Stowell, Zeilenga, Ruth, Vaughn & Treiger LLP

Supreme Court Finds Called Teacher to be an Exempt Minister Under Civil Rights Laws

Adam Treiger — Thu, 12 Jan 2012 21:29:40 +0000

On October 5, 2011, I blogged about the case of Perich v. Hosanna-Tabor Evangelical Lutheran Church and School, in which a federal appeals court found that a called teacher in a Lutheran Church – Missouri Synod church school was not a minister under the Ministerial Exception to the federal civil rights laws, and thus could sue her church employer for disability discrimination. On January 11, 2011, the United States Supreme Court reversed the appellate court’s decision, and held that the plaintiff called teacher was a minister under the Ministerial Exception, and therefore was not able to sue her church employer for violation of the American with Disabilities Act (or for violation any other federal employment discrimination law related to her dismissal).

The US Supreme Court held that both the Free Exercise Clause and the Establishment Clause of the First Amendment mandate that (i) the government cannot become involved in a church’s ecclesiastical decisions by contradicting a church’s determination of who can act as its ministers, and (ii) a religious group has the right to shape its own faith and mission through its appointments of its own ministers. Moreover, the Supreme Court held that the purpose of the Ministerial Exception is not to safeguard a church’s decision to fire a minister only when it is made for a religious reason, but rather is to ensure that the authority to select and control who will minister to the faithful is the church’s alone.

The Supreme Court also held that the Ministerial Exception is not limited to the head of a religious congregation, and that there is no rigid formula for deciding when an employee qualifies as a minister, leaving the door open for future litigation between churches and those they call ministers. But, the Supreme Court found that in this case, the plaintiff was a minister because (i) her title as a called teacher represented a significant degree of religious training followed by a formal process of commissioning, (ii) the plaintiff held herself out as a minister by, for example, accepting the formal call to religious service, and (iii) the plaintiff conveyed the Church’s message and mission through religious instruction. The Supreme Court held that the appeals court did not give enough weight to the fact that the plaintiff was a commissioned minister, gave too much weight to the fact that lay teachers at the school performed the same religious duties as the plaintiff, and placed too much emphasis on the plaintiff’s performance of secular duties.

This unanimous decision of the US Supreme Court is a big win for advocates of religious freedom in this country, as it reaffirms at least part of the wall between church and state, and as tells the government, including its courts, that it has no place in choosing who will be employed as a religious minister. However, this decision should not be read too broadly. It is still up to the courts to determine if someone is a minster or not, before the Ministerial Exception can be applied. Thus, although the called teacher in this case was found to be a minister, it is possible that in other contexts the outcome would not be the same, especially if the called teacher’s ecclesiastical duties were more modest than those of Ms. Perich. — Adam Treiger

Wage and Hour Issues When Closing Between Christmas and New Years

Adam Treiger — Wed, 07 Dec 2011 21:07:26 +0000

During the holiday season, many California employers wish to close down between the Christmas holiday and the New Years holiday. That is fine, but there are a few wage and hour laws that need to be considered. First, regarding non-exempt employees, such employees do not have to be paid for hours they do not work. Thus, such employees need not be paid during the closure. If non-exempt employees have paid vacation time accrued but unused, they should be given the opportunity to use that paid vacation time during the closure, but they should not be forced to do so. Of course, if the employer has a policy offering paid holidays for Christmas and New Years Day, employees should be paid for those two days and should not have to use their vacation time.

Second, regarding exempt employees, such employees are entitled to be paid an entire week’s salary for any week in which they do any work, subject to a few exceptions that I won’t go into here. But, if an exempt employee is directed not to work for an entire week, and is not allowed to do so, he or she is then not entitled to be paid for that week. (Just as with non-exempt employees, exempt employees can use their accrued vacation time if they want to during that time, but they should not be forced to do so.) Thus, in determining whether to pay an exempt employee during a closure between the Christmas and New Years, the employer has to first determine what its regular workweek is, and then determine if the closure time spans and entire week.

The default rule in California is that a work week is from Sunday through Saturday. Assuming this is the applicable work week, this year there should be no problem with not paying exempt employees during most of the holiday closure because most employers will be closed from Sunday, December 25 through Saturday, December 31, a full work week. But, assuming the employer re-opens on January 3, exempt employees would still be entitled to be paid their entire weekly salary for the first week in January, even though that week is shortened by a day. For comparison purposes, if Christmas falls on a Wednesday and New Years falls on a Monday, and the employer is closed from Wednesday through Monday, exempt employees who work Monday and Tuesday of the Christmas week, and come back to work on Tuesday after New Years, would lose no pay. The employer in this example would have to close the entire week, from December 22^ndthrough December 28^th, if they wanted not to pay exempt employees for that week. – Adam K. Treiger

The Professional Exemption Can Apply to Unlicensed Accountants and Lawyers

Adam Treiger — Wed, 09 Nov 2011 22:17:22 +0000

The California professional exemption provides that employees can be exempt from overtime laws if, among other things, they are either (i) licensed by the State of California to practice law, medicine, dentistry, optometry, architecture, engineering, teaching, or accounting; or (ii) primarily engaged in an occupation commonly recognized as a learned or artistic profession. Until now it has been unclear whether an unlicensed accountant or lawyer could be exempt under the professional exemption. Two recent cases, one state, one federal, have answered that question by holding that they can be. The federal case, Campbell v. PricewaterhouseCoopers, LLP, 642 F.3d 820, decided by the Ninth Circuit Court of Appeals on June 15, 2011, held that unlicensed accountants (i.e., persons who perform accounting functions assisting licensed accountants but who are not themselves licensed) could be so exempt. The California case, Zelasko-Barrett v. Brayton-Purcell, LLP, 198 Cal. App. 4th 58, decided by the California Court of Appeal for the First District on August 17, 2011, held that unlicensed lawyers (i.e., persons who have graduated from law school and who perform legal services assisting licensed lawyers but who have not themselves passed the bar), could be so exempt. Both of these cases hold that the professional exemption can apply because these types of employees work in occupations commonly recognized as learned professions. Of course, accounting firms and law firms still need to be cautious in classifying such employees as exempt, because for the exemption to apply, the employer still has the burden to prove that the employee in question (a) was primarily engaged on a weekly basis in exempt duties, (b) was paid the requisite monthly salary (i.e., twice minimum wage), (c) customarily and regularly exercised independent discretion and judgment in his or her job, and (d) was otherwise treated as an exempt employee. For example, it is unclear whether under Zelasko-Barrett a law clerk who is still in law school could be exempt under the professional exemption (though it has been well settled that a paralegal could not be). Thus, even with the new precedent set by Campbell and Zelasko-Barrett, there is still enough subjectivity and “grey-area” inherent in the professional exemption to allow unlicensed accountants and lawyers to sue for overtime and other non-exempt employee wages, penalties and benefits. — Adam Treiger

Three More New CA Employment Laws

Adam Treiger — Wed, 26 Oct 2011 16:59:28 +0000

SB 272: Organ Donor/Bone Marrow Leave of Absence. This leave of absence already existed, but the new amendments make it clear that the 30 day leave for organ donation is 30 business days, not calendar days, and that during this leave seniority and benefits, including vacation, continue to accrue.

SB 299: Health Insurance Coverage for Pregnancy Disability Leave (“PDL”). Under the old law, if an employer had fewer than 50 employees, the employer did not have to pay for health insurance for employees out on PDL. Moreover, if an employer had 50 or more employees within a 75 mile radius, the employer had to pay for health insurance coverage for employees out on PDL, but only for 3 months, not 4. The new law provides that all employers with 5 or more employees must pay for health insurance coverage for employees out on PDL for the full duration of the PDL, which can be up to 4 months.

AB 22: Credit Checks. Under the old law, employers could use employee’s credit reports to make hiring decisions, as long as the potential employee was notified. Now, Employers may not use credit checks at all, except when hiring for certain specified positions, such as managers and persons who will have access to the employer’s trade secrets or funds.

–Adam K. Treiger

More On AB 469 – “The Wage Theft Prevention Act of 2011”

Adam Treiger — Thu, 13 Oct 2011 18:47:25 +0000

Yesterday I blogged about a new California law known as AB 469, which imposes an obligation on employers to provide notice of certain information to new hires, and supplement those notices as information changes. I wanted to add a few more thoughts. First, this new notice requirement does not apply to exempt employees. So, as long as an employee is classified correctly as exempt, employers need not worry about this new law for these employees. Of course, if an employee is misclassified as exempt, this new law adds yet another layer of legal problems for an employer who is found liable for such misclassification. Second, the Labor Commissioner will be promulgating a form that employers can use to provide this notice. That will be helpful, but it won’t go very far to blunt the administrative burden this new law creates for employers. Third, this new law increases the statute of limitations for the DLSE to collect penalties from 1 to 3 years (but it does not increase the 1-year limitations period for penalties in private enforcement actions). Fourth, this new law does not take effect until January 1, 2012. So, Employers have about 2½ months to get ready for compliance. Fifth, this new law increases the penalties (both civil and criminal) for violation of the wage laws (as if the existing penalties were not bad enough). In this time of high unemployment, is this new law — especially the new notice requirements contained in it — really what is needed in California? I mean, if an employer is on the fence about hiring a new employee, and could go either way, why does the state want to impose this difficult notice requirement that only kicks in upon hiring a new employee? We should be thinking about ways to create jobs in this state. But, if we can’t do that, at least we should not pass unnecessary laws to discourage job creation. –Adam K. Treiger

California Has Three New Employment Laws This Week

Adam Treiger — Wed, 12 Oct 2011 17:27:07 +0000

First, SB 459. This new law increases the penalties ($5,000 to $25,000 per violation) for misclassification of a worker as an independent contractor, when the worker should have been classified as an employee. However, these new penalties only apply if the misclassification was “willful”. Willful is defined by the law as “voluntarily and knowingly misclassifying” an individual. Also, the new law adds a shame factor. If an employer is found to have willfully misclassified, the employer must display this fact prominently on its own website. An employer’s advisor (other than an employee or attorney) who knowingly advises the employer to misclassify a worker as an independent contractor may also have individual liability under the new law.

Second, AB 469: This new law requires that employers provide additional information to new employees at the time of hire, and supplement that information as it changes during the course of employment. The information that now must be provided is: (1) the pay rate and the basis, whether hourly, salary, commission or otherwise, as well as any overtime rate, (2) allowances, if any, claimed as part of the minimum wage, including meals or lodging, (3) the regular payday, (4) the name of the employer, including any “doing business as” names used by the employer; (5) the physical address and telephone number of the employer’s main office or principal place of business, and a mailing address if different, and (6) the name, address and telephone number of the employer’s workers’ compensation carrier.

Third, AB 887: The Fair Employment and Housing Act already outlaws gender indentify discrimination. But, this new law amends the act to include another protected classification to the list: “gender expression”. Gender expression refers to a person’s gender-related appearance and behavior, whether or not stereotypically associated with the person’s assigned sex at birth. –Adam K. Treiger

Are Called Teachers Exempt Ministers Under Federal Civil Rights Laws?

Adam Treiger — Wed, 05 Oct 2011 16:43:04 +0000

In 2005, a Lutheran Church and school in Michigan named Hosanna-Tabor, which is affiliated with the Lutheran Church-Missouri Synod, terminated Cheryl Perich, a called teacher, because she threatened to sue under the Americans with Disabilities Act (“ADA”), and because she did not try to resolve her dispute through internal church procedure. Perich taught third and fourth grades. Some subjects Perich taught were secular, and some religious. Perich sued under the ADA’s anti-retaliation provisions. The Church prevailed in the federal trial court, but that decision was overturned by the 11th Circuit Court of Appeals. The United States Supreme Court hears arguments on the case this week, and is expected to rule sometime next year. Under the ADA, it is clear that churches can discriminate on the basis of religion. And, under the Ministerial Exception to the federal civil rights laws, churches can discriminate against their ministers, and courts are not allowed to interpret or interfere with church doctrine. The main issue in the Perich case is whether Perich, a called teacher, is a minister, as the trial court found, or a secular employee, as the appeals court found. This question will not be easy to answer. On the one hand, Perich spent approximately six hours and fifteen minutes of her seven hour day teaching secular subjects, and using secular textbooks, without incorporating religion into the secular material. Moreover, the primary duties of called teachers at this church were identical to those of non-called teachers, who do not have the title of minister, and at least one non-called teacher who taught at the church was not Lutheran. On the other hand, Perich participated in and led religious activities throughout the day, Perich was required to be a “fine Christian role model”, Perich underwent extra religious training as a result of completing her colloquy, and Hosanna-Tabor gave Perich the title of “commissioned minister” and held her out to the world as a minister by bestowing this title upon her. There have been numerous cases that have ruled on the issue of whether a teacher at a church school is a minister. But, this will be the first time the Supreme Court will decide the issue. –Adam K. Treiger

Testing Applicants for Employment

Adam Treiger — Tue, 13 Sep 2011 23:13:45 +0000

Let’s say you want to give a real-world test to an applicant for employment, to see if she will fit in on your team. You don’t just want to give the applicant a hypothetical test, you want to put her to work for a shift or two to see how she really does. You don’t want to make it official, no paperwork or w-4s or paychecks, you just want to give the applicant a trial run. No problem, right? Well, no. If you take that course of action, and if the applicant gets hurt on the job, your workers compensation carrier may not recognize the person as an employee, and thus may not cover you if the worker sues in a personal injury lawsuit. On the other hand, your general liability carrier may recognize the worker as an employee, and deny coverage under its workers compensation exclusion. This leaves you holding the bag. Regarding California wage and hour law, it is likely that the Labor Commissioner, or the court, will deem the person as your employee, and therefore rule that you owe minimum wage for the hours worked, as well as a myriad of penalties based on, for example, your failure to pay wages, failure to keep proper employment documents, failure to provide (or at least document) meal and break times, etc. Along with that liability comes the obligation to pay 10% interest and the employee’s (not to mention your own) attorneys’ fees. And, if you do this a lot, watch out for a class action. Given all of this, it is better to stick with the good old fashioned interview coupled with a hypothetical skills test to make your most educated guess as to whether the job applicant is right for your team. And then, if you hire the applicant, have her sign an “at will” employment agreement so that if things don’t work out, you can terminate the new employee for any reason or no reason at all (as long as you don’t have an illegal reason – e.g., discrimination, harassment or retaliation). –Adam Treiger

CA Employment Law Applies to CA Employers’ Out-of-State Employees who Occassionally Work in CA

Adam Treiger — Tue, 23 Aug 2011 04:22:47 +0000

On June 30, 2011, the California Supreme Court ruled, in Sullivan v. Oracle Corporation (2011) 51 Cal. 4th 1191, that California employment laws apply to out-of-state employees working for California employers when those out-of-state employees perform work inside California. The plaintiffs in Sullivan were three employees of a California-based employer who lived in Colorado and Arizona, but who occasionally performed work in California (110 days, 74 days and 20 days, respectively). The employees claimed they were not paid overtime in accordance with California law for the days they worked in California. The California Supreme Court issued three specific holdings in the Sullivan case:

(1) the California Labor Code applies to overtime work performed in California for a California-based employer by its out-of-state workers;

(2) California’s Unfair Business Practices law (Business and Professions Code section 17200) also applies to such overtime work; and

(3) California’s Unfair Business Practices law does not apply to overtime work performed outside California for a California-based employer by non-resident workers even if the employer failed to comply with the overtime provisions of the federal Fair Labor Standards Act.

Left unresolved by Sullivan are the following issues:

(A) whether the ruling would be the same if an employee works only a partial day in California, and the rest of the day in a different state;

(B) whether the ruling would be the same if an employee is denied rights under California employment law other than overtime pay (e.g., meal and rest periods or vacation pay); and

(C) whether the ruling would be the same if an out-of-state employee working for an out-of-state employer performs some work in California.

Thus, given the rulings of Sullivan, California employers who employ non-California workers should consider being careful to comply with California employment law with respect to such workers whenever they perform work inside of California’s borders. –Adam K. Treiger

Meal and rest period — not one in the same.

Adam Treiger — Fri, 10 Jun 2011 00:20:32 +0000

Under California law, employees are entitled to take certain paid rest breaks, and unpaid meal breaks, during the work day. If an employee is denied those rights, she is entitled to be compensated with one hour of pay for each day in which the employee was denied those rights. See Labor Code section 226.7. Until now, it was unclear if an employee suing for such compensation was limited to recover only one hour of pay for each day she was denied either a rest period, or a meal period, or both, or whether an employee could recover two hours of pay in a day where the employee was denied both a rest and a meal period. That question was answered by the California Court of Appeal in the case of United Parcel Service, Inc. v. Superior Court (2011) 192 Cal. App. 4th 1043. In that case, the court followed a recent federal case in holding that employees may recover up to two additional hours of pay in a single work day for meal and rest period violations if both a meal and rest period are missed in that day. –Adam K. Treiger