California Peculiarities Employment Law Blog

Time to Revisit Your Pay Stubs?

Posted in Work Time Series

By Nicholas Clements and Kerry Friedrichs

Well-intended employers often lament the various gotchas that await them down the dark and winding road that is the California Labor Code. Perhaps no turn in the road is more treacherous than the one at Wage Statement Junction. Here one crosses at extreme peril, for the California Legislature, in Labor Code section 226, has planted legal land mines that can blow up at the slightest provocation.

A Common Sense Question With a Less-Than-Intuitive Answer:  “Can’t I avoid hazards if I just pay them the right amounts and on time?” Sadly, no, there’s much more to it. Labor Code section 226(a) lays out a long list of other requirements, some more sensible than others.

Not so Simple. Timely paychecks must be accompanied by a “simple” wage statement at least semi-monthly, and the wage statement must include nine distinct pieces of information for each employee: Continue Reading

We Need Your Votes! – California Peculiarities Employment Law in the Running for Top 100 Legal Blogs

Posted in 2014 Cal-Peculiarities

The American Bar Association is holding its annual competition for the 100 best legal blogs and Seyfarth’s California Peculiarities Employment Law blog is in the running.

Whether you are an avid reader of our timely legal and news updates, look forward to our popular Cal-Peculiarities publication, enjoy our complimentary webinars, or simply utilize our legal resources page, we would greatly appreciate your support in helping our blog make the ABA’s top 100 list.

You can cast your vote at http://www.abajournal.com/blawgs/blawg100_submit/.

Hurry, the deadline to vote is August 8, 2014.

Thank you for your support.

Avoid the Summer Heat! Sweat the Details of California’s “Cool-Down” Periods and Avoid the Burn of Wage and Hour Class Litigation

Posted in 2014 Cal-Peculiarities, 2014 Legislative Updates, Work Time Series

By Geoffrey C. Westbrook and Joshua M. Henderson

Just when one might have thought California employment law couldn’t get any stickier for employers, in January 2014 the California Legislature turned up the heat by expanding meal and rest break penalty provisions. Now there’s a new penalty for failure to provide “cool-down,” or recovery, periods to prevent heat illness.

Before, heat illness prevention laws were enforced only by the limited resources of Cal-OSHA. Now, newly amended Labor Code Section 226.7 authorizes private enforcement through class, individual, and multi-plaintiff actions, as well as by the DLSE. Monetary incentives, in addition to ambiguities on many aspects of the law, will likely trigger increased Cal-OSHA enforcement and new litigation, just as the remedies for meal and rest break violations have produced a heat wave of class action litigation. Talk about a scorcher!

But What is a “Cool-down” Period? California employers with “outdoor places of employment” must implement a heat illness prevention program, including allowing and encouraging employees to take a “cool-down rest in the shade for a period of no less than five minutes at a time when they feel the need to do so to protect themselves from overheating.” During these periods, employees must get continuous access to shade and drinking water.

While these obligations existed for almost a decade under Cal-OSHA’s oversight, private enforcement officially began January 1, 2014 with the amendment to Labor Code Section 226.7. Now, “an employer shall not require an employee to work during a meal or rest or recovery period” required by law. As a penalty, employers must pay non-exempt employees one additional hour of pay for each workday in which a meal or rest or recovery period is not provided. Penalties are cumulative, meaning it is now theoretically possible under Section 226.7 for an employer to incur three penalties in a given workday for each affected employee.

So, What are “Outdoor Places of Employment?” This term, not defined in the regulations, may seem self-evident. “Outdoor” really means “out of doors” in an open air environment. But how much time must one spend out of doors to make it a “place” of employment? Reasonable minds could differ here: is 50% of a workday spent outdoors sufficient to trigger the law, or will a mere 25% suffice?

Recovery Periods: A “Hotbed” for Litigation? There are no published decisions yet on cool-down periods, and the law is rife with ambiguities that only litigation will resolve. These uncertainties, and the prospect of penalties that will be very large when considered on a cumulative basis, may prompt private litigants to initiate civil actions against unsuspecting employers in industries with some outdoor work that haven’t traditionally been the focus of enforcement initiatives. These industries may include engineering, warehousing, carwash, outdoor recreation, automotive sales, security, country clubs, valets, summer camps, and janitorial businesses.

The following are areas where employers may face “cooling down” challenges: Continue Reading

After Iskanian, What’s Next For Defending PAGA Actions?

Posted in PAGA Series

By David D. Kadue and Simon L. Yang

Remember the Black Knight in Monty Python and the Holy Grail? The overconfident fellow who refuses to desist, even after losing four limbs in combat? Some lawyers are like that.

Although the California Supreme Court in Iskanian (June 23, 2014) upheld employer efforts to force waivers of class-action claims in mandatory arbitration agreements, some plaintiffs’ lawyers say that the real take-away from Iskanian is its holding that those agreements cannot be used to waive an employee’s right to bring representative PAGA actions. Moreover, say these lawyers, PAGA actions are particularly potent for plaintiffs because they are categorically unremovable to federal court, thus permitting the plaintiff to remain in more favorable state court.

So does this mean that Iskanian really was a disaster, signaling a new reign of terror for hapless employers who now must confront “gotcha” claims of obscure wage and hour violations while being subject exclusively to the tender mercies of California Superior Court?

Well, perhaps there are a couple of chinks in the Black Knight’s armor.

First, how solid is the dogmatic view about categorical unremovability of PAGA claims? PAGA cases once were routinely removed to federal court under diversity-of-citizenship jurisdiction, where the defendant employer was a non-California citizen and the amount in controversy exceeded the jurisdictional threshold ($75,000 in an individual action or $5,000,000 in a class action, although PAGA claims need not be brought as class actions). The amount in controversy was often easy to establish, as PAGA penalties mount rapidly: $100 per employee per pay period, even if one counts only the 25% of the penalties that go to the employees (75% go to the State of California).

But recent Ninth Circuit decisions dropped flies in the removal ointment. They rejected the efforts of removing defendants, in calculating the amount in controversy, to aggregate the potential individual recoveries of all the employees the plaintiff purported to represent. These decisions now suggest that one should consider only the PAGA plaintiff’s individual recovery, which would be well below $75,000. And the Ninth Circuit has stated, rather elliptically, that the State of California is not a citizen, suggesting that this observation precludes a finding of diversity of citizenship. Hence the basis for a new conventional wisdom that PAGA claims are categorically unremovable. But is this necessarily so? Continue Reading

Checking Out Applicants (Part 3): DIY Background Checks

Posted in Recruiting and Hiring

By Pam Devata and Dana Howells

Previously in this three-part series, we discussed employer obligations concerning background checks furnished by investigative consumer reporting agencies.  In this third and final segment, we highlight the requirements for California employers who do their own background checks without utilizing the services of a consumer reporting agency. 

Public Records Searches and Disclosure Obligations.  In the Internet age, many types of public records are instantly searchable. Employers who do their own public records searches (either on-line or using old fashioned techniques) must beware of a little-known California law.  Civil Code Section 1786.53(a)  provides broadly that any person who uses personal background information—even information that is a matter of public record—for employment purposes must provide that information to the consumer within 7 days.  “Public records” are defined as records documenting an arrest, indictment, conviction, civil judicial action, tax lien or judgment.

Here’s the most peculiar twist:  the obligation to provide the public records exists regardless of whether the employer obtained actual copies of  public records or simply obtained a verbal summary of the contents.  

  • For example, an in-house researcher may give a verbal report that an applicant has convictions instead of obtaining hard copies of the court records.  Does the employer have any disclosure obligations? Continue Reading

Checking Out Applicants (Part 2): Using Consumer Reporting Agencies for Background Checks

Posted in Recruiting and Hiring

By Pam Devata and Dana Howells

Both federal and California law impose additional requirements on the users of “background checks” over and above the requirements for “consumer credit reports.” California’s  most significant peculiarity is that it regulates not only background checks done by a consumer reporting agency, but also background checks done by employers in-house.  In this second part of a three-part series, we focus on California background checks done by an investigative consumer reporting agency.

Employers who use agencies to conduct background checks need a disclosure and authorization under both state and federal law.  However, California’s imposes additional burdens on employers.    

Disclosure Requirements.

Federal Law:  The federal Fair Credit  Reporting Act (the FCRA) imposes requirements on users of “investigative consumer reports.”  Investigative consumer reports are defined by federal law as containing information obtained through personal interviews of neighbors, friends, and other associates about character, general reputation, personal characteristics and mode of living.  

California’s definition is broader.

California Law:  The California Investigative Consumer Reporting Agencies Act’s (“ICRRA’s”) more expansive definition of “investigative consumer report” includes all third party collection of information about character obtained through “any means,” not just personal interviews with acquaintances. This broad definition would  include reference checks performed by a third party.  An employee could argue that any type of background check—other than a pure credit check—is covered by the ICRRA.  In several recent lawsuits, courts have found the ICRRA unconstitutionally vague because criminal background checks concern both credit-worthiness and character.  Therefore, it is unclear whether ICRRA or the less severe California Consumer Credit Reporting Agencies Act is the governing law.

Under California’s ICRRA, employers seeking authorization to procure an investigative consumer report must disclose: Continue Reading

Class Action Waivers and Minimum Wage Reminder

Posted in 2014 Cal-Peculiarities

By Colleen Regan

Christmas came early this year to California employers interested in stemming the tide of class action lawsuits asserting wage and hour violations.  On June 23, 2014, three judicial decisions—one by the California Supreme Court and two by the Ninth Circuit—clarified the ability of employers to use arbitration agreements to keep class actions out of court. 

The first, and most important, was the California Supreme Court’s decision in Iskanian v. CLS Transportation Los Angeles, LLC (Cal. Sup. Ct., filed 6/23/2014), which held that class action waivers in employment arbitration agreements must be respected under the Federal Arbitration Act.  The California Supreme Court thus recognized that its 2007 decision in Gentry v. Superior Court is no longer good law.  The Iskanian decision is welcome news to employers that wish to limit potential exposure to class actions by using arbitration agreements that include class action waivers.

The plaintiff in Iskanian also asserted a representative action under the Private Attorneys General Act of 2004.  Thus, another important question presented in Iskanian was whether the arbitration agreement had effectively waived the employee’s right to bring a representative PAGA action.  On this issue, the California Supreme Court sided with the employee, holding that the PAGA claim is beyond the scope of the FAA, which addresses only private disputes.  The PAGA claim, by contrast, is brought in the name of the State of California, and thus is not a private claim.  Click HERE to read our full One Minute Memo, and HERE for the text of the case.

A panel of the Ninth Circuit on June 23 also filed two important decisions of its own.  In Johnmohammadi v. Bloomingdale’s, Inc. (9th Cir. No. 12-55578, June 23, 2014), the court upheld an order enforcing an arbitration agreement that became effective if the employee failed to opt out of the agreement within 30 days.  Relying on this opt-out feature, the Ninth Circuit rejected the employee’s argument that the agreement violated the National Labor Relations Act:  there could be no question of interfering with concerted activity, the court concluded, where, as here, the agreement was not a mandatory condition of employment; the plaintiff could have opted out and preserved her right to proceed in court.

The same panel, in Davis v. Nordstrom, Inc. (9th Cir. No. 12-17403, June 23, 2014), reversed an order that had denied enforcement of an arbitration agreement that appeared in an employee handbook.  The court held that the employer could unilaterally modify its arbitration agreement to include a class action waiver, by giving 30 days of notice to employees.  This was enough to create a binding contract of arbitration, even without an employee signature.  While it would have been cleaner to have a clearly signed agreement to display in court, the Ninth Circuit panel here adhered to the old-fashioned view of employment contract formation, i.e., when an employee continues in employment after being given notice of changed terms, the employee has accepted those terms. 

REMINDER:  MINIMUM WAGE CHANGE COMING NEXT WEEK

California’s minimum wage goes up next week (July 1) to $9.00, on its way to $10 per hour on January 1, 2016.  This change has ripple effects: 

  • Employers must provide amended wage information (either through a “wage theft notice” or through the pay stub) to minimum wage workers within 7 days of the change. 
  • Thresholds for white collar exemption salaries will increase.
  • Minimum payments for non-productive work time for piece rate and commission-based employees also go up.  

Stay tuned later this week for Part 2 of our Credit Checks Series.

Northern District of California Judge Rules DFEH Does Not Have the Authority to Prosecute Violations of Title I of the Americans With Disabilities Act

Posted in Dealing with CA Agencies

By: Kristina Launey and Courtney Bohl

On June 11, 2014, Northern District of California Judge Jon S. Tigar ruled that the California Department of Fair Employment and Housing (“DFEH”) has neither standing nor statutory authority to enforce Title I of the Americans with Disabilities Act (“ADA”).  The decision made clear that while the DFEH has had authority—since January 1, 2013 (as we noted here and here)—to bring enforcement actions directly in state and federal courts, that authority does not extend to federal claims of employment discrimination under Title I of the ADA.

In early 2014, the DFEH filed suit against WinCo Foods in the United States District Court for the Northern District of California, asserting multiple claims for disability discrimination and failure to accommodate under both the California Fair Employment and Housing Act (“FEHA”) and Title I of the ADA.  WinCo moved to dismiss the Complaint because (1) the DFEH’s enabling statute does not empower it to sue under Title I of the ADA, and, even if that authority did exist, (2) the DFEH lacks standing to bring ADA claims. 

Judge Tigar, in granting WinCo’s motion, extensively analyzed the FEHA and other applicable provisions of the California Government Code. Judge Tigar concluded that no law empowers the DFEH to enforce Title I of the ADA.  Judge Tigar reasoned that the FEHA is the exclusive source of the DFEH’s authority over employment claims and sets forth the full range of prosecutorial powers granted to the DFEH.  Since the FEHA does not expressly authorize the DFEH to prosecute Title I ADA claims, the DFEH lacks authority to do so. 

Judge Tigar rejected the DFEH’s argument that it has implied authority to bring ADA claims under Section 11180 of the California Government Code.  Section 11180 is incorporated into the FEHA and authorizes the head of each state department to prosecute actions concerning matters relating to the business activities and subjects under the jurisdiction of the department.  Judge Tigar held that the DFEH’s broad interpretation of Section 11180 would render redundant the 2013 legislation, that grants the DFEH authority to sue in state and federal courts.  

Judge Tigar also rejected the DFEH’s other arguments.  He reasoned that the FEHA’s grant of authority to sue in federal court is a venue provision only; it does not, as the DFEH argued, authorize the DFEH to prosecute federal claims.  He also rejected the DFEH’s reliance on the California Code of Regulations and a Worksharing Agreement between the DFEH and EEOC.  Only the DFEH’s enabling statute (the FEHA) can authorize the DFEH to prosecute federal claims—not the agency’s own actions—and the FEHA does not do so.  

Finally, Judge Tigar held that the DFEH lacks standing to bring Title I ADA claims under either traditional Article III standing or the doctrine of parens patriae (a rarely invoked doctrine that confers standing upon states to protect quasi-sovereign interests under certain circumstances).   Judge Tigar found that the DFEH cannot show the necessary injury in fact to establish traditional standing, reasoning that since the DFEH lacks statutory authorization to prosecute Title I ADA violations, it has no legally protected interest that could be invaded.  The Court also held that the DFEH cannot stand in the shoes of the “State” to assert parens patriae standing on behalf of the State of California to enforce the ADA claims because State of California did not give the DFEH this authority. 

Dealing with administrative agencies in California can be daunting, especially now that the DFEH is able to bring actions seeking attorneys’ fees, costs, and damages in federal or state court.  Employers can take heart that the DFEH’s authority is not without limits, and courts will not be afraid to enforce those limits when the DFEH attempts to overreach.

Edited by Chelsea Mesa

Checking Out Applicants (Part 1): California Credit Checks

Posted in Recruiting and Hiring

By Pam Devata and Dana Howells

Complying with the federal Fair Credit Reporting Act (the FCRA) is not easy. Compliance with both the FCRA and California restrictions on credit and background checks is much more challenging. Given California’s extra-strength privacy protections and penchant for workplace regulation, it is not surprising that California has peculiarities when it comes to credit and other background checks.  In Part 1 of a three part blog, we take a dive into credit checks—California style.

California is one of  a growing number of states with laws restricting use of credit history for employment. Effective January 1, 2012, California Labor Code Section 1024.5 generally prohibits the use of credit reports for employment purposes by private sector employers.  If an exception to Section 1024.5 permits an employer to use credit reports, California employers must comply with both the FCRA and the California Consumer Credit Reporting Agencies Act, which are not always congruent. 

Comparing and contrasting the FCRA with the California Consumer Credit Reporting Agencies Act

What FCRA requires—in a nutshell.  Prior to conducting a background check on an applicant or employee through a third party, an employer must:

  • Provide a notice/disclosure to the employee/applicant that the employer will seek a credit report.  The disclosure must be clear, conspicuous, and made in a document consisting solely of the disclosure.  This is a huge area of class action litigation.
  • Supply a copy of  “A Summary of Your Rights Under the Fair Credit Reporting Act.”
  • Obtain written authorization/consent from the applicant/employee. 

Prior to taking adverse employment action against an applicant/employee based, in whole or in part, on a consumer credit report (or investigative consumer report—more about those in Part 2), employers must follow a two-step notification process required by the FCRA: Continue Reading

When Hitting the Road is Hitting your Pocketbook: Travel Time Rules in California

Posted in Work Time Series

By Dana Peterson and David Rosenberg

In today’s increasingly mobile workplace, employers often require their non-exempt employees to head out of the office for such things as client meetings, off-site events and training.  Understanding when you must pay employees when they’re on the move might help you avoid a train wreck down the road (pun intended.)

The basics.  If you’ve been following our blog with any regularity, the following should come as no surprise: when determining whether travel time is compensable, the applicable California and federal standards differ quite a bit.   For instance, federal law defines “hours worked” as: (a) all time during which an employee is required to be on duty or be on the premises or workplace of the employer, and (b) all time during which an employee is “suffered or permitted to work,” whether or not the employee is required to do so.

By contrast, California defines the term “hours worked” as “the time during which an employee is subject to the control of an employer, and includes all time the employee is suffered or permitted to work, whether or not required to do so.”  I.W.C. Wage Orders, Section 2 (emphasis added).  Therefore, employees must be compensated for time that they are “subject to the control” of the employer, even if they are not “suffered or permitted to work” during that time. 

Enough with the legal jargon, when do I need to pay for travel time? Continue Reading