CUSTOMER SERVICE TRAINER ENTITLED TO OVERTIME
The California Court of Appeal recently held that a customer service and training representative for a software company was entitled to overtime. The employee was hired at a salary of $60,000 per year and spent about half his time in the office and the other half onsite with customers. The majority of his time was spent performing customer service work, training customers, using his employer's software, and troubleshooting.
After his termination, the employee filed a claim with the Labor Commissioner for overtime. The trial court held that he was not an exempt administrative employee, awarding him over $50,000 in overtime. The California Court of Appeals agreed. To be exempt under the administrative exemption the employee must: (1) perform office, non-manual work directly related to management policies or general business operations of the employer or its customers; (2) customarily and regularly exercise discretion and independent judgment; (3) perform under only general supervision, work along specialized or technical lines requiring special training, or execute under only general supervision, special assignments or tasks; (4) be engaged in such activities at least 50% of the time; and (5) earn twice the state's minimum wage. The Court found that the employee was non-exempt because he did not meet the first test. His work did not relate to management policies or general business operations of the employer or its customers. The court found that since the employer was in the business of providing software, the employee was engaged in the primary business of his employer, i.e. implementing software for customers and supporting the customers. The Court found that the employee had no involvement in the policies or general business operations of his employer or its customers, and therefore was non-exempt. This case illustrates an important distinction between true exempt administrative employees (such as personnel directors and high level administrative assistants, who support their employers' business' operation) and non-exempt employees (who actually engage in the business of their employer).
The Court of Appeal also awarded the employee interest on the overtime, as well as attorneys' fees. The case is Eicher v. Advanced Business Integrators, Inc. (Cal.Ct.Appeal 2007).

CALIFORNIA SUPREME COURT RULES THAT MEAL AND REST BREAK AWARDS ARE WAGES, NOT PENALTIES
California Labor Code § 226.7 provides that employers who fail to provide meal periods or rest breaks must pay the employee one hour of pay for each meal period or rest break missed. In Murphy v. Kenneth Cole Productions, the California Supreme Court unanimously held that the one hour remedy is in the nature of wage rather than a penalty. This is important because there is a three year statute of limitations for wages, and only a one year statute of limitations for penalties. This decision also means that employees prevailing on meal and rest break claims may be entitled to attorneys' fees under Labor Code § 218.5, pre-judgment interest, and "waiting time penalties," if the meal or rest break payments were not made upon termination of employment (Labor Code § 203).
The Murphy case did not discuss the issue of what it means to "provide" a meal or rest break period under Labor Code § 226.7. While a common understanding would mean that the employer must simply make meal and rest periods available to the employee, the Labor Commissioner has taken the position that "provide" means that the employer must compel its employees to take meal breaks. The Murphy case also did not address whether an employer can be liable for one hour of pay for failing to provide a meal period, and one additional hour of pay for failing to allow a rest period in the same day.
The decision underscores the importance of having a policy requiring all non-exempt employees to take the required (unpaid) meal breaks, and to record their meal breaks on their time sheets. Employers must also provide the required rest breaks for all employees as well.

REGULATIONS ISSUED FOR NEW SAN FRANCISCO PAID SICK LAW
Under Proposition F, all employers in San Francisco were required to start offering paid sick leave to all employees by February 2007. One hour of paid sick leave must be provided for every 30 hours worked. Employees must be allowed to accrue at least 72 hours of sick leave (9 days). However, employers with less than ten (10) employees need only allow employees to accrue at least 40 hours of sick leave.
The sick leave must be available for the employee's own illness or injury, or that of a child, parent, legal guardian or ward, sibling, grandparent, grandchild, spouse or domestic partner. Employees with neither spouses nor domestic partners can designate another individual.
The law applies to San Francisco companies of every size, and to part time employees and temporary workers. The law applies to both exempt and non-exempt employees. There is an exception for employees under a collective bargaining agreement, but only if the collective bargaining agreement expressly waives the requirements of the law.
The employer need not cash employees out of their unused accrued sick leave when they leave employment.
While employers were required to start allowing employees to accrue sick leave in February of 2007, effective June 7, 2007 they must now pay out accrued sick leave to eligible employees taking sick leave. New rules recently issued by the City clarified several points, such as whether employees are required to provide advance notice for every use of paid sick leave, whether employers could require a doctor's note for every use of paid sick leave, whether employers could require employees to take off a full day to use sick leave, how to calculate sick leave. For employees who are paid on a salaried basis, and whether employers based outside of San Francisco who have employees performing work in the City must pay sick leave for hours worked in the City. The new rules can be found on the website of the City and County of San Francisco's Office of Labor Standards Enforcement: http://www.sfgov.org/site/olse_index.asp.

COURT AFFIRMS CLASS ACTION AT WAL-MART
The Ninth Circuit Court of Appeals recently affirmed an order certifying a class consisting of over 1.5 million female employees of Wal-Mart. Plaintiffs are suing under Title VII of the Civil Rights Act of 1964 alleging that women employees in Wal-Mart stores receive less pay than men in comparable positions, and receive fewer promotions to in-store management positions. The class is the largest ever certified in an employment case and includes women at over 3,400 stores across the United States. The Ninth Circuit affirmed the District Court's order certifying the class with respect to plaintiffs' equal pay and promotion claims, but denied certification on some of the promotion claims seeking lost wages and punitive damages on behalf of those women who had never expressed interest in the challenged promotions. The suit alleges that the employer's use of "subjective" criteria for promotions negatively affected women, even though the decision makers did not intend to discriminate. The case underscores the value of using "objective" criteria for promotions to the extent possible, and requiring employees to apply for posted positions rather than having management unilaterally select candidates for promotion. The case is Dukes v. Wal-Mart, Inc., 474 F.3d 1214 (9th Cir. 2007).

CALIFORNIA MINIMUM WAGE TO INCREASE AGAIN JANUARY 1, 2008
Effective January 1, 2007, the California minimum wage was increased from $6.75 per hour to $7.50 per hour. Effective January 1, 2008, the state's minimum wage will increase again to $8 per hour.
The City and County of San Francisco has its own minimum wage, which is currently $9.14 an hour (it too will increase January 1, 2008).

SUPREME COURT REQUIRES EMPLOYEES TO PROMPTLY CHALLENGE DISCRIMINATION
In a 5-4 decision, the United States Supreme Court ruled that in order to challenge discriminatory pay practices under Title VII, employees must file a timely charge of discrimination with the Equal Employment Opportunity Commission (EEOC) after each discriminatory pay decision. Otherwise the claim will be time barred. In Ledbetter v. Goodyear Tire & Rubber Co. (May 29, 2007), the Supreme Court dealt with a situation where an employee claimed that in the early 1980's and 1990's, her male supervisors gave her poor performance evaluations because she was a woman, which resulted in her pay being lower than it would have been had she been evaluated based on the merits of her performance. Plaintiff argued that as a result, her level of pay remained depressed throughout her employment until she retired in 1998, at which time she was earning less than her male co-workers. After she retired, the plaintiff filed an EEOC charge for sex discrimination and sued her employer.
Title VII requires an employee to file a charge of discrimination with the EEOC within 180 days in states which do not have their own fair employment practices agencies, or 300 days in states that have such agencies. While the plaintiff won a substantial verdict in the trial court, the Supreme Court reversed, finding that her claim was time barred because the only alleged discriminatory actions the employer committed were outside of the statute of limitations period. The Court rejected the argument that each paycheck that the employee received was itself actionable discrimination. The Court held that while the discrimination occurring years ago may have adversely affected the plaintiff's pay, such subsequent consequences of earlier discrimination were not actionable. Prior to the Ledbetter decision, the EEOC and some courts had held that discriminatory actions which adversely affected employees' paychecks in the future gave rise to a new claim with each paycheck. The Supreme Court rejected that approach.
Since the Supreme Court issued its decision, several members of Congress have announced plans to introduce a bill to amend Title VII to allow lawsuits similar to Ledbetter's. For the time being, employers can rest assured that they will not be subjected to stale discrimination claims simply because an employee alleges that his or her pay was affected by past discriminatory conduct.

NEW HIRE CHECKLIST
Want to see if your hiring process passes legal muster? Try this checklist:

• Employment advertising - do advertisements comply with all applicable laws?
• Does employment application comply with legal requirements?
• Are interviewers trained as to appropriate/inappropriate questions?
• If physical testing is done, does it comply with the handicap laws?
• Are any pre-employment tests properly validated for EEO purposes?
• Does employer keep data on race and sex of applicants to the extent required by law?
• Does application contain authorization to check all references?
• Does application contain the statement that all answers are true and that false information will be grounds for termination?
• Does application state that any future employment is at-will?
• Are applications kept for at least two years?
• Reference checking - has employer contacted former employers, verified necessary licenses, and checked all references?
• If pre-employment drug testing is used, is an appropriate waiver and consent form signed by the employee, or found in the application?
• Has employer given all required forms when hired?

ON THE LIGHTER SIDE: EBENEZER SCROOGE'S SICK LEAVE POLICIES

SICKNESS AND RELATED LEAVE
We will no longer accept a doctor's statement as proof of sickness. If you are able to go to the doctor, you are able to come to work.

SURGERY
Operations are now banned. As long as you are an employee here, you need all your organs. You should not consider removing anything. We hired you intact. To have something removed constitutes a breach of employment.

BEREAVEMENT LEAVE
This is no excuse for missing work. There is nothing you can do for dead friends, relatives or co-workers. Every effort should be made to have non-employees attend to the arrangements. In rare cases where employee attendance is necessary, the funeral should be scheduled in the late afternoon. We will allow you to work through your lunch hour and subsequently leave one hour early.

YOUR OWN DEATH
This will be accepted as an excuse. However, we require at least two weeks notice as it is your duty to train your replacement.

PREPARED AND PUBLISHED BY THE LABOR AND EMPLOYMENT GROUP. THE CONTENTS OF THIS PUBLICATION ARE INTENDED FOR GENERAL INFORMATION PURPOSES ONLY AND SHOULD NOT BE CONSTRUED AS LEGAL ADVICE OR OPINION WITH RESPECT TO ANY SPECIFIC FACTS OR CIRCUMSTANCES. READERS WITH SPECIFIC LEGAL QUESTIONS SHOULD CONSULT A LAWYER CONCERNING THEIR OWN PARTICULAR SITUATION.
● ©2007 MCQUAID BEDFORD & VAN ZANDT LLP. ALL RIGHTS RESERVED. PROMOTIONAL MATERIALS.