Letter of the Law: March 2011


EMPLOYMENT LAW: Important 2011 Updates

EMPLOYMENT LAW: Employer Liability for After Work Driving

Kring & Chung in the News

Important 2011 Updates

At the start of every new year, it is important for all California employers, no matter their size, to familiarize themselves with some of the changes and new developments in state and federal laws which may affect the workplace. While this summary is not exhaustive of all of the potential labor and employment changes in the past year, it outlines some of the areas of the law that have changed, and provides helpful links to obtain more detailed information.

Employee Handbooks – The Federal Motor Carrier Safety Administration (FMCSA) enacted a new rule banning commercial motor vehicle (CMV) operators from text messaging while driving. Specifically, the rule prohibits texting by CMV drivers while operating in interstate commerce and imposes sanctions, including civil penalties and disqualification from operating CMVs in interstate commerce, for drivers who fail to comply with this rule. For more information, read the entire content of the rule.

If you are a company that employs CMV drivers, you should update your Employee Handbook or provide an Addendum to include this new rule.

Also, this past year Kring & Chung, LLP helped numerous employers formulate new company policies pertaining to the use and restrictions of social media websites, such as Facebook and MySpace, especially when they are used for marketing and advertising purposes.

I-9 Update – Last year, regulations implementing the electronic Form I-9 were approved by the U.S. Department of Homeland Security. The new regulations allow employers to complete, sign and store the Form I-9 electronically, although there is no requirement that employers must keep I-9 information electronically. Whether filled out manually or electronically, an employer representative must still physically examine the required identification and work eligibility documentation. For more information, go to the U.S. Citizenship and Immigration Services (USCIS) website.

Drug Testing in the Workplace – For employers in the transportation industry, the Department of Transportation (DOT) issued a regulation in 2010 requiring employers to use an updated DOT Alcohol Testing Form beginning January 1, 2011. This form must be used for DOT alcohol tests.

Tip Pooling – In August 2010, the California Supreme Court in Lu v. Hawaiian Gardens Casino, Inc. (2010) 50 Cal.4th 592, ruled on a case that restricted employees’ ability to sue employers for tip pooling issues.

A dealer sued his employer for its policy of requiring dealers to set aside 15 to 20 percent of the tips received each shift, which were deposited into a “tip pool bank account” and later distributed to designated employees. The policy expressly prohibited managers and supervisors from participating in the pool. The plaintiffs brought a class action against a casino and its general manager, alleging that the casino’s tip pooling policy violated the employees’ protections under Labor Code § 351, prohibiting employers from taking, collecting or receiving employees’ gratuities.

The California Supreme Court held that Labor Code § 351 does not provide a private cause of action to sue in court, reasoning that there were other remedies that may be appropriate, such as a private lawsuit for “conversion.” To be clear, California law does not specifically prohibit involuntary tip pooling, so long as the employer and any supervisor are not sharing in the tips.

Unemployment Insurance – Effective January 1, 2011, employers must file returns with the EDD regarding an employee’s wages, taxes withheld and other required information quarterly instead of annually. The form is called New Quarterly Contribution Return and Report of Wages (DE 9). This form replaces the Annual Reconciliation Statement (DE 7).

Pregnancy Disability Issues – The federal Patient Protection and Affordable Care Act of 2010 amended the Fair Labor Standards Act to provide reasonable break time for an employee to express breast milk while nursing for up to one year after a child’s birth. This rule applies to all California employers with more than 50 employees. Under the federal law, employers with fewer than 50 employees are not subject to this requirement if it would impose an undue hardship. Note however that because federal law does not preempt state law, California employers of all sizes must comply with the state law requirements set forth below.

Specifically, California law requires an employer to “reasonably accommodate” employees who wish to express milk at work. See Labor Code §§ 1030-1033. An employer can require that the nursing employee use the paid rest break time already being provided. If an employee needs more than the allotted 10 minutes, the time must be given. However, any time over 10 minutes may be unpaid. Lastly, the employer must provide a private place for a nursing employee to express milk, other than a toilet stall, that is shielded from view and free from intrusion.

Worker’s Compensation: Construction – If you are a roofing contractor, a new law, AB 2305, extends the requirements that contractors with a C-39 roofing classification obtain and maintain worker’s compensation insurance, even if they have no employees. This requirement was originally set to expire on January 1, 2011, however it has been extended to January 1, 2013.

Another important update affects licensed or unlicensed contractors who fail to procure worker’s compensation coverage for employees. AB 1696 allows the registrar of contractors to issue a stop order, effective immediately, for failure of the contractor to procure worker’s compensation insurance. Employees affected by the order must be paid by the contractor for lost time, up to ten days.

Should you have any questions about how some or all of these changes may affect your business, please do not hesitate to contact us for more information.

Employer Liability for After Work Driving

By: Brendan J. Coughlin

The Fourth District Court of Appeal in California recently decided the matter of Lobo v. Tamco (2010) 182 Cal.App.4th 297. This case holds that a triable issue of material fact exists regarding whether an employer’s infrequent reliance on an employee to drive his own car to meet with customers was an incidental benefit to the employer. The legal finding of such an incidental benefit may be sufficient to support a claim of vicarious liability against the employer for personal injuries caused while the employee was off the job, driving after work.

The troubling facts of the case are as follows. A San Bernardino County deputy sheriff was one of three motorcycle officers travelling together on Arrow Highway with their lights and sirens activated. Tamco is a manufacturer of steel bars used in construction. A metallurgist employed by Tamco was driving his own car, leaving work for the day. The employee did not see the officers as he exited Tamco’s premises and entered the roadway. In the ensuing crash, Deputy Lobo suffered fatal injuries.

The officer’s widow and daughters filed suit for his wrongful death. Tamco’s attorneys argued in motions for summary adjudication that, under California’s “coming and going” rule, the company had no liability for the accident. This rule provides that employers are generally exempt from liability for tortious acts committed by employees while on their way to and from work. Tamco argued that the metallurgist was off work, driving his own vehicle, and was not on company business at the time of the accident.

In this case, the Court found that because there was evidence that the employee sometimes used his own car for company business, it could not be decided as a matter of law that Tamco could never be vicariously liable for its employee’s negligence. The Court stated, “If the employer requires or reasonably relies upon the employee to make his personal vehicle available to use for the employer’s benefit and the employer derives a benefit from the availability of the vehicle, the fact that the employer only rarely makes use of the employee’s personal vehicle should not, in and of itself, defeat the plaintiff’s case.”

This ruling expands the “required vehicle” exception to the “coming and going rule,” and stretches the concept of an incidental benefit to the employer. In such circumstances, where summary adjudication is not possible, the employer may be forced to choose between settlement or trial of a sympathetic, potentially high exposure case. Lobo v. Tamco illustrates how the facts of a particular case can make new or expanded law. It should be noted that the California Supreme Court has denied review of this case, letting the Court of Appeal’s decision stand.

The attorneys at Kring & Chung are knowledgeable in employment law, personal injury, and general civil litigation matters. We are available to discuss, draft and review with you your employee vehicle policies, as well as address all other important employment and liability issues.

Brendan J. Coughlin is an Associate with Kring & Chung, LLP‘s Irvine, CA office. He can be contacted at (949)-261-7700 or bcoughlinat-sign kringandchung DOT com.

Kring & Chung in the News

A lawsuit filed by Kring & Chung, LLP in February has received press coverage in Endurance Sports Business News, Avalon Bay News, Triathlon News, Runners Web, Triathlon Business, and Old Runner.

Since 1998, Pacific Sports, LLC has produced the award-winning Catalina Marathon which takes place every March on land managed by the Santa Catalina Island Conservancy. The land is open to the public for recreational use. No longer content to simply receive a permit fee and charitable donation from Pacific Sports, LLC for this race, the Conservancy has refused to grant Pacific Sports, LLC a permit to hold the Catalina Marathon in 2012, and instead recently announced that it has decided to produce this race itself.

This case could set a precedent that determines the future rights to and ownership of existing sporting events being held around the country. We believe this is the first such case within the endurance sports industry in which the permit holder has denied the permit in order to take over the event itself.

Laura C. Hess, the attorney with Kring & Chung, LLP that is representing Pacific Sports LLC, was quoted as saying, “Event producers of all kinds should be paying close attention to this case. The issue is broader than just what happens to your asset when the city won’t give you a permit. The issue is whether someone can try to stand in your shoes and capitalize off of your success by putting on an event so much like yours that people are confused as to which event is which.”

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