The California Employment Development Department (EDD) offers a program that may make sense for some employers.

The EDD offers what it calls a “Work Sharing Unemployment Insurance program.” The program allows eligible employers to reduce hours of workers, and offers the employees partial unemployment benefits. 

For example, if a business with 100 employees faces a temporary setback and could file a Work Sharing plan with EDD reducing the work week of all employees from five days to four days (a 20 percent reduction). The employees would be eligible to receive 20 percent of their weekly unemployment insurance benefits.

Says the EDD in a publication on the program: “Under this plan everyone benefits. The employer is able to keep a trained work force intact during a temporary setback and no employees lose their jobs.”

The catch of course is that the employer takes a hit on its EDD reserve account, which in turn would lead to higher employer contribution rates to make up for the depletion. That is, payroll taxes will increase. Because of this, straight layoffs may make more sense for some employers. Moreover, an employer may risk offending its entire workforce in an across the board reduction of hours, rather than offending only those who would receive the pink slip in a straight layoff.

The EDD offers a Guide for Work Sharing Employers.

Below are some FAQs offered in the publication:

Q. Who may participate in the Work Sharing program?

A. Any employer who has a reduction in production, services or other condition that causes the employer to seek an alternative to layoffs. The Work Sharing plan requires the participation of at least two employees, a minimum reduction of 10 percent of the regular permanent work force or work unit(s), and a minimum reduction of 10 percent of the wages earned and hours worked of participating employees.

Q. Who may not participate in the Work Sharing program?

A. Leased or temporary service employees may not participate.

Q. How does an employer apply for the Work Sharing program?

A. Employers must either call or write EDD’s Special Claims Office to request a Work Sharing Plan Application.

Q. How do employees qualify for the Work Sharing program?

A. To qualify for the Work Sharing program an employee must meet the following requirements for each Work Sharing week:

1. The employee must be regularly employed by an employer whose Work Sharing Plan Application has been approved by EDD.

2. The employee must have qualifying wages in the base quarters used to establish a regular California unemployment insurance claim.

3. The reduction in each participating employee’s hours and wages must be at least 10 percent.

4. The employee must have completed a normal work week (with no hour or wage reductions) prior to participating in Work Sharing.

Q. How much lead time is required to initiate a plan for participation in the Work Sharing program?

A. All Work Sharing plans begin on a Sunday. The earliest a plan may begin is the Sunday prior to the employer’s first contact date withEDD. If the Work Sharing Plan Application is submitted timely, the employer chooses the effective date. To be considered timely a DE 8686 must be submitted within 28 days of the employer’s first contact date with EDD.

Q. Can an employer with multiple locations have more than one Work Sharing plan?

A. No. Only one Work Sharing plan is approved for one California employer account number. However, units at the same or different locations may be included in the Work Sharing plan.

Q. When Work Sharing is no longer necessary, how does an employer cancel the Work Sharing plan?

A. Discontinue issuing the Work Sharing Certifications to participating employees. The Work Sharing plan will expire six months after the effective date without any further action from the Work Sharing employer.

Q. How many subsequent Work Sharing plans can an employer receive?

A. Subsequent Work Sharing plans will be approved provided the employer meets the requirements of the program. Each Work Sharing plan is effective for six months and subsequent plans may be approved until the employer’s economic conditions improve.

Q. Are Work Sharing participants required to serve a one week waiting period like regular unemployment insurance claimants?

A. Yes, like regular unemployment insurance claimants, Work Sharing participants must serve a one week unpaid waiting period. Usually the waiting period is the first week claimed after the initial claim is filed. Even though the waiting period is an unpaid week, all the eligibility requirements for the Work Sharing program must be met.

Submitted by:

Barker Olmsted & Barnier, APLC

The House vote follows the recent approval in the Senate. The bill will now go to President Bush. He is expected to sign the legislation.

Proponents of the bill have argued that U.S. Supreme Court decisions in the last decade have eroded rights of disabled workers.

As quoted in a House of Representatives press release: “The Americans with Disabilities Act guaranteed that workers with disabilities would be judged on their merits and not on an employer’s prejudices. But, court rulings since the law’s enactment have dramatically limited the ability of people with disabilities to seek justice under the law,” said Rep. George Miller (D-CA), chairman of the House Education and Labor Committee. “Today we make it absolutely clear that the Americans with Disabilities Act protects anyone who faces discrimination on the basis of a disability.”

Some of the more significant changes:

Expanded Definition of Major Life Activities

A disability is a physical or mental condition that substantially limits a “major life activity.” The ADA currently does not include a definition of “major life activities.” The EEOC regulations provide examples, and these are incorporated into the ADA by the amendment: “caring for oneself, performing manual tasks, seeing, hearing, eating, sleeping, walking, standing, lifting, bending, speaking, breathing, learning, reading, concentrating, thinking, communicating, and working.” Most courts have followed the EEOC regulations and therefore this part of the amendment does not represent a major change.

However, the amendment adds “major bodily functions” such as “functions of the immune system, normal cell growth, digestive, bowel, bladder, neurological, brain, respiratory, circulatory, endocrine, and reproductive functions.” This could lead to a substantial expansion of workers considered disabled under federal law, as it could potentially include conditions such as high blood pressure, asthma, and other conditions not traditionally viewed as disabilities.

Disregard of Mitigating Measures

U.S. Supreme Court decisions have held that mitigating measures, such as prosthetic devices, should be taken into account when determining whether the workers are disabled. For example, Sutton v. United Airlines, Inc., 527 U.S. 471 (1999), involved myopic twin sisters who were rejected for employment by an airline because of their poor vision, although their vision was correctable with prescription lenses. The airline’s policy required “uncorrected visual acuity” at a certain level, which the sisters did not have. The Supreme Court held that because the sisters’ vision was correctable, they did not satisfy the ADA definition of “disability” and therefore could not make out a claim for discrimination.

The ADA amendment rejects the Supreme Court’s interpretation of the ADA. Now, a worker may qualify as disabled under the ADA without regard to corrective measures such as medication, equipment, or appliances, low-vision devices (which do not include ordinary eyeglasses or contact lenses), prosthetics including limbs and devices, hearing aids and cochlear implants or other implantable hearing devices, mobility devices, or oxygen therapy equipment and supplies; use of assistive technology; reasonable accommodations or auxiliary aids or services; or learned behavioral or adaptive neurological modifications.

Inclusion of Condition in Remission

The amendment expands the definition of disability include a condition that is in remission or that is episodic, if it would substantially limit a major life activity when active.

“Substantially Limits” Liberalized

A disability must “substantially limit” a major life activity. The Supreme Court and the EEOC has set a high standard for “substantially limits.” An individual must have an impairment that prevents or severely restricts the individual from doing activities that are of central importance to most people’s daily lives. The ADA amendment rejects this standard.

But the amendment creates a definitional vacuum. The amendment does not provide an alternative definition. It merely states that the existing definition is invalid, and the ADA should be interpreted under a looser standard. Earlier versions of the legislation included a definition, but the definition was deleted as a compromise in order to pass the bill.

“Regarded As” Restricted

The ADA protects workers who, while not actually disabled, are regarded as disabled by the employer.  The amendment excludes from “regarded as” claims minor/transitory conditions lasting six months or less.

It will be some time before the effects of the ADA amendment can be gauged. Undoubtedly, there will be a period of uncertainty while employers seek to comply with the new standards. An increase in federal disability law litigation is inevitable. The EEOC may issue new regulations or guides, which may help employers comply with the new standards.

In some states, a more liberal definition of disability is already in place. For example, the law in California, under the Fair Employment and Housing Act, already includes many of the provisions found in the ADA amendment.

Employers should continue to monitor developments in ADA law and look for compliance advice in the coming months before the law becomes effective on January 1, 2009.

Text of the ADA amendment can be found here.

Submitted by:
Christopher W. Olmsted
Barker Olmsted & Barnier, APLC

The EEOC has tackled this thorny ADA question, and many others, in a new publication titled: ”The Americans With Disabilities Act: Applying Performance And Conduct Standards To Employees With Disabilities.”

An EEOC press release acknowledges that employers struggle greatly with the ADA’s vague proscriptions and mandates. “The EEOC continues to receive numerous questions on these topics from employers and from individuals with disabilities, indicating that there is still a high level of uncertainty about how the ADA affects these fundamental personnel issues. This document will serve a critical need and enhance compliance with the ADA.”

According to the new guide, the ADA permits employers to apply the same performance standards to all employees, including those with disabilities, and emphasizes that the ADA does not affect an employer’s right to hold all employees to basic conduct standards, notes the press release.  “At the same time,” cautions the EEOC, “employers must make reasonable accommodations that enable individuals with disabilities to meet performance and conduct standards.”

For example, the EEOC provides the following hypothetical example:

Steve, a new bank teller, barks, shouts, utters nonsensical phrases, and makes other noises that are so loud and frequent that they distract other tellers and cause them to make errors in their work. Customers also hear Steve’s vocal tics, and several of them speak to Donna, the bank manager. Donna discusses the issue with Steve and he explains that he has Tourette Syndrome, a neurological disorder characterized by involuntary, rapid, sudden movements or vocalizations that occur repeatedly. Steve explains that while he could control the tics sufficiently during the job interview, he cannot control them throughout the work day; nor can he modulate his voice to speak more softly when these tics occur. Donna lets Steve continue working for another two weeks, but she receives more complaints from customers and other tellers who, working in close proximity to Steve, continue to have difficulty processing transactions. Although Steve is able to perform his basic bank teller accounting duties, Donna terminates Steve because his behavior is not compatible with performing the essential function of serving customers and his vocal tics are unduly disruptive to coworkers. Steve’s termination is permissible because it is job-related and consistent with business necessity to require that bank tellers be able to (1) conduct themselves in an appropriate manner when serving customers and (2) refrain from interfering with the ability of coworkers to perform their jobs. Further, because Steve never performed the essential functions of his job satisfactorily, the bank did not have to consider reassigning him as a reasonable accommodation.

Employers addressing day-to-day personnel issues are often left guessing about the ADA’s ill-defined requirements. The EEOC’s guide does a laudable job providing specific examples and straightforward answers to questions. The explanation and examples regarding disciplining ADA employees are particularly helpful.

Other topics addressed include issues related to attendance, dress codes, and drug and alcohol use, and the circumstances in which employers can ask questions about an employee’s disability when performance or conduct problems occur.

Employers should carefully study the EEOC’s new publication. However, keep in mind that the courts have the final say on the ADA, and the judiciary is not bound to follow the EEOC’s guidance. For example, in Gambini v. Total Renal Care, Inc. dba DaVita, 486 F.3d 1087 (Wash. 2007), an employee was terminated for making violent outbursts at work. She claimed that it was caused by her bipolar disorder. The Ninth Circuit reversed a lower court decision, finding that the outbursts were protected ADA conduct. For more details on this case, click here.

Submitted by:
Christopher W. Olmsted
Barker Olmsted & Barnier, APLC

For details on the provisions of AB 2716, see our May 2008 summary here.

The bill died in the Senate because of budget constraints, noted Dean Calbreath, a San Diego Union Tribune columnist in a recent article. “The Schwarzenegger administration opposed the bill on the grounds that it would add costs to the state budget. The Department of Finance estimated that paying for the sick leave would add $600,000 to the budget, because the state would have to pay for sick leave for nurses who provide health care to elderly, blind and disabled patients in their homes.”

The cost to private employers would be much more. Although many employers offer sick pay as a benefit, most employers bristle at the thought of a state mandate requiring such pay. In a letter to the California Senate Appropriations Committee, the Cal Chamber of commerce wrote: “The ever-increasing burden of costly mandates on employers can cumulatively result in lower wages, reducing available health insurance, limiting training programs and - in the worst case scenario- job loss or reduced work hours. Job loss translates to lower tax revenues from employers and employees, as well as increased utilization of Unemployment Insurance. In an already troubled economy California should be seeking ways to stimulate job growth and avoid forcing costly mandates on employers.”

Supporters of the bill came up with all manner of public policy arguments. The pro-labor group Labor Project for Working Families argued in a fact sheet that employers should support the sick pay mandate because it would decrease employee turnover, increase productivity, and improve public health. 

The public health argument appeared to strike a chord with voters. The argument is that sick workers make more people sick. Korye Capozza, of the UC Berkeley Center for Labor Research and Education hypothesized in a policy brief that mandatory sick pay would improve decrease food poisoning and save the elderly. “AB 2716 would have clear benefits for individual workers but, importantly, it would also have public health benefits that extend beyond the household and workplace” wrote Capozza. “Specifically, such a policy could reduce the transmission of foodborne illness, decrease disease outbreaks in nursing homes, reduce the spread of infections in childcare settings and mitigate the transmission of seasonal influenza. There is also some evidence that paid sick leave influences workers’ decisions to see a doctor, parents’ decisions to stay home and care for a sick child and patients’ decisions about treatment choices. Finally, AB 2716 has the potential to improve patient compliance with preventive health-care guidelines and chronic care management, and thus to reduce health-care spending over the long term.”

Mandatory sick pay will be back. Assemblywoman Ma has vowed to reintroduce the bill next year. It is likely to gain public support. The California Center for Research on Women and Families, a program of the nonprofit Public Health Institute, publicized a public poll finding 73% of voters would support a law to guarantee that workers receive a minimum number of paid sick days from their employer.

Similarly, the poll found that 81% agree (57% strongly) that guaranteeing paid sick day laws to all restaurant workers who handle food would increase the chances that these workers would stay home when they get sick and not infect the public. Another 76% agree (50% strongly) that paid sick days should be considered a basic worker right, like being paid a decent wage.

The text to the most recent version of the bill can be found here.

Submitted By:
Christopher W. Olmsted
Barker Olmsted & Barnier APLC

The DOL considered the following facts:

The Employer operates restaurants and requires employees to wear “dark-colored” shoes without prescribing any particular quality, brand, style, model, or type. Aside from color, the only other requirements are that they not be open-toed and that, for safety reasons, they not have a slippery sole. Employees may wear shoes they already own when hired or may purchase shoes from any vendor they may choose. Employees are free to wear the shoes outside of work.

The Employer has arranged a program through which employees may, solely at their option, purchase shoes from a shoe manufacturer. The manufacturer offers over 60 different slip-resistant shoes in a broad spectrum of styles and in numerous dark colors. If an employee chooses to purchase shoes from this vendor, the employee may either pay the vendor directly or the Employer will pay the vendor and deduct the amount of the payment from the employee’s paycheck over a number of weeks. In some instances, the deductions may cause the remaining amount of the employee’s paycheck to fall below the minimum wage for each hour worked during that pay period. If the employee requests that the Employer pay for the shoes through a deduction, the employee must do so by submitting a request in writing describing the shoes to be purchased, requesting the Employer pay for the shoes, and authorizing the Employer to withhold future wages in an amount sufficient to reimburse the purchase costs. Neither the Employer, nor any person acting in its interests, realizes any profit or other benefit from the purchase program,

The DOL opined that the footwear was not a uniform. Quoting its Field Operations Handbook the opinion letter states: “If an employer merely prescribes a general type of ordinary basic street clothing to be worn while working and permits variations in details of dress, the garments chosen by the employees would not be considered to be uniforms.” More restrictive policies may lead to the opposite conclusion. “[W]here the employer does prescribe a specific type and style of clothing to be worn at work, e.g. where a restaurant or hotel requires a tuxedo or a skirt and blouse or jacket of a specific or distinctive style, color, or quality, such clothing would be considered uniforms.”

The DOL also examined whether the Employer may offer to advance the money necessary for employees to voluntarily purchase shoes from the shoe manufacturer and recoup the advance through payroll deductions where those deductions may cause the employee’s paycheck to fall below the minimum wage for each hour worked in the pay period.

The DOL determined that such a practice was acceptable under the FLSA. The FLSA includes as part of “wages” the “reasonable cost” to the employer for furnishing any employee with board, lodging or other facilities. The DOL opined that the shoes qualified as “other facilities.” “[A] deduction for the actual cost of the shoes is allowed under [the FLSA], even if it reduces the amount of the employee’s cash wages below the minimum wage, so long as the employer does not profit or include any administrative costs.”

The DOL letter notes that the rule would be no different for tipped employees.

To review the DOL opinion letter, click here.

Submitted by:
Christopher W. Olmsted, Esq.
Barker Olmsted& Barnier, APLC