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Why to Take a Positive View of Maternity Leaves

“We just hired her two months ago. Now she is telling us she is pregnant and will need three months off for the birth and for bonding with the child. Didn’t she have to tell us she was pregnant when we interviewed her? How are we supposed to run a business this way?” 

These sentiments of frustration are fairly common for employers in California, particularly those with fewer employees and less frequent encounters with maternity leaves of absence. Generally, these sentiments do not arise from hostility toward the employee or pregnancies in general, but rather from the difficulties the employer will face with staffing,  and the potential for increased  costs. These are real and legitimate concerns. Nevertheless, employers should consider taking a positive view of maternity leaves.

Taking a positive view begins with accepting that pregnant employees are protected by multiple laws. Disagreement with the laws should be directed toward the legislature, Congress and industry associations that lobby for employers. It should not be directed toward or communicated with employees. They did not create the laws, and raising disagreement or frustrations with them will only create bad evidence in pregnancy discrimination cases. 

Let’s look at some of the most basic rules.

Hiring

An employer cannot refuse to hire a woman because of her pregnancy or a pregnancy-related condition. Nor can an employer refuse to hire because co-workers, clients or customers have a negative view of a pregnant employee.

Pregnancy and Maternity Leave

An employer may not single out pregnancy-related conditions for special procedures to determine an employee's ability to work. Requiring a doctor's certification about the employee’s ability to work or the need for a leave of absence is permissible, but only if the employer requires similar certification for other kinds of medical issues and disabilities.

If an employee is temporarily unable to perform her job because of her pregnancy, the employer must treat her the same as any other temporarily disabled employee. The employee may also have the right to transfer to a different position. Pregnant employees must be permitted to work as long as they are able to perform their jobs.

As a general principle, employers must hold open a job for a pregnancy-related absence the same length of time jobs are held open for employees on sick or disability leave. But, even if the employer gives no time off for other leaves, a pregnant employee must be given as much as four months of leave while disabled by the pregnancy. Employers with 50 or more employees will also have to provide as much as 12 weeks of leave for bonding with the new child.

Health Insurance

Any health insurance provided by an employer must cover expenses for pregnancy-related conditions on the same basis as costs for other medical conditions. Employers must continue to pay for the health insurance during a pregnancy disability leave or mandated bonding leave on the same basis as though the employee were working.

Fringe Benefits

Pregnancy-related benefits cannot be limited to married employees. If an employer provides any benefits to workers on leave, the employer must provide the same benefits for those on leave for pregnancy-related conditions.

No Discrimination or Retaliation

It is unlawful to discriminate or retaliate against an employee for a pregnancy, for a leave of absence taken in relation to the pregnancy or for complaining about the employer’s policies or practices related to pregnancy.

These basic rules only scratch the surface of the details in the multiple and overlapping laws that apply to a pregnancy. Accordingly, it is often wise to get expert assistance when handling an employee pregnancy.  

It is also wise to carefully plan your communications related to the pregnancy. While poorly planned communication can create bad evidence, well-planned communications create positive energy and strengthen employee relations. 

Let’s take the example of an employer who is bothered because a new employee did not disclose that she was pregnant during the interview process. 

Taking a positive view requires the employer to understand that there are many legitimate reasons why an applicant might not tell. Fear of the employer’s reaction, desire to keep work and family matters separate and shame about an unwanted pregnancy are just a few. Wise employers can use this situation as an opportunity to set a positive tone, build openness and strengthen the relationship. It can start with a simple question asked in a friendly, non-threatening tone: “Is there a reason you did not tell us you were pregnant?” 

Where the conversation goes from there will vary. Here are a couple of possibilities:

Example 1: “I was concerned I would not get the job.” 

“That is understandable, but that’s not how we operate. In the future, we want you to feel comfortable that you can have open communications with us on this kind of thing or any matter. That’s the kind of employment relationship we want to have.”

Example 2: “I’m just private about my family things and did not think it was the company’s business.” 

“We understand and respect your desire for privacy. We are not going to try and become involved in your private affairs. On the other hand, your pregnancy is not entirely a private matter.  Because you will be taking time off from work, it has an impact on the company.  Communications and planning are important for the company. We want an employment relationship where you feel comfortable letting us know about family matters that directly affect the company because you know we are going to respect your privacy.”

Taking a positive view of pregnancies and maternity leaves may not be second nature for employers. The approach, however, will reduce the potential for the creation of bad evidence and increase the potential for high-quality employment relationships and the productivity and profit that result from them.

This article originally appeared in the Sacramento Business Journal.

The Right Way to Handle Employee Complaints

California employers have a legal duty to respond to certain employee complaints.  Failure to respond or failure to respond appropriately can result in significant liability.  This is particularly true with complaints of harassment, discrimination and other unlawful conduct.  Accordingly, employers should never take employee complaints lightly.  Even if no legal duty to investigate exists, a well-managed response can minimize or even eliminate problems and improve employee morale.

Achieving the well-managed response is not easy.  It takes careful planning and execution.  Fortunately, most employers do a very good job of managing their employees, and complaints are infrequent.  Unfortunately, this means most employers have little experience at managing the complaint process.  Being aware of and strategically planning at each step of the process can help make up for the lack of experience.

Here’s how you do it:

Receipt of the Complaint

How an employee complaint is received can be critically important.  If the employer has not created a culture of trust and respect, employees will not be comfortable coming to management with complaints.  That may mean fewer complaints but will also mean bigger problems — employees are not required to complain to the employer before filing a lawsuit.  Consistent with the culture of trust and respect, the manager receiving a complaint should express an interest in and concern for the employee making the complaint.  Remember, the employee is not happy about something.  A closed-minded, uncaring demeanor during the first contact will only make the unhappiness grow.

It is also very important to be aware of and address the complaining employee’s expectations.  If the employee requests that the complaint be kept confidential, the manager must be able to explain why it cannot be kept completely confidential and must be able to do so in a way that does not alienate the employee.  The manager should also address the employee’s expectations for the process and the result.  Obviously, it is too early for the manager to make promises about the result, but he can help build confidence in the fairness of the process.

Act Immediately

Once a complaint is received, the employer should act immediately.  Any delay in taking action on an employee complaint will be magnified tenfold in litigation, and the employer will have a very difficult time overcoming the perception that the complaint was dismissed as unimportant.

Conduct an Investigation

Every employee complaint warrants an investigation.  That does not mean that every complaint requires a lengthy, formal process conducted by professional investigators.  The investigation might be as simple as asking the employee a few questions.  Regardless of its scale, the investigation’s purpose remains the same: to get an accurate understanding of the facts.  Only with a solid understanding of the facts can the employer make an informed decision on the complaint.

As an initial matter, the employer must determine who will conduct the investigation.  Will it be conducted by a single individual or several people working in coordination?  Will it be conducted by the employer’s own staff or by an outside investigator?  In either case, the employer should consider the following factors:

  • The nature and seriousness of the complaint.  Complaints about the speed of the copy equipment do not warrant the same level of investigation as complaints about sexual harassment.
  • The skill and experience of the investigator.  Whether an employee or outside professional, the investigator should understand how to conduct a good investigation and have the skill to do it.  In some cases, an internal investigation is preferred.  If the employer does not have a skilled investigator on staff, the employer should hire an expert to guide and coach the employee conducting the investigation.
  • The investigator’s neutrality regarding the facts and witnesses.  Any bias, real or perceived, can render the investigation useless.
  • The investigator’s quality as a witness.  The investigator may well be a key witness in future litigation.  The ability to speak well and inspire confidence is essential in that arena.  It is equally important in giving the complaining employee and witnesses confidence in the investigative process.
  • The outside professional’s qualification.  California law requires outside investigators to be either a licensed private investigator or an attorney.
  • Whether creating a legal privilege around the investigation is important.  If it is, the investigation must be conducted by an attorney and conducted in a manner that maintains the privilege.
  • The scope of the investigation.  The investigator should find the facts and assess the credibility of the witnesses and information obtained.  The investigator should not make legal conclusions or suggestions on what actions to take, even if he is an attorney.

It is important to understand that the investigator or investigators cannot follow a set formula or pattern in every investigation and expect success.  A specific and strategic plan is always advised.  The plan will include consideration of who will investigate, who will investigate which parts, what order witnesses will be interviewed in, where they will be interviewed, what kind of record will be created and who will be responsible for communications.   As important as it is to have a strategic plan, it is even more important to not follow it blindly.  As facts are uncovered and circumstances change, the plan may need to be adjusted.  By definition, a good investigation will be flexible enough to ensure that all of the relevant facts are uncovered with a minimum of collateral damage.

Review the Investigation and Respond

The employer bears the ultimate responsibility for responding to the complaint.  Doing so appropriately requires a clear and complete understanding of the facts.  If the employer is uncertain about any facts contained in the investigator’s report, they should be clarified.  If the employer is not confident that the investigation was thorough, further investigation should be ordered.  With all the facts and confidence in them, the employer will decide what actions to take on the complaint.  This is the point where an employer should be interested in legal conclusions, particularly if the complaint is serious.  The deliberations about what actions to take and why should be protected against disclosure.  Often, it is advisable to have such deliberations protected by the attorney-client privilege.

While the deliberations may be secret, the decisions resulting from them are not. They will need to be communicated to the complaining employee and other interested employees and communicated effectively.  Once again, a strategic plan is critical.  How something is communicated is often as powerful as the content of the communication.   The effort put into the investigation and the problem-solving potential of the complaint process can all be lost by careless final communications.

Employers cannot escape the duty to investigate employee complaints.  Nor should they want to.  Employee complaints can be healthy for an organization.  They can uncover problems before they cause significant damage.  They can also be a vehicle for increased employee morale and productivity.  But the positive aspects surrounding employee complaints can only be achieved with a properly handled complaint process.

The Two Must-Haves for Employment Practices Liability Insurance

If you own or manage an organization and have not experienced an employee claim, count yourself lucky—and know that the chances are very good that your luck will change.

Many employers purchase Employment Practices Liability Insurance (EPLI) because general business insurance policies exclude employment-related claims for issues such as discrimination, harassment and wrongful termination.  Many EPLI policies do not, however, cover commonly asserted claims such as wage and hour violations or statutory penalties. The issues are complicated enough that decisions on EPLI require the assistance of two experts: a knowledgeable and trusted insurance broker and an experienced employment defense attorney. The insurance broker will guide you through the various policy options available and provide a wealth of risk-management information.  The defense attorney will advise on the real-world impact a particular policy will have when an employment claim arises.

If you purchase EPLI, you should prepare for employment claims before they are even asserted, by following these steps:

  • Select Defense Counsel in Advance. If you already use trusted employment law counsel, your carrier may allow you to designate your chosen law firm at the time the policy is purchased or renewed.  Some policies allow the insured to select its own counsel without such pre-designation.  Asking the right questions of your broker and specifying at the outset the employment lawyer you want is the best way to ensure that you get the defense counsel of your choice.  
  • Train Staff on Claims Recognition. Train key personnel to recognize a “claim” as it is defined under the EPLI policy.  What constitutes a “claim” is generally defined broadly.  A “claim” may even include pre-lawsuit claims, such as a discrimination complaint filed at a governmental agency like the California Department of Fair Employment and Housing.  Even a “demand” letter from a threatening employee or lawyer may constitute a claim.  As policies change from year to year, the definition of a claim may also change.  Key personnel should know what to do when a potential claim is spotted, including the who, what and when of communicating with the insurance broker or carrier.
  • Develop Protocol for Receipt and Processing of Claims. It is a good idea to have a specific person designated to whom all “claims” are promptly forwarded. The protocol should also include things such as identifying the name of the employee who received the claim and the date, time and how the claim was received.  It is critical to ensure that a potentially covered claim is properly and quickly processed. Communication problems can arise inside organizations because finance and operations executives, who were involved in buying the EPLI policy, tend to be knowledgeable about the terms of the EPLI policy, while human resources personnel tend to be the first to know that a claim has been filed.
  • Be Thoughtful and Precise in “Tendering” Claims to the Carrier. Once a claim arises, carefully consider the requirements in the policy for tendering the claim.  This may involve discussions with legal counsel regarding the pros and cons of tendering a particular claim at all and will definitely include advice on how and what to communicate with the carrier. Careful consideration cannot result in much delay.  EPLI policies typically require very prompt communication of claims and potential claims.  Follow carefully the means and timing of “tendering,” i.e., providing written notice to the carrier, as stated in the policy.   A copy of the lawsuit, administrative charge or “demand” letter should accompany the tender.  Follow up to ensure that the carrier has received the claim and accepted it.

    As a general rule, attorneys' fees and costs incurred to defend a tendered claim may not “count” against the insured's retention (deductible) until the date of tender.   If you incur attorneys’ fees and costs before the claim is tendered to the carrier, your company will likely have to pay those fees plus the full amount of the retention.  Worse yet, if a claim is not tendered in the manner and time frame required by the policy, the claim may be denied.  

The great majority of employers in California should at least seriously consider the addition of an EPLI policy, but not just any policy will do.  Without the expert guidance of a knowledgeable broker and employment counsel, you might be shelling out premium dollars that do not effectively achieve your risk-management objectives.  Once you have a policy, the development of effective protocols for handling claims is essential.  Those protocols will ensure that claims are not denied and that they are positioned to be effectively defended.

Are You Really An At-Will Employer?

The vast majority of private employers in California desire an at-will employment relationship with employees.  The vast majority also believe they are at-will employers.  They may be, but for a great many, it will take three years of litigation and several hundred thousand dollars to prove it.

It is often said that there are two types of employment: at-will employment and employment by contract.  This is actually a misnomer.  All employment is by contract.  It is either a contract for at-will employment or a contract for something else.  The most common alternatives to at-will employment are collective bargaining agreements in the union environment and individual employment agreements that provide for “good cause” termination.  In the at-will employment relationship, the employer is not required to provide advance notice of a termination decision and is not required to justify the decision with “good cause.”

It is also often said that in the absence of a written employment contract, all employment in California is at-will.  This is also a misnomer.  It is true that the Labor Code specifies at-will employment as the default employment relationship, but a written agreement is not necessary to overcome the default.  Oral agreements and implied-in-fact agreements can be entered which limit the employer’s rights to end the employment relationship.  Implied-in-fact agreements are the most problematic because the employer will not even know that it has entered into the agreement until the question is litigated and the court renders a decision.  A properly structured at-will employment relationship permits the employer to avoid this litigation.  It also provides the employer with flexibility in making decisions for operational reasons, and ensures that no judge or jury will later be called upon to second-guess the wisdom or fairness of the employer’s business decisions.

It is likely at least one half of the employers in California who think they are at-will employers are not.  Or, at least they are not in the sense that they can avoid extensive litigation by using the legal process of summary judgment to have wrongful termination lawsuits dismissed.  The problem arises because many employers, even the big ones, use borrowed or template documents.  Unfortunately, many of the attorneys and human resource professionals who write the documents lack a complete understanding of the law on at-will employment and they utilize documents which fail to properly establish the at-will relationship.  Employers who create documents on their own are at even greater risk for errors.  This is an area where the words and their precise placement really matters.

The most common errors made that interfere with the proper establishment of an at-will employment relationship are summarized below.

  • Relying exclusively upon at-will policy statements and agreements in employment application forms.  Courts have ruled that statements in employment applications are insufficient to prove at-will employment.
  • Relying upon at-will policy statements.  Courts have ruled that because policy statements are generally non-binding they cannot conclusively prove an at-will relationship.
  • Utilizing employee handbook language stating that the handbook is not intended to create a contract or contractual rights.  While that may be appropriate for most of the policies in the handbook, it can effectively wipe out any attempt in the handbook to create or confirm an at-will relationship.
  • Failing to utilize documents which create an at-will employment agreement. A key court decision that can be used to obtain summary judgment requires that the at-will nature of the employment relationship be set forth in an “employment agreement.”
  • Failing to control modification to the at-will employment agreement.  If a properly written at-will agreement can be modified without specific controls, the employer may be put to the burden and cost of litigation to prove that it was not modified.
  • Failing to integrate the at-will agreement.  Agreements that are integrated are much less likely to be subject to lawyers’ arguments and extensive litigation.
  • Failing to coordinate the numerous documents that may impact the at-will analysis. When the documents are not properly structured to work together in establishing the at-will relationship, there is an opportunity for lawyers’ arguments and litigation.
  • Failing to get good documents signed and failing to securely maintain them once signed.  Even the best designed documents are of limited value if they cannot be produced when needed.

Avoiding these errors can literally save years of litigation and hundreds of thousands of dollars in a typical wrongful termination case.  Even where an at-will employment relationship is not desired, these same types of errors can result in unnecessary litigation. 

Fortunately, the errors and litigation can be avoided.  Employers should start by taking the time to really understand the various forms of employment.  This includes the pros and cons of each form, and the elements necessary to properly establish each.  Regardless of the form desired, employers should take a comprehensive approach.  All of the documents which refer to or which may relate to the employment relationship should be audited. 

Once the audit is complete and the documents have been revised properly, attention should be turned to employee training.  Employees involved in the on-boarding process should understand the type of employment relationship being created and should be trained to avoid communications in interviews and communications in initial emails that may conflict with the desired relationship.  By following these steps employers will have surety in the type of relationship created and will avoid unnecessary litigation.

"Multi-Tasking" Managers May Not Be Overtime Exempt

Lawsuits based upon the misclassification of employees as overtime-exempt have been extremely common in California for the past 10 years. Given the incentives for filing such suits, it’s not surprising that the trend continues. A new case involving an assistant manager working for a major grocery chain provides importance guidance on proper classification and should serve as a reminder for employers to audit any position potentially misclassified.

The rules on employee classification can be tricky and a number of tests must be applied. One of the most important tests focuses on the employee’s job duties. In order to be properly classified as exempt, an employee must be “primarily engaged” in exempt duties. This means that an employer facing allegations of misclassification must prove the employee was performing exempt duties more than 50 percent of the time. This can be difficult when an employee also performs non-exempt duties.

This was exactly the issue with the grocery store assistant manager, and the jury was charged with determining whether or not she was misclassified as exempt. The jury was informed that duties such as forecasting sales, scheduling the work of employees, interviewing and hiring employees and preparing reports were exempt. Duties such as stocking shelves, gathering shopping carts and cashiering were non-exempt.

The jury was further instructed that the grocery store was required to prove that the plaintiff spent more than 50 percent of her time engaged in exempt tasks. This quantitative test requires, first and foremost, examining the actual tasks performed by the plaintiff. The jury was told that merely because an employee has the duty of managing is not sufficient to establish exempt status. They were instructed to examine the time spent on all of the plaintiff’s activities and classify the time as either exempt or non-exempt. If the plaintiff was simultaneously doing exempt and non-exempt work, the jury was to consider the primary purpose for which the activity was undertaken in counting the time as exempt or non-exempt.

The grocery store argued that the instruction on how to count the time of simultaneous exempt and non-exempt activities was wrong. It proposed a different standard for determining whether a manager is performing exempt or nonexempt work. The standard was based upon the notion that a manager does not stop managing just because she performs some non-exempt tasks. So long as the manager is still actively functioning in her managerial capacity, and addressing her attention to managerial tasks such as observing how the store is running and considering how to make the store perform more efficiently and profitably, how to best model and train the store’s employees in proper service activities, how to resolve any employee or operational problems that have arisen or are arising, and instructing employees in that regard, all the time should be considered exempt.

The plaintiff countered that the grocery store’s proposed standard is inconsistent with California law. She relied upon an opinion from the Labor Commissioner which concluded that it would be impossible for an employee to be engaged with managerial work while at the same time performing other, non-exempt duties. In other words, there can be no activity which is concurrently exempt and non-exempt. It must be one or the other. The plaintiff argued that where she merely answers a question while stocking shelves, she is not performing managerial work. Rather, she is primarily engaged in non-exempt production work. In order to count as exempt work, the manager must clearly disengage from the non-exempt activity and engage in the exempt activity.

Although the court stated the grocery store’s argument had some intuitive appeal, it ruled that California law did not support the “concurrent activity” approach. The court noted that the applicable regulations recognize that managers sometimes engage in tasks that do not involve the actual management of a department or supervision of employees. In those circumstances, the regulations do not say that those tasks should be considered exempt so long as the manager continues to supervise while performing them. Instead, the regulations look to the manager’s reason or purpose for undertaking the task. If the task is performed because it is helpful in supervising the employees or contributes to the smooth functioning of the manager’s department, the work is exempt; if not, it is non-exempt.

It is extremely common for managers to “roll up their sleeves” and pitch in with non-exempt production work. This is not a phenomenon isolated to small businesses. Employers must be aware that even if a manager never stops monitoring and managing, once the manager engages in non-exempt duties, there is a risk that the entire time performing those duties will be counted as non-exempt time when evaluating the “primarily engaged” test for exempt status.

The court’s opinion can be found here.