MMC, INC. E-Newsletter  Volume IV, Issue No. 6

June, 2008

Paving The Way To Business Success

For the past 25 years, MMC has enjoyed its role as a leader for innovative management solutions. Our turn-key solutions for Human Resources, Payroll, Employee Benefits, Risk Management and Compliance issues makes us an invaluable partner for successful businesses. You can reach our team of helpful professionals at (800) 899-MMCI (6624).

MMC University Announcement

History of MMC

In this issue

• Attention All California Drivers: Hands-Free Now Required
• Rising Gas Prices = Employer Paid Mileage Hikes?
• Legal Update: FMLA Doesn't Provide For 'Back Door' Emotional Injuries Award

Attention All California Drivers: Hands-Free Now Required

July 1, 2008 Marks Date For New DMV Laws For Cell Phone Use

As if California commuters did not have enough to worry about with rising gas prices, traffic congestion, and construction to build more and improved roads, drivers must now limit cell phone use while driving. Essentially two laws go into effect on July 1st in California. Drivers who are under the age of 18 are prohibited from using cell phones while driving unless required to due to an emergency. Drivers who are 18 and over must restrict cell phone use to only that which can occur via hands-free devices.

What this means for employers is that if you employ someone who is under the age of 18, you will not be able to communicate to him or her while they are driving. This means you should implement, if you haven't already, a system for logging delivery or commuting time to a check-in from employees prior to departing one place and upon arrival. For employers of those who are 18 and over and who are required to be available while commuting, those employees should be provided with headsets, blue tooths, or other mobile devices which enable hands-free communications while these employees are in route. If these devices enable the employee to perform usual and customary jobs as required by the employer, the purchase of these devices should arguably be an employer-paid expense.

To read more about this law click DMV July 1, 2008 laws. You should also feel free to call MMC's Employment Law Department at (800) 899-MMCI (6624).

Rising Gas Prices = Employer Paid Mileage Hikes?

IRS Authorizes Another Increase In Mileage Reimbursements

Perhaps not a minute too soon, the IRS has increased the optional standard mileage rate. Generally, what this means is for taxpayers who itemize deductions, they can deduct up to 58.5 cents per mile for miles driven for business, charity, medical, or in connection with moving. This increase is in response to rising gas prices and is an extraordinary increase in that it comes mid-year as opposed to at the end of a year, if at all.

In a statement issued during a June 26, 2008 press release, IRS Commissioner Doug Shulman offered: "Rising gas prices are having a major impact on individual Americans. Given the increase in prices, the IRS is adjusting the standard mileage rates to better reflect the real cost of operating an automobile," said Shulman. "We want the reimbursement rate to be fair to taxpayers."

What Does This Mean For Employers?

In states like California, employers are not legally required to apply IRS mileage rates to their mileage reimbursement policies. However, employers are responsible for reimbursing employees their actual expenses incurred as a requirement and condition of employment. (See link below to read Cal. Labor Code section 2802.) Because IRS mileage rates provide fair guidance as to how to calculate actual mileage expense, many employers readily rely on these rates. Thus it is anticipated that many employers will follow the IRS's lead and increase mileage reimbursement accordingly.

Legal Update: FMLA Doesn't Provide For 'Back Door' Emotional Injuries Award

In a June 27, 2008 published decision, Farrell v. Tri-Met, the 9th Circuit heard and affirmed a decision awarding an employee money damages based on an employer's repeated failure to approve time-off requests, which allegedly resulted in the employee suffering emotional injuries. In Farrell, bus driver Frank Farrell suffered from diabetes, eczema, asthma, chronic bronchitis and emphysema. In connection with these medical conditions, Farrell repeatedly sought time off, which his employer did not always grant. Farrell argued that the repeated denials not only violated his rights under the Family Medical Leave Act ("FMLA") but caused Farrell to develop an anxiety and depression disorder.

When Farrell successfully brought a civil action against his employer for damages related to FMLA violations, he was awarded $1,110 by a jury. Although the award was relatively minor, his employer Tri-Met appealed. Tri-Met argued that Farrell was not entitled to a monetary award because Congress never intended for FMLA to provide employees with an award for emotional injuries or to punish employers by enabling punitive damages to employees. (Ordinarily, civil plaintiffs with emotional injuries must establish a connection between emotional harm which manifests in actual medical injuries, and a civil wrongdoing, which Farrell failed to establish.)

The appellate court agreed with Tri-Met. While Congress did not contemplate FMLA as providing awards for emotional damages in connection with FMLA violations, or to punish employers for violating employee rights, Farrell was entitled to an award for actual damages suffered. Because the Court reasoned that the jury based its award to Farrell on actual wages lost as a result of Tri-Met's repeated denials, the Ninth Circuit affirmed the jury's award. Thus Tri-Met was required to pay Farrell's damages.

The Farrell decision highlights the importance of employers' compliance with federal, state and local leave laws. A failure to comply with labor and employment laws protecting employee rights exposes businesses unnecessarily to civil lawsuits, attorney's fees, and poor press. To read the decision in full click: Farrell v. Tri-Met.

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