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One of the most vague and, as a result, frequently disputed and litigated claims by workers is whether they are entitled to overtime compensation or whether they are properly classified as exempt under administrative exemption as provided in Federal Labor Standards Act (FLSA) and the applicable federal regulations. This article clarifies the administrative exemption standard as it has been recently applied by California courts.

First, it is important to note that exemptions from overtime compensation requirements are narrowly construed against the employer, and their application is limited to those employees who plainly and unmistakably within their terms. Bell v. Farmers Ins. Exchange (2001).

Generally, except satisfying the minimum rate of salary requirement, which is regularly adjusted, exempt administrative work must be (1) non-manual; and (2) related to management policies or general business operations of the employer or the employer’s customers; and (3) must involve the customary and regular exercise of discretion and independent judgment.

On March 27, 2009, the second appellate district court of California published its decision on the tip pooling rules in the service industry which has been a subject of debate among litigants during the past several years. Etheridge v. Reins International. In that case, one of the issues was the interpretation of California Labor Code section 351 that states, among other things: ” No employer or agent shall collect, take, or receive any gratuity or a part thereof that is paid, given to, or left for an employee by a patron, or deduct any amount from wages due an employee on account of a gratuity, or require an employee to credit the amount, or any part thereof, of a gratuity against and as a part of the wages due the employee from the employer. Every gratuity is hereby declared to be the sole property of the employee or employees to whom it was paid, given, or left for.” The Etheridge case focused on the interpretation of the term “employee” in the above code section.

Should only the waiters and bussers serving the table be entitled to the tips left on that table, or everyone in the “chain of service” of that table be included in the “tip pool?”

The court went with the latter interpretation, supporting its holding with compelling logic. The court stated that a patron tips on all of the services received, not simply the service provided by the employee the customer sees with his own eyes. If the plates on which the food is served are not clean, the food received is not hot, or is not as ordered, the patron may be inclined to leave a smaller tip even when the services of the servers and bussers are satisfactory. Likewise, when the meal is good, the presentation on the plates is pleasing, and special food requests have been satisfied, the patron may be inclined to leave a more generous tip, even when the servers and bussers might not have delivered exceptional service.

Proving any kind of employment discrimination is not easy. The core of any legitimate claim of discrimination is proving that the reason for the adverse employment action taken against the worker (demotion, transfer, termination, suspension, etc.) is the fact that he/she belongs to one or more of the protected classes, such as being of a certain race, being disabled, being injured, etc…

Age discrimination is one of the more subtle violations at workplace as there are so many easy ways to mask it. An employer who is determined to get rid of the older worker will use all kinds of legitimate reasoning in terminating that employee. One of the common ways to disguise the true reason for terminating an employee is creating a paper trail of poor performance. This may start from one or more bad performance reviews over the period of time, and end up with warnings and suspensions, eventually leading to employment termination.

Indeed, many workers don’t even suspect that they are being discriminated as it even cross their mind. However, there is a number of signs that would suggest that the worker was terminated due to his/her older age. If you are about to be laid off or were recently terminated while being 40 or older, ask yourself the following questions:

Under California law, an employee is presumed to be “at-will” employee unless agreed otherwise. Cal. Labor Code section 2922. “At will” means that an employee can be terminated for any reason, no reason, or arbitrary reason, as long as it’s not an unlawful reason (such as discriminatory or retaliatory discharge, to name a few).

There is a number of laws and ways in which the presumption of at-will employment can be defeated, as might be necessary in order to prove a wrongful termination claim. Some of those laws are stronger and more definite while others are more vague and are not applied by all courts equally in California. Below is a number of the more compelling ways to defeat at-will employment presumption.

An express agreement that employment is other than at-will of course defeats the at-will employment presumption. Thus, most union employees are not at-will employees as their contract with the employer – the collective bargaining agreements – almost always provides that an employee can be only terminated for good/just cause. Additionally, personnel manuals that list specified grounds for discharge are evidence of an implied-in-fact contact to terminate only for good cause.

The FMLA provides that employee are eligible for FMLA leave if they have worked at least 12 months for an employer, worked 1,250 hours during the 12 months immediately prior to requesting leave, and work at a location that has 50 employees within 75 miles. This requirement, however, creates uncertainty when an employee has joint employers, such as when the employee is working at a site through an off-site temporary agency. Under such circumstances, the regulations provide that when the employee has worked at least 12 months at a worksite, the employee will be considered to be employed where he physically reports. 29 C.F.R. section 825.111(a)(3).

This means, for example, that the employee, referred by a small temp agency to work at a large company shouldn’t be concerned about being ineligible for FMLA leave, as it’s the size of the number of employees at the physical location where he works that determines his eligibility; not the size of the temp agency.

In the past, compliance issues have arisen when evaluating FMLA leave requests by employees who telecommute / work from home. The regulations now confirm that the worksite for such employees is the location where they report and receive assignments, and not their physical location. This is logical, as counting employees at home wouldn’t make any sense.

An employee’s personnel file contains some of the most valuable information to a claim for discrimination, retaliation, harassment and wrongful termination. One of the powerful ways in which the personnel file can be used is when the employer argues that the worker was terminated for poor performance. If that worker’s personnel file contains good performance reviews, or even excellence awards and documentation of paid out bonuses, in addition to lack of warnings, bad reviews and disciplinary action, this will cast heavy doubt on the employer’s truthfulness and the true reasons for employee’s termination.

Often, however, when a personnel file is requested as permitted under California Labor Code 1998.5 and other provisions, the employer “interprets” that request very narrowly, providing minimum documentation, and claiming that all the other documents, such as performance reviews and investigation reports, are located in other files and therefore are not available. Some companies and especially their counsel will argue that the employee is only entitled to having that paperwork from his personnel file, which that employee has signed.

Both of the above arguments have no merit. In Wellpoint Health Networks, Inc., v. Superior Court 59 Cal.App.4th 110 (1997), the court specifically discussed the issue of obtaining personnel files. The court held that as California Labor Code section 1198.5(a) provides, every employer shall… at the request of employee, permit that employee to inspect such personnel files which are used or have been used to determine that employee’s qualifications for employment, promotion, additional compensation, or termination or other disciplinary action. The court further noted that these documents include, among others investigative reports of EEOC, pointing out that the above provision intends a broad definition of “personnel file” to preclude employers from assigning documents to files having some other name, and then refusing access to documents on the ground that they are not contained in the personnel file.

Having been working on sexual harassment and discrimination claims for a while now, I am puzzled as to why these kinds of violations still take place, considering the amount of training, warnings and other kinds of “cover up” that most if not all companies are concerned about creating. Thus, I always try to determine based on the facts of the cases I handle, what the source of sexual harassment/discrimination is at a given workplace. My observation reveals the following most common reasons as to why sexual harassment takes place and isn’t prevented at workplace:

1. The harasser genuinely believes that he isn’t doing anything wrong. A co-worker or a supervisor might perceive his jokes or his “affection” touching of a co-worker or his subordinate similar to his flirting at a happy hour, not realizing that the exact some behavior that would compliment a woman anywhere outside of work, would intimidate her and would make her feel threatened at workplace.

2. If the harasser is a very successful businessman (the owner of the company), he might be used to knowing that he can buy anything he needs, and he can buy his way in and out of everything. Thus, he feels entitled to treat his employees as he wishes. He might honestly believe that if he pays someone their salary, they have to do anything he asks.

The California Pregnancy Disability Leave LAW (PDLL) is part of California Fair Employment and Housing Act (FEHA). It requires employers to provide an employee up to four months of leave for disability due to an employee’s pregnancy, childbirth or related medical condition.

PDLL v. CFRA and FMLA

FMLA (Family Medical Leave Act) – a federal law allowing to take a qualifying employee up to 12 weeks of time off work due to a serious medical condition also applies to pregnancy, child birth or related condition. Interesting enough, CFRA (California Family Rights Act) expressly exclude pregnancy and child birth from its list of conditions entitling an employee to a CFRA leave.

You are a manager or a director at a manufacturing plant or a sophisticated technology company in San Francisco, Sillicon Valley, or elsewhere in California. You take great pride in your work, and you are rewarded with generous compensation and real prospects for promotion. One of your duties is supervising the company’s employees and making sure that they deliver what your clients expect.

One common challenge you might be facing is addressing issues in your subordinates’ performance. Sooner or later, you will likely find yourself in a predicament with regard to how to address problems in your employees’ performance effectively. You want everyone to be happy – you want the issues to be resolved, your clients to be happy, and your employees to improve their skills and abilities while maintaining great degree of respect for you as a boss.

Many managers, out of sheer kindness of their heart, choose to be too generous, too kind, and too polite with those employees whose performance doesn’t meet expectations. A supervisor might like an employee on a personal level or might not want to be perceived as a mean boss, who puts a great deal of stress on his subordinates, and will be reluctant to be as direct as necessary to address performance deficiencies.

Under the law, where the employee’s FMLA/CFRA certification is unclear about his health condition and his/her ability to return to work, an employer’s policy may lawfully require an independent medical examination (IME) to determine the employee’s fitness to return to work.

For example, in one case, an employee who was on FMLA leave because of a chronic back problem, submitted her treating physician’s certification that she may return to work. However, her doctor also stated that she should “avoid stressful working conditions.” Finding that FMLA certification confusing, the employer used its customary practice, incorporated in the collective bargaining agreement, and informed employee that an independent medical exam was required for her to return to work. The employee refused the exam, and as a result was fired. The court found that the employer did not violate FMLA.

Where the employee has been timely notified that a fitness for duty report will be required and has failed to provide the report, the employer may refuse to reinstate the employee until the certification is provided. If an employee does not provide either a fitness-for-duty report or a new medical certification for a serious health condition at the time the FMLA leave is concluded, the employee’s position may be lawfully terminated.