Clark & Trevithick Employer Bulletin

June 2007 – Volume 5, Number 2

California to Increase Prosecution of Misclassifying Employees as "Independent Contractors"

California Attorney General Jerry Brown is assembling a special unit to coordinate increased enforcement efforts to prosecute employers who misclassify employees as independent contractors. The extent to which a company controls the manner in which the person performs the job is an important factor in that exerting such control suggests an employment relationship. However, there are a number of factors which also must be considered to determine whether a person should be classified as an employee or independent contractor. A misclassification can result in monetary liability to the misclassified employee, tax liability, and potential criminal prosecution or civil penalties, depending on the nature of the violation.

WHAT YOU SHOULD DO:
If you utilize the services of independent contractors, you should consult with counsel to evaluate the factors impacting their classification as an independent contractor.

Handle That "Crazy" Employee With Care!

The Ninth Circuit Court of Appeals recently rendered an opinion which could complicate an employer's right to fire an employee who blows up at others, or is rude and offensive much of the time. The case is of concern given the increasing incidents of workplace violence. In Gambini v. Total Renal Care, Inc., the employer was aware that an employee was diagnosed with bipolar disorder. During a meeting with management, the employee threw her performance review across her supervisor's desk, slammed the door as she stalked out of the meeting, and was seen kicking and throwing things in her cubicle. When the employee took family medical leave, one of her co-workers asked that the employee not return to work due to concern for his personal safety.

The employee was terminated and she filed suit against her employer, including a claim for disability discrimination. The jury returned a verdict in favor of the employer, but the Federal Court of Appeals reversed and returned the case to the trial court for a new trial.
The Court of Appeals ruled the jury should have been instructed that conduct resulting from a disability is part of the disability and not a separate basis for termination. In other words, if the employee's bad behavior is due to a psychiatric disability, the employee is protected from termination for that behavior. The Appellate Court indicated that if the bad behavior which was the reason for her termination was due to her psychiatric disability, the employee had a viable disability discrimination claim against the employer.

However, keep in mind that an employer is permitted to terminate a disabled employee if the disability prevents the employee from performing essential job functions even with reasonable accommodations. Presumably, if the employer in Gambini could have established that an essential job function of the employee was to have good interpersonal skills and the ability to communicate and work with others, the employee's termination may have been deemed lawful.

WHAT YOU SHOULD DO:

Do not ask employees about any physical or emotional disability you suspect may exist. An employer has no liability for disability discrimination, unless the employer is aware of the disability (even if in a general sense) or treats the employee as disabled (even if no actual disability exists).
Prepare written job descriptions which identify essential functions of the job. A disabled employee can be terminated if an essential job function cannot be performed even with reasonable accommodations provided by the employer.
Be sure your Employee Handbook expresses the company's policy against all forms of unlawful discrimination and informs employees what to do if they believe they have been subjected to discrimination.

Is Your Arbitration Agreement with Employees
Still Enforceable?

As a general rule, the courts favor arbitration agreements between parties. However, courts carefully scrutinize arbitration agreements between an employer and employee due to an employer's superior bargaining position. What provisions may or may not be included in such an arbitration agreement is continuing to evolve through appellate court decisions. Earlier this month, the Ninth Circuit Court of Appeals issued a decision clarifying some of the ground rules for an enforceable arbitration agreement with an employee.

Among other things, the court in David v. O'Melveny & Myers concluded:

The agreement must clearly put the employee on notice that the right to a civil lawsuit and jury trial is being waived.
There must be mutuality, meaning that both the employer and employee are equally bound by the terms and conditions of the agreement. An employer's reserving the right to assert certain claims (such as embezzlement) against an employee in a civil lawsuit would likely invalidate the arbitration agreement.
The agreement cannot result in the employee incurring costs related to the arbitration proceeding which would not be incurred in a civil lawsuit.
A requirement that an employee must file a claim within a time period shorter than required by law may render the agreement unenforceable.
Certain provisions in the agreement whereby the employee is required to maintain the confidentiality of the arbitration claim may void the agreement.

WHAT YOU SHOULD DO:

The foregoing are just some of the requirements for an enforceable arbitration agreement. If you are using an agreement with employees which is older than 12 months, you should have it reviewed by legal counsel to determine whether it includes the most recent requirements imposed by the courts.

Leonard Brazil provides advice and guidance to employers to minimize and avoid employment liability in such areas as wage and hour laws, discrimination, harassment and other claims of wrongful termination, and to operate within the boundaries of employment laws in a common sense and practical manner. For more information regarding the Firm’s employment practice, go to www.clarktrev.com

Employer Bulletin is published by the law firm of Clark & Trevithick as a service to our clients and friends. You have our permission to forward this newsletter to business associates and friends. If you are not already a subscriber to this newsletter and wish to be, click here. The content of this bulletin should be view as only a general summary of the law and not as a substitute for legal advice in a particular matter. If you do not wish to receive further mailings, you may unsubscribe here.