The Big Question
When can you Terminate Employees on Workers’ Comp?

Steven McNamara is a Senior Partner at McNamara & Drass, LLP. He is a Certified Specialist in Workers’ Compensation by the State Bar of California and is a frequent speaker and author on workers’ compensation issues, including his regular participation as a panelist at Employers Group’s annual Workplace and Employment Law Update. His firm specializes in the defense of employers and insurance carriers on all issues before the WCAB.

The answer to this question has vexed employers for many years. There is no clear, easy answer. Labor Code Section 132a (LC§132a) contains harsh penalties for improperly terminating an industrially injured employee, including reinstatement with full retroactive wages, benefits and interest.

This article will address several scenarios where termination has been recognized as not violating LC§132a, and will then discuss a 2003 Supreme Court Decision that has refined the analysis of whether a termination violates LC§132a. There is still no “bright line” answer. Put simply, if the employer treats the industrially injured employee the same as all other employees, the employer should not run afoul of Labor Code §132a. The opinions expressed herein, however, are those of the author and are not intended to be a substitute for a complete legal and factual analysis of any specific situation.

This article covers only remedies available at the Workers’ Compensation Appeals Board (WCAB), through LC§132a. Any time an employer is considering termination of a disabled employee’s employment, counsel should be consulted for any civil implications, particularly under the Fair Employment and Housing Act (FEHA) or Americans with Disability Act (ADA) statutes. An injured worker may pursue, either simultaneously or subsequently, both Labor Code Section 132a and FEHA/ADA claims.

Labor Code Section 132a prohibits discrimination against an employee who has sustained or claims to have sustained, an industrial injury. A claim for benefits under LC§132a must be filed within one year of the discriminatory act or the date of termination of the employee. The relevant portions of the statute state:

It is the declared policy of this state that there should not be discrimination against workers who are injured in the course and scope of their employment. (1) Any employer who discharges, or threatens to discharge, or in any manner discriminates against any employee because he or she has filed or made known his or her intention to file a claim for compensation with his or her employer…. is guilty of a misdemeanor, and the employee’s compensation shall be increased by one-half, but in no event more than $10,000.00 together with costs and expenses not in excess of $250.00. Any such employee shall also be entitled to reinstatement and reimbursement for any lost wages and work benefits caused by the acts of the employer.

Labor Code Section 132a was interpreted by the California Supreme Court in Judson Steel Corp. v. WCAB (1978) 22 Cal. 3rd 658, wherein the Court noted that the provisions of the statute are not limited to those enumerated actions, but further prohibit employers from discriminating against an industrially injured employee “in any manner.” This article, however, is limited to the issue of termination.

Historically, an employee only had to show that because of an industrial injury the employer engaged in conduct detrimental to the injured employee. This constituted a prima facie (i.e., established a fact in the absence of contradictory evidence) showing of discrimination under LC§132a. The burden then shifted to the employer to defend the action, by proving that the act was in no way related to the industrial injury, or that the act was “necessary” and “directly linked to business realities.” As will be discussed below, the burden on the employee to show a violation of LC§132a has changed, but the defenses to a LC§132a claim have not, and are addressed below.

Acts that are not discriminatory
The most common defense, and sometimes the easiest to prove, is that the action taken was in no way related to the claim of injury. LC§132a does not prohibit an employer from terminating an employee for violating the employer’s rules when the violation is neither caused by the consequences of the employee’s injury nor related to a dispute over compensation benefits. An example might be an employer’s policy of “three days no call, no show” constituting job abandonment. The employee does not contact the employer or forward a doctor’s off-work slip to the employer or insurance carrier. The employer terminates for job abandonment. The termination is not because of the injury, but is due to a violation of company policy.

Under the business necessity defense, an employer is not required to retain an injured worker if there is a reasonable belief the employee is unable to perform their usual duties, or unable to perform their duties without risk of further injury.

Before an employer can make this determination, the employee’s medical condition must have stabilized and there must be a determination regarding any permanent restrictions arising from the injury. Once it is determined that an employee’s condition is medically permanent and stationary and precludes the employee from returning to his/her usual and customary job (or any modified or alternative work that is available and for which they are qualified), then termination of the employment relationship does not violate LC§132a.

The business necessity defense may also include the need of an employer to replace a worker, which may result in no position being available at the time the employee attempts to return to work. This defense requires a fact intensive analysis. What constitutes a business necessity for a sole proprietor is vastly different than for a large employer.

The analysis of whether a termination is justified by business necessity will be determined on the facts in each individual case. It is much easier for a four-person machine shop to justify hiring a replacement lathe operator than for a two hundred-employee call center operator to explain why they had to permanently replace one operator!

The new analysis under Lauher
The area in which most employers have concerns is termination of an employee who is off for an extended leave, sometimes with no end in sight, and none of the above defenses apply.

In 2003, the California Supreme Court issued its decision in Department of Rehabilitation vs. WCAB (Lauher), (2003) 30 Cal. 4th 1281; 68 CCC 831. In Lauher, the Supreme Court declared that the courts had been improperly analyzing LC§132a for nearly 25 years. Contrary to prior Workers’ Compensation Appeals Board and appellate court decisions, the Court held that an employee did not make a prima facie showing of discrimination merely be showing that an act of the employer caused detriment to the injured employee. The Court held there was another step required in the analysis, namely “the claimant must also show that he or she had a legal right to receive or retain the deprived benefit or status, and the employer had a corresponding legal duty to provide or refrain from taking away that benefit or status.”

The Court further stated “we agree that for Lauher merely to show he suffered an industrial injury, and that he suffered some detrimental consequences as a result, is insufficient to establish a prima facie case of discrimination within the meaning of Section 132a.” The Court noted, “to hold otherwise would elevate those who had suffered industrial injuries to a point where they enjoyed rights superior to those of their coworkers.”

Stated another way, the burden is on the employee to show that they have been treated differently than a non-industrially injured employee and that the reason for the different treatment was the injury. The Court in Lauher concluded, “nothing suggests his employer singled him out for disadvantageous treatment because of the industrial nature of his injury.”

In sum, the burden on the injured worker to make a prima facie case under LC§132a has been dramatically increased.

Since Lauher, approximately nine cases have gone up to the Court of Appeals on Labor Code Section 132a issues, and in only one did the injured employee meet the burden of proving discrimination within the meaning of LC§132a. This does not mean employers now have free reign to treat industrially injured employees any way they wish. The golden rule is that you must treat the industrially injured employee the same as you treat all other employees.

Therefore, the question of when to terminate the employment of an employee who is industrially disabled boils down to “when do you terminate the employment of an employee who is disabled from work for non-industrial reasons?” To facilitate a uniform non-discriminatory approach, a company should have a published policy setting forth a reasonable length of time an employee can be disabled from work (six months, one year…) before the employee is removed from the payroll. As long as this policy is consistently applied, any claim under LC§132a should be defensible.

However, in the nearly four years since the Supreme Court’s decision in Lauher, there has yet to be a published appellate court decision addressing this approach. Although there is a WCAB panel decision that found a six-month termination policy, which applied equally to all disabled employees, it did not constitute discrimination under LC§132a. Savage v. Circuit City (2004) 32 CWCR 101.

If an employer implements a termination policy limiting the length of time an employee can be off work on disability, the question arises whether that policy can be applied retroactively to employees currently off work, or whether it must be limited to prospective application to new lost time claims? A retroactive implementation affecting industrially injured employees currently disabled from work may give rise to a claim of discrimination for altering the amount of time allowed off work. Thus, this author would suggest that until there is adequate clarification of this issue by the courts, the safe approach would be to apply the policy only to employees whose disability starts after implementation of the policy.

One caveat – a specific individual employment contract will likely supersede a general policy. So will a union contract. The union contract may give the employee a legal basis for keeping their job, and allow them to make a prima facie case of discrimination if the employer takes action inconsistent with the union contract (or employment contract). As pointed out by the Supreme Court in Judson Steel, a union may not bargain away its member’s statutory rights against discrimination. This has not changed. However, a union may bargain for greater rights than an otherwise at-will employee may have had.

‘Other’ issues
A related issue regarding workers’ compensation injuries is whether an employer can request that an employee resign as a condition of settlement of a workers’ compensation claim. The legal answer is yes. The question was addressed in Housman v. WCAB, County of Santa Barbara (1999) 64 Cal. Comp. Cas. 1091. In Housman, the defendant offered to settle the case by Compromise & Release, but required the injured employee to resign, and not seek future employment with the County as a condition of the Compromise & Release. The employee agreed, then filed a claim under LC§132a, claiming discrimination. The court noted, “Since defendant had no duty to enter into a Compromise and Release its attempt to put conditions thereto is legally appropriate. It is entitled to negotiate an agreement that is in its own benefit just as the injured worker is. The legal art of negotiation cannot constitute a discriminatory act unless it causes detriment to the employee.”

Because the employee could have refused to settle by Compromise & Release, no discrimination was found. Despite the legality of requesting a resignation, many insurance companies prohibit their counsel from requesting a resignation because it is outside the scope of underlying workers’ compensation policy, which is the basis for the representation.

Another common question is whether an employer can limit benefits to an employee on a workers’ compensation leave. The author believes the same analysis as set forth in the discussion above regarding Lauher would apply, but wishes to point out that a LC§132a claim may be pre-empted if the group health benefit plan or pension plan is governed by ERISA. ERISA contains clauses, which pre-empt LC§132a. Navarro v. AA Farming, et al. (2002) 67 Cal. Comp. Cases 145.

Conclusion
Labor Code Section 132a is alive and well. Although the Supreme Court has refined the analysis of whether a violation has occurred, nothing has changed about the state’s declared policy that there shall not be discrimination against industrially injured employees. There still is no clearly established guideline as to when an employee who is disabled due to an industrial disability can be terminated from employment.

This author believes, however, that if a company has a reasonable termination policy, which is applied to all employees, and is consistently followed (no exceptions!), and there is no agreement that supersedes the policy, then application of the policy should not give rise to a violation of Labor Code Section 132a.

By Leslie Hollis,
Vice President of Consulting Services

California businesses have become far more receptive to outsourcing in recent years than survey numbers previously suggested. A poll conducted by Strategic HR in 2003 of approximately 360 California employers revealed that outsourcing was considered the answer to many internal challenges faced by California employers. Namely, employee selection and retention. Talent pools were dwindling and continue to dwindle in the face of Free Agency (temporaries and consultants breaking away from corporate business and striking out on their own) and employers are faced with hiring talent for individual positions as opposed to hiring multi-faceted workers who are capable of handling more than one responsibility. Enter outsourcing to the rescue. This article offers some talking points when you need to request approval for outside consultants.

California employers surveyed responded that two of the reasons they consider outsourcing are the need to free up internal resources for other purposes, and that internal resources for particular functions were not available. The “top three reasons,” however, that employers consider outsourcing beneficial are as follows:

1. Reduce and control operating costs
Companies polled indicated that when they attempted to hire individuals for each position/task within the company, comprehensive compensation programs were so excessive that companies were forced to pass these additional costs directly on to their clientele. In such circumstances, the employer could no longer remain competitive in the compensation arena but the cost of product development, production and delivery was also impacted, thereby minimizing the net margins, the only real reason for remaining in business.

2. Improve company focus
Outsourcing provided the opportunity for the business to focus on its core strengths by outsourcing operational functions to an external expert. More so than not, the consultants hired brought with them a myriad of experience far above that which the company could afford to pay on a W-2 basis and, in fact, the businesses polled felt that the experience demonstrated by the consultant provided additional value to the organization.

3. World class expertise
Employers also touted the world-class experience and insight received within the realm of the outsourced topic – which came, in some cases, from consultants with experience in competitor businesses. Consultants hired to perform the jobs often were prior Fortune 50/500 employees with in depth training and knowledge in their field of expertise, and could lend additional insight as to how the “big guys” were challenged in much the same way as the contracting company. Enter strategic planning on a much larger scale for a reasonable fee and access to intelligence that would easily command six figures (plus benefits and bonus packages) if one were to entertain bringing such an expert onto the payroll.

HR’s role in outsourcing decisions
Since many businesses have limited resources, especially in the area of human capital, outsourcing lends extra hands and minds to support the primary focus and function of the business. Since the decision to invest funds lies solely in the hands of senior management, it is crucial that the HR function be able to educate the senior management team, in the most cost-effective way, to obtain expert services within the means the organization has earmarked for such expenditures.
Typical outsourced functions
Of the areas most notably outsourced, the following list of operational functions were determined to be the most likely candidates for outsourcing:

1. Payroll
2. Employee Benefits Including Leaves of Absence Management
3. Marketing and Public Relations
4. Project-based Human Resources (specific functions on project basis and Interim HR Solutions)
5. Training and Management Development Programs
6. Staffing
7. Technology

Vendor selection
Keep in mind that even when a company is ready to outsource and is just beginning to understand the value of so doing, several factors in vendor selection must be considered:

• Expertise in the field. A seasoned professional consultant should be able to offer up three to five professional references of similar firms/companies that the vendor has supported to determine how they rated the outsourcing function. These references should attest to the vendor’s reliability, credibility and reputation.
  
  
• Price. Clearly affordability is a factor and the function must be completed within a competitive pricing model in order for it to be cost-effective for the business.
  
  
• Additional “value-add” capabilities. When searching for a consulting vendor, understand the depth and breadth of the capabilities beyond the position(s) you are looking to outsource. That is, if number 4 on the list is something you would consider outsourcing, look at the vendor from the full range of HR functions they could support. An HR generalist consultant could provide support in areas of policy drafting, wage and salary administration, staffing as well as employee benefits. Be careful to seek out a multi-faceted consulting vendor so that you maximize the resources invested to produce the greatest value in return.

Outsourcing can be the ultimate cost-benefit when done appropriately, with much forethought and careful monitoring of the vendor relationship on an ongoing basis.

Supervisors Must Know Some HR

By Mark Nelson, J.D.,
Helpline Consultant

On the Employers Group Helpline, we hear quite a few stories about human resource professionals cleaning up after supervisors who make a compliance-related mess of their departments, not because the supervisors meant to do so, but because they didn’t know any better. Training your frontline supervisory staff on HR fundamentals is critical. It is no defense to the DLSE that your supervisor “thought she was doing the right thing” responding to employee requests to work through breaks so they could leave early.

If your 2007 training budget doesn’t allow for supervisors to take classes in legal issues, and you do not have a separate supervisory manual in addition to the handbook that clarifies as much, ensure that someone from HR at least briefs them on what they may and may not do when interacting with their staff.

Below are a few of the most common trouble areas we hear about on the Helpline and the areas you’ll most certainly want to cover with your supervisors.

Harassment complaints
The moment your supervisors are made aware of a harassment complaint, they must forward the complaints to HR’s attention, even if the complainants later retract the statement. Once a supervisor knows, the company is deemed to have knowledge.

If the complaint is against a supervisor and the subsequent investigation is inconclusive, your supervisor must be coached on how to maintain a status quo with the employee who brought the complaint. Retaliation claims can move forward even when the underlying complaint went nowhere.
When an employee approaches a supervisor to make a complaint, insure your supervisors don’t make promises that the company can’t live up to. Supervisors can assure the complainant’s identity will be kept as confidential “as practicable” but no one can know for sure that it won’t be necessary to discuss situations that make the complainant’s identity obvious.

Employee absences
Employee absences are tricky. Supervisors should be told to bring HR into the loop if an employee is hospitalized or absent for more than three days. Many supervisors mistakenly operate under the assumption that an employee must request FMLA before the company can designate absences as such. Any requests for leaves that touch on illness, injury, baby-bonding, or care of a family member should always find their way to HR – that day.

Job modifications
Employee requests for job modifications are equally tricky. When employees ask for accommodations that stem from medical conditions, supervisors should also know to involve HR immediately. If supervisors act alone, they may not fulfill the company’s obligation to engage in the interactive process required of disability accommodation.

Wage and hour issues
Until you’re comfortable with your supervisory staff’s knowledge of wage and hour law, tell them to run any schedule accommodations through HR before implementing. As addressed earlier, supervisors too often assume employees can waive their right to such things as daily overtime by simply declaring as much (i.e., bypassing the obligation to fill out a make-up request form). Moreover, we often hear that a supervisor wants to let employees work a Saturday at straight time (despite the fact the employees have exceeded 40 hours that week) and then give them a weekday off the following workweek. This is not okay outside the public sector.

Making promises
Last, but certainly not least, supervisors must be counseled on what promises they are permitted to make to their employees, whether verbally or in writing. While handbook disclaimers (i.e., declarations that only the president, in writing, can change the at-will status of an employee) may offer protection from a supervisor’s promise of a “long and fruitful career,” statements impacting at-will aren’t the only promises that can bind an employer. We often hear about side deals between a supervisor and employee or negotiating with an entire department to work, say, a holiday. Even if such tactics are the only way to get employees to show up, inequity with other departments can signal employee relations issues and potentially employment discrimination.

(Editor’s note: For more information on this subject, see the article on Page 9 “Why Managers Fail,” by Sue Sorensen. The article also includes information about Employers Group’s training classes for supervisors.)

Workers’ Comp Update
Pre-designation of Physician

By Dagmar Muthamia,
SPHR, Helpline Consultant

Last month, California’s Division of Workers’ Compensation (DWC) released new regulations and a newly revised form for the pre-designation of a personal physician for treatment of occupational injury or illness.

Since the passage of reform legislation in 2004, there has been some confusion over when, how and whom an employee may designate as a primary treating physician. Medical Provider Networks (MPN) and a system of opting out of the MPN by pre-designating a personal physician was in reform legislation (SB 899) that became effective January 1, 2005

Changes effective January 1, 2007
The passage of AB 2068 last year modified the workers’ compensation system’s medical guidelines by extending the sunset provision of the right to pre-designate a personal physician for treatment of an industrial injury and made technical, clarifying changes.

The right to pre-designate a personal physician for treatment of an industrial injury was extended to December 31, 2009. The original provisions for pre-designating a personal physician were scheduled to end on 4/30/2007. Along with this, the DWC must conduct an evaluation of the pre-designation program and present findings to the Governor by December 31, 2008.

The term “personal physician” was broadened to include a medical group provided the medical group is a single corporation or partnership composed of licensed doctors of medicine or osteopathy, which operates an integrated multi-specialty medical group providing comprehensive medical services predominantly for non-occupational illnesses and injuries.

AB 2068 also enacted a specific set of medical guidelines for the provision of acupuncture treatment if the Administrative Director of the Division of Workers’ Compensation failed to do so.

Another helpful provision deleted the seven percent limit on the percentage of workers that may pre-designate. This ended confusion and controversy over the calculation of this number.

Requirements for pre-designation
Labor Code Section 4600, as amended, specifies the conditions under which an employee can establish a valid pre-designation. The personal physician may be a medical doctor (M.D.), doctor of osteopathic medicine (D.O.) or medical group. In addition:

1. The employer must have a Medical Provider Network (MPN).
   
   
2. The notice from the employee must be in writing.
   
   
3. The pre-designation must have been made prior to the date of injury.
   
   
4. The employer provides non-occupational group health coverage under a health care organization, health maintenance organization or group health plan.
   
   
5. The designated personal physician must be the employee’s regular physician who has limited his or her practice to general practice or who is a board-certified or board-eligible internist, pediatrician, obstetrician-gynecologist or family practitioner and has previously directed the employee’s medical treatment and has the employee’s medical records. Or, the “personal physician” may be a medical group.
   
   
6. The employee's personal physician must agree to the pre-designation.

New form for pre-designation
Regulations to conform with the changes made to Labor Code section 4600 were approved by the Office of Administrative Law and filed with the Secretary of State on February 21, 2007. The new regulation and form (Title 8, California Code of Regulations, section 9780.1) can be found at http://www.dir.ca.gov/t8/9780_1.html

The physician does not have to sign this form. It may be signed by a designated employee of the physician or medical group. Other documentation of the physician’s agreement may also be acceptable.

If the employer does not have a properly established MPN, the employee may choose a physician of his or her own choice at a facility within a reasonable geographic area 30 days after the date the injury was reported.

Change of physician
Employees may also request a change of physicians. This is an older provision of the Labor Code that has not been amended since 1998. Labor Code Section 4601 states that an employee has the right to request a one-time change of physician. This may occur at anytime and may be a change to physician, a chiropractor or an acupuncturist. Prior to the date of injury an employee pre-select in writing a physician or a personal chiropractor or acupuncturist who has previously directed treatment of the employee and retains the treatment records. If the employer uses an MPN, the employee must be seen for an initial evaluation before being seen by a pre-selected physician or requesting a change of physician.

Notices
As has been mentioned in an earlier Employers Group article about Medical Provider Networks (November 2006 issue, article by Jeff Whitaker, Executive Vice President of Bolton & Company), it is critical that employers post information about the MPN and provide employees with notices informing them about the MPN, their right to pre-designate and the right to change physicians after an initial evaluation. There are three times that the MPN notification must be given: 1) Prior to the implementation of the MPN, 2) At the time of hire or rehire, 3) When employee is injured.

What you should do

• Make sure that you have up-to-date forms for the pre-designation of personal physician.
  
  
• Provide notices at the times mentioned above.
  
  
• Keep in close touch with your workers’ compensation carrier about the MPN and the pre-designation process.

(Editor’s note: Per the referenced article above about Medical Provider Networks, Bolton & Company is one of Employers Group’s preferred insurance partners. To contact Bolton for information about their services, email Katherin Scott, kscott@employersgroup.com.)

Unemployment Compensation
The DOL defines “Able and Available”

By Sarah Rios, Manager,
Unemployment Insurance Services

Recently, the Department of Labor (DOL) issued a Final Rule on the application of the following - being able and available (A&A) for work in order to receive unemployment compensation (UC) benefits (20 CFR Part 604). Failure for any state agency to comply with the rule would jeopardize their federal funding for the administration of its UC program.

As simple as it may seem, it is hard to understand because of the terminology used and the exceptions available. States will continue to retain wide latitude in crafting their UC laws and may even impose additional A&A requirements.

With the recent DOL regulations, a state may consider an individual to be able to work for all or a portion of the week they are claiming benefits, provided any limitation on his or her ability to work does not constitute a withdrawal from the labor market. In order to determine if the individual has withdrawn from the labor market, the state agency must determine the geographical scope of the labor market and whether the individual is offering services for which a labor market exists. This does not mean that job vacancies must exist.

A&A considerations
The ability and availability to work is demonstrated by the most recent separation from employment. The state may consider an individual able to work despite an individual’s illness or injury, unless the individual has refused an offer of suitable work due to an illness or injury. In determining an offer of suitable work the state may, among other factors take into consideration the individual education and training, commuting distance to work, previous work history, salary, fringe benefits and years employed.

The DOL listed additional circumstances that states may consider an individual available for work such as:

Temporary lay-off
Available to work only for the employer that has temporarily laid off the individual.

Jury service
If an individual has previously demonstrated his or her availability for work following the most recent separation from employment and is summoned for jury service, then they would be considered available for work while attending jury service.

Approved training
A state must not deny UC to an individual for failing to be available during weeks claimed while attending training with the approval of the State agency.

Self-employment assistance
A state must not deny UC to an individual for failing to be available while participating and meeting all eligibility requirements in a self-employment assistance program.

Short-time compensation
A state must not deny UC to an individual on a reduced workweek schedule due to the employer participating in a state approved workshare program as long as they are available for his or her normal workweek.

Alien Status
The alien must be legally authorized to work in the United States. The State agency must follow the requirements related to verification of the alien’s status.

Employers should note, that a person who is disqualified for UC benefits because of an A&A issue only, may still be subject to future charges if the individual lifts the disqualification. The best way to reduce UI cost is to get a favorable determination on the reason for separation. A tax rated employer who receives a favorable ruling on a separation that is not overturned, will not be charged.

Employers should continue to address A&A issues that remove a claimant from the labor market excluding the exceptions the DOL has listed. This is especially important for employers that use the reimbursable finance UI system.

Summer Hires and Child Labor Laws

With the summer vacation period rapidly approaching, employers will be receiving an increase in applications from students seeking temporary employment. Some of these students are considered “minors,” whose working conditions and hours are regulated by state and federal laws. In some instances, the state or federal law will ban the employment of minors entirely.

Under the California Educational Code, a “minor” is defined as a child under the age of six and any person under the age of eighteen who is required to attend school. Employers Group’s Helpline Consultants put together this overview for employers.

Permits to Work/Permits to Employ
A work permit will be required prior to employing a minor, even during the summer vacation, unless the minor is a high school graduate or has a certificate of proficiency. In California, any minor who is at least 12 years of age may be issued a Permit to Work by school officials; however, few occupations are available to them. Federal and state occupational restrictions are such that in most cases minors must be at least fourteen years of age to begin working. The permit contains the maximum number of hours a minor may work in a day, range of hours during the day, occupational limitations and any additional restrictions imposed at the school’s discretions.

A Permit to Employ is the employer’s copy of the work permit and expires five days after the opening of the next succeeding school year. It must be renewed in order to continue employment.

Occupational Restrictions
Minors under eighteen are restricted in any occupations declared by the Secretary of Labor to be hazardous. The complex and lengthy regulations are set forth in Title 29 Code of Federal Regulation Part 570, Subpart E. A selected listing of these are:

• Motor vehicle drivers and helpers
  
  
• Positions in plants manufacturing explosives
  
  
• Operations of a power-driven wood-working machine, a hoisting apparatus or a metal forming, punching or shearing machine
  
  
• Operators of bakery or paper products machines
  
  
• Mining, coal mining and logging occupations
  
  
• Positions involving exposure to radioactive substances
  
  
• Jobs involving the operation of circular saws, bandsaws, or guillotine shears
  
  
• Brick and tile manufacturing positions
  
  
• Occupations involving excavation, roofing, wrecking, demolition or shipping.

Persons over eighteen may be employed in almost any occupation. However, there are rare exceptions, such as particular employment situations involving the sale and service of alcoholic beverages and transporting hazardous material. The California vehicle code also has additional restrictions.

By Wendy Taylor,
Editor and Legislative Coordinator

The 2007 California Legislative Session is framed by some interesting new dynamics this year.

This Legislature has the largest new freshman class in years - nearly three dozen new members. So there is a steep learning curve for these members and their new staffs. On the positive side, the new legislators are excited and anxious to “make their mark.” The downside is that they have no knowledge of the previously proposed legislation that had been determined not to be workable. So we see many of the “same old” concepts coming back in the 2,700 new bills. (Note: the deadline for proposing new bills was March 2.)

An early presidential primary
The Legislature and Governor Schwarzenegger quickly moved to establish a February 5 presidential primary, usually held in June, and ostensibly to make California more relevant in national politics. It appears that numerous other states may pick the same date, making February 5 the new “Super Primary.”

Term limits
Term limits may make it onto the ballot. While the overall number of years a legislator could serve in office would be reduced from 14 to 12 years, it would permit all 12 years to be served in one house, and it would permit a “pass” for existing office holders who would normally be termed out next year. Assembly Speaker Fabian Nunez and Senate President Don Perata have a vested interest in this proposal - who both want to continue in their powerful leadership positions.

Positive support for the Governor
The Governor is operating with strong public support, unlike his tenuous position 18 months ago. He has received national press attention on AB 32 - the greenhouse gas reduction legislation he championed last year. Expect the Governor to continue his enjoyment of positive press by advocating and signing environmental measures.

Healthcare
Healthcare is the big “elephant in the room” this year. Governor Schwarzenegger is committed to expanding coverage for the uninsured. Assembly Democrats, Assembly Republicans, Senate Democrats and Senate Republicans all have healthcare proposals of their own.

Accomplishing healthcare reform this year will be a big challenge for a Legislature dealing with so many conflicting interests in the healthcare debate. If it happens at all, most believe it would be towards the end of Session, in August/September. Alternatively, others are speculating that an incremental progress could be achieved by covering uninsured children.

Without a doubt, the spiraling cots of medical care must be addressed. And the ability of the State to mandate employer-provided coverage is seriously doubtful based on the Fourth District court decision overturning Maryland's employer mandate.

New bills are really “old” ones
Many of the bills introduced this year are repeats of failed bills from previous years.

• Minimum Wage - AB 71 (Dymally) would index the minimum wage to the Consumer Price Index. Expect that bill to pass the Legislature, only to be vetoed by the Governor; he signed a minimum wage increase into law last year, but without the automatic index.
  
  
• Meal breaks - Class action lawsuits against employers by employees who allege violation of the law requiring a meal break of 30 minutes after five hours of work continue to proliferate.

Three bills have been introduced on this issue: SB 212 (Wyland), sponsored by the Chamber of Commerce; SB 342 z9Ackerman); and SB 737 (Calderon). Because of labor’s influence in the Legislature, the only bill that could pass is a negotiated compromise between labor and business.

• Workers’ Comp - Several attempts in this category are underway. Legislation will likely focus on two areas: increasing permanent disability benefits under AB 1212 (Nunez), which will be opposed by the business community, and adjusting temporary disability guidelines to clarify unintended consequences arising from the prior reform package.

Other employer-related bills
Miscellaneous employer-related bills include AB 435 (Brownley), which would require employers to maintain wage and job classification records for 10 years, and AB 537, (Swanson), which would increase the circumstances under which an employee can take family leave to include parents-in-law, domestic partners, siblings, and grandparents.

We are happy to provide to any member upon request a comprehensive list of bills that we are following. For the current list of 2007 employer-related bills, go to the following link on the Employers Group Website.

Should you Terminate Unauthorized Aliens?

By Jim Kuns, J.D.,
Senior Helpline Consultant

An Italian employee accepted a position with a company in the United States. The top company official assured him that his job was secure if he performed well. He was brought to this country on an E-1 visa, which became invalid after ownership of the company shifted to French nationals. His employer claimed it legally terminated his employment under federal law because the Italian employee was no longer authorized to work.

The Ninth Circuit ruled against the company, thus supporting an earlier jury decision finding the company had wrongfully terminated the employee under California law, and that factors other than employment status were the real reason for the termination. The court also determined that under the circumstances of this case the company could have put him on a non-paid leave of absence while he obtained authority to work, or helped him in a timely manner to obtain an H1-B visa like it did for a similarly situated employee, see - Giancarlo Incalza v. Fendi North America, Inc.(2007).

Case background
Giancarlo Incalza, an Italian citizen, worked for Fendi North America, Inc. (the company) in Rome. He accepted an offer to fill a sales position in the company’s New York City store. The head of the company assured him that his employment would be secure as long as he continued to perform well. The company secured a Treaty Trader (E-1) nonimmigrant visa for him and renewed it several times. He worked in the New York store from 1990-2000.

In 2000, he became the manager of the company’s Beverly Hills store. He received good performance reviews, even though his supervisor reportedly didn’t like him. French businessmen purchased a controlling interest in the company in 2002. In 2003, the company was informed by their legal counsel that the E-1 visas, granted to employees who were Italian nationals, were no longer legal. This affected Incalza and one other employee. The company obtained an H1-B visa for the other employee, but not for Incalza.

The company fired Incalza in January 2003 telling him, incorrectly, that nothing could be done to remedy his visa problems. He was planning on getting married to a U.S. citizen, and would soon be eligible to work in the U.S. He asked for and was denied permission to take an unpaid leave of absence. He later asked that if he solved his visa problem could he have his job back. He was told he would not be rehired. In April 2003 shortly after his marriage, he obtained legal work authorization status. The company hired another employee to fill the position.

Employee sues the company
Incalza sued the company in a California state court claiming wrongful termination, and discrimination based on his Italian heritage. The company successfully had the case moved to federal court. The company argued that it was compelled by the Immigration Reform and Control Act of 1986 (IRCA) to terminate Incalza when his E-1 visa became invalid. Additionally, the company claimed that federal law is applicable in the case and state law should not be used.

Conflicts between state and federal law
Federal law prohibits employers from knowingly employing unauthorized aliens. Specifically, IRCA states that it is “unlawful for a person or other entity, after hiring an alien for employment in accordance with [the Act], to continue to employ the alien in the United States knowing the alien is (or has become) an unauthorized alien with respect to such employment.”

On the other hand California law supports employees who are fired in violation of an express or implied agreement that they will not be discharged without good cause. Additionally, in California, the law applies to illegal immigrants as well as other employees. In California, “[a]ll protections, rights, and remedies available under state law, except any reinstatement remedy prohibited by federal law, are available to all individuals regardless of immigration status who have applied for employment, or who are or who have been employed, in this state.” And, immigration status is irrelevant in legal proceedings, which enforce those state laws. Except where immigration status is relevant to comply with federal immigration law.

A Conflict between state and federal law occurs when “…either 1) it is not “possible to comply with the state law without triggering federal enforcement action or 2) state law stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress…” Tension between federal and state law is not enough to require that state law be preempted.

If an employer terminates an employee in compliance with IRCA there appears to be no conflict between state and federal law. However, conflict arises where an employer fires an employee “…for reasons that are unlawful under state law, and is required to pay damages for the violation of state law.”

Court’s determination
The court determined that the company could have been in compliance with federal law in this case by granting Incalza's request for an unpaid leave so he could resolve his work authorization problems. The court noted that “IRCA requires that an employer not ‘continue to employ’ workers if it discovers that they are unauthorized, but does not bar an employer from suspending an employee or placing him on unpaid leave for a reasonable period while he remedies the deficiency in his status.”

The court continued to say: “We read the IRCA implementing regulations as deeming an individual ‘employed’ only if he is performing work and receiving remuneration for that work. The regulations define employment as ‘any service or labor performed by an employee for an employer within the United States. …An employee is defined as ‘an individual who provides services or labor for an employer for wages or other remuneration.’ …Thus, an entity does not ‘continue to employ’ an alien in violation of [IRCA]… unless that individual is continuing to perform a service or labor for the employer for which it is providing remuneration. The employment status of an employee placed on leave without pay is, in effect, suspended during the period that he is neither working nor receiving pay.”

The court agreed with a lower court decision, and ruled against the company. The court accepted the argument that Incalza's manager wanted to get rid of him. He had recommended against promoting Incalza to manage the Beverly Hills store in the first place. He also was concerned about Incalza's negative attitude, and what effect that would have on the store and the staff.
Incalza’s manager’s opinion of him was the opposite of his prior manager. He had consistently high performance reviews. His current manager insisted that Incalza's visa problems could not be remedied, even after Incalza reminded him that he would soon be eligible for a green card due to his upcoming marriage, and that the company resolved the status of a similarly situated employee.

The court agreed that a “…jury could have concluded that King did not favor installing Incalza as Beverly Hills store manager in the first place, and that he was looking for an excuse to remove him from the position.”

Locating and Locking-in Top Talent
High Touch Hiring

By Kim Shepherd, the CEO of Decision Toolbox, is an Employers Group partner and a recruitment solutions provider based in Southern California with locations across the country.

The highly competitive job market of late 2005 and 2006 is here to stay for the foreseeable future, so employers should not expect a respite from talent shortages, increased turnover and an ever-lengthening time to fill key positions.

Most of us are aware of the latest unemployment figures - 4.5% in Feb. 2007. This percentage dips even further in specific areas, such as Orange County, where unemployment is 3.4%. Further, the national unemployment rate for college educated workers is down to 2.2%.

Now consider that 3,824,200 jobs were advertised online in February, an increase of 682,400 or 22% from January, according to The Conference Board Help-Wanted OnLine Data Series™ (The Conference Board is a nonprofit business research group). Translated, there were 2.5 advertised vacancies online for every 100 persons in the labor force in February. The state with the largest increase in new postings was (you guessed it) California, which added 110,400 new job postings in February alone.

In this type of job market, a company's recruiting and sourcing strategy will only be as successful as its understanding of the needs of candidates it is trying to attract.

Courting top talent: high touch hiring
The unemployment figures tell us that your next hire is most likely employed, but looking for a better opportunity. These “Better Opportunity Seekers” require a high-touch hiring and on-boarding process. High touch hiring means:

• Sharing, through online job advertising, an insightful, in-depth look at your open position (don’t post your dry, dusty job description)
  
  
• Acknowledging and thanking everyone who submits a resume. This can be automated, but should, at a minimum, be a genuine “thank you” for both their interest and time investment. Even better, give them a sense of your hiring process, your time frame for making the hire, and where you are in the process.
  
  
• Immediately (within one to three days of receiving their information) reaching out to candidates who meet the requirements of your opening and performing an initial phone screen.
  
  
• Fast-tracking candidates who are a strong match for your needs and culture. This means giving interviews a priority over anything else on yours and the hiring manager’s schedule, and even being prepared to present an offer on the spot.
  
  
• Making prompt and reasonable offers and remaining open to negotiation.

In all of these “touches”, the Better Opportunity Seeker needs to be reassured of the opportunity presented, and guided through the complex HR process that includes phone calls, interviews, offers, and discussions.

The best way to keep the Opportunity Seeker engaged is to learn and respond to their “hot-buttons”. Ask what attracted them to the position and why they would consider leaving their current job. According to a recent survey by CareerBuilder.com, when applying for new positions, workers say the most important attributes they look for in employers are:

• Good career advancement opportunities (23%)
  
  
• Company's stability and longevity in the market (23%)
  
  
• Good work culture (20%)
  
  
• Ability to offer flexible schedules (11%)

Staying connected
Even a high-touch hiring process can fall prey to counter-offers and “no starts”. One of our clients developed a successful on-boarding strategy for new hires that significantly reduced this risk. They schedule a “lock down” lunch with the new hire prior to their start-date to discuss expectations on both sides of the fence. This meeting helps to keep the new hire engaged during what is typically a two-to-three week lag between offer acceptance and start-date. It is also an informal way to address any newly arisen concerns before they become deal-breakers at the 11th hour.

Building your bench
It’s inevitable: you stumble across a great asset to your team at a time when there are no openings, no opportunities to offer. What you can do when you encounter a candidate you're unable to hire immediately is to show your interest by making a formal offer with a blank start date. Once they are a part of your “virtual bench”, open the door to regular communication so that when the day arrives and you have an opening on your team, you can reconnect quickly and the building blocks of a relationship are in place.

Keeping house
A competitive job market also creates great temptation. Not only are hundreds of thousands of new jobs advertised each month in California, nearly half of employers (49%) expect to increase salaries on initial offers to new employees. Talk about the grass being greener.
To counteract temptation – and proactively address turnover – don’t forget to nurture your existing talent. For example, you can re-connect through competency-based assessment tools that are helpful not only for recognizing job performance, but also for the creation of individual learning plans - just be sure to put concrete action items and timelines in place. Everything from team-building exercises to individual leadership training programs can develop the talent you need internally, and there are a multitude of excellent programs available.

If you are seeing dollar signs, just consider what you spend trying to fill an open position – whether a new management position or a back-fill opening – and the expense is easily justified. If you are not sure where to start, just ask your team; most likely what they request isn’t expensive, and may even be free.

(Editor’s Note: Decision Toolbox has been the only recruitment solution that Employers Group recommends to its members since 2002. For more information on Decision Toolbox and their services, contact Katherin Scott at (213) 765-3949 or kscott@employersgroup.com.)

Why Manager’s Fail

Susan Sorensen, SPHR, is President of SSA Training, Inc., and has held management and executive level training and development positions with Fannie Mae, Jafra Cosmetics Company, Ryland Homes and MDC Holdings. She specializes in designing, developing and delivering training initiatives and management and leadership development program, communication skills, performance management, legal issues for management, succession planning, and more.

Human Resources managers often bear the brunt of management’s poor performance, including employee relations issues, complaints, lawsuits, turnover, unclear and unfair performance management practices and its relationship to the delivery of overall operational goals.

According to the Center for Creative Leadership (CCL), a research and training organization devoted exclusively to leadership and management practices, manager “derailment” occurs in up to 40 percent of management placements. Common forms of derailment include transfer to a less responsible position, demotion, reassignment of some or all of the manager’s responsibilities, or – less commonly – dismissal. Regardless, the manager is perceived to be mediocre, weak in his/her management duties and thus static in career potential. Managers are at risk for derailment at key career junctions, including:

• Initial hire
• Promotion, new role
• Change of boss
• Significant change in organizational direction

Based on CCL and other organizational studies a variety of underlying factors are attributable in derailing a manager’s potential.

The seven most deadly managerial ailments and common symptoms include:

1. Interpersonal Issues
   Person fails to build relationships or communicate well. Too insensitive, arrogant, or obstinate, or conversely inappropriately informal, or lacking appropriate respect. May become overly emotional, stressed out, or hostile under pressure; lacks poise or charisma needed to lead.
   
   
2. Inflexibility
   Person struggles with change. Cannot accept new expectations, strategies or being managed and evaluated by new boss; disagrees with management decisions; cannot get on-board with changing ideas or tactics he/she doesn’t agree with; insensitive to complex, shifting political nature of higher level position.
   
   
3. Staffing / team issues
   Person is ineffective at staffing, picks wrong people (clones or drones), has low standards or too high of standards; unclear in expectations; fails to develop; fails to support; does not resolve team problems; doesn’t share credit or create team spirit, cannot create a high-performing team.
   
   
4. Strategic vision issues
   Person cannot see “big picture,” does not create effective longer-term strategies, or possess ability to see trends and devise plans to meet future challenges. Gets mired in everyday details, and avoids the complexity of higher-level management responsibilities. The person may depend upon mastery of a particular skill or expertise in one functional area too much; may lack other critical breadth of skills or knowledge needed to do the job.
   
   
5. Micromanaging
   The person over-controls, meddles, and remains too closely attached to lower level responsibilities; fails to delegate; continues to want to do the work, not manage the people who do the work; does not “lead.”
   
   
6. Integrity / ethics issues
   The person betrays trust, breaks promises, says one thing, then denies or changes it – often at the expense of others; pushes limits of company values and ethical behavior. The person may posture for promotion, play politics, “report up” well, but be ruthless with peers and subordinates; blames others for problems; takes all credit for successes.
   
   
7. Results issues
   Inability to deliver desired results. Possibly does not know what to do to turn problems around; fails to diagnose systemic problems or devise appropriate solutions; does not produce results consistently.

The most critical question for HR and senior management is why? Why is derailment so prevalent? How can these issues exist? Why do managers fail?

Here’s how it happens. Promotion into management most often occurs because an employee is a successful individual contributor. They demonstrate exceptional ability to perform specific technical, individual work. One fine day, someone offers the stellar individual contributor a new role as a “manager” (though the title may be supervisor, lead, foreman, etc). Elated by the promotion, the individual contributor goes home on one final Friday night, calls their mother and excitedly shares the great news.

Monday morning comes, however, and newly promoted managers, sitting in a fine new office, realizes that they are now responsible for the following (and more):

• Their own work (of course, they still have their individual work)
• Hiring (perhaps hiring their own replacement)
• Performance reviews (oh, by the way, they are due NOW!)
• Pay decisions
• Disciplining
• Terminations
• Budgeting
• Work assignments
• Team results
• Training
• Coaching / Motivating
• Keeping their management practices legal and defensible

In management seminars conducted across the nation, when existing managers are asked if they were immediately sent to training to learn how to do these new responsibilities, few, if any, raise their hand. If no training is provided, how do they learn these critical skills? Most managers agree that they learned how to manage through:

• Trial and error
• Making mistakes
• Doing what other managers do
• If lucky, some good coaching

Training is often a sub-set or a partner of HR. Developing a culture where all managers receive essential training in the “how-to’s” of management cannot be wasted dollars for the long-term benefit of the organization. HR professionals must join forces with their training staff to advocate for these programs. In the end, baseline training for managers leads to a more productive organization, more successful managers, and fewer HR headaches.

(Note from EG’s Training Department: Sue Sorensen is available to deliver on-site leadership development programs to Employers Group members. She will also be delivering two Management Essentials workshops on April 23-24 in Sherman Oaks and on May 1-2 in Costa Mesa. Please call 800.748.8484 for more details or email training@employersgroup.com.)

Workaholic or Just Enthusiastic?
Why you Need to Know the Difference

By Jennifer Shin,
Research Marketing & Communications Coordinator

When you get down to it, Americans are self-proclaimed workaholics. Not only do we vacation less than most of the industrialized world, many of us are all too familiar with the concept of bringing work home, to the gym, or the store – really anywhere our blackberry receives reception.

However, while any good employer knows that highly motivated employees are true assets to any organization, HR professionals are finding that a workaholic’s need to work is so exaggerated that it ultimately may hurt business with burnout, resulting in an employee’s endangered health, reduced productivity and deteriorated social functioning.

Work enthusiasts vs. workaholics
Often the term “workaholic” has a negative stereotype – a person driven by stress with an obsessive need to control the outcome of their job. According to Wilmar Schaufeli, a professor of organizational and clinical psychology at Utrecht University in the Netherlands, there is a clear difference between a workaholic and a “work enthusiast.”

Schaufeli argues that contrary to workaholics, engaged employees have a sense of energetic and affective connection with their work activities and they see themselves as able to deal well with the demands of their job. Even though they may work very long hours, they experience their work as expanding and nourishing rather than toxic. They know how to use time wisely and, unlike stereotypical workaholics, they manage stress and chaos, juggle multiple priorities, and appear to be in the flow of their work. They are energized and engaged with little concern for the clock on the wall.

Workaholics, on the other hand, often end up managing and micromanaging details and are powerfully addicted to busy-ness. The desire for control becomes overwhelming and when it becomes impossible, poor performers are tired and frustrated. While high performers are motivated by a commitment to their work or to their mission, many workaholics are motivated by a fear of failure. The problem, then, is not long hours or a purposeful focus on work, but an unhealthy addiction.

Workaholics are bred not born
According to Shaufeli, there are situations that cultivate workaholic behavior. Organizations that have undergone a lot of changes, such as downsizing, mergers, or have had significant effects on the lives of their employees should especially be wary. Due to these changes, employees are expected to give more in terms of time, effort, skills and flexibility, whereas they now receive less in terms of career opportunities, lifetime employment, and job security. Workaholism also occurs in situations where there is a lack of adequate information to do the job well or an absence of job resources. Lack of support from supervisors is especially important, even more so than support from coworkers. Burnout is also higher for people who have little participation in decision making.

Work/life balance
Through recognition, you can create an atmosphere conducive to work enthusiasts. In other words, work environments that are oppressive fail to recognize an individual’s quality of work or an employee’s personal life outside of the job, lead to workaholic behavior. Consequently, the key to countering workaholism is for employers to instill an environment that promotes work/life balance for employees.

When employees examine the number of hours spent at their jobs, thinking about their jobs, or working from home, the numbers often reflect an obvious imbalance. However, by promoting work/life balance employers are demonstrating care for their employees, which helps to distinguish the fear and dissatisfaction that promotes workaholism. Instead, by being supportive of non-work issues, employers are more importantly promoting work enthusiast behavior by creating the understanding that employers are on the employee’s side – there to help, encourage and praise.

The first step in promoting work/life balance is to keep in mind that imbalance is often caused by events in employees’ personal lives. Many employees have dependent family members, marriages, commitments and issues, which may interfere with their work life. Thus, in order to maintain work/life balance, employers should be flexible and initiate benefits that acknowledge an employee’s life outside of work.

Work/life initiatives to help produce work enthusiasts:

• Emergency childcare assistance
  
  
• Seasonal childcare programs (such as March break or Christmas)
  
  
• Eldercare
  
  
• Flexible working arrangements
  
  
• Family leave policies
  
  
• Other leaves of absence policies such as educational leave, community service leaves, self funded leave or sabbaticals
  
  
• Employee assistance programs
  
  
• On-site seminars and workshops (on such topics as stress, nutrition, smoking, communication etc)
  
  
• Internal and/or external educational or training opportunities
  
  
• Fitness facilities, or fitness membership assistance (financial)

For more information or questions about Research Services, please contact us at surveys@employersgroup.com or 213.765.3935.