United States: US Employment Litigation Round-Up: A Review of Key Cases and New Laws Affecting Employers

New California Anti-Bullying Law Opens Up a New Area of Employment Litigation

Decision: A new California law requiring company supervisors to undergo anti-bullying training took effect on January 1, 2015. The law mandates employers with 50 or more workers to include in their sexual harassment training curriculum additional training about preventing "abusive conduct" in the workplace. The statute defines "abusive conduct" as the "conduct of an employer or employee in the workplace, with malice, that a reasonable person would find hostile, offensive and unrelated to an employer's legitimate business interests." Such conduct may include repeated verbal abuse, such as "the use of derogatory remarks, insults and epithets, verbal or physical conduct that a reasonable person would find threatening, intimidating, or humiliating, or the gratuitous sabotage or undermining of a person's work performance." The new law clarifies that a single act does not constitute abusive conduct, unless especially severe or egregious.

Impact: Although the new law does not create a private right of action for workplace bullying, employees may use the statute to plead an employer's failure to comply with public policy. To reduce liability, employers should include training on workplace bullying as part of their mandated sexual harassment training and should keep good records of employee participation in the training. Employers should also investigate and address any employee complaints of bullying if they arise, just as the employer would investigate claims of sexual harassment or discrimination.

New Jersey Supreme Court Articulates New Standard for Independent Contractor Status

Decision: The New Jersey Supreme Court in Hargrove et al. v. Sleepy's, LLC, recently held that the three-part "ABC test," and not the FLSA's "economic realities test," was the appropriate standard for determining whether workers are employees or independent contractors. Under the "ABC test," workers are presumed to be employees unless the would-be employer can demonstrate otherwise based on analysis of three factors: (i) whether the company exercised control over the worker or had the ability to exercise control in terms of the completion of the work; (ii) whether the services provided by the worker were outside the usual course of business or were performed outside of all the places of the enterprise's business; and (iii) whether the worker has a profession that will plainly persist despite termination of the challenged relationship. The economic realities test used to determine appropriate worker classification under the federal Fair Labor Standards Act, analyzes six criteria with no single factor being dispositive.

Impact: Companies with employees in New Jersey should determine whether their independent contractors are properly classified under this new standard and should consult with counsel to determine how best to structure their contractor relationships going forward to ensure that those relationships meet the new test.

California Supreme Court Requires Employers to Pay Employees for On-Call Sleep Time

Decision: In Mendiola v. CPS Security Solutions, Inc., the California Supreme Court ruled that employers must pay certain workers for all time spent on the job, including time spent reading, watching TV or engaged in other personal activities, including sleep time, while the worker is on call. Security guards employed by CPS had filed a putative class action for unpaid wages for time spent on-call at the worksite in the evenings. The guards received no compensation for on-call time unless an alarm or other circumstances required that they conduct an investigation, or they waited for, or had been denied, a reliever.

The Supreme Court concluded that the guards were entitled to compensation because they were still under the employer's control, even when they were asleep, because: (i) the guards were required to reside in their trailers, or elsewhere at the worksite, during on-call hours; (ii) they were obliged to respond, immediately and in uniform, if they were contacted by a dispatcher or became aware of suspicious activity; (iii) guards could not easily trade on-call responsibilities; (iv) they could only request relief from a dispatcher; (v) if no relief could be secured, guards could not leave the worksite; (vi) even if relieved, guards had to report where they were going, were subject to recall and could be no more than 30 minutes away from the site; and (vii) restrictions were placed on nonemployee visitors, pets and alcohol use. The Supreme Court further held that the mere presence of the security guards was integral to CPS' business, such that the guards' on-call time was spent primarily for the benefit of CPS.

Impact: Californiaemployers should review their on-call policies to ensure that they comply with this new decision and/or with the California Wage Orders applicable to their industry. In particular, California employers should assess whether their on-call policies and practices place significant restrictions on their employees, thereby potentially requiring compensation for all on-call hours worked.

Sixth Circuit Rules that Handbook Language Prohibited Employer from Denying FMLA Coverage to Otherwise Ineligible Employee

Decision: In Tilley v. Kalamazoo County Road Commission, the Sixth Circuit Court of Appeals reversed a summary judgment award to the defendant employer on the plaintiff's Family Medical Leave Act of 1993 (FMLA) claim, finding that there was a material factual dispute as to whether the employer was equitably estopped from denying that the plaintiff was an "eligible employee" under the FMLA. The lower court had granted summary judgment because the defendant did not employ at least 50 employees at, or within 75 miles of, the employee's worksite at the time the plaintiff sought FMLA leave. However, the appellate court noted that the employer's personnel manual made an "unambiguous and unqualified statement" that employees like plaintiff who logged 1,250 hours in the year before seeking FMLA leave were covered by the FMLA and were eligible to apply for benefits, making no mention of the requirement that they work at, or within 75 miles of, a site at which the defendant employed at least 50 employees. The court found the statement in the manual sufficient to establish a claim for equitable estoppel under the FMLA and remanded the case to the trial court for a determination whether the plaintiff reasonably relied on the statement.

Impact: This case serves as a reminder that handbook language can create binding obligations for an employer, even where the law imposes none. Employers should have their handbooks regularly reviewed by counsel to ensure that they accurately convey only the rights and benefits to which employees are entitled.

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This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

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