Employers have been dealt another blow by the California Supreme Court on one case but in another case, the Court found in favor of an employer on the concept of at will employment. These cases are discussed in this issue. Also found in this edition are articles on volunteer work and background checks. Additionally, you will find articles on the new laws covering Electronically Stored Information and EEO-1 posting information.

Unfortunately for employers, the California Supreme Court has recently determined that the additional one hour of pay required to be paid for missed meals and/or breaks was a wage, and that a three-year statute of limitations applied to claims involving failure to provide meal and/or rest breaks. Murphy v. Kenneth Cole Productions, Inc.

The Labor Code and the Labor Commissioner's Wage Orders require that employees be provided a meal break if they work more than six hours per day, and a 10 minute rest break for every four hours of work. The meal break is to be taken by the completion of the 5th hour of work.

If an employer fails to provide the meal or rest breaks, the employer is liable for one additional hour of pay for each work day in which a required meal and/or rest break was not provided. (Labor Code § 226.7)

This decision has significant impact on California employers because it greatly increased the time period during which an employee can bring a claim to recover the penalties for missed meal or rest breaks.

• Take all steps necessary to ensure that all non-exempt employees are provided a 30 minute duty-free meal and a 10 minute rest break for each 4 hours of work.
• Keep accurate records of any days an employee is not provided a duty-free break and compensate him/her promptly at the next pay period.
• Require employees to certify at the end of the pay period that they have been provided all rest breaks (since they are not recorded time) and that they have been provided and took all duty free meal breaks

In Dore v. Arnold Worldwide, Inc., a prospective employee received an offer letter that listed his start date, compensation details and various benefits offered by the company. The letter also stated that he would have a 90 day assessment with his supervisor and that, at the 90 day assessment, objectives would be set against which he would be evaluated at the time of his annual review. In a separate paragraph, the letter stated that employment with the company was at-will and continued: "This simply means that Arnold Communications has the right to terminate your employment at time just as you have the right to terminate your employment with Arnold at any time." The applicant signed the letter and was hired. Shortly after employment, he was terminated, and sued arguing that the letter created an express or implied agreement that his employment was terminable only “for cause.” The California Supreme Court found that the company’s letter was a clear and unambiguous expression of the company’s intent that he be an “at-will” employee, and that the 90-day assessment and annual review neither expressly nor impliedly conferred on the employee the right to be terminated only “for cause.”

• Review your company’s offer letters, and new employee forms to ensure the at-will provisions are clear and unambiguous.
• Train managers and HR personnel on proper techniques to avoid making promises or creating implied contracts with employees.

Does your company use a third party (“consumer reporting agency”) to obtain background information including confirmation of social security numbers, educational or work history, credit reports, driving records or criminal records as part of background checks for applicants or employees? If so, the Fair Credit Report Act. (FRCA) imposes certain duties on the company.

A recent survey found that 80% of those surveyed conduct background checks on applicants. At least 10% of respondents stated that they did not comply with the FRCA requirements for authorization and disclosure.

Conducting background checks is critical in today’s workplace and all employers are encouraged to undertake some form of background check. This Newsletter contains a brief summary of the rules. Additional rules may apply if you use “investigative” reports, and the Fair and Accurate Credit Transactions Act may impose even more rules. Before you request consumer reports on applicants or employees, take the following steps.

• In a "separate document" make a clear and conspicuous disclosure to the applicant or employee in that a report may be requested.
• Obtain written permission from the applicant or employee to obtain the report.
• Provide certification of compliance with the FCRA to the consumer reporting agency that will provide the report or reports.
• If you plan to take any adverse action against an applicant or an employee based on a consumer report, you must provide to the applicant or employee the following:
• A copy of the actual consumer report that has been relied on;
• The summary of consumer rights provided by the Federal Trade Commission;
• The name, address, and telephone number of the consumer reporting agency that provided the report;
• A statement that the consumer reporting agency didn't make the adverse action decision and is unable to provide the applicant or employee the specific reason for the decision;
• A statement concerning the right to obtain a free copy of the consumer report by making a request within 60 days; and
• A statement concerning the right to dispute the accuracy or completeness of any information in the report.

Due to financial pressures or emergencies, employees sometimes request additional hours-- even if the work involves duties different from those they may request a second shift as a janitor. Employees may offer to waive their right to overtime compensation, in an effort to secure the additional hours.

Employers are often sympathetic and agree to allow the employee to work hours in excess of the normal eight hour day or 40-hour week at a different job within the company. However, it is important that employers understand that wage and hour statutes cannot be waived. Thus, even if the employee voluntarily signs an agreement waiving overtime pay, the employee retains the right to bring a claim for unpaid overtime wages. Damages awarded in these cases usually include civil penalties, interest and attorney’s fees.

If you own multiple businesses and allow the employee to work at the second business, the employee may still be eligible for overtime pay. If the businesses are inter-related, the Industrial Welfare Commission may count the hours worked at each business toward the total worked in a day, resulting in overtime being owed for hours worked beyond eight per day or 40 hours per week.

• Keep track of all hours worked by a non-exempt employee, regardless of the different tasks he/she performs.
• Pay overtime wages for hours in excess of 8 hours per day or 40 hours per week.
• Evaluate whether multiple businesses are completely separate from each other when counting hours worked.

When determining whether an individual is a volunteer, the primary consideration is the intent of the business and the “volunteer.” In a for-profit business situation, employers and employees rarely deal with each other on an equal footing. One can see that this lack of equal footing creates concerns about coercion about the “volunteer’s” true intent. For this reason, unpaid volunteers can rarely, if ever, be used by businesses.

Non-profit organizations, such as charitable, or religious organizations generally make use of true volunteers, relying on their members’ sense of commitment to the cause. However, if the charitable organization engages in a commercial enterprise serving the general public, that enterprise would be subject to the Industrial Welfare Commissions order, and those individuals who work would, in most circumstances, have to be employees paid for their time.

• Do not ask employees to work as “volunteers” at after hour events;
• Do not expect employees to work without compensation even if they agree to do so.

Is your business required to pay non-exempt employees for time spent traveling to conferences that you require they attend? The answer is yes if the employee is there because you are requiring them to be there. The employee must be paid for the time spent traveling to and from the conference, less the time of their usual commute. If the travel is by air, you must pay the employee from the time they leave their house (or the office) until they reach their destination, less the time of their usual commute. If, for example, the employee leaves for the conference a day early to spend time with family, the employer is not required to pay for the extra day but would be required to pay for the travel time. Wages are owed only for the time the employee is “suffered (i.e., required) or permitted to work.” The good news is that travel time may be paid at a rate lower than the employee’s normal rate, but not less than minimum wage, (currently $7.50). During the travel, employees must take meal and rest breaks and they must keep accurate time records to allow for proper calculation of overtime.

• Familiarize yourself with the travel hours that will be required to travel to conferences and the hours that will be spent attending the conference.
• Instruct employees on how to properly record their travel time, meal and break times.
• Instruct employees about any hours that will not qualify as paid hours.

The Employer Information Report EEO-1, otherwise known as the EEO-1 Report, must be filed with the U.S. Equal Employment Opportunity Commission's EEO-1 Joint Reporting Committee by September 30, 2007. Two kinds of employers must file the EEO-1: (1) employers with federal government contracts of $50,000 or more and 50 or more employees and (2) employers without government contracts that have 100 or more employees. For further information, go to http://www.eeoc.gov/eeo1survey.

Following a three week jury trial, Cynthia Elkins and her co-counsel prevailed and obtained a defense verdict in a hotly litigated case involving claims of sexual harassment.

The Plaintiff worked for a company for over two years without incident. She never complained about any sexually harassing conduct in the workplace. On the eve of her termination, which was the result of a complaint made by a co-worker against the Plaintiff for her use of disgusting language and profanity, the Plaintiff for the first time came forward with a complaint that she had been sexually harassed by the Vice President “since the day she was hired.”

At the outset of litigation Plaintiff demanded $1,000,000.00 to settle the case. After mediation, the Plaintiff decreased her demand to $300,000. After two years of litigation, and nearly 3 weeks of testimony the jury found 10-2 that they did not believe that the employee had suffered any damages as a result of the conduct she claims was sexually harassing. Plaintiff was awarded nothing.