California Public Agency Labor and Employment Blog - Useful Information for Navigating Legal Challenges

The IRS has issued a notice clarifying the tax treatment of employer provided cell phones and similar telecommunications equipment for business purposes.  The notice provides guidance on two key issues regarding employee cell phone use. 

First, if an employer provides an employee with a cell phone for “noncompensatory business reasons,” the IRS will treat the employee’s use of the phone for business purposes as a “working condition” fringe benefit.  This means that the value of this use is excludable from the employee’s income.  Second, if the employee uses the employer provided cell phone for personal calls, the value of the personal use will also be excludable from the employee’s income as a de minimis fringe benefit.

According to the IRS, a cell phone is provided for “noncompensatory business reasons” if there are substantial business related reasons for giving the phone to the employee.  These reasons can include the need to contact the employee at all times for work related emergencies or for the employee to contact clients while away from the office.  However, a cell phone is not provided for “noncompensatory business reasons” if the cell phone is given to the employee to “promote the morale or good will of an employee,” to recruit a prospective employee, or to provide additional compensation to the employee.

The IRS clarified its position following questions it received following passage of the Small Business Jobs Act of 2010 which removed cell phones from the definition of listed property for taxable years beginning after December 31, 2009.  When cell phones were included in the definition of listed property, employers and employees were required to keep detailed records of whether calls made on employer provided cell phones were for work or personal purposes.  This put an enormous record keeping burden on employers.  If no such records were kept, the value of the cell phone and the accompanying service were deemed “perks” that should have been treated as taxable income to the employee.  As a result, numerous employers were being hit with back tax charges by the IRS.  Some may remember that UCLA was slapped with nearly $240,000 in back taxes a few years ago.      

The IRS’ clarification regarding the tax treatment of work issued cell phones is welcome news to employers.  Now, employers and employees will not have to go through the onerous process of reviewing cell phone bills to separate work from personal calls and then include the value of the personal calls in the employee’s taxable income.  Nonetheless, employers who already have a cell phone policy should review it to make sure it clearly states that the phone should be used for business purposes only.  In addition, the policy should discourage employees from using employer provided cell phones for personal use.  Finally, employers who do not have a cell phone use policy should adopt one.

This guest post was authored by Liebert Cassidy Whitmore

Registration is now open for the Annual Liebert Cassidy Whitmore Public Sector Employment Law Conference, which takes place February 2-3, 2012 at the Hyatt Regency, San Francisco.  The conference is geared towards Public Agency Management and includes a variety of informative and entertaining presentations that offer practical lessons for success in the workplace.

Employment Law is an ever changing and exciting area of the law and the conference is designed to help participants learn and apply best practices.  Some of the sessions include:

• Demystifying the FLSA: 15 Common Solutions To Unknown Problems
  The complexity of the FLSA makes it easy for public employers to inadvertently violate the law.  During this workshop, we will discuss the 15 most common problems we see and how to fix them.  Do you have liability for your employees' use of cell phones and smart phones?  Do you pay for comp time at the   correct rate?  Do you have to include holiday pay in the regular rate calculation?  Do your overtime payments correspond to your FLSA workweeks?  Find out why these questions are important to ensuring that your agency is complying with the FLSA.
• Retirement Made Simple: FAQs and Town Hall Discussion
  PERS, CERL, STRS, DB, DC, EMPC, and PEMHCA.  Do you know what these letters mean?  Come learn from our panel of experts, who will answer your public employee retirement related questions.  In addition to answering questions, our experts will discuss the most frequently asked questions about making changes to retirement benefits.  You will also learn about the   latest retirement-related trends and pending legislative action.  All retirement systems welcome, including CalPERS, '37 Act systems, and STRS.
• Avoiding Difficult Conversations Is Riskier Than You Think
  You have been there, and probably avoided it.  And who wouldn't?  Conversations about performance problems, workplace conflict, or personal hygiene issues aren't easy.  Even everyday conversations with difficult co-workers are events that we all try to avoid.  This is your chance to gain some insight into the dynamics of these interactions, your role in creating them and steps that can be taken to pull the conversations back from the brink of disaster.
• When Johnny (or Janie) Comes Marching Home -- Hooray, Your Veterans Are Back...Now What?
  Many public employees are also reserve military members or members of military families. This session will address frequently asked questions regarding the rights of military member - employees and the complex issues which can arise when a military member returns from active duty.  Does an employee accrue vacation and sick leave while on military leave? What if the employee misses a promotional exam while he/she is on leave? What if the employee returns from active duty with a disability, such as PTSD? Can you require a returning veteran to submit to a fitness for duty exam? Can an employee use FMLA leave to assist a family member who is in the military? What about the CFRA? Grab your American flags and join us for a practical discussion regarding the laws and issues   surrounding the employment of military members.
• OMG!  Did U C Her Facebook Post?!?! The Risks and Rewards of Accessing and Viewing Employees' Online Activities
  Facebook, Twitter, Blogging - privacy and potential liability issues arising from employee social networking are becoming more prevalent in the workplace. This workshop will address not only ways to respond to inappropriate employee use of social networking media, but when employers can use this same media in hiring, investigations and discipline without running afoul of employee privacy rights and anti-discrimination laws.  This workshop will discuss Social Media, Privacy Rights, and best practices for public agencies and their employees.
• Wait, I Thought I Fired You!  Challenging Unemployment Insurance Claims
  This workshop addresses technical and strategic   questions that may arise when employers receive notice that a terminated employee has filed an unemployment insurance claim.  An award of benefits to a laid off employee is one thing, but why would benefits be granted to an individual who has been fired for misconduct?  What defenses are available?  How does the appeal process work?  Are there ever hidden advantages to pursuing an appeal?  Through interactive case studies, this workshop will answer these questions and more. Topics include eligibility issues, timelines and other procedural considerations, and strategies for dealing effectively with the administrative agencies involved in the unemployment insurance appeals process.
• Free Speech - You Can't Say That, Or Can You?
  An employee criticizes a supervisor on Facebook.  An agency fires an employee over a You Tube video.  An Association member verbally attacks a manager after a tense negotiating session.  This interactive workshop will focus on a number of real-world scenarios that will help attendees navigate through several common free speech issues.  Social media, tough economic conditions and other factors have all contributed to an increased tension between an employee's free speech rights and an agency's need to carry out its duties.  Join us for a lively discussion of this very  timely subject. 

Register now and access the full brochure. 

Also, follow us on Twitter and tweet with us using the hashtag #lcwac12.  For questions regarding the upcoming annual conference, please send us an email or call 310.981.2000.

We hope you can join us and look forward to seeing you! 

This post was co-authored by Michael Blacher

God said “Be fruitful and multiply.”  But does that make a math teacher at a religious school a “minister?”  The United States Supreme Court will soon decide.

On October 5, 2011, the U.S. Supreme Court heard oral argument in Hosanna-Tabor Evangelical Lutheran Church and School v. EEOC, a case which involves the application of the “ministerial exception.”  That exception allows religious organizations, including religious schools, to make employment decisions affecting “ministers” without being subject to anti-discrimination laws.  The ministerial exception is a judicial creation rooted in the First Amendment’s Free Exercise and Establishment clauses.  The Hosanna-Tabor case requires the Supreme Court to define the meaning of a “minister” and, in particular, to determine whether it can extend to a teacher at a religious school who instructed primarily on secular topics. 

The facts of Hosanna-Tabor are as follows.  Hosanna-Tabor Evangelical Lutheran Church and School operates a church and an elementary school.  It has two types of faculty: (1) limited-term “lay” or “contract” teachers and (2) for-cause “called” teachers.  Called teachers must complete a course of religious study and receive a certificate of admission into the teaching ministry.  They receive the title of “commissioned minister.” 

In 2000, Cheryl Perich began work as a contract teacher but shortly thereafter changed her status to a “called” teacher.  Her employment duties remained essentially the same.  She taught math, language arts, social studies, science, gym, art, and music.  However, Perich also taught a religion class four days per week, attended a chapel with her class once a week, and led her classes in prayer. 

In 2004, Perich went out on disability leave.  The School Board ultimately offered Perich a “peaceful release” agreement wherein she would release claims against the School in return for a monetary payment.  When Perich refused and threatened legal action, however, the Board fired her.

Perich filed a charge with the Equal Employment Opportunity Commission (“EEOC”) for disability discrimination and retaliation under the Americans with Disabilities Act (“ADA”), and the EEOC decided to litigate the charge of retaliation on her behalf.  The district court determined that Perich was covered by the ministerial exception and granted summary judgment to the School. 

The U.S. Court of Appeals for the Sixth Circuit reversed.  It found that because most of Perich’s job duties did not have a religious character, and that her “primary” functions were secular, the ministerial exception did not apply.  The School appealed to the United States Supreme Court which granted certiorari.

On October 5, 2011 the Court heard oral arguments.  The Justices did not appear to reach any kind of consensus.  Justices Sotomayor and Kagan appeared focused on the rights of all employees to bring retaliation claims.  Justice Roberts asked whether the Court could involve itself in this issue at all when some religions considered all members to be witnesses to the faith and “ministers” of sorts.  Justice Breyer’s questioning stood apart by appearing to suggest the exception should apply only if the employment action at issue rested on church doctrine and called upon courts to decide religious questions.    

The attorneys’ positions were equally diverse.  Counsel for the EEOC contended that the ministerial exception should not apply to retaliation claims.  The Assistant to the Solicitor General suggested that the ministerial exception should not apply at all since schools were regulated by the State.  The attorney for the School avoided articulating a precise definition of a “minister,” but during his rebuttal he proposed “[a] minister is a person who holds ecclesiastical office in the church or who exercises important religious functions . . . including teaching of the faith.”  Oral arguments ended without a clear sense as to how the Justices might rule.

The Supreme Court’s holding in this case will prove very significant for religious schools and organizations, and our firm will provide a supplemental report when it issues.

This post was co-authored by Elizabeth Arce

It seems that every time you turn on the news some new technological innovation is being announced.  For example, recent weeks have seen the unveiling of new tablet computers and smartphones.  In addition, social media platforms such as Facebook and LinkedIn are constantly announcing upgrades to their websites to improve the way users communicate with one another via the internet.  However, just as technology is rapidly changing, the law regulating the use of social media by employees also continues to evolve. 

Since our initial blog posts and article on legal developments regarding employee social media use, the National Labor Relations Board’s (NLRB) Office of General Counsel released a report analyzing various issues relating to social media use by employees and employer policies that attempt to regulate it.  In addition, two NLRB Administrative Law Judges (“ALJs”) issued decisions that provide further guidance in these areas. 

In Hispanic United of Buffalo (“HUB”), an ALJ ordered a nonprofit corporation to reinstate five employees who were fired after posting comments on Facebook criticizing workload and staffing issues.  The ALJ concluded that the employees engaged in protected concerted activity because they were discussing matters that involving terms and conditions of their employment. 

In Knauz BMW, an ALJ found that a car dealership’s employee handbook contained policies that restrict and limit an employee’s right to engage in concerted activity.  However, the ALJ upheld the employer’s termination of an employee who posted pictures of an accident at another dealership, also owned by his employer, with unflattering comments about the salesperson involved in it on the grounds that the posting was not protected concerted activity.

These recent pronouncements from the NLRB clarify the law regarding the scope of social media use by employees and provide the following guidance to employers:

1. Employees’ Social Media Postings With Each Other About The Terms and Conditions of Their Employment Are Protected.  Employees engage in protected concerted activity when they use social media to communicate with one another about work related issues.  Concerted activity will also be found when the employee posts comments that express the views of other employees or that attempt to initiate or induce coworkers to take group action.  This can include complaints among employees about commissions, tax withholding practices and workload and staffing issues.  Thus, posts that are not work related or that express individual gripes, frustrations or complaints are not protected. 
2. Work Related Postings That Are Sarcastic or Mocking in Tone May Be Protected.  In Knauz BMW, the ALJ considered two Facebook postings by the employee.  The first involved criticism of a sales event, including the inadequacy of the food being served, which employees felt could affect employee compensation.  The second posting involved an accident at another dealership.  The ALJ found that the posting concerning the accident was not protected concerted activity, and that the employer terminated the employee for that posting.  The decision discusses what language rises to the level of disparagement necessary find otherwise protected activities unprotected.  The NLRB has found statements that are mocking or sarcastic ,and terms such as “a-holes” and a “cheap son of a bitch” attributed to supervisors to be protected concerted activity when uttered in the course of otherwise protected concerted activity.  Employers must meet a very high threshold to prove language is disparaging and beyond protection in the context of employees acting together to challenge their working conditions.
3. Polices That Can Be Reasonably Interpreted to Restrict Employees’ Right to Engage In Concerted Activity Are Improper.  In evaluating whether a social media policy improperly limits an employee’s ability to engage in protected concerted activity, employers should ask whether the rule or policy explicitly prohibits the exercise of this right or would reasonably tend to chill the employee’s exercise of it.  In order words, policies that could be interpreted as discouraging an employee to discuss the terms and conditions of employment are likely improper.
4. Policies That Can Be Reasonably Interpreted to Protect the Relationship Between the Employer and Its Customers Are Proper.  In Knauz BMW, the ALJ determined that language in an employee handbook stating “[a] bad attitude creates a difficult working environment and prevents to [employer] from providing quality service to our customers” was proper.  The ALJ reasoned that the employer had a right to demand that its employees not display a bad attitude towards customers in order to protect the employer’s relationship with its customers.

Employers who have adopted social media policies should review them with the above guidelines in mind.  Finally, because the law in this area continues to rapidly change, employers should stay tuned to this blog and our Twitter (@lcwlegal and hashtag #lcwsocialmedia) for further updates.