California Public Agency Labor & Employment Blog

California Public Agency Labor & Employment Blog

Useful information for navigating legal challenges

EEOC Issues New Guidance on Pregnancy Discrimination and Accommodation Requirements

Posted in Discrimination, Employment

This blog post was authored by Alex Polishuk

Pregnant EmployeeOn July 14, 2014, the Equal Employment Opportunity Commission (“EEOC”) issued new enforcement guidelines on employer responsibilities with regard to pregnant employees under federal workplace laws.  The Enforcement Guidance on Pregnancy Discrimination and Related Issues (“Guidance”) advances the EEOC’s position that the Pregnancy Discrimination Act (“PDA”) and the American with Disabilities Act (“ADA”), as well as other federal statutes offer expansive accommodations to pregnant employees.  A full text of the Guidance can be found here. Employers should become familiar with the Guidance because it offers a detailed account of the EEOC’s position regarding pregnancy discrimination under federal law. But the Guidance does not provide pregnant employees with any greater rights than already exist under California’s Fair Employment and Housing Act (“FEHA”).

The Guidance is composed of four sections.  The first three sections explain the basic principles of the PDA, ADA, and other federal laws, respectively, and their applicability to pregnant workers.  The last section offers numerous “best practices” for employers.

Section I of the Guidance addresses accommodations for pregnant employees under the PDA.  Interestingly, the U.S. Supreme Court recently agreed to review the issue of an employer’s obligation to offer “light duty” work accommodations for pregnant employees under the PDA, during its next term.  By way of background, the PDA’s express language does not require accommodations but rather places an obligation that pregnant individuals be treated the same as other employees similar in their abilities or inabilities to work.  In comparison, the FEHA expressly requires reasonable accommodations for pregnant employees.  But, in its Guidance, the EEOC advances the position that the PDA includes a de facto requirement that employers provide accommodation for pregnant women if these types of accommodations are made available to other employees with similar abilities or inabilities to work.  As an example, the EEOC indicates that an employer must provide light duty for pregnant workers on the same terms that light duty is offered to employees injured on the job.

Section II of the Guidance expands the ADA’s definition of “disabilities” that result from pregnancy.  The EEOC explains that in determining whether an impairment is a disability, the cause of the impairment is not relevant.  The EEOC identified pregnancy-related carpal tunnel syndrome; gestational diabetes; swelling, especially in the legs, due to limited circulation, and depression as conditions that may require reasonable accommodation.

The EEOC provides other significant directions as well.  For example, the EEOC explains that discrimination against employees based on their intent to get pregnant or on their previous pregnancy is prohibited under the PDA.  Further, the EEOC indicates that to avoid a potential disparate impact violation, an employer’s health insurance plan must cover prescription contraceptives on the same basis as prescription drugs used to prevent the occurrence of a medical condition other than pregnancy.  While the EEOC acknowledged the recent Supreme Court’s Hobby Lobby decision, which struck down an almost identical federal regulation adopted under the Affordable Care Act, the EEOC stated that its Guidance “explains Title VII’s prohibition of pregnancy discrimination; it does not address whether certain employers might be exempt from Title VII’s requirements under the [Religious Freedom Restoration Act] or under the Constitution’s First Amendment.”

The EEOC’s suggested “Best Practices” are practices California employers should already have in place, such as:

  • Develop, disseminate, and enforce a strong policy based on the requirements of the PDA and the ADA.
  • Train managers and employees regularly about their rights and responsibilities related to pregnancy, childbirth, and related medical conditions.
  • When making hiring or promotion decisions, focus on the applicant’s or employee’s qualifications for the job in question. Do not ask questions about the applicant’s or employee’s pregnancy status, children, plans to start a family, or other related issues during interviews or performance reviews.
  • Develop specific, job related qualification standards for each position that reflect the duties, functions, and competencies of the position and minimize the potential for gender stereotyping and for discrimination on the basis of pregnancy, childbirth, or related medical conditions. Make sure these standards are consistently applied when choosing among candidates.
  • Review any light duty policies. Ensure light duty policies are structured so as to provide pregnant employees access to light duty equal to that provided to people with similar limitations on their ability to work.
  • Have a process in place for expeditiously considering reasonable accommodation requests made by employees with pregnancy-related disabilities, and for granting accommodations where appropriate.
  • Train managers to recognize requests for reasonable accommodation, to respond promptly to all requests, and to avoid assuming that pregnancy-related impairments are not disabilities.

Conclusion

The Guidance demonstrates that the EEOC has broadened its interpretation of employer obligations with respect to pregnant employees under federal laws.  While the Guidance is not a departure from what is already required by California laws, it is a good reminder to employers to ensure that their policies and practices take into account pregnant employees’ rights.  Further, although the EEOC’s guidelines are not binding on any court, they do provide insight into how the EEOC will assess pregnancy related discrimination claims and highlights issues the EEOC may focus on in the future.

Disability Related Inquiries Should Be Reviewed for ADA and GINA Compliance In Light of EEOC Informal Letters

Posted in Disability, Workplace Policies

EEOC SealThe EEOC issued two informal discussion letters critiquing policies and forms used by unidentified public employers when making disability related inquiries of employees.  Although informal discussion letters are not “official” EEOC opinions, they provide guidance on an employer’s legal obligations.  In these informal letters, the EEOC reviewed the agencies’ fitness for duty exam forms and sample reasonable accommodation policy and accompanying questionnaires and found that they contained language that violated both the American with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA).

One Size Does Not Fit All

The sample policy and forms reviewed by the EEOC were obtained from the website of an unidentified state agency.  They were never used by any employer as an official reasonable accommodations policy.  Rather, the documents were posted for training purposes only.  Nonetheless, the EEOC cautioned against the use of sample policies and forms because they could result in employers not conducting thorough interactive processes.  Reasonable accommodations must be handled on an individualized basis.  The interactive process to determine if an accommodation is warranted is influenced by factors such as the nature of an employee’s disability, the employee’s job, and the work environment.  The EEOC observed that it is difficult to develop a policy and related forms that can address all variables.  The take away for employers here is that accommodations policies should be drafted broadly to allow flexibility during the interactive process.  In addition, each interactive process should be allowed to develop organically given the variables involved.

Employers Should Seek Only Information Needed to Address Job-Related Concerns

The medical history form used by one of the public employers for an annual fitness for duty exams asked “In the past five years, have you been hospitalized overnight for any reason?” and “In the past twelve months, have you seen a doctor for anything other than routine checkups?”  The EEOC deemed these questions improper because they would likely result in the employee revealing more information than is necessary to address specific job related concerns.  For similar reasons, the EEOC also cautioned against asking employees to disclose treatment plans and use or recommended use of any medications or devices.  While there may be circumstances where limited inquiry into these areas may be appropriate, the EEOC believed such questions are generally impermissible.  Under the ADA, an employer may ask disability related questions and require medical examinations only if they are job related and consistent with business necessity.  This means an employer may only ask questions necessary to establish that the employee has a disability and/or needs a reasonable accommodation.  An employer is not entitled to any medical information it wants at any time for any reason.

Do Not Request Family Medical History

The same medical history form also asked “Have you, or any of your immediate family (father, mother, sister and/or brother) ever had any of the following” and then listed a number of medical conditions for the employee to select. The EEOC concluded that this language violated GINA which prohibits employers from requesting, requiring, or purchasing genetic information of applicants and employees, including family medical history.  This means that an employer may not request family medical history as part of an employment related medical exam.

Think Broadly and Creatively When Suggesting Accommodations

Another problem noted by the EEOC is that the sample forms stated that an employer is not required to permit “unscheduled (or erratic, unpredictable, intermittent) or excessive absenteeism or tardiness as a reasonable accommodation” and that working from home is “generally” not a reasonable accommodation “except in extraordinary circumstances.”  The EEOC objected to this language because it could lead to the inappropriate denial of a reasonable accommodation.  The EEOC gave as an example an employee with epilepsy.  The employee may have one or two seizures a year requiring unscheduled leave of one day each time.  The fact that the leave is unscheduled, or could be characterized as erratic, unpredictable and intermittent, would not mean that the employer can deny this type of leave.  An employer would have to grant leave under this scenario as a reasonable accommodation unless it could show undue hardship.  As for working from home, some courts have held that this can be an appropriate accommodation depending on the nature of the employee’s disability and the job position.

The key point for employers here is that policies and forms that contain language that could result in the denial of a reasonable accommodation may violate the law.  Another way this can happen is when these documents only focus on certain accommodations.  For example, forms that list types of possible accommodations such as changes to work schedules or modifications to work stations may inadvertently result in the exclusion of other accommodations.  Therefore, policies and forms should be written in a way to allow an employer the ability to think broadly and creatively when evaluating potential accommodations.

CalPERS Audits – What Agencies Can Do to Prepare

Posted in Retirement

Retirement-Sign.jpgCalPERS employers by now are well aware of the major changes in the Public Employees’ Retirement Law.  On the heels of these changes and into the horizon, we have seen continuing efforts by CalPERS to audit contracting agencies.

Is Your Agency Ready?

If you’ve been following our blog, you know that this area of law is constantly evolving. We have provided useful blog articles on the key topics, including:

In addition to keeping you informed through the blog, we helped many of you review and audit your practices for compliance. If you’ve not done this, you may want to consider:

  • Ensuring compliance now to avoid possible audits later.
  • Negotiate changes with the employee organization to protect your agency in the event of any future audit.

We can also help appeal if you’ve had any negative determinations by CalPERS.

At some point, every public entity will find itself in the middle of a CalPERS audit.  While never fun, this process does not have to be a painful one.  We recommend that agencies obtain the services of a trusted advisor early.  An advisor provides information on the process and what to expect, communicates with CalPERS’ auditors on your agency’s behalf, and assists in the information gathering process to comply with information requests.

The advisor must have experience with CalPERS audits, an understanding of the regulations and the nuances of the process, and how best to implement CalPERS’ items of improvement, not to mention the ability to assist in implementing the items of correction through labor negotiations and appealing any negative decision by CalPERS.

What Does a CalPERS Audit Look Like?

Generally, CalPERS comes to your agency, briefcase in hand, and spends several days looking at your practices and procedures.  Following this audit period, CalPERS creates an audit report that they provide to the agency documenting areas of improvement.  It can take months before receiving an audit report.  More details on the CalPERS audit process can be found here.

Want to Know More?

See our summary of benefits and options to help you with your CalPERS audit here. You can also attend the upcoming webinar on August 14, 2014.

For more information on any phase of the audit, please feel free to contact us to discuss your options.  For more information, please contact Steven M. Berliner at (310) 981-2002 or sberliner@lcwlegal.com, or Frances Rogers at (619) 481-5905 or frogers@lcwlegal.com.

“Going On Offense” Can Lead To Decertification of Class Action Lawsuits

Posted in Class/Collective Action, Wage and Hour

hourglass-small-copy.jpg

This blog post was authored by Geoffrey Sheldon.

The Los Angeles Police Department (“LAPD”) employs approximately 10,000 sworn police officers in eight ranks from Chief of Police down to Police Officer.  These 10,000 officers work in various bureaus, areas, divisions and groups in at least 33 different work locations scattered throughout the vast City.  Since 2000, these officers have been subject to a written overtime policy which required them to record all overtime worked truthfully and accurately, whether pre-approved or not, in six minute intervals.  Despite LAPD’s policy, however, approximately 2,500 of the officers filed class action lawsuits alleging that the City violated the Fair Labor Standards Act (“FLSA”) when their supervisors supposedly subjected them and other officers to an “unwritten” policy that prohibited them from claiming overtime when the time worked was less than one hour.  On May 21, 2014, a federal District Court Judge granted the City’s motions to decertify the two class action lawsuits.  In these cases the City was represented by Brian Walter and Geoff Sheldon of LCW’s Los Angeles office.  Roberto Alaniz, et al. v. City of Los Angeles, CV 04-8592 GAF (AJWx) and Cesar Mata, et al. v. City of Los Angeles, CV 07-6782 GAF (AJWx).

A review of federal court filings nationwide documents a steady increase in FLSA lawsuits against public and private employers alike over the past several years.  This is likely due to the fact that FLSA lawsuits can be financially lucrative for plaintiff side attorneys because they are frequently brought as “collective actions,” i.e., multi-plaintiff lawsuits akin to “class actions”.  How did the City decertify the officers’ class claims?  In short, by going on offense in the litigation.

In addition to Los Angeles, LCW has defended many agencies against FLSA collective action lawsuits (as well as State law class action cases) over the years, including claims alleging that employers failed to pay overtime properly under a variety of theories (such as for missed meal breaks, pre and post shift “off-the-clock” work, donning and doffing time), for misclassifying employees as “exempt” from overtime and for failing to calculate employee regular rates of pay properly as required by the FLSA.

Like class actions, collective actions are usually initiated by a single employee who believes he or she is aggrieved but who seeks relief for a large class of fellow employees.  Litigating collective action lawsuits presents a unique set of challenges and can be costly for employers.  Nowhere is this more evident than with respect to the “class certification” process.  There is generally a two step process when the employees’ lawyer seeks certification of a FLSA collective action.  In step one, the named plaintiff brings a motion requesting that the court distribute a notice (usually by the employer or at the employer’s expense) to all “similarly situated” employees so they can decide whether to join the lawsuit as additional plaintiffs.  Courts apply a very lenient standard at step one, and in many cases conditional certification is granted based just on “substantial allegations” that the plaintiff employee and other employees are alleged victims of a single decision, policy or practice.

Step two generally occurs once discovery is complete, or at least substantially complete.  At this stage, courts evaluate (1) the disparate factual and employment settings of the individual plaintiffs; (2) the various defenses available to the employer with respect to the individual plaintiffs; and (3) fairness and procedural considerations.  In off-the-clock work cases, for example, employers may be able to defeat class certification by showing that their policy (and enforcement of their policy) clearly prohibits unauthorized or unreported (or under-reported) time and that deviations from the employer’s policy, were due to individualized employee decisions rather than a management sanctioned practice applicable equally to all.

Generally speaking, gathering evidence to defeat final certification requires conducting discovery through representative sampling instead of taking discovery from all opt-in plaintiffs (i.e., those who have chosen to join the case.)  Thus, a statistically significant representative sample of plaintiffs would be selected to speak for all plaintiffs.  Depending on the size of the class, this can mean scores – or sometimes hundreds – of depositions and written discovery requests.

If an employer and its legal team are proactive, some courts will consider the step two factors during stage one of the analysis (thereby saving the employer significant expense and potentially thwarting a collective action before it ever takes shape.)  In this regard, it is imperative for the employer to meet with and secure declarations from employees very early in the litigation to use in opposition to the motion for class certification.  If the employer can secure a significant number of declarations early on, for example, declarations establishing that at least a good number of employees comply with their employer’s overtime policy, the employer may be able to defeat conditional certification at step one.  This is an approach LCW has successfully utilized in some cases.  Mary Rosales, et al. v. County of Los Angeles, CV11-09423-R (MANx).

If the employer is not successful at defeating certification at step one, decertification can still be achieved with vigorous use of the discovery tools available.  In this regard, depositions of as many as possible of the plaintiffs who are selected to be the representative sample for the collective action are important.  Some opt-in plaintiffs join a collective action with the expectation they do not have to do anything and will receive compensation just for opting in.  Many of these plaintiffs will dismiss their claims rather than be deposed.  This (apart from the testimony they or others might actually give) can help convince a court that decertification is warranted.

In addition, carefully analyzing an agency’s payroll records can provide useful evidence to show that the plaintiffs are not “similarly situated.”  In the LAPD cases, for example, the district court was persuaded because a department wide look at the City’s payroll data evidenced widespread compliance with the overtime reporting policy.  The court also found that the officers’ proffered evidence was not persuasive because it was submitted in legally objectionable form, e.g., while the officers submitted hundreds of declarations in opposition to the City’s motions, they lacked specifics and were overly conclusory.

The bottom line is that, while collective actions are high stakes and expensive litigation, employers and their counsel can successfully defeat certification – either at step one or step two – with proactive efforts.  In other words, going on offense can be the best defense to a collective action.

Let Them Eat Stale Cake – But They Won’t Be Getting COBRA!

Posted in Employment

DOLThis post was authored by Jessica Frier

Federal COBRA legislation allows departing employees and dependents to continue coverage under an employer’s group health plan after coverage is lost for almost any reason—including death, divorce, reduction in hours, and even termination for cause.  Only the employee’s “gross misconduct” provides a basis to deny COBRA coverage.

But what is “gross misconduct”? Employers often struggle, for good reason, to know when COBRA benefits can or should be denied due to gross misconduct.  The term “gross misconduct” is not defined by the statute or regulation, and although a handful of courts have applied the standard, judicial interpretations of what it means for an employee to engage in “gross misconduct” are sparse.

Employers can start with guidance from the Department of Labor (DOL), which states that being fired for most ordinary reasons, such as excessive absences or generally poor performance, does not amount to “gross misconduct.”  But when an employee’s termination is based on more serious infractions, such as theft or dishonesty, an employer may be justified in not offering COBRA to that former employee and his or her family members.

California district courts examining gross misconduct under COBRA have considered the following definition of “misconduct” applied by the California Supreme Court:

Conduct evincing such willful or wanton disregard of an employer’s interests as is found in deliberate violations or disregard of standards of behavior which the employer has the right to expect of his employee, or in carelessness or negligence of such a degree or recurrence as to manifest equal culpability, wrongful intent, or evil design, or to show an intentional and substantial disregard of the employer’s interest or the employee’s duties and obligations to his employer.

Paris v. F. Korbel & Brothers, Inc., citing Amador v. Unemployment Insurance Appeals Board.  Applying this definition, a security guard who intentionally deserted his post and falsified records to receive additional paychecks was found to have committed gross misconduct.  (Adkins v. United Int’l Investigative Servs., Inc., 1993 WL 345186 (N.D. Cal. Mar. 27, 1993).)

Recently, a federal district court in Idaho applied a similar definition in Mayes v. WinCo Holdings, Inc., ruling that the supervisor of a grocery store’s night time freight crew committed gross misconduct when she directed another employee to take a cake from the store bakery’s “stales cart.”  The supervisor argued that the stale cake had no value, she had permission to use it, management was aware of the practice, and it was a common for other management employees to use the cakes in the same fashion.  She then claimed that she was terminated not because she stole the cake, but because her supervisor wanted a man in charge of the freight crew.  The court found that the supervisor did not offer any evidence that her termination was based on anything other than theft and dishonesty, and noted that “[s]tealing from and/or lying to one’s employer, regardless of the value of the item, constitutes a willful and intentional disregard for the interests of one’s employer and is properly considered ‘gross misconduct’ under COBRA.”  (Id. at 21.)

Employers are cautioned that the Idaho district court broadly construed the definition of gross misconduct here.  Deciding to deny COBRA coverage on the grounds of gross misconduct should be considered only where an employee can be shown to have substantially disregarded or neglected the employer’s interest.  This will depend on the specific facts and circumstances of each firing, and employers may wish to seek legal counsel.  Federal district court decisions (like state trial court decisions) are not precedent, but provide some hint as to how a Court of Appeal may rule.

U.S. Supreme Court Says Police Need Search Warrant to Search Cell Phones

Posted in Public Safety Issues

Cell PhoneOn June 25, 2014, the U.S. Supreme Court ruled unanimously in the case of Riley v. California, that police may not generally search the cell phones of people they arrest without first getting search warrants. Should the police confront an authentic “now or never” situation, Chief Justice Roberts wrote, they may be entitled to search the cell phone if “exigent circumstances” exist. However, “[t]he fact that technology now allows an individual to carry such information in his hand does not make the information any less worthy of the protection for which the Founders fought.”  “Our answer to the question of what police must do before searching a cell phone seized incident to an arrest is accordingly simple — get a warrant.”

The Court had heard arguments in April 2014 in two cases addressing warrantless searches of cell phones. The first case, Riley v. California, involved the arrest of David L. Riley, who was pulled over by police in San Diego in 2009 for having an expired vehicle registration. The police found loaded guns in his car.  After seizing a cell phone from Riley’s pants pockets, the police found text messages and words in his contact list associated with the “Bloods” street gang.  At the police department about two hours after his arrest, a gang detective searched the phone again and found videos and photographs linking Riley to gang and other criminal activity, including a shooting.  Riley was later convicted of attempted murder and sentenced to 15 years to life in prison. The California Court of Appeal said neither search of Riley’s phone required a search warrant.  The second case, United States v. Wurie, involved a warrantless search of the call log of a flip phone belonging to Brima Wurie, arrested in 2007 after a police officer observed him making a drug deal from his vehicle. The U.S. Court of Appeals found that the police needed to have obtained a warrant to search the cell phone.

In reviewing the Riley and Wurie cases, the U.S. Supreme Court analyzed the privacy rights of individuals in the data on their cell phones.  Chief Justice Roberts wrote that cell phones  “…are now such a pervasive and insistent part of daily life that the proverbial visitor from Mars might conclude they were an important feature of human anatomy.”  The Court also acknowledged the vast amount of private data that can be stored on cell phones. The Court balanced the privacy rights of individuals against the police’s interest in conducting searches of cell phones without first securing a warrant.  Traditionally, harm to police officers and a risk of destruction of evidence have served as rationales for allowing searches of physical objects without first seeking a warrant.  The Court found that harm to police officers, and a risk of destruction of evidence, are not risks associated with searching the digital content on a cell phone.  Digital data on a cell phone cannot itself be used as a weapon to harm a police officer or to effectuate the escape of the arrestee.

Police may still search a phone’s physical aspects to make sure that the phone itself will not be used as a weapon, but since the data on the phone does not endanger anyone, the data cannot be searched without a warrant. Given the “vast quantities of information literally in the hands of individuals,” the privacy interests of the individual outweigh the interests of the government in conducting a search of a cell phone without a warrant.  Regarding the destruction of evidence, the Court stated that such concerns are remote, and that there are reasonable methods police may use to prevent the destruction of evidence on cell phones.  For example, remote wiping of a cell phone can be prevented by police turning the phone off or removing the battery.  Also encryption of data on the phone may be avoided by leaving the phone on and placing it in an enclosure that isolates it from radio waves.  The Court acknowledged that, if the police can demonstrate they still have concerns about the loss of evidence on a cell phone, they  may be able to rely on exigent circumstances to search the cell phone without first obtaining a warrant. For example, if there is evidence to suggest that an arrestee’s cell phone will be the target of an imminent remote-wipe, the police may be able to rely on exigent circumstances to conduct a warrantless search.

The Court unanimously held that police officers must generally secure a search warrant before conducting a search of a cell phone.  Justice Roberts acknowledged that the Riley decision “…will have an impact on the ability of law enforcement to combat crime.”  However, an individual’s privacy interest in the vast amount of personal information that can be stored on cell phones outweighed the government’s interests in combatting crime.  Police departments should immediately evaluate and update their arrest and search procedures and practices to ensure compliance with Riley.  Police officers should also receive training on any changes or updates to practices relating to the search of cell phones.

Tips from the Table: Importance of Communication and Accuracy in Information

Posted in Labor Relations

We are proud to continue our new video series – Tips from the Table. In these monthly videos, members of LCW’s Labor Relations and Negotiations Services practice group will provide various tips that can be implemented at your bargaining tables. We hope that you will find these clips informative and helpful in your negotiations.

AB 2126 Seeks to Amend MMBA Fact finding Provisions

Posted in Labor Relations

sacramento Town HallThis post was authored by Shardé C. Thomas

AB 2126, introduced on February 20, 2014, by Assembly Member Bonta (D-Oakland), would make four amendments to the Meyers-Milias-Brown Act (“MMBA”).  Some of these revisions are pro-union, while others favor management’s interests.  Reaction to AB 2126 has been mixed, but unions and management alike will be watching the progress of this bill.

The first change sought by AB 2126 would impose mandatory mediation in meet and confer negotiations.  Critics of mandatory mediation take issue with the fact that mediation is far less likely to be successful when forced upon a party.  Also, mandatory mediation would delay impasse procedures and likely provide little if any benefit to the parties.  Many public agencies would rather use voluntarily impasse mediation in attempts to reach resolution.  Another issue with this bill is that it does not provide a time period during which a party must request mediation.  It does clarify that the issuance of a written declaration of impasse is a trigger allowing either party to request mediation, but it does not set forth any deadline for making the request.

Currently, the issue of what scope of issues is subject to fact finding is disputed, whether it is impasse over a full memorandum of understanding (“MOU”) or over any and every single negotiable subject.  The second revision by AB 2126 would seek to clarify this issue.  One Superior Court judge recently held that fact finding is limited to full MOU negotiations.  An appeal was recently filed in that case.  (County of Riverside v. PERB, Case No. E061020).  Notwithstanding this court decision, the Public Employment Relations Board (“PERB”) recently issued two decisions holding that fact finding is not limited to MOU negotiations, but applies to all bargaining disputes over any matter within the scope of representation. (The cases can be found here and here.)  In line with these recent PERB decisions, AB 2126 would provide that fact finding is available in any impasse over any negotiable subject of bargaining.  That would greatly expand the potential scope of fact finding.

Also, AB 2126 would revise the MMBA to provide that not all fact finding factors listed in the statute must be considered by the fact finding panel and only those deemed relevant to the actual fact finding by the panel would apply.  AB 2126 would require consideration of the statutory criteria set forth in the MMBA only if relevant to the dispute.  This could narrow the scope of and time involved in fact finding by allowing a more targeted approach to fact finding.

Finally, AB 2126 would impact an employee organization’s right to waive fact finding.  Currently, employee organizations are prohibited from agreeing to waive their right to fact finding.  Public agencies must wait at least 30 days following the issuance of a written declaration of impasse before unilaterally implementing the last best final offer even if an employee organization previously indicated it would not seek fact finding.  AB 2126 would permit an employee organization to voluntarily waive fact finding.  This revision to the MMBA would help foster continued negotiations to strive and reach agreement where the parties otherwise would be at impasse sooner in light of the above-mentioned deadlines.

AB 2126 was recently read for the first time in the Senate and referred to the Public Employment and Retirement committee.  It had passed the Assembly on May 29 by a vote of 54-22.  Public agencies should stay aware of the progression of AB 2126 as it would have significant impacts on future negotiations if enacted.  If the bill does pass, neither union nor management representatives will approve of the entirety of the various amendments AB 2126 would make to the MMBA.

The U.S. Supreme Court Almost, But Doesn’t, Strike a Big Blow to Unions and Agency Shop Arrangements

Posted in Labor Relations

US-Supreme-Court.jpgThis blog post was authored by Connie Almond

Today, the U.S. Supreme Court issued a case that could have – but ultimately did not – have significant implications for labor unions and agency shops in particular.  In Harris v. Quinn, the Court held that in-home service providers in Illinois who are not union members cannot be required to pay the union an agency fee.  While this holding is fairly narrow, the Court’s 5-4 decision provides insight on the high court’s current perception and disfavoring of agency shops.  The bottom line for your agency is that existing agency shop arrangements continue as usual.

Background

Like in many states, Illinois has a program designed to assist individuals who, due to age or medical condition, are unable to live in their own homes without assistance but are also unable to afford the expenses of in-home care.  Under state law, the State provides in-home service providers who are jointly employed by the State who compensates the personal assistants and the “customers” who are the individuals receiving the care.  Illinois law provides that the personal assistants are “public employees” of the State but solely for the purposes of coverage under the state’s public labor law.

Service Employees International Union (SEIU) was the exclusive representative for the personal assistants for purposes of collective bargaining.  The Union and State negotiated an agency shop provision into the collective bargaining agreement requiring all personal assistants who are not union members to pay a “fair share” of the union dues.  Three of the personal assistants objected to this agency fee and sued the State and Union alleging that the agency shop violated their First Amendment rights because they were required to pay a fee to a union that they do not wish to support.  The trial court and Seventh Circuit Court of Appeals found in favor of the State and Union.

Court’s Analysis and Narrow Holding

The Court’s decision heavily criticized the Court’s prior decision in Abood v. Detroit Board of Education, 431 U.S. 209 (1977).  In Abood, the Court held that public employees who choose not to join a public-sector union may nevertheless be compelled to pay an agency fee to support union work that is related to collective-bargaining, contract administration, and grievance adjustments, but not for the union’s political or ideological purposes.

The Court distinguished the personal assistants in Illinois from “full-fledged public employees.”  The Court found that personal assistants are almost entirely answerable to the customers, who have the ability to hire, evaluate, establish working conditions, and fire the personal assistants.  In turn, the Court found that the scope of collective bargaining on their behalf is sharply limited.  Courts have upheld the constitutionality of agency fees because the State compels the union to promote and protect the interests of nonmembers in negotiating and administering a collective bargaining agreement and representing the interests of employees in settling disputes and processing grievances.   The Court found that these rationales do not apply to personal assistants because the State requires that they all receive the same pay rate and the union has no authority to represent a personal assistant in a grievance against a customer.

Ultimately, the Court narrowly held that an agency shop is not constitutional for the personal assistants in Illinois because it infringes on their First Amendment rights of speech.  The Court did not, however, find that agency shops are unconstitutional for “full-fledged public employees.”

What Does This Case Mean For Your Agency?

Likely nothing.  The Court’s holding narrowly applies to the personal assistants under the Illinois state program.  Although the Abood case came under heavy fire, the Court did not overturn it.  Consequently, current agency shop arrangements in your collective bargaining agreements remain valid and you should continue to enforce them.

Even for agencies who currently jointly employ in-home service providers, this Court’s rationale may not apply if the agency has more control as an employer than the Court found the State of Illinois had over its personal assistants.  We may anticipate some in-home service providers in California filing similar legal actions challenging agency shops.

For private sector employers, this case also has no direct impact.

There are two potential longer term outcomes of this case.  First, this case provides the arguments and legal foundation for individuals to challenge agency fee provisions in state laws, such as the Meyers Milias Brown Act, Educational Employment Relations Act, Higher Education Employer-Employee Relations Act, and others.

Second, although not the crux of this case, the Court also stated that, under the Pickering balancing test applied in First Amendment retaliation cases, union speech that is germane to collective bargaining addresses matters of public concern and, therefore, may be considered protected speech.  For example, speech in favor of increased wages and benefits for personal assistants would likely mean increased expenditures under the Medicaid program, and the Court stated that Medicaid funding levels are certainly of great public concern.  Although the dissent found that this speech would not be considered protected, we believe the Court’s discussion of this issue may open the door for individuals to file First Amendment retaliation claims on the basis that their speech regarding salaries, compensation, etc. is protected speech.

AB 1469’s Newly Enacted Fix For CalSTRS Unfunded Liability Means Increased Contribution Rates for Employers, Employees, and the State

Posted in Education, Legislation, Retirement

Retirement_Graphic.jpgThis blog post is authored by Michael Youril

Every employer who has employees covered by the California State Teachers’ Retirement System (“CalSTRS”) is aware of the massive funding gap for the CalSTRS pension fund, and the need to stabilize funding for CalSTRS before the pension fund goes broke.  At this time, the CalSTRS Defined Benefit Program is only about 67% funded and has an unfunded liability of nearly $74 billion.  CalSTRS has recognized the need for increased contribution rates and asked the Legislature to take action in order to sustain the long-term viability of the pension fund.

The Legislature took up the call and passed Assembly Bill 1469 to address the CalSTRS funding gap and eliminate the fund’s unfunded liability.  On June 24, 2014, Governor Brown signed AB 1469 into law.  AB 1469 is part of the 2014-2015 budget and will take effect immediately.  AB 1469 creates a plan to fully fund the CalSTRS Defined Benefit Program by 2046 through hefty increases to employer, employee, and State contributions.  Although rate increases phase in over a number of years, employers can expect to feel the effects of the increases almost immediately.

Employer contributions will steadily rise from the current rate of 8.25% of creditable compensation to 19.1%, phased in over the next seven years.  Under the new legislation, the employer contribution rates will be as follows:

  • July 1, 2014 – 8.88%
  • July 1, 2015 – 10.73%
  • July 1, 2016 – 12.58%
  • July 1, 2017 – 14.43%
  • July 1, 2018 – 16.28%
  • July 1, 2019 – 18.13%
  • July 1, 2020 – 19.1%

The employer contribution rates in effect on July 1, 2020, will remain in place unless modified by the CalSTRS Board.  Beginning in the 2021-2022 fiscal year, the STRS Board is required to increase or decrease the employer contribution rate to the rate required to eliminate the current unfunded actuarial liability by June 30, 2046.  However, the change cannot lead to an employer contribution rate increase of more than one percent in any fiscal year and the total increased contribution rate under the legislation cannot exceed 12%.  Thus, employers could see their contribution rate reach a total of 20.25% by fiscal year 2023-2024.

Employers are not alone in shouldering the rate increases. Employees will also see their contribution rates increase over the next three years.  CalSTRS members who are subject to the California Public Employees’ Pension Reform Act of 2013 (“PEPRA”), also known as “2% at 62 members”, will have their contribution rate increased from 8.00% to 9.205%.  CalSTRS members who are not subject to PEPRA, also known as “2% at 60 members”, will see their rates increase from 8.00% to 10.25%.  The employee rate will be as follows:

2% at 62 Members

  • July 1, 2014 – 8.15%
  • July 1, 2015 – 8.56%
  • July 1, 2016 – 9.205%

2% at 60 Members

  • July 1, 2014 – 8.15%
  • July 1, 2015 – 9.20%
  • July 1, 2016 – 10.25%

Of course, the member rate increases for current employees means that current employees will be paying a larger contribution towards their defined retirement benefit.  Generally, the contracts clauses of the state and federal constitutions prohibit an employer from impairing constitutionally-protected “vested” retirement benefits.  However, case law provides that vested benefits may be modified if, prior to the time of retirement, a reasonable modification is made to maintain the integrity of the pension system and the modification results in a comparable benefit or new advantage. The legislation creates a comparable benefit to offset the increased employee contribution by guaranteeing that all employees performing creditable service as of January 1, 2014, will receive the existing two percent “annual benefit increase.”

Finally, the State contribution rate will also increase from 3.041% to 6.328% over the next three years.  When contributions for purchasing power protection are included, the State increase will represent an increase from 5.541% to 8.828%.  Beginning in fiscal year 2017-2018, CalSTRS must, within certain restrictions, adjust the State contribution rate to reflect the contribution required to eliminate the unfunded actuarial liability attributed to benefits in effect before July 1, 1990.

Increased employer and member contributions required by this legislation are only applicable to the Defined Benefit Program.  Employer and member contributions creditable to the Defined Benefit Supplement Program, such as for earnings in excess of one year of service credit, will remain at eight percent.  The Excess contributions above eight percent received by CalSTRS that are creditable to the Defined Supplement Program will be returned to employers.  Employers will then return the excess member contributions to the employees and the returned pre-tax contributions will be considered taxable income in the year they are received by the employee.

Employers will begin to feel the effects of these changes as increased employer contributions begin to phase in over the next several years.  The Senate and Assembly bill analyses predict that the legislation will increase costs to employers by several billion dollars through 2046.  The contributions rate increases will have long-term effects on the fiscal stability of CalSTRS employers and will require employers to be mindful of these impacts as they make future collective bargaining and budgeting decisions.

If you have questions about this issue, please contact our Los Angeles, San Francisco, Fresno, or San Diego office.