Gordon & Rees - California Employment Update


	California Employment Update

November 2006

Legislative Update

The following federal and state bills were passed by the respective legislatures.

Federal Bills

H.R. 4: On August 17, 2006, President George W. Bush signed The Pension Protection Act of 2006, a new law intended to reform the outdated pension laws, provide more information and control to employees, and impose safeguards and contribution requirements for employee retirement plans to ensure sufficient funding.

State Bills

AB 2095: This Assembly Bill was signed by the Governor on September 29, 2006. As amended, it limits the application of the Fair Employment and Housing Act's ("FEHA") sexual harassment training requirement so as to apply only to supervisory employees who are located within California.

AB 1835/SB 1162: The Governor also signed AB 1835, which was amended to provide for an increase in the minimum wage to $7.50 on January 1, 2007 and to $8.00 on January 1, 2008. The revised amended bill does not include the controversial automatic future adjustments based on the rate of inflation.

Agency Update

DOL Issues Several Wage and Hour Opinion Letters
The Wage and Hour Division ("WHD") of the United States Department of Labor ("DOL") recently issued several opinion letters responding to inquiries about wage and hour issues under the federal Fair Labor Standards Act ("FLSA").

Do various employees qualify as exempt? In a series of separate opinion letters, the WHD addressed the exempt status of several specific categories of employees.

Senior Legal Analyst: The WHD found that a Senior Legal Analyst for a corporation does not fall under the administrative overtime exemption. The Senior Legal Analyst, who had two years of legal studies and eight years of experience in legal research and analysis, received assignments from attorneys to analyze facts, identify legal issues, and interpret the law for use by the attorneys. The WHD found that these duties and responsibilities do not satisfy the requirement of using "discretion and independent judgment in matters of significance" with regard to the administration of the business. The WHD also found that the Senior Legal Analyst position did not fall under the professional exemption that requires an advanced specialized academic degree for entry into the field. Wage and Hour Division Opinion Letter, FLSA2006-27.

Gasoline Service Station Managers: The WHD found that gasoline service station managers can still be classified as exempt at times they performed additional duties under the varying scenarios specifically set forth in the opinion letter (including traveling to other stations to perform managerial paperwork, performing banking duties for other managers off work, and training new managers). Wage and Hour Division Opinion Letter, FLSA2006-29.

Judicial Update

Ninth Circuit Upholds Dismissal When Employee Deleted Computer Files
The federal Ninth Circuit Court of Appeals recently decided a case in which the employee had made complaints of financial and reporting irregularities by his employer. Interestingly, the employer sued the employee for a determination that it could terminate the employee without violating the False Claims Act, the Sarbanes-Oxley Act, and disability discrimination laws. The employee in turn filed a cross-complaint against the employer claiming violations of those same laws and retaliation for whistleblowing. The employee also filed a complaint with the Department of Labor ("DOL") asserting the same whistleblowing allegations. The court granted the employer's motion to dismiss the employee's case and issued monetary sanctions on the ground that the employee had intentionally deleted 2,200 computer files related to his claims. It also found that the court could halt proceedings brought by the DOL which were based on the same facts and disputes, were already adjudicated, and involved parties that were related to each other, that is the employee and the DOL. Leon v. IDX Systems Corporation, 9th Cir. Case Nos. 04-35983, 05-35426 (September 20, 2006).

Ninth Circuit Applies Sovereign Immunity to Casino as "Arm of the Tribe"
The Ninth Circuit held that a casino owned and operated by a Native American tribe is an "arm of the tribe" and thus has sovereign immunity from being sued by a terminated employee. Accordingly, the court upheld the dismissal of an employee alleging he was terminated in retaliation for reporting that there were rats in the casino's restaurant and for applying to a civil court for guardianship of his three tribal children. Allen v. Gold Country Casino, 9th Cir. Case No. 05-15332 (September 29, 2006).