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FEHA protections v. FMLA Leave

The Federal Family Medical Leave Act, or “FMLA,” and the California Fair Employment Housing Act, or “FEHA” both cover sick or disabled workers. There are important differences between these two laws, however. A common mistake made by employers, for example, is limiting employees to 12 weeks of medical leave per year. Employers and employees alike often refer to this as “FMLA leave.” While there is such a thing as FMLA leave, California employees may be entitled to more than 12 weeks of unpaid FMLA leave as an accommodation of their disability under the FEHA. These protections are in addition to, and can work concurrently with, guaranteed leave under the FMLA. It is a costly mistake to automatically terminate an employee whose leave goes beyond 12 weeks in California.

How does the FEHA compare to the FMLA? Below are some of the most important differences between these two laws:

FEHA Protections:

  • Applies to any employer who employs five or more employees (FEHA) or 15 (ADA).
  • Employers are required to engage in the interactive process with employees who request a reasonable accommodation; failure to do so is an independent violation.
  • Employers are required to reasonably accommodate employees with a disability unless providing an accommodation constitutes an undue hardship on the employer;
  • Any physical, mental, or medical condition that limits a major life activity, including working, is covered as a disability.
  • Protected time-off is open ended. Employees are entitled to time off as a reasonable accommodation to the extent that the time off does not cause an “undue hardship” on the employee.
  • No leave for family members or dependents; protections only apply to the employee.
  • No minimum amount of service time required before employee is eligible. Applies to all employees and even job applicants.
FMLA leave:

  • Applies to employers with 50 employees or more within 75 miles of the affected employee.
  • Employees with a medical condition are entitled to 12 weeks of leave. There is no interactive process as there is no other accommodation other than leave.
  • Limited to 12 weeks of leave.
  • Allows leave for any “serious health condition.” Pregnancy specifically included.
  • Leave is available for both employee’s own condition as well as time off to care for sick family members.
  • Employees must be employed for a minimum amount of time before protections kick in.

Pregnancy Rights for California Employees

There are two primary laws affecting the rights of pregnant workers in California: the California Family Rights Act (CFRA) and the Fair Employment and Housing Act (FEHA). Both laws overlap in some areas but are different in others.

CFRA Maternity and Paternity Leave

First, the CFRA only applies to employers with at least 50 employees within 75 miles of the employee. Second, to qualify for CFRA leave, the employee must have worked for the employer for at least one year, and performed at least 1,250 hours of work in the past year. If you qualify, CFRA guarantees 12 weeks of unpaid leave to any parent for the birth of their child, to bond with their baby, or to take care of a sick family member.

FEHA Maternity Leave

The FEHA also guarantees four months of maternity leave for any disability related to your pregnancy. Any employer who employes five or more employees is covered by the FEHA. This can be for childbirth, recovery from childbirth, from complications during the pregnancy, or for any other reason that your doctor may want you to stop working during your pregnancy.

This leave can be applied cumulatively with CFRA leave, meaning that under some circumstances California employees are entitled to up to seven months of unpaid maternity leave. Importantly, the FEHA has no minimum service time requirement, meaning that from day one, you are protected.

Health Benefits

If your employer offers health benefits, they cannot cut them off while you are out. If you are out longer than four months however, your employer may be entitled to end your benefits, as long as this policy is applied equally to other employees who also take extended medical leaves.

Retaliation and Discrimination

Pregnant women are also entitled to protection from discrimination because the are pregnant. It is illegal to fire or not hire someone because they are pregnant, or because they requested time off for their pregnancy.

Reasonable Accommodations for Pregnant Women

In some cases, your employer may be required to provide more than four months of leave, or some other accommodation such as a change in your work schedule or duties, if you suffer from a pregnancy related disability. The FEHA has broad protections requiring that employers “reasonably accommodate” employees who are disabled. If your doctor thinks you should make changes at work to protect you or your baby’s health, your employer is legally obligated to work with you to try and accommodate you.

The Computer Professional Exemption

Certain types of computer software professionals are exempt from overtime and meal and rest period laws. To qualify for this exemption, an employer must prove that all of the following apply:

  • The employee is paid an hourly rate of at least $40.38 per hour (effective Jan. 1, 2014) or a salary of at least $7,010.88 per month ($84,130.56 annually).
  • The employee is primarily engaged in work that is intellectual or creative.
  • The employee is engaged in work that requires the exercise of discretion and independent judgment on matters of significance.
  • The employee is primarily engaged in duties that consist of one or more of the following:
    o  Responsible for applying systems analysis techniques and procedures, including consulting with users, to determine hardware, software or system functional specifications.
    o  Responsible for designing, developing, documenting, analyzing, creating, testing or modifying computer systems or programs, including prototypes, based on and related to user or system design specifications.
    o  Responsible for documenting, testing, creating or modifying computer programs related to the design of software or hardware for computer operating systems.
  • The employee is highly skilled and proficient in the theoretical and practical application of highly specialized information to computer systems analysis, programming and software engineering.

However, if any of the following apply, you are not exempt:

  1. The employee is a trainee or employee in an entry-level position who is learning to become proficient in the theoretical and practical application of highly specialized information to computer systems analysis, programming and software engineering.
  2. The employee is in a computer-related occupation but has not attained the level of skill and expertise necessary to work independently and without close supervision.
  3. The employee is engaged in the operation of computers or in the manufacture, repair or maintenance of computer hardware and related equipment.
  4. The employee is an engineer, drafter, machinist or other professional whose work is highly dependent on or facilitated by the use of computers and computer software programs and who is skilled in computer-aided design software, including CAD/CAM, but who is not in a computer systems analysis or programming occupation.
  5. The employee is a writer engaged in writing material, including box labels, product descriptions, documentation, promotional material, setup and installation instructions, and other similar written information, either for print or for onscreen media or who writes or provides content material intended to be read by customers, subscribers or visitors to computer-related media such as the Internet or CD-ROMs.
  6. The employee is engaged in any of the activities set forth in numbers 1 through 4 above for the purpose of creating imagery for effect used in the motion picture, television or theatrical industry.

Employers screw this up all the time. A common mistake is employers misclassifying “IT” workers who primarily deal with hardware and administration of a network of computers for a business, and whose job is basically fixing routine things that go wrong. (Dealing with employees who complain “My computer has a virus!” is not an exempt task.)  Lots and lots of tech workers are commonly misclassified with fancy titles like “Senior Network Engineer” or “Systems Administrator.”

Common misclassified and actually non-exempt tasks in the tech industry include:

  • Inputting code;
  • Troubleshooting problems;
  • Beta testing;
  • Writing scripts;
  • Writing user documentation;
  • Anything involving “on-call” work;
  • Anything involving hardware;
  • Maintaining a network;
  • Installing a network;
  • Updating software.

Remember, even if you are performing exempt tasks, like making high level operational decisions, designing a new program, or negotiation vendor contracts, you need to do this work more than half of the time and you need to be paid above the minimum salary or hourly rate.

Non-Compete Clauses

In California, “non-compete” clauses are illegal. In employment contracts there are no exceptions to this rule. Your employer cannot make you sign one, and prospective employers cannot refuse to hire you because you have signed a non-compete with a prior employer. If your employer fires you for not signing one, then that would be wrongful termination.

Unfortunately, many businesses do not know California’s very basic rule. Most other States allow non-competes, and particular issues arise when employees sign non-competes with employers in different states, and then move here to work for that same employer, or move here to work for a California employer in “violation” of their out of state non-compete. For employees working in California, California law still trumps the terms of an out of state contract. However, if your out of state employer sues you in your old state, the non-compete could still be enforced there. You should consult with an attorney if this is your situation as this can get fairly tricky, particularly in contracts with choice of law clauses.

Exceptions for Business Owners

Partnerships, LLCs, and business owners are allowed to agree to limited non-compete clauses in relation to the dissolution of a partnerships, LLC, and when businesses are sold. For example, a partner who leaves a partnership can agree that the partner will not practice a similar business within a specified geographic area in which the partnership is currently operating.

 

 

The Executive Exemption

An exempt employee is any employee:

(a) Whose duties and responsibilities involve the management of the enterprise or of a customarily recognized department or subdivision thereof;

(b) Who customarily and regularly directs two or more employees;

(c) Who has authority to hire or fire other employees or whose suggestions and recommendations as to the hiring or firing and as to the advancement and promotion or any other change of status of other employees are given particular weight;

(d) Who customarily and regularly exercise discretion and independent judgment; and

(e) Who is primarily engaged in duties which meet the test of the exemption; and

(f) Who earn a monthly salary equivalent to no less than two (2) times the state minimum wage for full-time employment.

It is the employer’s burden to prove every requirement.  If even one of the above does not apply to you, you are not exempt.

Management of the Enterprise and Supervision of Employees

It is not sufficient to simply have a fancy title or supervise a diffuse group of employees. You have to spend at least 50% or more of your day in charge of either the entire business itself or a recognized department or subdivision of the business.  “Department or subdivision” means “a shift of specific workers, performing the same primary function as a permanent unit operating within a larger organizational structure, and recognized and supervised as such within that organization…” (In re United Parcel Service Wage and Hour Cases (2010) 190 Cal.App.4th 1001, 1017 [emphasis added].) As the head of that subdivision of unit, you must also supervise at least two employees.  No “divisions” of one.

Frequent problems arise when employees have to “multitask,” particularly in retail or grocery stores. Can you supervise employees while at the same time performing non-exempt tasks? For instance, can you bag groceries while simultaneously supervising your new cashier? In California, the answer is no, if the “primary purpose” of the task is not managing the enterprise or the subdivision. The employer (and the jury) has to pick one purpose for the task and categorize it accordingly.

Authority to Hire and Fire

In addition to supervising employees, an exempt employee must also have the power to hire and fire. The ability to suggest hiring and firing decisions, along with proof that those decisions were given particular weight, is sufficient. I see this exemption fail on this criteria alone frequently.

“Primarily Engaged”

In California you must be “primarily engaged” in exempt duties. This means you must actually spend more than half of your time performing managing the enterprise or one of its subdivisions. Under Federal law, courts will look to the “primary duty” of the employee’s job, rather than how they spent their time actually working. This is sometimes referred to as the “qualitative (Federal) vs. quantitative (California)” approach.

Exercise of Independent Judgment

This is a frequent area of disagreement in litigation. Discretion and independent judgment . . . “implies that the employee has the power to make an independent choice free from immediate supervision and with respect to matters of significance…” (Nordquist v. McGraw-Hill Broadcasting Co. (1995) 32 Cal.App.4th 555, 573 [emphasis added].)  Matters of significance “are those of substantial significance to the policies or general operations of the business of the employer.” (Ibid.)  “An employee who merely applies his knowledge in following prescribed procedures is not exercising discretion and judgment” of the sort associated with executive level work. (Ibid.)  For example, identifying problems and reporting them to management are indicative of a non-managerial role. Deciding to do work tomorrow rather than today is not “significant.” Deciding to hire someone or fire someone, or deciding whether to purchase a new company or asset for the business, or deciding to make a loan or sign important documents, on the other hand, can be “matters of significance.”

Monthly Salary Requirement

You must earn double the minimum wage per week on a salary basis. This means you must get paid the same amount of money every two weeks no matter how much you work. While your employer can provide you bonuses for extra work and still qualify for the salary basis test, your employer cannot deduct wages for missed work, unless you miss a full day. Your employer can deduct missed hours from vacation pay, however. This is usually a simpler analysis than the other factors, since this is usually apparent from paychecks.

Like any other exemption, the executive exemption is complex and there is a great deal of additional complexities beyond those discussed on this page. If you think you are misclassified or have questions about your job, contact me.

The Professional Exemption

Exempt Professionals

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The California Wage Orders define exempt Professionals as follows:

Professional Exemption. A person employed in a professional capacity means any employee who meets all of the following requirements:

(a) Who is licensed or certified by the State of California and is primarily engaged in the practice of one of the following recognized professions: law, medicine, dentistry, optometry, architecture, engineering, teaching, or accounting; or

(b) Who is primarily engaged in an occupation commonly recognized as a learned or artistic profession. For the purposes of this subsection, “learned or artistic profession” means an employee who is primarily engaged in the performance of:

(i) Work requiring knowledge of an advanced type in a field or science or learning customarily acquired by a prolonged course of specialized intellectual instruction and study, as distinguished from a general academic education and from an apprenticeship, and from training in the performance of routine mental, manual, or physical processes, or work that is an essential part of or necessarily incident to any of the above work; or

(ii) Work that is original and creative in character in a recognized field of artistic endeavor (as opposed to work which can be produced by a person endowed with general manual or intellectual ability and training), and the result of which depends primarily on the invention, imagination, or talent of the employee or work that is an essential part of or necessarily incident to any of the above work; and

(iii) Whose work is predominantly intellectual and varied in character (as opposed to routine mental, manual, mechanical, or physical work) and is of such character that the output produced or the result accomplished cannot be standardized in relation to a given period of time.

(c) Who customarily and regularly exercises discretion and independent judgment in the performance of duties set forth in paragraph (a).

(d) Who earns a monthly salary equivalent to no less than two (2) times the state minimum wage for full-time employment. Full-time employment is defined in Labor Code Section 515 (c) as 40 hours per week.

Let’s break that down. There are three requirements:

1. You are employed and licensed in one of the listed categories or you are engaged in a “learned or artistic profession,” and

2. You customarily and regularly exercise discretion and independent judgment in the performance of your job, and

3. You earn at least two times California minimum wage a week (i.e., as of September 2014, $720 per week, which will increase to $800 per week on January 1, 2016).

Licensed or Unlicensed; Does it Matter?

A string of cases in 2011 confirmed that while the Wage Orders define specific professions, unlicensed employees who perform similar jobs, such as unlicensed accountants or law clerks, can also be exempt as engaged in a “learned or artistic” profession if their job duties fit within subparts (i) or (ii) of the above. “Learned” professions are jobs “requiring knowledge of an advanced type in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction and study as distinguished from a general academic education and from an apprenticeship and from training in the performance of routine mental, manual, or physical processes.” Typical examples of “specialized intellectual instruction” include law, medicine, architecture, engineering, and other fields with specialized academic degrees.  I.e., anything requiring more than a high school diploma. While a degree is not an absolute prerequisite for the individual employee, if the position is of the type that does not generally require an advanced degree, the position is not exempt. For example, even if you have been performing engineer-like duties for 20 years, and you design complicated valves for oil rigs with little or no supervision, if the position requires nothing more than a high school diploma, it is not exempt. (See Young v. Cooper Cameron Corp. (2d Cir. 2009) 586 F.3d 201.)  The take-away is thus that subpart (i) requires both advanced duties and a position that “customarily” requires an advanced degree.

Creative Professionals

creative professional exemption

The second category of the professional exemption covers artists, musicians, cartoonists, designers, actors, writers, and other professions whose work requires invention, creativity, originality, talent, and imagination. The less creativity the worker brings to the job, and the more control the employer imposes on the final result, the less likely the job is actually exempt. For example, consider the difference between a journalist and a reporter. A reporter may be tasked with fact gathering and documenting events in a narrative format, with editorial control of the final product maintained by a supervising editor. A journalist, on the other hand,

may not only gather facts, but may additionally interpret them for the reader, offer opinion on the facts as presented, or in other ways maintain control over the presentation of information in a certain way such that the final end result is mostly dependent on the journalist’s own talent and creativity. Another example might be a fashion designer versus someone who creates the individual pieces of clothing designed by someone else. It might take a lot of skill to make an intricately designed shirt or belt or pair of pants, but the if the design of the clothing was made by someone else, the person making the clothes is not exempt; the fashion designer is.

Discretion of Independent Judgment.

This is a frequent area of litigation in misclassification cases. For one, “discretion and independent judgment” must be used on “matters of significance,” as opposed to the myriad routine decisions every employee makes every day that requires discretion and independent judgment. Simply deciding to do a project tomorrow rather than today does not satisfy this part of the exemption. Instead, you should consider the following factors:

  • whether the employee has authority to formulate, affect, interpret, or implement management policies or operating practices;
  • whether the employee carries out major assignments in conducting the operations of the business;
  • whether the employee performs work that affects business operations to a substantial degree, even if the employee’s assignments are related to operation of a particular segment of the business;
  • whether the employee has authority to commit the employer in matters that have significant financial impact;
  • whether the employee has authority to waive or deviate from established policies and procedures without prior approval;
  • whether the employee has authority to negotiate and bind the company on significant matters;
  • whether the employee provides consultation or expert advice to management;
  • whether the employee is involved in planning long- or short-term business objectives;
  • whether the employee investigates and resolves matters of significance on behalf of management; and
  • whether the employee represents the company in handling complaints, arbitrating disputes or resolving grievances.

Misclassification is probably one of the most complicated areas of wage and hour law. If you have questions, I can help you.

Misclassification

WORKING PEOPLE

Are you exempt from overtime? Take the quiz to find out!

Misclassification is when your employer incorrectly classifies you as exempt from wage and hour laws governing your hours worked and how you must be paid for those hours. The “default” rule is that every employee is entitled to things like overtime, minimum wage, meal breaks, and other basic wage and hour protections. Exempt employees are literally exempt from these requirements. In California as well as under Federal law it is the employer’s burden to prove you are exempt. It is one of the most common (and costly) wage and hour mistakes.

So, how do you figure out if you are exempt from overtime? It boils down to an analysis of your job duties, how you spend your time, and how you are paid. I get into more detail in each exemption category linked at the end of the article and also found here. Let me dispel some common errors:

  • You are not exempt just because you are paid a salary;
  • You are not exempt just because you manage other employees;
  • You are not exempt just because you directly assist a C-level executive;
  • You are not exempt just because you perform some classically professional function, like accounting or providing tax advice (and Bookkeepers are generally not exempt);
  • You are not exempt just because of your job title;
  • You are not exempt just because your employer classifies you as exempt.

In 2004, when the US Department of Labor made major changes to Federal Wage and Hour laws, it was estimated at the time that out of 134 million workers in the United States, 19.5 million were excluded from Fair Labor Standards Act (“FLSA”) protections altogether, 45.8 million were “salaried,” and the remaining 69 million were paid hourly.  While it is a common misconception that being paid on a salary means you are exempt from overtime, odds are that a significant portion of those salaried workers, if not almost all of them, were classified as exempt by their employers. (Otherwise, why pay them a salary?)

Exempting almost half of the American workforce from overtime was never the intent of Congress when they originally passed the FLSA following the Great Depression. The intent of Congress in enacting the FLSA was to increase employment by encouraging employers to hire more workers, rather than demand long hours from current employees, and to protect “blue-collar” low wage workers that were working oppressive working hours. If you were in a high level position and were well compensated, you were more likely to be in demand, have more job security, and have better bargaining power in your working conditions. If you were a low wage worker however, you were likely replaceable, had little to no bargaining power, and thus had little to no chance to make your employer voluntarily pay you more for working long hours.  In 1937 (and in the decades that followed when the first Federal Regulations were drafted explaining FLSA exemptions) the American economy was very different than it is now. Industrial and factory jobs were far more prevalent, and in these jobs the delineation between the blue collar production worker and the white collar bosses and supervisors and administrators was easier to spot. Similarly, “office” jobs were limited to more classically “professional” jobs like accountants, lawyers, or financiers. Today, the world is vastly different. Service jobs have replaced factory jobs. More people are in the office than the factory floor. Nonetheless, the old exemption categories remain, albeit with layers and layers of added complexity, and employees and employers alike are left confused as to their application.

There are numerous categories of exempt employees in California, but most exemption classes fall under one of the following categories:

There are other specific exemption classes, such as sheepherders, babysitters, movie projectionists, and taxi-cab drivers. The California Wage Orders are replete with niche exemption categories, all of which have very stringent requirements. Click one of the above categories to learn more.

 

Employment Contracts

There is no requirement in California for employees to have an employment contract.  If you have an employment contract, it usually governs things like confidentiality, trade secrets, cause for termination, commissions, bonus payments, salary or wages, minimum qualifications for employment, and so on.

Some employment terms are illegal in California. For instance, employees cannot agree to work for less than the applicable minimum or overtime wage.  Employers also cannot enforce “non-compete” clauses against former employees, due to California’s blanket ban on non-compete clauses. On the other hand, some employment terms have to be in writing, such as commission plans (California Labor Code section 2751) or agreements for “comp-time” (time-off in lieu of overtime pay). Also, some California laws are guaranteed regardless of whether you have an employment contract, such as your rights under the FEHA or the ADA, your rights to be free from discrimination or retaliation, and your rights to a healthy and safe working environment under various health and safety regulations.

A breach of an employment contract is governed by normal breach of contract provisions. Namely, two parties exchange promises to do something for the other, and if one does what it promised while the other does not, then the party that fulfilled its end of the bargain has a breach of contract claim against the other party.

I usually see breach of contract claims in employment law come in three contexts: (1) an employment contract lists specific reasons for termination (typically called a “just cause” or “for cause” provision), the employee is terminated, and the employee does not believe that any of the listed reasons for termination occurred; (2) an employment contract provides for specific benefits, such as stock options, and the employer refuses to provide them or in some other way frustrates the employee’s use or enjoyment of these terms; or (3) a contract provides for commission payments, and a dispute arises as to payment of those commissions.

I also commonly encounter clients who received offer letters promising at-will employment at a certain salary, and lo and behold, the employer reneges on the salary and tries to pay the person less. Or, fires them altogether. Offer letters that do not promise employment for a specified term at a specified compensation, or do not specify the reasons that the employee could be terminated, do not offer much legal protection.

Each case is different, and part of my job is to be creative on your behalf. If you have a question about an employment contract, or need me to draft one, give me a call or send me an email. 

Sick Leave and Time Off Work

California recently became the second state in the US to require sick leave for employees. If you work for at least thirty days in a calendar year, you are entitled to at least 24 hours, or three paid sick days per year. The only other state to offer similar protections, Connecticut, allows employees to accrue up to forty hours of sick leave. Flight attendants, in home care workers, and workers subject to a collective bargaining agreement are exempt from California’s sick leave law.

California is seven years behind San Francisco, which enacted a mandatory sick leave ordinance in 2007. San Francisco employers who employ at least 10 workers must provide a maximum of 72 hours of paid sick leave to their employees. Employers of less than 10 workers must provide up to 40 hours. Interestingly, San Francisco’s sick leave ordinance not only provides more sick leave, but there is no annual cap. In other words if you have 40 hours of sick leave “in the bank” and you use 8, you begin accruing it as soon as you return to work.

Unpaid Time Off as a Reasonable Accommodation

While three days might not seem like a lot, it sure is better than zero. In the dark ages before paid sick leave, i.e. California circa August 2014, only unpaid time off from work to recover from an illness, injury, or disability was legally protected. Under the Fair Employment and Housing Act (FEHA), the Americans with Disabilities Act (ADA), the California Family Rights Act (CFRA), and the Family Medical Leave Act (FMLA), while you are entitled to medical leave, none of these statutes require paid leave.  Furthermore, a cold or a flu or some other minor sickness might not actually qualify under some or all of these statutes due to these laws’ definitions of “disability.”

Nonetheless, these laws are all still important and relied upon by millions of workers. The interplay of these laws is sometimes confusing. Below are some of the key differences of these laws.

FEHA/ADA leave

  • Applies to any employer who employs five or more employees (FEHA) or 15 (ADA).
  • Protected time-off is open ended. Employees are entitled to time off as a reasonable accommodation to the extent that the time off does not cause an “undue hardship” on the employee.
  • Any physical, mental, or medical condition that limits a major life activity, including working, is covered as a disability.
  • No leave for family members or dependents; protections only apply to the employee.
  • No minimum amount of service time required before employee is eligible. Applies to all employees and even job applicants.

CFRA/FMLA leave

  • Applies to employers with 50 employees or more within 75 miles of the affected employee.
  • Limited to 12 weeks of leave.
  • Allows leave for any “serious health condition.” Pregnancy specifically included.
  • Leave is available for both employee’s own condition as well as time off to care for sick family members.
  • Employees must be employed for a minimum amount of time before protections kick in.

These statutes can operate concurrently. For example, an employee can be on “FMLA” approved leave, but require more than the statutorily guaranteed 12 weeks of leave.  Just because the FMLA leave is over, this does not mean the employer can terminate the employee for failing to return to work. The employer and the employee still need to determine how much additional leave the worker can have, and whether any additional leave constitutes an undue hardship on the employer. Employers frequently make the costly mistake of terminating an employee that does not return at the end of their 12 week leave due to inflexible FMLA leave policies. This can be a costly mistake. If this happened to you, or if you have any sick leave or time off issues at work (or are anticipating them) give me a call or send me an email. 

Need to talk? Give us a call or send us an email.