Unused Vacation Time Lawsuit – Reznik v. IBM

Unused Vacation TimeReznik v. International Business Machines Corporation lawsuit. How much money is owed to an exiting employee for unused vacation time? Lots of us are familiar with “use it or lose it” vacation time policies – in which an employee forfeits any unused vacation time that he or she still has by the end of a year. In California, these types of policies are generally considered illegal. The California Supreme Court stated in the case of Suastez v. Plastic Dress-Up Co. that when an employer offers vacation time, that time vests, and is protected from forfeiture of unused vacation time.

This means that when an employee’s position is terminated, the employee is most likely entitled to compensation for any unused vacation time that the employee has accumulated. Section 223.7 of the California Labor Code states that an employee in this situation must be paid for all vested vacation time at his or her final salary rate. (There is an exception, however, if a collective bargaining agreement is in place, and the agreement allows vested vacation time to be forfeited.)

IBM was recently accused of violating this statute by a former employee named Yakov Reznik.

Reznik began working for IBM in 2012, and went on long term disability in 2014. During his time at IBM, he did not take any vacation days. He maintained that IBM failed to fully compensate him for his unused vacation days at the conclusion of his employment – and alleged that IBM’s real vacation policy is significantly different than its stated policy.

Does IBM’s Unused Vacation Time Policy Violate the Labor Code?

IBM’s stated policy for employees working in California is often referred to as the “California Plan.” According to the plan, employees with less than 10 years of experience at IBM, such as Reznik, may accrue up to 15 vacation days per year. In addition, employees are given “personal choice holidays,” and are allowed to carry over up to six unused personal choice holidays per year.

Under the California Plan, Reznik had accumulated six unused personal choice holidays, and had accrued 15 vacation days. When Reznik left IBM, he was paid $12,502.75, which amounted to 25 days of work at the salary he had been receiving.

Reznik alleged that IBM’s practices did not adhere to the California Plan. He claimed that he had been shown a PowerPoint presentation which stated that unused days cannot be carried over from one year to another, and that they cannot be “cashed out.” He alleged that this represented IBM’s true policy on the accrual of vacation time. He also argued that personal choice holidays should be regarded as vacation days, and thus should be subject to Section 227.3.

At trial, Reznik’s complaint was dismissed. The U.S. District Court for the Northern District of California granted IBM’s motion for summary judgment, holding that Reznik received proper compensation for his vacation time.

The ruling pointed out that, regardless of the language of the PowerPoint presentation, IBM had allowed Reznik to accrue 15 days worth of vacation time from a previous year and had paid him for his six unused personal choice holidays as though they were vacation days. According to the ruling, Reznik was only entitled to payment for 21 days of work, and thus he had actually been overpaid by four days. [Read more…]

San Francisco to Require Fully Paid Parental Leave

Paid Parental LeaveThe San Francisco Board of Supervisors has approved a new paid parental leave law that will allow employees to take up to six weeks of fully paid time off from work to be with a new child. The new paid parental leave legislation is the broadest of its kind in the United States.

What the Fully Paid Parental Leave Law Entails

Some of the most important features of the legislation are as follows:

Covered employees will be able to take the six weeks of fully paid leave to spend time with a newborn child, a newly adopted child, or a new foster child.

The law is intended to supplement the benefits that employees receive through California Paid Family Leave. California Paid Family Leave allows covered employees to receive 55% of their pay for as much as six weeks of family leave. The new legislation compensates employees with the remaining 45% of their salaries during that period.

Employees will not be covered unless they began working for their employers at least 180 days before the beginning of their leave periods, and they work at least 8 hours per week within the city of San Francisco, and they are eligible for California Paid Family Leave for the purpose of “bonding with a new child.” (If an employee’s work hours fluctuate from week to week, a determination will be made based on the average number of hours he or she has worked per week throughout the past three months.)

If an employee works for more than one employer, the employer’s share of that employee’s benefits under the new parental leave law will be based on how much of the employee’s salary is paid by each employer. (This means that if a covered employee earns 60% of his or her salary from a particular employer, that employer will be required to pay 60% of the employee’s supplemental benefits.)

If an employee voluntarily quits a position less than 90 days after the end of his or her leave period, the employee must reimburse the employer for the full amount of the benefits that the employee received under the new law. In addition, before receiving these benefits, an employee must sign a form agreeing to pay back the full amount of the benefits if he or she quits within 90 days of the end of the leave period.

The law will go into effect on January 1, 2017 for employers with 50 or more employees. It will go into effect on July 1, 2017 for employers with 35-49 employees, and on January 1, 2018 for employers with 20-34 employees.

Covered employers will be required to post a notice explaining the law’s provisions. The notice must be written in English, Spanish, Chinese, and any other language that is spoken by at least 5% of the employees at the location. [Read more…]

Disability Discrimination Clarified By CA Appeals Court

Disability DiscriminationWallace v. County of Stanislaus: A California appeals court clarifies what counts as disability discrimination. Dennis Wallace filed a complaint against Stanislaus County, California after he was fired from his job with the sheriff’s department after suffering a knee injury. He alleged that he was fired due to a disability, even though he could have performed his job with proper accommodations – and thus the county violated the California Fair Employment and Housing Act (FEHA).

At trial, the jury found that the county treated Wallace as a person with a disability, and that Wallace was capable of performing his job with or without the proper accommodations. But despite these findings, the jury sided with the county, and Wallace’s complaint of disability discrimination was dismissed.

Why? Because the judge had instructed the jury that Wallace had a burden to demonstrate that the county regarded or treated him “as having a disability in order to discriminate.” In other words, the jury was told that Wallace needed to show that the county was motivated by ill will toward Wallace and used disability as an excuse to fire him. The jury found that this burden had not been met, and so the disability discrimination claim was resolved in favor of the county.

Wallace appealed, arguing that the jury instructions were incorrect, and that FEHA prohibits disability discrimination even when an employer has no animus against the employee. The Court of Appeal for the Fifth Appellate District of California agreed and remanded the case to the trial court for further proceedings.

The Court’s Reasoning

The Supreme Court set a well-known standard for employment discrimination cases in McDonnell Douglas Corp. v. Green. Under McDonnell Douglas, there is a three stage test for complaints.

  • First, the burden is on the plaintiff to make a prima facie showing that employment discrimination took place.
  • If the plaintiff meets this burden, then the burden shifts to the employer, who must provide a legitimate reason for taking the negative employment action in question (such as a firing),
  • If the employer meets this burden, then the burden shifts back to the plaintiff, who can prove that discrimination took place by providing evidence that the employer had a discriminatory motive. This often involves demonstrating that the reason given by the employer was just a pretext for discrimination.

In Wallace, the appeals court clarified that the McDonnell Douglas test is only to be used if the plaintiff has no direct evidence of discrimination. In Wallace, there was direct evidence of discrimination, being as the employer acknowledged that Wallace’s disability was the reason he was fired.

The court held that when there is direct evidence of discrimination based on disability, the focus should not be on the employer’s motivations. Rather, the focus should be on whether the employee was able to perform essential job functions, whether a reasonable accommodation would allow the employee to perform these functions, and whether the accommodation would impose too much of a hardship on the employer. Thus, the court held that the instruction given to the jury was in error. [Read more…]

Employee or Independent Contractor – Lyft Driver Dispute

employee or independent contractorAm I an employee or independent contractor? Ridesharing company Lyft has reached a settlement agreement with California drivers who filed a lawsuit regarding their classification as independent contractors, rather than employees. The settlement requires Lyft to pay the drivers $12.25 million, but does not require the company to reclassify them as employees.

The case was filed in 2013 in the U.S. District Court for Northern California by a Lyft driver named Patrick Cotter, who claimed a variety of allegations related to wages and expenses. One of their complaints was that, because Lyft classifies its drivers as independent contractors, the drivers were required to pay for expenses such as gas and auto insurance. Cotter initially filed the lawsuit on behalf of himself and Lyft drivers nationwide, but amended the complaint to include only California drivers after the Court ruled that drivers outside of California did not have a cause of action.

The Settlement

After participating in mediation sessions, the parties agreed to a settlement. The settlement includes a $12.25 million payout which (if approved by the court) will be divided among the class of plaintiffs. The settlement also contains the following provisions:

  • Lyft will only “deactivate” drivers for specific reasons, rather than being able to deactivate them at will.
  • Before drivers are deactivated, Lyft will allow the drivers to address the concerns about their performance.
  • If a driver decides to go to arbitration to challenge his or her deactivation, or to address a compensation issue, Lyft will pay his or her arbitration expenses. (Lyft uses an arbitration clause in its contracts, but these clauses did not keep this case out of court.)
  • Lyft will create an option referred to in the settlement as “favorite driver,” which allows passengers to choose drivers who will receive unspecified benefits.
  • Lyft drivers will be given access to information about potential passengers via their smartphones, before deciding whether or not to accept the passengers’ ride requests.

The settlement does not, however, establish the drivers as employees. It contains language asserting that Lyft denies that any member of the settlement class is an employee, that Lyft denies any wrongdoing, and that Lyft denies that any of the plaintiffs’ claims are valid.

The settlement has no bearing on a similar lawsuit filed against Uber by its drivers, which is on course to head to federal court in June.

Employee or Independent Contractor – The Legal Landscape

Employment lawyers, business owners, and employees around the country were watching this lawsuit, hoping that a ruling might provide some guidance on how courts will handle similar cases. The issues brought up in this case regarding the line between employees and independent contractors are relevant not only to transportation companies, but to participants in the “on-demand” economy at large. [Read more…]

Does Former USC Coach Sarkisian Have A Discrimination Case

discrimination caseDoes former USC Football Coach Steve Sarkisian have a discrimination case? Steve Sarkisian was fired from his position as head coach of the University of Southern California (USC) football team in October, after incidents during which he allegedly appeared at events intoxicated. Sarkisian has now filed a wrongful termination suit against USC, alleging (among other claims) that the university discriminated against him on account of his alcoholism.

The circumstances of the firing are unclear. Sarkisian claims that he asked athletic director Pat Haden for time off to seek treatment for alcoholism, and in response Haden placed him on indefinite leave. According to Sarkisian’s complaint, he was then “kicked to the curb” less than a day later, when he was notified of his firing via email while he was traveling to a rehabilitation program.

However, USC issued a public statement in response to Sarkisian’s allegations that portrays the matter differently. According to USC, Sarkisian never acknowledged that he had a problem with alcohol and refused help when the university offered it. USC also claims that it provided Sarkisian with written notice that he would lose his job if there were further “incidents.”

Was Sarkisian’s Firing Justified or is a Discrimination Case a Possibility?

The discrimination case deals with some complex issues surrounding discrimination law. Under both the Americans with Disabilities Act (ADA) and California’s Fair Employment and Housing Act (FEHA), alcoholism is a protected disability. It is illegal under both statutes to discriminate against an employee based on the stigma of alcoholism or based on past alcohol use. However, an employee is not protected when it comes to current alcohol abuse or misbehavior that arises from alcohol abuse.

Sarkisian’s complaint acknowledges that he “appeared” inebriated at a USC fundraising event called Salute to Troy and that he uttered an obscenity at the event. Sarkisian claims that he drank two beers and then took two prescription anxiety medications, and that his behavior stemmed from the mixture of the medication and the alcohol in his system. This event could prove to be crucial to the case. If the finder of fact determines that this constituted Sarkisian being intoxicated at work, then the incident could be seen as a justifiable reason for termination.

However, if the finder of fact determines that Sarkisian was fired for seeking treatment for alcoholism, then his termination could be seen as discriminatory. It is generally considered a violation of the ADA as well as FEHA to fire an employee under such circumstances. [Read more…]

Employee Searches and Overtime Law – Employment Law

overtime law, employee searchesEmployee searches and overtime law. Imagine you work in a store that has had problems with employees stealing valuable merchandise. The store now has a policy that when an employee leaves at the end of a workday, any bags that he or she brought into the store will be searched. As such, after you punch out at the conclusion of each shift, you wait while a security guard goes through your bags.

When you were hired, you signed a contract allowing the store to search your bags. But you think it is unfair that you are not being paid for the time you spend waiting while the searches take place. Do you have a valid labor complaint?

According to the U.S. District Court for the Northern District of California, the answer is no. In Frlekin v. Apple, the Court recently dismissed a class-action suit filed by Apple employees who sued Apple for compensation for occasions when Apple searched their bags and verified ownership of their electronic devices. The employees argued that the time during which the searches took place should be considered “hours worked” under the standards of Wage Order 4.

Required Activities vs. Optional Activities

The Court sided with Apple and granted summary judgment, holding that the searches did not constitute hours worked. The court applied the traditional test of the control theory of liability, which takes into account whether the employer restrained the actions of an employee, and whether the employee has no plausible way to avoid the activity. The ruling states that while the plaintiffs demonstrated that Apple restrained their actions during the searches, the second prong of the test was not satisfied because the employees could avoid the searches if they did not bring bags into the stores where they worked, and thus the searches were optional.

The Court cited other cases such as Overton v. Walt Disney Co., in which employers were not required to pay for time spent by employees off the clock. Overton involved a Disney employee who sought compensation for time on a shuttle bus that carried him from an off-site parking lot to Disneyland’s employee entrance. The complaint was rejected because the worker had other options for getting to the employee entrance, such as walking from the parking lot, which was a mile away. The ruling rejected the employee’s argument that the shuttle bus was the only practical method of transportation.

In Frlekin, the Court also pointed out that none of the plaintiffs argued that they brought bags to work based on special needs – even though the class notice invited members with special needs to assert such a claim. The Court held that the plaintiffs were all in a position to freely choose to not bring bags to work.

Overtime Law and Wage and Hour Claims

If you are facing any type of wage and hour claim, or you are considering filing one, the employment and labor law attorneys at Beck Law P.C. in Santa Rosa can help. They serve clients in Santa Rosa, Petaluma, Ukiah, and all of the North Bay Area counties.

EEOC Age Discrimination Lawsuit Filed against Milpitas

age discrimination lawsuitA Federal age discrimination lawsuit has been filed against the City of Milpitas. Why? Well, many employers make hiring decisions using a points system in which points are assigned to applicants based on their attributes, such as experience and education. Using a system like this can be helpful, not only when it comes to making the best decisions, but also in defending their hiring choices if there is an accusation of discrimination.

However, the use of such a system can present a major problem for an employer when a discrimination complaint is filed – if the applicant chosen wasn’t the one who received the most points.

Officials in the city of Milpitas, California – located between San Jose and Fremont – chose to hire a candidate for an administrative position even though four older candidates had higher scores. The city is now facing a federal age discrimination lawsuit filed by the Equal Employment Opportunity Commission (EEOC).

The Milpitas Age Discrimination Lawsuit

The lawsuit alleges that the city violated the Age Discrimination in Employment Act (ADEA) in 2013 when it hired Rachel Currie, who was then 39 years old, as executive secretary to the city manager. A review panel had ranked the applicants for the position according to a 100-point scale. The panel gave Currie a score of 82.33. Four other women who had applied for the position, who were between the ages of 42 and 58, had received higher scores. (According to the San Jose Mercury News, an additional applicant named Lori Casagrande was also turned down for the position, but she is not part of the EEOC’s lawsuit, as she is seeking a private lawsuit against the city.)

The ADEA is a federal law prohibiting age discrimination against employees who are 40 years of age or older. The EEOC found in 2014 that there was reasonable cause to believe that Casagrande and the four women named in the lawsuit were all victims of age discrimination in violation of the ADEA. After issuing the finding, an attempt at conciliation failed, with the parties unable to agree to a settlement, which led the EEOC to sue the city in the District Court for the Northern District of California.

The EEOC is seeking damages for the applicants, as well as injunctive relief seeking a change in the city’s hiring practices. According to William Tamayo, the Director of the EEOC’s San Francisco District, the front and back pay for the four defendants is about $200,000.

Avoiding the High Costs of Litigation

23% of the claims filed with the EEOC in 2014 were age discrimination complaints. The costs of defending these suits can be tremendous, and yet many businesses do not have policies in place to deal with the issue of age discrimination.  [Read more…]

California Unlawful Discrimination Precedent Set By “Desperate Housewives” Case Ruling

unlawful discriminationCalifornia unlawful discrimination precedent established. In 2004, actress Nicollette Sheridan signed a contract with Touchstone Television Productions to play the role of Edie Britt on the television series Desperate Housewives. In 2008, she complained to Touchstone that the show’s creator, Marc Cherry, physically assaulted her during a rehearsal. When she learned that her contract was not being renewed for another season, she filed a complaint against Touchstone.

Sheridan’s original claim stated that she had been fired because she complained about the alleged assault, and argued that her firing was a wrongful termination in violation of public policy. Her claim went to court, where a mistrial was declared after the jury was unable to make a unanimous decision.

Sheridan then amended her claim, arguing that her firing amounted to retaliation under Section 6310 of the California Labor Code. In 2013, her case was dismissed, on the grounds that she was required to exhaust her administrative remedies under Sections 98.7 of the California Labor Code before she could sue under 6310. However, on October 20, 2015, a California Court of Appeal overturned that ruling.

The Appellate Court Weighs in

The Court of Appeal ruled only on the issue of whether Sheridan was permitted to file a lawsuit under Section 6310 without first exhausting her administrative remedies under Sections 98.7 and 6312. The decision held that she was not obligated to exhaust these remedies and allowed her complaint to proceed.

Section 6312 states that an employee may file a claim with the California Labor Commissioner under 98.7 if he or she alleges unlawful discrimination under 6310 or 6311. 98.7 states that an employee may file a complaint with the Labor Commissioner within six months of an alleged violation of any law under the Labor Commissioner’s jurisdiction.

The Court of Appeal’s decision holds that the use of the word “may” in Sections 98.7 and 6312 (as opposed to “shall”) indicates that filing a complaint with the Labor Commission was permitted, but not mandatory. In addition, the ruling points to the language used in subdivision (g) of Section 98.7, which states that the law has no requirement that a complainant exhaust administrative remedies.

The decision also cites the case of Lloyd v. County of Los Angeles, in which a public employee argued that he was wrongfully terminated in violation of Section 98.7. In that case, an appellate court rejected the County’s argument that the plaintiff was obligated to exhaust his administrative remedies. The Lloyd ruling stated that plaintiffs suing under the California Labor Code do not have an administrative exhaustion requirement.

What Does This Mean for Future Unlawful Discrimination – Wrongful Termination Lawsuits?

Since Sheridan filed her complaint, the California Legislature has amended the Labor Code to explicitly state that complainants do not have a requirement to exhaust their administrative remedies. The ruling described above asserts that there is no such requirement even for a complaint that was filed before these amendments went into effect in January 2014. [Read more…]

Cardenas v. Fanaian Firing Violated Public Policy Exception

public policy exceptionLast August we discussed California’s public policy exception for at-will employment – which prohibits employers from firing employees for reasons that contravene public policy. Since then, a California appeals court has ruled in favor of an employee who was fired for reporting a crime to the police, holding that her termination was in opposition to public policy.

Carcenas V. Fanaian – Facts of the Labor Law Case

In 2010, Rosa Lee Cardenas was working as a dental hygienist for a dentist named Masoud Fanaain. She realized one day that her wedding ring was missing and concluded that it had been stolen from Dr. Fanaian’s office. Cardenas and her husband filed a theft report with the police, and soon after, some police officers showed up at the dental practice and questioned employees.

After the police came to the office a second time, Fanaian terminated Cardenas’s employment. He told her that the presence of the police was making the staff uncomfortable. Cardenas filed a complaint against his practice in 2011, asserting that her firing was in violation of public policy.

Cardenas’s complaint also stated that her firing violated Section 1102.5 of the California Labor Code. 1102.5 prohibits an employer from retaliating against an employee for giving information to law enforcement, if the employee has reason to believe that the information pertains to a violation of the law. (It also protects employees who testify about legal violations and employees who give information to coworkers who have the authority to investigate legal violations.)

The Court’s Employment Law Holding

At trial, the jury sided with Cardenas regarding both causes of action and awarded her $117,768 in damages. Fanaian appealed the verdict to the Court of Appeal for California’s Fifth District, arguing that the firing did not contravene public policy.

The Court of Appeal upheld the decision. According to the opinion, Cardenas was engaging in protected behavior when she reported the theft of her wedding ring to the police because theft is a violation of the California Penal Code. Because there was a causal link between Cardenas’s police report and the decision to fire her, the termination was in violation of public policy.

Fanaian’s appeal asserted that that 1102.5 applies only when an employee discloses information about wrongdoing that is specifically related to the employer’s business activities. The Court of Appeal rejected this argument, holding that the plain language of 1102.5 does not contain any requirement that the information be about business activities. According to the opinion, the statute reflects an intent by the legislature to encourage employees to report unlawful conduct in general, and not just unlawful conduct by their employers. [Read more…]

Ninth Circuit Issues an Important Age Discrimination Ruling

age discrimination rulingThe Ninth Circuit Court of Appeal’s age discrimination ruling in the case of France v. Johnson, has overturned a District Court’s ruling on a federal age discrimination complaint. The Ninth Circuit’s decision, which was issued on August 3, 2015, sets an important precedent for how Ninth Circuit courts must handle claims arising under the Age Discrimination in Employment Act (ADEA).

The decision includes the following holdings:

  • If an employee files an ADEA complaint after being turned down for a promotion and the claimaint is less than 10 years older than the employee who received the promotion, then there is a rebuttable presumption that the difference in age is insubstantial. However, if there is an age difference of 10 years or more, then there is a rebuttable presumption that the difference in age is substantial. (This is the standard that has previously been applied by the Seventh Circuit.)
  • If someone involved in making an employment decisions makes a discriminatory remark, it can create a genuine dispute of material fact regarding pretext even if the person who made the remark was not the final decision maker.
  • The Ninth Circuit Court of Appeal’s previous declaration that circumstantial evidence relied upon by a plaintiff must be specific and substantial is tempered by its stance that the burden a plaintiff faces in raising a triable issue of fact is “hardly an onerous one.”

The Age Discrimination Case

The claim was filed by John France, a border patrol agent who works for the Department of Homeland Security. France applied for a promotion to a GS-15 position and was the oldest of 24 applicants. (He was 54 at the time, and the youngest applicant was 38.)

When France was not one of the six top-ranked candidates and thus was not eligible for final consideration, he filed a complaint under the ADEA. He argued that he had evidence of age discrimination, because one of the decision makers commented that he wanted to hire “young, dynamic” employees.

At trial, the decision makers argued that there were several nondiscriminatory reasons why France was not promoted, including poor leadership and judgment skills. The district court granted summary judgment to the Department of Homeland Security. The court’s ruling stated that France successfully established a prima facie case of age discrimination, but could not show that there was a genuine dispute of material fact regarding the agency’s purported nondiscriminatory reasons for why they did not promote him.

The Ninth Circuit Court of Appeal reversed the trial court’s decision. Its ruling stated that even though the average age of the selected employees was 8 years younger than France’s age – and thus was insufficient to establish a prima facie case of discrimination – France could nonetheless rebut the presumption that the decision was made for nondiscriminatory reasons. The court held that France’s evidence was substantial enough that a reasonable jury could find, by a preponderance of the evidence, that discrimination took place. [Read more…]

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