Medical Examinations for Applicants -- Penske Takes It on the Chin

The Department of Fair Employment and Housing ("DFEH") has announced a $450,000 settlement with Penske Logistics on behalf of 13 delivery drivers.  Penske took over delivery of the Fresno Bee when the newspaper outsourced that job.  Drivers who had been working for the Fresno Bee for years were required to apply for a job with Penske if they wished to continue working. 

Penske then compelled the driver-applicants to submit to medical examinations.  Even though they had been performing the job competently for years, the 13 drivers did not receive satisfactory scores on their examinations.  Thus they were not hired by Penske. 

According to the DFEH, Penske asked drivers to disclose non job-related physical conditions.  Penske also asked other specific medical questions such as whether applicants had diabetes or high blood pressure.  Applicants were further required to show their ability to achieve a "medium-heavy" strength rating, even though these drivers' duties did not include strength activities of this level. 

This case illustrates important points for employers.  First, don't make medical inquiries that are unrelated to job performance.  Asking general questions such as "Describe your medical conditions" is not an appropriate question. 

Second, when designing a  test to determine whether or not an applicant can perform job duties, make sure those tests relate to the job duties.  This is where employers should partner with a competent medical facility to design tests that mimic the activities of the job.  Whether the information is gathered in question format or by performing agility or physical tests, make sure the information is relevant to job duties. 

I often see a third issue arise whenever an employer has an applicant provide medical information.  The medical facility may provide the employer with the applicant's entire file.  It may include information such as an applicant's general medical history.  It may disclose a condition that has no bearing on the applicant's ability to perform. 

Once the employer has this information in its possession, it is difficult to argue that a decision not to hire the applicant was unrelated to the information in the medical file.  What employers should do is ask the medical provider to answer whether or not the applicant can perform the job duties.  If the applicant cannot, then ask the medical facility to identify what accommodations might allow the employee to perform the job.  In this way, by obtaining limited information, the employer has a lesser risk of facing a lawsuit related to improper medical inquiries. 

Workplace Hotheads -- Can They Be Sued?

The ABA Journal published an article about a news columnist in Alaska who responded to an inquiry by a law firm employee  who wants to sue her boss.  www.abajournal.com/news/article.  The article raises two very important questions -- Whether an employee can sue his/her boss for being a jerk; and on where should a person go for legal advice? 

The staffer feared one of her lawyer bosses who demanded his work be performed first.  She already had two priority projects on her desk from other other two "diva" bosses.  (By the way, who would you consider the diva at our law firm?)  He made a fist, put it close to her nose and demanded action.  When she tried to leave, he blocked the door and told her to sit down and complete his project. 

So what do you think?  Can she sue?  If so, under what theory?  Is this sexual harassment?  Is the action based on gender?  Was the act sufficiently serious?  The act probably didn't constitute battery since the diva did not touch her.  However, was it assault?  Could it be intentional infliction of emotional distress, which requires proof of conduct beyond anything tolerated in a civilized community? 

And if she could sue, would a lawyer take the case?  What are the damages?  There was no physical damage.  What is the emotional scarring worth?  And are attorneys' fees available? 

Interesting questions that I answer regularly in my legal practice.  Employers may act poorly, rudely, unprofessionally.  But is it legally wrong?  Can the action lead to a lawsuit?  These are questions I help my clients evaluate. 

I would never condone going after a person with clenched fists.  (By the way, a similar event happened to me on a job some 14 years ago.  It did not result in any physicality, but the experience was very unpleasant [although I could have taken him].)  What I have learned from my own experience and experiences of clients in this position is that when these unpleasant incidents with a senior level employee occur, there really is not a viable future for the victim at that workplace.  Yes, there may be a viable lawsuit in given the appropriate circumstances.  And a company should take serious action against anyone exhibiting physical or mental intimidation or violence.  Nevertheless, the victim won't ever be happy in that environment.  It's time to start looking for other opportunities. 

I can also say from very personal experience, that other opportunities exist.  You can find them.  You can create them.  The best professional decision in my life came when I created one of those opportunities and started this law firm with two lawyers, Bob Fishman and Michael Goldring, who I trusted and admired.  (I still do.) 

What about the second question -- who is a good source for legal advice?  I'll tell you this, it's not the newspaper.  It's not your neighbor.  It's not another business advisor.  It's not even a lawyer at a cocktail party.  It's a lawyer who you trust, and with whom you create a professional relationship.  That lawyer will take care of you. 

I tell my clients I want to be their attorney for the next 20 years.  (Yes, someday I want to retire.)  And after I am gone, I hope they will use my younger colleagues for legal advice.  You can bet that if I want a client to call me when issues arise over the next 20 years, I will do my best to treat them with respect and courtesy, and to provide the best in legal advice.  That's a promise in our office.   

Attorneys' Fees on an Appeal of a Labor Commissioner Decision: Arias v. Kardoulias

I'm reminded of the addage -- pigs get fat, hogs get slaughtered -- as I read the case of Arias v. Kardoulias 2012 DJDAR 10297 (July 26, 2012).  Arias filed a claim for unpaid wages associated with her care of the defendants' elderly father.  The Labor Commissioner awarded her $6,319.69. 

I can imagine how the case unfolded.  Arias worked for a home health care agency.  The family liked her, but didn't enjoy paying the fees associated with the agency.  Arias suggested that she work for the family directly, cutting out the agency.  But then Arias realized that she could make more money than she was paid.  Of course, the family didn't understand employment laws and how to pay a personal attendant.  When the relationship ended (perhaps with the death of the father), Arias sued for unpaid wages.  Thus, she probably is not a litigant with clean hands.  But wage and hour law doesn't care.  It requires payment for services rendered without regard to particular defenses. 

The family should have felt lucky to escape with a $6K award.  I have seen awards much higher than that.  And Arias probably should have been happy with her award, realizing that she would probably need legal help to appeal the case to Superior Court.  Yet, that's what she did.  Arias appealed, which means she is entitled to a hearing "de novo".  This means "do-over."  It's a second chance to prove your case before a Superior Court judge. 

But Arias filed the appeal late.  Thus, the court lacked jurisdiction to hear the case.  Eventually, the case was dismissed on the jurisdictional, not substantive, reason.  Arias should have been happy with her successful outing with the Labor Commissioner.  Instead, she became a hog and lost.  (She didn't lose enough, however, as she was still entitled to her $6K.) 

This is where the defendants turned from pig to hog.  They sought $8,495 in attorneys' fees and costs in getting the appeal dismissed. 

Under Labor Code section 98(c) if the party filing the appeal is unsuccessful, the court must assess attorneys' fees and costs.  According to this provision, an employee is successful if the court awards an amount greater than zero.  Thus, the court had to determine whether a dismissal of an appeal on jurisdictional grounds is the equivalent of an award of zero for purposes of assessing attorneys' fees. 

The court concluded that a dismissal on jurisdictional grounds is not the equivalent of an award of zero.  When the court dismisses a case on jurisdictional grounds, it does not determine the merits of the appeal.  An employee presents an unmeritorious appeal, on the other hand, only when the court reaches the merits of the appeal. 

So the result in this case is was the defendants did not recover any attorneys' fees.  The Labor Commissioner's decision constituted a judgment and the defendants were still required to pay Arias $6K in unpaid wages. 

Perhaps defendants would have been better off to forgo the claim for attorneys' fees (which probably could not have been recovered from a home caregiver), and forget the appeal and all of its associated costs. 

Pigs may get fat, but hogs definitely get slaughtered. 

No Attorneys' Fees for Missed Meals & Breaks: Kirby v. Immoos Fire Protection, Inc.

Employers scored a significant victory with the Supreme Court's decision in Kirby v. Immoos Fire Protection (2012) 53 Cal.4th 1244.  The court determined that a prevailing party in a claim of missed meal or rest periods under Labor Code section 226.7 is not entitled to attorneys' fees.  In this particular case, the employer was the prevailing party and it did not obtain attorneys' fees.  However, in most cases, the employee's lawyers use the prospect of obtaining attorneys' fees in order to increase the settlement value of their clients' cases.  What this should mean is that fewer cases will be filed alleging meal and rest period violations. 

Kirby filed multiple claims asserting various violations of wage and hour laws.  He eventually settled his claims with some defendants and then dismissed his claims against the employer.  The employer then sought attorneys' fees under Labor Code section 218.5. 

Section 218.5 provides for attorneys' fees to the prevailing party in an "action for the non-payment of wages" and other benefits. 

In 2007, the Supreme Court held that the one-hour premium imposed upon the violation of a meal or rest period constituted a wage rather than a premium.  Murphy v. Kenneth Cole Productions (2007) 40 Cal.4th 1094.  This decision was substantial since for two reasons:  (1) The statute of limitations for non-payment of wages is three years and that for a penalty is one year; and (2) attorneys' fees became available for miss meal and rest period cases. 

Apparently, we all had that wrong when it came to attorneys' fees.  According to the Supreme Court, the non-payment of wages is not the "gravamen" of a section 226.7 claim.  The one-hour premium is the remedy and whether or not it is paid, does not have a bearing on whether a violation of section 226.7 occurred.  And attorneys' fees under section 218.5 are in actions for the non-payment of wages, not the violation of the meal and rest period law. 

I am surprised, but pleased, with the Supreme Court's ruling.  I hope that it goes a long way in reducing the number of civil cases filed with allege meal and rest period claims.  Without the potential of obtaining their fees, attorneys will be less interested in asserting those claims.  Yet, the employee still has a fair avenue for redress by going to the Labor Commissioner and seeking the payment of the one-hour premium. 

Smile, you won one!  With Brinker that gives employers two substantial victories in 2012. 

Enforcing Non-Compete and Non-Solicitation Provisions in California

California employers are often concerned about their ability to prevent an employee from competing against the company, or soliciting customers or employees.  In addition, employers are concerned about competitors soliciting its employees.  Employers must be careful not to violate Section 16600 of the Business and Professions Code ("B&P Code) in attempting to implement or enforce non-compete and non-competition. 

The B&P Code prevents any contractual provision that restrains a person's ability to engage in their profession.  Exception is made for the person who sells his/her interest in a business.  Part of the value of the sold business is the retention of clients.  If the seller competes against the buyer of the business and solicits clients, then the value of the business is substantially harmed.  But few situations fall within this exception. 

Silguero v. Creteguard, Inc. (2010) 187 Cal.App.4th 60, is an instructive case on the effect of non-compete provisions .  The plaintiff worked for Floor Seal Technology ("FST") as an inside sales rep.  She signed a confidentiality agreement providing that she would not engage in sales activities for 18 months after leaving the company. 

Shortly after being fired, Ms. Silguero found employment with Creteguard.  However, FST contacted Creteguard and informed it of the confidentiality agreement with the non-compete agreement.    Creteguard did not believe the non-compete was legal, but fired Ms. Silguero anyway.  Ms. Silguero sued Creteguard for wrongful termination. 

The Court of Appeal held that a worker can maintain a cause of action against his/her employer for firing him/her due to an illegal non-compete provision.  To do so violates public policy by limiting a person's mobility and right to engage in a lawful profession. 

VL Systems, Inc. v. Unisen, Inc. (2007) 152 Cal.App.4th 708 also provides guidance on what an employer can and cannot do in implementing non-compete provisions.  VLS entered into an agreement to provide about 16 hours of computer services for Star Trac.  The agreement stated that Star Trac would not hire a VLS employee unless it paid VLS 60 percent of the employee's first year salary. 

After the job was complete, Star Trac advertised for an IT position.  A VLS employee who had not worked on the Star Trac project applied, and was hired.  VLS demanded that Star Trac pay it $60,000. 

The Court of Appeal invalidated the agreement, concluding that it was harsh, oppressive and over broad, in violation of 16600.  The Court took no position on whether a more narrowly-drafted provision would be viable under section 16600. 

I personally believe that in the correct circumstances, a narrowly-drawn provision prohibiting a customer from hiring your employee can be justified and permissible under section 16600.  However, a business must carefully review its circumstances and the justification for such a provision.  If reasonable, the court is more likely to uphold the agreement. 

A Flow Chart for Understanding an Employer Obligations Per EEOC Guidance on Considering Criminal Records in Employment Decisions

The EEOC issued a new guideline regarding the Consideration of Arrest and Conviction Records in Employment Decisions Under Title VII of the Civil Rights Act of 1964. You can read the entire document at www.eeoc.gov/laws/guidance/arrest_conviction.cfm

This is not the EEOC’s first foray into this area and so some of the materials are not new. For example, the EEOC differentiates between arrest records and criminal convictions. An arrest alone does not establish that criminal conduct occurred and excluding employees based on arrest records is impermissible. However, an employer can make an employment decision based on the behavior giving rise to the arrest. Similarly, the EEOC has taken the position that convictions are not necessarily reliable evidence that the underlying criminal conduct occurred. 

The EEOC also informs employers that they can be held liable under two theories of discrimination. Under a disparate impact theory, the employer can be held liable under the disparate treatment theory if the it treats one person differently than other persons. An employer can be held liable under a disparate impact theory if its background check policy adversely affects a particular protected group of people. 

After reviewing the Guidance, we have developed a flow chart to help employers understand how to understand the EEOC’s position on using criminal records for employment decisions. We think this flow chart will assist you in developing processes to address the issues raised by the EEOC Guidance. 

Please click on image to enlarge.

We recommend that every employer conduct background investigations. An employer can make a better hiring decision with more information, particularly information that an applicant does not necessarily volunteer. This information could be a criminal background or poor reviews at a prior job, inaccurate educational achievements, or manufactured or exaggerated jobs. 

However, a background check can be subject to challenges of unlawful discrimination. An applicant can claim disparate impact – that you treated him/her differently than other applicants. Perhaps the employer hired one applicant with a criminal record, but rejected another candidate with a similar record. This type of claim will arise most frequently when the employer has not established a policy with respect to what criminal information might exclude a candidate. 

An applicant could also claim that the company’s policy adversely affects persons in his/her protected class. The applicant might allege that by excluding persons with felonies within the past seven years persons of his/her ethnicity are excluded most frequently from being hired. 

You can see that the employer is darned if it does (have a policy) and darned if it doesn’t (have a policy). We recommend the employer consider implementing a policy, but making it sufficiently narrow that it does not adversely affect persons of a particular protected classification, or can be justified based on the job. 

If an applicant makes a challenge, the employer must articulate a justification for its actions. This means the employer must show job-relationship and a business necessity for considering the criminal record. This is where the EEOC Guidance focuses. 

An employer can justify its behavior in one of two ways. It can “validate” its criminal conduct screen for the job per the Uniform Guidelines on Selection Procedures provided data about the criminal conduct as related to subsequent work performance is available and validation is possible. This is not a viable option in most cases. 

The employer can also justify its decision by developing a targeted screen that considers three factors: The nature of the job; the nature of the crime; and the proximity in time between the crime and the application. These are the Green factors as articulated in Green v. Missouri Pacific Railroad, 549 F.2d 1158 (8th Cir. 1977). The screen should also include procedural safeguards. For example, the background check should be done competently and accurately. Second, the applicant should be given the opportunity to respond and explain. 

The employer should exercise due consideration in developing the targeted screen. It should document its analysis. For example, if hiring for a medical office position where the employee will have access to patient data, including data that could be used in identity theft, the employer can probably articulate a screen that excludes persons who have been involved in theft crimes or fraudulent activities. 

The employer will probably need to rely on its background check provider to allow the person to conduct an accurate check, and to provide the applicant an opportunity to respond to the convictions discovered. The information will need to be relayed to the employer so that it can consider the applicant’s response and explanation. 

Developing the target screen and by providing applicants an opportunity to explain the circumstances surrounding any criminal records is the best defense to challenges of unlawful discrimination occurring during the background check process.

Another Example of the Anti-Business Obama Administration

I recently reported on the NLRB's new webpage on "concerted activity."  To me it appears as another attempt at political pandering months before an election. 

This morning I read on Fox News an article about the NLRB's newest member.  Richard Griffin, a recess appointment, was general counsel to a scandal-ridden union.  Mob connections, bribery, intimidation, racketeering.  Great qualities in a union and its leaders!  Aren't we glad Obama carefully selected Mr. Griffin for a position on the NLRB when Congress was in recess, and on a day that allows Mr. Griffin to serve two years without congressional oversight or review. 

You should read the story.  Here's the link:
http://www.foxnews.com/politics/2012/06/22/obama-pick-for-nlrb-union-tainted-by-mob-ties-criminal-past/