December 09 Labor & Employment Law Update

Written by: Crystal M. O'Brien, Esq.

California Update: Employer’s Reliance on Attorney’s Opinion is “Confidential & Privileged”

Generally, employers who seek an attorney’s advice as to how to classify employees as exempt or non-exempt from overtime laws can rest assured that the effort will not pave the way to lawsuits.  However, this was not necessarily Costco’s experience in a class action lawsuit which resulted in the grocery warehouse giant having to produce a letter setting forth how and why it should manage compensation for its employees. 

When the letter supporting what advice of counsel Costco had relied on was discovered by attorneys for the putative class bringing wage and hour claims, Costco asserted attorney-client privilege to prevent being forced to turn over discussions it had on reliance that the same would remain confidential.  Nonetheless, a discovery referee reviewing the letter “in camera” or under special evaluation determined that the letter should not be protected from rules that ordinarily protect the attorney-client relationship and related work product from disclosure.  While the letter was critical to the class, Costco appealed the discovery referee’s decision which was the hinge pin of the class action.  On appeal, Costco prevailed.  The decision is positive for corporate compliance purposes.  This is because employers who aim to compensate employees correctly and seek advice of counsel should not fear that (1) they cannot disclose information and questions to arrive at good business decisions and (2) legal experts who proffer advice for employee classification should not lose the protections afforded to similarly situated counsel on matters of workplace policy. 

To read the Costco v. Superior Court (November 30, 2009) decision in full, click here.

Federal Update: Exposure of Hospital Staff’s Substance Abuse Didn’t Protect Dr. From Strained Relations

The First Amendment to the U.S. Constitution can protect an employee’s right to free speech, however, there are limits.  Free speech protection does not enable employees to be shielded from the consequence of strained work relations --- even amidst allegations that the same is in connection to an employee’s exercise of free speech.  In Couch v. Board of Trustees of Mem. Hosp. of Carbon County (10th Cir.), a federal appeals court concluded that a physician who had engaged in an effort to change hospital policies for drug testing staff was not the target of a retaliation campaign due to the doctor’s pointing to limited work opportunities and generally strained relationships.  While Dr. Couch alleged he was being mistreated as a consequence of his promotion of anti-alcohol/illegal drug use policies, the trial court and appellate court concluded that the doctor simply did not have a case.  As the court pointed out, more most be done to prosecute a free speech violation case than to assert allegations of adverse employment action.  Adverse employment action is demonstrated by demotions, terminations, and disciplinary action and not merely strained relationships and investigations of misconduct. 

To read the full November 17, 2009 decision, click here.

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