The Letter of The Law: June 2014

IN THIS ISSUE:

EMPLOYMENT LAW: She Is An At-Will Employee - I Can Fire Her, Right?

EMPLOYMENT LAW: Beware: A Snazzy Job Title Does Not Automatically Make An Employee Exempt

NEVADA LAW: Evidence Preservation, Spoliation, and the Potential for Adverse Inferences

She Is An At-Will Employee - I Can Fire Her, Right?

By: Laura C. Hess

This is a situation we see fairly often. The employer has an employee that it wants to terminate. The employer says, "I don't have to have a reason. I can fire her any time, she's an at-will employee!" What could possibly go wrong?

Well, a lot of things. It is true that the rule in California is that employment relationships are presumed to be at-will. This means that, generally speaking, the employee can quit at any time, with or without a reason, and the employer can terminate the employee at any time, with or without a reason (as long as that reason is not prohibited by law.)

However, what do you think is going to be happen if, for instance, the employee has been working for the same company for 20 years and suddenly is let go? The employee is going to be upset and angry about the fact that she has dedicated a substantial portion of her working career to one company, only to be handed a pink slip one day. More likely than not, that person is going to go talk to a lawyer.

Same thing with an employee that has, for instance, complained about sexual harassment within the last 6 months. Chances are the employee will claim that she was fired for pretextual reasons, and that the real reason she was terminated was because she reported sexual harassment.

Here is the bottom line. Any time you are considering letting go one of the following types of employees, that is when you should talk to your in-house legal department or outside lawyer before you take any action:

  • "Employees from hell"
    • someone who has a bad attitude and/or has been particularly difficult for co-workers to work with;
    • someone who seems to be trying to "poison the well" against the company in online comments or with co-workers, customers, or vendors.
  • "Red flag" employees
    • someone who uses legal terminology that indicates he or she may have already consulted with a lawyer (i.e., "This is a hostile work environment;")
    • someone who appears to be taking particular care to document communications with Human Resources or upper management;
    • someone who refuses to sign requested documentation, i.e., write-ups or negative performance evaluations.
  • Someone who is in a "protected class" - it is illegal under both California state and federal law for employers to terminate employees on the basis of their protected class status. Protected classes include, for example:
    • gender;
    • race;
    • age (40 or over);
    • disability;
    • pregnancy; and
    • religion.

This list is by no means exhaustive. In our practice, these are just some of the common protected classes that we see plaintiffs claim they fall under when they sue for wrongful termination or discrimination. The list of protected classes under California law is far lengthier than under federal law, and includes things such as marital status, sexual orientation, and military or veteran status.

If your in-house corporate counsel or your outside lawyer does not practice in California, you should definitely consult with a California lawyer who specializes in employment law before terminating any of the above employees. California leads the nation in terms of providing expansive legal rights to employees. Employment laws in California are many and complex. There are more employment lawsuits filed in California than in any other state in the country. In short, unless you know what you are doing in California, it is a virtual legal minefield for employers.

Beware: A Snazzy Job Title Does Not Automatically Make an Employee Exempt

By: Allyson K. Thompson

Many unwary employers fall into the trap of giving an employee the title of "Manager" or "Supervisor" only to find out that in fact the employee was misclassified. One of the most common mistakes an employer can make is to assume that a job title alone makes an employee "exempt" versus being "non-exempt."

Amongst other factors, a truly exempt employee is one that is primarily engaged in exempt work, 51% of the workweek. To determine whether an employee is primarily engaged in exempt work, the employer needs to analyze the actual work performed by the employee during the workweek. Most employees who are classified as exempt customarily and regularly exercise discretion and independent judgment in their jobs. Often times employers have Office Managers or Supervisors that do some exempt work, but also do non-exempt work during the workweek. That is how serious problems can arise.

In a recent case, Heyen v. Safeway, Inc. (2013) 216 Cal.App 4th 795, an multi-tasking assistant store manager sued Safeway for wage and hour violations stemming from a misclassification as an exempt employee.

Heyen worked for Safeway as an assistant store manager. The jury found that Safeway improperly classified her, and the Court entered judgment in her favor. The Court of Appeal affirmed, holding that the trial court properly found that time during which Heyen was performing both exempt and non-exempt tasks - for example, when she was both running a cash register and simultaneously managing the front end of the store, including instructing and coaching other employees - should count as non-exempt time for purposes of determining whether she was "primarily engaged in duties which meet the test of the exemption." The Court drew four general principles from the applicable Wage Order and the federal regulations incorporated therein:

1) Work of the same kind performed by a supervisor's non-exempt employees generally is "non-exempt," even when that work is performed by the supervisor. If such work takes up a large part of a supervisor's time, the supervisor likely is a "non-exempt" employee.

2) The regulations do not recognize "hybrid" activities-i.e., activities that have both "exempt" and "non-exempt" aspects. Rather, the regulations require that each discrete task be separately classified as either "exempt" or "non-exempt."

3) Identical tasks may be "exempt" or "non-exempt" based on the purpose they serve within the organization or department. Understanding the manager's purpose in engaging in such tasks, or a task's role in the work of the organization, is critical to the task's proper categorization. A task performed because it is "helpful in supervising the employees or contributes to the smooth functioning of the department" is exempt, even though the identical task performed for a different, non-managerial reason would be non-exempt.

4) In a large retail establishment where the replenishing of stocks of merchandise on the sales floor "is customarily assigned to a non-exempt employee, the performance of such work by the manager or buyer of the department is non-exempt." Similarly, in such a large retail establishment, a manager's participation in making sales to customers is non-exempt, unless the sales are made for "supervisory training or demonstration purposes."

The take-away from this important case is that employers must look at each individual manager or supervisor's job duties on a case-by-case basis. One of the best tools to undertake this analysis is creation of a Job Description for the role. Make sure all of the job duties are outlined in the Job Description. If the majority of the tasks appear to be non-exempt duties, then err on the side of caution and ensure that the employee is classified as non-exempt.

If you have any questions about classification of exempt employees, feel free to call or email Allyson K. Thompson, whose specializes in this type of analysis.

Evidence Preservation, Spoliation, and the Potential for Adverse Inferences

By: Russell D. Collings

The Nevada Supreme Court has held that a litigant is under a duty to preserve evidence which it knows or reasonably should know is relevant to an action, even where an action has not been commenced and there is only a potential for litigation. Fire Insurance Exchange v. Zenith Radio, Corp., 103 Nev. 648 (1987). In fact, sanctions under Nevada Rule of Civil Procedure 37(b) may be imposed for willful suppression or destruction of evidence which is clearly relevant, whether or not the party has been expressly ordered to produce the evidence. See Bass-Davis v. Davis, 122 Nev. 442 (2006). The entry of liability against a party destroying evidence is also an appropriate sanction under NRCP 37. Fire Insurance Exchange v. Zenith Radio, Corp., 103 Nev. at 648.

Spoliation of evidence occurs in a prospective civil action when evidence pertinent to the action is destroyed. A party who destroys evidence interferes with another party's ability to defend a lawsuit and right to discovery. Where a party spoils such evidence, sanctions should be imposed and the non-spoliating party may even be entitled to attorney fees. Stubli v. Bid D. Int'l Trucks, Inc., 107 Nev. 309 (1991).

The Nevada Supreme Court established the following eight factors to determine if such a sanctions are appropriate for spoliation of evidence: 1) the degree of willfulness of the offending party; 2) the extent to which the non-offending party would be prejudiced by a lesser sanction; 3) the severity of the sanction relative to the severity of abusive conduct; 4) whether evidence has been irreparably lost; 5) the feasibility and fairness of alternative and less severe sanctions such as an order deeming facts relating to improperly lost or destroyed evidence to be admitted by the offending party; 6) the policy favoring adjudication on the merits; 7) whether sanctions unfairly operate to penalize a party for the misconduct of his or her attorney; and 8) the need to deter both the parties and future litigants from similar abuses. Young v. Johnny Ribeiro Building, 106 Nev. 88 (1990).

In addition to the above sanctions, when relevant evidence is destroyed, the trier of fact may draw an adverse inference from the destruction. Reingold v. Wet'n Wild Nev., Inc., 113 Nev. 967 (1997), overruled on other grounds. The Ninth Circuit has noted that "simple notice of 'potential relevance to the litigation'" is sufficient when entering an adverse inference. Glover v. BIC Corp., 6 F.3d 1318 (9th Cir. 1993).

A party seeking the presumption has the burden to demonstrate that the evidence was destroyed with the intent to harm. Bass-Davis, 122 Nev. 442. When such evidence is produced, the presumption that the evidence was adverse applies, and the burden of proof shifts to the party who destroyed the evidence. To rebut the presumption, the destroying party must then prove, by a preponderance of the evidence, that the destroyed evidence was not unfavorable. Id. at 448.

Due to the extreme sanctions and consequences that follow negligently or willfully destroying evidence that could be used during litigation, it is imperative for all companies to consult with an attorney prior to destroying or disposing of any potential evidence.

NEWS AND EVENTS:

Allyson K. Thompson Selected to the 2014 Southern California Rising Stars List

Kring & Chung, LLP is proud to announce that Allyson K. Thompson has been recognized by Super Lawyers as a 2014 Rising Star. This is the second consecutive year that Ms. Thompson has been awarded this honor. Super Lawyers is a rating service of outstanding lawyers from more than 70 practice areas who have reached a high degree of peer recognition and professional achievement. Each year, no more than 2.5 percent of the lawyers in the state are selected to receive this honor.

Ms. Thompson's practice consists of employment issues, including sexual harassment, discrimination, wage and hour litigation, and advises employers on how to avoid employment related litigation. She represents individuals and small and large businesses in all aspects of civil litigation. This includes representing employees and defending employers, in lawsuits, class actions, mediations, arbitrations and Labor Commissioner hearings. Ms. Thompson also provides counsel to businesses to avoid litigation, including drafting policies, employee handbooks, and providing sexual harassment training.

Ms. Thompson is currently serving as Vice President of the Orange County Women Lawyers Association and formerly served as the Secretary and Board Member.

Merielle Enriquez Nominated as One of Nevada's Top Attorneys

Kring & Chung, LLP is pleased to announce that Partner Merielle Enriquez has been named as one of Nevada Business Magazine's Legal Elite for 2014. Legal Elite is an annual list that highlights the top attorneys in Nevada. The list of Nevada attorneys is selected through nominations received from their peers. There were 6,454 attorneys nominated for this designation and only 300 were selected and featured in Nevada Business Magazine.

Ms. Enrique joined the firm in June of 2009. Her practice is focused upon the defense of our clients and carriers in high exposure, complex general liability matters, as well as family law and business litigation cases.

2014 California HR Conference - Anaheim Convention Center

Kyle Kring and Laura Hess will present "So You Received a Sexual Harassment Complaint, What Not to Do, a Trial Lawyer's Perspective," at the 2014 California HR Conference taking place at the Anaheim Convention Center August 25, 2014 through August 27, 2014.

The workshop will include discussions on failing to implement appropriate policies and procedures prior to the alleged incident, failing to perform mandatory sexual harassment training, conducting a timely investigation and documenting the investigation, retaliating against the victim and many other topics that will assist you when dealing with a sexual harassment complaint.

Our attorneys have represented employers in all aspects of employment law. They defend employers against claims for sexual harassment, wrongful termination, retaliation, disability and age discrimination, failure to accommodate whistleblower, gender discrimination, misclassification and unpaid wages.

Registration is Open for the 2014 Kring & Chung Newport Beach Triathlon

Registration is open for the Kring & Chung Newport Beach Triathlon, which will take place on Sunday, October 5, 2014 in the Back Bay of Newport Beach, California. Start time for 1st stream is 7:00 a.m. Start time for 1st youth wave is approximately 8:00 a.m. The course includes a 1/2 mile swim, 15 mile cycle, and a three mile run.

Visit www.newportbeachtriathlon.com for more information and to register.