Golden State Update.

Littler's Tammy McCutchen Examines Department of Labor FLSA Enforcement Issues at Congressional Hearing.

California's 2012 Minimum Hourly, Monthly and Yearly Rates for Exempt Computer Software, Physician and Surgeon Employees.

State Minimum Wages in 2012.

The following is an analysis prepared by CalChamber, the California Chamber of Commerce, of impact of a recent ruling by the California Court of Appeal that took a broad view regarding the admissibility of "me too" evidence in a sexual harassment trial.

Employees suing for sexual harassment often try to introduce "me too" evidence. This evidence typically consists of testimony from other employees in the workplace stating that that they also faced similar types of harassing behavior. The argument is that if the accused employee harassed others, it is more likely that he or she harassed the employee who is now suing.

In this case, the court allowed a former employee to present “me-too” evidence that the accused employee harassed other co-workers, despite the fact that the actions did not take place in her presence and were not directed at her. This ruling is a significant departure from previous rulings, which limit the use of "me-too" evidence to narrow situations. Pantoja v. Anton, 198 Cal.App.4th 87 (2011)

Boss Engages in Repeated Touching

The case was brought by a Bakersfield office worker, Lorraine Pantoja, against her former employer, a local lawyer named Thomas Anton. Pantoja began working for Anton in 2002 and was fired eight months later. Pantoja claimed that during her employment, Anton slapped and touched her buttocks, touched her leg while offering her $200, and asked for a shoulder massage. She also alleged that he used the term "Mexicans" in a derogatory manner. Finally, he called her a “stupid incompetent b----” and then fired her. She sued for sexual and racial harassment and gender discrimination.

During the trial, Pantoja wanted to call former female employees as witnesses to testify that Anton treated them in a similar way. Some of this testimony included allegations that Anton:

Frequently leered at women’s buttocks
Touched female employees on their buttocks and thighs
Pulled down the elastic on a female employee’s bra to read the label
Told a female employee to wear see-through clothing
Commented on female employees’ bust size

Paradoxically, Anton testified at trial that he teaches seminars on the subject of sexual harassment and represents clients in sexual harassment cases. He claimed that he would never allow such conduct to occur in his office.

Excluding Evidence

Anton sought to exclude all evidence of other acts of discrimination or harassment unless:

The acts were personally witnessed by Pantoja
The acts adversely affected her working environment

The trial court agreed with Anton and only allowed "me too" testimony if the conduct occurred while Pantoja was employed by Anton and if she was aware of it. The jury decided in Anton’s favor.

"Me too" Evidence May Show Gender Bias and Lack of Credibility

Pantoja appealed the trial court’s decision, and the appellate court overturned the trial court’s ruling. The appellate court found that the "me too" evidence would help the jurors decide whether Anton engaged in the alleged unlawful conduct. Its exclusion was prejudicial to Pantoja.

According to the court, Pantoja should have been allowed to present evidence of other harassment outside of her presence to attempt to show that Anton had a discriminatory intent or a gender bias, but not to show that he had the type of character that would lead to harassment. The court also ruled that Pantoja should have been allowed to present the evidence to try to cast doubt on Anton’s credibility.

The court found that the value of the evidence to the jury was "unquestionable:"

"If the evidence had been admitted, the jury would have had additional grounds for believing Pantoja's contention that Anton harbored a gender bias that was expressed in his words and actions toward her, and additional grounds for disbelieving Anton's contentions that he had a policy of not tolerating harassment and a practice of not directing profanity at individuals."

Best Practices

The court took a liberal view of the admissibility of such evidence. This decision will likely expand the type of discovery that will be available to employees suing for discrimination and harassment.

The case reinforces the need to be proactive and take action at the first sign of questionable conduct. If you wait until you have a full-fledged legal violation, you waited too long.

Employers should:

Have an anti-harassment policy in place that specifically prohibits sexual harassment and provides a complaint process. Communicate the policy to all employees

Post the required anti-harassment/anti-discrimination poster and distribute the required sexual harassment pamphlet.

Investigate concerns about harassment in the workplace

Ensure that you have taken all steps necessary to remedy any harassment that occurs and to prevent harassment from occurring again

Train supervisors to recognize the types of conduct that amount to sexual harassment. For many employers, 2011 is a mandatory supervisor sexual harassment training year

Copyright: HRC/Cal Chamber

Hi Everyone, Please vote for HR Allen Consulting Services for "Best of Citrus Heights" in the HR and Payroll Category. Please vote as many times as you can. Here is the link http://www.bestofcitrusheights.org/Vote.asp?Category=Human%20Resources%20/%20Payroll. Thank you Everyone.

Rep. Lynn Woolsey (D-CA) has reintroduced legislation that would create new record-keeping requirements for employers that hire independent contractors, and impose stricter penalties for misclassification. Notably, the?Employee Misclassification Prevention Act?(H.R. 3178) would amend the Fair Labor Standards Act (FLSA) to require employers to keep records on and notify workers of their employment or independent contractor classification and their right to challenge that classification. In addition, the measure would do the following:

• Establish certain employer recordkeeping requirements for non-employee workers. If no records required under the bill are maintained and preserved for a worker, he or she would be presumed to be an employee, subject to clear and convincing evidence to the contrary;


• Within six months of the bill’s enactment, require employers to notify their workers and independent contractors of their appropriate classification. Such notice must include a statement directing the worker to a Department of Labor (DOL) website established for the purpose of providing further information about the rights of employees under the law, in addition to the address and contact information for their local DOL office. Moreover, notices to non-employees must contain the following statement: “Your rights to wage, hour, and other labor protections depend upon your proper classification as an employee or non-employee. If you have any questions or concerns about how you have been classified or suspect that you may have been misclassified, contact the U.S. Department of Labor.”


• Prevent an employer from discriminating or retaliating against workers who exercise their rights under the bill;


• Impose civil penalties under the FLSA (up to $1,100 per employee for first offenders; $5,000 per employee for repeat or willful violations) on employers that misclassify employees as independent contractors;


• Allow the DOL and the Internal Revenue Service to share information on cases where employers misclassify workers;


• Direct the DOL to perform targeted audits focusing on employers in industries that frequently misclassify employees;


• Amend the Social Security Act to establish administrative penalties for misclassifying employees, or paying unreported wages to employees without proper recordkeeping, for unemployment compensation purposes;


• Mandate state unemployment insurance agencies to conduct audits to identify employers who are misclassifying employees;


• Track and monitor states’ effectiveness in identifying employers who misclassify employees.

According to a?press release?issued by Rep. Woolsey’s office, approximately 10 million U.S. workers are identified as independent contractors, and DOL estimates up to 30 percent of U.S. companies misclassify their employees. The bill was also included among recommendations sent by the Democratic Members of the House Committee on Education and the Workforce to the Joint Committee on Deficit Reduction, the “Super Committee”.

In a statement, bill co-sponsor Rep. George Miller (D-CA) added:

Misclassification is fundamentally unfair to our nation’s law-abiding employers, and unfair to the countless workers who are unlawfully stripped of basic protections like minimum wage, overtime, and the right to organize. Strengthening the law to prevent misclassification will level the playing field for those that follow the law and help to close an estimated $54 billion federal tax gap resulting from this illegal activity.

A similar bill – the Payroll Fraud Prevention Act (S. 770) – was?introduced in the Senate?in April. In addition, last July the House Subcommittee on Workforce Protections?held a hearing?on whether the FLSA needs to be revised to address worker misclassification, among other related issues. On the regulatory front, the DOL’s Wage and Hour Division (WHD) intends to develop a proposed rule that would update the recordkeeping regulation issued under the FLSA to “promote greater levels of compliance by employers, to enhance awareness among workers of their status as employees or independent contractors and employee rights and entitlements to minimum wage and overtime pay, and to facilitate DOL enforcement.” During a?web chat?to discuss the WHD’s regulatory agenda, WHD Deputy Administrator Nancy Leppink claimed that this proposal is still under development.

by?Ilyse Schuman

The California Supreme Court will soon issue its opinion in the widely talked about?Brinker?meal and rest periods case. A hearing is set for November 8, 2011, and a final decision is due within 90 days of that date.

In question are the meaning and requirements of California’s rule on meal and rest breaks. The court’s written opinion will decide:

• Whether employers must ensure employees take their meal and rest periods or simply make the breaks available


• When employees must take their meal break


• The number of required rest breaks during a shift and when they must occur

Sign up?by Monday, November 7, 2011, to receive email notification of the court’s decision, plus advance notice of CalChamber’s follow-up webinar, "Meal & Rest Breaks: What Does the?Brinker?Decision Mean for Your Workplace?"

Our employment law experts, Susan Kemp and Erika Frank, will analyze the?Brinker?decision and discuss how it impacts current meal and rest break requirements. You’ll also learn best practices and tips on complying with the court’s ruling.

Request the notification alert, and CalChamber will give you advance registration notice for the webinar before we officially announce the webinar date, time and details.

Copyright: HRC/Cal Chamber

Bipartisan legislation introduced in the Senate last week would update the Fair Labor Standards Act’s (FLSA) computer employee exemption.?Section 13(a)(17) of the FLSAestablishes minimum wage and overtime exemptions for computer systems analysts, computer programmers, software engineers, or other similarly skilled workers provided that these employees’ specific job duties and compensation meet certain requirements.?Specifically, to qualify for a computer employee exemption under current law the employee’s “primary duty” must consist of:

• The application of systems analysis techniques and procedures, including consulting with users, to determine hardware, software or system functional specifications;


• The design, development, documentation, analysis, creation, testing or modification of computer systems or programs, including prototypes, based on and related to user or system design specifications;


• The design, documentation, testing, creation or modification of computer programs related to machine operating systems; or


• A combination of the aforementioned duties, the performance of which requires the same level of skills.

In practice, the computer employee exemption does not reflect the evolution of computer and information technology occupations.

To remedy this coverage lapse, Senator Kay Hagan (D-NC) introduced the?Computer Professionals Update (CPU) Act?(S. 1747) along with Senators Johnny Isakson (R-GA), Mike Enzi (R-WY) and Michael Bennet (D-CO). The bill would modify the computer employee exemption to apply to the following individuals:

any employee working in a computer or information technology occupation (including, but not limited to, work related to computers, information systems, components, networks, software, hardware, databases, security, internet, intranet, or websites) as an analyst, programmer, engineer, designer, developer, administrator, or other similarly skilled worker, whose primary duty is--

(A) the application of systems, network or database analysis techniques and procedures, including consulting with users, to determine or modify hardware, software, network, database, or system functional specifications;

(B) the design, development, documentation, analysis, creation, testing, securing, configuration, integration, debugging, modification of computer or information technology, or enabling continuity of systems and applications;

(C) directing the work of individuals performing duties described in subparagraph (A) or (B), including training such individuals or leading teams performing such duties; or

(D) a combination of duties described in subparagraphs (A), (B), and (C), the performance of which requires the same level of skill;

who is compensated at an hourly rate of not less than $27.63 an hour or who is paid on a salary basis at a salary level as set forth by the Department of Labor in part 541 of title 29, Code of Federal Regulations. An employee described in this paragraph shall be considered an employee in a professional capacity pursuant to paragraph (1).

This bill has been referred to Senate Committee on Health, Education, Labor and Pensions.

by?Ilyse Schuman

In September, the Internal Revenue Service (IRS) launched a new program to offer some employers partial relief from federal employment taxes. The program is available to those employers who currently treat their workers, or a class or group of workers, as independent contractors or other nonemployees.

Through the?Voluntary Classification Settlement Program (VCSP), eligible employers can obtain significant relief from past federal payroll taxes (and penalties and interest) if the employers voluntarily reclassify independent contractors as employees, and treat those misclassified workers as employees for future tax periods.

Proper classification of workers can be difficult because different agencies apply different tests to determine whether the worker is an independent contractor. Improper classification of a worker as an independent contractor can lead to substantial financial damages for the employer, including back taxes, penalties and interest.

The IRS finds wrongful classification in up to 90 percent of firms audited, and estimates the employment taxes not collected because of misclassification at $35 billion per year. The IRS, in conjunction with the federal Department of Labor (DOL), has increased efforts to stop worker misclassification, and the agencies have agreed to share information relating to worker classification issues.

This past year, the IRS announced a three-year plan to increase audits of independent contractors, and the DOL also stepped up enforcement efforts, asking for $15,223,000 and 107 employees for an additional 3,250 misclassification investigations in 2012.

To be eligible for the VCSP, the company must have:

• Consistently have treated workers in the past as nonemployees


• Filed all required 1099 tax forms for the workers for the previous three years


• Not be under an IRS audit


• Not be under an audit by the Department of Labor (DOL) or any state agency relating to the proper classification of these workers

The program allows employers to get into compliance by making a “minimal” payment covering past payroll tax obligations, rather than being subjected to a potential audit. According to the IRS, employers accepted into the program will pay an amount effectively equaling just over one percent of the wages paid to the reclassified worker for the past year. No interest or penalties will be owed, and the employers will not be audited on payroll taxes related to these workers for prior years.

Given this increased enforcement, companies may want to consider the new settlement initiative to address potential federal tax liability. However, reclassification may have other consequences.

For example, wages and penalties could potentially be owed for wage and hour violations resulting from the misclassification, such as missed meal and rest periods or overtime.? Thus, employers should seek legal counsel prior to deciding to enter into the new IRS settlement program.

Copyright: HRC/CalChamber