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Second Quarter 2010Newsletters California Update Employment Law

What Is Half of Infinity? Or It's Accrual World (Posted February 22, 2010)

It's been more than 10 years since California enacted Labor Code § 233, commonly referred to as the "kin care" statute. In essence, the statute requires employers to allow employees to use half of their sick leave accrual to care for certain relatives if they become ill. State law does not require employers to offer sick leave. But if they do, they must allow employees to use up to half their sick leave to care for a sick child, parent, spouse or domestic partner.

But what happens when an employer doesn't cap sick leave? That was the situation in McCarther v. PacificTelesis Group. The plaintiffs worked under collective bargaining agreements that allowed employees to take up to five consecutive days off for each illness with pay. Once they returned to work, even for a day, they would again be entitled to another paid sick leave period of up to five days in a row. If their absences were excessive, they could be disciplined. But the system did not provide for accrual of sick time and, because there was no accrual, there was no cap.

If there's no cap on paid sick leave, how do you apply the rule that employees get to take half their sick leave for kin care? The California Supreme Court said last week that you don't. It ruled that "the reach of the statute is limited to employers that provide a measurable, banked amount of sick leave. "As a result, the court ruled that the employer in this situation wasn't required to provide kin care to its employees.

So what is half of infinity? In this case, zero.

A Clear Rule for Removal Jurisdiction (Posted February 24, 2010)

As we said before, we love federal court. And yesterday, the United States Supreme Court made it easier for us to get there. In Hertz Corporation v. Friend, the Court recognized a bright line rule regarding a corporation's principal place of business:

"[W]e conclude that the phrase "principal place of business" refers to the place where the corporation's high level officers direct, control, and coordinate the corporation's activities. Lower federal courts have often metaphorically called that place the corporation's "nerve center." See, e.g., Wisconsin Knife Works v. National Metal Crafters, 781 F. 2d 1280, 1282 (CA7 1986); Scot Typewriter Co. v. Underwood Corp., 170 F. Supp. 862, 865 (SDNY 1959) (Weinfeld, J.). We believe that the "nerve center" will typically be found at a corporation's headquarters."

Before this decision, much time was spent comparing and contrasting how much business a corporate defendant had in one state versus another. Now, absent a showing of jurisdictional manipulation, the inquiry is simple:

"[T]he courts should instead take as the "nerve center" the place of actual direction, control, and coordination."

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