California Peculiarities Employment Law Blog

U.S. Supreme Court Declines to Referee Slugfest Between Federal and California Courts on Enforceability of Arbitration Agreements

Posted in 2015 Cal-Peculiarities, Case Update, PAGA Series

By David Kadue

On Tuesday, January 20, 2015, the Court declined to take the case of CLS Transportation Los Angeles, LLC v. Iskanian, in which an employer asked the Court to reverse a ruling of the California Supreme Court. At issue was whether an employee who has agreed to submit all employment-related claims to arbitration, and who has also agreed to waive participation in class and representative actions, can evade that agreement and sue the employer under California’s Private Attorney General Act (“PAGA”). The California Supreme Court in June 2014 had sided with the suing employee.

Many observers expected that the case would be the latest episode in a drama that features a complicated relationship between two supreme courts. To simplify a bit, the U.S. Supreme Court traditionally has read the Federal Arbitration Act (“FAA”) to require the enforcement of private arbitration agreements by their terms. The California Supreme Court, meanwhile, has often searched creatively for some Cal-centric reason to deny enforcement to arbitration agreements.

Recent examples of the contrasting supreme viewpoints have occurred in the context of arbitration agreements that waive the procedural right to proceed or participate in a class action. The California Supreme Court once held, in both the consumer-claim context and in the employee-claim context, that a class-action waiver in an arbitration agreement is unenforceable, because any such waiver offends the California public policy favoring class actions. But then the U.S. Supreme Court, in Concepion v. AT&T Mobility, ruled in 2011 that the FAA preempts the California ban on class-action waivers. Concepion involved a consumer complaint. For several years, California courts resisted the clear implication that Concepcion also applies to employee complaints. Finally, in Iskanian, the California Supreme Court relented, acknowledging that, under the FAA, class-action waivers in arbitration agreements are enforceable, even in California. Continue Reading

COMING IN 2015: REVISED CFRA REGULATIONS, or “How To Comply With Mandatory Family Leaves in the Golden State”

Posted in 2015 Cal-Peculiarities

By Colleen Regan

New guidance on how to comply with the California Family Rights Act (CFRA) is nigh. 

On January 13, 2015, the California Fair Employment & Housing Council approved revised regulations interpreting the CFRA, attached here. Procedurally, the regulations now go to the Office of Administrative Law (OAL) for additional consideration and eventual approval. We have it on good authority that the text of these proposed regulations will not change unless the OAL requires changes; however, given the vagaries of the process, we are not expecting the final revised CFRA regulations to be promulgated until about July 2015.

As most readers know, the CFRA is the California analog to the federal Family & Medical Leave Act (FMLA). While the CFRA and the FMLA are consistent to a large degree, there are some important differences. Significantly, the revised CFRA regulations, as proposed, would:  

  • interpret the CFRA more consistently with the FMLA (for example, with respect to retroactive designation of CFRA leave after the employee has returned to work),
  • clarify employer and employee rights and responsibilities (for example, prohibiting employers from contacting health care providers except to authenticate a medical certification), and
  • prescribe a new medical certification form that should help employers who would otherwise be tempted to use the DOL’s form for FMLA leaves. Using the DOL form is not a good idea in California because it requests “medical facts,” including diagnosis. That kind of request is generally impermissible in California given our constitutional right to privacy. 

Helpfully, the proposed changes to the CFRA regulations are called out in the attached in underscore, strike-through, italics and boldface

Workplace Solution:  Although these new regulations are still just proposed, the wise employer will become familiar with them now to avoid any surprises when they (or a closely similar version) are finally adopted later this year.

Next week:  We expect the United States Supreme Court to soon decide whether to grant certiorari in the Iskanian case. If you are following the issue of mandatory arbitration of PAGA claims, stay tuned to this space for further developments.

Edited by Jonathan Brophy and Chelsea Mesa

Thanks for Making Us A Fan Favorite!!! . . . and a Couple of Nitty Gritty Wage Hour Decisions

Posted in 2015 Cal-Peculiarities

By Michele Haydel Gehrke and Colleen M. Regan

Cal Pecs Blog is a BLAWG 100 Fan Favorite!!!!

In November, we announced that our Cal Pecs blog was selected as one of the ABA Journal’s 2014 “BLAWG 100.”  Today, we are thrilled to further proclaim that we earned the most votes from YOU, our devoted readers, in the ABA Journal BLAWG 100’s Labor & Employment category, making us the top Employment Law Blog vote-getter.  THANK YOU!  Your support of our beloved enterprise has us over-the-moon with gratitude and delight.  We promise to continue to earn your loyalty and readership as we work to develop content that keeps you abreast of California’s peculiar—and ever-changing—employment laws.

Click here to see vote totals for all 100 blogs featured in the ABA Journal’s December 2014 cover story, and click here to see a list of the winners of each category.  This victory will also be announced in the February issue of the ABA Journal.

Court of Appeal Permits “On-Call” Rest Breaks for Workers

Worth noting is a favorable, if unpublished, decision from the California Court of Appeal that was filed on December 31, 2014.  In Augustus v. ABM Security Services, Inc., the appellate panel overturned a troubling decision by the LA County Superior Court.  The trial court had granted summary judgment to a class of security guard plaintiffs and awarded them almost $135 million in damages, attorneys’ fees and costs.  The trial court’s award was based on a finding that carrying a pager and being “on call” during paid rest breaks violated the Labor Code and required one-hour wage penalties for each and every rest break, whether or not the guard’s rest was interrupted. 

Applying some welcome common sense, the Court of Appeal reversed, and held that being “on call” subject to interruption did not constitute “work.”  Although this decision is not citable, we are glad to know that at least one court recognizes the difference between being required to work (i.e., being under the control of the employer) and being relieved of all duties (such as the duty to remain on call). 

California Supreme Court Hangs Up On Employers And Denies Petition for Review In Controversial Cell Phone Expense Reimbursement Case

You may recall that in Cochran v. Schwan’s Home Services, Inc., the Court of Appeal held that, under California Labor Code § 2802, employees who must use personal cell phones for work are entitled to reimbursement for “some reasonable percentage” of the personal cell phone bill.  This appears to be the rule irrespective of whether the employee has incurred additional charges for the work use, whether a third party has paid the bill, or whether the employee has changed plans to accommodate work-related cell phone usage.  

On November 25, 2014, the California Supreme Court denied a petition for review filed by Schwan’s requesting that the high court review this controversial appellate decision, and also denied its request to depublish the Court of Appeal decision.  The petition had wide support among the employer community, which has questioned the broad holding in Cochran and what it means for employers. 

Now that we know the Cochran decision will not be overturned, it remains to be seen whether other California courts will follow Cochran’s lead.  In the interim, employers are left to wonder what the Cochran ruling means for them, and how they  may need to implement or update their Bring Your Own Device (“BYOD”) and expense reimbursement policies to avoid potential claims (particularly potential-expensive class actions). 

We suggest that employers consult with counsel to evaluate their technology and expense reimbursement policies and practices to ensure compliance with this evolving area of law.  Please reach out to your favorite Seyfarth attorney for more guidance. 

Happy New Year! And a Look Back at 2014

Posted in 2014 Cal-Peculiarities

Our readers will be happy to see the end of 2014, from an employment law point of view. With the exception of the Iskanian case, in which the California Supremes finally agreed that most workplace disputes can be subject to mandatory arbitration, employers had little to cheer about. This past year the Golden State brought us a new crop of employee entitlements—also known as employer mandates—requiring significant changes in how companies hire, schedule labor, monitor hours of work, and give employees time off.

Clothed in the language of worker rights and positive societal goals (e.g., the “Healthy Workplaces/Healthy Families Act”), the new laws increasingly cover areas that traditionally have been the subject of collective bargaining (e.g., mandatory paid time off and rates of pay). There is also a trend toward preventing job loss that might result from personal life circumstances, such as requiring paid time off for an employee to seek help for domestic violence, and forbidding questions about an applicant’s criminal or credit history. In short, government protectionism is alive and well in California.

What were the biggest headlines of the year?  Let’s focus on three: Continue Reading

Bay Area Voters Impose Local Requirements for Minimum Wage, Sick Leave, and Workplace Flexibility: Part 2 of 2

Posted in 2014 Cal-Peculiarities, San Francisco Ordinances

By Jason Allen 

Those who spent some time with us last week already know that Bay Area voters took to the polls with an eye toward employees this year. But it wasn’t just with regard to pay. They also ventured into the oh-so-complicated world of sick leave and flexible schedules.

Sick Leave 

As we have discussed before, California’s statewide Healthy Workplaces, Healthy Families Act of 2014 takes effect on January 1, 2015, and will require employers to provide paid sick leave after July 1, 2015 to most employees. The statewide Act may have engendered apoplectic responses in certain circles, but employers in San Francisco and Oakland likely review its mandates with yawns and shrugs to go with their soy lattes. San Francisco had already addressed this subject in 2007, and Oakland intends to impose requirements similar to San Francisco’s when Measure FF takes effect next year. 

Under San Francisco’s Paid Sick Leave Ordinance, employees who regularly work at least eight hours per week in San Francisco accrue one hour of sick leave for every 30 hours worked in the City, just as they do under the state law. The accrued time carries over year to year, with some limitations: for employees of businesses with fewer than 10 employees, the accrued paid sick leave is capped at 40 hours (lower than the state’s cap); for businesses with 10 or more employees, the cap is 72 hours, which is higher than the state’s cap. As with the state law, San Francisco’s ordinance does not require employers to pay employees for any unused accrued sick leave upon separation; employers are not “prevent[ed] from adopting or retaining leave policies that are more generous”; and employees may use sick leave for themselves or to help a family member. Note also that San Francisco employees can designate individuals other than a spouse, domestic partner, or other family member for whom the employee may use paid sick leave to provide assistance or care. The bottom line is that because there are areas where the San Francisco law is less or more generous than the state’s, employers must craft policies for their San Francisco employees that consider the more onerous parts of both the state and local requirements. 

Oakland’s Measure FF, which we discussed last week in the context of wage increases, also imposes sick leave requirements similar to San Francisco’s:  Employees will accrue one hour of leave for every 30 hours worked, capped at 40 hours for businesses with fewer than 10 regular employees and 72 hours for businesses with at least 10 regular employees. As under San Francisco’s ordinance, employees with no spouse or domestic partner may designate one person other than a family member for whose care or assistance they can use paid sick leave. And Oakland’s ordinance will not require any payout for unused accrued leave upon separation. But Oakland’s new ordinance may cause some consternation for employers who already offer PTO policies that meet or exceed Measure FF’s minimum sick leave requirements. 

The issue with Oakland’s new ordinance on this front may stem from its combining minimum wage and sick leave requirements in one ordinance—something that no other Bay Area city has yet done. On one hand, Measure FF includes a provision similar to those in the statewide and San Francisco mandates: employers with existing PTO policies that meet or exceed Measure FF’s sick leave requirements need not provide any additional sick leave. (See Measure FF Section 5.92.030(A)(4).)  On the other hand, the ordinance expressly precludes an employer from funding the required increases in compensation by reducing “vacation, or other non-wage benefits.”  (See Section 5.92.050(A)(2).) While that provision was likely intended to prevent employers from robbing Peter to pay Paul—to essentially pay for the costs associated with the increased minimum wage by reducing other benefits provided to employees—it looks to have additional consequences for employers in Oakland. An employer seeking to modify its existing leave policies to comply with the new ordinance by reducing existing vacation or PTO benefits to establish a distinct sick leave benefit—an adjustment that appears permissible under both state law and San Francisco’s ordinance—may run afoul of Oakland’s ordinance.

Flexible Work Schedules 

The next potential trend in local ordinances or state laws regarding employee benefits may require greater flexibility in determining or modifying employee work schedules. San Francisco stepped onto this previously untrodden ground in 2013, and, on November 4, 2014, Berkeley voters suggested that their City Council follow. 

As detailed here, here, and here, San Francisco’s Family Friendly Workplace Ordinance, effective January 1, 2014, requires employers with 20 or more employees to allow employees who regularly work eight hours per week in San Francisco to request flexible work arrangements so they can assist with caregiving responsibilities for children, parents age 65 or older, or other family members.

By approving The Berkeley Flexible Work Time Initiative of 2014, Berkeley’s voters didn’t quite force their city’s hand, but they certainly gave it an urgent nudge. The initiative “advis[es] the city of Berkeley to pass a right-to-request law that applies to employees in Berkeley.” The provisions for such an ordinance “should be based on the provisions of the Working Families Flexibility Act, first introduced [but not enacted] in Congress in 2007 as Senate Bill S. 2419, and on the Family Friendly Workplace Ordinance, passed by San Francisco in 2013.” We predict that the City will not ignore this hint, and that provisions of the sort advised will find their way into an ordinance within the next year. 

*          *          *

The law in these areas, much like the ground underlying the Bay Area, is always moving and shaking. Stay tuned. We will provide updates regarding statewide and local requirements on minimum wage, sick leave, and flexible work time as they develop. And, as always, if you have any questions, please reach out to your friendly neighborhood member of Seyfarth’s California Workplace Solutions Team to help you navigate the choppy waters of the Bay.

Bay Area Voters Impose Local Requirements for Minimum Wage, Sick Leave, and Workplace Flexibility: Part 1 of 2

Posted in 2014 Cal-Peculiarities, San Francisco Ordinances, Sick Leave Series

By Jason Allen 

As the year winds down, we thought it wise to look back at what California’s busiest locality has done in developing local employment law. The folks in the Bay Area have been so busy flexing their employment law muscles that we’ve split this summary into two easily digestible posts to provide what you’ll need to hop on the trolley to compliance city.

Voter-approved measures addressed higher wages, more sick leave, and increasingly flexible work schedules for employees in Oakland, San Francisco, and Berkeley. While many have left their hearts in San Francisco, these measures will have some employers wanting to have their business elsewhere. Those measures require employers to provide wages and benefits that far exceed state and federal requirements. These new laws also may indicate what’s to come for the rest of the very active Bay Area.

Minimum Wage

As this blog has previously covered (e.g., here and here), California recently raised its minimum wage to $9 per hour, effective July 1, 2014—with an increase to $10 per hour scheduled for January 1, 2016. But the state was a bit late to this game, as several  cities had already mandated higher wages for local employees. Cities in the Bay Area have been particularly active here: San Jose ($10.15, effective March 2013, with an annual cost of living adjustment (COLA)), Richmond ($9.60, effective January 2015, with incremental increases to $12.30 by 2017, then an annual COLA), and Berkeley ($10.00, with planned incremental increases culminating at $12.53 by October 2016). 

On November 4, 2014, voters approved the following measures in Oakland and San Francisco that will raise wages in those cities to similar and even higher levels.

Oakland: Ballot Measure FF

Despite Gertrude Stein’s famous observation to the contrary, perhaps in Oakland there is some “there there: On November 4, Oakland voters passed Measure FF, adding provisions to the City’s municipal code regarding a “city minimum wage, sick leave, and other employment standards.” Effective March 2, 2015, Oakland’s minimum wage will increase to $12.25 for any employee who (a) is covered by state and federal minimum wage laws and (b) works at least two hours “[i]n a particular week … within the geographic boundaries of the City for an Employer.” Beginning January 1, 2016, and to celebrate New Year’s Day for every year that follows, the minimum wage will increase in line with a COLA.

The Oakland ordinance also includes a provision specific to employees in hospitality industries that impose “Service Charges” to collect separately for such items as banquets, deliveries, room service, or porterage. Under the new ordinance, Service Charges must be paid directly to the employees performing the relevant services. The section addressing Service Charges specifically exempts “any tip, gratuity, [or] money” given to hospitality workers “by customers over and above the actual amount due for services [or goods] rendered,” perhaps because state law already requires these payments to be provided to the employees.

San Francisco: Proposition J 

Attentive readers of this blog will recall the list of Bay Area cities with recent minimum wage ordinances. San Francisco does not appear on that list, because, as we’ve previously discussed, San Francisco set the standard for a higher minimum wage way back in 2003. That ordinance calls for annual COLA increases and, as of January 1, 2014, had set the floor for wages for San Francisco employees at $10.74.

Unwilling to let the full spotlight shine on the bright side of the Bay, Frisco’s voters, in November, passed Proposition J. This true San Francisco treat for employees has amended the existing ordinance to increase the minimum wage yet again. The local minimum wage now will increase to $11.05 per hour on January 1, 2015; will incrementally increase the minimum wage to $15 per hour by July 1, 2018; and thereafter will annually increase, in accordance with a COLA.1 

While the voters thus decided to ensure the Bay Area remains a pricey place to pay wages, they didn’t stop there. Stay tuned for next week when we walk you through two other areas where Bay Area voters let themselves be heard on behalf of employees: sick time and flexible schedules.


1 Note that “Government Supported Employees”—without getting into too many details, employees either younger than 18 or older than 55, whose positions are subsidized by federal, state, or local governments—will see increases of a different scale. Government Supported Employees must be paid a minimum wage of $12.25 effective May 1, 2015, with annual COLA increases thereafter.

San Francisco “Retail Workers’ Bill of Rights” Enacted—What Now?

Posted in San Francisco Ordinances

By Dana Peterson

Many know SFO as the code for the San Francisco airport. But to businesses employing workers in the City by the Bay, SFO has come to mean “San Francisco Ordinance.”

In this first of a three-part series on recent action by San Francisco’s labor friendly Board of Supervisors, we review two ordinances (here and here) that together have come to be known as the “Retail Workers’ Bill of Rights.”

Last August, we blogged about the initially proposed version of this legislation. The final version, as amended, was passed on November 25, 2014. Though some troubling provisions (such as giving employees and applicants the right to sue employers for violations) were removed prior to passage, the ordinances still impose burdensome new requirements on Formula Retail Employers.

But wait: I own some martial arts studios. So surely this new law doesn’t apply to me, right? 

Well, we hate to be the bearer of bad news, but yes, it absolutely could affect your business.

The ordinances cover employers with 20 or more employees in San Francisco who operate “Formula Retail Establishments.” These are businesses that engage in retail sales or services regulated as “Formula Retail Uses” under the San Francisco Planning Code, with one change: the ordinances apply only to establishments with at least 20 retail sales locations worldwide (the Planning Code definition requires fewer locations).

A “Formula Retail Use” is one that is, basically, standardized in terms of two or more of the following indicators: array of merchandise, façade, décor and color scheme, uniforms, signage, and trademark or service mark.

As outlined in greater detail here, the foregoing definition includes businesses that some may not consider to be “retail,” such as bars, health spas, dry cleaners, massage parlors, movie theatres, banks, credit unions, art studios, pet grooming establishments, and, yes, even martial arts studios. The Planning Code specifically identifies each such entity as a type of businesses considered to be engaging in “Formula Retail Use.”

Yikes, so what do I have to do to comply with these new laws?

We would need more space than we have here to fully explain each new requirement (hence the link to the more fulsome Management Alert). Suffice it here to say that covered employers: Continue Reading

California’s Anti-Pay Secrecy Law: It’s Not Just a Federal Contractor Problem

Posted in 2014 Cal-Peculiarities

By Cassandra Carroll

Earlier this year, the Paycheck Fairness Act, which would have functioned to ban “pay secrecy” policies in the workplace and prohibit retaliation against employees for disclosing compensation information, languished in Congress. President Barack Obama then sidestepped the Congress and signed Executive Order 13665: Non-Retaliation for Disclosure of Compensation Information. EO 13665 includes the same pay secrecy prohibitions previously set forth in the proposed Paycheck Fairness Act, but its scope is far more limited, as it applies only to federal contractors. Similar anti-pay secrecy protections have existed, under an interpretation of Section 7 of the National Labor Relations Act. And California employers have their own peculiar version of anti-pay secrecy rules to worry about.

California Labor Code section 232—banning pay secrecy policies and prohibiting discipline on the basis of wage disclosure—emerged on the scene way back in 1985. (That was when Marty McFly first introduced the “hover board”; you’re so late to the party, Tony Hawk.) Although Section 232 has rarely been litigated, President Obama’s hard push for anti-pay secrecy laws has raised employee consciousness of this issue, and we expect an uptick of related claims in this area.

Section 232 states that an employer must not: Continue Reading

CA Paid Sick Leave Update: Labor Commissioner Issues FAQs

Posted in 2014 Cal-Peculiarities, Sick Leave Series

By Kristina M. Launey

Speculate no more: the wait is over. No, we don’t know the details of the new Star Wars movie. Nor do we know the gender of the second royal baby. But we do have the Labor Commissioner’s just-issued FAQs, which can help guide employers in navigating California’s new Paid Sick Leave Law (AB 1522).

These FAQs come on the heels of the LC’s issuance of the highly anticipated Poster and Wage Theft Notice Template.

Of particular significance, the FAQs provide the following guidance and clarifications: Continue Reading

UPDATE: San Francisco Board of Supervisors Passes Retail Workers’ Bill of Rights At Confirmation Vote

Posted in 2014 Cal-Peculiarities, San Francisco Ordinances

By Duwayne A. Carr and Laura J. Maechtlen

Last week, we blogged that the San Francisco Board of Supervisors tentatively and unanimously passed the Retail Workers’ Bill of Rights, which requires certain employers to (a) offer additional hours of work to current part-time employees before hiring new employees or subcontracting, (b) retain employees for 90 days upon transfer of the establishment, and (c) make a post-sale written job offer to certain individuals on a retention list (text of the legislation is here and here). The legislation was subject to a confirmation vote yesterday, November 25. We attended the scheduled confirmation vote yesterday. The legislation passed unanimously (10-0). 

At the meeting, Supervisor London Breed expressed concerns that the ordinance – as written – might apply to existing property service contractors, such as janitorial service companies, and stated that she plans to introduce an amendment as trailing legislation for the next Board meeting. But that proposal may face strong opposition. Supervisor Chiu noted that he would not support it, and Supervisor Campos went so far as to say that any such proposal would “weaken the legislation rather than strengthen it.”

San Francisco Mayor Ed Lee now has ten days to sign the legislation, although we understand from his office that he may sign earlier than the 10th day. An ordinance typically becomes effective 30 days after the Mayor’s signature, and the legislation itself provides that it will become operative 180 days after passage. Thus, assuming the Mayor signs, employers will have 210 to 220 days to craft compliance solutions.      

Stay tuned for updates regarding any new developments.

Edited by Julie Yap