MID-YEAR EMPLOYMENT LAW UPDATE AND U.S. SUPREME COURT RULES ON APPLICATION OF AGE DISCRIMINATION LAWS

June 26, 2008
REMINDER - Handsfree Cell Phone Use in Vehicles Mandated By California Law on July 1, 2008

Don’t forget that effective July 1, 2008, most Californians will be prohibited from using cell phones in motor vehicles unless they are used with handsfree devices. Certain exceptions apply to commercial vehicles and agricultural vehicles using two-way radio cell phones (e.g. Nextel), authorized emergency vehicles, tow trucks, certain transit vehicles, and the use of a cell phone for emergency services (e.g. 911 call).

As a result, if not already done, employers should prepare now for this upcoming handsfree cell phone law by establishing or revising a cell phone use policy that encourage employees to refrain from driving during cell phone use and to pull off the road to use a cell phone. Employers can also consider providing handsfree devices to those employees who operate motor vehicles in the course and scope of employment to minimize distractions during cell phone use in the vehicle and to promote compliance with this new law.

UPDATED - IRS Mileage Reimbursement Rate Increased to 58.5 Cents Per Mile on July 1, 2008

Effective July 1, 2008, the IRS made a rare mid-year adjustment to the mileage reimbursement rate to increase it to 58.5 cents per mile. The IRS made this adjustment in response to increasing gasoline costs nationwide.

As discussed in a previous version of the Personnel File, this mileage reimbursement rate is an effective tool to reimburse employees for personal vehicle usage under Labor Code section 2802 by tracking mileage incurred within the course and scope of employment. While the use of the IRS mileage reimbursement rate to reimburse employees is not necessarily presumptive under Labor Code section 2802, a recent California Supreme Court case clarified that it is the employee’s burden to establish that the reimbursement under this method did not fully cover vehicle expenses incurred in the course and scope of employment.

AGE DISCRIMINATION - Layoff Issues & U.S. Supreme Court Clarifies Burden of Proof in Age Discrimination Lawsuits Is On Employers

With the state of our economy and due to business necessities, more and more employers are implementing reductions in force. When layoffs affect employees 40 years of age and over, employers must comply with certain legal requirements. For example, under the Older Workers’ Benefit Protection Act ("OWBPA"), if a waiver of claims is requested by the employer from an employee 40 years of age or older in connection with a severance agreement or some other employment termination program (such as a reduction in force, layoff, or early retirement program), offered to a "group or class of employees" (two or more) the employer must allow the employee 45 days to consider the waiver/severance agreement. Additionally, every employee who is offered participation in the severance program must be informed in writing of: the class of individuals covered by such program; the eligibility requirements of the program; the time limits applicable to the program; the job titles and ages of the employees eligible or selected for the program; and the ages of all employees in the same job classification or organizational unit who are not eligible or selected for the program. This is a lot of information that must be provided to laid off 40+ year olds, for which many employers may not be aware and could result in lawsuits.

On June 20, 2008, the United States Supreme Court addressed the issue of age discrimination lawsuits in Meacham, et al. v. Knolls Atomic Power Laboratory 554 U.S. ___ (2008). Due to business necessities, the employer, Knolls, implemented a reduction in force. Approximately 100 employees chose to take the company’s buyout offer; nevertheless, Knolls had to eliminate 31 job positions. The method that Knolls chose to select individuals for layoffs was to have managers score their employees on "performance", "flexibility", and "critical skills". The scores were tallied, and of the 31 employees laid off, 30 were at least 40 years old. Twenty-eight of the individuals sued alleging that the method utilized to select individuals for layoff had a disparate impact on their age group under the Age Discrimination In Employment Act ("ADEA").

The ADEA states in part, "It shall not be unlawful for an employer . . . to take any action otherwise prohibited under [the ADEA] . . . where age is a bona fide occupational qualification reasonably necessary to the normal operation of the particular business, or where the differentiation is based on reasonable factors other than age . . ." Basically, the ADEA provides the employer with what are called "affirmative defenses" to an age discrimination lawsuit, one being the employer’s action was taken based on "reasonable factors other than age." The Court held that an employer defending a disparate impact claim, who plans to raise this defense must not only produce evidence supporting the defense, but the employer must also persuade a judge or jury of its merit. So the employer has both the burden of production and the burden of persuasion. The employer must show not only was a "non-age factor" at work, but the factor was a "reasonable" one for the employer to use, with "reasonable" being the primary focus.

The Court noted that an age discrimination case as opposed to other types of discrimination cases is of a "distinctive nature." Of significance, the Court also acknowledged, "[T]here is no denying that putting employers to the work of persuading factfinders that their choices are reasonable makes it harder and costlier to defend than if employers merely bore the burden of production; nor do we doubt that this will sometimes affect the way employers do business with their employees."

The effect of this case on employers defending themselves in age discrimination cases should not be significant since the Ninth Circuit here in California has already assigned the burden of this affirmative defense on employers; nevertheless, if employers are planning to reduce their forces and layoff employees, they must follow certain legal requirements and be prepared to "prove" their cases when defending age discrimination lawsuits.

This article was written by Shelline K. Bennett and Gage C. Dungy, attorneys with the labor and employment law firm of Liebert Cassidy Whitmore (LCW). Ms. Bennett (sbennett@lcwlegal.com) is a Partner and Mr. Dungy (gdungy@lcwlegal.com) is an Associate in the Fresno office and they can be reached at (559) 256-7800. For more information regarding the discussion above or on our firm please visit our website at www.lcwlegal.com, or contact one of our offices below.

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