A common question a California employer faces is for how long to provide an unpaid leave of absence as a reasonable accommodation to a disabled employee. Generally, a finite leave of absence may be a reasonable accommodation, if it is likely that the employee will be able to perform his or her duties at the end of the leave. Under most circumstances, an indefinite leave of absence is not a reasonable accommodation. This makes sense as it would be unfair to expect employers to wait indefinitely wait for a disable employee to return to work.

Court Rulings

Some courts have ruled, however, that there is no per se rule that an indefinite leave of absence is not a reasonable accommodation, and extensions of leave of absence may be reasonable under some circumstances.  An employer’s size and resources may affect its obligation to provide “indefinite” leaves of absence as reasonable accommodations. For example, in the case of a very large employer, with high turnover and fungible employees, the employer may be required to provide an indefinite leave of absence, if the leave would enable an easily replaceable employee to perform the essential functions of the position eventually, and the employer will not incur significant expenses as a result of maintaining the employee in the status of an employee.

The courts may consider several factors including whether the employee indicates when he or she can return to work; whether the employee’s absences from work are erratic and unexplained; whether the employee will be able to perform his duties when he returns; whether the employer hired the employee to perform a specific task; and whether a leave poses an undue hardship given the circumstances of the situations.

Both employers and employees should remember that “reasonableness” of a request for an extended leave depends on specific circumstances as “each case must be scrutinized on its own facts.”

• See Disability Discrimination Practice Area

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Despite the loaded word “wrongful” in “wrongful termination,” many if not most terminations do not violate the law. The vast majority of employment relationships are “at-will,” meaning that either the employer or the employee may terminate the employment relationship at any time for any reason or no reason. Employers may even give the dismissed employee a reason which is false, evasive, vague, or even an outright lie. But just because your employer lies about the reasons for the termination does not make it a “wrongful termination.”

However, the right to terminate an employee for any or no reason is not absolute. One important limitation is based on the premise that employers should not be permitted to frustrate vital public policies. These public policies must be well established and fundamental meaning that the employer knew or should have known that terminating the employee would violate a public policy. The difficulty lies in determining when a public policy qualifies as well established and fundamental.

In California, wrongful termination in violation of public policy may be based on a statute, common law, or the California Constitution. A termination may violate public policy where an employee is discharged for refusing to perform an illegal act; for performing a statutory duty, such as serving on a jury; for invoking statutory rights, such as filing worker’s compensation claim; or for complaining about discrimination. California also extends public policy protection to some whistleblower acts in which the employee reports unlawful conduct by the employer.

California, like most other states, considers terminations in violation of public policy to be a tort, which is a civil wrong. Accordingly, traditional tort remedies generally apply which include lost wages, damages for pain and suffering and, if the employer’s conduct was malicious or willful, punitive damages.

A word of caution, terminations come in all forms and for all kinds of reasons, some legitimate, some not so legitimate. But after some hard analysis, if your company fired you and the reasons just don’t seem to add up, seek professional advice.

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From an employee’s perspective since taxes are not deducted from an employee’s paycheck, many employees may think that being classified as an independent contractor is negligible or maybe even a good thing. However, some things to consider — independent contractors are not covered by most employment laws such as wage and hour laws, the anti-discrimination statutes (Family Medical Leave Act, Americans with Disabilities, Title VII and FEHA), occupational safety laws, and the unemployment insurance code. One of the limited exceptions is that FEHA protects independent contractors from racial and sexual harassment.

From the employer’s perspective, if they establish that a worker is an independent contractor the employer may avoid paying unemployment insurance, social security benefits, workers’ compensation, state disability insurance, minimum wage, and overtime.

California’s Labor Code presumes that workers are employees and the burden is on the employer to establish an independent contractor relationship. The biggest factor is the “right to control” element – if the employer controls the manner and means by which the worker’s tasks are accomplished, then the worker is most likely an employee. The fact that the employer and employee have a written agreement is one of many other factors and is not controlling in the analysis.

For both employees and employers, it’s important to thoroughly analyze the type of work to be performed, the resources involved, and the level of control over the worker’s time.

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Courts have held that the “interactive process” should be informal, non-ritualized, and conducted in good faith between the employer and employee to find an accommodation which will enable the employee to perform the job effectively. The law is clear that the employee must first request an accommodation, however the employee is not required to use any magic words. If the employer knows about the employee’s physical condition, the interactive process obligation arises “once the employer becomes aware of the need to consider an accommodation.”

A recent California court decision, Scotch v. Art Institute of California, emphasized that the interactive process is a continuous, “cooperative problem-solving” endeavor, and that communications must be open with each side airing its concerns in an effort to find a workable solution. Although this may sound like a departure into a marriage counseling session or a process best suited for resolving inter-personal conflict, the court was quite serious in its analysis of who is at fault for a breakdown in the process. The court noted that, “liability hinges on the objective circumstances surrounding the parties’ breakdown in communication, and responsibility for the breakdown lies with the party who fails to participate in good faith.”

The employer has a somewhat greater responsibility to identify workable solutions since the employer generally has better information about open or available job positions or the types of accommodations that may be available. Nonetheless, if a lawsuit has been filed, the employee must “identify a reasonable accommodation that would have been available at the time the interactive process should have occurred.”

With these ideas in mind, employees should not be afraid to ask questions, to continue to press their employers for more information, and to seek accommodations that will allow them to perform their job.

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The undue hardship defense though is a higher bar than one might assume. It does not mean merely inconvenient or burdensome for the employer. The FEHA definition and its interpretative regulations state that the accommodation must be a “significant” difficulty or expense when considering several factors: (1) the cost of the accommodation, (2) the financial resources, number of employees, and the effect of the accommodation on the employer, (3) the type of operations of the employer, and (4) the relationship between the employer’s facilities.

In a 2008 California Supreme Court decision, Ross v. Ragingwire Telecommunications, the court majority held that an employee could not sue his prospective employer for refusing to allow the employee to use doctor-prescribed medical marijuana while off-duty to treat his long-term back problems. The majority basically found that employers are not obligated to accommodate the use of off-duty drugs.

However, in dissent, the justices noted that a reasonable accommodation includes changing the employer’s policies – such as the no drug use policy. The employer had presented no evidence “to substantiate its claim that accommodating plaintiff’s doctor-recommended use of marijuana would necessarily or likely have substantial adverse effects on its business operations. In the absence of such evidence, there is no basis for the majority to conclude that accommodating plaintiff’s doctor-approved marijuana use would be unreasonable within the meaning of the FEHA.”

Given the high burden to establish the undue hardship defense, most employer’s opt to challenge the reasonableness of the accommodation first. For employees, it’s always a good idea to keep in mind the reasonableness of any requested accommodation.

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In Edwards v. Arthur Andersen LLP, Mr. Edwards, a former employee, agreed not to solicit Arthur Andersen’s clients after his departure. In seeking new employment, Mr. Edwards’ new firm (HSBC) required that he obtain a waiver from Arthur Andersen as a condition of employment. Arthur Andersen demanded that Mr. Edwards sign a general release in exchange for waiving the covenant. Edwards declined to sign the general release and sued Arthur Andersen for interference with his potential new job.

The court decided in California covenants not to compete will only be enforced if necessary to protect a company’s trade secrets or if signed as part of the sale of business. The court rejected a line of cases, mostly decided by federal courts interpreting California law, which had allowed covenants not to compete so long as a “substantial portion of the market” was still available to the employee.

For employees, this means that any employee non-disclosure or confidentiality agreement that attempts to restrain the employee from soliciting customers, competing against the former employer, or otherwise seeking new employment are void and unenforceable unless necessary to protect a trade secret. Trade secrets are a very narrow subset of information and much employer information does not meet the definition of trade secrets. Further, if the employer attempts to enforce an invalid non-disclosure or confidentiality agreement, then the employer may be liable for tortious interference with the employment relationship.

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The new sick leave policy, however, is capped based on the size of the employer. For employers with less than 10 employees, employees are capped at five sick days per year, and for employers with more than 10 employees, the employer may cap at nine days per year. Accrued sick leave may be carried over from year to year, however, it is limited to the caps noted above. Employees hired before February 5, 2007 may begin accruing the sick leave immediately, and employees hired after that date begin accruing leave 90 days after their hire date. Sick leave, unlike vacation, may not be cashed out upon employment separation.

Employers who fail to provide the sick leave may be subject to penalties including fines up to three times any unlawfully withheld sick leave, $50 for each hour withheld, attorneys’ fees and interest.

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The administrative exemption requires an employer to establish that the employee meets all of the following factors:

• The employee’s duties involve office or non-manual work directly related to the management or general business operations of the employer.  For example, developing or executing financial, marketing or sales strategies would be considered “administrative” tasks.  On the other hand, making or selling the company’s products or services is considered “production” work.

• The employee’s duties must be of “substantial importance to the management or operation of the business.” For example, routine clerical work performed by bookkeepers, secretaries, bank tellers, or clerks is not of substantial importance.

• The employee’s duties fit into one of three categories:
  • The employee regularly and directly assists the business owner or another exempt executive administrator.  For example, an “executive assistant” or “assistant manager,” are considered to fall within this job duty category; or
  • The employee performs, under minimal supervision, specialized or technical work that requires special training, experience or knowledge;  or
  • The employee executes special assignments and tasks under only general supervision. The phrase “special assignments and tasks” is not defined but would include such job duties as movie location managers, account executives in advertising films, or brokers in stock exchange firms.

• The employee customarily and regularly exercises discretion and independent judgment over significant matters.

• The employee spends more than half of her work time performing exempt administrative tasks (the “50% rule”).

If you believe that you are misclassified as an exempt administrative employee, but do not meet the above test, we urge you to contact an attorney to discuss your situation as soon as possible.

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Generally, for a severance agreement to be enforceable, the contract must offer an employee something to which she was not already entitled.  For example, the severance agreement would not be enforceable if the amount offered was payment for hours already worked, wages earned, benefits accrued, or in exchange for receiving the employee’s final paycheck.

An employee may lawfully release (or “waive”) statutory claims such as discrimination claims, tort claims, or contract claims.  However, certain claims can never be waived by the employee and if contained in the severance agreement, they would be void and unenforceable.  For example,

• An employer cannot put any conditions on the payment of undisputed wages that are due to an employee, including minimum wage and overtime pay.  On the other hand, an employee may release a claim for wages that were subject to a bona fide dispute between the parties over whether or not such wages were owed.

• An employer cannot ask an employee to waive her unemployment insurance claims in a severance contract.

• An employer cannot require an employee to waive the right to bring a discrimination claim to the EEOC (but as noted above, can require the employee not to bring a lawsuit in court for discrimination claims).

• A workers’ compensation claim cannot be waived in a severance contract.  However, a workers’ compensation claim can be settled in a separate “Compromise and Release” agreement, which requires approval from the Workers’ Compensation Appeals Board.

Finally, certain procedures must be met before an employee can waive her rights to the protections of the Age Discrimination in Employment Act (“ADEA”) which is discussed here.

If you feel that the severance agreement presented to you by your employer asks you to waive “unwaivable” claims, we urge you to contact an attorney before signing.

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However, in order to waive the protections of the Age Discrimination in Employment Act (“ADEA”) the release agreement must meet the specific requirements to ensure that older workers are not unduly pressured into waiving their ADEA rights.

The burden is on the employer to draft a valid release.  If the release fails to meet any of the following requirements, the release will be void, entitling the employee to sue the employer, without having to return the consideration (usually the severance payment) given for the release. A valid waiver:

•    Must be written in a manner calculated to be understood by the average individual

•    Must specifically refer to rights being waived under the ADEA

•    Must not attempt to waive claims arising after the signing of the release

•    The consideration or payment for the waiver must be more that what the employee is entitled to under existing pension or compensation schemes

•    Must advised the employee in writing to consult an attorney

•    Must give the employee at least 21 days to consider the agreement, or 45 days if the waiver is requested in conjunction with an exit incentive

•    Must give the employee seven days to revoke, and

•    If the waiver is part of an reduction in force (“RIF”) or termination to a group or class of employees, the employer must provide the ages and titles of the other employee’s in the group or class, in writing.

If you feel that the severance agreement presented to you by your employer does not meet these requirements, we urge you to contact an attorney before signing.

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