Retail Employment Law Blog : U.S. Lawyers & Attorneys for Labor Law

By Randall J. Hakes

For the first time, a California appellate court has addressed when paid leave offered as a sabbatical is considered “paid vacation.” The distinction is important because, under California law, employers must pay separating employees accrued but unused vacation time, whereas employers need not pay separating employees for accrued but unused sabbatical leave time.

In Paton v. Advanced Micro Devices, Inc. No. H034618 (6^th App. Dist., Aug. 5, 2011), the appellate court emphasized that a sabbatical is more than additional vacation time.  To qualify as a sabbatical, the paid leave must be “intended to retain the most experienced or valued employees or to enhance their future service to the employer.” Altering the Labor Commissioner’s test for a sabbatical, Paton found four factors distinguish a sabbatical from regular paid vacation:

1.      A sabbatical is granted infrequently (noting that once every seven years is the traditional frequency);

2.      The length of the leave is sufficient to achieve the purpose of the sabbatical—and when no conditions are set regarding how an employee spends his or her sabbatical, the length of leave should also be longer than that normally offered as vacation;

3.      A sabbatical is granted in addition to regular vacation; and

4.      The sabbatical program incorporates a feature that demonstrates the employee is expected to return to work after the leave is over.

Paton makes clear that employers must carefully consider whether sabbatical programs meet the new test. Any employer with a sabbatical program should document the purpose(s)/goals of the program and administer the program consistent with the identified purposes, noting that sabbaticals with no conditions on how the employee uses the leave (similar in nature to vacations) must meet additional standards. While general guidance can be gleaned from the specific facts in Paton, the court noted that the validity of each sabbatical program “will have to be decided on its own facts.” Thus, employers should carefully review all of the circumstances associated with their particular sabbatical programs to ensure they are true sabbaticals.

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By Julia M. Ebert

A federal court has held that Cal. Labor Code section 2802 does not require employers to reimburse employees for internet and phone expenses when employees voluntarily telecommute. Novak v. The Boeing Company, Case No. 09-01011-CJC-(ANx) (C.D. Cal. July 20, 2011). In Novak, Boeing supplied physical workspaces with computers, phones, and necessary equipment at its offices, and employees were not required to work from home.  The plaintiff employee, however, applied for and received permission to participate in Boeing’s virtual worker program. Boeing initially reimbursed virtual workers for phone and internet expenses, but later changed its reimbursement policy and ceased paying for such expenses. An employee sued for reimbursement under section 2802, and the court granted summary judgment to Boeing.

Section 2802 requires employers to reimburse employees for “necessary expenditures or losses incurred by the employee in direct consequences of the discharge of his or her duties.” The court reasoned that, because the employee was telecommuting voluntary, his telecommuting expenses were not “necessary” to the discharge of his duties. Under Novak, a telecommuting program is voluntary, and therefore an employer need not reimburse employees’ expenses in connection with the program, where employees: (1) apply to work from home, (2) receive employer approval, (3) choose to work from home, and (4) as a result, could potentially incur phone and internet expenses, which the employer would pay for if the employee worked at the employer’s offices.

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By Lisa Baiocchi

The U.S. Court of Appeals for the Eighth Circuit upheld summary judgment for Wal-Mart on a manager’s claim for retaliation, holding the arguably unprofessional conduct she allegedly received while working at the retailer did not amount to adverse action. Chestine Clay was manager of the Vision Center at a Bloomington, Minnesota Wal-Mart. Clay alleged that, after she complained of racial discrimination against her, the store manager showed her disrespect and engaged in conduct that Clay perceived as demeaning toward her. For example, the store manager allegedly failed to provide certain assistance she requested, and excluded her from management meetings.  The Court held this alleged conduct did not meet the legal standard of an adverse employment action, which is “action that would deter a reasonable employee from making a charge of employment discrimination or harassment.” The Court noted that, while the store manager’s conduct may not have made Clay happy, “not everything that makes an employee unhappy is an actionable adverse action.”

Additionally, the court held, even assuming Clay suffered an adverse action, Clay could not show a causal connection between the adverse action and her complaints of discrimination. Some of the store manager’s conduct occurred before Clay had complained of discrimination, so of course her complains could not have caused the adverse conduct. Further, the rest of the store manager’s objectionable conduct occurred well after her discrimination complaints: she complained of discrimination in August 2005, but the store manager’s objectionable conduct occurred in July 2006. The court held that lengthy time period was insufficient evidence of causation to establish a prima facie case of retaliation.

Lessons to Take Away: Employers should investigate and document every incident of alleged wrongful conduct brought to their attention. It is equally important to document performance issues of every employee. Objective evidence that an employee was not performing up to standards prior to engaging in protected activity undercuts the significance of any temporal proximity between that protected activity and a subsequent adverse action.

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By Heather Panick

                In Morris v. Lowe’s Home Ctrs. Inc., 2011 U.S. Dist. LEXIS 63008 (M.D. N.C. 2011), the United States District Court in North Carolina held that equitable tolling applies to Plaintiff’s disability claim because the delay caused by the EEOC in scheduling the claimant’s interview after the deadline to file a lawsuit was an “extraordinary circumstance” beyond Plaintiff’s control that made it impossible for her to file her claims on time.

                Plaintiff resigned her position as live nursery specialist with Lowe’s Home Centers Inc. on May 1, 2007 after allegedly being harassed about her breast cancer and hospitalization due to injuries that she sustained while working. Ms. Morris visited the EEOC on October 10, 2007 and completed an intake questionnaire and an ADA disability questionnaire. She indicated on these forms that the deadline to file a lawsuit was October 28, 2007. The EEOC did not interview Ms. Morris then, but rather scheduled her interview for November 5, 2007 and then rescheduled the interview for November 27, 2007. The EEOC was aware that both of these dates were passed the required filing deadline.

Plaintiff then filed her lawsuit beyond the deadline to do so. The district court denied Lowe’s subsequent motion to dismiss for filing beyond the deadline, however, on the ground the deadline was equitably tolled. The district court followed Fourth Circuit precedent holding equitable tolling may apply when the untimely filing resulted from processing delays at the EEOC or from misleading statements by EEOC officials. The district court further found that there was no harm in the delay, given that Ms. Morris first took action three weeks prior to the filing deadline. The district court reasoned that because the delay was caused by the EEOC, that delay was an “extraordinary circumstance” that was out of Ms. Morris’ control and left her incapable of filing the charge on time. 

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As more mergers and acquisitions take place in  the retail industry, acquiring companies need to be mindful of whether they are successor employers for determining liability under the FMLA.  In Sullivan v. Dollar Tree Stores, 623 F.3d 770  (9th Cir. 2010), the Ninth Circuit articulated eight factors which are critical to determining whether a company is a successor employer under FMLA, including: (1) substantial continuity of the same business operations, (2) use of the same plant, (3) continuity of the workforce, (4) similarity of jobs and working conditions, (5) similarly of supervisory personnel, (6) similarity of machinery, equipment and production methods, (7) similarity of products or services, and (8) the ability of the predecessor to provide relief.

In the case, the Ninth Circuit found that although both employers were in the retail business operations, this was too general to demonstrate a substantial continuity giving rise to liability.

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In Washington v. Arby’s Restaurant Group, Inc., 2010 U.S. Dist. LEXIS 42471 (Md. Tenn., 2010), the United States District Court in Tennessee held an employer need not reinstate an employee returning from disability leave who would have lost his job even if he had not taken leave.  Moreover, the court held an employer is not required to reinstate an employee returning from disability leave if application of a uniformly-applied policy would have resulted in his discharge.  The Court noted the company’s decisional process is not required to be optimal or that it leave no stone unturned.      

This case continues in a line of cases reaffirming that while an employee on leave is entitled to certain protections under the applicable laws  (e.g., the FMLA),  those laws do not confer on the employee a greater entitlement to reinstatement as compared to other employees not on leave.

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In Whitten v. Fred’s Inc. 601 F.3d 231 (4th Cir. 2010), the company argued in a sexual harassment lawsuit that a  store manager lacked the authority to fire, promote, demote or otherwise make decisions that had an economic impact on the plaintiff.  The Fourth Circuit held the ability to take tangible employment actions is not dispositive of supervisory status.  Rather, the critical question is whether the particular conduct was aided by the agency relationship.  In this case, the court  concluded the store manager was a supervisor because he was the highest ranking employee at the store and there was typically no one superior to him to provide a check on his behavior.

In many jurisdictions, the issue of supervisory status of store managers is key to determining employer liability for the manager’s acts and exposure to punitive damages.  For many retailers, store managers are given autonomy but not necessarily discretion  and judgment in terms of how their stores operate.  Therefore, cases such as Whitten may have a large impact given the organizational structure of many retailers.  Here the court focused not on the actual conduct and authority of the manager, but rather on the fact that no other employee was as high ranking in the store as him, thus leaving a vacuum as to who is on site to monitor his actions.

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In Sanford v. Slade’s County Stores, 2010 U.S. Dist. LEXIS 34094 (N.D. Ala., 2010), the plaintiff claimed the company discriminated against her on the basis of her son’s disability when she was informed that health insurance was available after 90 days, and also when she was discharged.  The District Court recognized a claim for associational discrimination under the Americans with Disability Act but found that employers are not required to make reasonable accommodations for disabilities of relatives or associates of a non-disabled employee.

This case underscores that as more plaintiffs are able to prove they have a “disability” under the amended ADA, the focus of litigation will turn to whether employers have complied with their obligation to provide “reasonable accommodation” and equal employment opportunities to qualified individuals with disabilities.

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On October 20, 2010,the EEOC held a meeting to hear testimony from representatives of various stakeholder groups as well as social scientists and the Federal Trade Commission on the growing use of credit histories as selection criteria in employment.  It is somewhat unclear what the commission intended to have come out of the hearing, but it is significant that in her first meeting as chair, Jackie Berrien wanted to cover this issue. 

In her opening remarks, Chairwoman Berrien noted that this will be the first in a series of hearings that will focus on neutral employment tools that may have a discriminatory effect in the employment marketplace.  The EEOC will likely move to issue guidance on this issue in the near future. 

Consumer reports remain a critical tool to minimize legal liability and help gather the best pool of job applicants.   However, federal and state laws make lawfully utilizing background checks difficult.  Employers should consider the relationship between the competencies of the position and how the information obtained in the report fits with those competencies.

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           In Hernandez v. Chipotle Mexican Grill, Inc., 2010 Cal. App. LEXIS 1853 (2010), the California Court of Appeal issued a decision addressing the issue currently before the California Supreme Court: whether employers must ensure that employees take required meal and rest breaks, as opposed to simply providing the opportunity to take required breaks.  California employers, especially retailers, have been waiting anxiously for the Supreme Court to address this issue in Brinker v. Superior Court of San Diego.  While there are many outstanding cases waiting for this ruling, many judges have been reluctant to issue a decision while Brinker is pending.

           However, in Hernandez, the Court of Appeal sided with federal precedent in holding the employers need only provide the opportunity to take required breaks.  This opinion remains good law, at present.  Of course, the Supreme Court’s ruling in Brinker will either affirm or strike down this ruling.

            Brinker remains the “case to watch,” for at least two reasons.  First, retailers will likely be saddled with more onerous monitoring and liability if they are required to ensure breaks are taken rather than merely provide break time. Second, however, an “ensure” rather than “provide” standard may make class action treatment more appropriate in multi-plaintiff break cases. Courts may be more likely to find whether an employer simply provided break time presents a common question of fact for all plaintiffs, as opposed to the question whether the employer required each individual employee to take all required breaks, which may present individual factual issues.

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Jackson Lewis LLP, on behalf of the Retail Litigation Center, Inc., the legal arm of the Retail Industry Leaders Association (“RILA”), has filed with the National Labor Relations Board a “friend-of-the-court” brief urging the Board to limit non-employee union agents’ right of access to store property to communicate to shoppers the union's disagreement with the way the retailer is operating.  The brief asks the NLRB to limit such access only to cases where the employer has allowed like conduct by other individuals and groups, so that the union has been singled out for adverse treatment. 

The action came in a case involving Roundy’s, Inc., a supermarket operator in Wisconsin and Minnesota. The retail chain had sought to prevent a carpenters union from handbilling shoppers on store grounds to protest the supermarket’s use of a non-un ion contractor paying less than “area-standard” wages to perform renovations and asking the public not to shop at the store.  The Board had invited interested parties to submit briefs in the matter.

Almost two decades ago, the Supreme Court reaffirmed a retailer’s right to exclude unwanted intruders from its property, subject only to certain limited exceptions.  Jackson Lewis’ amicus curiae brief for the retail industry advocates argues that the 2007 Board decision in Register-Guard presents the best way to analyze the "discrimination exception" raised in Roundy's. The brief says the Board’s earlier decision enables retail employers to control over access to their property by non-employee union agents.  It also may have the best chance of assuring protection for employers in contexts other than "area standards" protests, such as union organizing.

RILA is an association of America’s retail leaders, including nine of the nation’s ten top retailers.  Members collaborate to achieve excellence within their own enterprises and to pursue positive change for the industry at large.  Among other things, RILA serves the retail industry as an advocate in legislative and other matters. The Retail Litigation Center engages in legal proceedings affecting the retail industry.  By participating in selected federal and state cases, the Center gives the retail industry an opportunity to be heard on important legal questions and help inform the courts and administrative agencies of the potential effects of their decisions on the industry. 

Michael J. Lotito, a partner in Jackson Lewis and one of the authors of the Firm’s brief said, “We are indeed gratified that the Retail Litigation Center has given us the chance to present the views of our country’s leading retailers on the important questions raised in this case. Retailers should not be made to choose between allowing groups onto their property that help attract customers to the stores, build strong community ties, and assist worthwhile charities, and suffering the presence of groups that seek to discredit them and drive customers to competitors. We hope our brief helps the Board reach a decision that gives proper regard to retailers’ property rights.”

The Board’s decision is expected this Spring.

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