Bates v. UPS Redux

We originally posted about the Ninth Circuit's panel decision in Bates v. UPS here. It's back. The court decided to reconsider the case with a 15 judge "en banc" panel. The court overhauled the panel's opinion and overruled some prior precedent as well.
At issue was a hearing test UPS required for drivers of certain trucks. The trucks were below the weight that would have required federal DOT hearing tests. UPS decided to use the federal testing standards for the lower weight trucks. The hearing tests of course screened out those with hearing impairments. A class action of hearing impaired applicants sued under the ADA.
Sitting en banc, the court decided the following:
- When an employer expressly takes a "disability" into account in making an employment decision (here, disqualifying the hearing impaired who failed the test), then no "burden shifting" case analysis is necessary.
- Even in such a case, the plaintiff must establish a prima facie case (that s/he has a disability, an adverse action, and causation), and that s/he is a "qualified" individual.
- To show "qualified," the plaintiff must establish (1) s/he satisfies the minimal prerequisites for the job and (2) that s/he can perform the essential job functions with or without reasonable accommodation.
- Essential job functions are duties. The employer has the burden of production to establish the essential job functions.
- There is a difference between duties and qualification standards, which include physical and mental requirements. The parties agreed that the ability to communicate effectively and drive safely were essential job functions. Hearing, on the other hand, is a qualification standard. It may be useful or necessary to perform the essential functions, but hearing in and of itself is not an essential duty.
- The employees must meet the burden of establishing "safe driving" as an essential job function before the employer is required to show that its qualification standard - satisfactory hearing - is job-related and consistent with business necessity.
- "To successfully assert the business necessity defense to an allegedly discriminatory
application of a qualification standard, test or selection criteria, an employer bears the burden of showing that the qualification standard is (1) 'job-related,' (2) 'consistent with business necessity,' and (3) that 'performance cannot be accomplished by reasonable accommodation.' The court overruled prior case authority suggesting the employer had to establish undue hardship or a "BFOQ" as part of the business necessity defense."
- "To show 'job-relatedness,' an employer must demonstrate that the qualification standard fairly and accurately measures the individual’s actual ability to perform the essential functions
of the job."
-"To show that the disputed qualification standard is 'consistent with business necessity,' the employer must show that it 'substantially promote[s]' the business’s needs. This is a high burden, the court noted.
- "Finally, to show that 'performance cannot be accomplished by reasonable accommodation,' the employer must demonstrate either that no reasonable accommodation currently
available would cure the performance deficiency or that such reasonable accommodation poses an 'undue hardship' on the employer."
- "[T]he employer is entitled to use a method of selecting drivers that will retain the overall safety record of its driver pool. Any suggestion in the district court’s opinion that hearing-impaired drivers may be held to a lower safety standard than hearing drivers is disapproved."
- "UPS is entitled to use as some evidence of its business necessity defense the fact that it relied on a government safety standard, even where the standard is not applicable to the category of conduct at issue."

This obviously is a significant ruling for employers to consider when setting job qualification standards that focus on physical or mental abilities. We will write a more detailed article in the weeks to come.


NLRB: Employees Have No Right to Email About Unions

Not news: Employees use email for personal reasons. News: Employees have no special right to use email for union activities. Employees and their advocates argued to the National Labor Relations Board that employers' property rights should yield to employees' right to communicate under section 7 of the National Labor Relations Act. In a case of first impression, the NLRB said "no" in The Guard Publishing Company, opinion here. So, Employers have the right to ban employees from using their email system for personal reasons.
But if employees email each other about sports, gossip, etc., can the employer selectively ban union talk? Not necessarily. Employers that single out section 7 rights for discriminatory treatment commit an unfair labor practice under section 8(a)(3) of the NLRA. The Board had an answer for that issue as well. In the opinion, the Board re-defined what constitutes "discrimination" in the context of employer policies. The employer may lawfully ban communications about non-work-related activities, so long as the employer's distinctions are not "along section 7 lines." Example: the employer may allow solicitations by charitable organizations, but ban all other solicitations (including by unions).
The decision was 3-2 over a strong dissent, the Board is about to turn over some members, and I hear there's an election coming up next year. So, the degree to which employers may rely on this decision for the long term is unclear. For now, however, employers have more latitude regarding their policies regarding the use of employer property, and their solicitation and distribution policies.


ERISA Preempts San Francisco Health Care Ordinance

The Golden Gate Restaurant Association took on San Francisco's attempt at universal health care - the Health Care Security Ordinance - and won. It turns out you CAN fight City Hall, particularly when City Hall decides to pass legislation that is clearly preempted by ERISA.

The San Francisco Health Care Security Ordinance was set to take effect January 1, 2008, and would have phased in based on employer size. Basically, employers had to spend a certain amount of money on health care or contribute to a San Francisco fund (read: another tax). But, unless the Ninth Circuit stays the district court's decision and allows the statute to take effect [which would be an insanely burdensome and expensive error if the law ultimately is deemed preempted] the SF ordinance is not going to take effect. Btw, the City is asking the Ninth Circuit to stay the district judge's order.

The district judge's opinion is here. (H/T Workplace Prof's blog for the link to the opinion).
You can learn about the ordinance and the ERISA preemption issues there. Here's the holding:

The Ordinance’s health care expenditure requirements are preempted because they have an impermissible connection with employee welfare benefit plans. By mandating employee health benefit structures and administration, those requirements interfere with preserving employer autonomy over whether and how
to provide employee health coverage, and ensuring uniform national regulation of such coverage. The Ordinance’s provisions also make unlawful reference to benefit plans because they refer to, are designed to act immediately upon, and
cannot operate successfully without the existence of employee welfare benefit plans.

:::temporary editorial breach of the fourth wall - "Speaking of tips: to my friends at that firm with initials that start with C. -- maybe for the New Year you can adopt the "hat tip" as your very own technique for acknowledging those of us who actually do the work!" ::::: [End the editorial narrowcast attack on lazy competitor].

Happy New Year everyone, even the folks at the C. firm!


California Court of Appeal Enforces Employment at Will

After the California Supreme Court's 2006 decision in Dore v. Arnold Worldwide, discussed here, it is hard to dispute a provision that provides for termination at will, even if the term "at will" is not expressly used.

The Court of Appeal in Bernard v. State Farm, opinion here, held this language provided for employment at will:

“III A. You or State Farm have the right to terminate this Agreement by written notice delivered to the other or mailed to the other’s last known address.
“III B. In the event we terminate this Agreement, you are entitled upon request to a review in accordance with the termination review procedures approved by the Board of Directors of the Companies, as amended from time to time.”

The court rejected the plaintiff's argument the agreement was "ambiguous," thereby allowing the admission of "parol" evidence to explain the contractual term. The court also rejected the notion that the review of termination provision limited State Farm's power to terminate the contract.

In an unpublished portion of the decision, the court rejected the argument that the employer's alleged misrepresentations about the circumstances that led to termination could give rise to a fraud claim. Hunter v. Up-Right remains good law on this point.

No wonder I don't see many implied contract claims anymore.


California Court of Appeal Upholds 30X Attorneys' Fees Award

So, you litigate a discrimination case and you win. The jury's verdict is about $30,000, which probably is considered a low verdict by your client and you. Silver lining - attorneys fees are available. What are the plaintiffs' attorneys' fees awarded in this case? (Insert Dr. Evil impression here:) About one million dollars. (Pause for dramatic effect with the whole pinky under the chin thing). In fairness, the case was litigated for years and a jury did find intentional discrimination in promotional opportunities at the airport.

The Court of Appeal affirmed nearly all the award, holding it was within the trial court's discretion to award the substantial fees based on a "lodestar" formula (the number of hours expended times a reasonable rate). The court rejected the employer's several arguments that fees should be a multiple of three times recovery, allocated in proportion to the time spent on successful claims, etc. The case is Harman v. City and County of San Francisco, opinion here.

The defense's claim that the recovery should limit the fees is supported by case law. But the trial court has discretion to make such adjustments and apparently did not abuse its discretion here. Unfortunately, the employer's settlement offer was close to the recovery. But there is no mention of a statutory offer to compromise, which could have resulted in a lower fee award. Here's a link to my article on the use of offers to compromise under Code of Civil Procedure section 998. Article.


Court of Appeal Upholds Denial of Meal/Rest Class Action

The Court of Appeal gave a mixed bag of coal and presents to H.F. Cox, Inc. The court held that class certification should have been granted on an overtime claim and on whether a vacation policy violated California law. However, the court upheld the trial court's decision to deny certification on a meal and rest break claim.
The opinion is interesting because the overtime claim appears to involve a lot of individual issues regarding whether each truck driver was exempt under federal or state exemptions for truckers. But the court found no substantial evidence of individual issues.
The vacation claim is interesting because the plaintiffs should not win on the merits, because the trucking company's policy of paying a flat sum of vacation pay (rather than basing it on the plaintiffs' actual pay, is probably quite legal. So, class certification may be a hollow victory, since the defendant can bring a motion for summary judgment.
The meal period claim should warm the hearts of defense attorneys. The court had no trouble finding there substantial evidence of individual issues regarding whether and to what extent employees took meal breaks. There was no argument over whether they must be affirmatively "provided" or forced.
There was also a claim for off-the-clock work, for which certification was denied. Again, the court of appeal found substantial evidence that individual issues predominate.

The opinion, Bell v. Superior Court, is here.

Congress Amends FMLA to Cover Leave for Relatives on Active Duty in the Military

Congress has amended the FMLA. The bill is here. The President has not signed the bill yet, but is expected to do so soon.
The new provision permits (1) up to 26 weeks of leave in a one-time 12-month period to care for a service member with a "serious illness" who is injured in the line of active duty and (2) up to 12 weeks of leave in any 12-month period for a "qualifying exigency" related to a service member's call to active duty.
The Department of Labor will define "qualifying exigency."
The 26-week leave is a one-time leave. The "qualifying exigency" leave is available like FMLA - 12 weeks per 12 month period.
The reinstatement rights, benefit protections, etc. will be the same as under the current FMLA. This is all new, so stay tuned. Expect to revise your FMLA policies and replace your posters.


San Francisco Minimum Wage Going Up

The SF minimum wage increases to $9.36 per hour effective 1/1/08. Please replace your posters, too. Information on the new minimum wage and the poster available here.

Happy holidays!


EEOC Issues New Guidance on Employment Testing

The Equal Employment Opportunity Commission has issued new "enforcement guidance" on "Employment Tests and Selection Procedures," link here.

The Guidance does not contain a lot of analysis. However, it is interesting for a couple of reasons:

- the EEOC considers background checks - such as criminal and credit checks - to be "tests," analyzed under disparate impact and treatment theories. This could have wide-ranging implications. It may be that applicants challenge such tests under an "adverse impact" theory. If adverse impact is shown, the employer will have to prove the tests are "job-related and consistent with business necessity." That means that background/credit/criminal checks for all employees could be challenged.

- the EEOC also identifies "performance appraisals" under the same rubric.

Otherwise, the Guidance briefly discusses anti-discrimination laws and how employment selection procedures may violate them. It also summarizes some EEOC litigation.

H/T to Storm.


Arbitration Policy Not Enforceable as Agreement

If you have a handbook policy referring to a separate arbitration agreement, a court will expect to see a separate arbitration agreement if the employer tries to enforce it. So, if an employee does not sign the separate agreement contemplated by the policy, the employer should not expect the court to consider the short policy as evidence of an agreement to arbitrate. That's what the court of appeal said in Mitri v. Arnel Management Co, here.
This case is NOT saying that an arbitration agreement cannot be contained within a handbook. Rather, this case says that if the employer says there is a separate agreement in its handbook, the employer should ensure that the separate agreement is signed.


California Court: USERRA Claims Cannot Be Released

General releases are ineffective to release a growing list of statutory claims. Claims under the FLSA, FMLA, and claims for unpaid wages under California law are just some of the claims that may not be included in a release. The California Supreme Court is going to decide whether claims for unpaid expenses under Lab. Code section 2802 may be released, as was held in Edwards v. Arthur Andersen, discussed here.

So, add another statute to the list of un-releseable laws: USERRA. The Court of Appeal decided in Perez v. Uline, Inc. that a general release was ineffective against a later claim for wrongful termination in violation of public policy and breach of contract. USERRA contains language invalidating such waviers:
This chapter supersedes any State law . . . contract, agreement, . . . or other matter that reduces, limits, or eliminates in any manner any right or benefit provided by this chapter . . . .

Applying this section, the Court held that a release of USERRA claims was invalid. The common law Tameny and contract claims, however, are not USERRA claims. But the Court of Appeal did not make that distinction.

An alternative practice may be to have the employee agree (if true) that he or she has received all wages and leave to which he or she is entitled.

USERRA claims will be more prevalent as more soldiers return to work from duty in Iraq and Afghanistan. Employers should be aware of their obligations under this law. A release apparently is not an option.

As a final note, the case is interesting, too, because it reminds practitioners that waivers of Civ. Code section 1542 are not required in a release for it to be enforceable:

Plaintiff testified he understood he was releasingclaims arising under all statutes the agreement referred to, even those he did notunderstand. This knowledge is sufficient to withstand the provisions of Civil Codesection 1542. Nothing in that statute requires that it be designated in the release or that aparty specifically waive its provisions. While it might have been more comprehensive to have a reference to Civil Code section 1542 in the release, “‘To be effective, a releaseneed not achieve perfection . . . .’ [Citation.]”

This is not exactly news, but it may be new to you. For the record, we always recommend inclusion of the waiver to avoid disputes over the enforceability of a general release.