The Labor and Employment Law Blog

LAW ALERT: COBRA Subsidy is Extended Again

Leslie DuFresne — Thu, 04 Mar 2010 14:34:46 -0800

On March 2, 2010, President Obama signed the Temporary Extension Act of 2010 (H.R. 4691) that, among other things, extends the eligibility period for the COBRA subsidy provided in the American Recovery and Reinvestment Act (ARRA) for an additional 30 days.

The new legislation extends the eligibility date for the COBRA subsidy from February 28, 2010 to March 31, 2010.

The COBRA subsidy provisions under the ARRA provide that eligible employees (those who are “involuntarily terminated” within the stated period) pay 35% of the premium costs and employers pay the other 65%. The employer can then file for a federal tax credit for the premium subsidy it pays.

LAW ALERT: $6.2 Million Settlement in EEOC Complaint Against Sears, Roebuck & Company Re: Inflexible Leave Exhaustion Policy Violates ADA

Leslie DuFresne — Tue, 09 Feb 2010 12:17:30 -0800

by Lizbeth V. West

On February 5, 2010, the EEOC issued a press release announcing the court approval of a $6.2 million settlement of its lawsuit against Sears, Roebuck & Company on behalf of 235 employees. The lawsuit maintained that Sears had an inflexible workers’ compensation leave exhaustion policy that terminated employees once they exhausted their workers’ compensation [leave] entitlement rather than engaging in the interactive process to determine if a reasonable accommodation existed to help return them to work. The settlement is the largest ADA settlement in a single case in EEOC history. Each of the 235 employees will receive approximately $26,300 in settlement funds.

This case is an important reminder to employers that when an employee is out on some form of statutory leave of absence (e.g. workers’ compensation or FMLA), if the employee exhausts such leave and is still experiencing a medical condition that qualifies under the ADA (and/or a state disability law like California’s Fair Employment and Housing Act), the employer must engage in the interactive process to determine if a reasonable accommodation (including a possible extension of the employee’s leave) is available that can be provided to the employee without creating an undue hardship on the employer. Otherwise, strict application of leave policies that result in the termination of an employee who fails to return to work at the exhaustion of such leave (e.g. at the end of 12 weeks of FMLA leave) can expose the employer to significant liability.

The EEOC press release is available at: www.eeoc.gov/eeoc/newsroom/release.

LAW ALERT: Employers Should Take Advantage Of Sacramento County's "Job Opportunities Program"

Leslie DuFresne — Fri, 29 Jan 2010 08:20:26 -0800

by Lizbeth V. West

Sacramento County’s Department of Human Assistance (DHA) is implementing a new subsidized employment program called the “Job Opportunity Program.” The Job Opportunity Program is a new job stimulus program funded by the American Recovery and Reinvestment Act (ARRA) of 2009 and authorized under the federal TANF Emergency Contingency Fund (ECF). Through this funding the County will reimburse participating employers 80% of the employer’s subsidized employment program, which could include 100% of the employee’s wages for up to six months. Participants are men and women who have marketable skills but are currently unemployed or underemployed. Participants placed with an employer will closely match the established minimum requirements.

The purpose is to assist the local economy through an employment subsidy of local business’s hiring needs, and to promote employment of skilled CalWORKs participants who are unemployed or underemployed. Job retention is the expected outcome after the conclusion of the contracted period. This program opportunity will end on September 30, 2010.

Interested employers should contact DHA to discuss how the Program is administered. Please see the DHS Flyer and Brochure that provides further details on the Program.

LAW ALERT: Department Of Labor Issues Model Notices For The Extended COBRA Subsidy

Leslie DuFresne — Wed, 20 Jan 2010 11:00:12 -0800

by Lizbeth V. West

On January 19, 2010, the Department of Labor (“DOL”) issued model notices to help plan administrators and employers comply with COBRA notice requirements as dictated by the American Recovery and Reinvestment Act (“ARRA”), as amended by the Department of Defense Appropriation Act, 2010 (“2010 DOD Act”).

There are three DOL model notices that plan administrators and employers can utilize: 1) the Updated General Notice; 2) the Premium Assistance Extension Notice; and 3) the Updated Alternative Notice. Below is a brief summary of the DOL’s explanation of the notice requirements in connection with the extended COBRA subsidy and which model notices should be used.

1. Updated General Notice

Plans subject to the Federal COBRA provisions must provide the Updated General Notice to all qualified beneficiaries (not just covered employees) who experienced a qualifying event at any time from September 1, 2008 through February 28, 2010, regardless of the type of qualifying event, and who have not yet been provided an election notice. This model notice includes updated information on the premium reduction as well as information required in a COBRA election notice.

2. Premium Assistance Extension Notice

Plan administrators must provide notice to certain individuals who have already been provided a COBRA election notice that did not include information regarding ARRA, as amended. The model Premium Assistance Extension Notice includes information about the changes made to the premium reduction provisions of ARRA by the 2010 DOD Act. Listed below are the affected individuals and the associated timing requirements.

· Individuals who were "assistance eligible individuals" as of October 31, 2009 (unless they are in a transition period - see below), and individuals who experienced a termination of employment on or after October 31, 2009 and lost health coverage (unless they were already provided a timely, Updated General Notice) must be provided notice of the changes made to the premium reduction provisions of ARRA by the 2010 DOD Act by February 17, 2010;

· Individuals who are in a "transition period" must be provided this notice within 60 days of the first day of the transition period. An individual's "transition period" is the period that begins immediately after the end of the maximum number of months (generally nine) of premium reduction available under ARRA prior to its amendment. An individual is in a transition period only if the premium reduction provisions would continue to apply due to the extension from 9 to 15 months and they otherwise remain eligible for the premium reduction.

3. Updated Alternative Notice

Insurance issuers that provide group health insurance coverage must send the Updated Alternative Notice to persons who became eligible for continuation coverage under a State law. Continuation coverage requirements vary among States and issuers should modify the model notice as necessary to conform it to the applicable State law. Issuers may also find the model Premium Assistance Extension Notice or the updated model General Notice appropriate for use in certain situations.

The model notices can be obtained at the DOL website: www.dol.gov/ebsa/COBRAmodelnotice.html.

LAW ALERT: COBRA Subsidy Is Extended By President Obama

Leslie DuFresne — Wed, 23 Dec 2009 13:05:02 -0800

by Lizbeth V. West

President Obama signed the “Fiscal Year 2010 Defense Appropriations Act” (“DAA”) on December 21, 2009. The DAA provides two important changes to the COBRA subsidy that was established under the “American Recovery and Reinvestment Act of 2009” (“ARRA”) earlier this year.

The important changes made by the DAA are:

1. Employees who are involuntarily terminated at any time prior to February 28, 2010 (rather than December 31, 2009) may be eligible for the subsidy; and

2. The maximum period an eligible employee may receive the subsidy is fifteen (15) months rather than nine (9) months.

Employees who reached the end of the original nine (9) month period before the enactment of the DAA, have sixty (60) days from the enactment date to pay their portion of any missed premiums, or thirty (30) days after receipt of a notice of extension from the health plan administrator, whichever is later.

The DAA requires that employers notify current and future COBRA beneficiaries of the new fifteen (15) month premium subsidy period within sixty (60) days from enactment (by February 17, 2010) unless an individual’s COBRA “qualifying event” occurs after December 19, 2009 in which case the notice must be sent pursuant to the general time requirements under COBRA. It also permits employers to offset future COBRA premiums or issue a refund check to beneficiaries who overpaid their COBRA premiums because they paid the entire amount without any subsidy.

The DAA also clarifies that an employee’s or beneficiary’s eligibility for COBRA need not occur before February 28, 2010 in order for the individual to be eligible for the subsidy. Rather, it is the COBRA “qualifying event” (“involuntary termination” of an employee) that must occur on or before February 28, 2010.

LAW ALERT: The COBRA Subsidy Will End November 30, 2009 For Some Beneficiaries

Leslie DuFresne — Tue, 03 Nov 2009 11:14:11 -0800

by Lizbeth V. West

The sixty-five percent (65%) COBRA premium subsidy provided for in the American Recovery and Reinvestment Act of 2009 (ARRA) will come to an end on November 30, 2009 for some qualified beneficiaries.

By way of background, the ARRA created the COBRA subsidy for those qualified beneficiaries who were “involuntarily” terminated (including not just layoffs but also poor performance terminations) from their employment between September 1, 2008 and December 31, 2009, and provided for a 65% premium subsidy for up to nine (9) months. The first date of the subsidy under the ARRA was March 1, 2009. Therefore, for those qualified beneficiaries who received the subsidy as of March 1, 2009, their nine months expires November 30, 2009. Qualified beneficiaries who became eligible subsequent to March 1, 2009 will have the applicable nine month period following the beginning date of their subsidy payments.

What Should Employers and/or Plan Administrators Do?

Provide beneficiaries with sufficient notice prior to the expiration of their COBRA subsidy. The notice should advise them of the date the subsidy will expire and also provide them with the amount of COBRA premiums they will be responsible for during the remainder of the COBRA period in order for COBRA coverage to continue.

Is Your Company Ready for the November 21, 2009 Deadline under GINA?

Leslie DuFresne — Tue, 03 Nov 2009 11:06:42 -0800

by Lizbeth V. West

The Genetic Information Nondiscrimination Act (GINA) takes effect November 21, 2009. Among other things, GINA requires that employers post a notice informing employees that the employer does not discriminate on the basis of genetic information.

The following EEOC notices can be used to meet the posting obligation:

1. “Equal Employment Opportunity is THE LAW” (EEOC 9/02 and OFCCP 8/08 – EEOC-P/E-1 (Revised 11/09). A copy of the notice is attached or you can obtain a copy at the EEOC’s website: www.eeoc.gov/posterform.html.

2. “EEO is the Law Poster Supplement” (Mandatory Supplement to EEOC 9/02 and OFCCP 8/08). A copy of the notice is attached or you can obtain a copy at the EEOC’s website: www.eeoc.gov/posterform.html.

In addition to posting the notices by November 21^st, employers should also do the following:

1. Update their EEO and anti-discrimination policies to include genetic information as another protected class.

2. Make sure their interview and hiring documentation (e.g. applications, questionnaires, testing materials) do not request information about an applicant’s genetic medical history.

3. Review all policies and procedures that involve medical information (e.g. pre-hire screening, worker’s compensation, FMLA and other medical leaves of absence) to be sure they properly provide for the security and confidentiality of an applicant’s or employee’s (or employee’s family member’s) medical information including any genetic information.

4. Make sure all supervisory or management-level employees who have the responsibility of working with applicants or employees in connection with any of the policies referred to in number 3 immediately above, have been properly trained: a) not to improperly inquire about genetic medical history of an applicant or employee (or employee’s family member); and b) if they become aware of such information, to keep it confidential.

The employment lawyers at Weintraub Genshlea Chediak regularly draft effective employment policies and provide management training on a variety of employment law subjects. They would be happy to assist employers in the review and update of their policies to comply with GINA.

FTC Extends Enforcement Deadline for the "Red Flags" (Identity Theft) Rule Again

Leslie DuFresne — Mon, 02 Nov 2009 16:19:42 -0800

by Lizbeth V. West

The FTC issued a news release on October 30, 2009 advising that at the request of Members of Congress, the Federal Trade Commission is delaying enforcement of the “Red Flags” Rule until June 1, 2010, for financial institutions and creditors subject to enforcement by the FTC.

The Rule was promulgated under the Fair and Accurate Credit Transactions Act, in which Congress directed the Commission and other agencies to develop regulations requiring “creditors” and “financial institutions” to address the risk of identity theft. The resulting Red Flags Rule requires all such entities that have “covered accounts” to develop and implement written identity theft prevention programs to help identify, detect, and respond to patterns, practices, or specific activities – known as “red flags” – that could indicate identity theft.

A copy of the news release is available at http://www.ftc.gov/opa/2009/10/redflags.shtm

LAW ALERT: The "2010 National Defense Authorization Act" Expands FMLA Military Leave Entitlements

Leslie DuFresne — Mon, 02 Nov 2009 09:34:11 -0800

by Lizbeth V. West

On October 28, 2009, President Obama signed into law the National Defense Authorization Act for Fiscal Year 2010 (H.R. 2647). The new law is expansive with over 500 pages of text. Section 565 of the Act makes significant changes to the military leave entitlements under the Family and Medical Leave Act (FMLA) which went into effect earlier this year. Below is a summary of some of the changes made:

Qualifying Exigency Leave.

Currently, if an employee has a family member (e.g. spouse, son, daughter, step-son, or step-daughter) serving in the National Guard or Reserves (not active duty military) and such family member is called to active duty, the employee may be eligible for up to 12 weeks of “qualifying exigency” leave if time off is needed to address qualifying exigencies arising out of the fact that the family member has been called to active duty. Examples of qualifying exigencies for which an eligible employee may take leave to attend to include: military events and related activities, childcare and related activities, financial and legal activities, counseling, rest and recuperation (up to 5 days of leave to spend time with a military family member on short term leave from deployment), post-deployment activities for a period of 90 days following termination of military family members active duty status, and other events agreed upon by the employer and employee.

New Law: Under HR 2647, those employees with a family member in any regular component of the Armed Forces (not just the National Guard or Reserves) are eligible for Qualified Exigency leave. The new law also removes the requirement that this sort of leave can only be taken to support a contingency operation. Rather, it is available “because of any qualifying exigency arising out of the fact that the spouse, or a son, daughter, or parent of the employee is on covered active duty (or has been notified of an impending call or order to covered activity duty) in the Armed Forces.”

Military Caregiver Leave.

Currently, if an employee has a covered family member in the armed services (e.g. spouse, son, daughter, step-son, step-daughter, parent, step-parent, or “next of kin” which is defined by the regulations as either the person designated by the service member or the nearest blood relative) who is undergoing medical treatment, recuperation, or therapy or is otherwise in outpatient status, or on the temporary disability list for a serious injury or illness incurred in the line of duty on active duty, the employee may be eligible for up to 26 weeks of military “service member care” leave if time off is needed to care for the covered family member.

New Law: Under HR 2647, the definition of “covered servicemember” does not just apply to active members of the Armed Forces (including National Guard and Reserves), but has been extended to veterans who were members of the Armed Forces (including the National Guard or Reserves) at any point in time within five (5) years preceding the date on which the veteran undergoes medical treatment, recuperation, or therapy. The new law also extends the definition of “serious health condition” for active duty covered servicemembers to include any injury or illness that “existed before the beginning of the member’s active duty and was aggravated by service in line of duty on active duty in the Armed Forces.” In the case of veteran covered servicemembers, a “serious health condition” includes any injury or illness that “was incurred by the member in the line of duty on active duty in the Armed Forces (or existed before the beginning of the member’s active duty and was aggravated by service in line of duty on active duty in the Armed Forces) and that manifested itself before or after the member became a veteran.”

What Should Employers Do?

1. Review and update FMLA policies and administration documents to be sure that they accurately reflect the new HR 2647 definitions and requirements.

2. Train those charged with administering FMLA leave requests and leaves with the new HR 2647 requirements.

3. Keep an eye out for new guidelines and publications from the Department of Labor on the new HR 2647 requirements.

LAW ALERT: Employee Didn't Improperly Access Employer's Computer Ninth Circuit Rules on What Is and What Is Not "Authorization" under the Federal Computer Fraud and Abuse Act

Leslie DuFresne — Fri, 30 Oct 2009 15:05:15 -0800

by Lizbeth V. West

In LVRC Holdings, LLC v. Brekka, et. al. (9/15/09), the Ninth Circuit Court of Appeals upheld the trial court’s summary judgment for defendants finding that defendant, Brekka, was “authorized” to use LVRC’s computers while he was employed, and that he did not access the computers “without authorization” under the Federal Computer Fraud and Abuse Act (CFAA) when he emailed documents to himself and his wife prior to leaving LVRC.

Factual Background.

Brekka was hired by LVRC in April 2003 to oversee a number of aspects of its residential treatment facility in Nevada. His duties included internet marketing programs and interacting with LVRC’s website consultant, LOAD, Inc. At the time he was hired, he owned and operated two other consulting businesses himself which were also in the addiction rehabilitation services. While he worked for LVRC, Brekka commuted between Florida where he resided and one of his businesses was located, and Nevada. He was assigned a computer at LVRC but while commuting back and forth between Florida and Nevada, he would email documents he obtained or created at LVRC to his personal computer. There was no written policy at LVRC regarding the emailing of LVRC documents to personal computers.

In June 2003, Brekka asked a LOAD administrator, Nick Jones, for a log-in for LVRC’s website and it was provided. With this log-in, Brekka could gain access to information about LVRC’s website. In August 2003, Brekka and LVRC entered into discussions regarding the possibility of Brekka purchasing an ownership interest in the company. He emailed a number of LVRC documents to his personal email account and his wife’s personal email account. They included a LVRC financial statement, its marketing budget, admissions reports for patients at the facility, among other things. After discussions between LVRC and Brekka broke down in mid-September 2003, Brekka quit. He left his LVRC computer at the company and it still contained the email in which LOAD had sent him the log-in information. After he left, another employee or consultant of LVRC deleted that email with the log-in information. During a routine monitor of the website on November 19, 2004, a LOAD administrator noticed that someone was logged into the LVRC website using the log-in and password given to Brekka back in June 2003. The log-in and password were then deactivated and LVRC filed a report with the FBI alleging that Brekka had been unlawfully logging into LVRC’s website.

The Case.

LVRC filed a civil lawsuit claiming that Brekka committed two of the crimes established by the CFAA: 1) that he intentionally accessed a computer without authorization or exceeded his authorized access; and 2) that he obtained information from a protected computer (and the conduct involved an interstate or foreign communication). (18 U.S.C. §§ 1030(a)(2) and (a)(4).) LVRC alleged that Brekka violated these sections of the CFAA when he emailed LVRC documents to himself in September 2003 and when he continued to access the website after he left LVRC.

The CFAA prohibits a number of different computer crimes, the majority of which involve accessing computers without authorization or in excess of authorization, and then taking specified forbidden actions, ranging from obtaining information to damaging a computer or computer data. (18 U.S.C. § 1030(a)(1)-(7).) While violation of the CFAA carries with it criminal penalties, section 1030(g) of the statute provides for a civil private right of action by persons injured by the crimes.[1]

The trial court granted Brekka’s summary judgment motion holding that LVRC had failed to establish a violation of section 1030(a)(2) or (a)(4). The trial court found that “It is undisputed that when Brekka was employed by Plaintiff that he had authority and authorization to access the documents and emails that were found on his home computer and laptop.” There was no evidence that Bekka accessed an LVRC computer or any of the documents on the computer “without authorization.” Brekka had “authorization” to access the LVRC computers for purposes of sections 1030(a)(2) and (a)(4) because he was employed by LVRC at the time he emailed documents to himself and his wife, and there was no evidence that he had agreed to keep the emailed documents confidential or to return or destroy those documents upon the conclusion of his employment. Also, the trial court found that LVRC had failed to put forth any evidence that Brekka logged into the LVRC website after leaving LVRC’s employ.

The Ninth Circuit found that while the CFAA does not define “authorization,” based on the fundamental canon of statutory construction, the word is to be given its ordinary and common meaning. Therefore, it held that “an employer gives an employee ‘authorization’ to access a company computer when the employer gives the employee permission to use it.” According to the court, because LVRC permitted Brekka to use the company computer, he did not act “without authorization.” Further, the court found that Brekka did not “exceed authorized access.” This phrase was defined by Congress to mean “access a computer with authorization and to use such access to obtain or alter information in the computer that the accesser is not entitled so to obtain or alter.” (18 U.S.C. § 1030(e)(6).) According to the Court, based on this definition, an individual who is authorized to use a computer for certain purposes but goes beyond those limitations is considered by the CFAA as someone who has “exceeded authorized access.” On the other hand, a person who uses a computer “without authorization” has no rights, limited or otherwise, to access the computer in question. In this case, the court found that there was no dispute that Brekka had permission to access the computer without limitation and he was still employed by LVRC when he emailed the documents to himself and his wife. The Court affirmed the trial court’s summary judgment finding that Brekka did not access LVRC’s computer without authorization.

The Court also affirmed the trial court’s summary judgment that Brekka did not violate CFAA by logging onto the website after he left LVRC because LVRC did not meet its burden of producing evidence that a genuine issue of material fact existed in this regard.

Note to Employers.

This case review addresses solely the CFAA. LVRC and other employers often have other legal remedies available if a departing employee misappropriates its confidential and proprietary information or fails to return its property.

However, it is important that employers have clear and concise Electronic Use Policies and Confidentiality & Proprietary Information Policies in place. These policies can help to protect against an employee’s improper use of the company’s electronic media (e.g. computers, telephones, and remote communication devices) and the improper access to, and disclosure of, the company’s confidential and proprietary information. The employment lawyers at WGC regularly draft such policies and would be happy to assist employers in the review and/or drafting of such policies.

[1] Section 1030(g) provides in part that “Any person who suffers damages or loss by reason of a violation of this section may maintain a civil action against the violator to obtain compensatory damages and injunctive relief or other equitable relief.”

Labor Commissioner Approves Temporary Salary Reduction for Furloughed Exempt Employees

Anthony Daye — Tue, 01 Sep 2009 18:41:04 -0800

On August 19, 2009, in response to the current economic downturn, the California Labor Commissioner published an Opinion Letter which provides employers with an option to laying off their exempt employees; furloughs.

Under the Labor Commissioner’s Opinion Letter, it is now lawful for California employers to reduce the work hours of their exempt staff, with a commensurate reduction in salary. California law now permits employers to temporarily reduce an exempt employee's salary, with a commensurate reduction in hours, without jeopardizing the employee's overtime exempt status, so long as employee still meets the minimum requirements for exempt status, such as wage ($2,773.33 per month) and duty requirements.

Previously, a 2002 Opinion Letter provided that a reduction of an exempt employee's salary pursuant to a corresponding reduction in hours was a violation of California law. The August 19, 2009 Opinion Letter reverses this interpretation of California law. It is now permissible for employers to temporarily reduce exempt employees’ salaries when their hours are reduced without affecting the employees’ exemption status.

UPDATING CALIFORNIA'S DISCOVERY RULES WITH THE ELECTRONIC DISCOVERY ACT

Leslie DuFresne — Thu, 16 Jul 2009 14:04:16 -0800

by Dale Campbell and Emily Hirsekorn

State rules concerning electronic discovery just got clearer. On June 29, 2009, Governor Schwarzenegger signed the Electronic Discovery Act (the “Act”), which became effective immediately. Just last year, the Governor vetoed an almost identical version of the Act in order to focus more attention on the budget crisis. Of course, we see how well that plan worked. The Act is modeled after the 2006 amendments to the Federal Rules of Civil Procedure. The new rules govern the discovery procedure for electronically stored information (“ESI”) in California civil actions.

The Act broadens the scope of California’s Civil Discovery Act by specifically including provisions relating to ESI and governing the production of ESI pursuant to discovery requests. The Act is the first significant revision of California’s discovery rules in a couple of decades and is a compromise between those who favor in-depth discovery of electronic records and others who want safeguards for information that would be burdensome and costly to produce.

The Act’s Most Significant Changes to Existing Discovery Rules

Expands the Means of Discovery
- A party may now request testing or sampling of discoverable information, not just an inspection or copying.

Governs Preservation of Objections to Requests for ESI
- A responding party may object to a request to produce ESI on grounds that it is not stored in a reasonably accessible source and the production would constitute an undue burden or expense. The objecting party can refuse to conduct a search absent a cost-sharing agreement.
- The objection must identify the source deemed not reasonably accessible.

Governs the Form of Production of ESI
- The requesting party may specify the form in which the ESI must be produced. The responding party must either produce the ESI in that form or object and state the form in which it intends to produce each type of requested information.
- If no form is specified in the request, the responding party must produce the ESI in the form in which it is ordinarily maintained or a form reasonably usable.
- The responding party cannot be required to produce more than one form of the requested ESI.
- A subpoena requesting ESI must follow the same guidelines.

Provides for Burden Shifting between Parties
- A party seeking a protective order or objecting to a demand for ESI has the burden to prove that the ESI is maintained in a source deemed not easily intelligible or otherwise not reasonably accessible because of undue burden or expense. Federal courts that have applied e-discovery rules require specific facts and evidence of the alleged burden and expense. One can expect California courts will do the same.
- If the objecting party meets its burden, the burden shifts to the requesting party to show good cause as to why the information still should be produced.
- If the court, in its discretion, decides that the information should be produced, it may then limit the discovery and set conditions to reduce the complained-of burden or expense for the responding party.

Reinforces Cost-Shifting: In Toshiba v. Super. Ct., the California Court of Appeals applied California Code of Civil Procedure section 2031.280(c) to the discovery of ESI on backup tapes, ruling cost shifting for the production of ESI was mandatory where the requested data must be translated to render it intelligible or accessible. 124 Cal.App.4th 762 (2004). Specifically, the Court held:

Where requested information must be translated to render it intelligible or accessible, the requesting party bears the burden of the translation expense.
Allocation of costs for such translation and willingness of the requesting party to pay for the translation are factors considered as to the discoverability of ESI.
Former section 2031.280(c) was renumbered as section 2031.280(e) in the Act.
Code of Civil Procedure section 1985.8(g) sets forth mandated cost shifting with respect to subpoenas for ESI.

Governs Sanctions for Failure to Produce ESI
- A responding party that fails to produce discoverable ESI pursuant to a discovery request may face monetary sanctions.
- Sanctions, however, are prohibited if the failure to produce ESI resulted from the loss of ESI during routine, good faith business operations.

Provides for the Return of Privileged Information
- ESI must be returned at the conclusion of the case because producing a large amount of ESI increases the risk of inadvertently disclosing privileged information.
- The Act does not explicitly state whether privilege is waived with inadvertent disclosure.

Provides Other Limits on Discovery
- A discovery request may also be limited by the court when it is unreasonably cumulative or duplicative, the requested information can be found in a more easily accessible or less expensive source, the requesting party had ample opportunity to obtain the information but did not do so, or the potential burden and expense of production is outweighed by the expected benefits.
- The following factors will be considered in determining whether to limit the request: amount in controversy, resources of the parties, importance of the issues in the litigation, and importance of the requested discovery in resolving the issues. The goal of limiting discovery is to ensure that the cost of discovery is relative to the cost of the overall case.

The Act seeks to limit costs of discovery and litigation over discovery disputes. So long as litigants familiarize themselves with the Act and maintain and implement a routine document retention policy, they will have the tools necessary to comply with all applicable provisions of the Act.

Dale Campbell is a shareholder with Weintraub Genshlea Chediak practicing in the firm’s Litigation and Intellectual Property sections. Dale has a broad range of litigation experience in all areas of business, intellectual property and real estate litigation.

Emily Hirsekorn is a summer clerk at Weintraub Genshlea Chediak who will be entering her third year at McGeorge School of Law.

AN EMPLOYEE'S "ME TOO" EVIDENCE CAN PROVE DISCRIMINATION

Leslie DuFresne — Tue, 07 Jul 2009 14:22:00 -0800

By Lizbeth V. West

In Johnson v. United Cerebral Palsy/Spastic Children’s Foundation of Los Angeles and Ventura Counties, a California Court of Appeal has held that an employee can prove a case of discrimination by putting on evidence from other employees that claim that they too were subject to discrimination by the employer (“me too” evidence).

In Johnson, Plaintiff claimed she was terminated after taking sick leave related to her pregnancy. The employer filed a summary judgment motion claiming that Plaintiff was terminated because she falsified her timesheets when she said she had worked at home when she had not. The Plaintiff submitted various pieces of evidence in opposition to the summary judgment motion to try and prove that the employer’s stated reason for termination was pretext, including declarations from other employees who believed that they had been subjected to discrimination by the employer but had never taken any action against the employer for such alleged discrimination.

One employee said in her declaration that when she attended a meeting with managers involved in Plaintiff’s case, they discussed their desire to fire a pregnant employee because “they were worried about being liable in case she was injured, but they could not do that because it was illegal.” According to the declaring employee, the managers then discussed what reasons they could use to fire the employee. Another employee declared that one of the managers fired her and told her it was because she was pregnant; and yet another declared that she was terminated without any reason within weeks after revealing she was pregnant.

The trial court held that the declarations were inadmissible and ruled in favor of the employer on the summary judgment. Plaintiff appealed and the Court of Appeal held that the “me too” evidence in the declarations was per se admissible and was substantial evidence that the employer’s stated reason for terminating Plaintiff was pretext for discrimination. The court said that this evidence of the managers’ prior treatment of pregnant women showed intent or discriminatory animus.

A DISABILITY ACCESS CLAIM UNDER THE UNRUH ACT DOES NOT REQUIRE A SHOWING OF INTENTIONAL DISCRIMINATION

Leslie DuFresne — Tue, 07 Jul 2009 14:19:39 -0800

The California Supreme Court has finally settled the troubling issue of whether intentional discrimination must be shown to prove a disability access claim under the California Unruh Act. In Munson v. Del Taco, Inc., the Court decided the issue after it was certified to the California Supreme Court from the U.S. Court of Appeal for the Ninth Circuit because of the conflicting decisions in federal and state courts.

Plaintiff, Munson, was a disabled person who claimed that when he visited Del Taco in San Bernardino, he encountered numerous architectural barriers that prevented his equal access. He sued Del Taco under the federal ADA and the California Unruh Act. The Unruh Act prohibits discrimination by business establishments in California on the basis of age, ancestry, color, disability, national origin, race, religion, sex, and sexual orientation.

After summary judgment proceedings, Del Taco appealed arguing that the Unruh Act requires a showing of intent. The Court of Appeal certified the following issue to the California Supreme Court: “Must a plaintiff who seeks damages under California Civil Code § 52, claiming the denial of full and equal treatment on the basis of disability in violation of the Unruh Act, prove intentional discrimination?”

In answering the question, the California Supreme Court examined the original language and history of the Unruh Act and the various cases interpreting it. It noted that in 2001, it ruled in Harris v. Capital Growth Investors XIV, that proof of intentional discrimination was necessary to establish a violation of the Act. However, it went on to explain that in 2002, the state Legislature amended the Act to include ADA violations as violations of the Unruh Act. Under the ADA, there is no requirement that intentional discrimination be shown to establish a violation of the Act. Therefore, the California Supreme Court held that proof of intentional discrimination was not necessary to establish a violation of the Unruh Act based on the public accommodation provision of the ADA.

EMPLOYEE HAS NO RIGHT TO POST-TERMINATION COMMISSIONS

Leslie DuFresne — Tue, 07 Jul 2009 14:18:03 -0800

In Nein v. HostPro, Inc., a Court of Appeal held that the language of the employee’s employment agreement precluded him from recovering commissions following his termination of employment. Plaintiff worked as a sales representative for HostPro for a period of 2 years. He signed an employment agreement that expressly provided that Plaintiff would be eligible for commission pay “so long as [he] remains employed with the Company as a Sales Representative.”

Plaintiff was terminated in December 2001. In January 2002, HostPro and a potential customer who Plaintiff had approached and negotiated with prior to his termination, completed the transaction. Plaintiff sued claiming he was entitled to commissions on the transaction. HostPro moved for summary judgment arguing that based on the terms of the employment agreement, it had no duty to pay Plaintiff commissions. The trial court granted summary judgment and Plaintiff appealed. The Court of Appeal agreed. It said that the employment agreement was “susceptible to only one interpretation – that once plaintiff ceased to be employed by defendant, he would no longer be eligible for commission pay.”

CAUTIONARY NOTE: Despite the ruling in HostPro, employers should be careful when drafting commission plans and consult with their employment counsel since there are other cases which have interpreted similar language as punitive and resulting in a forfeiture of commissions when the sales was ultimately consummated based on the efforts of the employee prior to termination.

CAN AN EMPLOYEE RELEASE A WAGE CLAIM? IT DEPENDS: IS THERE A BONA FIDE DISPUTE?

Leslie DuFresne — Tue, 07 Jul 2009 14:15:51 -0800

Labor Code section 206.5 provides that “an employer shall not require the execution of a release of a claim or right on account of wages due, or to become due, or made as an advance on wages to be earned, unless payment of those wages has been made. A release required or executed in violation of the provisions of this section shall be null and void as between the employer and the employee.” The section also provides that requiring such a release could constitute a misdemeanor.

Based on this section, for years employers have either been unable to obtain a release from an employee for any wage claim, or have obtained such releases without any guarantee that they are enforceable.

Recently however, the Court of Appeal in Watkins v. Wachovia Corporation provided some clarification on when a release of a wage claim may be valid. In Watkins, the Plaintiff was employed by Wachovia as a sales assistant. She assisted stockbrokers with client contact and other duties. After the federal Department of Labor investigated a separate Wachovia branch office and determined that the sales assistants had been improperly classified as exempt employees, Plaintiff joined in a class action against Wachovia claiming unpaid overtime. Wachovia brought summary judgment claiming that when Plaintiff’s employment was ended, she signed a release of all claims, known or unknown, specifically including wage claims, in exchange for severance pay. Plaintiff conceded that she signed the release but argued that it was unenforceable as to her overtime claim based on Labor Code section 206.5’s prohibition on such releases. Wachovia responded that section 206.5 does not prohibit releases of claims subject to a “bona fide dispute.” The trial court agreed and granted the summary judgment. Plaintiff appealed and the trial court’s decision was affirmed.

Based on the court’s decision, a release of a wage claim is valid if: 1) there is a “bona fide dispute” regarding whether or not wages are owed; 2) the employer has paid all of the undisputed wages without regard to whether the employee signs the release; and 3) the employee receives something of value in exchange for releasing the right to sue for the additional (disputed) wages.

When does a “bona fide dispute” exist?

A bona fide dispute exists when the employee and the employer have a reasonable factual basis for taking a position contrary to the other side’s position. In this case, the court found that a bona fide dispute existed when Plaintiff signed the release. She claimed she worked overtime hours for which she was not paid. In the litigation, she submitted a declaration indicating that she had been told to work off the clock if she had not finished her work within her scheduled 8 hour workday. She also submitted separate time sheets she had kept while working for Wachovia that showed the overtime she had worked. Finally, she testified that she had complained to management about not being paid overtime and that one manager had told her that her brokers would have to compensate her for any overtime which they did not.

The court held that when Plaintiff signed the release of all claims at the time of her termination, a “bona fide dispute” existed because: 1) she received all wages Wachovia conceded were due based on the timesheets she submitted; 2) she believed she possessed a claim for further overtime; and 3) she voluntarily elected to receive enhanced severance benefits in exchange for releasing her claims against Wachovia. Therefore, the court ruled that the release of the wage claim was enforceable.

AN EMPLOYER'S DILEMMA: DISPARATE TREATMENT VERSUS DISPARATE IMPACT

Leslie DuFresne — Tue, 07 Jul 2009 14:12:42 -0800

The United States Supreme Court has issued its ruling in the Ricci, et. al. v. Destefano, et. al. case (referred to by the press as the “reverse” discrimination case that U.S. Supreme Court nominee, Sonia Sotomayor, decided with other Court of Appeal justices). Essentially the case stands for the rule that an employer may not manipulate (adjust for race conscious reasons) the results of a legitimate, facially neutral, and job-related promotional examination to obtain a more diverse workforce absent a showing that there is a strong basis for the employer to believe that if it does not manipulate the results it will be exposed to disparate impact liability (unintentional discrimination liability based on the negative effect an otherwise neutral policy or practice may have on a protected class).

In the Ricci case, the New Haven Fire Department conducted written and oral exams for promotion to the ranks of Captain and Lieutenant. Each exam had previously been validated as job related and race neutral. Of the 41 employees who took the Captain’s exam, 25 were white, 8 were black, and 8 were Hispanic. Based on the results, it appeared that no blacks and only two Hispanics would be eligible for the promotion. Of the 77 employees who took the Lieutenant’s exam, 43 were white, 19 were black, and 15 were Hispanic. The results of this exam revealed that no blacks or Hispanics were eligible for promotion to Lieutenant.

After conducting a hearing for the certification of the results of the exams, the New Haven Civil Service Board was afraid that it would face a disparate impact discrimination lawsuit if it promoted only those who scored high enough to be promoted. Based on this fear, the Board failed to certify the exams and no individuals were promoted. The firefighters eligible for promotion (17 whites and one Hispanic) sued claiming that the Board’s decision was intentional discrimination (“disparate treatment”) against white firefighters which violated Title VII and the Equal Protection Clause. The lead plaintiff, Ricci, also had dyslexia and had engaged in extensive training and studying to take the test. Unlike usual challenges to employment exams where individuals argue that the use of the racially discriminatory exam results in a disparate impact on protected classes, the Plaintiffs argued that “but for” the city’s actions (refusal to use the results of an exam that had previously been approved as racially neutral), they would have been promoted.

The Court concluded that it is not enough to satisfy the strong basis of evidence standard by simply pointing to a significant statistical disparity such as the one that existed in this case. The Court said that since the city had pre-validated the exams and they were clearly job related, the city would likely have prevailed in any disparate impact challenge and therefore its refusal to promote those firefighters who passed the exam constituted discrimination under Title VII.

AGE MUST BE THE "BUT FOR" CAUSE FOR ALLEGED EMPLOYMENT DISCRIMINATION

Leslie DuFresne — Tue, 07 Jul 2009 13:51:36 -0800

In the recent case of Gross v. FBL Financial Services, Inc., the United States Supreme Court held that a plaintiff must prove that his/her age was the “but for” cause of the adverse employment action they claim was discriminatory (e.g. demotion). Plaintiff was 54 years old when his employer reassigned him from his position as a claims administration director to a claims project coordinator. Many of his responsibilities in the director position were transferred to one of his subordinates who was in her early 40’s. Although Plaintiff’s compensation was not reduced, he believed that his transfer to the coordinator position was a demotion and filed an age discrimination claim under the federal Age Discrimination in Employment Act (ADEA).

When instructing the jury, the trial court utilized the “mixed motive” instruction. The court told that jury that Plaintiff only needed to show that his age was a “motivating factor,” among other factors, in order for him to state his case and then the burden would shift to the employer who would have to prove that it would have “demoted” Plaintiff regardless of his age. Based on the mixed motive instruction, the jury returned an award in Plaintiff’s favor. The employer appealed and the appellate court reversed the trial court finding that the Plaintiff must show “direct evidence” that age was a reason for the demotion before the court could provide a mixed motive instruction.

The case went before the Supreme Court on the sole issue of whether an ADEA plaintiff must present direct evidence of discrimination in order to receive a mixed motive jury instruction. However, in reviewing this issue, the Court actually decided that the mixed motive theory does not apply to the ADEA at all. It’s decision was based on the distinction it made between Title VII which permits the use of the mixed motive theory and the ADEA. The Court reviewed a previous decision, Price Waterhouse v. Hopkins, in which the court found that under Title VII, a plaintiff must first prove that discrimination was a “motivating” or “substantial” factor in the employer’s action, after which the burden of persuasion shifts to the employer to show that it would have taken the same action regardless of the impermissible discriminatory consideration. Congress amended Title VII after Price Waterhouse to adopt its reasoning and clarify that a plaintiff need only prove that the discriminatory factor was a “motivating” factor not the “but for” cause of the decision.

The Court found that not only is the language of the ADEA and Title VII different, but also that Congress did not amend the ADEA when it amended Title VII to adopt the Price Waterhouse reasoning. Thus, the Court held that under the ADEA, a Plaintiff must prove that ‘but for” his or her age, the employer would not have taken the claimed discriminatory action.

DEPARTMENT OF LABOR ISSUES AN OPINION LETTER CLARIFYING AN EMPLOYER'S RIGHT TO ENFORCE ITS CALL-IN POLICIES UNDER THE FMLA

Leslie DuFresne — Wed, 06 May 2009 15:47:22 -0800

On January 6, 2009 the Department of Labor (DOL) issued Opinion Letter FMLA2009-1-A to respond to a request for clarification regarding employee notification procedures under the Family and Medical Leave Act (FMLA) as discussed in the DOL’s previous Wage and Hour Opinion Letter FMLA-101 (January 15, 1999). The DOL indicated that it was brought to its attention that some employers had interpreted Opinion Letter FMLA-101 to stand for the proposition that under the FMLA, employers were not permitted to apply their internal call-in policies or discipline employees under their no call/no show policies, provided the employees provide notice within two (2) business days that the leave was FMLA-qualifying, regardless of whether the employee could have practicably provided notice sooner.

The FMLA requires employees to provide notice of the need for leave due to the birth or placement of a child, or for their own serious health condition, or to care for a covered family member with a serious health condition, 30 days before the leave is to begin where possible. (See 29 U.S.C. § 2612(e).) Where it is not possible to provide 30 days notice of the need for such leave, employees must provide “such notice as is practicable.” (Id.)

On January 16, 2009, the DOL’s final updated FMLA regulations (Final Rule) went into effect. (73 Fed. Reg. 67934 (11/17/08).) In the Final Rule, the DOL adopted the proposed revisions regarding the timing of employee notice of the need for FMLA leave with some minor modifications. The DOL noted that the “one to two business days” time frame set forth in the 1995 regulations had been misinterpreted as permitting “employees two business days from learning of their need for leave to provide notice to their employers regardless of whether it would have been practicable to provide notice more quickly.” (73 Fed. Reg. 68003.) In discussing the proposed changes to § 825.302, the DOL stressed that

“both current and proposed § 825.302(b) defined ‘as soon as practicable’ as ‘as soon as both possible and practical, taking into account all the facts and circumstances of the individual case.’ The deletion of the ‘two-day rule’ does not change the fact that whether notice is given as soon as practicable will be determined based upon the particular facts and circumstances of the employee’s situation.” (73 Fed. Reg. 68003.)

Thus, the final § 825.302(b) states that

“[w]hen an employee becomes aware of a need for FMLA leave less than 30 days in advance, it should be practicable for the employee to provide notice of the need for leave either the same day or the next business day. In all cases, however, the determination of when an employee could practicably provide notice must take into account the individual facts and circumstances.” (73 Fed. Reg. 68098.)

Also, the final § 825.303(a), which addresses the timing of notice for unforeseeable FMLA leave, similarly states that an employee must provide notice to the employer as soon as practicable under the facts and circumstances of the particular case. Specifically, “[i]t generally should be practicable for the employee to provide notice of leave that is unforeseeable within the time prescribed by the employer’s usual and customary notice requirements applicable to such leave.” (73 Fed. Reg. 68099.) According to the DOL’s Opinion Letter FMLA2009-1-A, in both situations, employees must comply with their employer’s usual and customary notice and procedural requirements for requesting leave, absent unusual circumstances. (See 73 Fed. Reg. 68099 (setting forth § 825.302(d) (“Complying with employer policy”) of the Final Rule); 73 Fed. Reg. 68100 (setting forth section § 825.303(c) (“Complying with employer policy”) of the Final Rule).)

The Final Rule replaces the statement that employees will be expected to give notice to their employers “promptly” with the statement that “it generally should be practicable for the employee to provide notice of leave that is unforeseeable within the time prescribed by the employer’s usual and customary notice requirements applicable to such leave.” Therefore, according to the DOL, where an employer’s usual and customary notice and procedural requirements for requesting leave are consistent with what is practicable given the particular circumstances of the employee’s need for leave, the employer’s notice requirements can be enforced. The DOL concluded that to the extent that Opinion Letter FMLA-101 has been interpreted to create a flat “two-day rule,” the Department is hereby rescinding it.

To clarify its interpretation of the Final Rule, the DOL applied it to the following example: if an employer has a policy requiring employees to call in one hour prior to their shift to report absences and an employee who is absent on Tuesday and Wednesday, but does not call in on either day and instead provides notice of his need for FMLA leave when he returns to work on Thursday, it is the DOL’s opinion that unless unusual circumstances prevented the employee from providing notice consistent with the employer’s policy, the employer may deny FMLA leave for the absence.

The DOL’s FMLA2009-1-1 Opinion Letter can be obtained at: www.dol.gov/esa/WHD/opinion/opinion.htm.

FEDERAL TRADE COMMISSION EXTENDS DEADLINE TO COMPLY WITH THE "RED FLAGS" IDENTITY THEFT PREVENTION RULE

Leslie DuFresne — Wed, 06 May 2009 15:24:36 -0800

The Federal Trade Commission (FTC) has just announced that it will delay enforcement of the identity theft "Red Flags Rule" (Rule) until August 1, 2009. The Rule was discussed previously in Weintraub Genshlea Chediak’s Law Alert Article: Deadline to Have Identity Theft Prevention program Prepared and Implemented is May 1, dated April 15, 2009.

The Rule was adopted by the FTC after the Fair and Accurate Credit Transactions Act of 2003 (FACTA) directed financial regulatory agencies, including the FTC, to promulgate rules requiring “creditors” and “financial institutions” with covered accounts to implement programs to identify, detect, and respond to patterns, practices, or specific activities that could indicate identity theft. FACTA’s definition of “creditor” applies to any entity that regularly extends or renews credit – or arranges for others to do so – and includes all entities that regularly permit deferred payments for goods or services. Accepting credit cards as a form of payment does not, by itself, make an entity a creditor. According to the FTC, some examples of creditors are finance companies; automobile dealers that provide or arrange financing; mortgage brokers; utility companies; telecommunications companies; non-profit and government entities that defer payment for goods or services; and businesses that provide services and bill later, including many lawyers, doctors, and other professionals. “Financial institutions” include entities that offer accounts that enable consumers to write checks or make payments to third parties through other means, such as other negotiable instruments or telephone transfers.

The express purpose of the extension is to provide more time to entities that may be covered by the Rule to create and implement written identity theft prevention programs. The FTC’s announcement of the extension also indicates that it plans to publish a template to help entitles with a low risk of identity theft to comply with the Rule.

The FTC’s announcement can be found at: http://ftc.gov/opa/2009/04/redflagsrule.shtm.