed division of the collective tips among employees and shift supervisors — even if they were “agents” otherwise prohibited from sharing in a tip pool. The court reasoned that customers intended to reward the whole group and determined that Section 351 does not prohibit an agent from retaining part of a tip intended for the entire group, particularly when no employees were asked to transfer their tip to an agent. Refuting the plaintiff’s argument that the court’s ruling would allow any store manager to share in the group tip, the court expressly noted “[o]ur ruling is based only on the particular and narrow facts before us.” In particular, the court relied on four facts: (1) the majority of the shift supervisors did the same work as the other employees in the group; (2) the employees rotated jobs and were a “team;” (3) customers intended tips to reward the whole group; and (4) the division of the collective tips was equitable.

Notes:

[1] Lu v. Hawaiian Gardens Casino, Inc., 170 Cal. App. 4th 466 (2009), review granted, 207 P.3d 506 (Cal. Apr. 29, 2009); Budrow v. Dave & Buster’s of Cal., Inc., 171 Cal. App. 4th 875 (2009); Grodensky v. Artichoke Joe’s Casino, 171 Cal. App. 4th 1399 (2009), review granted pending outcome in Lu v. Hawaiian Gardens Casino, 2009 WL 2176348 (Cal. June 24, 2009); Etheridge v. Reins Int’l Cal., Inc., 172 Cal. App. 4th 908 (2009); Chau v. Starbucks Corp., 174 Cal. App. 4th 688 (2009).

[2] In relevant part, Section 351 states: “No employer or agent shall collect, take, or receive any gratuity or a part thereof that is paid, given to, or left for an employee by a patron, or deduct any amount from wages due an employee on account of a gratuity, or require an employee to credit the amount, or any part thereof, of a gratuity against and as a part of the wages due the employee from the employer. Every gratuity is hereby declared to be the sole property of the employee or employees to whom it was paid, given, or left for.”

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Employers Must Subsidize COBRA Premiums for Involuntarily-Terminated Employees

Effective February 17, 2009, employers must subsidize Consolidated Omnibus Budget Reconciliation Act of 1986 (“COBRA”) premium payments made by employees who have been involuntarily terminated. The subsidy, part of the President’s American Recovery and Reinvestment Act of 2009, commonly referred to as the Stimulus Act, requires that employers pay 65% of COBRA premiums for qualifying, involuntarily-terminated employees and their dependents for up to nine months after termination. To be affected by the COBRA subsidies, an employee must have been involuntarily terminated between September 1, 2008 and December 31, 2009.

The 65% “premium reduction” is reimbursable to the employer, insurer or health plan as a credit against certain employment taxes. If the credit exceeds the tax liability of the employer, insurer or health plan, the Secretary of the Treasury will reimburse the excess amount. Employees who have an adjusted gross income (“AGI”) of $145,000 ($290,000 “joint”) or more are not eligible for the subsidy. The subsidy phases out for employees with an AGI between $125,000 and $145,000. The phase out, however, does not affect the employer’s payroll tax credit.

To maximize use of the government-provided subsidy, employers should think carefully about any employer-provided COBRA coverage. The subsidy only applies to the COBRA premium charged by the employer, and the 35% payment must be made by the Stimulus Beneficiary or someone other than the employer. Thus, if an employer provides employer-paid COBRA coverage for any portion of the first nine months of coverage (e.g., as part of a reduction in force package), the employer will not receive any subsidy credit for that period and will only receive the credit for the remaining portion of the nine months allowed under the Stimulus Act. Further, if an employer allows a Stimulus Beneficiary to continue coverage at a reduced rate (e.g., the active employee rate) for some period, the Stimulus Beneficiary need only pay 35% of that reduced premium. The employer, however, can only receive the subsidy credit for 65% of the reduced premium rather than 65% of the full premium.

Employers are required to inform employees of certain COBRA subsidy provisions. The United States Department of Labor has issued model notices to assist employers in providing the required information, available at:

http://www.dol.gov/ebsa/COBRAmodelnotice.html.

The Internal Revenue Service has issued a guidance document for employers, which includes questions and answers regarding “involuntary termination” and how to calculate the premium reduction. The guidance document is available at:

http://www.irs.gov/pub/irs-drop/n-09-27.pdf.

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Senators Remove Card-Check Provision from EFCA

The Employee Free Choice Act of 2009, commonly known as “EFCA” (S. 560 in the 111th Congress), underwent a political overhaul in mid-July of this year. Senators dropped from EFCA a “card-check” provision, by which an employer must recognize a union, without an election, once organizers have submitted signed cards from a majority of workers in a proposed, appropriate bargaining unit.

Other controversial EFCA provisions remain, in particular binding arbitration if the company and its newly-certified union cannot reach an initial contract after a 90-day negotiation period and a 30-day mediation period, and increased penalties for unfair labor practices committed by employers during an organizing drive, including civil fines up to $20,000 per violation for willful or repeated violations. Those provisions may be subject to union-friendly revisions in exchange for the recent card-check deletion.

According to a survey conducted in March 2009, 60% of human resources professionals were either unaware of EFCA or had done nothing to prepare for the possible passage of the bill.

The immediate future of EFCA is up in the air. Senator Majority Leader Harry Reid has indicated that the Senate may not vote on EFCA any time soon because of its already too-busy schedule. Senator Reid also intimated that he is hesitant to push for EFCA without significant changes to its current form. In the event EFCA passes the Senate, it will almost certainly be signed by President Obama, who co-sponsored the bill as a Senator and has indicated his intent to approve the legislation.

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ADA and Military-Related FMLA Changes Effective

As reported in the April 2008 edition of Employment News, in January 2008 then-President George W. Bush signed legislation amending the Family and Medical Leave Act of 1993 (the “FMLA”) to add: (1) a military active duty leave entitlement; and (2) Servicemember Family Leave. In November 2008, the Department of Labor (the “DOL”) published a final rule updating the FMLA regulations to implement the military leave-related amendments and to make other changes to the regulations. The final rule went into effect on January 16, 2009.

Employers should pay attention to the regulations’ broad definition of a “qualifying exigency” that could entitle an employee to leave. A “qualifying exigency” will arise out of an employee’s spouse, son, daughter or parent’s active duty in support of a “contingency operation.” Examples include: (1) short notice deployment; (2) military events and related activities; (3) childcare and school activities; (4) financial and legal arrangements; (5) counseling; (6) rest and recuperation; (7) post-deployment activities; and (8) additional activities. This leave entitlement applies only to relatives of individuals serving in the National Guard or reserves; it does not include those in the regular armed forces.

In addition to the military active duty leave provisions, the regulations:

  • contain six definitions of “serious health condition,” and modify the test for “incapacity and treatment”;
  • clarify employer and employee notice requirements;
  • define the requirements and limits of seeking medical certification;
  • specify that “light duty” will not count against an employee’s FMLA leave entitlement; and
  • discuss the ability to settle, waive or otherwise release FMLA claims.

Separately, the Americans with Disabilities Act Amendments Act of 2008 amended the ADA to clarify that an episodic impairment, or one that is in remission, qualifies as a disability if it substantially limits a major life activity when active, and to explain that mitigating measures will not be considered when determining whether a person has a disability. To review all the new changes to the ADA, visit:

http://www.ada.gov/pubs/ada.htm.

The EEOC took a first step towards issuing new regulations for the ADA by approving a proposed Notice of Proposed Rulemaking on June 17, 2009.

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California Amends E-Discovery Rules

Governor Arnold Schwarzenegger signed California Assembly Bill 5, also known as the Electronic Discovery Act (the “Act”), into law on June 29, 2009. The Act amends the California Code of Civil Procedure to add provisions specifically addressing electronic discovery. The new provisions became effective upon signing.

The Act’s provisions largely track the electronic discovery amendments to the Federal Rules of Civil Procedure that took effect in 2006. The Act’s significant new provisions cover: (1) the form in which electronically-stored information (“ESI”) must be produced; (2) the extent to which ESI must be produced and the methods for challenges to requests or productions; and (3) the limits or conditions a court may impose on discovery of ESI. The Act also includes a “safe harbor” that guards against imposition of sanctions for the loss of ESI under certain circumstances (a provision that is actually somewhat broader than the Federal Rules equivalent) as well as a process for addressing the inadvertent production of ESI subject to claims of privilege or attorney work product protection. The Act also clarifies that third parties responding to subpoenas are subject to the same rules about ESI production as parties to the action.

The full text of the Act may be found at:

http://www.leginfo.ca.gov/pub/09-10/bill/asm/ab_0001-0050/ab_5_bill_20090629_chaptered.html

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