Wilke Fleury Partner and Chief Lobbyist, John Valencia, will address The Federation of State Medical Boards (FSMB) on November 1st in New Orleans. Mr. Valencia has been invited to present on "The Use of MedSpas in California to Facilitate the Nonphysician Practice of Medicine." Mr. Valencia will chronicle the recent, successful enactment into law by California Governor Jerry Brown of Assembly Bill 1548 to counter these unlawful practices – a project of Wilke Fleury client, the American Society for Dermatologic Surgery (ASDS).

The measure was strongly supported by the Medical Board of California.

The Federation of State MedicalBoards is a national non-profit organization representing the 70 medical and osteopathic boards of the United States and its territories. The FSMB’s 2012 Board Attorneys Conference convenes over two days to address key, patient-protection issue developments in the states.

Recent Federal Court Decision Deems Obesity a Disability Under the ADA
Studies estimate the rate of obesity in this country to be at an all-time high – over one-third of adult Americans are now considered clinically obese. As this trend has risen over the years, many courts have grappled with the question of whether obesity may be considered a disability under the Americans with Disabilities Act (ADA) such that employers must offer accommodations to their employees whose obesity interferes with their job performance. A recent federal court decision out of Louisiana adopted the EEOC’s liberal view on this issue, holding that obesity on its own may be considered a disability under the ADA, even absent a showing of an underlying physiological disorder – something other courts have required in the past.

In EEOC v. Resources for Human Development, Inc. (827 F.Supp.2d 688 (E.D. La. 2011)), the employee at issue supervised the employer’s day care program and weighed over 500 pounds. Although she had received exemplary performance reviews, she was ultimately fired based on concerns over her “limited mobility” and difficulty performing CPR. The employee later died due to complications from her obesity, but the EEOC brought suit on her behalf, arguing that a person with “severe obesity” (which they defined as having body weight in excess of 100 percent above normal) is disabled under the ADA. The employer, on the other hand, argued that there must be a showing of underlying physiological disorder – such as a cardiovascular or respiratory problem – in order to bring the condition within the meaning of a “disability” under the ADA. The employer’s position was supported by holdings in several other federal court cases. The court, however, was not persuaded, and adopted the EEOC’s broader standard.

Although no court in California has similarly recognized obesity as a disability in and of itself under the ADA or FEHA, California employers should consider the Louisiana decision a harbinger of a more liberal approach to the issue. Employers who encounter obese employees seeking accommodations under the ADA should consider seeking legal advice before dismissing such requests outright.

Employee Wellness Programs Are Increasingly Popular, But Not Without Risk
In an effort to confront the problem of obesity in the workplace before it becomes an issue, many employers are implementing wellness programs. Wellness programs encompass a broad array of approaches to incentivizing healthier lifestyles and promoting health and wellness. Some offer rewards for adopting healthier habits such as losing weight or quitting smoking, and some simply encourage employees to have better nutrition or to be more active. The most typical arrangement rewards participants in the program with reduced health plan premium costs (which are usually automatically deducted from paychecks), but other common examples include gift cards or additional paid time off as incentives for participation or reaching certain specified goals. Studies show that up to 60% of employers now offer some type of wellness program to their employees.

Implementing these programs can appear to be a win-win for employers, as they may result in workers losing weight, becoming healthier, avoiding costly medical issues, and missing work less frequently. However, employers should be aware of certain pitfalls that may accompany workplace wellness programs. Employers should avoid implementing wellness programs that are too aggressive, such as requiring employees to undergo a health risk assessment. The ADA states that such assessments must be voluntary, so participation cannot be a standard for employment. In addition, the recently implemented Genetic Information Nondiscrimination Act (GINA) prohibits employers from asking about employees’ genetic information, so questions about family history may violate the law. Moreover, the Health Information Portability and Accountability Act (HIPAA) forbids employer medical plans from charging higher rates based on health status – so a health assessment or wellness program designed to ferret out smokers, for instance, may violate HIPAA. (There are exceptions to this provision for employer wellness programs that meet certain criteria, such as providing alternative rewards to employees who cannot or should not achieve a particular health goal.) Finally, employers should take care not to allow certain employee health information to fall into the hands of those making employment decisions. A terminated employee could easily allege that he was fired not based on his job performance, but rather because of a health condition that may be protected under the ADA.

The potential for liability should not dissuade employers from implementing wellness programs at all. Such programs have proven successful in improving employee health and morale and reducing health care costs. If in doubt about the legality of such programs (or certain provision in such programs), employers should seek legal advice.

The California Supreme Court has further clarified the administrative exemption from overtime pay requirements. In Harris v. Superior Court, the Supreme Court found that the “administrative/ production worker” test is not a dispositive tool in determining whether an employee is exempt from overtime pay. Rather, courts must consider the particular facts and apply the language of the statutes and wage orders at issue. While the Court’s decision appears to provide more latitude for employers, the Court gives minimal guidance for determining what actually constitutes an administrative exemption.

California’s Mandatory Overtime Law and its Three Exemptions:
According to Section 510 of the California Labor Code, employers must pay overtime to any employee who works more than eight hours a day or forty hours a week. However, Wage Order No. 4-2001 establishes three exemptions to California’s mandatory overtime: The executive exemption, the administrative exemption and the professional exemption.

The administrative exemption covers employees who perform work directly related to management policies or general business operations of either the employer or the employer’s clients. Employees who fall under this exemption must customarily and regularly exercise discretion and independent judgment, and must work under only general supervision. Furthermore, they must either perform specialized or technical work requiring special training, experience or knowledge, or they must execute special assignments and tasks. There is also a minimum salary requirement of two times the State’s minimum wage for full-time employment.

Case Background:
Plaintiffs, who were claims adjustors, brought a class action lawsuit alleging that their employer erroneously classified them as administratively exempt from overtime pay. Plaintiffs moved for summary adjudication, arguing they were not exempt as a matter of law. The trial court granted Plaintiffs’ motion. The Court of Appeal affirmed the trial court’s decision by using the “administrative/production worker” dichotomy test.

The “administrative/production worker” dichotomy test distinguishes between “administrative employees,” who are primarily engaged in administering the business affairs of the enterprise, and “production-level employees,” whose primary duty is producing the commodity that the enterprise exists to produce and market. The former falls under the administrative exemption for overtime pay, while the latter does not.

Case Analysis:
The California Supreme Court’s decision focused on the scope of the administrative exemption for overtime pay under Wage Order 4-2001. The Court noted the “administrative/production worker” dichotomy test applied by the lower courts failed to utilize the actual language of Wage Order No. 4-2001 and other pertinent statutes and regulations. The Court further noted that the dichotomy may be impractical in the modern workplace: “Because the dichotomy suggests a distinction between the administration of a business on the one hand, and the production end on the other, courts often strain to fit the operations of modern-day post-industrial service-oriented businesses into the analytical framework formulated in the industrial climate of the late 1940s.”

Work qualifies as “administrative” when it is directly related to management policies or general business operations. The Court explained what work qualifies as directly related as follows: First, it must be qualitatively administrative in nature. Second, quantitatively, it must be of substantial importance to the management or operations of the business. To determine the qualitative component, the Court decided it needed to look to more specific statutes and regulations specifically listed within Wage Order No. 4-2001 to see what is actually administrative in nature. Former Regulation 541.205(b) (now (c)) provided that administrative operations include work done by white collar employees engaged in servicing a business. Such servicing may include advising management planning, negotiating, representing the company, purchasing, promoting sales, and business research and control. An employee performing such work is engaged in activities relating to the administrative operations of the business notwithstanding that he is employed as an administrative assistant to an executive in the production department of the business. These activities may be administrative in nature whether or not they are performed at the level of policy. (29 C.F.R. § 541.205(b)(c).) In this particular case, Plaintiffs attacked Defendants’ showing as to only the qualitative component. The Court thus expressed no opinion as to the quantitative component of the test.

The Supreme Court did not make a ruling on whether Plaintiffs were actually exempt, but instead sent the case back to the Court of Appeal to determine whether Plaintiffs’ duties were administrative in nature. The take-away point from this decision is that the “administrative/production worker” dichotomy is not dispositive on the issue of administrative exemption. Moreover, the Ninth Circuit has held that under more recent applicable federal regulations, claims adjusters are exempt from the Fair Labor Standards Act’s overtime requirements, “[i]f they perform activities such as interviewing witnesses, making recommendations regarding coverage and value of claims, determining fault and negotiating settlements.”

What This Means For You:
We now know that the “administrative/production work” dichotomy is no longer dispositive in determining exemption; work done by white collar employees engaged in servicing a business, including advising management, planning, negotiating, representing the company, purchasing, promoting sales, and business research and control may be deemed to satisfy the qualitative component. To satisfy the quantitative component of the same test, it must be of substantial importance to the management or operations of the business. Employers should consider these new guidelines in determining whether their employees properly qualify as administratively exempt. Each case must be determined on a fact-intensive basis; there are no bright line rules.