The federal Equal Employment Opportunity Commission (EEOC) recently reported that it reached a settlement with a military vehicle manufacturing company that allegedly fired an employee because he was morbidly obese.

According to the EEOC, the disability discrimination provisions of the Americans with Disabilities Act (ADA) protect morbidly obese employees and applicants. “So long as an employee can perform the essential job duties of a position, with or without reasonable accommodation, the employee should be allowed to work on the same basis as any non-obese employees. Employers cannot fire disabled employees based on perceptions and prejudice.” 

The employee weighed nearly 700 pounds at the time he was fired. The EEOC alleged that the employee was qualified to perform the essential job functions of his material handler position. The EEOC also alleged that the company did not engage in any discussions to determine if reasonable accommodations were available.

The EEOC asserted that the employee’s morbid obesity substantially limited him in one or more major life activities and rendered him “disabled” under the ADA Amendments Act of 2008 (ADAAA). The EEOC further asserted that the company “regarded” the employee’s morbid obesity as a disability, even if a court should hold that obesity was not a disability within the meaning of the ADA.

The company will pay the employee $55,000 and provide him with six months of outplacement services.  The settlement also requires the company to provide training to managers on equal employment opportunity compliance, disability discrimination law and responsibilities regarding reasonable accommodation.

A California Chamber of Commerce-opposed bill mandating private non-unionized employers that do not offer a retirement plan to enroll their employees in a government-created defined benefits plan will be heard in the Assembly Appropriations Committee on August 8.

SB 1234 (DeLeón and Steinberg) subjects employers to significant cost, fiduciary responsibilities and liability with no commensurate benefit to employees by requiring employers without a retirement plan to enroll their workers in the new “California Secure Choice Retirement Savings Program” or pay a penalty of $250 per employee.

Small Business Burden
The new risks mandated by SB 1234 (which applies to employers with as few as five workers) could be particularly harmful to small businesses that can’t afford the added liability, including the duty to properly educate employees about the retirement options available so the employees can make an informed decision.

Employer Liability
Retirement plans for private sector employees are regulated by the federal Employee Retirement Income Security Act (ERISA), which subjects participants to significant responsibilities and requires every employer participating in the program to file annual reports and actuarial valuations.

According to a recent legal opinion, employers participating in the program would be subject to these ERISA requirements and would incur significant fiduciary responsibilities.

Citing U.S. Department of Labor advisory opinions, the legal opinion concludes that under SB 1234 “each employer sponsor of a plan that participates in the arrangement will be subject to ERISA’s fiduciary provisions.”

Among other responsibilities, California businesses would be personally liable to make good to the plan any losses resulting from any breach of the new fiduciary responsibilities.

Action Needed
The CalChamber and a coalition of businesses, insurers and employer groups argue that the effort, liability and expense of SB 1234 are unnecessary given that California already has a highly competitive retirement savings market. The CalChamber is urging members to contact legislators and ask them to oppose creating the new retirement program in SB 1234.

Employees filed a record number of federal wage-and-hour lawsuits under the Fair Labor and Standards Act (FLSA) from March 31, 2011, to March 31, 2012, according to a chart released by Seyfarth Shaw LLP. The figures were confirmed by the Federal Judicial Center.

FLSA wage-and-hour claims exploded over the past decade — more than tripling since 2002 when only 2,035 claims were filed.

The claims forming the bulk of these numbers include misclassification of employees, alleged uncompensated “work” performed off the clock and miscalculation of overtime pay, according to Richard L. Alfred, chair of Seyfarth Shaw’s wage-and-hour litigation practice.

As employers in California are all too aware, wage-and-hour lawsuits brought under California’s labor laws increased similarly in recent years. This year, California employers received welcome guidance from the California Supreme Court in one area of wage-and-hour litigation — meal and rest periods ­— in the Brinker Restaurant Corp. v. Superior Court decision.

Interns can be an excellent source of inexpensive — or even free — labor for small businesses. In the ideal scenario, everyone wins: Your company gets a helping hand, and the intern gains professional experience.

When it’s time to sell your business, one immediate concern should be how to address the issue with your employees. Business owners and experts are divided on the best approach to take. Some assert that you should be completely transparent from the outset. Others contend that knowing a sale is imminent may adversely affect morale and productivity. Here’s a look at both options.

On July 23, 2012, in Harris v. Superior Court (Liberty Mutual Ins. Co.), a case that the California Supreme Court previously had reversed and remanded, the California Court of Appeal stuck by its prior conclusion and held that insurance claims adjusters do not qualify for the administrative exemption from overtime pay requirements.

California Attorney General Kamala Harris announced today that the state Department of Justice created a new Privacy Enforcement and Protection Unit. The new Privacy Unit will focus on protecting consumer and individual privacy through civil prosecution of state and federal privacy laws, according to a statement from the attorney general.

The Privacy Unit will enforce laws regulating the collection, retention, disclosure and destruction of private or sensitive information by individuals, organizations and the government. This includes laws relating to cyber privacy, health privacy, financial privacy, identity theft, government records and data breaches. 

The Privacy Unit will be housed in the state’s eCrime Unit and will include six prosecutors who will concentrate on privacy enforcement.

On July 2, 2012, the California Court of Appeal affirmed a trial court ruling denying class certification to a group of newspaper carriers claiming they were misclassified as independent contractors.  In Sotelo v. Medianews Group, Inc., the Court of Appeal concluded that plaintiffs’  proposed class of newspaper carriers could not be certified because the class was not ascertainable and common issues of law and fact did not predominate. 

The Internal Revenue Service released a questions and answers document (Rev. Rule 2012-18) that provides guidance on how taxes are imposed on tips under the Federal Insurance Contributions Act (FICA).

The guidance includes an explanation of employer and employee obligations. It is the employer’s obligation to withhold “the employee share of FICA taxes on the reported tips from the wages of the employee (other than tips) or from other funds made available by the employee for this purpose.”

The guidance also includes information on:

Owners and operators of gentleman’s clubs recently received a new arrow in their quiver in the ongoing dispute over a question that has created a barrage of lawsuits across the industry – “Are exotic dancers employees?”  A decision from the United States District Court for the Eastern District of Arkansas on July 12 answered this question in the negative, holding that exotic dancers were not employees under the FLSA or Arkansas Minimum Wage Act.