United States: News Bites - February 2013

Kmart Victorious in First Suitable-Seating Trial

Kmart emerged triumphant in the first of the "suitable seating" cases to be tried.  In Garvey v. Kmart, a California federal district court evaluated the state's wage order provision that "All working employees shall be provided with suitable seats when the nature of the work reasonably permits the use of seats."  After considering the evidence, which included agreement that seats could not be provided to cashiers at the Tulare store in a safe way that achieved legitimate business goals such as efficiency and projecting a customer-service focused image, the court concluded the plaintiff class failed to prove that the nature of a cashier's work reasonably permitted the seating modification urged by plaintiffs' counsel at trial.  Signaling for future cases, which involve different stores and cashier station configurations, the court invited a more developed record on use of a lean-stool. 

California Supreme Court Announces Sea-Change in Rules Governing Use of Parol Evidence to Show Fraud in Contract Interpretation

In Riverisland Cold Storage, Inc. v. Fresno-Madera Production Credit Association, the California Supreme Court clarified and ultimately rewrote the applicable legal standard for introduction of parol (or oral) evidence that a written contract is tainted by fraud.  The Court overruled a decades-old doctrine that only allowed parol evidence that "tend[ed] to establish some independent fact or representation, some fraud in the procurement of the instrument or some breach of confidence concerning its use, and not a promise directly at variance with the promise of the writing."  While in the borrower-lender context, the decision is likely to have far reaching effects, including in employment contexts, since it lowers the bar for alleging and proving a fraudulent inducement claim.  For further information on the decision, see the January 28, 2013 Litigation Alert.

Discharge Lawful Where Store Manager Could Not Be Physically Present in Store

In Lawler v. Montblanc North America, LLC, the Ninth Circuit Court of Appeals (applying California law) recognized that adverse action because of a disability is unlawful discrimination only if "the disability would not prevent the employee from performing the essential functions of the job, at least not with reasonable accommodation."  Lawler, a manager for a Montblanc store in the Valley Fair Shopping Center, was responsible for "hiring, training, and supervising sales staff; overseeing and developing customer relations; administering stock and inventory; cleaning; creating store displays; and preparing sales reports."  It was undisputed that Lawler could perform her duties only in the store.  In 2009, Lawler was diagnosed with a chronic medical condition requiring a reduced workweek.  While Montblanc was evaluating her accommodation request, in a related incident, Lawler injured her foot.  Lawler presented certification of her need for leave through the holiday season and into January.  After unsuccessfully soliciting further information from her physicians to confirm whether alternative means existed to return Lawler to work, Montblanc terminated her employment because she could not be present in the store.  The court threw out Lawler's disability discrimination claim because Lawler's inability to be physically present in the store meant she could not perform the essential functions of her position even with the requested accommodation. 

FB Posts of Mexico Vacation Land Employee on FMLA Leave in Hot Water

In Lineberry v. Richards, an employee on FMLA leave due to back and leg pain so angered her colleagues by her Facebook posts of a Mexico vacation and other activities that they reported her for potential leave abuse.  When confronted with questions about the vacation, the employee asserted she used wheelchairs at both airports so she did not have to stand for long periods.  Upon further investigation, the employee admitted she had not used a wheelchair; other Facebook posts also showed the employee holding her grandchildren and described other social activity inconsistent with her alleged medical need for FMLA leave.  The employer terminated her employment for dishonesty and leave abuse.  A Michigan federal district court threw out the employee's claim that her employer interfered with her FMLA rights, finding the employer "treated [the employee] 'the same, whether or not she took leave,' as required and permitted by the FMLA."  Recognizing the limits of the FMLA, the court observed that, "Based on such undisputed dishonesty, [the employer] had a right to terminate [the employee] – without regard to her leave status because the FMLA does not afford an employee greater rights than she would have if she was not on FMLA leave."

Six-Month Claims Limitations Period In Arbitration Agreement Unconscionable

In Bowlin v. Goodwill Industries of Greater East Bay, Inc., a California federal district court found Goodwill's requirement, as part of an arbitration agreement, that employees file claims within a six-month limitations period to be one-sided, oppressive and overly harsh.  This is the latest in a line of cases finding, under California law, such limitations to be unconscionable, violative of an employee's statutory rights, and unenforceable under Armendariz.  Employers maintaining arbitration agreements that limit claims periods must do so with the full understanding that such limitations expose the agreement to attack.  If the arbitration agreement has a severability clause and withstands any other challenges for unconscionability, as was the case in Bowlin, it is possible a court will sever the provision and compel the parties to arbitrate the claims.  But, such a result is neither guaranteed nor usual.  Thus, employers should include limitations on claims periods only after consulting counsel and carefully balancing goals and legal risk. 

NLRB Continues Focus on Overbroad Employer Policies

Notwithstanding the uncertainty of the validity of the current NLRB quorum, the Board continues its focus on the intersection of employer policies and protected activity.  In In re DirectTV U.S. DirecTV Holdings LLC, the Board again found fault with broad prohibitions in employer policies that fail to distinguish between protected and unprotected activity.  Specifically, the court found four of the employer's policies – which prohibited contacting the media, communicating with law enforcement, or disclosing company information including employee records and information on the job or coworkers – failed to distinguish protected concerted activity from violation of the policies.  Examples of protected activity that could be chilled under the policies include communications with the media about labor relations and communications with Board agents or other enforcement officers.

Save the Date: Commissions Breakfast Briefing – May 7 (Mountain View, 8-10am) and May 8 (San Francisco, 9-11am)

AB 1396 became effective January 1, 2013, requiring all agreements to pay employees commissions based on services to be rendered in California to be in a writing signed by the employer and employee, with a copy retained by the employer. See October 2011 FEB. If your company has sales employees, you likely have (or need) a commission or compensation plan, but do you know the common legal pitfalls of such plans? Save the date and join us for a two-hour breakfast briefing in which we will review, among other things, common drafting mistakes, key provisions that should be included in every plan, and how plans impact exempt classifications.

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