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Employment Law Commentary, May 2006

California Case Law Potpourri: Grooming Standards, Travel Time, Forum Selection Clauses, and More, Vol. 18, No. 5

5/26/2006

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Over the last few months both federal and state courts have issued a number of important new employment law cases. These cases (except perhaps the Cal/OSHA dual employer decision) bring needed clarification to previously ambiguous issues and should be helpful for employers.

 


Ninth Circuit Decision: Employers May Require Different Grooming Standards Based On Gender

In Jespersen v. Harrah’s Operating Company, Inc., No. 03-15045 (April 14, 2006), the Ninth Circuit reaffirmed the circuit law concerning appearance and grooming standards and clarified the evolving law of sex stereotyping claims.

Factual and Procedural Background

Darlene Jespersen worked successfully as a bartender at Harrah’s for twenty years. During her tenure at Harrah’s, the company maintained a policy encouraging female beverage servers to wear makeup. The policy was not enforced until 2000, when Harrah’s implemented a "Beverage Department Image Transformation" program. Part of the program consisted of new grooming and appearance standards that applied equally to both men and women, such as a standard uniform, and some sex-differentiated appearance requirements as to hair, nails, and makeup. For example, the policy prohibited men from having hair that extended below the top of their shirt collar, prohibited makeup, and required their nails to be clean and neatly trimmed. Women were required to wear their hair down at all times, use only clear, white, pink, or red nail polish, and wear makeup at all times.

Jespersen challenged Harrah’s appearance and grooming standards for all bartenders on the ground that they discriminated against women by (1) subjecting them to terms and conditions of employment to which men were not similarly subjected, and (2) requiring that women conform to sex-based stereotypes as a term and condition of employment. The district court granted Harrah’s motion for summary judgment as to all claims and Jespersen appealed.

Legal Analysis

The Ninth Circuit’s opinion focuses primarily on two issues: (1) whether the grooming standards imposed unequal burdens on men and women; and (2) Jespersen’s sex stereotyping claims.

Unequal Burdens

The Ninth Circuit reaffirmed settled law that grooming standards that appropriately differentiate between the genders are not facially discriminatory—companies may differentiate between men and women in appearance and grooming policies, so long as the policy does not create an "unequal burden" for one gender. The Court held, "Under the established equal burdens analysis, when an employer’s grooming and appearance policy does not unreasonably burden one gender more than the other, that policy will not violate Title VII." 

In reviewing Harrah’s grooming policy, the Court found that the policy applied to both male and female bartenders, and was aimed at creating a professional and very similar look for all of them. Such a policy would only be discriminatory if Jespersen could show that it was more burdensome on women than men. The Court found that the grooming standards imposed an equal burden on both men and women. Jespersen asked the Court to take judicial notice of the fact that it costs more money and takes more time for a woman to comply with the makeup requirement than it takes for a man to comply with the requirement that he keep his hair short. Finding that these were inappropriate requests for judicial notice, the Court rejected Jespersen’s "evidence" of unequal burden. Because Jespersen failed to create a record establishing the grooming standards as more burdensome for women than for men, the Court affirmed summary judgment in Harrah’s favor.

Sex Stereotyping

The Ninth Circuit reaffirmed the availability of a sex stereotype claim, but rejected the claim under the facts of this case. The Court found this case to be in stark contrast to other sex-stereotyping cases such as Price Waterhouse v. Hopkin, 490 U.S. 228 (1989), where the stereotyping interfered with the plaintiff’s ability to perform her job. In Price Waterhouse, the plaintiff was rejected for partnership at an accounting firm because she was aggressive, strong, and independent. She was often described as "macho" and told she "overcompensated for being a woman" and to take "a course in charm school."  Hopkin was also told to "walk more femininely, talk more femininely, dress more femininely, wear make-up, have her hair styled, and wear jewelry."  On these facts, the Supreme Court found that Hopkin sufficiently showed that her employer had considered her gender and the fact that she was not "feminine" in denying her partnership. However, the Court remanded on the liability issue because the lower court required the employer to prove by clear and convincing evidence, rather than the more appropriate preponderance of the evidence, that it would have made the same decision absent consideration of Hopkin’s gender.

Here, the grooming standards were for the most part unisex. They required all bartenders to wear exactly the same kind of uniform—from the black tie to non-skid shoes—while interacting with customers. In addition, no evidence in the record indicated that the grooming standards were "adopted to make women bartenders conform to a commonly-accepted stereotypical image of what women should wear"; nor did the record suggest the grooming standards would inhibit a woman’s ability to do her job.

The Court emphasized, however, that its opinion does not preclude a claim of sex stereotyping on the basis of dress or appearance codes as a matter of law. Rather, each case should be reviewed on its facts, and a claim for sex stereotyping should be refined as the law evolves.

Application for California Employers

Despite this decision, the law on sex stereotyping is still in its infancy and likely to evolve. Employers seeking to institute grooming standards should ensure that their standards apply to both men and women, and do not impose a greater burden on one sex than on the other. In addition, employers should refrain from implementing grooming policies that could be interpreted as making their female employees "conform to a commonly-accepted stereotypical image of what women should wear."

 


California Appellate Court Decisions
  • Employee’s Travel Time Between Parking Lot And Work Site On Company Shuttle Is Not Compensable

In 2000, the California Supreme Court held that when an employer requires its employees to use transportation provided by the employer to go to work, the employees need to be compensated for their travel time. Recently, the Second District, California Court of Appeal, refused to expand the holding of Morillion v. Royal Packing Co., 22 Cal. 4th 575 (2000), to situations where an employer provides its employees with transportation, but does not require that they use it. Overton v. Walt Disney Company, 136 Cal. App. 4th 263 (Jan. 4, 2006).

Factual and Procedural Background

Bobby Overton was employed by Disney at its Disneyland Resort in Anaheim. Disneyland consists of two theme parks (Disneyland and Disney’s California Adventure), a shopping district, and three hotels. Prior to its expansion in 1998, Disneyland consisted only of the Disneyland Park. A sizeable parking lot was located directly south of the Park. Employees parked in this lot, and walked to an entrance known as Harbor Pointe to clock in. Overton, like all other employees, parked in this lot.

When Disney expanded in 1998, Disney’s California Adventure was constructed in the space where the parking lot used to be, and parking—for both visitors and employees—was relocated. As Disneyland stands today, there are at least four parking lots: the Katella lot, the Ball lot, the Simba lot, and the Team Disney Anaheim lot. Of these, the Katella was the only one from which employees could not walk to the nearest entrance, clock in, and proceed to their work sites. Because the Katella lot was located approximately one mile away from the nearest entrance, Disney provided free shuttle buses from the Katella lot to the entrance. According to Disney, employees parked at the Katella lot were not required to ride the shuttle at a particular time, but could choose to arrive early and have breakfast or lunch at the Park, could bike or walk to the entrance, or could take alternative means of transportation that would drop them off in front of the entrance.

Employees were assigned to a parking lot based on their assigned work sites within Disneyland. Overton was assigned to the Katella lot. Overton claimed he had to arrive "substantially earlier" to the Katella lot to wait for and ride the shuttle in order to arrive on time for work. Believing himself to be entitled to compensation for this extra time, Overton sought to bring a class action on behalf of all hourly employees who were "required to travel on vehicles controlled by [Disney] to and from their place of assignment, and who were not compensated for the time spent in such travel."

The trial court concluded that Morillion did not apply to these facts, and granted summary judgment in favor of Disney. Overton appealed.

Legal Analysis

The Court began its analysis by reviewing the Morillion opinion. The Court acknowledged Morillion’s holding that employees must be compensated for any time, including travel time, when they are subject to their employer’s control. Thus, when an employer requires its employees to meet at a designated place to take its buses to work, and prohibits them from taking their own transportation, these employees were subject to the employer’s control and had to be compensated for the travel time.

Overton argued that Morillion mandates travel time payments to employees who, as a practical matter, are required to use employer-provided shuttles because no alternative transportation is available or feasible. The Court rejected this argument, refusing to extend Morillion to situations where an employer, such as Disney, does not "require" its employees to use its shuttle services. The Court found that ten percent of Disney employees did not drive to work, and instead took alternative forms of transportation. Specifically, Disney encouraged these alternative forms of transportation, which included organized vanpools, public transportation, or rides from friends or family. The Court also found that Disney did not prevent employees who parked at the Katella lot from walking or riding a bicycle to the entrance, rather than waiting for the shuttle. In short, the Court determined that Overton was not required to park in the Katella lot, or take the shuttle, in any real or de facto sense.

The Court also rejected Overton’s proposed solution:  that the time clock where he punched in be moved from the Park entrance to the shuttle departure area. The problems with the proposed solution were numerous. First, it would require Disney to compensate its employees for their time waiting for the shuttle and their ride to Disneyland—precisely the type of compensation to which the Court found Overton was not entitled. Second, it would require Disney to pay unnecessary compensation to many of its employees, such as "walking time" or "bicycling" time for those who chose to do either for exercise and meal time for those who arrived early to eat at Disneyland before starting their shifts. Third, the ten percent of employees who had arranged for alternative transportation would have to be redirected to the Katella lot to clock in, and then shuttled back to work.

For all of the above reasons, the Court rejected Morillion’s application to Overton’s case and affirmed the trial judge’s decision in favor of Disney.

Application for California Employers

The critical inquiry in connection with travel time compensation is whether the employee is free to choose whether to take the employer-provided transportation. If the employer-provided transportation is a requirement, the time will be held compensable under California law. If the employer-provided transportation is merely a courtesy to the employees, the travel time will be held non-compensable.

  • A Primary Employer Is Responsible For The Safety Of A Leased Employee Under Cal-Osha

The Third District, California Court of Appeal, has issued an opinion requiring a primary employer to establish, implement, and maintain an effective injury-prevention program for employees leased to a secondary employer. Sully-Miller Contracting Company v. California Occupational Safety and Health Appeals Board, 138 Cal. App. 4th 684 (April 13, 2006).

Factual and Procedural Background

Sully-Miller Contracting Company ("Sully-Miller") is an asphalt paving company that employed Jeff Moreno for 22 years as a roller operator. Moreno was still on Sully-Miller’s payroll in October 1998, but had been without work, and without compensation, for a number of days. Manhole Adjusting, Inc. ("Manhole"), another paving contractor, asked Sully-Miller, pursuant to industry custom, to provide it with two qualified roller-operators. Sully-Miller rented Moreno out to Manhole, with Moreno’s consent, for three days.

Moreno was under Manhole’s exclusive direction and control while he worked at its site. On October 1, 1998, his first day working for Manhole, Moreno was operating a heavy roller on a steep grade. He was not wearing his seatbelt because the clasp was broken. Another roller, further up the grade, went out of control and rammed the rear end of Moreno’s roller. Moreno was thrown to the pavement, and into the path of his roller’s rear wheels, where he was run over and killed. After Moreno’s death, Sully-Miller paid Moreno’s family for his work at Manhole, and billed Manhole for Moreno’s wages and benefits, as well as a substantial rental fee.

As a result of this accident, Cal-OSHA cited Sully-Miller for a serious violation of workplace regulations and proposed a penalty of $2,500. The penalty was upheld during the administrative appeal process. Sully-Miller went to court, seeking a reversal of the administrative decision. The trial court denied Sully-Miller’s request to overturn the administrative decision, and Sully-Miller appealed.

Legal Analysis

Sully-Miller raised several arguments in court. First, Sully-Miller argued that Moreno was not its employee at the time of his fatal accident because he was working at the direction and control of Manhole. Second, Sully-Miller argued that only the employer with direct supervision and control over an employee has responsibility for providing an injury-prevention program. Finally, Sully-Miller argued that its injury-prevention program satisfied the workplace regulation requirements. The Court addressed each argument in turn, giving significant deference to Cal-OSHA’s findings.

Sully-Miller Was Moreno’s Primary Employer

In determining whether Moreno was Sully-Miller’s employee at the time of his fatal accident, the Court reviewed statutory definitions of "employee" and borrowed from workers’ compensation law. It found that the relationship between Sully-Miller, Moreno, and Manhole fell neatly within the "dual employer" concept recognized in the workers’ compensation context. It defined dual employment as one in which the employer sends an employee to work for another person, and both have the right to exercise certain powers over the employee. Under these circumstances, Moreno effectively had two employers:  Sully-Miller, the primary, general employer, and Manhole, the secondary, special employer.

Applying these principles, the Court concluded that Moreno was Sully-Miller’s employee even though it was under the direction and control of Manhole at the time of his accident. Moreno had been employed by Sully-Miller for 22 years. Although Moreno had been unable to work, Sully-Miller expected him to resume working for it as soon as work was available, and maintained Moreno on its payroll. The fact that Manhole contacted Sully-Miller and Sully-Miller in turn contacted Moreno before Moreno could work at Manhole further supports a finding that Moreno was Sully-Miller’s employee. Finally, Sully-Miller issued Moreno’s family a paycheck for Moreno’s work done at Manhole, and collected from Manhole Moreno’s wages, benefits, and a substantial rental fee.

Section 6401.7: The Injury-Prevention Program

Embracing Cal-OSHA’s decision in In re Petroleum Maintenance Company (OSHA App. Bd. May 1, 1985, No. 81-R4D1-594-599), the Court held that section 6401.7(h) imposed training obligations on a secondary employer who directly supervises contract employees employed by another employer. The section did not alter the established training obligations of an employer to its primary employees, whether or not the employer leases those employees to a secondary employer. Thus, to meet its responsibilities under the Labor Code, Sully-Miller was required to determine with particularity the work which a contract employee will be called to perform for the secondary employer, maintain an injury-prevention program, and only send out those employees trained to do the work.

Sully-Miller argued, unsuccessfully, that it would be unrealistic to expect a primary employer to ascertain the hazards specific to a secondary job site. The Court dismissed the argument because Moreno was to perform at Manhole the same job he already performed for Sully-Miller. Thus, the same general safety hazards and precautions were applicable and no additional expertise or knowledge was required. In fact, Sully-Miller’s existing injury-prevention program already covered the hazards in question.

The Proper Injury-Prevention Program for Leased Employees

The Court agreed that Sully-Miller’s injury-prevention program was appropriate for its primary employees working at its sites. However, the Court upheld the citation because it found that Sully-Miller did not have a system to ensure employees’ compliance with safe practices at the secondary site, and did not have a system to periodically monitor the secondary site’s compliance with safe work practices and conditions. Specifically, the Court agreed with Cal-OSHA’s requirement that, to be in compliance with workplace regulations, Sully-Miller needed to (1) instruct Moreno that he should refuse to perform any assignments involving a dangerous condition until that condition was abated; (2) maintain and enforce an inspection program to ensure that Moreno was not exposed to unsafe conditions while working for Manhole, or coordinate with Manhole to see if that such program was in place; (3) inspect Manhole before Moreno began working; and (4) provide appropriate training and monitoring of employees assigned to work under the direction of other employees.

Application for California Employers

Primary employers proving labor to a secondary employer must determine the work the employee will be asked to do, maintain an injury-prevention program and send out only specifically-trained employees, inspect the secondary employer’s site to ensure that it is compliant with workplace safety laws, and instruct employees that if they reasonably believe an assigned job is dangerous, they should refuse to do the work until the danger is abated.

 

  • Forum Selection And Choice-Of-Law Clauses In Employment Contracts May Encompass Discrimination Claims

The Second District Court of Appeal held recently that forum-selection and choice-of-law provisions in an employment contract may encompass age discrimination claims when the provisions cover all causes of action arising from or related to the agreement. Olinick v. BMG Entertainment, No. B179478 (April 27, 2006).

Factual and Procedural Background

Martin Olinick, a lawyer admitted to both the New York and California bars, began working for RCA Records in New York in 1971. In 1977, Olinick relocated to California. In 1986, BMG, a New York general partnership with worldwide headquarters and principal place of business in New York City, acquired RCA. Despite the acquisition, Olinick remained employed with RCA/BMG.

In November 2000, after contract negotiations lasting nine months, Olinick and BMG executed an eight-page employment agreement covering the period from July 1, 2000 to October 31, 2004. These negotiations took place almost entirely in New York, and both parties were represented by New York attorneys. The parties exchanged more than ten drafts before reaching an agreement. Paragraph G of the agreement contained a choice-of-law and forum selection provision that read, "This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of New York, without regard to conflicts of law. The parties agree to the exclusive jurisdiction and venue of the Supreme Court of the State of New York for New York County and/or the United States District Court for the Southern District of New York for the resolution of all disputes arising under this Agreement."

Olinick’s employment was terminated on March 26, 2003. After exhausting his administrative remedies, Olinick filed a complaint in Los Angeles Superior Court alleging two causes of action:  (1) statutory claim under FEHA for age discrimination; and (2) a common law tort claim for wrongful termination in violation of California public policy, namely, the public policy against age discrimination. BMG filed a motion to stay or dismiss the action on the ground of inconvenient forum, pointing to the forum selection provision in the agreement. The trial court granted the motion and Olinick appealed.

Legal Analysis

On appeal, Olinick argued that Paragraph G applied only to contractual disputes, and that because his complaint did not raise a contractual issue, the provision was inapplicable. The Court disagreed.

The Court of Appeal recognized that Olinick’s FEHA claim and wrongful discharge claim are not predicated on the existence of the agreement, but could have been asserted even if Olinick had been an at-will employee. However, because the legal relationship between the parties emanated from the agreement, its interpretation—which contained two different termination provisions—would be a central issue in the discrimination case. Paragraph G specifically provided that it applied to "all disputes arising under" the agreement. Relying on the California Supreme Court case of Nedlloyd Lines B.V. v. Superior Court, 3 Cal. 4th 459 (1992), the Court concluded that, absent limiting language, Paragraph G encompassed "all causes of action arising from or related to [the] agreement, regardless of how they are characterized."  If Olinick and BMG intended to limit Paragraph G in the manner urged by Olinick, they could have so specified.

The Court also disagreed with Olinick’s argument that public policy made Paragraph G unenforceable. The Court reaffirmed case law holding that employment discrimination claims, like other claims, may be held subject to forum selection clauses pursuant to the usual standards, as long as the selected forum provided an adequate remedy for the employee’s claims. Because New York’s human rights law prohibits age discrimination and permits awards of compensatory and punitive damages, emotional distress damages, and an award of attorney fees to the prevailing party, a New York forum provided an adequate remedy to Olinick. In addition, the Court found relevant that FEHA did not contain an anti-waiver provision that would prohibit the parties from selecting a forum or substantive antidiscrimination law other than California’s.

Application for California Employers

California employers seeking to include forum selection and choice-of-law provisions in their employment contracts may do so, but whether the provision will be enforced will depend on a variety of factors, including the sophistication of the parties, their intent, and the chosen forum’s ability to remedy the employee’s wrong.

  • Employer Properly Terminated Employee After A Seven-Month Disability Leave

In Williams v. Genentech, Inc., No. A110611 (May 9, 2006), Rochelle Williams, a receptionist with Genentech, was criticized by her supervisors for mishandling an incident involving company security. She suffered stress and an exacerbation of an existing medical condition following the criticism and went on medical leave on October 18, 2000. Her physicians extended her leave several times between October 20, 2000, and May 2001. They released her to work without restrictions effective May 16, 2001.

Genentech’s written family and medical leave policy provided for six months of paid medical leave. It also provided that employees who qualified for leave under the California Family Rights Act ("CFRA") would be placed in the same or equivalent position upon their return to work if their leave did not exceed 12 weeks in a 12-month period. The policy also provided that if the leave extended beyond 12 weeks, Genentech could not guarantee that a position would be available, but provided the employee with 60 days to find a position within the company for which the employee was qualified. If the employee did not, the employee’s employment was terminated.

From the time Williams went on leave until January 2001, Genentech covered Williams’s position with three floater receptionists. Using these floaters resulted in several business problems: inadequate coverage for illnesses, vacations, and planned sabbaticals; receptionists’ lunch breaks were shortened; only one receptionist could be out on a given day; and morale suffered. In January 2001, Genentech decided to hire a full-time replacement for Williams’s position. According to Genentech, Williams’s reaction to or inability to handle the criticism was not considered. Genentech notified Williams in writing that it had contacted her doctor and learned she was still incapacitated and unable to work, that she had exhausted her 12-week position guarantee, and that it would hire a replacement. Genentech also told Williams it would assist her in locating a different position within the company when she returned.

Williams returned to work in May 2001. There were no vacant receptionist positions at Genentech. Genentech human resources assisted Williams in attempting to find a different position, but at the end of the 60-day period, she had not found one. Genentech terminated Williams’s employment. Williams filed an administrative charge alleging race and disability discrimination, and filed suit alleging Genentech discriminated against her by filling her position while she was on "stress leave" and refusing to hire her to a vacant position upon her return to work following her leave. The complaint pled race and disability discrimination, failure to reasonably accommodate disability, and failure to engage in the interactive process. Genentech moved for summary judgment and the trial court granted the motion.

Legal Analysis

The Court of Appeal affirmed summary judgment. First, it reaffirmed established law that FEHA requires its procedural requirements to be construed liberally, and that any claims not alleged in an administrative charge that are reasonably related to the claims alleged in the charge are proper. Thus, the Court found that Williams had raised failure to accommodate and failure to participate in the interactive process claims.

Prima Facie Disability Discrimination

Next, the Court held that Williams failed to make out a prima-facie case of disability discrimination. Genentech provided evidence, which Williams failed to dispute, that one week before the decision to fill her position was made, Williams’s doctor extended her medical leave until March 5. Between April 12 and May 15, 2001, her physician again diagnosed her as suffering from anxiety and depression and determined that she was totally incapacitated and unable to work. This evidence created the reasonable inference that Williams was unable to perform the essential functions of her job at the time the decision to fill her position was made. Thus, Williams failed to prove a necessary element of disability discrimination. With respect to Genentech’s failure to hire Williams into other vacant positions in the company, the Court found that Genentech presented undisputed evidence that it had legitimate, nondiscriminatory reasons for not hiring her. Williams specifically complained that Genentech should have given her a labware technician position; however, Genentech proved that Williams did not have the qualifications for that position.

Failure to Accommodate

The Court rejected Williams’s failure to accommodate claim. The Court found that Williams’s request for a new manager was without merit. The evidence showed that Williams was unable to return to work in November 2000, when Williams made the request. Further, an employer has discretion to choose between "effective accommodations" and may choose the accommodation that is less expensive or easier for the employer to provide. The employee does not get to choose what accommodation is reasonable. Further, Williams’s supervisor had been promoted out of her division before Williams went on leave, and Williams was aware of that fact.

In addition, the Court found that Williams failed to raise a triable issue as to the reasonableness of Genentech’s decision to fill Williams’s position while she was on leave, stating, "Reasonable accommodation does not require the employer to wait indefinitely for an employee’s medical condition to be corrected."  Genentech held Williams’s position open for over twelve weeks, and had a legitimate reason for filling it when it did.

Interactive Process

Finally, the Court reaffirmed the rule that a finite leave of absence can be a reasonable accommodation. It found that Genentech satisfied its duties to engage in an interactive process with Williams, in part because Williams presented no evidence suggesting that Genentech’s proffered accommodation, the leave of absence, was not reasonable. Further, the only alternative Williams offered as a reasonable accommodation was that she be completely shielded from a particular supervisor. The court noted that Williams never made the request, and that, at the time of Williams’s leave, the supervisor no longer managed Williams.

Application for California Employers

This case reaffirms established disability discrimination case law. As long as employers hold the position of an employee out on disability leave open for the statutorily required period, have legitimate business reasons for filling that position, and engage in an interactive process to reinstate the disabled employee into an equivalent position, the employer is in compliance with California’s disability laws.

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