Reversing summary judgment for more than 2,000 unlicensed junior accountants in a class action lawsuit, the U.S. Court of Appeals for the Ninth Circuit (San Francisco) has held that the plaintiff-accountants were not “categorically ineligible” to be exempt from overtime under California’s professional and administrative exemptions. Campbell v. PricewaterhouseCoopers, LLP, No. 09-16370 (9th Cir. June 15, 2011). The Court ruled the district court erred in determining the unlicensed accountants, who were required by law to work under the supervision of a licensed accountant, could never meet the requirements for exempt employees. The Court warned against categorically excluding entire classes of employees from overtime exemption analyses.

The Facts

Jason Campbell and Sarah Sobek worked as junior, unlicensed accountants for PricewaterhouseCoopers, LLP (“PwC”), an international accounting and professional services firm, in California. They performed audits for the firm’s clients under the general supervision of licensed accountants.

Claiming PwC had erroneously classified them as professional or administrative employees exempt from overtime pay under California law, Campbell and Sobek sued PwC for unpaid overtime on behalf of a class of unlicensed junior accountants working in PwC’s California offices (collectively, the “plaintiffs”). The parties cross-moved for summary judgment on whether the plaintiffs fell within either the professional or administrative exemptions. The district court found the plaintiffs were “categorically ineligible” for the professional exemption because they were unlicensed. The district court also found PwC failed to show the plaintiffs fell within the administrative exemption. PwC appealed.

Professional Exemption

Under California law, to claim the professional exemption, PwC must show that the plaintiffs meet one of the following two criteria: (1) “licensed or certified by the State of California and primarily engaged in … law, medicine, dentistry,… accounting; or” (2) “primarily engaged in an occupation commonly recognized as a learned or artistic profession.”

PwC argued that, even though the plaintiffs were unlicensed, they should be exempt because they were members of a learned profession. The Court agreed. It found the language of the exemption unambiguously indicating “no intent” to exclude accountants from the learned profession provision. If the drafters intended to exclude the professions listed in the law, the Court said, they could have easily done so by including limiting language. The drafters did not do so; to the contrary, they used the conjunction “or”, allowing employees to fall within either provision. The Court concluded the plaintiffs could meet the requirements of the learned profession provision if PwC demonstrated they performed work that is “predominately intellectual and varied in character” and ruled the district court erred in denying PwC the opportunity to prove the plaintiffs fell within the learned profession provision.

The Court further observed that, notwithstanding the unambiguous text, the district court’s conclusion would create “highly problematic” precedent by stating that “unlicensed California employees in all [of the] enumerated professions — including doctors, engineers, and lawyers — would have a compelling argument for mandatory overtime pay.” The Court declared, “This cannot be the law.” Interpreting the exemption as the district court did would create “significantly troubling results,” the appeals court wrote. For example, employers would be required to pay overtime to recent medical school graduates working as residents in hospitals, first year associates at law firms who had not yet passed the bar, or attorneys who relocated temporarily to California to try a case. The Court explained it could not “endorse a ruling that would open the door” for such employees to sue their employers for overtime pay.

Administrative Exemption

To claim the administrative exemption for its unlicensed accountants, PwC must show that the plaintiffs:

1.performed work “directly related to management policies or general business operations” of either the employer or the employer’s clients;
2.“customarily and regularly” exercised discretion and independent judgment;
3.worked “under only general supervision” while either: (a) performing work along specialized or technical lines requiring special training, experience, or knowledge, or (b) executing special assignments and tasks;
4.were “primarily engaged” in exempt work meeting the above requirements; and
5.satisfied a minimum salary requirement.

The Court determined that summary judgment was improper because it was unclear whether the work of the unlicensed accountants was directly related to PwC’s operations or its clients’ operations and whether they worked only under general supervision while performing specialized or technical work. Accordingly, the Court reversed summary judgment and returned the case for trial.

By: Jackson Lewis LLP

A little-known California labor law appears to be causing a headache for retailers now having to look at a potentially new way to handle their employees—especially individuals working as counter staff and checkout technicians who spend the vast majority of their shift on their feet.

California labor code is said to be one of the most stringent in the US, governing everything from overtime computation to meal and rest breaks. It's the latter that retail employees, or those who spend an inordinate part of their day on their feet, come to rely on for relief from standing.

However, according to a recent report by the Associated Press (AP) that was carried earlier this month in the Washington Post, many retailers in the state of California—including such national chains as Wal-Mart, Home Depot and Target—are facing lawsuits alleging that plaintiffs are not afforded "suitable seating" for relief from standing.

According to the AP report, the obscure statute is known as the private attorney general provision and lurks in California labor employment law. Long since accustomed to standing for hours at a time, plaintiffs are now demanding the means by which to take a load off while they're at their workstation.

According to AP, a couple of recent appellate decisions have allowed for workers and their legal advisers to employ the private attorney general provision—which apparently opens the door for a complaint to management about lack of proper seating, according to provisions in California and labor law.

Observers have noted that major retailers could be facing millions of dollars in damages. A first violation reportedly carries a fine equaling $100 per employee per pay period. The penalty is said to be doubled for any subsequent violation.

Employees who work as checkout consultants in supermarkets have sometimes required special footwear due to the need to constantly stand while at their workstation. Others have experienced back problems due to the inability to take a load off their feet outside of designated break periods.

The private attorney general provision in California state labor laws apparently provides plaintiffs with a framework to try and effect change.

By: Gordon Gibb

For some employers, summer is the time to reduce labor costs by bringing onboard (not hiring) unpaid interns, typically college students. But officials are cracking down on misclassified interns and issuing guidance letters to employers advising whether they are breaking the California labor law.

Contrary to what some employers believe, an internship does not mean free labor; many people are exploited and misclassified, and therefore owed wages and possibly overtime pay.

Brittany wants to become a dog groomer. She couldn't afford to attend school so she searched Craigslist and accepted on-the-job training at a "doggie daycare" with a promise that she would learn the trade within a few months. Instead, she spends most of the day "cleaning up the premises, feeding the dogs and getting coffee for the owner." According to California labor law, if you are an unpaid intern, no work can be performed that is of any benefit at all to the company.

In other words, Brittany should only be grooming dogs. No coffee runs, no mopping the floor. Brittany must be paid at least minimum wage, California overtime (any time over 8 hours in a day and 40 in a week) as well as meal and rest breaks if her employer hasn't met the Department of Labor's (DOL's) six criteria, as follows:

• The training, even though it includes actual operation of the employer's facilities, is similar to that which would be given in a vocational school.
• The training is for the benefit of the trainees or students.
• The trainees or students do not displace regular employees, but work under their close observation.
• The employer derives no immediate advantage from the activities of the trainees or students, and, on occasion, the employer's operations actually may be impeded.
• The trainees or students are not necessarily entitled to a job at the conclusion of the training period.
• The employer and the trainees or students understand that the latter are not entitled to wages for the time spent in training.

Clearly, Brittany's employer is deriving "immediate advantage from the activities of the trainee(s)." In the US, internships are illegal in the "for profit" sector if the intern isn't there strictly to learn. Recently, an Oregon jury awarded two men who installed solar panels for their "internship" $3,350 each in pay, determining they were actually working rather than learning. And California isn't far behind: California labor law officials are now issuing warnings to companies with internship programs.

According to a 2008 survey by the National Association of Colleges and Employers, 50 percent of graduating students had participated in internships. And in 2010, Stanford University's job board had 643 unpaid internships posted by employers, which was more than triple that of two years ago. In 1992, however, a Northwestern University study reported 17 percent had interned. Possibly because of the recession—employers are trying to keep costs down and jobs are scarce—unpaid internships would appear to be on the upswing.

Unfortunately, many unpaid interns are not reporting this abuse; they are afraid of retaliation and possibly not getting the job they are promised. But retaliation is also a violation of the California labor code—ask an experienced California labor law attorney.

By: Jane Mundy

Q: Our business is thinking about hiring high-school students this summer. Should we be aware of any restrictions or unique requirements?

A: The California Labor Code, the federal Fair Labor Standards Act and the California Education Code regulate employment of minors in California. The interaction of all three will govern any decision you make. Employers should think about several issues, including hours of work, minimum age for employment, occupational restrictions, and health and safety rules.

Online Tools

When summer approaches, high-school students looking for work are a willing and eager workforce. With a little preparation, employers can benefit from this labor pool and make it a positive experience for the teen worker. May was Safe Jobs for Youth month in California, and information about hiring youth is just a click away on several websites:

• Learn the basics at the California Chamber of Commerce website HRCalifornia, and take the child labor quiz. Members must log-in.


• Visit the Young Workers' Health and Safety Website for guidance about health and safety issues, and ideas to enhance the working relationship with your teen employees. Download fact sheets, resource kits and more.


• Visit the Division of Occupational Safety and Health (Cal/OSHA) website for more information about health and safety regulations.

Work Permits

May is also a good time to start the hiring process so that all required paperwork is completed and on file before the teens begin work. With certain limited exceptions, California requires that minors under 18 years of age, who have not graduated from high school or obtained a "Certificate of Proficiency," must have a valid work permit, which is issued through the school the student attends. Application for the work permit is initiated by the student.

Work permits are required year-round, even when school is not in session. Obtaining a work permit helps assure that the duties performed comply with child labor laws and hour restrictions.

Be sure to carefully review the work permit for the exact hour restrictions, as the school may, at its discretion, issue a permit for fewer hours than the law allows.

Age Restrictions

The age of the minor determines the hours of work, occupation and duties permitted for that age group. As a result of federal and state occupational restrictions, a minor usually must be at least 14 years old before beginning work.

Separate rules and regulations cover younger minors working in the entertainment industry. The occupational restrictions and exceptions are complicated and lengthy.

The Division of Labor Standards Enforcement provides a comprehensive child labor booklet that includes a summary of age groups and occupations permitted for that age group.

Federal child labor laws were updated in 2010 and added new prohibitions for youths under the age of 18. However, they also allowed additional job opportunities for 14- and 15 year-olds. Be sure to review the most current information at the federal Department of Labor's website.

There is no sub-minimum wage rate for minors in California. The California minimum wage of $8 per hour applies to minors. A limited learner’s exemption, however, allows payment at 85 percent of the minimum wage only during the first 160 hours of employment in occupations in which the employee has no previous similar or related experience.

Avoid penalties by training your supervisors to understand and comply with all child labor and safety laws. Form a partnership with your young workers to enjoy a positive summer work experience.

Permission granted to reprint from California Chamber of Commerce

When meal or rest periods are not given or taken in California, the employer owes the employee premium pay. Labor Code section 226.7 states that employers are required to pay an employee a premium payment of one additional hour of pay "for each work day that the meal or rest period is not provided."

Question:

• Does this statute authorize one premium payment per work day, regardless of the number or type of break periods that were not provided?


• Or does the statute authorize two premium payments per work day - one for failure to provide a meal period and another for failure to provide a rest period?

This issue was recently decided by a California Court of Appeal in United Parcel Service Inc. v. Superior Court (Allen), No. B227190?2011 WL 2150776 (Cal Ct. App., 2d Dist. June 2, 2011).

UPS is being sued in 32 coordinated actions by employees who are seeking compensation for meal and rest period violations. UPS asked the court to determine before trial whether the employees were entitled to one premium payment or two premium payments per day. After a rehearing on the issue, the court affirmed that the Labor Code permits up to two premium payments per work day. The court reasoned that without the second penalty an employer might be tempted to require an employee who missed a meal break to also miss his or her 10-minute rest break.

Employers continue to wait for the California Supreme Court to decide Brinker Restaurant Corp v. Superior Court and resolve the uncertainty as to whether employers are required to merely provide meal and rest periods or ensure that they are taken.

The best course of action pending a final decision:

• Ensure that meal and rest periods are taken


• For meal breaks, ensure that the employee is relieved of all duty and free to leave the worksite


• Require employees to accurately record all hours worked

Source: Cal Chamber

Without a showing of sexual intent or motivation, threats of sodomy and “grossly offensive comments” of a sexual nature made by a male supervisor to a male employee are not sufficient to support claims for same-sex harassment and discrimination under California’s Fair Employment and Housing Act (“FEHA”). Kelley v. The Conco Companies (June 6, 2011). Nonetheless, the California Court of Appeal found that teasing and ostracism by non-managerial coworkers was sufficient to support a claim for retaliation where the company knew or should have known of the retaliatory conduct and failed to take reasonable actions to end it.

The Facts

During Patrick Kelley’s first week on the job as an ironworker, his supervisor and coworkers made several grossly offensive, sexually explicit comments to him. For example, his supervisor told Kelley he wanted to sodomize him, while a coworker stated he was going to make Kelley perform oral sex on the supervisor. Although the supervisor apologized and stopped making these comments after Kelley complained to management, other employees began calling Kelley a “bitch,” “faggot,” “narc,” or “snitch” for complaining. This conduct persisted for several months and was overheard by other supervisors at the company. Kelley complained about the conduct repeatedly and was regularly transferred to other job sites, but was told nothing could be done because that is “just the way these guys are.”

Kelley sued Conco?and his former supervisor for sex discrimination, sexual harassment, and retaliation in violation of the FEHA. After the trial court granted Conco’s motion for summary judgment, Kelley appealed.

The Court’s Decision in Kelley

The Court of Appeal began its analysis by referring to the Supreme Court’s opinion in Oncale?v. Sundowner Offshore Services, Inc. and acknowledging that it sometimes is difficult to determine “when same-sex harassment amounts to discrimination because of sex.” Based on its reading of Oncale, the court noted that “workplace harassment, even harassment between men and women, is [not] automatically discrimination because of sex merely because the words used have sexual content or connotations.” Rather, the court found that the critical issue is “whether members of one sex are exposed to disadvantageous terms or conditions of employment to which members of the other sex are not exposed.”

After assessing the various “evidentiary routes” Kelley could use to create an inference of gender-based disparate treatment, the court found that evidence of the supervisor’s explicit sexual overtures and threats was not sufficient by itself to create triable issues of material fact with respect to Kelley’s claims without some proof that the supervisor was motivated by sexual desire or intent.

Kelley disagreed, citing Singleton v. United States Gypsum for the proposition that, even if no sexual intent or desire could be established (e.g., if the male supervisor is heterosexual), the comments supported his claim of discriminatory harassment because the comments attacked his identity as a heterosexual male and would not have been leveled against a female.

The Kelley court acknowledged that Kelley’s supervisor may have treated him differently than he would have treated a woman, but found that the relevant inquiry “is not whether the two sexes are treated differently . . . but whether one . . . sex is treated adversely to the other sex.” Without any evidence indicating that the supervisor’s comments were motivated by sexual intent or desire, the court concluded that Kelley could not prove the sexually offensive comments and threats were made “because of sex,” and affirmed the lower court’s dismissal of his sex discrimination and harassment claims.

Although Kelley did not prevail on his sex discrimination or harassment claims, the court found that the Conco?could be held liable for retaliation in violation of FEHA?because the ostracism, bullying, and harassment he suffered at the hands of his non-managerial coworkers was severe or pervasive, and because Conco, in light of Kelley’s repeated complaints, should have known about the retaliatory conduct and taken reasonable actions to end it.

What Kelley Means For Employers

Kelley?clarifies the difficult burden of proof for plaintiffs claiming same-sex harassment under the FEHA?based on sexually suggestive comments, holding that this type of conduct is not sufficient by itself to satisfy FEHA’s “because of sex” standard. Post-Kelley, plaintiffs asserting these claims must show that the harasser was motivated by sexual desire, or they must come forward with some other evidence showing that they were treated adversely compared to members of the opposite gender. Kelley?also is a good reminder that retaliation claims under the FEHA are available for the retaliatory conduct of non-managerial employees when the employer knew or should have known of the conduct, and failed to take action.

Source: Seyfarth Shaw

The United States Supreme Court recently ruled that states may require businesses to use the federal E-Verify program. The court’s ruling also permits states to penalize businesses that hire undocumented workers. States may impose conditions on a business’s ability to obtain and keep a business license, including suspending or revoking a business license.

E-Verify is a federally created program that allows employers to use an Internet-based system to electronically check employees’ work authorization status. E-Verify compares Form I-9 documentation against federal government databases to verify employees’ employment eligibility.

Arizona enacted a law that gave the state the power to decide whether to suspend or revoke the licenses of Arizona employers that knowingly or intentionally employ workers not authorized to work in the United States. The law also created circumstances under which the state must suspend or revoke such employers’ business licenses. The Arizona law further required Arizona employers to use E-Verify.

A lawsuit challenged the state law on the grounds that federal immigration laws pre-empted Arizona’s law and that the federal E-Verify program is voluntary and Arizona had no right to mandate its use. The U.S. Supreme Court disagreed with these challenges in a 5-3 decision (with one justice not participating), and concluded that the law was legal. Chamber of Commerce v. Whiting, No. 09-115, 563 U.S. (2011), 2011 WL 2039365

The court noted that the federal Immigration Reform and Control Act (IRCA) explicitly states that though state and city governments cannot impose civil or criminal sanctions for immigration violations, state and city governments can impose sanctions through the use of licensing conditions on businesses operating in the state. According to the court, Congress specifically preserved such authority for states and did not intend to prevent them from using appropriate tools to enforce immigration laws.

The court further concluded that federal law did not stop states from mandating the use of E-Verify. Though federal law made the E-Verify program voluntary at the national level, the law expressed no intent to stop states from requiring businesses to use E-Verify.

This decision will likely put pressure on other states to implement mandatory E-Verify laws. A few other states, including Utah, Mississippi and South Carolina, already enacted laws mandating that all employers use the E-Verify program. Other states enacted laws mandating the use of E-Verify in various degrees — for example, only requiring state employers to use E-Verify.

Some city governments also require the use of E-Verify. For example, a Mission Viejo, California, city ordinance requires the city and certain employers with city contracts to verify the eligibility of new employees through E-Verify.

Best Practices

E-Verify is not mandatory in California, except for certain federal contractors or subcontractors. Other employers can choose whether they want to use E-Verify. Regardless of whether you use E-Verify, you must verify that each new employee is legally eligible to work in the United States.

• If you are not certain whether you are required to use E-Verify, consult legal counsel


• If you use E-Verify, you must post two required notices (the OSC Employee Rights Poster and the You Should know Your Rights and Responsibilities Under E-Verify poster). These notices are available from HR Allen Consulting Services


• Consistently use the same employment verification procedures


• Correctly and completely fill out all required information on Form I-9

Read The Press Release Here http://bit.ly/ea6DeJ

New Federal Unemployment Insurance Extensions.

Emergency unemployment benefits reauthorized.