Monday, November 5, 2012

It's November, so See's Candy is on every employer's mind...

I've made my own views about time-clocks for employers known before, but here comes a case that may change that.  Even if you are using time cards that an employee fills out by hand each day, questions come up about whether an employer can round time up (or down) to the nearest five, ten or fifteen minute period.  

Now, the California Court of Appeals has an answer for us - and again, it's a good result for employers (always nice to see in this employee-friendly state).  In See's Candy Shops, Inc. v. Superior Court, a case out of San Diego, the court upheld a policy used by See's Candy that rounds employee punch in/out times to the nearest one-tenth of an hour.  That's six minutes, for the math challenged among us.

The policy must be "fair and neutral on its face"  and over time it cannot appear to deprive the employee of just compensation for the time they have worked.  My guess is that this will translate as "round up, as well as down" as an easy-to-follow rule for employers.

This ruling ties in with policies from the United States Department of Labor and  California Division of Labor Standards Enforcement.  And, as we get closer to Thanksgiving, it is a well-deserved treat for employers everywhere.

Monday, October 29, 2012

To fire, or not to fire? A $17 million question.

One of the most frequent questions I get from clients is a variation on the following:

I want to terminate an employee, but he/she has been sick/is pregnant/made a worker's compensation claim/just turned 55/is the only minority in the business.  How can I do this without getting sued?

For disgruntled employees, the threat of a retaliation or discrimination claim against a former employer has long been a way of guaranteeing a severance payment.  Smart employers do not fire employees who may threaten litigation without first considering the risks and taking steps to protect themselves from legal action.  

The case of  Marlo v. United Parcel Service made the news when a unanimous federal jury awarded a former UPS supervisor, Michael Marlo, $2,201,425 in economic and non-economic damages, and an extraordinary $15,897,053 in punitive damages.  Evidence at trial showed that UPS may have had a mixed motive for firing Marlo.  The jury found that UPS had retailiated against Marlo for bringing an wage and hour claim, reporting safety violations and encouraging other supervisors to file lawsuits against the company; UPS argued that it had legitimate reasons for firing Marlo that were unrelated to these factors.

Quoting Grant-Burton v. Covenant Care, Inc. (2002) 99 Cal.App.4th 1361, the Marlo court explained the mixed motive test clearly:

In some cases, the evidence will establish that the employer had “mixed motives” for its employment decision. In a mixed motive case, both legitimate and illegitimate factors contribute to the employment decision. Once the employee establishes that an illegitimate factor played a motivating or substantial role in an employment decision, the burden falls to the employer to prove by a preponderance of the evidence that it would have made the same decision even if it had not taken the illegitimate factor into account.

Jury instructions are often a good, "plain English" way of understanding the law.  In this case, the jury were given the following instruction:
Plaintiff Michael Marlo claims that UPS retaliated against him in violation of the California Labor Code by terminating his employment. Mr. Marlo has the burden of proving each of the following elements by a preponderance of the evidence:

1. That Mr. Marlo engaged in protected activity;

2. UPS subjected Mr. Marlo to an adverse employment action by terminating his employment; and

3. UPS terminated Mr. Marlo's employment because he engaged in protected activity-that is, that the protected activity was a motivating or substantial factor in UPS's decision to terminate his employment.

If you find that Mr. Marlo has failed to prove any of these elements, your verdict must be for UPS.

If you find that Mr. Marlo has proved all three of these elements, then UPS must prove by a preponderance of the evidence that it would have made the same decision to terminate Mr. Marlo even if his protected activity had not been a motivating or substantial factor in the decision. If UPS does not meet this burden, then your verdict must be for Mr. Marlo.

Simply put, in a mixed-motive case, the employee must prove that his termination from employment was improper.  If he or she does so, the employer can defend against the claim by showing that the other factors for termination were strong enough that he or she would have been fired anyway.

My advice to any employer looking to terminate an employee is to spend ten or twenty minutes talking to an attorney first, especially if, like Mr. Marlo, that employee has filed safety complaints and wage and hour claims.  

Every case is different, of course, and nothing herein on any of these entries is intended as legal advice or to create an attorney-client relationship between reader and writer.  This material is offered as a service to clients and the community but should not replace legal advice from a licensed attorney.

Tuesday, October 23, 2012

More limits on arbitration provisions

I've written about the problems employers face enforcing arbitration agreements before, and here is a new spin on the issue.  In Elijahjuan v. Superior Court (2012) --- Cal.Rptr.3d ----, the Second District Court of Appeal, Division 8 (Los Angeles) ruled that a lawsuit brought by a group of employees challenging their status as independent contractors  fell outside the scope of an arbitration agreement that specified that the individuals were independent contractors.  

Why? According to the Court of Appeal, because the lawsuit did not concern the application or interpretation of the Agreement, but instead sought to enforce rights arising under the Labor Code, it was "outside" the agreement. The Labor Code would not apply to independent contractors and did not cover any of the rights and responsibilities set forth in the agreement.

Wednesday, September 5, 2012

Job recruiters ruled "employed in sales," exempt from overtime

Sometimes, the specific work your employees do triggers special handling under California Labor Law - just last month, I wrote about mortgage underwriters being ruled nonexempt for purposes of overtime and FLSA.  This month, we have a new decision relating to job recruiters.

Muldrow v. Surrex Solutions Corp. (August 29, 2012)___Cal.App.___) was originally transferred back to the Court of Appeal by the California Supreme Court with instructions to reconsider an earlier ruling in light of Brinker Restaurant Corp. v. Superior Court (2012) 53 Cal.4th 1004.

Finding that Brinker had no impact on an earlier ruling, the Court of Appeal affirmed an earlier decision and ruled that job recruiters were employed "principally in selling a product or service," and fell within the commissioned employee exemption from overtime law. The recruiters' job was to offer a candidate employee’s services to a client in exchange for a payment of money from the client to the recruiters’ employer, and it was only upon the successful placement of a candidate that the employer recorded a “sale” and the client was required to pay.

The facts of this case showed that seven to ten recruiters consistently received payments in excess of their guaranteed draw (suggesting a commission system), and approximately two-thirds of the recruiters in the employer's current workforce had been paid commissions.  This, in the eyes of the Court of Appeal, was sufficient to establish that the commission system was bona fide and the employees were not entitled to overtime.

Thursday, August 30, 2012

What's cooking at the courthouse for the Julia Child Foundation?

We all need a break from employment law sometimes.  Today's hotsheet (a list of new case filings in Santa Barbara, San Luis Obispo and Ventura Counties) has an interesting new lawsuit that will make many court-watchers' salivate (sorry, enough food jokes).

The Julia Child Foundation for Gastronomy and the Culinary Arts v. BSH Home Appliances Corporation dba Thermador was filed on August 28, 2012, in Santa Barbara County Superior Court by Los Angeles attorney Charles Harder of  Wolf Rifkin Shapiro Schulman & Rabkin, LLP.  

The lawsuit, for misappropriation of right of publicity, alleges that Thermador used Julia Child's name, photograph, likeness and other publicity rights in magazine and website advertisements, newsletters, and commercial marketing materials to promote and sell Thermador products without permission. The plaintiff is asking for revenues and profits received, the imposition of a constructive trust, an injunction preventing defendant from using Ms. Child's publicity rights, general and punitive damages.

This dispute has been brewing for a while, and the Los Angeles Times has a great story about it here.  According to the LA Times, "[t]he campaign rolled out this year by Thermador, a 96-year-old brand based in Irvine, ranged from a Facebook 'like' of its products by 'Julia Child, chef' to glossy magazine ads that showed photos of Child and two of the brand’s ovens with the caption, 'An American Icon and Her American Icons.'"

Julia Child, who would have celebrated her 100th birthday this year, loved Santa Barbara and set up home here late in life, giving her stamp of approval to scores of local restaurants.  

Wednesday, August 29, 2012

Arbitration provisions in the employment context

Including an arbitration provision in an employment agreement is almost the norm these days - however, including an enforceable arbitration provision is less common.  For a great primer on arbitration in the employment context, click here.

The Courts consider arbitration agreements to weigh in the employer's favor, at the expense of the employee's right to trial.  Because of this, an arbitration agreement should not be an afterthought but a separately signed agreement.  Second, an arbitration agreement must clearly state what it is intended to cover and indicate that the signatories understand that they are giving up their rights to trial.

In Simmons v. Morgan Stanley Smith Barney, LLC. (2012) _________, the United States District Court, Southern District of California ruled that arbitration provisions in promissory notes and bonus agreements did not cover statutory employment discrimination claims.

In that case, the agreements to arbitrate were included in an executive's promissory notes and bonus agreements with his employer.  They did not state that the executive waived his right to a jury trial on his statutory claims for employment discrimination or otherwise show that the executive had knowingly foregone his statutory remedies for such claims.  Because of this, the Court ruled that the agreements to arbitrate did  not apply to the claims for employment discrimination

The Court did find that the arbitration agreement covered the executive's remaining claims for wrongful termination in violation of public policy, fraud, and breach of contract, and his request for a temporary restraining order and preliminary and permanent injunction.

Moral of the story? A well-drafted arbitration provision can save you time and money, and a poorly-drafted provision could cause you big problems.

Thursday, August 23, 2012

Mortgage underwriters ruled non-exempt, qualify for overtime and FLSA rules

In a class action lawsuit out of Washington state, the District Court has ruled that residential mortgage underwriters are not exempt from the requirements of the Federal Fair Labor Standards Act (FLSA) and Washington's version of the same law, the Washington Minimum Wage Act.
Good Faith Does Not Protect Employers Who Make Mistakes
First, the employers in this case went the extra mile in trying to comply with the law. In 2006, they hired  law firm Morgan, Lewis & Bockius to audit their decision to classify Plaintiffs as exempt administrative workers. Morgan Lewis ultimately advised Defendants that the decision was proper.
In 2008, Morgan Lewis reviewed Whalen v. J.P. Morgan Chase & Co., 569 F.Supp.2d 327 (W.D.N.Y.2008), which held that mortgage underwriters fell under the FLSA's administrative exemption.  Morgan Lewis reviewed Whalen and concluded that it supported the employer's decision to classify Plaintiffs as exempt. The law firm also reviewed a 2006 opinion letter on loan officers, published guidance on financial services industry employees and other legal authority.  
In this case, despite the law firm's advice that the mortgage underwriters were covered by the administrative exemption, the employers were clearly concerned about the decision to classify their underwriters as exempt employees. Internal emails from May 2009 showed that the issue had been “a source of debate for some time.” The employers were particularly concerned because they knew that most of their competitors were paying their underwriters overtime.
The employers next hired another attorney, Maxine Goodman, to perform a new audit of the exemption decision. Like Morgan Lewis, Goodman concluded that the 2006 opinion letter on loan officers, published guidance on financial services industry employees, and Whalen supported Defendants' exemption decision. 
In this case, it seems like the employers were ahead of the legal curve - in November 2009, the Second Circuit issued Davis v. J.P. Morgan & Chase Co., 587 F.3d 529 (2d Cir.2009), which reversed Whalen and held that underwriters did not qualify for the FLSA's administrative exemption. 
Attorney Maxine Goodman reviewed the Davis decision and concluded that underwriter duties described in that case were analogous to Plaintiffs' duties. In January 2010, she recommended that the employers reclassify their mortgage underwriters as nonexempt. They did so about a month later.  
Think the employers were acting in good faith when they hired all those lawyers?  The court wasn't ready to say so.  Under the law, there is a very limited good faith defense available under § 260 of the Portal–to–Portal Act. Under § 260, “if the employer shows to the satisfaction of the court that the act or omission giving rise to [an overtime pay action] was in good faith and that he had reasonable grounds for believing that his act or omission was not a violation of the [FLSA], the court may, in its sound discretion, award no liquidated damages or award any amount thereof not to exceed the amount specified in [§ 216(b) ].” 29 U.S.C. § 260. 
What is the administrative exemption?  
Section 13(a)(1) of the FLSA provides an exemption from both minimum wage and overtime pay for employees employed as bona fide executive, administrative, professional and outside sales employees. Section 13(a)(1) and Section 13(a)(17) also exempt certain computer employees. To qualify for exemption, employees must meet certain tests regarding their job duties and be paid on a salary basis at not less than $455 per week. 
Job titles do not determine exempt status. In order for an exemption to apply, an employee’s specific job duties and salary must meet all the requirements of the Department of Labor’s regulations.
As of August 23, 2012 (remember, the law changes every day), to qualify for the administrative employee exemption, all of the following tests must be met:
• The employee must be compensated on a salary or fee basis (as defined in the regulations) at a rate not less than $455 per week;
• The employee’s primary duty must be the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers; and
• The employee’s primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.
Here, the mortgage underwriters were working in excess of 40 hours a week, and were expected to review a certain number of applications each day.  Incentive bonuses were based on the total value of reviewed loans, and evaluations included the number of errors made in applying the mortgage company's guidelines.
In short, the underwriter's duties were "functional as opposed to conceptual,"  as one employer witness said.  After mortgage applications went through an automated review system, the employees reviewed the application for compliance with guidelines the automated review system could not process and made the final decision about whether to approve the application.  They were able to recommend approval of loans that did not meet guidelines, but in those cases, the final approval went to another department.  The underwriters had limited freedom to calculate income and assets, but the calculations had to be in line with the employers' own criteria.
The law changes every day, and this legal analysis is for information purposes only.  Nothing herein is intended to create an attorney client relationship, nor is this intended as an advertisement for legal services.  You should always consult a licensed attorney for legal advice.  

Friday, August 10, 2012

What You Should Know About Trademarks

Summer is a great time to catch up on the training and education that you need to run your business (think of it as summer school for adults).  This program is a must-attend for those using trademarks in their business, and best of all, it's FREE!

What: The MIT Enterprise Forum of the Central Coast and the United States Patent and Trademark Office's Trademark Educational Outreach Program are pleased to announce a free event to be held on August 15, 2012.

When: Wednesday 8/15/2012 - 5:30 pm - 7:30 pm

Where: Cabrillo Pavilion Arts Center, 1118 E Cabrillo Blvd, Santa Barbara, CA 93103

Cost:  Free

About the Speaker
Craig Morris has been with the USPTO since 1983, currently as the Managing Attorney for Trademark Outreach in the Office of the Commissioner for Trademarks. For fourteen years prior, he was the Managing Attorney for the Trademark Electronic Application System, focusing on making the Trademark Operation a total e-government.

Click here to reserve your place.

Wednesday, July 25, 2012

EDD Classroom Seminars in Ventura

Some of the best tips for employers come from the most surprising sources.  If you haven't attended any of the Employment Development Department's informational Classroom Seminars, make time to do so - these workshops offer some great advice to employers looking to stay on the right side of tax-related issues and California employment law, and who better to teach the class than the folks you have to write checks to each quarter?  

For a full list of upcoming classes, click here.

To register for the Federal/State Basic Payroll Tax seminar in Ventura on August 7, 2012,  click here.

Spaces in these seminars is always limited, but the EDD tends to repeat classes on a regular basis.  

Thursday, July 12, 2012

If you fire an employee for sleeping on the job, is it age discrimination?

Sometimes, lawsuits sound like screenplays or comedy sketches - and this one is no exception.

In a Third Circuit (Pennsylvania) decision filed July 6, 2012, Vasbinder v. Secretary Department of Veterans Affairs , truth is definitely stranger than fiction.  Employee Barry Vasbinder was employed as a Utility Systems Repairer Operator Leader by Butler Veterans Administration Medical Facility.  In plain English, that means he was tasked with continuously monitoring a boiler plant at a hospital.  According to the Third Circuit opinion, boiler malfunction could lead to explosions, property damage, interruption of medical services, injuries or fatalities.

On  a Saturday morning in November 2008 (when there is no doubt that the boiler was operating at full capacity - after all, we are talking winter in Pennsylvania) Vasbinder arrived for work at 7:45 a.m.  He was alone in the boiler plant.  What happened next is extraordinary: according to his supervisor, who arrived at the plant at 9 a.m., Vasbinder had placed a blanket and pillows on the floor, set an alarm clock, and was fast asleep.

Considering the potential harm a boiler malfunction would have caused (fatalities, according to the opinion), this was a serious employment offence.  However, Vasbinder denied having blankets, pillows or being asleep, and said he was just "relaxing."  His supervisor wrote up the incident, and within a few days the Chief Engineer of Facilities recommended that Vasbinder be terminated.  Ultimately, instead of being terminated, he was demoted.  Vasbinder filed an EEOC complaint about the demotion, but it was denied.

When a position closer to his original role opened up, Vasbinder applied, but did not get the job (a younger employee, who was shown to be more qualified, did).  He then sued the Butler VA over the demotion and for age discrimination.

To establish a prima facie case of age discrimination under the Age Discrimination in Employment Act, or ADEA, Vasbinder needed to demonstrate (1) that he was forty years of age or older; (2) that the Butler VA took an adverse employment action against him; (3) that he was qualified for the position in question; and (4) that the adverse employment action occurred under circumstances giving rise to an inference of discrimination.

Vasbinder's argument was that his supervisor had an unspoken policy of getting rid of older employees.  The supervisor had once mentioned that he was eager for older employees to retire, but there was no other evidence of this "policy."  Vasbinder also used the report of him being found sleeping on the floor, which he maintained was unreliable and had not been adequately investigated, as evidence of the age discrimination.

Vasbinder ultimately lost the case - but in my opinion, noone won.  The Butler VA, tasked with caring for returning veterans (and keeping them warm in winter) had to continue employing a litigious employee who had been accused of sleeping on the job, albeit in another role, and merit-less cases like this make a mockery of laws designed to protect employees.

Tuesday, June 19, 2012

Supreme Court rules that pharmaceutical sales reps are "outside salesmen" under the law

In Christopher v. SmithKline Beecham Corp. the US Supreme Court has ruled (in a 5-4 decision) that certain pharmaceutical sales representatives are exempt from the overtime-pay requirement of the Fair Labor Standards Act (FLSA).  In this case, the court ruled that sales reps whose primary duty is to obtain nonbinding commitments from physicians to prescribe certain prescription drugs qualified as "outside salesmen" and are thus outside the FLSA minimum wage and maximum hour requirements.  

Outside salesmen are among the employees categorized as "exempt" in 29 U.S.C.A. 213(a)(1) as "any employee employed in a bona fide executive, administrative, or professional capacity ... or in the capacity of outside salesman (as such terms are defined and delimited from time to time by regulations of the Secretary of Labor).... " 

The law defines an "outside salesman" "as any employee: (1) Whose primary duty is: (i) making sales within the meaning of section 3(k) of the Act; or (ii) obtaining orders or contracts for services or for the use of facilities for which a consideration will be paid by the client or customer; and (2) Who is primarily and regularly engaged away from the employer's place or places of business in performing such primary duty." 

Under 29 C.F.R. 541.501(b), "sales" include "the transfer of title to tangible property, and in certain cases, of tangible and valuable evidences of intangible property."  While there was no transfer of title in the Christopher v. SmithKline Beecham Corp. case, the pharmaceutical sales representatives that brought the underlying action were responsible for calling on physicians in their sales territory to discuss the features, benefits, and risks of  SmithKline Beecham drugs.  They were not selling the drugs in the traditional sense of the word, because their primary objective was to obtain a nonbinding commitment from a physician to prescribe the drugs if and when appropriate.   Working about 40 hours per week calling on physicians, and an additional 10 to 20 hours per week on other activities, the sales reps were paid a base salary plus incentive pay.  However, they were not paid time-and-a-half wages when they worked in excess of 40 hours per week, and brought the underlying lawsuit alleging that SmithKline Beecham had violated the FLSA's overtime laws.  

What does this mean for you?  If you employ outside sales representatives, you should ensure that you are complying with both state and federal laws, especially if your sales representatives cover a territory that covers multiple states.  The law changes frequently, and it is a good idea to schedule annual review of employee and sales representative contracts to make sure that they are up-to-date and protect you, the employer, from as much risk as possible.

This is intended as a legal update, not legal advice.  Every situation is different, and this case may not apply to your situation, nor is any attorney-client relationship formed by your use of the information contained herein.  For tailored legal advice, consult a licensed attorney. I offer free thirty minute legal consultations to employers in San Luis Obispo, Santa Barbara and Ventura counties, and am always happy to help business owners minimize the risk of employee lawsuits.

Thursday, April 5, 2012

Do you use Google to search for legal advice?

I often hear from business owners that they use Google or similar search engines to locate form letters and templates for use in answering basic employment questions.  Good idea? Well, as lawyers like to say, it depends.  There are some incredibly good government resources for employers that I always recommend, such as the FAQ fact sheets from the Department of Industrial Relations, which has some very usable fact sheets on basic issues like meal breaks and rest periods, overtime and whether your potential hire is an independent contractor or an employee.  Refining that information and making sure it fits your business model is a job best left to a human resource professional or licensed employment attorney; if in doubt, call a lawyer.

Thursday, March 29, 2012

Ever wish you had a friend in employment law? I am now offering transparent, flat-free employment law counseling

In my practice, I meet two types of clients: the ones who reach out to an employment attorney before they face litigation or administrative claims, and the ones who didn't. Both types of client, for the record, are a pleasure to work with - however, it is always easier (and less expensive) to try and prevent a lawsuit than it is to resolve a dispute once a problem employee has filed a complaint.

In response to concerns about unpredictable legal costs, a huge factor for employers deciding whether to pick up the phone and call an attorney for employment advice, I started to seek out alternative billing models to better meet my clients' needs. I regularly read law practice management blogs and journals, and have long admired the pioneering work that The Beale Firm, from Knoxville, Tennessee, has done for their employer and employment law clients. After working to set up a similar model here in Santa Barbara, Ventura and San Luis Obispo Counties, I am excited to launch the Central Coast's first fixed-fee employment counseling services to businesses and nonprofits.

Whether you have one employee or 1,000, employment decisions have a lasting impact on your business and your bottom line. To help our clients manage risk and manage legal costs, we have developed a special fee structure for business and non-profit clients that enables you to access legal advice throughout the year. If you have ever wished you could call your attorney but still have control over your budget for legal and consulting costs, this plan is for you!

At Hardin & Coffin, we understand that having an attorney on hand to answer questions about hiring, employment contracts, wrongful termination, discrimination claims, FEHA and ADA accommodations, retaliation, defamation, wage and hour issues or any aspect of an employee’s relationship with your business or nonprofit is a vital part of your growth as an organization. Whether you are big enough to have in-house counsel or a dedicated human resources department, or small enough that hiring a part-timer will double the size of your workforce, having a friend in the employment law field is invaluable when it comes to employment decision making.

I currently offer two annual fee plans, both offering significant savings over my usual hourly rates:

• $5,000 – 25 hours of prepaid employment advice.

• $2,500 – 10 hours of prepaid employment advice

 WEV graduates, NAWBO and Santa Barbara, Ventura and Santa Maria Contractor’s Association members save an additional 5%! If you belong to an organization or a professional association that doesn't currently receive a discount, get in touch and we will work with you and your group to offer a similar rate.

Once you sign up, each month you will receive a statement detailing the services you have received and the amount of time you have remaining in your package. If you face litigation or administrative hearings, my firm will work with you to set up an alternative billing structure to cover the additional time requirements.

In addition to our flat rate legal consultation packages, I also offer services billed on a traditional hourly rate. Let our employment attorneys help you with:
 • Hiring and Firing
 • Employee Handbooks
 • Employment Contracts
 • Wrongful Termination
 • Discrimination
 • FEHA and ADA Accommodations
 • Discrimination Claims
 • Sexual harassment
 • Hostile work environment claims
 • Retaliation
 • Defamation
 • Overtime claims

Want to know more about our employment law services? I offer free thirty-minute consultations, and am always happy to meet with employers to discuss your employment attorney needs.

 DISCLAIMER: This is an advertisement for legal services, provided by an attorney licensed by the State Bar of California. Nothing herein is intended to guarantee or represent a certain outcome to your case, and every matter is different. No attorney-client relationship is formed or intended to be formed by your use of this information, and nothing herein is legal advice, which should always be obtained directly from an attorney familiar with your legal situation.

Monday, March 12, 2012

Union Bank to buy Pacific Capital Bancorp - what will this mean for Santa Barbara employees?

Another Monday morning scoop from Pacific Coast Business Times, and this one has mixed messages for the Santa Barbara County economy:

According to PCBT, eighteen months after buying Pacific Capital Bancorp, Santa Barbara Bank & Trust's parent company, Dallas-based Ford Financial Fund is selling the local banking group to Union Bank's parent for an estimated $1.5 billion.

The deal will likely cause a further shake-up at Santa Barbara Bank & Trust, which has laid off at least 300 employees and had 963 employees in 2010.

UPDATE: more great reporting from PCBT has revealed that Santa Barbara Bank & Trust will be renamed and re-branded as part of the Union Bank group. My guess is that this will provide a big boost to Montecito Bank & Trust, now one of the only local banking groups on the central coast.

Wednesday, March 7, 2012

When does casual humor become sexual harrassment?

Mary Luros, a Napa attorney with the firm of Hudson & Luros, LLP, writes an excellent business column in the Napa Valley Register. Check out this great article about a topic that impacts business owners everywhere: the thin line between one employee's humor and another's sexual harassment.

Tuesday, March 6, 2012

Can an employer ask a job applicant for access to their Facebook page?

This interesting article from MSNBC raises some timely issues related to employer "screening" of job applicants' social media posts. However, internet searches on potential employees can be problematic, raising issues of discrimination and privacy.

According to MSNBC, in Maryland, job seekers applying to the state's Department of Corrections have been asked during interviews to log into their accounts and let an interviewer watch while the potential employee clicks through wall posts, friends, photos and anything else that might be found behind the privacy wall.

Arguably, this makes sense when the potential employment is in law enforcement: if an employee is associating with recreational drug users, for example, then this could impact their suitability for employment in a corrections facility. However, what if the applicant is looking for work in a small business? Increasingly, small business owners are turning to Google searches of public information to get a read on what type of employee they are hiring. For example, Forbes recently ran an article titled "Facebook Can Tell You If A Person Is Worth Hiring." The article, based on a study published in the Journal of Applied Social Psychology, says that publicly available content on Facebook (photos, status updates, and conversations with friends) can be used to measure emotionally stability, conscientiousness, extroversion, intellectual curiosity and agreeableness - all qualities considered essential by employers.

Finding out more about a potential employee sounds like a good idea, but like everything in employment law, there are downsides. Treat casual internet searches just as you would reference checks - with care. Even though the information is available publicly, the results of online searches and Facebook reviews could provide access to information about religious views, national origin, or sexual orientation. You can't ask questions about these things in an interview, and by finding out the answers in an internet search, you could be subjecting yourself to later claims for “disparate impact” or discrimination claims. For example, say you run an internet search on a job applicant and Google turns up a webpage telling you the potential employee is a volunteer deacon at a local church. You now know something - that the applicant is likely to have a particular set of religious beliefs - that you could never ask about in interview. A competing applicant turns out to be a cantor at their local synagogue. You are a Christian, and hire the employee who volunteers at the church. Proving that you didn't discriminate may be a difficult task!

If you choose to search social networks and the internet for information on an applicant, consider asking the employee for permission to do so. This won't protect against discrimination claims, but may help against arguments that you have invaded their privacy.

Mistakes in hiring can become expensive, and by seeking guidance through the hiring process, you stand a good chance of avoiding future claims. The foregoing is intended as information for clients and the Santa Barbara, Ventura and San Luis Obispo business communities, and nothing here is intended as legal advice or to form an attorney-client relationship. If you have questions about hiring and background checks, contact me!

Friday, March 2, 2012

Physician's assistant wins record $168 Million verdict in harassment suit

A Sacramento jury has awarded a whopping $168 Million to a hospital employee who sued her employer, Sacramento's Mercy General Hospital, for harassment. Mercy General Hospital is run by Catholic Healthcare West, now known as Dignity Health (although there is not much dignity in the events reported in this lawsuit). The verdict is thought to be the largest ever for a single harassment claim in U.S. history, and because the hospital intends to appeal the verdict, it could have ramifications for all of us.

Ani Chopourian, a physician's assistant, worked at at Sacramento's Mercy General Hospital for two years. "I have never seen an environment so hostile and pervasive,” said Chopourian of the harassment she endured, which led to her filing at least 18 separate complaints with her supervisors. She was fired after filing her last complaint, which dealt specifically with the quality of patient care and doctors' demeaning behavior. The final complaint was deemed "professional misconduct" by Mercy General Hospital.

According to a report in the Los Angeles Times, among the complaints filed by Chopourian are details of a surgeon who stabbed her with a needle (and in another incident, broke the ribs of a patient in a fit of rage). Yet another surgeon regularly greeted her with the phrase "I'm horny" and slapped her on the bottom; a third called her a "stupid chick" and made racially disparaging remarks about her Armenian heritage, asking if she had joined Al Qaeda.

The verdict includes $125 million in punitive damages and $42.7 million for lost wages and pain and suffering.

Under California and Federal employment law, the employer was liable for the behavior of the surgeons [Faragher v. City of Boca Raton (1998) 524 US 775, 789–790, 118 S.Ct. 2275, 2284]. California law takes things a step further and under FEHA, the employer is “strictly liable” for quid pro quo sexual harassment perpetrated by a supervisor and has no defense to liability. As an employer, once you know or suspect that harassment or discrimination is occuring in your workplace, it is unlawful for you “to fail to take all reasonable steps necessary to prevent discrimination and harassment from occurring.” [Government Code § 12940(k) .]

My first thought on the Chopourian case was "what were they thinking?" The steps an employer takes to prevent harassment from occurring and the actions taken to investigate and remedy complaints affect whether the employer will be held liable for the harassment. Both California and Federal Employment law set out clear guidelines for preventing harassment and discrimination, and handling complaints when they come in: it is hard to believe that a huge employer like Catholic Healthcare West did not follow the law.

In California, employers with at least 50 employees must provide all supervisory employees lwith at least two hours of interactive training regarding sexual harassment prevention and correction at least once every two years. If you hire a new supervisor, you must train them within six months of their hire date. [Government Code § 12950.1(a),(c).]

Under FEHA, you must also:

—display a poster on the illegality of sexual harassment in the workplace

—distribute an information sheet on sexual harassment to all employees.

Get a copy of the poster and information sheet from the Department of Fair Employment and Housing..

If you don't use the DFEH information sheet, you must provide equivalent information to all employees that contains the following information:

—the illegality of sexual harassment

—the definition of sexual harassment under applicable state and federal law

—a description of sexual harassment, with examples of proscribed conduct

—internal complaint process available to the employee

—legal remedies and complaint process available through the DFEH and FEHC

—how to contact the DFEH and FEHC; and

—legal protection against retaliation for opposing sexual harassment or for filing a complaint or otherwise participating in an investigation, hearing or other proceeding regarding a claim of sexual harassment.

However small your business, having a Workplace Discrimination Policy that mirrors California and Federal law is incredibly helpful. My take on using these in smaller workplaces is simple: it is much easier for a small business to defer to an objective guideline - the employee handbook - than it is to step up and tell an employee that they are out of line without any backup. For assistance in drawing up a Workplace Discrimination Policy, you should contact an employment attorney who specializes in representing employers.

As always, this is not intended as an advertisement and is offered as a service to my clients and the community. Nothing herein is intended as legal advice and the above is for informational purposes only. Every situation is different and you should consult a licensed attorney for advice tailored to your business needs.

Wednesday, February 29, 2012

Santa Barbara County Economic Summit announces historic lineup of speakers

If you live or work in Santa Barbara County, you have likely benefited from the work done by UCSB's Economic Forecast Project. The Economic Forecast team puts together statistics regarding Santa Barbara County's economy and employment, and more importantly, interpret the statistics in plain language so that business owners can use the information.

This year, the 2012 Santa Barbara County Economic Summit has an especially good lineup of speakers for the event on May 3, 2012, at the beautiful Granada Theatre:

- Gillian Tett, US Managing Editor of The Financial Times

- Dennis P. Lockhart, President of the Federal Reserve Bank of Atlanta

- Charles I. Plosser, President of the Federal Reserve Bank of Philadelphia

- John C. Williams, President of the Federal Reserve Bank of San Francisco

- David E. Altig, Senior Vice President & Director of Research at the Federal Reserve Bank of Atlanta

- Peter C. Rupert, Executive Director of the UCSB Economic Forecast Project and Chair of the UCSB Department of Economics

For more on the event, or to register, go to

Monday, February 27, 2012

State Fund in the news... will this effect your business?

Pacific Coast Business Times has an interesting story about State Fund today in their Monday Briefing.

According to Business Reporter Stephen Nellis, the State Compensation Insurance Fund, a government sponsored fund which offers workers compensation coverage to firms that can't find insurance elsewhere, is hurting for cash - and looking to local business owners to fill the gaps in their funding. State Fund has filed seven lawsuits against contractors and small business, each seeking unpaid workers compensation premiums. Nellis' article also reports that one local employer has accused State Fund of refusing to investigate fraud claims, championing a "pay benefits now, ask questions later" approach to handling workers compensation claims.

State Fund is the largest provider of workers’ compensation insurance in California: because of this, what we are seeing will likely trickle down to other carriers as insurers try to grapple with mounting costs, more complex claims and tighter purse strings. As an employer you must carry workers compensation insurance in almost all situations (domestic employees are a rare exception, and even they can require coverage). I recommend that all of us watch the State Fund situation carefully - and of course, try to keep claims to a minimum with safe workplaces and good employee policies.

Thursday, February 23, 2012

Are we seeing a rise in the number of employment lawsuits?

Most mornings, I start the day by opening an email from Courthouse News Service, or CNS. The CNS "hot sheet" tells me who is suing whom in Santa Barbara, Ventura, San Luis Obispo, Santa Cruz, San Benito and Monterey Counties, listing daily case filings with a summary of each new lawsuit. (In case you are wondering, by the way, I don't read this for fun - the CNS hot sheet helps me monitor filings for existing clients and help other businesses I care about know whether they are being sued.) The hot sheet email doesn't make great reading, especially if you are an employer: an unscientific and highly personal review of the sheets tells me that as the economy has gotten worse, more and more employees are treating their employers (or former employers) as "deep pockets." Disgruntled employees are filing wage and hour lawsuits, discrimination claims (age, gender, and increasingly, sexuality), and alleging retaliation against any employer who tries to terminate their employment.

So, what does my unscientific, purely observational survey of recent employment lawsuits tell me?

First, high unemployment means that employees are less likely to turn away from a job they don't like. If they can't find another job, they are more likely to file a complaint with the Labor Commissioner, or hire an employment law attorney. The alternative - work someplace else - is no longer an alternative.

Second, lower incomes and problems with mortgages, credit card debt and loans mean that employees are more likely to look for "compensation" for workplace ills like discrimination or unpaid overtime. If you are in business, you are a target.

Third, if you have terminated an employee, they are going to have problems finding alternative employment. The answer to some is to file a lawsuit for unfair dismissal, retaliation, discrimination, unpaid overtime or failure to give meal breaks.

Depressing reading? Only if you don't have an employment risk management plan in place! The best time to defend against an employment lawsuit is before you get sued. Make sure you have clear workplace policies and procedures, consider an employee handbook, and keep good records. Before terminating an employee, think about consulting an employment law attorney to run through the potential risks to your business. More to come on the process of terminating employees, but for now, the message is simple - with employment lawsuits on the increase, prevention is better than cure when it comes to protecting your company.

Friday, February 10, 2012

Getting paid: lunchtime seminar for architects & design professionals

One of my partners, and a founding member of Hardin & Coffin LLP, is Mark Coffin, who serves as a member of the Board of Directors for Santa Barbara's chapter of the American Institute of Architects, and dedicates a significant part of his practice to representing architects and design professionals. (Mark also practices construction law, and is known locally for his role in an eleventh-month endurance race of a trial, El Escorial Owners Association v. Santa Barbara Villas.).

On February 15, 2012, Mark Coffin is presenting a lunch program at the Santa Barbara AIA, "Lien and Learn" with an overview of lien procedures that architects can use to encourage full and prompt payment for their services. To learn more about the program, visit the AIA website at or visit their events page.

Thursday, February 9, 2012

What to Look For in an Employment Lawyer

Ever get the feeling an employee is gearing up to sue you or file a complaint with the Labor Commissioner, or worse still, ever find out that they already HAVE filed a complaint? If you don't have an attorney already, finding one when you are under the additional pressure of facing an employment lawsuit or labor claim can be overwhelming.

Hiring an Employment Attorney

- What type of employment matters does the lawyer handle? If you are already facing an employment claim, look for an attorney with trial experience. If you want advice on preventing future claims, look for someone with experience in advising businesses like yours, so that your attorney brings an understanding of the issues you face as an employer to the table.

- What is the attorney's skill level? Are you confident that the employment lawyer you are considering will be able to argue your case with opposing counsel, interact with employees in sensitive situations, or negotiate the best deal for you as an employer?

- How much does the attorney know about employment law? The law changes fast, and it is important that the person you choose to represent you is up to date on new legislation and regulations. State and federal labor laws can be complicated. Ask the lawyer if they are aware of any changes in the law as it impacts your case.

- What is the attorney's fee structure? Look for an attorney who offers value billing, and a commitment to working with you as an employer to keep your legal fees and expenses trim.

If the employment attorney you choose offers a free consultation, come prepared with questions about your case and how they will handle it. Look for a lawyer who will keep you up to date on the progress of your case and make themselves available for any questions you have. This may seem logical, but did you know that failure to return phone calls is one of the biggest complaints clients have about their lawyers?

Finally, it is important that you feel comfortable discussing your business and your employees with your employment attorney. A good lawyer should not be intimidating, speak about your case using legal terms that you don't understand, or forget that being sued or having a claim filed against you is a stressful and unique experience for even the most experienced employers.

What do you think? Are there other things you want to see in an employment lawyer? As always, I look forward to your calls and emails.