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Thursday
Sep282017

Executives Behaving Badly: Can CEO be Fired for Kathy Griffin Hate Speech?

Wrongful Termination Defense

by Amy I. Huberman

818-907-3014

 

Neighbors don’t always get along – not even affluent neighbors living in exclusive gated communities in Bel-Air.

Disciplining Executive EmployeesThis was proven most recently, when the Huffington Post released security camera audio of Jeffrey Mezger yelling profanities at his neighbor Kathy Griffin and her partner Randy Bick. Warning: the audio is definitely NSFW – keep the speakers on low so as not to offend colleagues.

Mezger is the Chief Executive Officer of KB Home which is one of the largest home builders in the nation, and a publicly traded company.

Griffin, of course, is a well-known and somewhat controversial comedienne. In July she shaved her head to show support for her sister who was dying of cancer. In August she was fired by CNN for posting a photo in which she held a mask of President Donald Trump covered in fake blood. In mid-September, Griffin’s sister passed away, and more recently, she was the target of Mezger’s rant.

Mezger called Griffin, among other things, a “bald f-ing dyke” – not just obscene, but truly insensitive to Griffin’s recent loss.

The reason for Mezger’s rant?  He was upset that Griffin and Bick called the police with a noise complaint between 8 and 9 p.m. on a Saturday night. The alleged noisemakers were Mezger’s young grandchildren who were playing in the pool – supervised by the children’s mother and grandmother.

Mezger’s anger may or may not be justified, but how he expressed his anger was not. His employer acted quickly to minimize damage.

An Employer’s Right to Terminate

Some may believe what an employee does outside of the workplace is strictly the employee’s business. That’s mostly true, but only to a certain extent. And what about free speech rights?

These concerns were addressed recently, just after the Charlottesville “Alt-Right” march last August. 

Photos from Charlottesville featured individuals who were later identified by the public in social media, and tagged by Twitter user @YesYoureRacist. There was a very public call to action via social media for employers to fire the Alt-Right participants, particularly those brandishing swastikas.

Here are some legal clarifications:

First, the Bill of Rights protects citizens from our government’s attempts to quash speech – the Bill doesn’t protect employee speech from employers. There are other laws for that, as seen below.

Second, most California employees are “at will”, and can be terminated for any reason or no reason at all, provided the decision is not based on race, age, religion, gender, gender identification, marital status, or other protected categories defined by state and federal laws.

California’s Labor Code section 1101-1106  prohibits employers from discriminating against employees for expressing political views. Discriminatory or adverse acts could include firing, or refusing to consider the employee for promotions, bonuses, professional training, or other opportunities. However, there are exceptions. 

For instance, if an employee’s political activity creates a conflict of interest, or if the activities interfere with work duties.  In Mezger’s case, there is some evidence KB Home’s stock prices dropped about three percent following release of the meltdown audio. As CEO, Mezger has a fiduciary duty to protect the company.

How Can Employers Reduce Risk of Wrongful Termination Claims?

Separation Agreement to Reduce Claims Risk

Mezger’s expletive-ridden rant created a public perception problem for KB Home. But the employer in this case reacted quickly and we think, effectively.  

Here’s what employers in this position should consider: 

  1. The home builder chose to slash Mezger’s year-end bonus by 25 percent. There is some question as to whether or not the CEO will even earn a bonus this year, but Mezger is on notice that his behavior affects his income.

  2. KB Home created a written record expressing that the CEO’s “personal dealings with a neighbor is unacceptable….” The record is a public filing with the securities exchange, but most other employers can just send a troublesome employee an email or memo. Either way, the employee should be informed in writing, and a copy added to the personnel file.

  3. The employer protected its interests. Though KB Home states it has full confidence in Mezger’s abilities (this may cause a problem if Mezger ever files a wrongful termination suit against KB Home in the future), the builder also states outright that Mezger will be terminated should similar incidents occur later. 

The lessons for employers?

First and foremost, make expectations clear. If those expectations are not met, consider a separation agreement as a means to offer the employee a bit of transition assistance in return for a waiver of future claims.

Amy I. Huberman is an Employment Defense Attorney.

Disclaimer:
This Blog/Web Site is made available by the lawyer or law firm publisher for educational purposes only, to provide general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for obtaining legal advice from a licensed professional attorney in your state.

Wednesday
Nov232016

Employers: Texas District Court Grants Nationwide Injunction Against DOL's Final Rule

Lawyer for EmployersEmployment Defense

by Tal Burnovski Yeyni

818-907-3224

 

In May we reported the Federal Department of Labor issued its Final Rule regarding the minimum salary level required for the exemption of executive, administrative and professional (EAP) employees.  The final rule was designed to raise the minimum salary required for the exemption from $455 per week ($23,660 annually) to $913 per week ($47,476 annually). 

In an 11th hour ruling,  U.S. District Court Judge Amos L. Mazzant granted a motion for preliminary injunction filed by 21 States that challenged the Minimum Salary Rule and imposed a nationwide injunction against the implementation of the Final Rule that was scheduled to take effect on December 1, 2016.  

In a 20-page decision Judge Mazzant opined the DOL lacked authority to define and delimit a minimum salary threshold for exemption. Per Judge Mazzant, Congress intended for the EAP exemption in the Fair Labor Standards Act (FLSA) to depend on employee’s duties rather than on the employee’s salary.  Accordingly, the DOL’s authority was limited to define and establish the types of duties that might qualify an employee for the exemption:

While this explicit delegation would give the [DOL] significant leeway to establish the types of duties that might qualify an employee for the exemption, nothing in the EAP exemption indicates that Congress intended the Department to define and delimit with respect to a minimum salary level. 

Further, Judge Mazzant held that with the Final Rule, the DOL exceeded its delegated authority and ignored Congress’s intent by raising the minimum salary level “such that it supplants the duties test” and creates a “de facto salary-only test”.

Following the Court’s analysis regarding the DOL’s authority to promulgate the Final Rule and the likelihood of the irreparable harm and balance of hardship between the parties’ the Court decided that a nationwide injunction was proper in this case.

Implications for California Employers

As the Final Rule is currently on hold, California employers are required to comply with the California threshold for EAP exemption, which is at least two times the state’s minimum wage for full time employment (currently, $3,466.67 monthly; $41,600 annually).  Note that with the gradual raise in the State’s minimum wage starting on January 1, 2017, the minimum threshold for exemption will go up as well.

Finally, employers should be advised that the salary threshold test is merely one component of a valid exempt status. To be properly classified as an exempt employee an employee must: 

  • Primarily engage in “exempt duties” and;
  • Earn a minimum monthly salary of no less than two times the state minimum wage for full-time employment.  

While some commentators speculate the DOL will appeal yesterday’s ruling, it still remains to be seen whether the feds will challenge Judge Mazzant’s decision. 

 

Tal Burnovski Yeyni is an attorney in our Employment Practice Group

Disclaimer:
This Blog/Web Site is made available by the lawyer or law firm publisher for educational purposes only, to provide general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for obtaining legal advice from a licensed professional attorney in your state.

Wednesday
Apr132016

California Wage & Hour: Employer Q&A

Wage and Hour DefenseEmployment Litigation Defense

by Sue M. Bendavid

818.907.3220

 

Recently, the California Labor Commissioner cited a residential care provider for multiple wage theft violations, including for failure to pay minimum wage and overtime.

Wage Theft DefenseAs a result of the Labor Commissioner’s investigation the company was found to owe approximately $192,000 in pay. However, in addition to back wages, this particular employer will have to pay nearly $450,000 because of penalties, interest, liquidated damages and other fees.

The lesson for all employers is this:

Ensure proper payment of all wages now, or double (or perhaps triple) the costs later.

So what can employers do to stay compliant and reduce the risk of wage claims? Here’s a Q&A regarding some of the bigger pitfalls in timekeeping and payroll.

 

Payroll & Timekeeping FAQs

Q:  When should an employer change an employee’s time entries?

 

A:   An employer should change an employee’s time records when the employee forgets to record his or her start or end time or meal period on a timesheet or time clock. Further, an employer can record an employee’s work time if the employee is out sick, on vacation, or absent on some other form of time off.

If the employee forgets to clock in or out, or record a meal period, the employer may enter the actual in or out time to ensure the employee is paid correctly. If an employee is out sick or out for some other form of time off, the employer can change the time record to show the reason for the time off. 

Important: Employees should initial any changes to their timecards to confirm they are accurate.

 

Q:  What are some of the common mistakes employers make when tracking time?

 

A:  Don’t assume an employee only works 8 hours a day or 40 hours in the week or takes a 30-minute or 1-hour meal break each day, regardless of the hours the employee was scheduled to work or the Company’s meal break policy or practice.

An employer may not change a time record to show fewer hours than actually worked. For example, an employer may not reduce an employee’s time record from 10 hours in a work day to 8 hours to avoid overtime payment. This is true even if the employee consents to the change.

If an employee wants to take personal time off during a particular day and make up the time later in the same week, consider whether the “makeup” rules can apply.  If done correctly these rules can allow an employee to work up to 11 hours in a workday (3 hours of makeup time) without triggering overtime, as long as the employee does not work more than 40 hours in a workweek).

 

Q:  What are some of the potential claims if the employer fails to accurately pay an employee?

 

A:  Under California law, if an employer does not pay an employee correctly, they can expect to see some or all of the following claims: 

  • Failure to pay minimum wage (for off the clock work/hours that may not have been recorded on time records)

  • Failure to pay wages for hours worked

  • Failure to pay overtime

  • Waiting time penalties (up to 30 days wages)

  • Paystub violations (up to $4,000 in penalties or damages)

  • Failure to keep accurate records

  • Penalty claims under the Private Attorneys General Act (PAGA)

  • Liquidated damages

  • Missed Meal Break Penalties (one additional hour of pay per day missed)

  • Missed Rest Break Penalties (one additional hour of pay per day missed)

  • Violation of Business & Professions Code Section 17200 (restitution and injunctive relief)

  • Interest

  • Attorneys’ fees

  • There is risk of both civil and statutory penalties under various Labor Code provisions.    

Not only is the employer potentially liable, there is a recent move to try and hold individuals liable for penalties (against those who caused the violations to occur).

 

Q:  What is the statute of limitations on these claims?

 

A:  Under California Business & Professions Code Section 17200, employees can assert various wage claims going back up to four years. This includes claims for wages, meal breaks, rest breaks, overtime, minimum wage, failure to pay all wages, etc. Some claims go back one – three years, depending on the particular statute at issue.

 

Q:  How can an employer avoid (or at least reduce the risk of) claims?

 

A:  Strict compliance is critical. Employers should minimize unnecessary changes to time records, including requiring all employees to accurately record and maintain their own time records. Employers should prohibit changes to time records unless pre-approved and signed off by the employee.

Employers should develop policies prohibiting off-the-clock work, ensure employees are authorized and permitted to take all rest periods and meal periods as required by law, and have employees review, sign and date their own time records each pay period.

All work hours must be recorded, even if the work is performed remotely or before or after regular work hours.

PAGA DefenseEmployers who may be exposed to litigation risk because of previous violations should consider a payroll audit (under the attorney-client privilege) to determine the scope of potential liability. Ensure you have non-retaliation policies in place and inform employees there will be no retaliation if they complain about errors or “wage theft” or raise questions about timekeeping, breaks or pay.

It is also important to analyze classification of workers as independent contractors vs. employees and exempt vs. non-exempt. Non-exempt employees are entitled to overtime premiums. Exempt employees must be paid at least two times minimum wage on a salaried basis. Recent minimum wage increases must be complied with and there are many local minimum wage ordinances to be aware of as well.

Pay stubs must be reviewed to ensure accuracy and compliance with the law.

 

Q:  What documentation would be important when changes are made to time records?

 

A:  When changes are made to a time record, employers should keep the original and create a modified record, or line through the error on the original, make the correction, and have both the employer and employee sign and date the corrected record. The reason for any changes should be noted and signed.

If engaging in a wage audit, enlist the help of an experienced employment attorney.

 

Paying Employees in California

Don’t forget the new laws that went into effect in various metro areas like Los Angeles, as well as new state laws affecting pay, including: 

  1. The Fair Pay Act, ensuring equal pay for all genders.

  2. Senate Bill 3, signed by Governor Jerry Brown earlier this month, SB3 amends the Healthy Workplaces, Healthy Families Act and provides an increase in minimum wage as of January 1, 2017.

  3. The Los Angeles Minimum Wage Ordinance also mandates a minimum wage increase as of July 1, 2016. 

Remember, in cases where a city or county law conflicts with state or federal law, employers should always pay the higher standard.

 

Sue M. Bendavid is the Chair of the Employment Practice Group at our firm. 

Disclaimer:
This Blog/Web Site is made available by the lawyer or law firm publisher for educational purposes only, to provide general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for obtaining legal advice from a licensed professional attorney in your state.

LEWITT HACKMAN | 16633 Ventura Boulevard, Eleventh Floor, Encino, California 91436-1865 | 818.990.2120