Year in Review – Employment Law Changes for Employers in 2010

Year in Review – Employment Law Changes for Employers in 2010

2010 marked several significant changes to federal and state laws affecting employers. The following are key changes that happened in 2010 in Oregon, Washington, and California and what employers need to do to follow these new laws as well as the recent health care reform legislation.


All States


Health Care Reform. President Obama signed into law numerous reforms to health care laws in 2010. The reforms impose many requirements on employers and health plans. The effective dates range from 2010 to far into the future. Reforms that became effective in 2010 include:


   Many small employers (with fewer than 25 full-time employees) became eligible for a tax credit to purchase health insurance for their employees; and


   Some employment-based plans became eligible for reimbursement for providing coverage to early retirees and eligible dependants.


The reforms also provide that as of January 1, 2011, employers will be required to report the value of the employees' health coverage on the employees' W-2 forms. The IRS has recently announced, however, that it will not enforce this requirement in 2011 in order to allow employers additional time to update their payroll and tax reporting systems. Employers should review their plans with their benefits counsel or insurance brokers.




Medical Marijuana. The Oregon Supreme Court held that Oregon employers are not required to accommodate an employee's use of medical marijuana. Oregon employers may now enforce their drug and alcohol policies consistently amongst all employees, without regard to whether an employee has a prescription for medical marijuana if they test positive. Drug testing policies and practices should be reviewed by your employment attorney.


Restrictions on Credit Histories. Effective July 1, 2010, most Oregon employers are prohibited from using information in a credit history report to make employment decisions about applicants and employees. The law contains an exception if the information is "substantially job-related," but with no guidance as to what that means In such cases, the employer's reasons for using the information must be disclosed to the employee or applicant in writing. Job descriptions should be modified to include this requirement where job related.


Employers Must Post Mandatory Meeting Restrictions Poster. As of January 1, 2010, Oregon employers are required to hang posters that notify employees of their right to refrain from attending meetings in which the employers' opinions on political, union, or religious issues will be addressed.


Hands-Free Cell Phone While Driving. Oregon's law prohibiting cell phone use while driving (except for hands-free) went into effect January 1, 2010. Employer handbook policies should ban texting and cell phone use while driving. In emergency situations or business necessity, require all calls to be made with a hands-free device, or better yet, only after pulling off the road safely.


Increased Accommodation of Religious Dress and Observances. Oregon employers must now allow employees to use vacation time or other leave to engage in religious practices or observances. It is now also an unlawful employment practice to restrict employees from wearing religious clothing, taking time off for a holy day, or taking time off to engage in a religious observance or practice unless it causes an undue hardship on the employer.


Minimum Wage Increase. Effective January 1, 2011, Oregon's minimum wage will increase by ten cents, to $8.50 per hour.




Medical Marijuana. In September 2009, the Washington Court of Appeals in Roe v. Teletech Customer Care, LLC addressed the issue of whether an employee who failed a drug test because she was using medically prescribed marijuana could be terminated. The case created more questions for employers than it answered. The case was appealed to the Washington State Supreme Court, and briefs were filed during 2010. The Washington Supreme Court has scheduled argument for January 18, 2011, so it is likely that there will be a decision and some clarification on this issue during 2011. Meanwhile, employers should review drug-testing policies and should consult an employment attorney if an employee raises a medical-marijuana question.


Regulations Regarding Leave for Victims of Domestic Violence, Sexual Assault, or Stalking. In 2008, the Washington State legislature added leave protection for the victims of domestic violence, sexual assault, or stalking, including allowing employees to take leave to deal with these types of events. In July 2010, the Washington State Department of Labor & Industries issued regulations that provide guidance to employees and employers about when leave is available, how employees may request leave, what types of leave are available, how employers can verify an employee's request for leave, and other issues. The regulations became effective September 1, 2010. Employers should be familiar with these regulations, and should carefully evaluate any employee request for time off related to these types of events.


Cell Phone Use While Driving. In 2007, Washington prohibited the use of cell phones to make calls without using a hands-free device and sending or reading text messages. When these laws were originally passed, these were secondary offenses, meaning that police could only ticket drivers who were pulled over for another violation. As of June 10, 2010, talking on a cell phone without using a hands-free device and reading, writing, or sending a text message are all primary offenses, meaning that police may pull drivers over if they witness these activities. Employers should review their handbooks and policies to confirm that employees who drive comply with all traffic laws, and should consider reminding employees of this recent change in the law.


Minimum Wage Increase. For the first time since 2008, the state minimum wage increased effective January 1, 2011. Washington State's minimum wage is calculated to track changes in the Consumer Price Index. That index increased during 2010 for the first time since 2008. The new minimum wage is $8.67 per hour. Washington remains the state with the highest minimum wage in the country.


Employment Security Department Audits On The Increase. The Employment Security Department has increased its audits of employers in an effort to find unpaid unemployment taxes. While that alone is not newsworthy, this is: ESD was so successful in doing so that the U.S. Department of Labor bestowed its Unemployment Insurance Innovation Award – Integrity on ESD. It specifically highlighted the arrangement that the Washington ESD, Washington L&I, and Washington Department of Revenue have to share their audit information with each other. Employers are reminded that in another year of budget woes in Olympia, state agencies can be expected to increase revenue any way they can. Employers who have any question about whether they have classified employees correctly or are paying appropriate unemployment taxes or workers' compensation premiums should contact an employment attorney for assistance.




Employers Must Provide Paid Time Off For Employees to Donate Bone Marrow and Organs. SB 1304, effective January 1, 2011, requires private employers with 15 or more employees to provide leave as follows: employees who have exhausted all available sick leave are permitted to take a leave of absence with pay, not exceeding 30 days for the purpose of organ donation and not exceeding 5 days for bone marrow donation. Employers must restore an employee returning from leave for organ or bone marrow donation to the same position held by the employee when the leave began or an equivalent position. In addition, employers are prohibited from interfering with an employee taking organ or bone marrow donation leave, and from retaliating against an employee for taking that leave or opposing an unlawful employment practice related to organ or bone marrow donation leave. Employers with 15 or more employees should update their leave of absence policies to include this new leave.


Changing Benefit Plans For Retirees Is Not Age Discrimination. AB 1814, effective January 1, 2011, provides that California law does not prohibit an employer from providing health benefits or health care reimbursement plans to retired persons that are altered, reduced, or eliminated when the retiree becomes eligible for Medicare benefits.


Meal Period Exemptions For Certain Industries and Employees. AB 569, enacted in September, 2010, exempts from California's meal period requirements employees in a construction occupation, commercial drivers, employees in the security services industry employed as security officers, and employees of electrical and gas corporations or local publicly owned electric utilities, as defined, but only if those employees are covered by a valid collective bargaining agreement containing specified terms, including meal period provisions. If employers with collective bargaining agreements want to take advantage of this new law, they should ensure that their agreements include provisions for meal periods.


Terminating An Employee For Having An Unlawful Non-Compete Agreement With A Former Employer May Support a Claim for Wrongful Termination. In Silguero v. Creteguard, Inc., the employee signed an agreement with the former employer which prohibited the employee "from all sales activities for 18 months following either departure or termination." The employee's former employer called her current employer to advise them of the non-compete agreement. The new employer terminated the employee's employment out of "respect and understanding with colleagues in the same industry," notwithstanding its belief that "non-compete clauses are not legally enforceable here in California." The Court held that because of Business and Professions Code section 16600's legislative declaration of California's settled public policy in favor of open competition and employee mobility, the employee had a viable claim for wrongful termination in violation of public policy against the new employer. Employers should carefully evaluate any agreements employees have signed with prior employers and assess whether and how those agreements may be enforced against the employee.


Arbitration Agreement Unenforceable When Agreement to Arbitrate "Buried" In Another Agreement and Employee Was Not Given A Copy of the Arbitration Rules. In Trivedi v. Curexo Technology Corporation, the Court found that an agreement to arbitrate was procedurally unconscionable, and therefore unenforceable. The arbitration agreement was buried in an employment agreement the employee was required to sign, and nothing was done to bring the employee's attention to the arbitration agreement. The agreement also required that the arbitration be conducted in accordance with the rules of the American Arbitration Association (AAA). The Court relied on three primary factors in making its ruling that the agreement was unenforceable: (1) the agreement was prepared by Curexo without input from the employee; (2) it was a provision of another mandatory agreement; and (3) the employee was not given a copy of the AAA rules. These factors, when viewed together, resulted in the Court ruling that the agreement was unconscionable. All employers with arbitration agreements should have them reviewed by counsel for compliance with this and several other recent rulings limiting the effectiveness of these agreements.


Employers and Employees May Not Agree to Shorten the Statute of Limitation for Wage Claims. In Pellegrino v. Robert Half International, Inc. (RHI), recruiters brought an action against RHI alleging that RHI failed to comply with Labor Code provisions pertaining to overtime compensation, commissions, meal periods, itemized wage statements, and unfair competition. RHI argued that Plaintiffs' claims were barred because they entered into agreements that shortened their statutes of limitation from four years to six months. The Court held that as a matter of public policy, the reduction of the statute of limitations was unenforceable. The right to wages is a statutory right that cannot be waived; therefore, the employees could not agree to reduce the statute of limitation on wage claims.


Kin Care Does Not Apply When Sick Leave is Unlimited and Does Not "Accrue." Labor Code section 233 requires that employees entitled to accrued sick leave can use up to half of the annual accrual amount to care for certain ill relatives. In McCarther v. Pacific Telesis, the California Supreme Court ruled that this law does not apply to paid sick leave policies where the employee does not accrue a set amount of sick leave per year. Pacific Telesis's employees were allowed to take paid time off whenever they were sick; they did not accrue sick days, and the number of days they could take was unlimited. The Supreme Court held that kin care obligations apply only to employers "that provide a measurable, banked amount of sick leave." In a plan like Pacific Telesis's, employees did not accrue time off, thus the amount of time an employee would have for kin care leave could not be determined.


"Stray Remarks" Admissible To Support. Discrimination claims. The Plaintiff in Reid v. Google, Inc. filed an age discrimination lawsuit against his former employer, Google, Inc. Reid alleged, that numerous employees made derogatory age-related remarks to Reid. The Court examined whether California courts should follow the federal .rulings in which statements that non-decision-makers make or that decision makers make outside of the decisional process are deemed "stray," and they are irrelevant and insufficient to support a claim. The Court disagreed , and held that application of the stray remarks doctrine is unnecessary and its categorical exclusion of evidence might lead to unfair results. This shows how important it is for employers to crack down on co-worker teasing and discriminatory remarks.


Independent Contractor Status Examined Under California Law for California Workers, Regardless of Choice-of-Law Provision in Contract. In Narayan v. EGL, Inc., truck drivers were operating in California and delivering goods in California. However, they had signed independent contractor agreements which stated that they were independent contractors and that Texas law would govern the agreement between the parties. The drivers filed suit in California, claiming they were misclassified as independent contractors and were entitled to unpaid overtime wages, business expenses, meal compensation and other relief under the California Labor Code. The court held that it should apply California law to the employment relationship and the statutory claims brought by the drivers, not Texas law, and the drivers were employees under California law. This ruling may undermine choice of law provisions in employment and independent contractor agreements. Those agreements should be reviewed by legal counsel.




Nevada's legislature meets on a biennial basis, with legislation and regulatory changes taking effect every other year. Thus, with the upcoming legislative session set to begin in February 2011, it is anticipated that this year should see a host of Nevada specific changes in the various disciplines of labor and employment law. BHB maintains a significant Nevada presence in this area and will certainly present these changes in future updates, as developments occur.


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