California Peculiarities Employment Law Blog

To Follow or Not To Follow … (Social Media in the Workplace—Part 1 of 2)

Posted in 2015 Cal-Peculiarities

HiResYou’re reading a blog post, and thus need no primer on the prevalence of social media. But you may not be aware of the pitfalls facing employers that use, monitor, or implement policies regarding social media.

Employers can face liability for a wide variety of social media-related practices. For example, if you thought employers generally could prohibit employees from picking fights online or that there isn’t anything wrong with an employer friending an applicant before extending a job offer … well, think again.

Big Brother The NLRB Is Watching

In recent years, the National Labor Relations Board has increasingly scrutinized social media employment policies to see if they would deter the rights of employees to engage in concerted activities, including the rights to discuss their terms and conditions of their employment.

We previously lamented the lack of clarity regarding what constitutes an acceptable social media policy in the jaundiced eyes of the NLRB. The good news is that the NLRB’s General Counsel has issued guidelines regarding social media policies.  The bad news is that the guidelines sometimes offer insufficient guidance, or guidance that the courts may not accept. Further, the views expressed in the guidelines are those of the General Counsel, and may or may not be accepted by the NLRB.

For example, the NLRB guidelines advise that the following seemingly innocuous rules are likely unlawful:

  • prohibiting employees from engaging in disrespectful, negative, inappropriate or rude conduct towards employers or management;
  • generally prohibiting employees from sending unwanted, offensive or inappropriate emails;
  • banning, across the board, picking fights online; and
  • requiring employees to get approval before creating a blog or discussion group.

The NLRB guidelines disapprove of such generally stated policies because they could have the effect of curbing protected activity.

In contrast, the NLRB explained that the following, more specific, rules would likely be lawful:

  • prohibiting employees from being disrespectful, negative or rude to customers;
  • prohibiting conduct that threatens, intimidates, coerces, or otherwise interferes with the job performance of fellow employees or visitors; and
  • requiring employees to get approval before creating an online forum that does not relate to wages, terms, and conditions of employment or other protected activity.

The NLRB guidelines suggest that these rules likely would be permissible because they are drafted with sufficient specificity to demonstrate that they won’t impede the right of employees to discuss the terms and conditions of their employment.

The main takeaway from the NLRB guidelines is that context is key. A rule that might come across as ambiguous (and unlawful) in isolation may take on a whole new meaning with carve outs or examples that demonstrate how the rule won’t prevent an employee from engaging in a protected activity.

Pandora’s Box of Potential Pitfalls

The NLRB is not the only policer of social media employment policies. California and a growing number of other states prohibit employers from (1) requiring job applicants to provide social media passwords, (2) requiring job applicants to “friend” employees, or (3) requiring applicants’ friends to disclose what the applicants posted online. [Keep an eye out for Part 2 of our Social Media article, with its link to Seyfarth’s Social Media Privacy Legislation Desktop Reference Guide.]

It remains true, of course, that California employers are not explicitly prohibited from viewing publicly available information. But just because it’s not unlawful doesn’t mean it’s advisable.

In addition to social media revealing trivial information like what someone just listened to on Spotify, social media can also reveal a host of personal information that employers cannot ask for during the hiring process (and may be better off not knowing). By viewing this information and then deciding not to hire an applicant, employers can inadvertently expose themselves to litigation risk. For example, if a rejected applicant’s Instagram or Facebook postings contain pregnancy-related pictures, or photographs of church-related functions, or show that the applicant has a disabled child or spouse, a potential employer might later find itself embroiled in a discrimination claim.

So while California has not (yet) forbidden you to check out your potential employee pool online, the potential problems caused by doing so may mean you might want to skip the Facebook stalking and stick with Candy Crush. (The uninitiated who find this reference obscure may wish to consult

Workplace Solutions

Given the trove of personal information available online, the best practice is to avoid using social media during the hiring process. And it might seem harmless to prevent an employee from being rude to a supervisor on Twitter, or to look up a potential employee on your Facebook app, in this case what you inadvertently know might hurt you. So steer clear if you can—knowing how many Grumpy Cat memes an applicant or employee posted is not worth it!

If you have any questions regarding your workplace’s social media policies or practices, please contact the author, or another Seyfarth attorney.

Double-Bagged: Governor Signs Second Piece of Grocery Worker Retention Law

Posted in 2015 Cal-Peculiarities

iStock_000000642401_LargeYesterday, Governor Jerry Brown signed into law AB 897, a “clean up” bill he requested to address an omission in AB 359, which Governor Brown had signed into law on August 17, 2015. This legislation, effective January 1, 2016, will require a successor grocery employer to retain eligible workers for a 90-day transitional period and, upon completion of that period, will require the successor grocery employer to consider offering continued employment to those workers. The new law will apply to retail stores in California that are over 15,000 square feet in size (your typical supermarket is 45,000 square feet) and that sell primarily household foodstuffs for offsite consumption.

To be “eligible,” the employee must

  • have worked for the predecessor employer for at least six months and
  • not be a manager, supervisor, or confidential employee (someone with access to confidential or discretionary information such as legal, budgeting, or development of policies and procedures pertaining to labor/employee relations).
  • The law will prohibit the new owner from discharging inherited employees without cause during a 90-day transitional period. As “successor grocery employers,” the new owners will also likely inherit the store employees’ union and any collective bargaining agreement, as well as problem employees and senior employees earning high wages.

But all is not restrictive: AB 359 permits successor employers to establish new terms and conditions for the inherited employees, which may allow for an opportunity to renegotiate any existing union contracts. In addition, the law expressly states that “parties may, by collective bargaining agreement, provide the agreement supersedes the requirements” of AB 359. This will presumably require a new employer to either become involved in the predecessor’s bargaining session prior to the purchase, or to engage in immediate bargaining with the current union to avoid having to offer employment to inherited employees after the 90-day transitional period.

What is the Impact on California Employers?

Grocery employers’ abilities to hire their own workforces will be substantially curtailed. No longer will a new employer be able to refuse to hire inherited employees based on results of background checks or other typical pre-employment screens. Instead, a new employer that does not wish to employ an inherited employee must have a valid reason to terminate the employee “for cause.” Further, a new employer that wants to build a culture from the ground up, with its own fresh crew, should think twice about triggering WARN and Cal-WARN Act obligations related a large scale reduction in force before releasing inherited employees.

Will the substance of AB 359 survive judicial challenge? In 2011, the California Supreme Court rejected a challenge to a similar Grocery Worker Retention Ordinance enacted by Los Angeles, which requires new grocery store owners to keep existing employees for months after taking over ownership.

Not the End of the Story…

Governor Brown also noted in his signing message some ambiguity in the law: “as drafted, the bill is not clear on how the provisions apply if an incumbent grocery employer has ceased operations.” He noted the author and sponsor have committed to clarify that the law would not apply to a grocery store that has ceased operations for six months or more, and that he expected to see legislation to that effect before the end of this legislative session. On August 20, Assembly Member Gonzalez, followed the Governor’s directive, gutting and amending AB 897, which previously related to court records. Now, AB 897 amends provisions that will be put in place by AB 359 on January 1, 2016 to exclude from the definition of “grocery establishment” a retail store that has ceased operations for six months or more. The Governor signed AB 897 on September 21, 2015.

Workplace Solutions

If you are thinking about purchasing an existing grocery establishment, you may want to wrap up the transaction and hire your new workers before this new law becomes effective on January 1, 2016. Companies that cannot close a deal before January 1, 2016, may consider the following:

  • Make sure you have a clear picture of the existing workforce, with whom you will be living for at least the first 90 days.
  • Set new terms and conditions of employment (i.e., position offered, wages, amount of vacation, etc.) before offering positions to inherited workers.
  • Condition the purchase of the grocery establishment on the negotiation of clear and unambiguous waiver language within its collective bargaining agreement (if any) giving successor grocery owners greater flexibility to screen and terminate inherited employees.
  • Hire effective managers and ensure human resources policies are solid, to hold inherited workers accountable for poor performance and ensure any disciplinary decisions comply with the new law’s “for cause” standard.

If you have any questions or would like further information, your favorite Seyfarth attorney is standing by to help.

2015 California Labor and Employment Legislation Update: The End (of Session) Is Near…

Posted in 2015 Legislative Updates

California State Capitol in Sacramento

The California Legislature adjourned Friday evening, September 11, to close its 2015-16 Legislative Session. It sent a number of employment-related bills to Governor Brown for consideration by his October 11, 2015 deadline to sign or veto the bills. Below is a summary of those before him for consideration, as well as some significant bills he has already signed or that did not make it to his desk. Which private labor and employment bills will the Governor sign into law? We’ll keep you updated…


Wage and Hour

Piece Rate. AB 1513, if approved, would make it even more difficult for California employers to pay employees on a piece-rate basis. The bill provides that employers must pay piece-rate employees for rest and recovery periods (and all other periods of “nonproductive” time) separately from (and in addition to) their piece-rate compensation. Specifically, the bill would require that employers pay the following rates for rest and recovery periods and “other nonproductive time.”

  • Rest and recovery periods. Employers must pay piece-rate employees for rest and recovery periods at an average hourly rate that is determined by dividing the employee’s total compensation for the workweek (not including compensation for rest and recovery periods and overtime premiums) by the total hours worked during the workweek (not including rest and recovery periods).
  • Other nonproductive time. Employers would have to pay piece-rate employees for other nonproductive time at a rate that is no less than the applicable minimum wage. If employers pay an hourly rate for all hours worked in addition to piece-rate wages, then those employers would not need to pay amounts in addition to that hourly rate for the other nonproductive time.

The bill also would specify additional categories of information that must appear on a piece-rate employee’s itemized wage statement: (i) the total hours of compensable rest and recovery periods, the rate of compensation paid for those periods, and the gross wages paid for those periods during the pay period. If employers do not pay a separate hourly rate for all hours worked (in addition to piece-rate wages), then the employer must also list the total hours of other non-productive time, the rate of compensation for that time, and the gross wages paid for that time during the pay period.

AB 1513 would add Section 226.2 to the Labor Code, and repeal Sections 77.7, 127.6, and 138.65 of the Labor Code. Enrolled on September 16, 2015.

Gender Wage Equality, SB 358, AB 1017, AB 1354. As we recently wrote, there are a few important gender pay equality bills making their way through the Legislature. First, representing what media observers call the nation’s most aggressive attempt yet to close the salary gap between men and women, SB 358 would substantially broaden California gender pay differential law. SB 358 (enrolled and presented to the Governor September 15) would prohibit an employer from paying any employee at a wage rate less than that paid to employees of the opposite sex for doing substantially similar work—when viewed as a composite of skill, effort, and responsibility—and require the employer to affirmatively demonstrate that a wage differential is based entirely and reasonably upon one or more enumerated factors, such as a seniority system, a merit system, a system that measures earnings by quantity or quality of production, or a bona fide factor that is not based on or derived from a sex-based differential in compensation and that is consistent with a business necessity. The bill contains anti-retaliation provisions and provides a private right of action to enforce its provisions.

AB 1017 (enrolled and presented to the Governor September 15) and AB 1354 (enrolled September 10). AB 1017 would add section 432.3 to the Labor Code, to prohibit an employer from seeking salary history information about an applicant for employment. AB 1354 would amend Government Code section 12990 to require, of each employer with over 100 employees that is or wishes to be a state contractor or subcontractor, a nondiscrimination program that includes policies and procedures designed to ensure equal employment opportunities for all applicants and employees, an analysis of employment selection procedures, and a workforce analysis that contains the total number of workers, the total wages, and the total hours worked annually, with a specific job category identified by worker race, ethnicity, and sex.

PAGA. AB 1506 would amend California’s Private Attorneys General Act (“PAGA”), now codified in Labor Code sections 2699, 2699.3, and 2699.5, to give employers a limited right to cure certain wage-statement violations, before an employee may bring a civil action under PAGA. Specifically an employer would be able to cure a violation of the requirement in Labor Code section 226(a) that an employer provide employees with the inclusive dates of the pay period and the name and address of the legal entity that is the employer. The employer would be allowed to take advantage of this provision only once for the same violation of the statute during each 12-month period. The bill’s provisions would become effective immediately upon the Governor’s signing the bill. Enrolled September 11, 2015.

Leaves of Absence

Kin Care. SB 579 would amend California’s Kin Care law (Labor Code Section 233) to tie its protections to the reasons and definition of “family member” specified in the Healthy Workplaces, Healthy Families Act of 2014. The bill also would expand coverage of California’s school activities leave (Family School Partnership Act, Labor Code Section 230.8) to include day care facilities and cover child care provider emergencies, and the finding, enrolling, or reenrolling of a child in a school or day care, and would extend protections to an employee who is a step-parent or foster parent or who stands in loco parentis to a child. Enrolled and presented to the Governor September 8, 2015.

CFRA Leave. SB 406 would extend the protections of the California Family Rights Act (“CFRA”), Government Code Section 12945.2, to care for grandparents, all children (removing any age restriction), and grandchildren, as well as siblings, domestic partners, and in-laws. Enrolled September 16, 2015.


Unemployed. Undeterred by the Governor’s 2014 veto of similar legislation in AB 2271, AB 676 was introduced and made its way to the Governor’s desk. The bill would add section 432.4 to the Labor Code, beginning July 1, 2016 to prohibit employers from publishing an announcement for a job that states or indicates an unemployed person is not eligible for the job, and from asking applicants to disclose, orally or in writing, the applicant’s current employment status. Enrolled and presented to the Governor September 16, 2015.

Public Employees. AB 883 would add section 432.6 to the Labor Code to prohibit a state or local agency from discriminating against current or former public employees in publishing job advertisements, in establishing qualifications for job eligibility, and in making adverse employment decisions. The bill would also prohibit persons who operate job posting websites from publishing any job advertisement or announcement that indicates the applicant must not be a current or former public employee. The current version of the bill removes private employers from its scope and removes damages and penalty recovery provisions. Enrolled September 14, 2015.

Annual E-Verify Bill. AB 622 would add section 2814 to the Labor Code to prohibit an employer from using E-Verify to check the employment authorization status of an existing employee or an applicant who has not received an offer of employment, except as required by federal law or as a condition of receiving federal funds. The bill would subject each employer that uses E-Verify in violation of this new section to $10,000 per violation. Enrolled and presented to the Governor September 16, 2015.


Employer Liability: Employee Family Member Protected Complaints & Labor Contractor Joint Liability. AB 1509 would amend Labor Code sections 98.6, 1102.5, and 6310, to make it unlawful for an employer to retaliate against an employee for being a family member of an employee who has, or is perceived to have, engaged in activities protected under those Labor Code sections. The bill would also amend Labor Code section 2810.3, which was added to the Labor Code January 1, 2015 to impose joint liability on client employers for employees supplied by a labor contractor (our analysis of that law is here), to exclude from that law client employers that use Public Utilities Commission-permitted third-party household goods carriers, as specified. Enrolled and presented to Governor September 16, 2015.

Expansion of Labor Commissioner Enforcement Authority. AB 970 would amend Labor Code sections 558, 1197, and 1197.1 to authorize the Labor Commissioner to enforce local laws regarding overtime and minimum wage provisions and to issue citations and penalties for violations, provided the local entity has not already cited the employer for the same violation. The bill would also authorize the Labor Commissioner to issue citations and penalties to employers who violate the expense reimbursement provisions of Labor Code section 2802. Enrolled and presented to the Governor September 15, 2015.

Arbitration and Pre-Employment Waiver Restrictions. As we recently wrote, AB 465 would add section 925 to the Labor Code to (i) prohibit companies from conditioning employment offers (or renewals) on the waiver of any Labor Code-related right, (ii) require that any waiver of Labor Code protections be knowing, voluntary, and in writing, (iii) deem any waiver of Labor Code rights conditioned on employment to be “involuntary, unconscionable, against public policy, and unenforceable,” (iv) prohibit retaliation against any person who refuses to waive Labor Code-related rights, and (v) authorize an attorneys’ fees recovery for a plaintiff who enforces rights under the newly created section 925. Enrolled and presented to the Governor September 3, 2015.

Athletic trainers. AB 161 would make it unlawful and an unfair business practice for any person to use the title of athletic trainer, unless the trainer is certified by the Board of Certification and has completed specified educational or training requirements. Exempt from these provisions are persons who have worked as athletic trainers in California for a period of 20 consecutive years prior to January 1, 2016. AB161 would add sections 18898 and 18899 to the Business and Professions Code. Enrolled and presented to the Governor September 16, 2015.


Paid Sick Leave Amendments. AB 304. Read our detailed analysis of this legislation and its effect on the Healthy Workplaces, Healthy Families Act of 2014 provisions it amended (Labor Code sections 245.5, 246, 247.5). The bill was signed by the Governor July 13, 2015, and became effective on that date, as Chapter 67 of the Statutes of 2015. AB 11, which would have included in-home support services under the definition of “employees” under the Healthy Workplaces, Healthy Families Act, did not make it out of the Assembly.

Accommodation Request as Protected Activity. AB 987 was intended to overturn any contrary interpretation in Rope v. Auto-Chlor Sys. of Washington, Inc. (2013) 220 Cal. App. 4th 635 that an accommodation request is not a protected activity. By amending Government Code section 12940, the Legislature intended to clarify that a request for reasonable accommodation based on religion or disability constitutes protected activity. With the amendments, the statute, effective January 1, 2016, will expressly prohibit retaliation and discrimination against a person for requesting accommodation, regardless of whether the request is granted. Signed by the Governor on July 16, 2015. Chapter 122 of the Statutes 2015.

Professional Sports Team Cheerleaders as Employees. AB 202 requires California-based professional major and minor league baseball, basketball, football, ice hockey, and soccer teams to classify and treat cheerleaders who perform during those teams’ exhibitions, events, or games as employees and not independent contractors. Adds section 2754 to the Labor Code. Signed by the Governor on July 15, 2015. Chapter 102 of the Statutes 2015.

90-Day Retention of Grocery Workers Following Change of Ownership. AB 359 and AB 897. AB 359 would require a “successor grocery store employer” to retain the current grocery workers for 90 days upon the “change in control” of a grocery store. It also imposes specific requirements on the incumbent grocery store. Look for a separate blog devoted to this important piece of legislation for the grocery industry on Adds §§ 2500-2522 to the Labor Code. Signed by the Governor on August 17, 2015. Chapter 21 of the Statutes 2015.

Governor Brown noted in his signing message an ambiguity in how the law applies if an incumbent grocery employer has ceased operations, and noted the author and sponsor have committed to clarify that the law would not apply to a grocery store that has ceased operations for six months or more. On August 20, Assembly Member Gonzalez gutted and amended AB 897, which previously related to court records, to amend provisions that will be put in place by AB 359 on January 1, 2016 to exclude from the definition of “grocery establishment” a retail store that has ceased operations for six months or more. AB 897 was presented to the Governor on September 15.

BILLS THAT FAILED TO MAKE THE CUT (i.e., “it coulda been worse”)

Minimum Wage Increase. SB 3 would have increased the minimum wage to $11 per hour in 2016 and $13 per hour in 2017. The bill would have also, beginning January 1, 2019 automatically adjusted the minimum wage on each January 1 to maintain employee purchasing power diminished by the rate of inflation in the prior year. Other minimum wage bills on which we previously reported, AB 1007 and AB 669, failed to make it out of the Assembly. This bill, likewise, stalled in appropriations.

Retail Scheduling. The much-feared “Fair Scheduling Act of 2015,” AB 357, based upon the recent San Francisco Retail Workers’ Bill of Rights, was held in the Assembly and ordered inactive in June. Watch for its provisions to reappear in 2016.

OT Exemption. AB 1470 was held in the Assembly at the author’s election. It would have established a rebuttable presumption that employees with gross annual compensation of $100,000 or greater (at least $1,000 per week paid on a salary or fee basis) who regularly perform any exempt duties of an executive, administrative, or professional employee are exempt from overtime pay.

Double Pay on the Holiday Act of 2015. AB 67, Assembly Member Gonzalez’s attempt to require employers to pay employees double pay on Christmas and Thanksgiving failed passage out of the Assembly. The bill then was ordered to the inactive file by the author.

Workplace Flexibility Act(s) of 2015. AB 1038 would have amended the Labor Code to permit nonexempt employees to request employee-selected flexible work schedules providing for workdays up to 10 hours per day without obligating the employer to pay overtime for those additional hours. The bill did not make it out of its first committee hearing. SB 368 similarly would have allowed a nonexempt employee to request a flexible work schedule up to 10-hour work days, and, entitled the employee to overtime for hours worked greater than 10 hours in a work day or 40 hours in a work week.

Voluntary Veterans’ Preference Employment Policy Act. AB 1383 would have amended the FEHA to ensure that none of its nondiscrimination provisions affect the hiring decisions of an employer that maintains a veterans’ preference employment policy established in accordance with the Voluntary Veterans’ Preference Employment Policy Act (Gov. C. Section 12958 et seq.), which this bill would have also created.

Age Information. AB 984, which would have prohibited an employer from using information obtained on a website regarding an employee’s or applicant’s age in making any employment decision regarding that person, failed in committee.

Unfair Immigration-Related Practices. AB 1065 was also held in committee. This bill would have made it an unlawful employment practice for an employer to request more or different documents than are required under federal law relating to verification that an individual is not an unauthorized alien, or to refuse to honor documents tendered that on their face reasonably appear to be genuine, or to attempt to reinvestigate or re-verify an incumbent employee’s authorization to work unless required to do so by federal law.

Paid Family Leave Benefit Extension. AB 908 would have required the family temporary disability insurance program to provide up to eight weeks, rather than the existing six weeks, of wage replacement benefits to workers who take time off work to care for specified persons, or to bond with a minor child within one year of the birth or placement of the child. This bill also would have required the weekly benefit amount under this program to be calculated using a specified formula.

Workplace Solutions

We will continue to monitor and report on these potential sources of annoyance for California employers, as well as any other significant legislative developments of interest. Follow our Cal Pecs blog for more in-depth analysis of how some of the new legislation may affect employers doing business in California.

The Expert Institute’s Best Legal Blog Competition Nominee

Posted in 2015 Cal-Peculiarities

 We are excited to announce that from a field of more than 2,000 potential nominees, our Cal-Peculiarities blog has received enough nominations (thank you!) to join the 250 legal blogs participating in The Expert Institute’s Best Legal Blog Competition!

Now that the blogs have been nominated and placed into their respective categories, it is up to you, our cherished readers, to select the very best. With an open voting format that allows participants one vote per blog, the competition will be a true test of the dedication of our readers, while also giving up-and-coming players in the legal blogging space exposure to a wider audience. Each blog will compete for rank within its category, while the three blogs that receive the most votes in any category will be crowned overall winners.

We work tirelessly to keep abreast of trends and issues in California employment law so that our readers are too…Please help us spread the word and capture votes. The competition will run from NOW until the close of voting on OCTOBER 9th. Thank you in advance for your support of our beloved California Peculiarities Blog, and a big thank you to our dedicated bloggers.

Please vote by clicking here!

California Gender Pay Equality Bill To Be Strictest In Nation?

Posted in 2015 Legislative Updates, Uncategorized

Business Man and Woman Workplace InequalityRepresenting what media observers call the nation’s most aggressive attempt yet to close the salary gap between men and women, SB 358 would substantially broaden California gender pay differential law. Since the bill landed on his desk September 1, all eyes have been on Governor Jerry Brown. Though aide Nancy McFadden tweeted on Women’s Equality Day (August 26) that “@JerryBrownGov will sign CA “Fair Pay Act” when it reaches his desk,” he has not yet done so.

The Equal Pay Act (29 U.S.C. § 206(d)) has been on the books since 1963. And California has its own gender pay equality law—Labor Code section 1197.5. But California lawmakers think these laws are not enough. According to the legislative intent section of SB 358, the current law contains “loopholes” that make it difficult to prove a claim. And many employees, unaware of existing California law that prohibits employers from banning wage disclosures and retaliating against employees for doing so, are still afraid to speak up about wage inequity.

What difference would SB 358 make?

Current law, Labor Code section 1197.5, prohibits an employer from paying an employee less than employees of the opposite sex who perform the same job, requiring the same skill, effort, and responsibility, in the same establishment, under similar working conditions. Exempt from this prohibition are payments made pursuant to systems based on seniority, merit, or that measure earnings by quantity or quality of production; or differentials based on any bona fide factor other than sex.

SB 358, which its supporters call the “Fair Pay Act,” would become effective January 1, 2016. The “Fair Pay Act” would expand pay equity claims by removing the requirement that the pay differential be within the same “establishment,” and would modify the “equal” and “same” job, skill, effort, and responsibility standard. The new standard would require only a showing of “substantially similar work, when viewed as a composite of skill, effort, and responsibility, and performed under similar working conditions.” These changes would dramatically lower the bar for an equal pay suit, permitting the plaintiff to compare herself with men working at any location for the same employer, and in any similar—and not the necessarily the same—job.

The “Fair Pay Act” would also require employers to affirmatively demonstrate that the wage differential is based entirely and reasonably upon one or more factors. The “Fair Pay Act” would add to the three existing system-based factors (seniority, merit, or production-based) a “bona fide factor”: a factor that is not based on or derived from a sex-based differential in compensation, that is related to the position in question, and that is consistent with a “business necessity” (defined as “an overriding legitimate business purpose such that the factor relied upon effectively fulfills the business purpose it is supposed to serve”). The “bona fide factor” defense expressly does not apply if the plaintiff demonstrates that an alternative business practice exists that would serve the same business purpose without producing the wage differential.

The “Fair Pay Act” would also extend—from two years to three—the employers’ obligation to maintain records of wages and wage rates, job classifications, and other terms of employment.

Talk Is Cheap?

The “Fair Pay Act” also would remind employers that they are not to forbid employees to disclose their own wages, discuss others’ wages, ask about others’ wages, or aid or encourage other employees to exercise their rights under Labor Code section 1197.5. Labor Code section 232 already contains a similar prohibition, but does not specifically prohibit inquiring about the wages of other employees if the purpose of that inquiry is to exercise the right to equal pay for equal work. In a small nod to employers, the “Fair Pay Act” would not require them to disclose wages.

The “Fair Pay Act” would expressly prohibit employers from discharging, discriminating against, or retaliating against employees who invoke or assist in the enforcement of Labor Code section 1197.5.

New Methods of Enforcement, Too…

Current law vests enforcement authority in the Department of Labor Standards Enforcement, which it can exercise through the administrative process or through a civil action brought on an individual or class basis. Current law does not require employees to exhaust this administrative process before suing, unless the employee consents to the DLSE’s bringing an action. Current law authorizes an employee who chooses to sue directly in court—provided the employee does so within two years, or three if the violation is “willful”—to recover the balance of wages, interest, liquidated damages, costs, and reasonable attorney’s fees.

The “Fair Pay Act” would create another private right of action—this one with a one-year statute of limitations—by employees who have been discharged, discriminated against, or retaliated against for engaging in any conduct protected by the statute. These employees could seek reinstatement and reimbursement for lost wages and benefits, interest, and “appropriate equitable relief.” The “Fair Pay Act” bill would also give these employees an alternative: they could file complaints with the DLSE alleging employer violations of the new prohibitions on discrimination, retaliation, and restricting employee wage-information discussions.

What’s the Word on The Street?

The list of the bill’s supporters is long. Conspicuously dissenting is the California National Organization for Women, which opposes this bill because it lacks protections for wage discrimination with respect to such categories as race, ethnicity, LGBTQ status, and disability status. The bill’s author, Hannah-Beth Jackson, has said she expects to see across-the-board changes for all employees after the bill is signed into law.

And even the California Chamber of Commerce has supported the bill, stating it “provides a great balance between making sure there is no gender inequity in pay, but also leaving flexibility for an employer to reward employees for education, skill, training experience with regard to compensation as well.” Cal Chamber cites the inclusion of a defined “bona fide factor” test as a clarification that would help employers “navigate their pay structure” and “avoid unnecessary litigation” about what business purposes would qualify as a legitimate factor.

Workplace Solution (what to do now?)

How can employers fortify pay structures against scrutiny under the new standards? Employers that want to understand and mitigate their risks can consider conducting an attorney-client privileged analysis of employee pay. Using a multiple regression analysis, for example, an employer may determine how well permissible considerations of skills, effort, responsibility, seniority, merit, quality or quantity of production, education, training, experience, and other factors explain existing pay differentials. While we find that employers don’t intentionally pay women any less, pay differentials may appear to be superficially correlated with sex as a result of inconsistent processes for setting pay, especially starting salaries. Seyfarth has an experienced group of attorneys and analysts who specialize in conducting pay analysis. If you consult anyone to conduct an analysis, consider establishing an attorney-client privilege protocol to maintain confidentiality and create protections from disclosure in litigation.

In Related News…

Two other bills addressing the same issue are still alive: AB 1017 and AB 1354. AB 1017 would add section 432.3 to the Labor Code, to prohibit an employer from seeking salary history information about an applicant for employment. AB 1354 would amend Government Code section 12990 to require, of each employer with over 100 employees that is or wishes to be a state contractor or subcontractor, a nondiscrimination program that includes policies and procedures designed to ensure equal employment opportunities for all applicants and employees, an analysis of employment selection procedures, and a workforce analysis that contains the total number of workers, the total wages, and the total hours worked annually, with a specific job category identified by worker race, ethnicity, and sex. AB 1354 would require that this information be submitted to the DFEH. AB 1354 cites the OFCCP’s August 2014 Notice of Proposed Rulemaking, which required federal contractors with greater than 100 employees to submit an annual equal pay report on employee compensation.

Stay tuned to we are following each of these bills and others making California all that much more peculiar.

California Moves Toward Ban On Mandatory Arbitration of Labor Claims

Posted in Arbitration

Tearing contract sheetOn August 31, the California Legislature passed AB 465, aiming to “ensure that a contract to waive any of the rights, penalties, remedies, forums, or procedures under the Labor Code”—such as an arbitration agreement—is “a matter of voluntary consent.” This bill, now before Governor Brown for his approval, raises two big questions: (1) will the Governor sign the bill, and, if he does, (2) to what extent would the new law be enforceable?

The proposed bill would add Section 925 to the California Labor Code, to

  • prohibit companies from conditioning employment offers (or renewals) on the waiver of any Labor Code-related right,
  • require that any waiver of Labor Code protections be knowing, voluntary, and in writing,
  • deem any waiver of Labor Code rights conditioned on employment to be “involuntary, unconscionable, against public policy, and unenforceable,”
  • prohibit retaliation against any person who refuses to waive Labor Code-related rights, and
  • authorize attorneys’ fees recovery for a plaintiff who enforces rights under Section 925.

The bill would not affect the enforceability of other provisions in an agreement that contains an unenforceable arbitration provision. And it would not apply to employees who are represented by counsel in negotiating the terms of such an agreement.

What? Why? How?

You wonder why this legislation is necessary (um, Armendariz)? Or how it is legal (FAA, anyone)? You’re not alone. While the bill’s supporters call it essential for worker protection, its opponents call it unnecessary, unenforceable, and counterproductive.

The bill’s author, Assembly Member Roger Hernández (D-West Covina), introduced the bill with this explanation: “No worker should be forced to choose between a job and giving up core labor rights and procedures. Existing labor laws are meaningless if workers are forced to sign away enforcement of those rights.”

Opponents, including the California Chamber of Commerce, say the bill is unnecessary in light of current law, unenforceable as preempted by the Federal Arbitration Act, and counterproductive because, as a matter of public policy, arbitration is a fair, low-cost avenue to resolve labor disputes: “AB 465 will only serve to increase litigation costs of individual claims, representative actions and class action lawsuits against California employers of all sizes until such legislation can work through the judicial process to be challenged once again.”

Hardly a Boon to Employees

The law hardly seems essential to workers’ rights. Current California law on mandatory, pre-dispute, arbitration agreements already provides these safeguards:

  • a neutral arbitrator, who is to make a written award subject to judicial review,
  • allowance of adequate discovery,
  • the remedies that would be available in court, and
  • the employee relieved of any obligation to pay any more costs than what the employee would have to pay in court.

Nor have proponents of AB 465 shown that arbitration subjects employees to worse outcomes. The bill’s opponents, meanwhile, have pointed to studies showing that arbitration offers better outcomes for employees in less time than traditional litigation.

A cynic might wonder, then, if the bill primarily serves the interests of trial lawyers.

A Textbook Case of Conflict Preemption?

Should the Governor approve AB 465, new Labor Code section 925 would face judicial challenges on preemption grounds. The Federal Arbitration Act declares that contractual agreements to arbitrate disputes are “valid, irrevocable, and enforceable.” And the U.S. Supreme Court has often reminded California about the pesky Supremacy Clause, while invoking the FAA to trump California rules that were hostile to arbitration.

In fact, one anti-arbitration rule the Supreme Court has struck down appears in a predecessor of AB 465—Labor Code section 229. Section 229 purports to invalidate arbitration agreements involving wage claims. After the Supreme Court’s 1987 ruling that the FAA preempts Section 229, that section is now a nullity except in that rare case in which the arbitration agreement does not involve transactions affecting interstate commerce.

The language of AB 465 directly contradicts Supreme Court pronouncements on FAA preemption: the bill (1) would outlaw mandatory agreements to arbitrate Labor Code claims, such as wage and hour disputes, unless that agreement is negotiated by the employee’s attorney, and (2) states that all mandatory agreements to arbitrate Labor Code claims are “unconscionable, against public policy, and unenforceable.” It’s like the Legislature has already written the preemption decision for the Court!

Workplace Solutions

AB 465 is just one step away from becoming California law. Should Governor Brown sign it, its validity will almost certainly be challenged. But with this bill closer to reality, employers should consider its potential implications on their arbitration programs, especially if they are made a condition of employment (as many are).

With that in mind, it is worth pondering:

  • Since AB 465 requires the employer to prove that the employee entered into the arbitration agreement “knowingly and voluntarily,” and that it was not a condition of employment, can the employer establish that proof simply by including a recital that the parties are voluntarily waiving the right to sue in court, and that this waiver is not a condition of employment?
  • Must the employer offer additional consideration to ensure that the arbitration agreement is truly voluntary?
  • Must employers reconsider the methods by which employees enter into arbitration agreements altogether? Is including arbitration agreements in handbooks now completely dead? Is there anything that would make clear that the employee has read and agreed to the arbitration terms?
  • What other policies, e.g., electronic signatures, opt-out methods, etc. can be used to most effectively ensure that employers can make a strong case for knowing and voluntary waiver?

If you are struggling with finding answers to these or other questions, we encourage you to consult a friendly Seyfarth attorney near you.

Edited by Julie Yap

NLRB’s New “Joint Employer” Standard: Seismic Impact for California Employers?

Posted in 2015 Legislative Updates

EarthquakeYesterday, the National Labor Relations Board issued its much-anticipated decision in Browning-Ferris Industries of California, 362 NLRB No. 186 (August 27, 2015). By a 3-2 vote, the Board announced a new standard to determine whether multiple entities are “joint employers” of a single workforce. The Board will now inquire whether there is a common-law employment relationship with the employees in question (including the “right to control” the employees). If this common-law employment relationship exists, the inquiry then turns to whether the putative joint employer possesses enough control over the employees’ essential terms and conditions of employment to permit “meaningful collective bargaining.”

The Board majority wrote that it was “restating” its joint employer test. “Restate” here means to alter dramatically, as Browning-Ferris overturns decades of precedent. Gone is the requirement of “direct and immediate” control over working conditions, and not of a “limited and routine” nature. Now, indirect control and even the reserved right to control working conditions is enough to establish joint employer status if two or more entities “share or codetermine those matters governing the essential terms and conditions of employment.” The essential terms and conditions of employment include hiring, firing, discipline, supervision, direction, “dictating the number of workers to be supplied,” scheduling, seniority, overtime, assigning work, and “determining the manner and method of work performance.” And this list is illustrative, not exhaustive.

So what does this mean for California employers? Browning-Ferris will likely have a wide-reaching impact. Any business that regularly uses contractors, such as a cleaning or janitorial services, maintenance services, caterers, or a management company to staff and operate its business could be affected. Among the entities possibly affected are:

  • hotels,
  • tech companies (from start-ups to the well-established),
  • investors, real estate holding companies, and general contractors,
  • any entity that outsources non-core work integral to its business model, such as a manufacturer that contracts with a trucking company for shipping,
  • any entity that uses a staffing agency to obtain additional or temporary help,
  • any franchisor that contracts with others via franchise agreements, and
  • any entity with a relationship to a subsidiary or other corporate entity.

The expanded definition of joint employer may result in companies unwittingly being pulled into collective bargaining negotiations (in the case of an already unionized workforce), or even union campaigns and elections with its contractors. With the advent earlier this year of expedited election rules, many companies will no doubt feel whipsawed by these unwelcome developments.

The new joint employer standard might also affect non-union settings. Employees—whether or not unionized—have the right under federal labor law to engage in protected, concerted activity. As the dissent in Browning-Ferris notes, companies who are putative joint employers may find themselves named in unfair labor practice charges with the NLRB, or the subject of increased picketing and boycott activity. Moreover, California employers have long faced unique obstacles to challenging union activity on their premises. The Moscone Act and California Labor Code section 1138.1, which the California Supreme Court has upheld against a constitutional challenge, make it very difficult to obtain injunctive relief against union trespass on private employer property. Now, more companies can expect to bear the brunt of this activity.

Workplace Solution

We have identified a number of steps companies can take to assess their risks and respond to the Board’s new joint employer standard, including broad indemnification agreements with third-parties. This last suggestion may sound familiar to many California employers in light of recent state law changes. As of the beginning of this year, as we’ve noted, Labor Code section 2810.3 requires a “client employer” to share civil liability with “labor contractors” (including pay rolling, temporary staffing, or employee leasing agencies) for (1) payment of wages of the contract employees, and (2) failure to procure worker’s compensation coverage. (This statute followed Martinez v. Combs, 49 Cal. 4th 35 (2010), which broadened the definition of “employer” in the wage-hour context.) A “client employer,” however, may contract with its “labor contractor” for indemnity. While client employers cannot avoid the Board’s new joint employer standard, a broad indemnification agreement (placing the duty to defend and hold harmless on the contractor), may ease the impact of this decision.

No More “Aliens”: Outdated Term Shipped Back to Home Planet

Posted in 2015 Legislative Updates

HiResDid you know that California law currently allows employers in certain circumstances to give preferential treatment to candidates who aren’t “aliens”? No, you didn’t miss the new Independence Day movie (what took so long?) or yet another landing at Roswell. A 1937 statute, codified in California Labor Code section 1725, has for almost 80 years defined “alien” to mean “any person who is not a born or fully naturalized citizen of the United States.” And Labor Code section 2015 currently creates a three-fold order of preference for certain California public-works applicants: California “citizens,” U.S. “citizens,” and “aliens who are within the State at the time of making application.” So current law contemplates an employment situation where non-citizens authorized to work in the United States could be cast aside in favor of naturalized or native-born citizens.

All this will change, as of January 1, 2016, because of a bill that Governor Brown signed into law on August 10, 2015. The bill repeals preferential treatment for citizens and removes from the Labor Code the characterization of foreign-born workers as science fiction characters. Senator Mendoza, who authored SB 432, recognized the term “alien” is outdated and considered derogatory to immigrant workers, and wanted to remove unfair treatment of non-citizen workers. Senator Mendoza further noted the current law is inconsistent with California laws prohibiting national origin and ancestry discrimination.

The bill’s repeal of a preference for citizen hiring is part of California’s pattern of strengthening protections for immigrant workers. Other recent examples include the law prohibiting discrimination against individuals with the type of driver’s license provided to those who cannot prove their presence in the United States is authorized, and the law prohibiting discrimination against individuals who update their personal information based on a lawful change in name, social security number, or federal employment authorization document.

As of January 1, 2016, be mindful that employers, even on public works projects, should not be using a citizens preference system in screening applicants. You must disregard citizenship status, just as you would in hiring for any other position, so long as the applicant is authorized to work in the United States. The new law does not, however, require that you hire actual aliens, regardless of their home planet or whether they come in peace.

If you have any questions regarding SB 432, or any other new employment laws, please reach out to your favorite Seyfarth attorney.

“Are We There Yet?” The Road To Arbitration

Posted in Arbitration

HiResIn this season of family road trips and every parent’s favorite question from the back seat—“are we there yet?”—California employers on the road to arbitration recently received some good directions from the Supreme Court. As explained here by our very own Pam Vartabedian, the California Supreme Court recently smoothed over some bumps in that road, holding that reasonably balanced arbitration agreements are enforceable even if they look like a “simple, old-fashioned, bad bargain.”  With this guidance, more California employers with an arbitration destination in mind may eventually get there yet.

It’s Summer! Let’s Take a Dip in the Cal/OSHA.

Posted in OSHA Series, Uncategorized

HiRes (2)As we trudge through the dog days of summer, temperatures rise, employees daydream about vacation, and, unfortunately, workplace accidents and injuries happen. This is a time to note that some Cal/OSHA District Offices take a very expansive view of injury and illness reporting requirements.  And not all District Offices take the same approach!  Thankfully, we have a team of Cal/OSHA lifeguards to help keep you above water.

Please see here for a fascinating article on the District Offices’ view, written by two Cal/OSHA experts: Mark A. Lies, II and Ilana R. Morady. With this guidance, the forecast is more likely to show clear waters ahead!