It has been a busy few months on the employment law scene with two lawsuits of note to pass your way and a recent Appellate case that will impact the way you handle employees out on medical leave and their subsequent re-employment.  The moral to each is that early identification of the a potential problem and then proper planning can save a business tens of thousands of dollars.

1.         Wage & Hour Lawsuit - Proper Classification of Exempt Employees

Jim Ballard and Sarah Evans recently defended an Investment Securities Firm charged with violating State and Federal wage laws.  More specifically, the plaintiffs attempted to certify a wage & hour class action that would have included over 150 employees arguing that the Investment Securities Firm had misclassified its brokers as exempt from overtime pay. 

All employees are entitled to overtime pay unless he/she falls within a specific exemption to the established rules such as the Management or Administrative Exemption.  As you have probably gathered from the recent news reports, wage & hour class actions are all the rage these days as employers have been called to the mat for not paying overtime or not mandating meal & rest periods. 

Given the penalties, interest and attorneys fees that go into calculating the amount due to the potentially aggrieved employee, these cases can turn expensive in a hurry.  This case was no different as the opening settlement demand exceeded $13 million.  Through creative lawyering, extensive research on the legal issue of exempt status and a good mediation strategy, Jim and Sarah were able to resolve the case for less than $1 million. 

This is no doubt a good time for you to make sure that your own employees are properly classified, that your job definitions reflect duties that would create exempt status (if applicable), that proper wages are being timely paid and that meal & rest periods are carefully defined and enforced.  This is also a good time to make sure that your Employee Handbook is up to date and has been received (and acknowledged) by all of your employees.  Jim Ballard, Dick Semerdjian and Ross Schwartz can assist you in reviewing your exempt employees to be sure he/she falls within an applicable exemption.  We can also help you to update your Employee Handbook to reflect the current wage & hour standards.  This time up front can save numerous headaches down the road.

2.         Race Discrimination Lawsuit - Heading Off These Cases Early

Jim Ballard also recently defended a race discrimination case in Oakland that reinforces the notion that employers and, especially corporations, need to avoid jury trials at all costs.  In that matter, a long-time African-American employee sued his employer alleging that both his demotion and subsequent termination was based upon his race.  Although the evidence strongly suggested that the employer had legitimate reasons for both the demotion and termination, the jury hung as to whether the actions were based upon race.  Fortunately, the Court granted the majority of our motions for nonsuit following the jury’s failure to reach a decision and the case has been gutted. 

Some lawsuits will occur even if you do everything the “right” way and have good, legitimate reasons for the actions taken.  But this case may have been avoided altogether had the employer retained an attorney to handle the investigation of the race discrimination allegations and/or negotiated a severance package complete with a release of all claims.  Although this requires attorneys fees up front, it would have been less than the cost of a jury trial and the risk that goes with that.  The moral is that you never want to create a claim ripe for a jury and early resolution certainly beats the risks of allowing 12 typically employee-friendly peers to review the final employment actions taken.  Jim Ballard, Dick Semerdjian and Ross Schwartz can assist you handling troublesome employees and navigating the treacherous waters of investigations, demotions and terminations.   

3.         Employees on Medical Leave - The Road Gets Tougher

California law makes it unlawful for an employer to discriminate against an employee because of his/her physical disability or to terminate an employee because of a physical disability.  California law also requires an employer to provide reasonable accommodations to a disabled employee and to engage in a good faith interactive process with the employee to determine what reasonable accommodations can be made.  While this may seem like simple mandates, in our experience, no area causes more confusion for the employer than handling employees out on medical leave and ready to return to the work force.

A recent Appellate Court decision only adds to the confusion involved with handling disabled employees.  In Nadaf-Rahrov v. Neiman Marcus Group, Inc., the employee went out on a disability claim and many months later asked for her job back.  In the interim, the plaintiff’s doctor had opined that she was not physically fit for her old job and did not release her back to work.  Despite the doctor’s opinion, the plaintiff sought a list from the employer of all job openings within the company.  Because the plaintiff’s physical limitations would not qualify her for any job within the company and because she had not been released to resume work, the employer refused to provide a list of job openings and refused to engage in a good faith interactive process to determine what job, if any, she could fill.  The employer did state that it would be willing to so engage once the plaintiff had been released to resume working.  The employee sued the employer for disability discrimination and for its refusal to engage in the mandatory good faith interactive process to determine if any job would suit her unique physical requirements.

The trial court sided with the employer finding that the plaintiff was unable to perform the “essential duties” of her job and was not qualified for other jobs within the company.  The Appellate Court, however, reversed the trial court’s decision finding that the employer had not done enough to investigate the plaintiff's actual physical condition or to explore potential alternate positions.  In making such finding, the Court illustrated how exhaustive the employer's efforts must be if it expects to avoid legal liability in dealing with employees out on disability claims. To wit: