Seyfarth Synopsis: California’s Department of Fair Employment and Housing has just issued its Annual Report on civil rights complaints during 2016. Here are some highlights.

The DFEH hails as the largest state civil rights agency in the country, with 220 full-time employees operating out of five offices throughout California. Its annual report makes clear that its core work is litigation. It sues chiefly under the Fair Employment and Housing Act, California’s more expansive version of federal anti-discrimination law, and also sues under the Unruh Civil Rights Act, the Disabled Persons Act, and the Ralph Civil Rights Act.

The annual report comes in the DFEH’s fourth year as an active litigant. Beginning in 2013, the DFEH gained power to file lawsuits to pursue violations of the state’s anti-discrimination laws. No longer is there administrative adjudication of claims by the Fair Employment and Housing Commission (now defunct). The DFEH now has broad authority to sue California employers, housing providers, and other entities for unlimited compensatory damages, as well as attorney fees and costs. Moreover, the DFEH can launch state-wide class or representative actions for systematic or large-scale violations of state civil rights laws. And, like its big sister, the federal Equal Employment Opportunity Commission (which has always been able to sue in court), the DFEH may go beyond monetary damages and demand certain forms of “affirmative relief,” such as employee retraining, redrafting and posting of policies, and regular monitoring to ensure compliance. In short, the DFEH is now a fully operational litigation shop, employing investigators, litigators, paralegals, and mediators.

A Tidal Wave of Complaints. The DFEH received more than 23,000 general administrative complaints and inquires in 2016. The amount was on par with 2015, and significantly more than the 19,000 filed in 2014. About 93% of 2016 complaints were employment-related, 6% were housing matters; the rest involved claims under the Unruh, Ralph, and Disabled Persons Acts. About 17,000 complaints resulted in formal charges filed with the DFEH. Most of the formal charges (12,242) requested an immediate right to sue, thus bypassing the DFEH’s investigation process.

A plurality of the 2016 formal charges (6,614, or 38%) originated out of Los Angeles County. Next in order were Orange, San Diego, and San Bernardino Counties (7%, 6%, 4% respectively). Together, these four counties created most of the DFEH’s 2016 workload: SoCal employers beware! Surprisingly, Sacramento County—not San Francisco County—accounted for most charges filed in Northern California (Alameda County was the most active in the Bay Area). Placer County, with 120 formal charges, was the most litigious in 2016 in proportion to its population size.

In terms of demographics, little is known about the 2016 class of DFEH complainants. The DFEH tracked only race and national origin, on the basis of the complainants’ self-reporting. Only 51% of complainants identified their race, and 65% identified their national origin. Of those who self-reported, Caucasian individuals topped the list with 35% of complaints; American or U.S. national origin was most reported, at 52% of complaints. Individuals identifying as Hispanic or Latino filed 28% of complaints in 2016, and those identifying as African American filed 22%. The DFEH did not collect data on the complainants’ sex, gender, age, religion, marital status, household income, or other demographic information.

Most Complaints Did Not Settle. The DFEH investigated 4,799 complaints in 2016. The DFEH settled a total of 1,036 complaints (21%), and referred 118 to the Legal Division, which brought 31 civil actions. The remaining 3,700 complaints were presumably withdrawn by the complainant, settled without the DFEH’s participation, dismissed by the DFEH, or consolidated into a single lawsuit.

Moneywise, the DFEH’s Enforcement Division resolved 573 complaints for a total of $2,635,979, which was the most settlements for any division (averaging $4,600 per settlement). The Dispute Resolution Division, which conducts mediation when the parties voluntarily agree to mediate, brought in the highest dollar amounts via 417 settlements with $7,385,372 ($17,710 average). The Legal Division raised $1,553,800 by settling 46 complaints ($33,778 average). In total, the DFEH conducted 783 mediations in 2016 (up considerably from 632 in 2015 and 590 in 2014).

The DFEH Carefully Selects Which Cases To Try. Less than 1% of 2016 complaints resulted in litigation. Of the 4,799 claims the DFEH investigated, it referred only 118 (2%) to the Legal Division, which then brought only 26% of that total to litigation. As noted above, the DFEH filed 31 lawsuits for 75 complainants during 2016, while filing 36 lawsuits for 57 complainants during 2015.

One-half of the 118 complaints referred to the Legal Division were housing-related. Employment claims made up 40%, followed by Unruh Act claims at 6%, Ralph Civil Rights claims at 3%, and Disabled Persons Act claims at 1%. Substantially more employment claims had been referred to the Legal Division in 2015 (73 of 130 complaints, or 56%).

Housing-related complaints were statistically the DFEH’s priority in 2016. The annual report does not specify the total number of housing complaints, but nearly 70% of complaints involved claims for FEHA housing violations. This percentage is markedly higher than in 2015, where only 36% complaints related to housing issues. Employment complaints were king in 2015 comprising 59% of complaints, but that number decreased in 2016 to 25%. Overall, the DFEH was consistently more focused in 2015 and 2016 on FEHA violations—including employment and housing claims—than with complaints regarding the Unruh, Ralph, and Disabled Persons Acts.

Disability discrimination was the claim most frequently asserted by the DFEH in 2016 in litigated matters (as it was in 2015), appearing seven times in the employment context and 11 times in the housing context. Race and ancestry discrimination were asserted only once, sex/gender discrimination only twice, and sexual harassment only four times. Retaliation was asserted seven times against employers and five times against housing providers.

Lessons For 2017 And Beyond. The DFEH is evidently hand-picking the few complaints it takes to court each year. Only a small percentage of claims make their way to the DFEH’s Legal Division, which is the final stage before a lawsuit is filed, so employers and housing providers should consult with litigation counsel if they find themselves in that unfortunate position (or earlier).

The data and public filings, consistent with our experience with the DFEH, indicate that the DFEH did not target any particular industry or size of entity in 2016: public entities, such as high schools and cities, as well as small non-profit organizations found themselves in the DFEH’s crosshairs. And the DFEH hauled into court businesses in virtually all industries, including banking and financial services, food and agriculture, real estate, retail, hospital and healthcare, insurance, commercial carriers/airlines, manufacturing, and entertainment. Many cases were brought on behalf of multiple individuals, and we can expect that trend to continue as the DFEH appears to find multiple-complainant litigation an efficient way broaden its enforcement reach. Inasmuch as the EEOC has used systematic litigation for years as way to grab headlines and pressure employers to change their policies, we can expect the DFEH to follow suit. The DFEH went to trial on some cases, although verdict results are not summarized publicly (the DFEH has not issued any press releases of DFEH jury wins from 2016).

Finally, in that the DFEH’s focus on litigation in 2016 (and 2015) was on disability and retaliation issues in employment and housing, California companies would be wise to review policies and practices on disability accommodation over the next year. Our firm is available to assist in that process and provide recommendations on how to best avoid DFEH scrutiny, and defend any civil action by the DFEH if necessary.

Edited by Colleen Regan.

Seyfarth Synopsis: Genetic discrimination lawsuits can result in substantial costs. California employers should regularly review their hiring and employment policies and procedures to ensure that they are not exposing themselves to potential liability on the basis of genetic information discrimination.

For most of us, exposure to “DNA” dates back to high school science class or dinosaur theme park movies. Many of us would not know how to begin to explain the intricacies of the human genome, including how different nucleotides form the basis of DNA, or how they cause characteristics in multi-cellular organisms. Luckily, for purposes of California employment law, all that you need to understand are the basics of what is permissible and impermissible when it comes to the use of genetic information for employment purposes in California.

What’s the Rule?

Since January 1, 2012, the California Genetic Information Nondiscrimination Act (“CalGINA”) has prohibited genetic discrimination in employment, housing, mortgage lending, education, and public accommodations. CalGINA provides broader protections for employees than does the federal Genetic Information Nondiscrimination Act (“GINA”) of 2008, which is limited to health insurance and employment discrimination coverage. Additionally, CalGINA, unlike GINA, allows for an employee to seek unlimited damages if they have been the victim of genetic discrimination. This prospect can be scarier than a reconstituted velociraptor, and makes it significantly more important for employers to ensure that they are not using genetic information improperly.

CalGINA added “genetic information” as a basis for discrimination to California’s Fair Employment and Housing Act (“FEHA”), which now states that “[i]t is an unlawful employment practice, unless based upon a bona fide occupational qualification, or, except where based upon applicable security regulations established by the United States or the State of California … [f]or an employer, because of the … genetic information…of any person, to refuse to hire or employ the person or to refuse to select the person for a training program leading to employment, or to bar or to discharge the person from employment or from a training program leading to employment, or to discriminate against the person in compensation or in terms, conditions, or privileges of employment.” Cal. Gov’t Code § 12940 et seq.

CalGINA defines “genetic information” as (1) the individual’s genetic tests, (2) the genetic tests of family members of the individual, or (3) the manifestation of a disease or disorder in family members of the individual. This definition includes any gene or chromosome (or combination or alteration thereof) that is known to cause a disease or disorder in a person or the person’s offspring, as well as inherited characteristics that are associated with a statistically increased risk of developing a disease or disorder. The definition does not include information about a person’s age or sex.

Why should employers care?

Although discrimination on the basis of “genetic information” may seem like an obscure proposition, it is easier than an employer might think to be exposed to liability on these grounds.

Genetic employment discrimination can occur when you—as the employer or potential employer—gain information about an applicant or employee (or his or her family) related to genetic tests or family medical history, and then use that information as a factor in making an employment decision. You don’t necessarily have to have access to a medical file. Think about conditions that are generally known to have a genetic or inherited component, such as some forms of cancer, sickle cell anemia, Huntington’s disease, cystic fibrosis and Down syndrome. Once you know of such a condition, you can’t “unknow” it, so it is better to avoid being the recipient of such information, when possible.

Employers should also be very careful if they canvass social media profiles of applicants or employees. Social media sites can reveal all kinds of personal information about a candidate that would be illegal to request during the hiring process. For example, an employer could glean from a Facebook post that an applicant has a daughter or sibling with cancer. If not hired, that applicant might bring a claim for association discrimination under the ADA, the FEHA, or even the CalGINA/GINA.

What can employers do to comply with CalGINA?

Generally, employers should make sure that:

  • Policies and procedures specifically include prohibitions on discrimination, harassment and retaliation based on genetic information.
  • Applications, medical leave certifications, and other employment-related forms do not, even inadvertently, seek genetic information.
  • Pre-employment physical examinations do not inquire about family medical histories.
  • Managers and supervisors are trained on how GINA and CalGINA affect the company’s policies and procedures. For example, teach managers and supervisors how to respond to an employee who discloses family genetic information, such as “my father has cancer,” and encouraging them not to do any digging on social media on applicants or employees, lest you may discover some information you really do not want to know.

Finally, you can always reach out any of our experts at Seyfarth Shaw for more information.

Edited by Chelsea Mesa.

Seyfarth Synopsis: Pay equity and Ban The Box bills lead the list of bills approved to continue their quest (moving to the other house of the California Legislature) to become California law.

Friday, June 2, marked the last day for bills in the California Legislature to pass out of their house of origin—the Senate or Assembly—and continue the legislative process for a shot at becoming a new California Peculiarity. Pay equity and Ban The Box bills lead the list of bills approved to continue moving through the process. Meanwhile, some other feared bills, including the Opportunity to Work Act and retail holiday overtime, did not make the cut. But the substance of these bills, like zombies, may refuse to die and re-emerge through amendment to bills that are still alive. We’ll keep watching, and keep you updated, through the September 15 deadline for bills to pass from the Legislature to the Governor’s desk.

Still Alive:

Pay Equity: Salary Inquiry Ban. AB 168 would prohibit employers, including state and local governments (even the Legislature) from asking applicants about their salary history information, including compensation and benefits. The bill would also require private employers to provide the applicant with the position’s pay scale upon a reasonable request. Will the third time be the charm for this legislation? AB 168 is scheduled for hearing June 14 in the Senate Committee on Labor and Industrial Relations.

Pay Equity: Gender Pay Gap Transparency Act. Attempting a California version of the revised EEO-1 report, AB 1209, effective July 1, 2020, would require employers with 250 or more employees to collect specified data on gender pay differentials, to publish the data on their websites, and to submit the data annually in reporting to the Secretary of State. The required data would include the difference between the mean salary and median salary of male exempt employees and female exempt employees, by job classification or title, and the difference between the mean compensation and median compensation of male board members and female board members. Committee analyses note that this bill was modeled after the recent measure passed in the United Kingdom that requires employers with 250 or more employees to publish their gender pay figures by April 2018.

Applicants: Prior Criminal History. On the heels of Los Angeles’s adoption of “Ban-the-Box,” this year’s attempt at even stronger, state-wide “Ban the Box” legislation marches on. AB 1008 would make it unlawful under California’s Fair Employment and Housing Act (“FEHA”) for an employer to include on any employment application any question seeking disclosure of an applicant’s criminal history, to inquire into or consider the conviction history of an applicant before extending a conditional offer of employment, or to consider or distribute specified criminal history information in conducting a conviction history background check. The bill would require an employer that intends to deny a position solely or in part because of the applicant’s prior conviction to assess whether the applicant’s conviction history has a direct and adverse relationship with the specific job duties. Then, the employer must notify the applicant of the reasons for the decision, provide the applicant time to respond, and consider the response before making a final written employment decision. Exempted from the bill’s scope are criminal justice agencies, farm labor contractors, and positions for which the law requires a state or local agency to conduct a background check or precludes employment based on criminal history.

Voluntary Veterans’ Preference Employment Policy Act. AB 353 would allow private employers to establish a veterans’ preference policy and uniformly grant a hiring preference to veteran applicants, regardless of when the veteran served. This preference would not violate the FEHA or any other local or state equal opportunity employment law or regulation (provided that the policy is not applied for the purpose of discrimination on the basis of any protected classification).

Credit and Debit Card Gratuities. AB 1099 would require entities that allow debit or credit card payment for services to also accept gratuities or tips via debit or credit card, and to pay those gratuities to the worker no later than the next regular payday. Prior to amendments, the bill would have applied to specified employers (lodging establishments, car washes, barber shops and beauty salons, massage parlors, restaurants, and on-demand service providers such as transportation network companies). As amended, rather than specifying the industries to which it applies, AB 1099 defines “entity” as “an organization that uses an online-enabled application or platform to connect workers with customers … including, but not limited to, a transportation network company.” The author’s stated reason for the bill is to make it easier and more reliable for workers in the gig economy to receive tips. The Assembly Appropriations Committee estimates the bill would cost approximately $300,000 in annual enforcement by the Department of Labor Standards Enforcement (“DLSE”), an estimate that could earn this bill the Governor’s veto.

Overtime Compensation: Executive, Administrative, or Professional Employees. AB 1565 would exempt from overtime compensation an executive, administrative, or professional employee who earns a monthly salary of either $3,956 or no less than twice the state minimum wage for full-time employment, whichever amount is higher. The bill states the Legislature does not intend to change the “duties test” of the overtime exemptions established in orders of the Industrial Welfare Commission for executive, administrative, or professional employees;  those provisions would continue to apply. The bill’s proponents argue that it would create “important protection for middle class workers who fall into the gap between the state’s overtime pay protections and what would have been higher overtime protections afforded” by federal Fair Labor Standards Act regulations adopted by President Obama’s US Department of Labor but enjoined through a court challenge. Opponents argue the bill unnecessarily accelerates salary increases for California exempt employees and applies to all employers regardless of size.

Immigration: Worksite Enforcement Actions. AB 450, the proposed “Immigrant Worker Protection Act,” would prohibit an employer from allowing federal immigration agency worksite enforcement authorities warrantless access to nonpublic areas of a place of labor and from releasing employee records to those federal authorities without a subpoena. This bill would also require an employer to notify the Labor Commissioner and employee representative of an Immigration and Customs Enforcement I-9 Employment Eligibility Verification audit within 24 hours of receiving the inspection notice and provide a copy of the notice. The bill would prescribe penalties, recoverable by the Labor Commissioner against employers for failing to satisfy the bill’s requirements and prohibitions, of not less than $2,000-$5,000 for the first violation and $5,000-$10,000 for each subsequent violation.

Good Faith Defense: Employment Violations. SB 524 would permit an employer to raise an affirmative defense that, at the time of an alleged violation of statute or regulation, the employer was acting in good faith when the employer relied upon a valid published DLSE opinion letter or enforcement policy. Even though SB 524 failed to pass the Senate Committee on Labor and Industrial Relations, reconsideration was granted and this bill is heading to the Assembly.

Retaliation: Expanding The Labor Commissioner’s Authority.  A former placeholder bill, as amended, SB 306 would authorize the Labor Commissioner, upon finding reasonable cause to believe an employer discharged or discriminated against an employee in violation of Labor Code section 98.7—before issuing a final determination—to seek temporary and permanent injunctive relief. This bill also would allow the Labor Commissioner to recover attorney’s fees and costs on a successful enforcement action, would authorize the Labor Commissioner to cite and penalize a person it determines violated Section 98.7, and would create procedural requirements for these processes.

Reproductive Health. AB 569 would add a provision to the Labor Code that would prohibit employers from taking any adverse employment action against an employee based on the employee’s or an employee dependent’s reproductive health decisions, methods, or use of a particular drug, device, or medical service (e.g., in vitro fertilization), including the timing of such. This bill would also prohibit employers from requiring employees to sign a code of conduct or similar document denying an employee the right to make such decisions. This bill would also require employers to include a notice of the employee rights and remedies in its handbook.  This bill is aimed at religiously affiliated institutions, noting (in language that would not be codified)  the Legislature’s agreement with Justice Alito in Hosanna-Tabor Evangelical Lutheran Church and School v. EEOC (2012) 565 U.S. 171, 199, that “the ministerial exception should apply only to an ‘employee who leads a religious organization, conducts worship services or important religious ceremonies or rituals, or serves as a messenger or teacher of its faith.’”

New Parent Leave Act. SB 63, as its predecessor (the vetoed SB 654 of 2016) attempted, would prohibit larger employers (having at least 20 employees within 75 miles) from refusing to allow an employee to take up to 12 weeks of parental leave to bond with a new child within one year of the child’s birth, adoption, or foster care placement as long as the employee has at least 1,250 hours of service with the employer during the previous 12-month period. This bill would also require the employer to maintain and pay for the employee’s coverage under a group health plan during this leave and allow—although not require—an employer to grant simultaneous leave to two employees entitled to leave for the same birth, adoption, or foster care placement.

Employee Request: Injury and Illness Prevention Program. AB 978 would require an employer to provide an employee or the employee’s representative a copy of the employer’s injury prevention program, free of charge, within 10 business days after the employer receives a written request. Under this bill, a recognized collective bargaining agent would automatically be treated as an authorized employee representative. The employer would be able to assert an impossibility of performance affirmative defense.

Bills Stuck in the House of Origin:

Opportunity to Work Act. More expansive than the City of San Jose’s voter-approved Opportunity to Work Ordinance, the much-publicized and employer-feared AB 5 would have required employers with 10 or more employees in California to offer additional hours of work to existing nonexempt employees in California before the employer could hire additional employees or temporary employees. AB 5’s hearing in Assembly Appropriations was postponed by the committee on May 3. Read more on what AB 5 would have implemented here, here, and watch here.

Rest Breaks. AB 817 would have carved out an exception to Labor Code section 226.7’s off-duty “rest period” requirement for employers providing emergency medical services to the public. The bill would authorize those EMS employers to require employees to monitor and respond to calls for emergency response purposes during rest or recovery periods without penalty, as long as the rest break is rescheduled. AB 817 stalled in the Assembly Committee on Labor and Employment as the bill’s author, Assembly Member Flora, canceled the hearing.

Retail Employees: Holiday Overtime. AB 1173 would have established an overtime exemption that would have allowed an employee to work up to 10 hours per workday with no overtime pay. Hours worked between 10 and 12 in a workday, or over 40 hours in a workweek would be paid at one and one-half the regular rate of pay. All hours over 12 in a workday and over eight on a fifth, sixth, or seventh day in a workweek would have been paid at double time. This bill never even received a definition to fill in its “retail industry” blank, and was sent to but never heard in the Assembly Committee on Labor and Employment.

Voluntary Veterans’ Preference Employment Policy Act. Feeling déjà vu? AB 1477, almost identical to AB 353, detailed above, would have allowed private employers to establish a veterans’ preference policy  and uniformly grant a hiring preference to veteran applicants, regardless of when the veteran served. This bill remained stagnant in the Assembly Committee on Veterans Affairs and Labor and Employment.

Health Professional Interns: Minimum Wage. AB 387 would have expanded the definition of “employer” to include a person who employs any person engaged in supervised work experience (i.e., clinical hours) to satisfy the requirements for licensure, registration, or certification as an allied health professional. AB 387 was amended to only include work experience longer than 100 hours before Assembly Member Thurmond ordered it to the inactive file on June 1.

Resident Apartment Manager Wages. AB 543 would have authorized an employer that doesn’t charge a resident apartment manager monthly rent, to apply up to one-half of the fair market rental value, instead of the two-thirds provided by existing law, of the apartment to meet minimum wage obligations to the apartment manager, pursuant to a voluntary agreement. This bill’s hearing in the Assembly Committee of Labor and Employment was canceled at the author’s request.

Labor Organizations: Compulsory Fee Payments. AB 1174 would have prohibited a person from requiring employees, as a condition of employment, to pay union dues or contribute financially to any charity sponsored by or at the behest of a labor organization. This bill failed to pass the Assembly Committee on Labor and Employment.

Employer Liability: Small Business and Microbusiness. AB 442 would have prohibited Cal OSHA from bringing an enforcement action for any “nonserious violation” against any employers with small businesses or microbusinesses without first giving the employer written notice of the violation and providing 30 days to cure. The bill would have authorized Cal OSHA to assess a reasonable fee, up to $50, to cover its costs for enforcement. The bill’s hearing in the Assembly Committee on Labor and Employment was canceled at the request of the author.

PAGA: Three Valiant, But Failed, Efforts. 

AB 281 attempted to reform PAGA by (1) requiring an actual injury for an aggrieved employee to be awarded civil penalties, (2) excluding health and safety violations from the employer right to cure provisions, and (3) increasing employers’ cure period to 65 calendar days, up from 33.

AB 1429 would have limited the violations an aggrieved employee can bring, required the employee to follow specific procedural prerequisites to filing suit, limited civil penalties recoverable to $10,000 per claimant and excluded the recovery of filing fees, and required the superior court to review any penalties sought as part of a settlement agreement.

AB 1430 would have required the Labor and Workforce Development Agency (“LWDA”) to investigate alleged Labor Code violations and issue a citation or determination regarding a reasonable basis for a claim within 120 calendar days; and allow an employee private action only after the LWDA’s reasonable basis notification or the expiration of the 120 day period. Read our further analysis of the proposed PAGA amendments here.

All three PAGA reform attempts stalled in the Assembly Committee on Labor and Employment.

Workplace Solutions

We will keep you apprised of these continuing Peculiarities, as well as any other significant legislative developments that occur as the end of the 2017 Legislative Session draws near. Contact your favorite Seyfarth attorney with any questions.

Seyfarth Synopsis: Summer is just getting started, and with it come special circumstances California employers should keep in mind. Vacations, hot weather, and company-sponsored events are among the summertime activities that raise employment issues. Here are some tips to beat the heat this summer.

Vacations

The kids are out of school and employees are ready to hit the road. Here’s what you need to know as to vacation pay:

Must employers provide paid vacations? Employers need not provide vacation time at all, paid or unpaid. But California employers who elect to offer paid time off should be aware that this time is considered a form of wages that is earned as work is performed.

How is vacation pay accrued? Like other wages, vacation pay accrues proportionally as the employee works. Consider an employee who is entitled to two weeks (10 business days) of vacation time each year who works 40 hours per week. She will accrue 1.538 hours of vacation time for each week. This accrued vacation time is treated as wages. When an employee leaves the company, voluntarily or involuntarily, any accrued and unused vacation time should be paid out at the employee’s final rate of pay along with the employee’s final pay check.

Can employers require that employees use their vacation time by a certain date or forfeit it? No. California does not allow a “use-it-or-lose-it” approach to paid vacation time, but our previous posts explain how employers may place a cap on the amount of vacation an employee accrues or limit the eligibility for paid time off.

How does vacation pay compare to holiday pay? Holiday pay, like vacation pay, is something that employers need not provide but often do. Holiday hours, like vacation hours, do not count as hours worked for the purpose of calculating overtime pay. If a holiday is tied to a specific event (think birthdays or national holidays), then unused holiday pay is not due when an employee leaves the company. But employers should beware of “floating holidays.”

Preventing Heat-Related Illness.

Rising summer temperatures can present serious dangers for outdoor workers. Making sure you comply with California’s regulations for heat-related illness prevention means everyone can keep their cool.

California employers must provide non-exempt employees with a paid 10-minute rest break for every four hours worked or major fraction thereof. Refresh your recollection of California’s rest break requirement here. And employers in certain industries should be mindful of their additional obligations to help outdoor workers avoid heat-related illnesses by providing water, shade, and additional rest breaks as required by California’s heat illness prevention regulations.

Who is subject to heat illness prevention regulations? Anyone with outside workers, but the list of industries commonly affected includes, and is not limited to:

  • Agriculture
  • Construction
  • Landscaping
  • Oil and gas extraction
  • Transportation or delivery

What does California require regarding outdoor places of employment? Employers must establish, implement, and maintain an effective heat illness prevention plan for outdoor workers. The Department of Industrial Relations offers detailed instructions and tips to help employers comply with state laws, but below are some of the main concerns:

Drinking Water. In addition to mandatory break periods, employees must have access to potable water that is “fresh, pure, suitably cool, and provided free of charge.”

Shade. If temperatures are greater than 80° F, then employers must maintain an area with shade at all times that is either open to the air or provides ventilation or cooling.

High-heat procedures. When temperatures exceed 95° F, employees in the industries specifically listed above must be given a minimum 10-minute cooldown every two hours. These breaks may be concurrent with meal or other rest periods when the timing aligns properly.

What should I do if a worker suffers from heat-related illness? If a worker does show any signs of heat-related illness, a supervisor should be prepared to respond with first aid or other medical intervention—and should not permit a worker showing any symptoms of heat-related illness to resume working until the worker has sufficiently recovered from the symptoms.

Employer-Sponsored Events

Summer is the time of company picnics and other social events that bring colleagues together. But employers may unwittingly find themselves obliged to pay their employees for company-sponsored social events unless they follow a few ground rules.

When is a company-sponsored event compensable? Generally, there is a 4-factor test to determine whether employees must be paid. And while the rule refers to pay for lectures, meetings, or training programs, the rules are a good guideline for determining obligations for paying an employee for a company-sponsored event. An employer need not pay if all of the following apply:

  • Attendance is outside business hours
  • Attendance is voluntary
  • The activity is not directly related to the employee’s job
  • No substantive work is performed during the activity

How can employers sponsor events that do not trigger compensation? There are options for employers to consider to ensure their events fall outside the four-factor test spelled out above:

  • Inform employees that the event is in fact voluntary (and then be mindful not to pressure them too much to attend).
  • Throw the event off-site and outside typical business hours.
  • Have any necessary work be done by exempt employees only.

With these guidelines in mind, everyone can beat the heat and enjoy the summer! As always, Seyfarth’s attorneys are available to answer your questions and address your concerns on these issues.

Edited by Chelsea Mesa.

Seyfarth Synopsis: Our mission here at Cal-Pecs is to illuminate how California employment law differs from the law that employers generally experience throughout America. In this back-to-basics piece, we provide some background and a brief catalog of stark contrasts.

In 1846, American settlers in Mexican Alta California staged the Bear Flag Revolt. They declared an independent republic, seeking freedom from Mexico. The rebels got lucky: the Mexican-American War soon intervened to dislodge the California territory from Mexican control. California, in 1850, became our thirty-first state.

The legacy of the Bear Flag Revolt continues: the state flag depicts a grizzly bear astride a patch of grass, above the logo “California Republic.” The underlying rebellious attitude has persisted as well. State politicians—especially since the 2016 election—have defiantly proclaimed California’s right to chart its own course on such vital matters as the environment, health care, immigration, and the right to use marijuana.

Perhaps nowhere is California’s independence more prominent than in the area of employment law. Federal labor law hit high tide in the 1930s, with the National Labor Relations Act and the Fair Labor Standards Act. The high tide returned in the 1960s—bringing us the Equal Pay Act, Title VII, and the Age Discrimination in Employment Act—and returned yet again in the 1990s, bringing us the Americans with Disabilities Act and the Family and Medical Leave Act.

In the Golden State, meanwhile, the waves of employment regulation have risen ever higher, even when federal regulations have ebbed. The chart below spots differences between federal and California law in key areas of interest to employers that operate both in California and in the rest of America. In each case, of course, the California version favors employees, plaintiffs, and unions, while never favoring the employer.

Issue U.S. Law & State Law Generally California Law
What’s the minimum wage? $7.25, and higher in a few states $10.50, rising to $15 by July 2022
Must that wage be paid separately for all work, including unproductive tasks? No. Employers generally can comply with an average wage that meets the minimum. Yes. This result has surprised some employers that pay piece rate or commissions.
Must employers pay non-exempt piece-rate and commission workers separately for rest breaks? No Yes
Must employers pay non-exempt employees for required travel outside regular hours? No Yes
What overtime hours generally require premium pay? Only hours worked in excess of 40 per week. Weekly overtime plus daily overtime (over 8 hours per day) plus any time on seventh consecutive workday in a workweek.
Can employers use the “fluctuating workweek method” to compute overtime pay for salaried non-exempt employees? Yes. The regular rate is salary divided by all hours worked, with a 0.5 multiplier for overtime hours. No. The regular rate is deemed to be weekly salary divided by 40, and the overtime multiplier is 1.5, not 0.50.
Is doubletime ever required? No Yes, for hours exceeding 12 per day or 8 hours on a seventh consecutive workday.
Are there civil penalties for labor law violations? Often no, and penalties that do apply are relatively modest. Yes: for many Labor Code violations penalties are typically $100 per employee per pay period.
Can plaintiffs personally sue supervisors and co-workers under anti-harassment statutes? No Yes
Are middle managers, pharmacists, and nurses typically exempt from overtime rules? Yes No
Are employees entitled to reimbursement for routine business expenses? No Yes
What statuses do employment discrimination laws protect? Race, color, religion, sex, national origin, age over 40, disability (and sexual orientation by some judicial readings of Title VII) Those plus sexual orientation, gender identity, transgender status, political affiliation, marital status, breastfeeding, HIV status, requests for disability accommodation, etc.
Can employers invoke the “undue hardship defense” for religious accommodations simply by showing a cost > de minimis, and can they accommodate grooming and dress practices by transferring employees to a more remote location? Yes and yes. No and no. The “undue hardship” defense must meet the same tough test required in disability cases. And it is categorically unreasonable to accommodate a religious dress or grooming practice by moving the employee away from the public.
Can undocumented workers recover back pay on a claim for wrongful termination? No Yes; immigration status of a worker is irrelevant to any California remedy, except reinstatement of employment if prohibited by federal law.
Can an employer fire a worker who provided a false name, SSN or information about legal status to work? Yes No; an employer cannot discharge, discriminate, retaliate or take any adverse action against an employee who updates such information based on a lawful change.
What consequences do employers suffer for denying meal or rest breaks? Breaks that are too short are counted as working time. Failure to provide specified, timely breaks can result in up to two extra hours of premium pay per day.
Are “use it or lose it” vacation plans acceptable? Yes, generally. No
Is paid sick pay required? No Yes
Do farmworkers have the right to unionize, and do unions enjoy special protections with respect to their mass picketing? No and no. Yes and yes. California’s Agricultural Labor Relations Act protects farmworkers, and its Moscone Act limits judicial power to prohibit mass picketing.

As this limited sample of comparisons might suggest, an employer used to doing business elsewhere can find California employment law a real bear. For more detailed treatment, see the 2017 edition of our Cal-Peculiarities: How California Employment Law is Different.

Seyfarth Synopsis: Automation is redefining the workplace. While some may fear that automation will displace workers, automation can enhance a company’s workforce and improve productivity. In this segment, we examine industry changes resulting from an automated workforce and identify future trends.

Many of us remember our neighborhood video store closing its doors, forever changing the way we select our Friday night entertainment. Today, we can stream a new movie release from the comfort of our own home or interact with a large red kiosk after picking up groceries at the local supermarket. Automation seems inevitable and appears to be spanning most industries.

Automation has already reduced the number of workers throughout the manufacturing industry—brightest on the radar these days being the reduction in the labor force needed by the coal industry. That trend is likely to continue. But in recent years, automation has become more widespread. Retailers are closing their brick and mortar stores to do online business. And self-checkout aisles at grocery stores are ubiquitous. Should these changes be welcomed or feared?

While recent news articles and economists’ predictions can fuel the anxiety of the American worker, there is reason to be optimistic when examining this trend as a whole. Economist David Autor reminds us that prior stages of technological growth did not devastate, but rather transformed, the U.S. labor force. If we look to the past, we can find numerous examples of when invention and improvements were feared for reasons similar to those espoused today:  mass production of the automobile, mechanical harvesting in agriculture, and more recently the advent of ATMs replacing bank tellers. Rather than displacing an entire population, these innovations improved productivity and created new job functions for workers that enabled them to increase their economic value.

Such promise appears possible with automation in the retail industry. For example, Lowes recently rolled out the “LoweBot,” an automated robot that helps customers find products. It even assists employees with inventory-related tasks. Rather than simply eliminate the store’s employees, though, Lowes states that LoweBots augment the customer service the company can provide. A LoweBot can tell a customer what aisle to find paint brushes, but staff can demonstrate their expertise and offer suggestions for customers’ at-home projects.

Meanwhile, in Japan, the sometimes frustrating self-checkout aisles are enhancing the customer’s experience by automatically reading what’s in the customer’s basket without the need to scan each item.

Anticipated Trends Resulting from an Automated Workforce

Change is inevitable, and often difficult to embrace. A fitting analogy comes from the introduction of music on television by MTV. On the one hand, it may have killed the radio star, as the Buggles so eloquently put it. But at the same time MTV made music accessible to a larger audience. To succeed, musicians had to be open to evolve and master the new visual medium. Similarly, the era of the American worker isn’t coming to an end, but it may be in transition. This new workforce, like the musicians facing a video age in the 80’s, may need to develop new specializations and skills to obtain those future positions.

Automation is here and it’s changing the labor landscape: “we can’t rewind, we’ve gone too far.” But that’s not necessarily a bad thing. Here are some trends future employers can consider as they step into the age of automation:

Potential uptick in age discrimination claims. Jobs augmented with some form of automation will likely require greater proficiency in technology. Some speculate that this will put older workers disproportionately at risk because of the belief that younger workers are more adept with technology. This perception, coupled with the aging of the baby boomer generation, may increase the number of age discrimination filings. Employers may need to monitor the latent effects of any new policies, including those relating to worker’s expectations, more closely. In choosing a qualified applicant, employers can ask questions about an applicant’s technological skills, since those questions necessarily concern the applicant’s ability to perform job-related functions. However, hiring committees should ensure their decisions are guided by business needs and not assumptions about an applicant’s grasp of technology based on their age.

Increase in workplace safety. Automation of dangerous tasks should improve safety in manufacturing, distribution and other industries, which keeps workers safe. A decrease in the number of injuries on worksites should be accompanied by a decrease in the number of worker’s compensation claims. In addition, automation should also serve to improve companies’ compliance with OSHA regulations.

Retraining or cross-training current workforce. New jobs are likely to require specialized skills to build and fix the new technology. Employers can begin to offer training programs to their workforce to ease the transition into the emerging jobs created in response to a more automated industry. This would be an efficient way for employers to retain their workforce and combat the negative effects of high-turnover and understaffing. An early investment in cross-training may both build skills that help both workers increase career mobility and allow the company to meet its demand for skilled workers.

New job types. The roll-out of new technology in the workplace is likely to generate new types of jobs with new functions and areas. Workers will be needed to maintain, fix, and repair new technology.

If you have any questions or concerns and wish to discuss, Seyfarth’s team of seasoned attorneys is available to assist you navigate the legal landscape and the future of work. We also invite you to peruse Seyfarth’s Employer’s Guide to the Future of Work.

Edited by Michael G. Cross.

Seyfarth Synopsis: The California Supreme Court, in Dynamex Operations v. Superior Court, has agreed to address the legal standard for determining whether a worker classified as an independent contractor is really an employee. The Supreme Court’s opinion is expected to be significant for anyone thinking of using independent contractors in California.

The Future of Work: A Surging Demand for Independent Contractors

Recent years have seen tremendous growth in the sharing economy, aka, the “gig economy,” which reflects the technological ability to quickly summon goods or services through a smart phone. While the new economy has grown rapidly, the relevant legal standards have not. Yet business owners continue to invest heavily into business models that have created tens of thousands of flexible jobs for workers classified as independent contractors. In the absence of legislative guidance tailored to the realities of the new economy, California courts and administrative agencies have struggled to apply the law developed during an earlier age.

The new economy is a powerful fact of life. According to Seyfarth’s “Future of Work” Outlook Survey, 45% of respondents expect their company’s demand for independent contractors to grow in the next five years. Companies in the areas of information technology and telecommunications are among those most likely to experience these developments, as opposed to companies in the areas of real estate and consumer staples. (A deeper analysis of our survey’s findings appears here.)

These survey responses provide a valuable snapshot, but employers are likely to change their tune based on the regulatory environment and any significant judicial rulings narrowing the use of independent contractors.

One such potential ruling could come in Dynamex Operations West, Inc. v. Superior Court. The California Supreme Court has agreed to review a Court of Appeal decision that stunned employers by expanding the definition of “employee.” That definition of employee arguably could encompass many individuals traditionally retained as independent contractors.

When determining whether workers were independent contractors, many companies previously considered how much control the company exerted over a worker and how much a worker economically depended on the company. This framework provided some consistency.

Taking a turn, the Court of Appeal in Dynamex adopted the Wage Order’s much-broader definition of “employ,” meaning “to engage, suffer or permit to work.” As a result, the Court of Appeal expanded the meaning of the term “employee,” arguably extending it to nearly every labor relationship a company would be likely to have with an individual. The potential ramifications of such a definition upon the future use of independent contractors cannot be overstated. Indeed, the U.S. Chamber of Commerce and California Chamber of Commerce have both warned that a decision to affirm the lower court’s expansive ruling “would effectively eliminate independent contractor status for any use in California.”

Consequences of Misclassification

Making it more difficult to properly classify an independent contractor would only increase the risks of costly litigation. By now, readers should know that misclassifying California employees as contractors has dire consequences, including statutory penalties of $5,000 to $15,000 for each “willful” violation. Failing to properly classify workers can create liability for back wages, penalties, fines, and the assessment of back taxes. Additional exposure can also arise when misclassified workers, who would otherwise be entitled to employee benefits, have not received those benefits. California state agencies in search of employment-tax revenues have increased their enforcement efforts, including audits. In fact, the California Labor and Workforce Development Agency has agreed to jointly investigate independent contractor misclassification with the IRS, reflecting both agencies’ desire to increase enforcement.

California employers with operations in other states should also note that increased misclassification enforcement is not peculiar to the Golden State. In July 2015, the U.S. Department of Labor’s Wage and Hour Division issued its Administrator’s Interpretation, concluding that “most workers are employees under the FLSA” in part due to the “expansive definition of ‘employ’ under the FLSA”; we previously observed this position to be an “unapologetic effort to restrict the use of independent contractors.” Today, it still remains to be seen whether the Trump Administration will redirect federal enforcement priorities away from independent contractor issues. But even if the federal government backs off of these issues, there is no indication that state governments and the ubiquitous plaintiffs’ bar will stop aggressively challenging independent-contractor classifications.

Scrutinize Your Existing Relationships with Independent Contractors

As always, employers should remain vigilant for new legal developments and should consult their employment counsel to scrutinize existing relationships with independent contractors.

Edited by Michael G. Cross.

Seyfarth Synopsis: California employers may not require employees to submit to random drug testing, except under very limited circumstances.

California public policy, stated in our Constitution, strongly favors the right of privacy. But employers have their own legitimate interest in maintaining a safe, drug-free work environment. So what’s the blunt truth about random drug testing in California?

As we blogged on April 12, 2017, California voters gave an enthusiastic, yet relaxed green thumbs up to recreational use of marijuana with the passage of Prop 64, but Prop 64 recognizes an employer’s right “to enact and enforce workplace policies pertaining to marijuana.” This development sparks important questions about best practices and policies to implement regarding workplace drug use and random drug testing, including how employers can best reduce the risk of litigation, and whether anything has changed in the wake of legalized marijuana. The short answer is that these rules remain the same as they were.

Way back when, in 2008, the California Supreme Court held that employers need not accommodate an employee’s medicinal marijuana use. And it remains the practice for many employers to enforce drug use policies specifying that the employer has a zero tolerance toward working under the influence of drugs, including newly legalized substances such as THC (the active ingredient in marijuana). Unambiguous drug use policies will put even the most dazed and confused employees on clear notice that these “legalized” substances are not tolerated at the workplace.

Under what circumstances may a California employer conduct a lawful random drug test?

Here’s the rub: California employers may have a legitimate interest in enforcing a drug free workplace, but our Constitutional right to privacy generally protects against a random, suspicionless drug tests. Because an employer’s right to drug test relies on a balancing test (is the employee’s privacy interest outweighed by the employer’s interest in keeping the workplace safe and drug-free?), courts commonly look to whether there are less intrusive ways than random testing to protect the employer’s interest, and typically determine that there are.

There are a few exceptions to this general rule. First, certain federal authorities require California employers to establish a controlled substances and alcohol testing program that includes random testing. This requirement essentially snuffs out the employee’s privacy interest. Federal authorities imposing such a requirement include the Department of Transportation, Federal Motor Carrier Safety Administration, Federal Railroad Administration, Federal Aviation Administration, Federal Transit Administration, Pipeline and Hazardous Materials Safety Administration, and United States Coast Guard.

Absent a federal legal mandate to conduct random testing, a California employer may engage in random testing only if the employer can make a strong case that an employee works in a safety-sensitive position and, if allowed to work under the influence of drugs, would pose some imminent safety or health threat with irremediable consequences. Note though that this is a very difficult standard to meet. Employees in the few positions that have presented such a threat have included nuclear power plant workers, correctional officers, hazardous pipeline employees, government employees with secret national security clearances, aviation personnel, and civilian employees at a chemical weapons plant. Working in those positions while under the influence could have dire consequences for these employees and everyone around them, thus causing the employer’s and the public’s interest to outweigh that of the buzzed employee.

Bay Area employers should also note that California rules come with an unusual, perhaps unsurprising, caveat: San Francisco has long restricted the drug testing of employees, and has even passed a local ordinance declaring that “[u]nder no circumstances may employers request, require or conduct random …blood, urine or encephalographic testing.” Therefore, unless this requirement is preempted by the federal mandates described above, San Francisco employers should avoid random testing.

What are the liability risks and resulting penalties?

California views the individual’s right to privacy in the strongest of terms. Conducting an unlawful random drug test of an employee creates significant risks for the employer, including claims for invasion of privacy or wrongful termination in violation of public policy if an employer takes action based on the employee’s refusal to take the test. Given the risk of litigation exposure, employers should steer clear of any random drug tests of current employees, unless the employer is confident that federal law authorizes the random drug test or unless the employee is truly performing a safety-sensitive role.

A reminder for workplace solutions.

As marijuana use for medical and recreational use becomes more prevalent, employers should assess their written policies, job applications, background check procedures, and interview materials—especially nationwide companies using form documents—to ensure compliance with California’s unique drug testing laws.

(Shameless plug: For those interested in the evolution and implementation of marijuana laws in the United States and their impact upon employers, you are encouraged to visit and subscribe to “The Blunt Truth” blog.)

Seyfarth Synopsis: The California Assembly Committee on Labor and Employment yesterday heard and approved AB 5, The Opportunity to Work Act, as it continues to move through the legislative process.

iStock_000000642401_LargeThe Opportunity to Work Act, which would require employers to offer hours to part-time employees before hiring new employees or temporary workers, yesterday cleared its first hurdle in the legislative process, receiving a go-ahead vote from the Assembly Committee on Labor and Employment. Read and watch our summaries of the bill. Next stop: Assembly Appropriations.

The bill’s co-author, Assembly member Gonzalez-Fletcher, kicked off Wednesday’s hearing by touting AB 5’s purported benefits and protections for employees in the retail and fast food industries. Conceding that the bill leaves much to be desired among members of the business community, she emphasized her desire to work with businesses to refine the bill’s language.

Opponents highlighted the ambiguities in AB 5’s language and the difficulties employers would likely face in implementing its provisions. They presented surveys and statistics that conflicted with those presented by the bill’s proponents. For example, the proponents stated that most part-time workers want to work full time, while opponents claimed that 5% of all part-time workers harbor such a desire.

Opponents posed questions such as: How exactly are employers supposed to offer additional hours in a non-discriminatory fashion? Must employers offer hours to all employees (in the same or similar position)? How are employers supposed to notify employees of the additional hours? Do the hours get awarded to the first employee to respond? What if an employee wants to work only a portion (e.g., one or two hours) of the offered shift? Must the employer then ask other employees to cover the remaining hours? Does the bill’s requirement that employers document their offers of additional hours to current employees mean that employers must keep copies of all employee communications, or require employees to sign written acknowledgements of each offer of additional hours?

These questions, Gonzalez-Fletcher assured, arise from intentional ambiguities that she wants to clarify with the help of business owners. She’s already considering amendments that would

  • delay implementation of the bill (for one year) for 501(c)(3) organizations,
  • create a carve-out for collective bargaining agreements that expressly define work hours,
  • limit the bill’s application to only the location where the additional hours are available, if the employer has locations throughout the state, and
  • provide an employee opt-out provision.

We’ll keep monitoring this bill’s progress through the legislative process and keep you updated.

Seyfarth Synopsis: Back from Spring Break, and Back to Work: Our List of L&E Bills to Watch in the remainder of the 2017-2018 California Legislative Session.

New LegislationCalifornia Legislators were, as always, very busy in the first few months of the 2017-18 Legislative Session, introducing well over 2000 bills by the February 17th bill introduction deadline. But, in comparison to prior years, the calendar has been surprisingly light for heavy-hitter labor and employment bills. The Legislature returned to work on April 17, after its spring break, and continued to push bills out of the house of origin in advance of the June 2nd deadline.

Here’s what we’re watching:

Opportunity to Work Act. Modeled after the City of San Jose’s November 2016 voter-approved Opportunity to Work Ordinance (effective April 1, 2017), AB 5 would require employers with 10 or more employees in California to offer additional hours of work to existing nonexempt employees in California before the employer may hire additional employees or temporary employees. The employer would not have to offer the hours to existing employees if those hours would result in the payment of overtime compensation to those employees. The bill would require employers to retain documents, including work schedules of all employees and documentation of offering additional hours to existing employees, prior to hiring new employees or subcontractors. The bill would also require employers to post a notice to be created by the Division of Labor Standards Enforcement (DLSE) outlining employee rights under this (proposed) new law. This Act would create a new Labor Code section, and provide for enforcement by the DLSE on its own accord or via complaint by an employee, or via employee private right of action. The Act would allow for an express CBA carve-out. The bill is scheduled for its initial hearing in the Assembly Committee on Labor and Employment on April 19. Stay tuned for an update on this bill following the hearing.

Rest Breaks. AB 817 would carve out an exception to Labor Code section 226.7’s off-duty “rest period” requirement for employers providing emergency medical services to the public. The bill would authorize those EMS employers to require employees to monitor and respond to calls for emergency response purposes during rest or recovery periods without penalty, as long as the rest break is rescheduled. The bill expressly states that it is declaratory of existing law. Likely in response to the California Supreme Court’s December 22, 2016 ruling in Augustus v. ABM Security Services, Inc. (holding that no true rest break was permitted when security guards were required to carry radios or pagers and respond to calls during rest breaks), this bill is one to watch.

Retail employees: Holiday Overtime. AB 1173 would establish an overtime exemption for “a holiday season employee-selected flexible work schedule,” requested in writing by individual nonexempt retail employees and approved by the employer. The exemption would allow the employee to work up to 10 hours per workday with no overtime pay. Hours worked between 10 and 12 in a workday, or over 40 hours in a workweek would be paid at one and one-half the regular rate of pay. All hours over 12 in a workday and over eight on a fifth, sixth, or seventh day in a workweek would be paid at double time. This bill contains a CBA carve-out, and clearly has many details to still be ironed out, as it contains a blank in the bill text for the definition of “retail industry.”

Pay Equity: salary inquiry ban. Once again, AB 168 seeks to ban employers, including state and local government employers, from asking job applicants about their salary history, as well as compensation and benefit information. The bill would also require that private employers, upon reasonable request, provide the applicant with the position’s pay scale. AB 168 brings back language that was shot down twice—first by Governor Brown in his October 2015 veto of AB 1017, then removed from 2016’s AB 1676 (fair pay legislation) before it received the Governor’s approval in September 2016.

Pay Equity: Gender Pay Gap Transparency Act. Dubbed the “Gender Pay Gap Transparency Act,” by author Assembly Member Gonzalez-Fletcher in her April 4, 2017 Equal Pay Day press release, AB 1209 would “require companies with more than 250 employees to include gender pay data as part of their annual reporting to the Secretary of State.” If passed, AB 1209 would require employers, beginning July 1, 2020, to publish and update yearly the difference between the mean salary and median salary of male exempt employees and female exempt employees broken down by job classification or title and the difference between the mean compensation and median compensation for male board members and female board members. Arguments against this bill will likely mirror those made in response to the EEOC’s revised EEO-1 rule.

Voluntary Veterans’ Preference Employment Policy Act. Dubbed the “Voluntary Veterans’ Preference Employment Policy Act,” AB 353 and AB 1477 would allow private employers to establish a veterans’ preference policy  and uniformly grant a hiring preference to veteran applicants, regardless of when the veteran served. These bills would expand Government code section 12940(a)(4), which currently allows for a veterans’ preference policy for Vietnam-era veterans only. The bill would provide that the granting of a veterans’ preference will not violate any local or state equal employment opportunity law or regulation, including FEHA, as long as the policy is not applied for the purpose of discriminating against an employment applicant on the basis of any protected classification.

Applicants: prior criminal history. The Legislature is joining the flurry of “Ban-the-Box” initiatives throughout California with AB 1008, which would make it unlawful for an employer to: 1) include on any job application questions that seek the disclosure of an applicant’s criminal history; 2) inquire or consider an applicant’s prior convictions before extending a conditional offer; and 3) when conducting a background check, to consider or disclose  various information. The bill would also require employers that intend to deny employment to an applicant because of prior convictions to perform an individualized assessment of whether the applicant’s conviction history has a direct and adverse relationship to the specific job duties, considering the nature and gravity of the offense, the time passed since the completion of the sentence, and the nature of the job. Then, the employer must notify the applicant of the reasons for the decision and provide the applicant 10 days to respond and challenge the accuracy of that information or provide evidence of rehabilitation which it must consider before making a final employment decision, in writing. This bill is substantially similar to the recent Fair Employment and Housing Council regulations, which go into effect in July 2017; and would thus largely codify what will soon be required by regulation.

Health professional interns: minimum wage. Following the recent increases in minimum wage, AB 387 would expand the definition of “employer” to include a person who employs any person engaged in supervised work experience (i.e., clinical hours) to satisfy the requirements for licensure, registration, or certification as an allied health professional. Cal Chamber opposes this bill, as it could cause internships provided for educational credit to be eliminated.

Resident apartment manager wages. AB 543 would authorize, under a voluntary written agreement, an employer that doesn’t charge a resident apartment manager monthly rent, to apply up to one-half of the fair market rental value of the apartment to meet minimum wage obligations to the apartment manager. Existing law allows employers to take a credit against minimum wage for two-thirds of the ordinary rental value, up to $564.81 per month for a single occupant and $835.49 per month for couples.

Credit Card gratuities. AB 1099 would require employers that are lodging establishments, car washes, barber shops and beauty salons, massage parlors, restaurants, and on-demand service providers such as transportation network companies that allow debit or credit card payment for services to also accept a debit or credit card for gratuities or tips. This bill would require the tip payment to be made to the employee by the next regular payday following the date the credit card authorized payment.

Overtime compensation: executive, administrative, or professional employees. AB 1565 would exempt from overtime compensation an executive, administrative, or professional employee, if the employee earns a monthly salary of either $3,956 or no less than twice the state minimum wage for full-time employment, whichever amount is higher.

Labor organizations: compulsory fee payments. AB 1174 would, beginning January 1, 2018, prohibit a person from requiring employees, as a condition of employment, to pay union dues or contribute financially to any charity sponsored by or at the behest of a labor organization.

Employer liability: small business and microbusiness. AB 442 would prohibit Cal OSHA from bringing an enforcement action for any “nonserious violation” against any employers with 100 or fewer employees and an average gross of $10,000,000 or less over the past three years, or microbusinesses  with 25 or fewer employees and an average gross of $2,500,000 or less over the past three years, without first giving the employer written notice of the violation and providing 30 days to cure. AB 442 would authorize Cal OSHA to assess a reasonable fee, up to $50, to cover its costs for enforcement.

Immigration: worksite enforcement actions. AB 450, the “Immigrant Worker Protection Act,” would impose several requirements on public and private employers dealing with federal ICE workplace raids or enforcement actions. Assemblymember Chiu has described the key components as:

  • Requiring employers to ask for a warrant before granting ICE access to a worksite.
  • Preventing employers from releasing employee records without a subpoena.
  • Requiring employers to notify the Labor Commissioner and employee representative of a worksite raid and notifying the Labor Commissioner, employees, and employee representatives of an I-9 audit (i.e., employment eligibility verification).
  • Preventing retaliation by enabling workers crucial to a labor claim investigation to receive certification from the Labor Commissioner that employee complainant or employee witness has submitted a valid complaint for violations of the Code and is cooperating in the investigation and prosecution of the violations.

The bill would authorize the Labor Commissioner to asses penalties of at least $10,000 to $25,000 for each violation against employers for failure to satisfy the bill’s requirements and prohibitions.

FEHA enforcement expansion. SB 491 would expand Government Code section 12993 and allow local jurisdictions, such as cities and counties, to enforce FEHA discrimination regulations. Cal Chamber opposes this bill.

Good faith defense: employment violations. SB 524 would permit an employer to raise an affirmative defense that, at the time of a violation, the employer was acting in good faith when the employer relied upon a valid published DLSE opinion letter or enforcement policy. SB 524 would only apply after January 1, 2018 to DLSE opinion letters or enforcement policies that are still in effect at the time of the violation. Employers would not be able to claim an affirmative defense when a DLSE opinion letter or enforcement policy has been modified, rescinded, or deemed invalid. Cal Chamber supports this bill but hearings for SB 524 have been canceled at the request of the author, Senator Vidak. We’ll keep our eye on this to see if there is any further movement.

Reproductive health. AB 569 would prohibit employers from taking any adverse employment action against an employee based on the employee or employee’s dependent’s reproductive health decisions. The bill would also prohibit employers from requiring employees to sign a waiver or any document denying an employee the right to make his or her own reproductive health care decisions, including the use of a particular drug, device, or medical service (e.g., in vitro fertilization). The bill would require an employer to include in its handbook a notice of the employee rights and remedies under this bill.

New Parent Leave Act. Likely DOA, but resurrected for another go from its 2016 veto, SB 63, the “New Parent Leave Act,” would prohibit employers with at least 20 employees within 75 miles, from refusing to allow an employee to take up to 12 weeks of parental leave to bond with a new child within one year of the child’s birth, adoption, or foster care placement. Like under CFRA, to be eligible, the employee must have more than 12 months and at least 1,250 hours of service with the employer during the previous 12-month period. The bill would require the employer to maintain and pay for the employee’s coverage under a group health plan during this leave. SB 63 would also allow—but not require—an employer to grant simultaneous leave when two employees are entitled to leave for the same birth, adoption, or foster care placement. This bill is almost identical to 2016’s SB 654, which Governor Brown vetoed, and only provided for 6 weeks of leave, rather than the 12 weeks SB 63 would provide. The Governor’s veto message expressed his concerns for impact the leave would have on small business and pointed lawmakers to explore an amendment that would have made mediation an option—which the SB 63 does not have.

PAGA: Three New Valiant Efforts. AB 281 attempts to reform PAGA by: 1)  requiring an actual injury for an aggrieved employee to be awarded civil penalties; 2) excluding health and safety violations from the employer right to cure provisions; and 3) increasing employers’ cure period to 65 calendar days from 33.

AB 1429 would limit the violations an aggrieved employee can bring, require the employee follow specific procedural prerequisites to filing suit, limit civil penalties recoverable to $10,000 per claimant and exclude the recovery of filing fees, and require the superior court to review any penalties sought as part of a settlement agreement.

AB 1430 would require the Labor and Workforce Development Agency (LWDA) to investigate alleged Labor Code violations and issue a citation or determination regarding a reasonable basis for a claim within 120 calendar days; and allow an employee private action only after the LWDA’s reasonable basis notification or the expiration of the 120 day period. Read our further analysis of PAGA proposed amendments here.

Workplace Solutions

We will continue to monitor and report on these potential Peculiarities, as well as any other significant legislative developments over the course of the 2017 Legislative Session. Contact your favorite Seyfarth attorney with any questions.

Edited by Colleen Regan.