California Public Agency Labor & Employment Blog

California Public Agency Labor & Employment Blog

Useful information for navigating legal challenges

Final Judgment Rule – Four Exceptions to Keep in Mind

Posted in Appeals, Litigation

Judge 2Many times, parties to a lawsuit receive trial court rulings in the midst of the litigation that are unfavorable, oppressive, and seem to them to be demonstrably wrong.  The parties want to appeal immediately, but their counsel will say that cannot happen, citing the “Final Judgment Rule.”  The rule certainly sounds dark and fateful.  Perhaps courts intend it to be, because the rule serves to deter disgruntled litigants from appealing while the trial court case is ongoing, and typically requires those litigants to wait months, or even years, to appeal.  So what is this rule?  And perhaps more importantly, what are ways to gain access to an appellate court early without offending it?

The Final Judgment Rule (sometimes called the “One Final Judgment Rule”) is the legal principle that appellate courts will only hear appeals from the “final” judgment in a case.  A plaintiff or defendant cannot appeal rulings of the trial court while the case is still ongoing.  For example, a party that loses its motion to compel discovery, motion for summary judgment, or demurrer cannot appeal these decisions, at least not until a final judgment has been entered in the case, concluding the lawsuit in the trial court.  The Final Judgment Rule has existed for hundreds of years, and serves the purpose of promoting judicial efficiency – cases would practically never end if the party who lost a motion while the case was pending could appeal it, wait for a decision from the court of appeal, and then continue with the trial court case.

Moreover, the Final Judgment Rule greatly reduces appellate court workloads by tending to make it so that only very important issues are ultimately presented to those courts.  If a party loses a motion early in the trial court case, they may certainly feel wronged.  But in the weeks or months afterward, the case may settle, the issue may fade in importance, or the trial court might actually decide to change the ruling, making appellate review unnecessary.  Postponing review conserves appellate court resources, and those of the parties as well.  In addition, postponing appellate review allows the appellate court to rule on all the challenges to the trial court’s decisions at the same time, thereby further promoting efficiency.  The appellate court will not have to consider “piecemeal” appeals.

The Final Judgment Rule may make sound policy sense.  But it is not much comfort to a litigant who has lost an important motion in court many months before the actual trial will start and cannot immediately appeal the bad ruling.

There are, however, some ways around the Final Judgment Rule.  Here are examples of four significant ways, and the circumstance under which each is available.

1. Petition for Writ of Mandamus:

This is the classic method for obtaining relief while a litigation matter is still ongoing.  This type of petition to an appellate court seeks a “writ of mandamus” (sometimes also called a “writ of mandate”), essentially an order from the appellate court to the trial court directing the trial court to change its decision or take some other action.  This type of writ is available in both federal and state courts.

The advantage of a petition for writ of mandamus is that it is available to overturn essentially any ruling or order made by a trial court, even though the lawsuit is still ongoing.  The disadvantage of this type of petition, however, is that it is entirely discretionary in the court of appeal.  The court of appeal is free to turn down any writ petition, even one that clearly has merit, and the court of appeal denies the overwhelming majority of petitions for writ of mandamus seeking review of trial court orders.  The state court percentage of accepted petitions is low and the number is even lower in federal court.  The reason these writs are so often denied on this summary basis (i.e., without even considering whether they raise a valid legal point) is that courts of appeal rarely see any reason to depart from the underlying principles of the Final Judgment Rule.

There are particular types of scenarios in which appellate courts are more likely to decide a writ on the merits.  One is when issues of privilege or confidentiality are concerned.  For example, when a trial court orders a litigant to disclose sensitive personnel records of individuals or information in which the litigant claims attorney-client privilege, the need for appellate review is immediate.  If the litigant obeys the trial court’s order, then the disclosure will be made, and the alleged harm done, before any appellate court can determine whether the trial court’s ruling in fact was correct.  It is widely understood that in these scenarios, appellate courts will more likely choose to intervene in the midst of litigation.

Another example is when the issue raised by the writ petition is one of great public importance, and when the party who files the petition can persuade the court that the public would be well served by the appellate court immediately reviewing and providing guidance on that particular issue without waiting for the case to conclude.

2. A Preliminary Injunction Ruling:

The parties can also immediately appeal a trial court’s ruling granting or denying injunctive relief.  Trial courts have the power to issue preliminary injunctions at the beginning of a case that can operate to preserve the status quo.  For example, a trial court can order that a public college must stop enforcing a rule that supposedly stifles student First Amendment free speech rights.  Trial courts can make these orders based on an initial showing by the plaintiff, at the beginning of the case, that they are likely to succeed on the merits of their claim, that they are likely to suffer irreparable harm if the preliminary injunction is not granted, and that general equities and the public interest support issuance of the injunction.

Not only are these types of orders for injunctive relief by trial courts (either granting or denying) immediately appealable, but in the federal appellate courts, appeals of injunctions are given priority over other types of cases.

3. Rulings on Anti-SLAPP Motions:

An immediate appeal is also available from a state trial court’s ruling on what is known as an “anti-SLAPP motion.”  This type of motion can be used by a defendant, including a public entity, in response to a lawsuit that challenges conduct by the defendant in furtherance of the defendant’s right of petition or free speech as defined by the anti-SLAPP statute.  (SLAPP stands for “Strategic Lawsuit Against Public Participation,” and is meant to refer essentially to meritless lawsuits brought against persons or organizations to punish them for and/or deter them from speaking out on important issues or petitioning the government for redress.)  The statute defines protected activities very broadly.  Indeed, courts have interpreted the definition to include government statements in various types of proceedings, including internal investigations conducted by public entities as to their employees.  (Hansen v. California Dept. of Corrections and Rehabilitation.)

If the anti-SLAPP statute applies in a given context, then the defendant can make a motion at the outset of the case to have a trial court determine if there is any “probability” of success on the claim.  If the plaintiff cannot present evidence making this showing of a “probability,” then the trial court rules in favor of the defendant.  If the defendant wins the motion, the trial court will require the plaintiff to pay the defendant’s attorneys’ fees and costs.  If defendant loses the motion, defendant can immediately appeal that loss, without the case going to final judgment. Thus, another very important way to have an appeal heard early in state court is to bring an anti-SLAPP motion.

4. Qualified Immunity Decisions:

Another judicial determination that is often immediately appealable, in the midst of litigation, is a federal trial court’s decision on the defense of qualified immunity.  This is a defense available to individuals who are officials or employees of government agencies and are named personally in federal civil rights lawsuits.  In general, the defense of qualified immunity applies when the individual defendant is challenged for actions he or she took relating to an area of law that is unclear or unsettled.  If it is sufficiently difficult for the individual to tell what is constitutionally prohibited in the situation in question, then this defense will apply.  Qualified immunity will not provide a defense to claims for declaratory or injunctive relief against the individual, but it will serve as a defense to a monetary damages claim.

If the trial court either grants or denies a motion based on qualified immunity in the middle of the case, then either side respectively can appeal the determination, if the appeal involves essentially legal questions such as whether the plaintiff’s alleged rights at issue were sufficiently unclear to merit applying the defense.  The defense applies in a wide variety of cases brought against government officials and employees.  Significantly, individual defendants can claim the qualified immunity defense in wrongful termination cases in which the former employee claims violation of his or her constitutional free speech or due process rights.

Each of these four ways to obtain appellate review on an interlocutory basis — i.e., in the middle of the case — are available to public entity defendants.  This gives public entities a unique ability in many cases to structure the defense to obtain immediate access to an appellate court, and thus have important matters resolved before the case concludes.


For other litigation posts on related issues, see prior LCW articles: “Anti-Slapp Motions As A Litigation Resource For Public Employers,” “Extending Qualified Immunity To Private Individuals,” and “Appellate Law — What Are Amicus Curiae Briefs?”

Summer Lovin’, Had Me A Look At The Recreational Establishment Exemption. Tell Me More, Tell Me More!

Posted in Wage and Hour

Swimming_pool_with_lane_ropes_in_placeWhile Danny Zuko and Sandy may have had themselves a blast during those summer lovin’ months, this may be a good time for your agency to take a look at the FLSA “recreational establishment” exemption.  This is a unique exemption that will exempt those employees working at “recreational establishments” from the traditional overtime threshold of 40 hours per week.

The United States Department of Labor (“DOL”) has defined an establishment as a “distinct physical place of business” and not necessarily the entire business or enterprise.  In so doing, the DOL has also opined that the following may be recreational establishments, even when operated by a public agency: stadiums, golf courses, swimming pools, summer camps, ice skating rinks, zoos, beaches, and boardwalk facilities.  In other words, your entire agency does not have to qualify as a recreational establishment, but it can be a distinct business within your agency, such as a swimming pool or a summer camp.

If your agency operates a “recreational establishment,” then employees who are employed solely for the purposes of the operation of the recreational establishment may be exempt from the FLSA.  For example, seasonal employees hired to operate a swimming pool that only operates for the summer may be exempt.  On the other hand, an employee who is employed by your agency, who happens to work at the recreational establishment during its limited operation, will likely not qualify.

The key inquiry in determining whether this exemption applies is whether your agency is operating a “recreational establishment.”  The FLSA exempts:

any employee employed by an establishment which is an amusement or recreational establishment, organized camp, or religious or non-profit educational conference center, if (A) it does not operate for more than seven months in any calendar year, or (B) during the preceding calendar year, its average receipts for any six months of such year were not more than 33 ⅓ per centum of its average receipts for the other six months of such year. (29 U.S.C. § 213(a)(3).)

The reasoning behind this exemption is that recreational establishments have a “particular character” that may require longer hours in a shorter season.

First Way to Qualify: the establishment does not operate for more than seven months in any calendar year

Simply look at how many months in a year the establishment operates.  If the establishment is closed for more than seven months, then it will qualify as a “recreational establishment.”  Examples might be a pool that only operates in the summer or an ice skating rink that only operates in the winter.

It should be noted that this timing requirement is applied to the establishment, not the employee.  In other words, seasonal employees do not qualify for the “recreational establishment” exemption because they only work for three months a year.  For example, a lifeguard who is only hired for the three months that a City pool is open may qualify because the City pool only operates for three months, not because she is only being hired for three months.

Second Way to Qualify: average receipts for any six months were more than 33 1/3 % of establishment’s average for the other six months of the year.

This will require a little math, but it is relatively straightforward.  The establishment can operate year-round, and if any six months of receipts are one-third of the other six months, then it can qualify.  Examples of this might be pools, in which you charge admission that experiences sharp peak seasons and slack seasons.

The key here is “receipts.”  The word receipt suggests that there is a specific cost to the consumer that is being collected by the establishment, e.g., admission fees.  In other words, we would not use the cost of the monthly electricity bill to calculate “average receipts.”

FLSA audit is an effective method for proactively ensuring that an agency understands and meets all necessary obligations under the statute. Visit our website to see whether you need to schedule an FLSA Compliance Audit for your agency.

Is Your Public Agency Aware of These Lesser Known Job-Protected Leaves?

Posted in Employment, Public Sector

Vacation Request 2Many public agencies are familiar with the well-known reasons why an employee can take time off of work, such as for paid sick leave, family and medical leave, disability or industrial injury leave, and jury duty leave.  However, in California, there are a few “lesser known” leaves that often get overlooked.  These leaves include School Activities Leave; Leave for Victims of Domestic Violence, Sexual Assault and Stalking; and Leave to Perform Emergency Duties or Attend Related Training.  While these types of leaves may be less famous compared to others, they nonetheless apply to public agencies and provide employees with important job-protection rights.

When a leave provides job protection, an employer cannot discharge, threaten to discharge, demote, suspend, or in any other manner discriminate or retaliate against an employee for taking time off for the purposes of the leave.  Employers who do not abide by the required terms and conditions of the leave may be required to reinstate the employee and reimburse the employee for lost wages and work benefits.  Employers could also be subject to a civil penalty or found guilty of a misdemeanor.

Below is a refresher course on these lesser known leaves.  The next time one of these situations arises, your public agency should be able to identify the need for leave and the employee’s rights under the law.

School Activities Leave (Labor Code section 230.8)

Employers with 25 or more employees working in the same location are required to provide School Activities Leave.  School Activities Leave gives an employee with up to 40 hours of job-protected leave each year if the employee is a parent of one or more children in kindergarten through grade 12 or attending a licensed child care provider and the employee requests leave for a qualifying reason.  For purposes of this leave, a “parent” means a parent, guardian, stepparent, foster parent, or grandparent of, or a person who stands in loco parentis to, a child.

An employee may take up to eight hours of School Activities Leave in any calendar month (out of the 40 hours allotted each year) for one of the following reasons: (1) to find, enroll, or reenroll a child in a school or licensed child care provider; or (2) to participate in activities of his/her child’s school or licensed child care provider.  An employee may also use School Activities Leave, without a use limit per month, to address a school or child care provider emergency.  Emergencies include behavioral or disciplinary problems, school closure, the school making a qualifying request for the child to be picked up, or a natural disaster.

Employees are required to provide reasonable notice to an employer for planned absences.  Employers are allowed to request documentation from the employee of school-related activities.  The documentation must come from the school or child care provider.

When an employee takes School Activities Leave for a planned absence, the employee is required to simultaneously use existing vacation, personal leave, or compensatory time off to cover time away.  An employer also has the discretion to allow employees to take School Activities Leave on an unpaid basis.

If more than one parent of a child works for the same agency at the same worksite and both want to use School Activities Leave for a planned absence, only one parent may use School Activities Leave at a time.  The first parent to give notice to the employer gets to use School Activities Leave.

Leave for Victims of Domestic Violence, Sexual Assault, and Stalking (Labor Code sections 230 & 230.1)

Employers with 25 or more employees are required to provide job-protected leave for employees who are victims of domestic violence, sexual assault, or stalking for the following purposes:

  • To seek medical attention for injuries caused by domestic violence, sexual assault, or stalking;
  • To obtain services from a domestic violence shelter, program, or rape crisis center;
  • To obtain psychological counseling related to an experience of domestic violence, sexual assault, or stalking; or
  • To participate in safety planning and take other actions to increase safety from future domestic violence, sexual assault, or stalking, including temporary or permanent relocation.

To use this leave, the employee must give the employer reasonable advance notice of the intention to take time off, unless such notice is not possible.  If an employee does not provide advance notice, the employee has the opportunity to provide certification to the employer of the reason for the absence.  Certification could be a police report, a court order, evidence of a court appearance, or documentation from a licensed medical professional or domestic violence counselor.

When an employee takes this leave, the employer has a duty to maintain the confidentiality of the employee’s request and reasons for the leave.  The leave required by the statute does not need to be paid by the employer, but the employee may use existing vacation, personal leave, or compensatory time off to cover time away, unless otherwise provided by a collective bargaining agreement (the statute provides that a collective bargaining agreement cannot diminish rights the statute provides).

On or before July 1, 2017, the Labor Commissioner is expected to create a notice to inform employees of their rights to use victim’s leave.   Once the Labor Commissioner’s Office posts this notice on its website, employers will be required to provide notice of this leave to new employees upon hire and to other employees upon request.

In addition to providing leave for victims of domestic violence, sexual assault, or stalking, employers are also required to provide reasonable accommodations for the safety of the victims while at work, if the victims make a request for such accommodations.

Leave to Perform Emergency Duties or to Attend Related Training (Labor Code section 230.3)

Employees are allowed to take time off to perform emergency duties as a volunteer firefighter, a reserve police officer, or emergency rescue personnel.   However, public safety agencies do not have to provide this leave if the employee’s absence would hinder the agency’s availability to provide public safety or emergency medical services.

An employee who performs duties as a volunteer firefighter, a reserve peace officer, or as emergency rescue personnel, and who works for an employer with 50 or more employees, shall be permitted to take temporary leaves of absence, not to exceed an aggregate of 14 days per calendar year, for the purpose of engaging in fire, law enforcement, or emergency rescue training.

For purposes of this leave, the term “emergency rescue personnel” means any person who is an officer, employee, or member of a fire department or fire protection agency of the federal government, the state, a city, county, district, or other public or municipal corporation, or of a sheriff’s department, a police department, or a private fire department, whether that person is a volunteer or partly paid or fully paid, while he or she is actually engaged in providing emergency services.

If you have any questions about these leaves, please contact our Los Angeles, San Francisco, Fresno, San Diego, or Sacramento office.

California Legislation to Watch in The Final Journey to the Governor’s Desk

Posted in Legislation

786x496@100dpi - 4The California Legislature is working hard to push bills through to the general assembly and senate votes that are scheduled for September.  A number of bills making their way to that final vote are noteworthy for public employers.

PERB, Firefighters and the Right-to-Sue

Right-to-sue notices may not be just for Department of Fair Housing and Employment (DFEH) complaints.  If Senate Bill No. 548 passes, the Public Employment Relations Board (PERB) will have the authority, and may be required, to issue right-to-sue notices to an employee organization that represents firefighters under two circumstances: (1) if PERB dismisses the unfair practice charge for failing state a viable claim or (2) if PERB has not issued a decision within 150 days from the filing of the unfair practice charge.  The California Professional Firefighters organization explains in its analysis of the bill that PERB was supposed to have provided a “more efficient and timely resolution of labor disputes between public employers and public employee firefighters”; however, PERB’s workload has caused delays “that match or exceed those previously experienced in superior court.”  The California Professional Firefighters further argue that since they are prohibited by law from striking during labor disputes, allowing union access to superior court would decrease delay in resolving those disputes.  The bill would require that litigation be initiated within one year from the right-to-sue notice. The Senate Floor passed the bill on May 4, 2017, and ordered it to the Assembly.

Local Public Agencies Say “What About Us?”

Existing law exempts certain state agency documents related to the collective bargaining process from the California Public Records Act.  However, under current law, the exemption applies only to state agencies and not local public agencies.  Assembly Bill 1455, if passed, would establish the same public records exemption for local public agencies.  Specifically, documents regarding collective bargaining that reveal the local agency’s “deliberative process, impressions, evaluations, opinions, recommendations, meeting minutes, research, work product, theories, or strategy, or that provide instruction, advice or training to employees who do not have full collective bargaining and representation rights” would not need to be disclosed.  The legislation is a result of a superior court judge’s decision that the public records exemption for state agencies did not extend to local public agencies.  The bill is in the Assembly and recently passed review by the Judiciary Committee.

Conflict of Interests in Collective Bargaining

Senate Bill No. 371 is one of the several bills aimed at changing statutes that concern collective bargaining.  Existing law is that an individual who is covered by a collective bargaining agreement is not allowed to represent the agency in employer/employee negotiations—which seems to be an obvious requirement to avoid conflicts of interest. Senate Bill No. 371 proposes to modify the statutory language in Government Code section 3505.9 from “an individual who will be covered by a memorandum of understanding” to “an individual who will be affected, directly or indirectly, by a memorandum of understanding.  The bill proposes a definition of “affected, directly or indirectly” that would include anyone “who may derive increased benefits or compensation from the existence of the memorandum of understanding.”  Several employee organizations are opposed to the bill, including the California Professional Firefighters, which noted in its opposition to the bill that a public agency is capable of determining who should represent the agency in collective bargaining.  The bill failed to pass the Senate Committee on Public Employment and Retirement; however, on May 9, reconsideration was granted.  Stay tuned.

Firefighters Want Out of PERB – Peace Officers Want In

Presently, most peace officer employee organizations are not within PERB’s jurisdiction. The author of Assembly Bill 530 contends that adding peace officer associations into PERB’s jurisdiction “will allow peace officer unions to use the expertise of PERB and give smaller unions the ability to defend themselves against unfair labor practices.”  The further argument in support of the bill is that labor disputes involving peace officer unions “go to the Superior Court, which can be costly and time-consuming,” which is in direct contrast to the firefighters’ argument noted in SB 548 (discussed above) that PERB takes too long to resolve disputes.  AB 530 is supported by several peace officer associations, and was passed by the Assembly Committee on Public Employees, Retirement and Social Security and sent to the Appropriations Committee.  There, it was placed in the suspense file on May 10, 2017, to allow for consideration on the fiscal impact on PERB.

If interested in following the progress of any of these bills, the California Legislative Information website allows individuals to track bills to receive updates.

California Legislation Seeks to Limit Public Agency Activities Surrounding Immigration Enforcement and Religious Freedom

Posted in Education, Employment, Legislation, Public Safety Issues

786x496@100dpi - 6In December 2016, shortly after the November 8 presidential election, members of the California Legislature introduced for consideration a series of bills addressing immigration enforcement. Within the series, three bills would place limitations on a public agency’s ability to participate in federal immigration enforcement efforts and collect personal information regarding an individual’s religion, national origin or ethnicity:

  1. Assembly Bill 699 – Safe Schools for Immigrant Students: AB 699 seeks to establish various policies and protections governing public school districts and charter schools in order to promote safe and equitable learning environments for all pupils, regardless of their immigration status. In this vein, AB 699 expressly protects persons in public schools from discrimination, harassment, intimidation or bullying based on their immigration status. AB 699 also seeks to provide direction to school officials and Local Educational Agencies by creating rules for the place, manner, and procedure for Immigration and Customs Enforcement (ICE) officials seeking to enter a public schoolsite. Under the bill, school officials are prohibited from allowing an ICE official or employee to enter a schoolsite for any purpose, without first providing valid identification, a written statement of the purpose of the visit, a valid judicial warrant or court order, and approval to enter the schoolsite from the superintendent of the school district, the superintendent of the county office of education or the principal of the charter school. Furthermore, even if the ICE agent meets these requirements, schools would be required to limit access to facilities where pupils are not present. AB 699 also prohibits school officials from collecting information or documents about the immigration status of pupils or their families. AB 699 encourages schools to work with students’ families to update emergency contact information in the event that a pupil’s parent or guardian is taken into custody. Schools would be encouraged to contact all persons on the emergency contact list before engaging Child Protective Services to arrange for the pupil’s care. Lastly, the bill would require school districts to provide counseling and other support services to pupils who are affected by federal immigration enforcement activities.
  1. Senate Bill 31 – California Religious Freedom Act: SB 31 would establish the California Religious Freedom Act. The Act would prohibit a state or local agency or public employee holding him or herself out as an agent of the agency from providing or disclosing to the federal government personal information regarding an individual’s religious beliefs, practices or affiliation, when the information is sought for compiling a database of individuals based on religious belief, practice, or affiliation, based on national origin or based on ethnicity for law enforcement or immigration purposes. In the event that the federal government were to enact laws or regulations requiring persons to register their religion, national origin, or ethnicity, SB 31 would also prohibit state and local law enforcement from using agency or department moneys, facilities, property, equipment or personnel to investigate, enforce, or assist in the investigation or enforcement of violations of these laws or regulations. The bill would prohibit state and local law enforcement agencies and their employees from collecting information on religious belief, practice, or affiliation from any individual except (1) as part of a targeted investigation based on a reasonable suspicion that the individual has engaged in or been the victim of criminal activity where such activity has a clear connection to religious belief, practice, or affiliation, or (2) when necessary to provide religious accommodations. However, agencies may still compile aggregate non-personal information about religious belief, practice, or affiliation, national origin or ethnicity, and share such information with other local, state or federal agencies. SB 31 would take effect immediately upon the Governor’s signature.
  1. Senate Bill 54 – California Values Act: SB 54 establishes the California Values Act. The Act would prohibit state and local law enforcement agencies, including school police and security departments, from using their resources to carry out immigration enforcement activities. Such activities include, but are not limited to, making arrests based on civil immigration warrants; performing the functions of an immigration officer; inquiring into an individual’s immigration status and providing an individual’s personal information to federal immigration authorities. Despite these limitations, local and state law enforcement agencies will continue to be permitted to:
    • share with federal immigration authorities information about an individual’s criminal history;
    • make inquiries necessary to grant visas to potential victims of crime or trafficking;
    • respond to a notification request by federal immigration authorities regarding persons currently serving sentences for violent felonies; and
    • participate in a joint law enforcement task force with federal agencies, so long as the primary purpose of that task force is not immigration enforcement.

However, to the extent that a state or local law enforcement agency chooses to participate in joint law enforcement task forces with federal immigration agencies, the agency would be required to issue a report every six (6) months regarding the joint activities. Finally, the bill would require all public schools, including elementary and secondary schools, charter schools, the California Community Colleges and the California State University, public libraries, and specified healthcare facilities and courthouses to implement a model policy, to be drafted by the California Attorney General, which prohibits public school assistance with immigration enforcement activities. Other entities would be encouraged to establish the model policy.

All three bills are currently making their way through the various fiscal and policy committees of the State Assembly and Senate. This week, Governor Brown issued a revised state budget, popularly known as the “May Revision,” which reallocates certain budget items based on the State’s financial outlook. To the extent that these bills have a fiscal impact, their future success will depend on the changes the Government made to the State budget.

We will provide you updates in the coming months regarding the status of these bills.

The U.S. Supreme Court Lets Stand an Important FLSA Case on Cash Paid in Lieu of Health Benefits and Overtime Rates

Posted in Wage and Hour

Courthouse 7On Monday, May 15, 2017, the U.S. Supreme Court denied the City of San Gabriel’s petition for review of Flores v. City of San Gabriel, a 2016 decision by the U.S. Court of Appeals for the Ninth Circuit that offered new interpretations of the Fair Labor Standards Act (FLSA). Therefore, Flores remains the governing law in the eight states within the Ninth Circuit Court of Appeals, including California.  The primary holding of Flores is that amounts paid to employees in lieu of health benefits must be included in employees’ regular rate for purposes of calculating FLSA overtime. The holdings of the case will remain the law of this Circuit unless and until (1) Congress acts to amend the FLSA to provide relief to employers, or (2) another Circuit Court rules differently than the Ninth Circuit on the same issue or issues and the Supreme Court grants review of that case and rejects Flores.

How Did We Get Here?

In 2012, Danny Flores and other police officers working for the City of San Gabriel filed a lawsuit seeking to recover back overtime pay under the FLSA. After a decision by the trial court, both parties appealed the decision to the U.S. Court of Appeals for the Ninth Circuit. The Ninth Circuit issued its decision on June 2, 2016. The holdings of the decision are discussed below. On June 16, 2016, the City sought a rehearing by the Ninth Circuit (“en banc review”). The request was denied by the Ninth Circuit on August 23, 2016. In January 2017, the City filed a petition for writ of certiorari with the U.S. Supreme Court, asking the Supreme Court to review and overturn the Flores case. Two amicus curiae briefs were filed in support of the City’s petition, including a brief from seven different public sector organizations that demonstrated the wide impact of the Ninth Circuit’s decision. On May 15, 2017, the Supreme Court denied the City’s petition, thus terminating the possibility of further judicial review of the Flores decision. The Flores decision remains the law of the Ninth Circuit and is binding upon California employers.

A Review of the Three Main Holdings of the Flores Case

Cash in Lieu

The clearest mandate arising from the Flores case is that cash payments to employees for waiving health insurance or not using their entire health allowance (“cash-in-lieu”) must be included in the employees’ FLSA “regular rate of pay,” which is the hourly rate used to compensate non-exempt employees for FLSA overtime hours. The FLSA regular rate requirements apply to FLSA overtime hours, but not other types of contractual overtime. Many labor agreements provide overtime more generously than required by the FLSA – such as treating paid leave time as hours worked, or paying overtime for working on holidays. The FLSA regular rate requirements do not apply to those “non-FLSA” contractual overtime hours.

For employers who pay employees significantly in excess of minimum FLSA overtime requirements, an inclusion of cash-in-lieu in the FLSA regular rate of pay may not result in additional FLSA overtime liability because of the various offsets against FLSA overtime liability that are available to those employers. This is particularly true for public safety employees for whom the employer has adopted a section 207(k) work period. For employers with high cash-in-lieu amounts or contractual overtime practices that more strictly follow the FLSA, implementing this aspect of the decision will likely result in higher overtime costs. Before making changes to a regular rate calculation because of Flores or other similar issues, employers should carefully evaluate whether inclusion of cash-in-lieu in the FLSA regular rate of pay will require them to pay more than their current contractual overtime obligations.

Bona Fide Plans

Per Flores, if the aggregated amount of cash-in-lieu an agency pays to employees is more than 40% of total plan payments (total plan payments means cash-in-lieu and other plan contributions), the employer’s plan is not bona fide under the FLSA. This means the value of all plan payments must be included in the FLSA regular rate of pay. There is no bright line rule as to a percentage that will ensure an employer’s plan is bona fide. Indeed, the Ninth Circuit in Flores threw out the formerly-applicable 20% test but offered no guidance as to what the test should be. Accordingly, employers that offer cash-in-lieu should work with legal counsel to evaluate whether their plans are bona fide under the Ninth Circuit standard. If an employer’s benefits plan is not bona fide, overtime costs will undoubtedly rise since the FLSA regular rate for non-exempt employees will increase.

Willfulness

Now that Flores is final, the current Ninth Circuit standard on willfulness is the following: in the words of the Court, an employer’s violation of the FLSA is willful when the employer is “on notice of its FLSA requirements, yet [takes] no affirmative action to assure compliance with them.”  A willful violation subjects an employer to liability for three years of back pay (instead of two). This “willfulness” standard places a burden on employers who have any awareness of their FLSA obligations to be proactive in their FLSA compliance efforts. We recommend employers work with legal counsel to ensure sufficient active steps to achieve FLSA compliance are taken and – importantly – documented on a regular basis.

Final Thoughts

The Flores decision illustrates the challenge of FLSA compliance for employers. The FLSA was enacted 79 years ago and the statute and the Department of Labor regulations and interpretations have not kept pace with the realities of the twenty-first-century workplace, such as payments to employees for opting out of health insurance. This is especially true in the public sector, where employers have a myriad of different types of employees and pay requirements. In light of those challenges, the decision reiterates the importance of conducting and documenting a careful review of FLSA overtime payment practices, to not only ensure compliance, but also to prevent a willful violation and be able to prove a good faith defense.


LCW-WebinarLCW Webinar: The Flores Decision is Here to Stay – What Do California Public Employers Need to Know?

Join us for a webinar, as our wage and hour experts will discuss the significance of this decision and the way it will impact California’s public employers.

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Tips from the Table: Negotiations: The Timing and Order of Settlements

Posted in Labor Relations, Negotiations

We are excited to continue our video series – Tips from the Table. In these monthly videos, members of LCW’s Labor Relations and Collective Bargaining 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.

It’s (Almost) Summertime, but the Livin’ is not Always Easy for Employers

Posted in Employment

SummerMany kids and adults alike look forward to summer all year. Summer means longer days, more ice cream, and no school. However, summer can also mean challenges for employers. Though the issues discussed below can come up any time of year, employers often find that they crop up more frequently during the summer months. The tips below will help employers get ahead of potential problems, and make summer feel like a day at the beach.

  1. Dress Codes

As the weather gets warmer, employees may be tempted to wear clothing and shoes that are not appropriate for the workplace. Therefore, now is the time to review and update your agency’s dress code or create a written policy governing employee dress if one is not already in place.

California law allows for employers to establish reasonable dress and grooming standards based on legitimate business concerns, which can include workplace safety and professionalism generally. It follows that employers should tailor dress codes to employee job requirements. For instance, more restrictive policies may be appropriate for employees who have contact with the public than for employees who are always behind the scenes.

Additionally, employers should be prepared to make reasonable accommodations as necessary, unless doing so would create an undue hardship for the agency. For instance, though an agency’s dress code may prohibit employees from wearing hats, it may be a reasonable accommodation of an employee’s religious practice to allow, for example, a Sikh man to wear a turban or a Muslim man to wear a skullcap. Similarly, sneakers and athletic shoes might be prohibited under a dress code, but an employee with a foot condition might be allowed to wear them as a reasonable accommodation.

As with all policies, it is critical that dress codes be applied equally to all employees. Treating employees differently with respect to the administration of this type of policy can open the agency up to claims of harassment, discrimination, or retaliation.

  1. Interns

Many high school and college students on summer break are looking for work experience, including experience through unpaid internships. Employers may view internships as a win-win – the student gains work experience at no cost to the employer.

However, the fact that a position is designated as an “internship” is not sufficient to establish that it is properly an unpaid position. Agencies should take great care to ensure that a court would not consider their “interns” to be employees who are entitled to wages and overtime under the Fair Labor Standards Act (“FLSA”).

The Department of Labor has created a list of six factors that are critical to determining whether a person is appropriately labeled an “intern.” Though this list is not legally definitive, nearly all courts examining this issue look at these factors to some degree. The factors are:

  1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;
  2. The internship experience is for the benefit of the intern;
  3. The intern does not displace regular employees, but works under close supervision of existing staff;
  4. The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;
  5. The intern is not necessarily entitled to a job at the conclusion of the internship; and
  6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

Given the fact-specific analysis that is required, agencies wishing to utilize unpaid interns should work with counsel to ensure that they are complying with all applicable wage and hour requirements.

  1. Vacation Requests

Many employers experience a significant uptick in employee vacation requests during the summer months. To avoid a last-minute rush of requests, supervisors should take time now to review the agency’s vacation or paid time off policy with their subordinates. Supervisors should be sure to specify to whom employees should direct their vacation requests and how far in advance requests should be made.

In addition, this is another area where a uniform application of the agency’s policy is critical. It is not uncommon for multiple employees to request to take vacation during the same time period, which may not be possible from an operational standpoint. Strict adherence to the agency’s policy regarding vacation requests will help avoid the perception of preferential treatment.


Man-in-front-of-computerIs it Time to Update Your Personnel Policies? 

California’s labor and employment laws are changing every year. It is essential for public agencies to continuously review and update their personnel handbooks to make sure that they are legally compliant. This is why we launched the Liebert Model Personnel Policy Portal (LMP3) – an online one-stop shop for all personnel policy needs.  Its mission is to serve as a reliable resource throughout the personnel rules audit process. LMP3 offers online access to mandatory and essential model personnel policies, as well as important commentary and legal references that explain and provide context behind the policies. Subscribers will also receive updated policies that reflect recent changes in the law. Explore all of the benefits >

Retirement for Disability – Latest Developments in CalPERS’ Requirements

Posted in Retirement

Breaking-News1.jpgRetirement for disability can already be a cumbersome and confusing process. The California Public Employees’ Retirement System’s (CalPERS) new and additional mandates – as set forth in its March 30, 2017 Circular Letter – raises the ante. The Letter informs all contracting public agencies of the following six requirements pertaining to the disability retirement of local safety members:

  1. Submission of a disability retirement application;
  2. An eligibility determination when a member is facing pending discipline or was terminated for cause;
  3. Information that must be included in a resolution or certification of delegate in support of an application for disability retirement;
  4. Determination of when a disability is “extended and uncertain” in duration;
  5. Requirement of competent medical evidence of continuous disability;
  6. Medical qualifications for disability retirement; and
  7. Disability re-evaluation procedures for members under the minimum age for service retirement.

While local agencies are likely familiar with some of the requirements described in the Letter, we highlight here those stated requirements that are likely new or little known, to local agencies.

CalPERS recently announced that it will be conducting an audit into the industrial disability retirement (IDR) process for 60 contracting agencies. It is our understanding that the scope of the audit will include requesting medical records to assess the validity of IDR claims and seek disclosure of safety officer personnel records to ensure legal compliance. In addition, CalPERS indicates it will audit to see whether members granted IDR who are younger than 50 are being re-evaluated to determine if the member is still eligible for IDR.

Duty to Provide Relevant Personnel and Medical Records

According to CalPERS “[a]n employer must forward all relevant personnel documents and medical records to CalPERS and obtain CalPERS’ determination that the member is eligible to apply for disability retirement before an employer starts the process of a disability determination for any of the following circumstances:

  • Disciplinary process underway prior to the member’s separation from employment.
  • The member was terminated for cause.
  • The member resigned in lieu of termination.
  • The member signed an agreement to waive his or her reinstatement right as part of a legal settlement (i.e., Employment Reinstatement Waiver).
  • The member has been convicted of or is being investigated for a work-related felony.

CalPERS relies on Government Code sections 20128, 20221 and 20223 for the proposition that CalPERS may require a member (and its employer) to provide information it deems necessary to determine entitlement to benefits and information affecting his or her status as a member.

Evidence of Continuous Disability

A qualifying disability must be permanent or “extended and uncertain.” CalPERS indicates that extended and uncertain means the disability will last at least twelve consecutive months from the date of the application for a disability retirement.  In the past, CalPERS used an unofficial six-month measurement.

CalPERS will require medical records of the member’s physical or mental incapacity to perform the duties of their position from one year before their last day of physical work to the present in order to establish a continuous disability.  There must be medical evidence from the last day of physical work to the present, with no gaps in the medical treatment of more than six months.

Confirmation of a Permanent and Stationary Date for Industrial Disability Retirement

In cases of an industrial disability retirement preceded by a workers’ compensation claim wherein there is a dispute concerning the date on which the member became permanent and stationary, the employer or member must now make a “Petition for Finding of Fact” before the Workers’ Compensation Appeals Board (WCAB) in which the WCAB must certify the date on which the member’s condition became permanent and stationary.  This date then becomes the effective date of the member’s retirement.

The problem will inevitably arise, however, that members who otherwise qualify for an industrial disability retirement may be denied an IDR if the member has not been found permanent and stationary by the qualified or agreed-upon medical examiner.  In some cases, a member’s workers compensation case may go on for years.  This means employers may find themselves providing advanced disability pension payments for much greater periods of time.

Duty to Re-Evaluate Disability Retirees

The Circular Letter also requires that a contracting agency conducts regular re-evaluations of determinations for disability retirees who are under voluntary service retirement age. The purpose “is to verify whether the recipient remains physically or mentally disabled from the position which they disability retired for the condition(s) that they were approved for.” CalPERS recommends gathering the following information:

  • Is the retiree currently employed?
    • What type of work is he/she doing? Is he/she working within his/her work restrictions?
    • Obtain a duty statement and physical requirements of the job for comparison.
    • When an independent medical examination is deemed necessary, submit these documents for the examiner’s review.
  • Is the retiree currently being treated for his/her disability?
    • If so, obtain a list of his/her treating physician(s) and contact information, and request his/her medical records since retirement.
  • If the retiree is not currently being treated or the medical records received from the treating physician do not substantiate a continuous disability, the member should be evaluated by an Independent Medical Examiner.
  • If indicated, consider surveillance.

To support requiring re-evaluation, CalPERS relies on Government Code section 21192, which gives authority to the employer from whose employment a person was retired to require any recipient of a disability retirement allowance under the minimum age for voluntary retirement for service applicable to members of his or her class to undergo a medical examination.

How This Affects Your Agency

A. Disclosure of Peace Officer Personnel Records

CalPERS has and will continue to demand the disclosure of peace officer personnel records to determine a member’s eligibility for disability retirement in the event the officer was terminated or discipline is pending. But Penal Code section 832.7 establishes that peace officer personnel records (or information obtained therefrom) are confidential and may not be disclosed in any criminal or civil proceeding without the peace officers written consent or a Pitchess motion: the discovery procedure required to access peace officer personnel records. (See People v. Superior Court (Johnson) (2015) 61 Cal.4th 696 [California Supreme Court held that even prosecutors must comply with the Pitchess procedures if they seek information from confidential peace officer personnel records]). Thus, there is a potential conflict between CalPERS’ right to these records under the Government Code and the prescribed discovery procedures required under Pitchess.

Agencies should avoid unilaterally disclosing peace officer records without first notifying the officer concerning the request and obtaining his or her consent/waiver in writing. If the officer decides not to provide consent to disclosure, the agency should consult with legal counsel.

B. Disclosure of Medical Records

Confidentiality of Medical Information Act

Under California’s Confidentiality of Medical Information Act (CMIA), an employer is generally prohibited from using, disclosing, or knowingly permitting its employees or agents to use or disclose medical information pertaining to an employee unless the employer first obtains written authorization from the employee. There are several important exceptions to the requirement for written authorization. For example, medical information may be used in a lawsuit, arbitration, grievance, or other claim or challenge to which the employer and employee are parties and in which the employee has placed in issue his or her medical history, mental or physical condition, or treatment. In addition, medical information may be used exclusively for purposes of administering and maintaining employee benefit plans, including healthcare plans and plans providing short-term and long-term disability income, and workers’ compensation. Accordingly, when an employee applies for disability retirement and CalPERS is administering disability benefits for the employee, an authorization may not be required under the CMIA. Nonetheless, agencies should obtain consent with a written waiver and authorization for release of the medical records.

Health Insurance Portability and Accountability Act (HIPAA)

HIPAA’s privacy rule applies to covered entities: health plans, health care clearinghouses or health care providers conducting certain health care transactions electronically. Also affected by HIPAA are hybrid entities whose business activities include both covered and non-covered functions and health plan sponsors.

CalPERS maintains that member consent and a HIPAA release are not required because it is not a covered agency. However, agencies should be careful not to unilaterally disclose medical records to CalPERS without first notifying the employee and obtaining written consent.

C. Duty to Re-Evaluate Retirees

CalPERS will require all contracting agencies to periodically re-evaluate retirees under the voluntary service retirement age of 50 years old. CalPERS justifies this new requirement based on the combination of Government Code sections 21192 and 20221. Section 21192 gives authority to the board or governing body of the employer from whose employment a person was retired to require any recipient of a disability retirement allowance under the minimum age for voluntary retirement for service applicable to members of his or her class to undergo a medical examination. Section 20221 provides that each employer must provide CalPERS with any information concerning any member that CalPERS requires in the administration of the System.

If an agency chooses not to re-evaluate, CalPERS has other recourse available: it can re-evaluate a retiree on its own under Government Code sections 20128 and 20223.

Although CalPERS asks agencies to re-evaluate disability retirees, neither CalPERS nor the Government Code requires the employer to hire back the retiree if he/she is found to no longer qualify for a disability retirement.

The issues presented here are not exhaustive so please consult with legal counsel as to the appropriate response to CalPERS’ circular letter and any pending or future related audit.

Application of the U.S. Civil Rights Act to Sexual Orientation Discrimination

Posted in Discrimination

Gavel-and-Books.JPGTitle VII of the U.S. Civil Rights Act of 1964 (hereafter “Title VII”) has long prohibited discrimination on the basis of sex in the terms, conditions or privileges of employment. One question of ongoing statutory interpretation has not been definitively answered: what constitutes “sex” for the purposes of employment discrimination? Are the terms “sex” and “gender” interchangeable under the law? And does the prohibition of discrimination on the basis of sex extend to a prohibition of discrimination on the basis of sexual orientation?

In 1989, the U.S. Supreme Court, in Price Waterhouse v. Hopkins, determined that Title VII’s prohibition of discrimination on the basis of sex extended to discrimination on the basis of sex-stereotyping; i.e. a person’s perceived failure to comply with socially constructed gender norms.  But, the Court has not to date proclaimed that the prohibition of discrimination on the basis of sex stereotyping prohibits sexual orientation discrimination. Neither has Congress amended Title VII to explicitly include “sexual orientation” as a protected classification. (“Sexual orientation” discrimination is expressly prohibited by California’s Fair Employment and Housing Act (“FEHA”)).

Absent a position by the Supreme Court, the Equal Employment Opportunity Commission (“EEOC”), the federal agency that administers Title VII, issued a bulletin in 2015 proclaiming that the agency interprets and enforces Title VII’s prohibition of sex discrimination as “forbidding any employment discrimination based on gender identity or sexual orientation,” regardless of any contrary state or local law.  Also in 2015, the EEOC issued an administrative decision that “sexual orientation” discrimination is discrimination based on sex and therefore violates Title VII.  In Baldwin v. Dep’t of Transportation, the EEOC explained:

Discrimination on the basis of sexual orientation is premised on sex-based preferences, assumptions, expectations, stereotypes, or norms. “Sexual orientation” as a concept cannot be defined or understood without reference to sex. A man is referred to as “gay” if he is physically and/or emotionally attracted to other men. A woman is referred to as “lesbian” if she is physically and/or emotionally attracted to other women. Someone is referred to as “heterosexual” or “straight” if he or she is physically and/or emotionally attracted to someone of the opposite-sex. [citations omitted.] It follows, then, that sexual orientation is inseparable from and inescapably linked to sex and, therefore, that allegations of sexual orientation discrimination involve sex-based considerations.

The EEOC then concluded, “[s]exual orientation discrimination is sex discrimination because it necessarily entails treating an employee less favorably because of the employee’s sex.”

On April 4, 2017, the U.S. Court of Appeals for the Seventh Circuit (headquartered in Chicago) became the first federal appeals court to agree with the EEOC that Title VII’s prohibition against sex discrimination includes discrimination on the basis of sexual orientation as a “form of” sex discrimination.  In Hively v. Ivy Tech Community College of Indiana, the Court explained that “all gay, lesbian and bisexual persons fail to comply with the sine qua non of [i.e. inseparable from] gender stereotypes – that all men should form intimate relationships only with women, and all women should form intimate relationships only with men.”  In this decision, the Court endeavored to clean up an outstanding contradiction that resulted from the Supreme Court’s 2015 decision in Obergefell v. Hodges where the Court determined that the due process and equal protection clauses of the U.S Constitution protect the right of same-sex couples to marry.  Obergefell, in conjunction with prior federal appeals court decisions that refused to recognize sexual orientation discrimination as sex discrimination under Title VII, created a “paradoxical legal landscape in which a person can be married on Saturday and then fired on Monday for just that act.”  Looking to the Supreme Court’s decision, the Seventh Circuit issued its ruling in consideration of “what the correct rule of law is now.”  It concluded, there is no line between a gender nonconformity claim and a claim based on sexual orientation:

Any discomfort, disapproval, or job decision based on the fact that the complainant—woman or man—dresses differently, speaks differently, or dates or marries a same-sex partner, is a reaction purely and simply based on sex. That means that it falls within Title VII’s prohibition against sex discrimination, if it affects employment in one of the specified ways…The logic of the Supreme Court’s decisions, as well as the common-sense reality that it is actually impossible to discriminate on the basis of sexual orientation without discriminating on the basis of sex, persuade us that the time has come to overrule our previous cases that have endeavored to find and observe that line.

As noted, California’s FEHA explicitly prohibits discrimination on the basis of sexual orientation (as well as gender identity and gender expression).  However, the Ninth Circuit Court of Appeals (covering California) has not explicitly applied Title VII to sexual orientation discrimination. Indeed, its rulings on this issue leave open an opportunity for further exposition.

For example, in Schwenk v. Hartford the Ninth Circuit in 2000 relied on Title VII cases to conclude that violence against a transsexual person was violence because of gender under the Gender Motivated Violence Act.  The Court proclaimed that the term “sex,” as used in Title VII, means both “sex” (then described as the biological difference between men and women) and “gender” (described as an individual’s sexual identity, or socially constructed characteristics.)  Therefore, the Court concluded, discrimination based on sex included discrimination based on socially constructed gender characteristics.

Without precluding the possibility that Title VII could apply to sexual orientation discrimination, the Ninth Circuit in 2002 held that an employee’s sexual orientation was “irrelevant for purposes of Title VII.”  In Rene v. MGM Grand Hotel, Inc., the Court explained that Title VII “neither provide[d for] nor preclude[d] a cause of action for sexual harassment.” The Court determined that the fact that an alleged harasser was, or may have been, motivated by hostility based on sexual orientation was similarly irrelevant to a sexual harassment claim.  The Court explained that it is enough to assert a cause of action under Title VII based on allegations that the harasser engaged in “severe or pervasive unwelcome physical conduct of a sexual nature.”  Whether that conduct was “because of” the victim’s sexual orientation, a personal vendetta, misguided humor, or boredom, was beside the point.

Later, in 2011, the Northern District Court for California (the federal trial court headquartered in San Francisco) re-asserted that neither Title VII nor any other federal law protects against discrimination on the basis of sexual orientation. Accordingly, it dismissed a plaintiff’s “failure-to-promote claim” based on alleged sexual orientation discrimination. See Johnson v. Eckstrom. More recently, in 2015 the Central District Court for California (headquartered in Los Angeles) rejected the Northern District ruling and concluded that claims of sexual orientation discrimination are gender stereotype or sex discrimination claims covered by Title VII (and Title IX, which applies specifically to federally supported education). See Videckis v. Pepperdine University.  Also, see Nichols v. Azteca Rest. Enters., Inc., a 2001 decision of the Ninth Circuit holding that discrimination against either a man or a woman on the basis of gender stereotypes is prohibited.  Like the recent Seventh Circuit decision, the California Central District in its 2015 decision in Videckis v. Pepperdine University concluded that sexual orientation discrimination is not a category distinct from sex or gender discrimination. Rather, it held, “claims of sexual orientation discrimination are gender stereotype or sex discrimination claims.”

Based on the Ninth Circuit’s varying application and interpretation of Title VII’s application to sexual orientation discrimination, the split reasoning regarding its application by the lower District Courts, and based on the Seventh Circuit’s more complete exposition of sexual orientation discrimination as a form of gender discrimination, this issue is likely ripe for the Ninth Circuit’s review.  Indeed, given the split among U.S. Courts of Appeal, the issue may well be ripe for Supreme Court consideration.