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Although not a recent case, the decision discussed below is worth repeating during this down business cycle when some smaller and less profitable business sell to larger more profitable competitors. The business that does the acquiring should be aware of the implication of this case as it relates to successor liability for violations of the Family Medical Leave Act (FMLA).

Contract Transport Inc. took over a transport contract with the U.S. Postal Service from Byrd Trucking around June 2003. Shortly after the purchase of the Byrd Trucking contract, Ronald Cobb, a truck driver who worked for Byrd for three years before being hired by Contract Transport in June 2003, became ill and needed time off of work. Due to Mr. Cobb’s inability to work, due to his medical condition, Contract Transport terminated the employment of Mr. Cobb. Mr. Cobb then filed suit claiming that his termination violated the federal Family & Medical Leave Act (“FMLA”).

Contract Transport argued that Cobb was not eligible for FMLA leave because he had not worked for Contract Transport for the minimum of 12 months required under FMLA. While the lower court agreed with Contract Transport, the reviewing Appeals Court, in June 2006, reversed the lower court, holding that Cobb was an eligible employee for FMLA purposes and deemed Contract Transport potentially liable for violating the FMLA.

As the Appeals court noted, an employee is only eligible for FMLA leave after working for a covered employer for at least 12 months. However, work for a covered employer includes work performed for the employer from which leave is requested and any previous employer to whom the current employer is a “successor in interest.” 29 USC §2611(4)(ii)(II). Whether a “successor in interest” relationship exists is determined based upon the totality of the circumstances. However, the key factors examined are:

• Substantial continuity of the same business operation
• Use of the same plant
• Continuity of the work force
• Similarity of jobs and working conditions
• Similarity of supervisory personnel
• Similarity of machines and equipment
• Similarity of products and services
• Ability of the predecessor to provide relief.

Significantly, the Sixth Circuit rejected the argument that successor liability could only apply following a merger or transfer of assets. The court ruled that successor liability was applicable even in the absence of a merger or asset transfer.

This decision should serve as a clear reminder for employers that acquire on-going businesses, or succeed other companies in certain contracts, that newly acquired employees may be eligible for FMLA leave based upon time of service to the previous employer. If your business is considering the purchase of another business or taking over the contract services of a failing business, please consider consulting with an attorney about these and other issues that may impact how you handle the ongoing employment relationship of the acquired company’s employees.

In Spielbauer v. County of Santa Clara, 45 Cal.4th 704, cert. denied (June 22, 2009), the California Supreme Court reversed the lower court and affirmed the general rule that public employers have the right to compel employees to participate in interviews during investigations, and the employers may use a threat of discipline to compel the interview by the employee, so long as the employee has not been required to waive his Fifth Amendment privilege against self-incrimination. The Court of Appeal had held that an employer must secure a formal grant of criminal immunity from the local prosecuting agency before requiring an employee to answer questions about work-related misconduct. But the Supreme Court of California disagreed, and instead held that, in the public employment context, an employee may be compelled under threat of discipline to answer questions about the performance of his or her duties, so long as the employee is not required to waive any right against self-incrimination.

In such a circumstance, the employee’s statement cannot be used against him in a criminal proceeding and will be excluded from evidence. This rule of excluding such evidence is based in part on a public policy that believes public employees owe unique duties of loyalty and trust to their employers and the public at large and public entities must be able to promptly investigate and remedy breaches of such trust. The Supreme Court found this exclusionary rule sufficient to protect the interest of the employees without overburdening the employers. Therefore, public employees should be careful about refusing to answer questions about performance of their official duties when they are given assurances by their employer that such statements will not be used against them in future criminal proceedings. Refusing to participate in such investigation or interviews may result in discipline or termination.

If you are an employer with employees who work outside, you should be aware of the California Heat Illness Prevention Program and Regulations. These rules not only apply to those who work outside all day, but may also apply to those employees who work both in and outside in a given day. Where employees are spending any significant portion of the day outside, the rules should be complied with to avoid regulatory violations.

The Heat Illness Prevention Regulations address such topics as shade requirements, drinking water requirements, heat illness training requirements and other related matters. Feel free to review the following links, and contact our office if you have further questions in this regard.

Heat Illness Prevention FAQ from Cal-OSHA:
http://www.dir.ca.gov/dosh/heatIllnessQA.html

Cal-OSHA Heat Illness Prevention General Information and Links: http://www.dir.ca.gov/DOSH/HeatIllnessInfo.html

Video Information from Cal-Osha:
http://gov.ca.gov/index.php?/videoblog/9624/

Pocket Pamphlet in English (also available in Spanish) to Give to Outdoor Employees: http://www.dir.ca.gov/dosh/dosh_publications/HeatIllnessEmployeeEngSpan.pdf

Employer Sample Heat Illness Prevention Policy Published by Cal-OSHA: http://www.dir.ca.gov/dosh/dosh_publications/ESPforHeatIP3-10-19-07.pdf

Minimum Wage Update: Employers, please remember that effective July 24, 2009, the federal minimum wage has increased from $6.55 per hour to $7.25 per hour. While the increase will not impact California employers, who are already bound to comply with California’s higher minimum wage of $8.00 per hour, you should be sure your labor posters refer to this new standard. Multi-state employers need to be mindful of the federal minimum wage increase and ensure compliance.
You can visit www.calchamber.com or www.calbizcentral.com for updated posters.