On February 25, 2014, the Ninth Circuit Court of Appeals issued its decision in Escriba v. Foster Poultry Farms, Inc., holding that employees who affirmatively decline to take FMLA leave do not have the protections of FMLA.  Maria Escriba worked in a Foster Poultry Farms, Inc. (Foster Farms) processing plant in Turlock, California for 18 years.  She was terminated in 2007 for failing to comply with the company’s “three day no-show, no-call rule” at the end of a previously approved two week period of leave that she took in order to care for her ailing father in Guatemala.   Escriba filed a lawsuit under the Family and Medical Leave Act (FMLA) and its California equivalent, the California Family Rights Act (CFRA).  The parties disputed the characterization of Escriba’s request for a two-week period of leave.  Foster Farms claimed that Escriba requested vacation leave, not FMLA leave.  Escriba claimed that Foster Farms knew the purpose of her leave was to care for her ill father and therefore her termination was an unlawful interference with her rights under the FMLA.  Foster Farms responded that, although Escriba provided an FMLA-qualifying reason for taking leave, she explicitly declined to have her time off count as FMLA leave.

The trial court characterized the case as a classic “he said, she said” matter which focused on what Escriba told her supervisors. Escriba’s claims therefore proceeded to a jury trial in 2011.  Before Escriba’s claims were submitted to the jury, both parties moved for judgment as a matter of law (JMOL). The trial court denied Foster Farm’s motion and took Escriba’s under advisement, pending the jury’s determination. After the jury returned a verdict in favor of Foster Farms, Escriba renewed her motion for JMOL and requested a new trial. The trial court denied both of her motions. Foster Farms, as the prevailing party, then moved to tax costs against Escriba but the trial court declined to do so.  Both parties appealed the respective adverse rulings against each of them to the Ninth Circuit and it affirmed the trial court’s rulings on all issues.

When analyzing the merits of the case, the Ninth Circuit said that the FMLA does not expressly state whether an employee may defer the exercise of FMLA rights under the statute. The pertinent FMLA regulations promulgated by the Department of Labor in 1995, however, provide some guidance.  After an employee alerts the employer of desiring to take leave for a reason that would qualify under the FMLA, the “employer will be expected to obtain any additional required information through informal means.” (29 C.F.R. § 825.303(b).) During this “informal” process, the employee will be expected to “provide more information.” Id.

The regulations go on to state that the “employee need not expressly assert rights under the FMLA or even mention the FMLA,” but the employer “should inquire further of the employee if it is necessary to have more information about whether FMLA leave is being sought by the employee, and to obtain the necessary details of the leave to be taken.” (29 C.F.R. § 825.302(c).)

The Court reasoned that, “an employer’s obligation to ascertain whether FMLA leave is being sought” strongly suggests that there are circumstances in which an employee might seek time off but intend not to exercise his or her rights under the FMLA.  According to the court, “[a] compelling practical reason supports this conclusion.  Holding that simply referencing an FMLA-qualifying reason triggers FMLA protections would place employers like Foster Farms in an untenable situation if the employee’s stated desire is not to take FMLA leave. The employer could find itself open to liability for forcing FMLA leave on the unwilling employee.”  Therefore, the Court concluded that an employee can affirmatively decline to use FMLA leave, even if the underlying reason for seeking the leave would have invoked FMLA protection.

The Court rejected Escriba’s claim that if an employee is permitted to affirmatively decline FMLA leave that would be tantamount to waiving it, and waiver of FMLA rights is not permitted under the regulations.  Escriba pointed to the regulation providing that “[e]mployees cannot waive, nor may employers induce employees to waive, their rights under FMLA.” (29 C.F.R. § 825.220(d).)  The Court found instead that affirmatively declining the present exercise of a right in order to preserve it for the future is fundamentally different from permanently relinquishing that right.

The Court concluded that viewing the evidence in the light most favorable to the jury’s verdict, there is substantial evidence that Escriba elected not to take FMLA leave.  After her initial request for a leave to go to Mexico, there were two more meetings and Escriba was asked twice (through an interpreter) if she needed more time in Guatemala. Escriba twice answered “no.”  Further, Escriba’s supervisor testified that she then told Escriba to visit the Human Resources Department if she later decided to request more than two weeks of leave.  The Court found that a jury hearing this evidence could conclude that the supervisor had “inquire[d] further of the employee . . . about whether FMLA leave [was] being sought,” (per 29 C.F.R § 825.302(c)), and that Escriba’s two “no” responses clearly indicated that she did not intend to take FMLA leave.  The Court also found that the fact that Escriba approached her supervisor in the first place rather than going directly to the Human Resources Department was in itself telling because, as Escriba conceded, her supervisor had previously approved all of Escriba’s vacation requests in, but Human Resources had handled all of her requests for FMLA leave – which the evidence showed, she had successfully requested on fifteen prior occasions.  Thus, substantial evidence supported the jury’s verdict that Escriba did not intend to take FMLA leave.

Takeaway:  This case was a win for the employer but employers should beware that this case is not a free pass for them to impose upon employees the responsibility of specifically requesting FMLA leave and/or requesting that qualifying leave be designated as FMLA leave.  The Ninth Circuit’s decision in this case is very fact specific and each situation must be analyzed on its own based on the relevant circumstances.

Summary of Program

Employee policy handbooks are essential for employers in today’s litigious environment. While preparing the handbook and consistently enforcing the policies contained therein may take time and money, it is time and money well spent. Why?  Because the enforcement of effective policies and procedures contained in a carefully prepared and customized handbook can be one of the best defenses an employer has when it is sued by an employee.

This hands-on, in-depth, and informative seminar and training session will outline the ins and outs of drafting an effective employee handbook. You will receive recommended language regarding certain policies and best practices to meet your business needs and will leave with the information and knowledge necessary to complete your handbook.

Seminar/Training Program

Date:     March 20, 2014

Time:    10:00 a.m. – 2:00 p.m.

Location:  400 Capitol Mall, 11th Floor, Sacramento, California

Cost:   $750

For details of this seminar/training and to register, please click here.

 

On March 20, 2014, my colleagues Meagan Christiansen, Chelcey Lieber and I will be presenting a seminar called “The Ins and Outs of Preparing the Right Employee Handbook for Your Business.”  In preparing for the seminar, we reviewed some examples of the increasingly popular prepackaged, one-size-fits-all employee handbooks that we have heard about or have been asked to review.  These templates are floating around the internet at attractive prices.  The quiz attached contains actual text taken from the more odious samples, highlighting some of the traps for the unwary: seemingly complete templates may not be up-to-date, might not be compliant with the law in your state, and, by definition, are never tailored to the employer’s business needs, industry, or size.   To see the quiz and review the results, please click here.

We are not suggesting that employers who have relied on these templates need to immediately have a handbook bonfire. However, be advised that your handbook may need some minor revisions or a total overhaul.

For employers who do rely on handbook templates, who have and outdated handbook, or who have no handbook at all, we encourage you to attend our low-cost handbook workshop on March 20. For a minimal cost, we’ll bring our model verbiage, list of must-have policies, experience, and the most current laws and practical tips and work with you to draft or update your handbook to fit your company’s needs. More importantly, you will gain the comfort of knowing your company has a current and compliant handbook and a powerful tool in combating today’s litigious environment.

For more information on this and other upcoming seminars, please click here.

Under California law, non-compete provisions with an employee are generally unenforceable.  Statutory exceptions to this rule include the seller of a business’s goodwill or a membership interest in an LLC.  Courts have also recognized a judicial exception to this rule: where the non-compete is necessary to protect an employer’s trade secret information.  This judicial exception seeks to balance the tension that exists between an employee’s right to mobility versus the employer’s need to protect its valuable business information.

A recent decision from a federal district court in the Northern District of California shows what a fine line it is between permissible and impermissible non-competes.  In Sunbelt Rentals, Inc. v. Victor, 2014 U.S. Dist. LEXIS 14416, a company that operated rental centers sought a preliminary injunction against one of its former employees who had joined a competing company.  In addition to alleging a claim for trade secret misappropriation, Sunbelt accused Victor of breaching his employment agreement which contained a non-compete/non-solicitation provision.  The provision at issue was an agreement by the employee that he would not solicit any customer “who purchased or leased products or services from [Sunbelt] at any time during the 12 calendar months immediately preceding the termination of this agreement for any reason and for or with whom employee had contact, responsibility or access to confidential information related to” the customer.  Sunbelt argued that Victor had breached this provision of his agreement and thus, was entitled to injunctive relief against Victor.

Victor opposed the motion for preliminary injunction by arguing that the “non-compete” provision in his employment agreement was unenforceable under section 16600 of the California Business and Professions Code.  The Court began by recognizing that under this section “covenants not to compete are generally unenforceable” and that this section “represents a strong public policy” of California.  The Court continued by recognizing the three statutory exceptions to 16600 as well as the judicially-created rule that such provisions are not necessarily invalid when “necessary to protect trade secrets.”

Sunbelt attempted to argue that the “non-compete” was enforceable because it only sought to prevent its former employees “from using Sunbelt’s confidential information to solicit Sunbelt’s customers.”  The Court rejected this argument finding that the subject provision was much broader.  The Court noted that it prevented the solicitation of any customers who had done business with Sunbelt during the preceding 12 months, even if that customer was no longer doing business with Sunbelt.  Further, the Court found that the provision would apply if Sunbelt could show that its former employee merely had access to confidential information, not that the former employee had used such information to make the solicitation.

Given this, the Court found that the subject “non-compete” provision went too far and was thus unenforceable under section 16600.  (The Court did find that a contractual provision preventing the former employee from soliciting his former coworkers was, at least at the preliminary injunction stage, valid.)

The Sunbelt opinion once again demonstrates the high level of scrutiny courts apply when an employer accuses a former employee of violating a non-compete contractual provision.  Great care must be exercised in preparing such provisions to ensure that they do not run afoul of section 16600.  Should a court invalidate such a provision, the employer may be left with having to carry a heavier burden to establish that the employee has misappropriated trade secret information in order to prevent the unfair competition.

By:  Brendan J. Begley

A number of recent California appellate decisions reveal hidden traps that may ensnare employers in administrative proceedings involving employee claims for unemployment or workers-compensation benefits. Such proceedings typically appear routine and uncomplicated. Nonetheless, missteps in handling those routine and relatively low-risk claims can greatly increase an employer’s exposure to liability in a separate civil action alleging wrongful termination, harassment, discrimination, retaliation, or similar claims.

Continue Reading Traps for Employers in Routine Unemployment and Workers Comp Proceedings