If we only knew in March what we know now, things would have been a lot easier. The learning curve on this never-before-situation has been steep. We were all, in many respects, flying by the seat of our pants these last 4-5 months, and that’s never a good place to be. There’s only one cure for that, and it’s planning and preparedness.
If this were to happen again, and it very well might, what could (or would) you do differently? What have you (hopefully) learned that you can apply next time? What do you need to be doing now to prepare for next time?
You could bury your head in the sand and believe that this won’t happen again. You may be right. What if you’re not? What if this happens again in November or next March? For many, your practice is the most important asset you have, should you be so cavalier when it comes to its future? What if even the smallest amount of planning could lessen stress, reduce mistakes, improve profits, and provide more long-term security?
Below is information to help you formulate a game plan for the “next” one. While the focus is on pandemics, this game plan could be applied to many situations. For example, inclement weather that causes a shutdown or a fire, flood or other emergency that challenges your leadership. Bottom line: not being prepared for any of these things is reckless when it comes to your business.
Stop, Think, Execute
With mandated shutdowns many employers acted too hastily when making decisions and taking certain actions. Some of it was born out of: 1) the thought that this would only last a few weeks and 2) just not taking the time to figure things out carefully vs. making knee-jerk decisions. This led to some problems like:
- Laying off some employees that were actually needed
- Not laying off some employees that needed to be laid off
- Not managing compensation appropriately when an employee’s hours were reduced
- Mishandling health insurance plans
- Confusion from both parties about ongoing expectations, if any
- Miscommunications, misunderstandings, conflict
If a mass shutdown occurs again, stop, think, execute.
- Stop – take the time to carefully plan how to best move forward.
- Think – think about what you will need in the short and long-term.
- Execute – put the plan of action in motion.
To help in the formulation of a plan, consider these questions:
- Are you shutting down completely or only partially?
- Which employees need to be fully laid off? In other words, you absolutely have no need for their services during a shut down.
- Which employees could work on a reduced schedule?
- Which employees need to be on-call and available for emergencies?
- Which employees can work remotely given the nature of their job or your available technology?
- What will be your expectations during the shut down in terms of communication or meetings?
- Will you bring everyone back at the end of this, assuming you can, or are there some that you would rather not come back?
- How will you handle their health insurance during the shutdown?
- If you have employees on a leave of absence (for example pregnancy) at the time the shutdown occurs, how will they be handled?
Unless there is clear guidance, consider making these decisions as if this will last longer than a few weeks. We just went through 2-3 months, so why not assume the same or worse for next time? The plan can easily be modified if that ends up ending sooner.
Is It a Furlough or A Layoff?
There was a lot of confusion about what the shutdown meant in terms of a “work stoppage” and what it should be called. While this seems inconsequential, it’s actually not. Someone who remains employed retains all employment rights and privileges. Whereas an employee whose employment has ended does not.
A furlough is a temporary layoff from work. The employee could be on unpaid time off or even reduced hours when a furlough occurs. For example, a business that has shut down for the Christmas holiday for two weeks has effectively furloughed their employees. In another example, an employer who reduces an employee’s hours from 40 to 20 for a short period of time has furloughed the employee by 20 hours a week. In both cases, the employee remains employed and expected to return to work after the furlough/temporary layoff ends.
Furloughs are intended to be for a very limited duration (few weeks to a few months) and have an absolute expectation on the part of both the employer and employee of returning to work. Furloughs make sense when the circumstances that the business are experiencing are thought to be truly temporary or short-lived in nature.
A layoff effectively ends employment permanently; the same as a termination does. There is not a mutual expectation of reinstatement back to work, and the employee has no recall rights. All benefits at the time of the layoff are terminated. A laid off individual could seek employment opportunities elsewhere.
Appropriate reasons to use layoffs can include: a position is eliminated; the economic recovery of the business is less certain or completely unknown; the business is overstaffed and needs to reduce overhead.
To avoid confusion, it is best to use the term furlough when reinstatement back to work is expected, and the term layoff when it is not.
Final Pay Rules
When employment is stopped, final pay rules kick in. It doesn’t matter if it’s stopped due to furlough, layoff, discharge, or resignation, an employer must adhere to final pay rules at all times. This was, in large part, mishandled by many employers.
Too often, employers erroneously believe they control when they pay employees. This can lead to wage & hour violations and liability. In fact, every state has its own rules to follow. Click here to access a document that provides this information.
To go back to the “stop, think, execute” from above, what type of situation do you find your employees in? Are they actively working or not? If they will no longer be working, at all, then you must provide their final pay in accordance with your state’s rules. If they’re going to be working a reduced schedule, then you can keep them on payroll and pay them according to your normal paydays since they remain active employees. If their return to work is unknown and may only be activated during emergencies or on an on-call basis, then it is best to follow final pay rules since they are not working regularly and may never be called again.
Many states have rules in place that must be followed if employees are furloughed. For example, in California, employees must be given their final pay if they are not scheduled to work again in the current pay period, or within 10-days. In Oregon, that same rule applies if they are not scheduled to resume working within 35-days. To keep things simple, if your employees are not scheduled to work within a week or two, simply plan on providing their final pay to avoid any other problems.
To Pay or Not to Pay Time Off Benefits?
The answer to this will depend almost entirely on when you must activate final pay rules. Final pay is not just about wages earned. It is also about paying out vacation, paid time off (PTO), sick leave, and any other applicable paid time off benefits that you offer. Thus, you may be required by either your state law or your policy to payout paid time off benefits when issuing final pay. The following is an example of how this should be managed:
- Reduced schedule: if the employee remains actively working each week, even for just a few hours, they remain on payroll and no paid time off has to be paid out.
- Furlough: employee is not working for more than a week or 10-days, final pay is activated; payout vacation/PTO and other applicable benefits.
- On-call status: return to work is unknown and intermittent, final pay is activated; payout vacation/PTO and other applicable benefits.
- Layoff/Resignation/Discharge: final pay is activated, payout vacation/PTO and other applicable benefits.
You must know, in advance, if your state law requires payout of vacation or PTO when issuing final pay. Many states like California, Illinois, and Massachusetts require this to be paid. Other states like Arizona, Florida, and Nevada allow for this to be driven by employer policy. Either way, you will need to follow the established rule to avoid problems.
If the benefit is something other than vacation and/or PTO, then it will generally be driven by policy. For example, sick leave in most states is a discretionary benefit and would only have to be paid out if policy requires as much. Even in states where sick leave is required by city/county/state law, there is no requirement to pay it out when final pay is provided.
Let’s say you’re not required by state law to payout these benefits and your policy states that you don’t, can you pay it out anyway? Although not advisable or recommended, yes, you can make an exception to your policy. Is the reverse also true? Can you not pay it even if your policy says that you will? No, that is not allowable. You must follow your policy. While an employee is not likely to be upset by getting paid their benefit when they weren’t expecting it, the same cannot be said for not paying it. In this situation, you may be exposing yourself to a wage & hour claim for not paying it according to your policy. Making exceptions to policies is almost never advisable – weigh the pros and cons before doing so.
If your state law or policy requires payout but your employees are requesting that you not do that because they’d prefer to have their time available upon resuming work, accepting their request is risky and not recommended. If you do this, be sure you get written agreement signed by them first.
Thinking in the long-term is best when it comes to making decisions on this issue. If you truly have a choice on paying it or not, what would you prefer to be the return to work scenario? Do you want them to have time that they can take or not? Either has it potential ramifications.
It’s important to consider not taking actions or making decisions “just to be nice.” Employees often won’t reciprocate and hurt feelings can abound. Employers who paid it out “to be nice” are mad because employees now don’t appreciate it and are asking for more. Employers who didn’t pay it out “to be nice” are mad because employees are asking to take vacations after two months off.
What best supports the business and your employees? This may not make everyone happy, which is a hard goal to meet anyway. If you do something just to be nice, leave it at that and move on; don’t expect reciprocation.
Some teams had weekly meetings via Zoom, others had group text messaging, some sent weekly emails, and others had no contact during the shutdown. Regardless of the method, ongoing communication is an important part for ensuring everyone knows what to expect.
If you expect employees to participate on any of these communication platforms regularly, they must know your expectations in advance. Inform them about things like:
- Frequency (daily, weekly, bi-weekly, monthly)
- Duration (a few minutes, 1 hour, 2 hours)
- Timing (day and time)
- Voluntary vs. required participation
If you don’t make this clear, then you can’t hold it against them when they don’t participate. If participation is voluntary, then you can’t admonish them later for not being involved.
You must also distinguish between paid time and unpaid time. Too many employers continued communications with their employees about work, work activities, and believed it to be unpaid time. It is not. If you’re expecting them to participate in actual work communications, then the time involved is paid. This is also true if you are requiring them to participate, even if you don’t discuss work-related content.
If the communications are purely social, not required, and will not impact the individual’s performance standings with the employer, then that can be unpaid time.
Maintaining Health Insurance
First and foremost, always check with your insurance carrier on what they allow in this regard. Consider the following:
- What are the eligibility criteria?
- Must it be continued?
- Can it be cancelled?
- If it’s cancelled, what is available for continuation coverage? Who provides this information?
- Can the employer pay 100% of the premium even though it’s normally shared between the employer and the employee?
No entity other than your carrier can answer these questions. This is driven by state/federal laws on insurance as well as the individual plan that you have.
Some employers provided full payment of the premiums while shutdown with an expectation that this be reimbursed by the employee when work resumed. Assuming this process checks out with the carrier, this can be an agreeable arrangement if all parties agree in advance. Employees should have a choice in whether they want to agree to this or not, and it should never be sprung on them after the fact.
If you’re going to do this, your plan needs to account for these scenarios:
- What if they don’t resume working later? What if they quit?
- What if you decide you can’t bring them back to work at the end of all this?
- What if they can’t work their full schedule upon returning to work, whether due to their own circumstances or yours?
- Do you plan on making a paycheck deduction? If so, is that legal in your state? How much would you be allowed to recoup on any given check?
- What if they come back and then quit or get fired?
There are a lot of considerations to make when it comes to this. It could be about being nice, or keeping up morale, or ensuring retention of good employees, or just because it seems like the right thing to do. All of this matters and should be considered. Just be sure you recognize the potential drawbacks as well. It could be money wasted and lost. It may not be reciprocated by the employee in any meaningful way, or result in an expression of gratitude.
If you move forward with this, be sure this is established in a written agreement before you proceed.
Document and Communicate
Once all of the above has been decided and you know your plan, document it and have it at the ready for next time. If/when another shutdown occurs, you can reference it, tweak/revise as necessary, and get it out to your staff as soon as possible.
That’s the last critical piece. This document outlining how this shutdown will be handled must be issued to your employees. This is not a secret. You cannot expect from them what you do not communicate first.
The threat of a pandemic and subsequent shutdown is deeply stressful and worrisome in and of itself. Everyone can be freaked out. Emotions run high. The uncertainty and the chaos seem unbearable. It is a tough situation no matter how you slice it.
Learn from your mistakes. Those who were prepared and effectively managed everything from the start experienced far fewer problems than those that didn’t. Employers who “played it by ear” or “shot from the hip” or “took at it one day at a time” came to regret that later when they had no foundation from which to take action.
When that’s the case, it’s generally recommended to focus on what you can control. Your business and managing your employees in these types of situations should not feel completely beyond your control. The only way to ensure that is to plan. Plan for the next one and be ready. You and your employees will greatly benefit.
YOU ASK, WE ANSWER
Q: I have an overwhelming amount of old employee records/personnel files. I’d like to go through and shred anything I don’t need any more and free up some space. How long are we required to keep employee records? What about if they were never hired? How long are we required to keep applications and/or resumes?
A: How long you must keep these records will depend on the type of record it is. Laws and statute of limitations vary from one record to the next. Click here for a record retention document that covers many of the normal records that employers may have on applicants and employees. While not all potential documentation is listed, this will give you a basic idea of what is required so that you can reduce your recordkeeping backlog. You will note on this form that, outside of certain safety & OSHA documents, it is best to keep employee records for the life of the employment relationship plus 6-7 years unless litigation occurs.
Q: We have a situation in which an individual who is a licensed doctor in Brazil is looking to volunteer at our hospital this summer. She is unable to legally work. We wanted to find out if we could use her as a volunteer. What would our liability be if she were to get hurt? Would it be able to go under workers’ compensation? What are your thoughts on doing something like this?
A: Unfortunately, volunteering is not legal in the private-sector. If you are unable to employ her legally, then I recommend you pass on her offer. There could be various avenues for liability: wage & hour, immigration, and the IRS, just to name a few. Also, as you mention, if she got hurt on the job, there could be liability with workers’ compensation because she should be covered, but she wouldn’t be an employee, which could be a red flag for them to possibly report you to other authorities.
It sounds like a great opportunity, but this could become a real mess and is not advisable.
Q: One of our employees’ daughter, who is 12, sometimes comes to office to hang out. This is mostly due to lack of childcare and our employee needing to watch her during the day. While she’s here, we will often have her “work” by scanning documents, filing records, and other miscellaneous tasks around the office. How do we go about getting her on payroll so that we can pay her for her work? The total time she “works” does not add up to more than 10 hours a week.
A: Unfortunately, this is not legal. If it was the businesses owner’s child, that would be different and legal. Since it’s not, 12 is too young to be working in almost every industry. Please check your state’s Minor Labor Laws to ensure compliance with these rules.
Going forward, I recommend you not allow this person to work. In addition, I would not put this individual on payroll and pay her like an employee. If you’re going to pay her for the services she performed already, I think the only thing you can do is pay it out of yours or the employer’s personal account, much like you would if this person came by and mowed your lawn at your house.
Q: I’ve been told that there is a “rule” that some employers swear by that you need to call the previous employer before hiring one of their employees. I had another employer call me today and accuse me of stealing their employees. She told me I should call first and if she cannot afford to lose the employee, I should look elsewhere for another employee. We are simply posting our job online and gathering candidates. They are seeking us out.
These employers in the area want us to call them before even contacting a candidate who is still employed by them. Basically, they want to know that we are interviewing one of their employees. I feel this is a conflict as we may not hire a candidate and they may be unnecessarily punished in their current office depending on the temperament of the current employer.
I just wanted to make sure that I understood the law – these employers have gotten quite angry with me. This happens when I call for references. Am I required to get permission from the applicant first before I do this?
A: So sorry that your peer is not happy with potentially losing her employee. I agree, employees have free will and can apply for any job they see fit and leave their current employer at any time. If you did not purposefully solicit your peer’s employee and the candidates applied for your open position, then that is exactly what I would share with your peer.
I 100% agree with you that contacting your peers when one of their employees has only applied with you to give them a “heads up” would likely result in a negative outcome for the individual who is applying for the position. If you started doing this, it is likely you would see your candidate pool dwindle.
The law doesn’t require that you get permission from the applicant to call on their references, if you are doing the calling. If you are going to use a third party to call the references then you would have to have signed consent.
As for the peer who cannot afford to lose her employee. That is not your problem. She should have thought of that when creating the culture and benefits for her employees. It is likely the employee is not looking to leave your peer for better pay or benefits, but more likely your peer is not providing the environment this employee wants to work in. Your peer’s extreme anger toward you is likely just a sample of how she treats her employees.
I understand this is a delicate matter. You do not want your peers to be upset thinking you are “stealing” their employees, but at the same time you have to staff your practice and if you are the employer of choice that just means you are doing things right. Hopefully over time this will pass and everyone will be able to move on.
Did You Know?
The Oregon Supreme Court declined to review an Oregon Court of Appeals ruling, which has meal break implications for employers?
The ruling by the Oregon Court of Appeals will result in employers being held to a standard of “strict liability” for failing to ensure that non-exempt employees take their full 30-minute meal breaks.
In Maza v. Waterford Operations, LLC, current and former employees brought a class action lawsuit against their employer seeking penalty wages for allegedly shortened meal periods. The employer argued the case was not suited for class action treatment because, while employers are required to provide a 30-minute meal period, there are times when the employer cannot guarantee that employees take their full meal period, such as when employees work remotely or voluntarily return to work before the full 30 minutes have elapsed. The trial court agreed with the employer’s argument, and the employees appealed to the Oregon Court of Appeals, which agreed with the class of employees.
In their ruling, the minimum meal period prescribed by Oregon Administrative Rule 839-020-0050 is “mandatory” and, in the absence of a waiver of the meal period as provided in OAR 839-020-0050(8), an employer of non-exempt employees must require a 30-minute meal period free of all work duties. The Court of Appeals noted it was an employer’s duty to exercise control over its employees to ensure full 30-minute meal periods are taken and that employers face “strict liability” for failing to ensure that employees take the full meal break.
The Maryland General Assembly passed a plethora of new laws affecting the workplace?
Amendments to the Equal Pay for Equal Work Act (effective October 1, 2020): restricts how much an employer (or prospective employer) can inquire about an employee’s or applicant’s wage history and provides protections to those who wish not to voluntarily reveal wage history. Employers are also prevented from retaliating against an employee for inquiring about their own wages.
Limitations on “Use of Facial Recognition” during Interview Process (effective October 1, 2020): restricts the use of artificial intelligence (AI) during the interview process. Employers are not permitted to use facial recognition technology for the purposes of creating a facial template during the interview process unless the applicant expressly agrees to the use of this technology.
Mini-WARN Act Governing Mass Layoffs Mandatory (effective October 1, 2020): an employer implementing a “reduction in operations” must provide 60 days’ advance notice to employees and others, and also provide continuation of health, pension, severance and/or other benefits to affected employees. These obligations are triggered by the closure of all or a portion of operations affecting as few as 15 employees, as well as by relocations of operations.
Requirement to Protect Employees from Heat Stress (effective October 1, 2020): employers will be required to implement certain measures to protect their employees from “heat-related illness” caused by “heat stress.”
Increased Cap on Amount of Back Wages for Commissioner to Issue a Notice of Failure to Pay Wages to Employer (effective October 1, 2020): the Maryland Wage Payment and Collection Law was amended by increasing the maximum amount of unpaid wages—from $3,000 to $5,000—claimed by an employee for which the Maryland Department of labor (MDOL) may issue a complaint to an employer.
An Amendment to the Maryland Fair Employment Practices Act Expands the Definition of “Race” (effective October 1, 2020): The Maryland Fair Employment Practices Act, the state anti-discrimination statute, prohibits discrimination on the basis of several protected classes, including race. This amendment broadens the scope of the definition of “race” to include “traits associated with race, including hair texture, afro hairstyles, and protective hairstyles.” Protective hairstyles include braids, twists, and locks.
Reporting Period for Workplace-Caused or Exacerbated Hernias (effective October 1, 2020): an employee who suffered a hernia due to a workplace accident, or whose existing hernia was exacerbated by a workplace accident, now must report the injury within 45 days to the employer or the employee will risk being permanently blocked from receiving workers’ compensation benefits for that injury.
Maryland Enacts a Statewide “Ban-the-Box” Law (effective February 29, 2020): it is unlawful for any employer with 15 or more employees to inquire into an applicant’s criminal history before the employer conducts its first in-person interview.
That investigations must occur to determine if Coronavirus infections are work-related?
Effective May 26, 2020, OSHA now requires all employers, not just those with high levels of coronavirus exposure in the workplace, to determine whether employees who have COVID-19 contracted it at work, which reverses previous guidance. If the employee caught the Coronavirus at work or while performing work-related activities, the employer must record the illness on the OSHA Form 300.
OSHA covers most employers. However, employers with 10 or fewer employees and certain employers in low-hazard industries have no recording obligations, and they must report only work-related coronavirus illnesses that result in a fatality or an employee’s in-patient hospitalization, an amputation or the loss of an eye.
WHAT’S NEW in Employment Compliance
Employer Notice Required Regarding Unemployment Regulations
As amended, the new law requires employers in the Commonwealth to provide employees at the time of separation, regardless of the type of termination, with notice of the availability of unemployment compensation. Under Act 9 of 2020, the notice to employees must include the following information:
- Availability of unemployment compensation benefits to qualifying workers;
- Workers’ ability to file an unemployment claim in the first week that their employment ends or their hours are reduced;
- Availability of assistance or information about unemployment claims on the website for the Pennsylvania Department of Labor and Industry’s Office of Unemployment Compensation or by calling the Department’s toll-free number: (888) 313-7284; and
- That the worker will need to provide certain information when they file a claim, including the worker’s full legal name, Social Security number, and, if the worker is not a U.S. citizen or resident, their authorization to work in the country.
A slew of newly enacted laws impact employers
Wage Theft: The Wage Theft Law creates a private right of action for employees to sue their employers for allegedly unpaid wages. This law permits recovery of wages owed, plus 8% interest from the date the wages were due. In addition, it permits recovery of treble damages and a $1,000 civil penalty per violation. If an employer is found to have committed a “knowing violation,” a court can award attorneys’ fees. In some cases, employers can be found guilty of a misdemeanor. In others, guilty of a felony and subject to possible prison time.
Non-Compete: The “Ban on Restrictive Covenants for ‘Low-Wage’ Employees (Restrictive Covenant Law)” prohibits employers from entering into, enforcing, or threatening to enforce a restrictive covenant against “low-wage” employees. The law took effect July 1, 2020.
The law defines restrictive covenants as “an agreement that restrains, prohibits, or otherwise restricts an individual’s ability to compete with his former employer.”
If the employee is successful in such a challenge, the employer is liable for liquidated damages, lost compensation, attorneys’ fees and the Commissioner may also impose a civil penalty of up to $10,000 for each violation it determines.
Employer must also post a new notice in the workplace summarizing the law.
Marijuana Decriminalization: Governor Northam approved SB 2 and HB 972 which will decriminalize simple marijuana possession offenses (up to one ounce of marijuana). It also seals the records related to prior convictions under the marijuana law and prohibits employers (and educational institutions) from requiring an applicant to disclose information concerning any now-decriminalized marijuana arrests, criminal charges, or convictions.
Creating Private Cause of Action (HB 984): Effective July 1, 2020, any individual not properly classified as an employee can bring a civil action for damages against their employer for failing to properly classify them as an employee if the employer had knowledge of the individual’s misclassification.
Prohibiting Retaliation Against Employees (HB 1199): Effective July 1, 2020, it is unlawful for any employer to discharge, discipline, threaten, discriminate against, or penalize an employee or independent contractor, or take other retaliatory action regarding an employee’s or independent contractor’s compensation, terms, conditions, location, or privileges of employment, because the employee or independent contractor either reported or plans to report to an appropriate authority that an employer failed to properly classify an individual as an employee and failed to pay required benefits or other contributions or is requested or subpoenaed by an appropriate authority to participate in an investigation, hearing, or inquiry by an appropriate authority or in a court action.
Creating Investigative Authority for Department of Taxation, Prohibit Improper Misclassification Agreements (HB 1407): Effective January 1, 2021, an individual performing services for an employer for remuneration will be considered an employee of the party that pays that remuneration, unless the individual or the employer demonstrates that the individual is an independent contractor.
Department of Human Rights (IDHR) Released Model Training Program for Prevention of Sexual Harassment
As previously announced, under the Illinois Human Rights Act (IHRA), employers must provide annual sexual harassment prevention training to all employees. This training must be completed by December 31, 2020, and at least once each year starting in 2021.
The model training program meets the requirements of IHRA section 2-109 (775 ILCS 5/2-109), which includes:
- An explanation of sexual harassment;
- Examples of unlawful conduct;
- A summary of relevant federal and state statutes (including remedies available); and
- A summary of employer responsibilities for preventing, investigating, and correcting sexual harassment.
Not only should employers consider using this training, even though they can create their own, but employers should also maintain a record of the training for submission to the IDHR upon request.
COVID-19 Lawsuits and Claims Increasing Nationwide
According to recent information, over 2,000 lawsuits relating to COVID-19 have been filed in federal and state courts. As of mid-June, more than 230 lawsuits directly related to labor and employment violations have been filed (including 30 class action suits). Perhaps unsurprisingly, California leads the nation with 32 employment lawsuits already filed, with Florida, New York, and New Jersey close behind.
Where workplace liability is concerned, there is no shortage of laws or regulations under which employers may see claims, such as:
- Paid Leave. Under the Families First Coronavirus Response Act (FFCRA) and numerous state and local laws, ordinances, or regulations, several new laws exist related to paid leave for employees during the COVID-19 pandemic. Already employees are alleging that they were denied leave to which they were entitled under these new laws, or retaliated against for seeking leave.
- Discrimination Claims. The Americans with Disabilities Act, which governs what medical information employers can seek from employees, and requires employers to “reasonably accommodate” employees with disabilities, seems to be a likely potential source of COVID-19 claims as well as laws that prohibit discrimination on the basis of age and pregnancy. Employers should be mindful of potential legal “pitfalls” even where they believe they are acting in an employee’s best interests. For example, the U.S. Equal Employment Opportunity Commission, which enforces federal civil rights laws, has made clear its position that employers may not prevent older workers, or pregnant workers, from returning to work if they wish to do so, even if the employer believes it is acting to protect more vulnerable workers from risk.
Other types of claims like wage & hour, workplace safety, and workers’ compensation also seem likely.
“Unlimited” Vacation Policies in California May Be Limited According to A Recent Court Case
In recent years, many employers have been transitioning to “unlimited” vacation policies. Employees subject to such policies may generally take as much vacation as they would like, and because vacation does not vest under this type of policy, it need not be paid out on separation.
In McPherson v. EF Intercultural Foundation, Inc., the employer had a written vacation policy in its employee handbook that applied to hourly employees but did not apply to the three plaintiffs that were exempt managers. These managers were verbally told they could take time off with pay but did not accrue vacation days. They did not use the company’s online system to request time off or track the number of days taken. Instead, they were required to notify their supervisors before taking time off and time off during certain busy periods was “strongly discouraged.”
None of the three plaintiffs were paid out accrued, unused vacation on separation. They filed a claim alleging violation of Labor Code Section 227.3.
On appeal, the Court of Appeal agreed Section 227.3 applied to the Company’s “purported ‘unlimited’ paid time off policy based on the particular facts of this case.” The court noted the company did not have a formal written “unlimited” vacation policy, did not inform plaintiffs they were entitled to “unlimited” vacation, and did not offer “unlimited” vacation in practice. In this regard, the court offered suggestions for an enforceable written unlimited vacation policy, including that the policy:
- Be in writing;
- Clearly provide that employees’ ability to take paid time off is not a form of additional wages for services performed, but perhaps part of the employer’s promise to provide a flexible work schedule – including employees’ ability to decide when and how much time to take off;
- Spell out the rights and obligations of both employee and employer and the consequences of failing to schedule time off;
- Allow sufficient opportunity for employees to take time off, or work fewer hours in lieu of taking time off; and
- Is administered fairly so that it neither becomes a de facto ‘use it or lose it policy’ nor results in inequities, such as where one employee works many hours, taking minimal time off, and another works fewer hours, and takes more time off.
This case illustrates that a compliant written policy could potentially save the day – and a lawsuit.
A Different Supervisor Is Not A Reasonable Accommodation Request
In White v. Employment Development Department, Calif. Ct. App., No. C082811 (March 3, 2020), the plaintiff filed suit against the Employment Development Department (EDD) alleging four causes of action under the California Fair Employment and Housing Act (FEHA), including failure to reasonably accommodate her disability. The employee claimed that she needed a flexible schedule because of her disability and requested a different supervisor as a reasonable accommodation.
The trial court dismissed all the claims before trial, and the plaintiff appealed. The appellate court affirmed. The court concluded that the plaintiff presented insufficient evidence to show she was denied a reasonable accommodation.
The court noted that the elements of a claim based on a failure to accommodate under FEHA are that:
- The plaintiff suffers from a disability.
- She is otherwise qualified for her job.
- Her employer failed to reasonably accommodate her disability.
A reasonable accommodation is a modification or adjustment of the work environment that allows the employee to perform the essential function of her job. An employee is not entitled to the “best” accommodation. She is entitled only to a reasonable one, and when multiple options are reasonable, the employer may choose which of these options to adopt, the court explained.
Employees, however, cannot use FEHA’s mandate that employers provide “reasonable accommodations” to dictate with whom they will work, the court said. “An employee’s request for a different supervisor is not a reasonable accommodation request,” the court concluded.