California Peculiarities Employment Law Blog

No Rest for the Weary: California Law on Rest Breaks

Posted in 2016 Cal-Peculiarities, The Battle After Brinker, Work Time Series

Seyfarth Synopsis: California’s rules on rest breaks are still developing. Recent cases have addressed the timing of rest breaks, and whether employees (particularly those who remain “on call”) must be relieved of all duty during breaks.

Our fair state has long imposed peculiar—and specific—requirements for employee work breaks. Varying interpretations of the rules for meal and rest breaks have spawned prodigious class action litigation, both before and after the California Supreme Court’s crucial 2012 decision in Brinker Restaurant Corp. v. Superior Court. Accordingly, California employers have a keen interest in making their break policies and practices as compliant as possible.

But this can be hard to do while the rules remain in flux. In this post, we discuss two cases—one decided a few months ago and the other now pending before the California Supreme Court—that bring the requirements for rest breaks into finer focus. The cases raise these questions: (1) Exactly when must employers provide rest breaks? (2) Can employers require workers on break to remain “on call”?

So we invite you to “take 10” and read on.

The Basic Rule

Section 226.7 of the Labor Code says that employers can’t require employees to work during breaks mandated by an order of the Industrial Welfare Commission. The IWC, in turn, has mandated (in Section 12(A) of the Wage Orders) that:

Every employer shall authorize and permit all employees to take rest periods, which insofar as practicable shall be in the middle of each work period. The authorized rest period time shall be based on the total hours worked daily at the rate of ten (10) minutes net rest time per four (4) hours or major fraction thereof.

More about that pesky phrase “insofar as practicable,” below.

Timing of Rest Breaks

The rule on rest breaks is often short-handed as “10 minutes paid rest for every four hours (or major fraction thereof) worked.” But must each rest break occur during the middle of each four-hour work period? Or can it be permissible to allow—or require—employees to combine breaks, or to schedule them at some time other than midway through the work period? And what does “insofar as practicable” mean, anyhow?

The 2016 California Court of Appeal decision in Rodriguez v. E.M.E., Inc. took a stab at answering. E.M.E. gave one 20-minute rest break and one meal break per eight-hour shift, due to the nature of the work and the clean-up time required at each break. Rodriguez brought a class action claiming that this practice violated Section 12(A) of the applicable Wage Order.

The Court of Appeal held that the phrase “insofar as practicable” means that employers must implement the rest schedule specified in the Wage Orders unless there is “an adequate justification why such a schedule is not capable of being put into practice, or is not feasible as a practical schedule.” More specifically, employers may depart from the Wage Order schedule (i.e., a rest break in the middle of each four-hour period or major fraction thereof) only when it (1) will “not unduly affect employee welfare” and (2) “is tailored to alleviate a material burden” on the employer that would result from using the Wage Order schedule.

Reversing summary judgment for the employer on the certified rest break claim, the Court of Appeal sent the case back to the trial court to resolve triable issues about these questions. The court highlighted two issues: (1) Was the nature of the work (i.e., sanding, painting and finishing metal parts for the aerospace industry) such that it took 10 minutes to prepare for each break and 10 minutes to ramp up again after the break? (2) Did the employees actually prefer to receive one combined 20-minute break? If E.M.E. could establish these points, then E.M.E. could use a schedule other than the one specified by the Wage Order.

Relief From All Work?

Poised for decision by the California Supreme Court in Augustus v. ABM Security Services, Inc., 233 Cal. App. 4th 1065 (2014) review granted, 186 Cal. Rptr. 3rd 359 (2015), is the question whether an employee on a rest break must be relieved of all duties, even the duty to be on call. The employees at issue in Augustus were security guards who remained “on call” even while taking their rest breaks. The guards claimed that their “on call” status deprived them of legally compliant rest breaks. The trial court agreed and granted them summary judgment.

But then, in a refreshing display of common sense, the Court of Appeal reversed, holding that on-call rest breaks are permissible. The Court of Appeal explained that although on-call hours constitute “hours worked,” an employee who is merely available to work is not actually working. Section 226.7 proscribes only work on a rest break; being on call is a compensable activity, but it is not work. This result is consistent with the point that employers may require employees on a rest break to stay on the employer’s premises because the breaks are, after all, paid. The issue of whether a rest period is compensable time (it is) is not the same as whether a rest period is a true break from work (on-call duty, when one is not called, is not work).

Yet employer hopes that the Court of Appeal had the final say on this matter were dashed when the California Supreme Court granted review of the decision. Check this space after the oral argument on this case, scheduled for September 29, 2016, to read our take on how the Supreme Court may be leaning when it comes to the issues presented in this case.

Workplace Solution

Even after Brinker, the waters continue to roil around rest break rules. We welcome your inquiries regarding any Cal-peculiar issues of employment law.

The Fault Line Running Under “No Fault” Attendance Policies

Posted in 2016 Cal-Peculiarities, Sick Leave Series

Seyfarth Synopsis: Many employers have “no fault” attendance policies in place to manage employee absenteeism.  Are these policies putting California employers on shaky ground? Read on….

“No fault” attendance policies are one popular method among employers to, with consistency, counsel, discipline and, in some instances, terminate employees who rack up excessive absences.  Under these policies, the reason for the employee’s absence is usually irrelevant–there’s “no fault” for the absence.  These policies typically involve assigning employees a certain number of days that they can miss or be late, known as “occurrences” or “occasions,” without facing discipline.  But when the number of absent days or instances of tardiness reaches a set level, the employee is often put on a disciplinary track, which can begin with a write-up or counseling, and end in termination.

While  in theory “no fault” policies are relatively easy to implement and administer, in practice they can land employers on shaky ground.  Employers well-versed in federal law are likely aware that best practices advise that they not count certain legally-protected absences covered by the Americans with Disabilities Act and/or the Family and Medical Leave Act in their “no fault” attendance policy calculations.  Riding the aftershocks of shifts in federal law, California’s Healthy Workplace Healthy Family Act complicates things even more, as we have blogged before.

Finding Cracks in “No Fault” Attendance.  AB 1522, California’s Healthy Workplace Healthy Family Act, set forth new laws on the accrual and usage of paid sick leave, which we have reviewed in more detail here.  It is important to keep in mind that the new law broadens the scope of reasons for using sick leave.  And while the basis for leave may not bear on an employee’s attendance under a “no fault” policy, to the extent an employee’s leave is covered by AB 1522, its provision regarding retaliatory conduct by employers for absences covered by the act, and penalties for doing so, may matter.  AB 1522 advises against employers denying an employee the right to use paid sick leave, discharging or threatening to discharge an employee who uses paid sick leave, or demoting, suspending or discriminating against an employee.  Damages for AB 1522 violations may range from mandatory reinstatement to hefty civil and/or administrative penalties.

Here is where things get shaky.  The no-retaliation restriction of AB 1522 makes it challenging to impose “no fault” attendance policies or evaluate performance based on leave an employee takes under the new law.  Setting aside instances of fraud or failure to report absences, employer-imposed discipline for taking leave under the new law can cause a 9.0 on the Richter scale.  But fear not–“no fault” policies need not be levelled entirely.

What about Perfect Attendance Rewards?  On the flip side of “no fault” attendance policies, many employers reward employees with perfect attendance with cash bonuses, gift cards, or extra planned time off.  While such rewards reinforce and incentivize good employee behavior, including punctuality and reliability, the threat of violating the ADA, FMLA and/or AB 1522 still looms.  For example, FMLA regulations indicate that employers may not count FMLA as a “negative factor in employment actions, such as hiring, promotions or disciplinary actions”.  See, 29 C.F.R. § 825.220(c).  Considering AB 1522 contains similar language regarding retaliation (see supra) for covered leave, employers who make exceptions to their policies may want to include AB 1522 absences as one in many perfect attendance reward considerations.

Reducing Hazards with a “Two-Bucket” Approach.  If employers do not distinguish between AB 1522 leave and policy-based leave, they run the risk of facing penalties for discipline (or rewards) based on employee attendance where that employee may have used paid-time-off.  To continue applying their “no fault” attendance policies, employers can adopt a “two-bucket” approach to tracking the accrual and use of sick leave and vacation that would allow them to separately monitor each employee’s accrual and usage of AB 1522-mandated leave versus non-protected time off.  Employers could thereby isolate leave for which discipline can be issued and subject it to their attendance and/or performance standards.  Employers must also be aware that given California’s multitude of protected reasons for taking time off, even with the “two-bucket” system, some vacation time may still be protected time.

Alternatives to the “Two-Bucket” Approach–is there a way to retrofit existing policies?  A little flexibility in “no fault” attendance policies can go a long way. Employers may choose to carve out leave protected under federal, state, and local laws from their tally of employee absences.  One way to incorporate such flexibility is to expressly state in the attendance policy that the employer will excuse absences protected by federal, state, and local laws, and will consider them on an individual basis.

Another method of avoiding aftershocks would be to change attendance policy numbers to account for leave for legally authorized purposes.  In other words, employers may limit penalties to employees whose absences go above and beyond the amount time that is, or may be, authorized under AB 1522 (or other federal, state and local laws).  Ultimately, the goal is to ensure that employers do not penalize or discriminate against employees taking lawful leave.

A few tips on preparedness and prevention:

As you can gather from the information above, this area of employment law is complex, technical and, like the ground in California, ever-shifting.  No employer should rely solely on dated or generalized information in forming, revising, or implementing “no fault” attendance policies.  It is best to proceed with caution, and the assistance of expert employment counsel.  That being said, here are some key takeaways:

  • Communicate attendance policies clearly to all employees. Include the policies in handbooks and on posters in common areas.
  • Avoid taking adverse employment actions against an employee who requests or takes legally-authorized leave.
  • For actions against employees pursuant to a “no fault” attendance policy, or reward based on perfect attendance, document business reasons for the action on file.
  • Keep an eye on employment laws, and review and revise your attendance policies to comply with the law regularly–there’s no telling when a new shift will change the landscape again.

We will continue to monitor and report any activity on this front, but feel free to reach out to your favorite Seyfarth attorney if you have questions.

Edited by Chelsea Mesa.

“Takin’ Care of Business” at Home: Hiring California Household Help

Posted in 2016 Cal-Peculiarities

Seyfarth Synopsis: Have you pondered the implications of hiring help around the house? Here are some legal requirements regarding employment of domestic helpers.

Household workers or “domestic helpers” are people who work within a private household or on their employer’s premises. They include cleaners, maids, groundskeepers, dog walkers, cooks, nurses, home masseuses, personal trainers, and nannies, and those holding more unusual jobs like bodyguards, butlers, valets, furnace workers, and crews of private yachts. Their wages and working conditions are subject to the provisions of Wage Order 15 for Household Occupations.

  • Note some exceptions: Carpenters, electricians, librarians, musicians, nurses leased from a nursing registry, painters, plumbers, private secretaries, and workers provided by independent businesses (such as janitorial services and pool maintenance services) generally do not count as household employees.
  • Also, home-based “personal attendants” (people who supervise, feed, or dress children, the elderly, or the disabled), and baby sitters under the age of 18 are generally excluded from most of Wage Order 15’s requirements.

While few of us enjoy private yachts, many of us do employ household workers. Household employment triggers certain special requirements:

  • “Dolla Dolla Bill Y’all”—At what point do I become an “employer”? According to Section 684 of the California Unemployment Insurance Code (CUIC), a “household employer” is someone who has paid $750 or more in cash or wages to one or more household workers in a calendar quarter. Generally, you must register with the Employment Development Department (EDD) within 15 days after you have paid $750 in cash or checks.
  • “Working 9 to 5”—What are the rules for hours of work and payment for household employees?  Generally household workers are subject to the same minimum wage and overtime requirements as any other job. That means, they are entitled to the prevalent state (or local, depending on your local law) minimum wage, overtime pay at 1.5 times the wage rate for any work over eight hours in a day, over forty hours in a week, and for the first eight hours worked on the seventh consecutive day in a work week, and double-time for any work over twelve hours in a day and anything over eight on the seventh consecutive workday. Employers also must pay a split-shift premium of one hour’s pay at minimum wage, and reporting time pay, if applicable.
    • There are a number of specific exceptions and requirements for live-in household workers, and for individuals who work every day but not more than thirty total hours per week, detailed in Wage Order 15.
    • And, keep in mind, that much like a corporate employer, household employers have the same obligations to provide meal and rest periods, keep records of hours worked, provide required uniforms and equipment, and provide suitable seating, among other things.
  • “Taxman” – Tax Implications? If a “household employer” pays cash wages of $750-$999.99, they are responsible for reporting wages for purpose of State Disability Insurance. The SDI taxes are deducted from employees’ wages and remitted by the employer to the EDD.

If a “household employer” pays cash wages of more than $1,000, they are responsible for not only SDI taxes, but also Unemployment Insurance and Employment Training Taxes pursuant to Section 682 of the CUIC. For more detailed guidance please visit the EDD’s website.

Note: these numbers are subject to changes annually and do not include Social Security taxes the employer pays for the employee.

  • “Work, Work, Work, Work, Work, Work”ers Compensation Insurance. In every work situation in California, workers’ compensation insurance is required for any domestic worker employed 52 or more hours, or who earned $100 or more, during 90 calendar days immediately preceding the date of an injury or last exposure to the hazard of an occupational disease. The provision does exclude workers employed by a parent, spouse, or child.
  • “I Left My Heart in San Francisco”—What about City Ordinances? In addition to State rules, numerous cities have added additional special protections for household employees. For example, San Francisco explicitly included household employees who perform work in San Francisco in their “Paid Sick Leave Ordinance,” which means that household workers in San Francisco are entitled to (and employers must track and pay for) accrued paid sick time.

“With A Little Help From My Friends.” These are just a few of the potential legal implications to hiring help in the home in the State of California. To be on the safe side, always check local regulations and city ordinances to make sure you are complying with the law. Friendly Seyfarth Shaw attorneys are also always available to advise on practical solutions.

Edited by Colleen Regan and David Kadue.

2016 California Labor and Employment Legislation Update: The End (of Session) Is Near…

Posted in 2015 Legislative Updates

Seyfarth Synopsis: The California Legislature sent a number of employment bills to the Governor, including bills that would expand the Fair Pay Act to race and ethnicity and prohibit salary history inquiries; require overtime pay for agricultural workers, extend family leave protections to employees of small businesses, and much more!  We will update you on what received the Governor’s approval after his for September 30 deadline.

The California Legislature adjourned in the wee hours yesterday, Wednesday, August 31st, having reviewed over 100 bills in the single day, bringing the second half of the 2015-2016 Legislative Session to a close. Several employment-related bills have been sent to Governor Jerry Brown for his consideration by the September 30th deadline to either veto or sign the bills. Below is a summary of what made the Legislative cut, bills the Governor has already signed, and those that did not make it to his desk. Of particular interest, bills that would have doubled pay for large grocery and retail employees on Thanksgiving did not pass the legislature, while bills allowing overtime pay for agricultural employees and expanded parental leave are in the Governor’s hands. Which bills will further complicate our already peculiar California laws? Stay tuned…

PENDING BILLS

Fair Pay Act: Prior Salary. AB 1676 would prohibit employers from considering prior salary to justify any disparity in compensation. Before the amendments, the bill would have prohibited employers from seeking an applicant’s salary history information just as its predecessor, AB 1017, attempted to do last year. In vetoing AB 1017, Governor Brown stated that we should wait and see whether last year’s momentous Fair Pay Act, SB 358, addressed the pay equity issue before making further changes. Has one year been enough time for the Governor to believe the Fair Pay Act has or has not been effective?  Will he think it is time to keep up with other governments that have recently pursued similar legislation? On August 2, 2016, Massachusetts passed a law prohibiting Massachusetts employers from requesting the compensation history of a prospective employee prior to making an offer, unless the prospective employee has “voluntarily” disclosed such information; and on August 16, the New York City Council followed suit, introducing a bill that would prohibit employers from inquiring about a prospective employee’s salary history on a job application, or at any other stage in the employment process.

Fair Pay Act: Race/Ethnicity. SB 1063 seeks to expand the provisions of last year’s Fair Pay Act — at the time the strictest gender pay equity law in the country — to race and ethnicity, and responds to critics of the Fair Pay Act that the pay equity issue is not limited to gender. Specifically, it would prohibit employers from paying employees a wage less than the wage paid to employees of a different race or ethnicity for substantially similar work. This bill would also make the prior salary prohibition change proposed in AB 1676 if both bills are signed by the Governor and this bill is signed last. If AB 1676 is not signed into law, this bill would not incorporate the prior salary prohibition.

Parental Leave. SB 654 would, beginning January 1, 2018, significantly expand California’s parental leave laws by requiring employers with 20 to 49 employees to provide up to six weeks of job-protected parental leave to bond with a new child within one year of the child’s birth, adoption, or foster care placement. Existing law, the California Family Rights Act (Gov. C. § 12945.2), applies only to employers with 50 and greater employees, and provides for at least 12 weeks of job-protected parental leave. This bill — dubbed the “New Parent Leave Act”— would impose many of the same requirements as CFRA: to be eligible, an employee must have worked 1250 hours in the preceding 12-month period; the employer must guarantee reinstatement of the employee to the same or comparable employment at the conclusion of the leave; the employee is entitled to use accrued paid time off during the time off; and the employer must maintain and pay for coverage under a group health plan for employees while taking this leave. This bill applies to private and state and local government employers except for school districts, county offices of education, and community college districts. SB 654 was given new life as a mellower gut and amend version of SB 1166, which failed to pass in committee in June.

Agricultural Workers. AB 1066AB 2757 failed to pass the house of origin in June. Undeterred, author Assembly Member Lorena Gonzales resurrected it with that handy legislative “gut and amend” trick, putting its contents into a bill formerly relating to educational employees. On August 30, the much-publicized AB 1066 was sent to Governor Brown’s desk, where it currently awaits his action.  The bill would delete an exemption for agricultural workers from the entire chapter of the Labor Code relating to working hours, and enact the “Phase-In Overtime for Agricultural Workers Act of 2016”, which would require employers to pay agricultural workers overtime over a four-year phase-in process. Beginning January 1, 2019, employers would be required to pay overtime for any hours worked above 9.5 hours per day or 55 hours per workweek. Each year the hours worked triggering overtime pay will reduce, until reaching 8 hours per day, 40 hours per week beginning January 1, 2022. Also beginning on January 1, 2022, any employee who works over 12 hours per day must be paid at a rate no less than double his or her regular rate of pay. The Governor may temporarily suspend the scheduled overtime requirement but only if the minimum wage increases are suspended as well. Employers that employ 25 or fewer employees are given an extra three years to comply with the phase-in and must begin paying overtime by January 1, 2022.

Property Service Workers. AB 1978 would create the Property Services Workers Protection Act by establishing various requirements for the janitorial industry, including registering annually with the DLSE, to protect janitorial employees from wage theft and sexual harassment. The provisions of this bill would apply to employers that employ at least one or more “covered workers” that enter into a contract, subcontract, or franchise agreement to provide janitorial services. This bill would also require the DLSE to maintain a database of property service employers and to develop a biennial sexual harassment and violence prevention training. This bill would also prohibit an employer from registering or renewing its registration if it has not fully satisfied any final judgment for unpaid wages or made appropriate tax contributions. “Successor employers” would also liable for any wages and penalties owed to the predecessor’s employees.

Minimum Wage Violation Challenges. AB 2899 would require that any employer, prior to filing an appeal of a decision by the Labor Commissioner relating to a violation of wage laws, file a bond with the Labor Commissioner that covers the total amount of any minimum wages, liquidated damages, and overtime compensation owed. The bill would require that the bond be issued in favor of the unpaid employees. The bill would also provide that the total amount of the bond would be forfeited to the employee if the employer fails to pay the amounts owed within 10 days from the conclusion of the proceedings.

Criminal History. AB 1843 would prohibit employers from asking an applicant for employment to disclose any information regarding juvenile convictions. The bill would also prohibit employers from seeking or utilizing any information related to juvenile arrests, detentions, or court dispositions as a factor in their employment determination. The bill does specify that an employer at a health facility can inquire into an applicant’s juvenile criminal background if a juvenile court made a final ruling or adjudication, that the applicant had committed a felony or misdemeanor relating to sex crimes or certain controlled substances crimes within five years prior to applying for employment. Still, these employers cannot inquire into an applicant’s sealed juvenile criminal records. Read more about existing California law on background checks here.

Transportation Network Companies, Background Checks: AB 1289 would require a transportation network company (“TNC”; i.e., Uber) to conduct, or have a third party conduct, criminal background checks on each participating driver. This bill follows a 2014 lawsuit that accused TNC’s of misleading customers by suggesting their background checks were the toughest in the industry. The bill would also prohibit an TNC from contracting with a driver who is currently registered on the DOJ’s National Sex Offender Public Website; has been convicted of specified felonies within the past seven years; and/or has been convicted, within the past seven years, of misdemeanor assault or battery, domestic violence, or driving under the influence of drugs or alcohol.

DLSE Enforcement. AB 2261 would provide the Department of Labor Standards Enforcement (DLSE) with new independent authority to, with or without an employee complaint, bring an action against an employer who it suspects may have terminated or otherwise discriminated against an employee in violation of any law under the jurisdiction of the Labor Commissioner. The authors of this bill argue that despite laws providing employees protection and encouragement to report abuse, the reality is that many workers do not report out of fear of losing their jobs. AB 2261 builds upon AB 970, which the Governor signed into law last year, and which we wrote about here.

Unfair Immigration-Related Practices. SB 1001 is a redux of 2015’s AB 1065, which was held in committee (and which we reported here). SB 1001, like AB 1065, would make it an unlawful employment practice to request more or different documents than required under federal law to verify that an individual is not an unauthorized immigrant, or to refuse to honor documents tendered that on their face reasonably appear to be genuine, refuse to honor documents or work authorization based on specific status or term that accompanies the authorization to work, or to attempt to reinvestigate or re-verify an incumbent employee’s authorization to work using an unfair immigration-related practice. Assembly amendments have removed this year’s bill provision that would have allowed a private right of action for job applicants and employees who suffer an “unfair immigration-related practice.” Instead, those job applications and employees can file a complaint with the DLSE for enforcement. The bill provides that a violation of these provisions could result in a penalty of up to $10,000.

Employment Protections. AB 2337 this bill would expand the notice requirement employers must give their employees regarding domestic violence protections. Specifically, this bill provides that an employer must inform each new employee, and to other employees upon request, of the rights protecting employees affected by domestic violence in writing.

Employment Contracts—Choice of Law and Forum. SB 1241 would allow an employee to void a contract provision that requires the employee to adjudicate a claim outside of California, or require the employee to waive their protections under California law. Specifically, this bill prohibits an employer from requiring an employee, who resides and works in California, as a condition of employment, to agree to a provision that would either require the employee to adjudicate outside of California a claim arising in California or deprive the employee of the protection of California law with respect to a controversy arising in California. The bill also provides that any contract that violates these provisions is voidable by the employee. A court may award an employee reasonable attorney’s fees, among other remedies, for enforcing his or her rights under the act. This bill would not apply to employee who are represented by legal counsel during the contractual negotiations.

Employment of Minors, Agricultural Packing Plants. SB 702 would extend a Lake County-specific exemption of child labor law that allows minors to work during the peak agricultural season when school is not in session.

BILLS SIGNED BY THE GOVERNOR

Paid Family Leave Expansion. AB 908, which the Governor signed on April 11, 2016, increases the amount of benefits paid to employees on paid family leave and state disability leave. Read our report on AB 908 here.

Talent Services. AB 2068 updates the Talent Service Act’s existing communication and contractual protections to include new technologies, such as mobile applications. Specifically, AB 2068 updates the protections for an artist’s information or image to include information posted on an online service, online application, mobile application, or website. AB 2068 also updates the communication and advertisement protections between talent agencies and artists by including communication through the use of a telecommunication device, in print, on the Internet, or through the use of a mobile or online application or other electronic communication. AB 2068 also adds “text message” and other “electronic communication” to the list of methods by which an artist may ask for photographs and other information about the artist be removed from a Web site, online service, online application, or mobile application owned or serviced by the talent service.

Work Experience Education. AB 2063 provides an additional option for a student, at least 14 years old, to participate in work experience education. The bill also increases the number of hours per week a student may participate in job shadowing from 25 to 40 hours per semester if the principal of the school where the student is enrolled certifies that it is necessary for the student’s participation in a career technical education program.

Itemized Wage Statements. AB 2535 comes on the heels of the recently decided federal case, Garnett v. ADT, LLC, and clarifies Labor Code section 226. This bill specifies that employers are not required to list the number of hours worked on wage statements for any exempt employee whose compensation is solely based off of salary and the employee is exempt from overtime wages.

BILLS THAT DIDN’T MAKE THE CUT (i.e., “it coulda been worse”)

Double Pay on the Holiday—2016 Edition. The Double Pay on Holiday Act of 2015 failed to make its way to the Governor for the second year in a rowAB 67 would have required retail and grocery store establishments, as well as restaurants located within them, to pay at least twice the regular rate of pay for employees who work on Thanksgiving.

Employee Time Off. AB 2405 would have required an employer to provide an employee at least eight hours annually of paid, job-protected, time off for an absence under the Family School Partnership Act. This bill came on the heels of SB 579, chaptered in 2015, which expanded the authorized reasons an employee can take job-protected time off under the Act and specified the definition of ‘family member” under California’s Kin Care. Read our report on SB 579 here.

Work Hours. SB 878 was similar to AB 357, the Fair Scheduling Act of 2015, which did not make it out of the Assembly. SB 878, the Reliable Scheduling Act of 2016, would have required that restaurant, grocery, and retail employers provide non-exempt employees with a 21-day work schedule in advance of their first shift on that work schedule. SB 878 would have required at least seven days advance notice. SB 878 would have required employers to pay “modification pay”—defined as compensation in addition to regular pay (the hourly rate calculated based upon 90 days prior)—if any scheduled shift is canceled, moved, or added, and for each shift for which an employee is required be on call but is not called into work.

California Workplace Flexibility Act. SB 985, SB 368’s predecessor, would have allowed employees to submit a written request for a flexible work schedule of up to four 10-hour days per week without obligating the employer to pay overtime for the 9th and 10th hours worked per day. The employer would have still been obligated to pay overtime for any hours worked over 10 hours per workday or 40 hours per workweek.

Meal and Rest or Recovery Periods. AB 1948 would have provided a statutory remedy for an employer’s failure to provide a meal or rest or recovery period. The bill would have specified that the entire “penalty amount” was an additional hour or pay for each day that a meal or rest or recovery period was not provided to the employee.

Employee Safety. AB 2895 would have required an employer to keep at each worksite with three or more employees a complete, updated copy of the currently required written injury prevention program and make it available for inspection by any employee or by the Division of Occupational Safety and Health upon request. This bill also required an employer to inform each employee of the availability, and employee’s rights, to inspect and receive a copy of the written injury prevention program. Additionally, an employer that received a written request for a copy of the injury prevention program would have to comply within a specified timeframe. The bill would have also entitled the employee to injunctive relief if the employer did not timely respond to the request.

Employment Arbitration Agreements Discrimination. AB 2879, the “Service Member Employment Protection Act,” brings back the language of 2015’s AB 465, which the Governor vetoed (read our summary here), but would have limited the application to military service members, similar to USERRA. Specifically, the bill would have prohibited employers from requiring service members to waive any Labor Code protections, including the right to file and pursue a civil action or complaint, and would have prohibited employers from requiring service members to accept private arbitration, as a condition of employment, unless the waiver was voluntary.

Human Trafficking Training. AB 1595 would have required public and private mass transportation providers (bus, train, light rail, etc.) to provide human-trafficking training to their employees who are likely to interact with victims of human trafficking. AB 1942 would have required the same training but is specific to hotels and motels that provide lodging services.

Sexual Offenses Against Minors. AB 2199 would define a two-year sentence enhancement where a defendant who committed a sex crime against a minor held a position of authority over the minor. The bill specifically provided that a person in a “position of authority” included, but was not limited to, a stepparent, foster parent, partner of the parent, youth leader, recreational director, athletic manager, coach, teacher, counselor, therapist, religious leader, doctor, or employer, or employee of one of the aforementioned persons.

PAGA. AB 1317. This bill expanded on last year’s bill, AB 1506, which was signed by the Governor, that gave employers a limited right to cure certain wage-statement violations before an aggrieved employee could sue under PAGA. This bill would have provided an employer a right to cure any violation of the Labor Code before an employee could sue and would have provided an appropriation to the Labor and Workforce Development Agency to establish new positions to review and investigate PAGA cases. This bill was stuck in the Senate committee on rules.

PAGA Reform. None of the bills in this year’s five-bill Private Attorneys’ General Act (PAGA) reform package made it out of the Assembly. Those bills were:

  • AB 2461 would have limited violations an aggrieved employee was authorized to bring and required specific procedures before bringing an action.
  • AB 2462 would have provided employers with a right to cure before an employee brought a civil action.
  • AB 2463 would have established a penalty cap of $1,000 for each aggrieved employee.
  • AB 2464 would have authorized a court to dismiss an action if the court found the aggrieved employee suffered no appreciable physical or economic harm.
  • AB 2465 would have required the Labor and Workforce Development Agency to investigate alleged violations and determine if there was a reasonable basis for a civil action.

Independent Contractors. AB 1727 would have established rights for independent contractors to organize and negotiate with “hosting platforms.” This bill would have provided a right for independent contractors to engage in “group activities” in an effort to negotiate through activities such as withholding work and boycotting or critiquing. The bill would authorize an independent contractor or a representative of independent contractors claiming a violation under this bill to bring an action in superior court.

Workplace Solutions.

We will continue to monitor and report on these potential sources of annoyance, as well as any other significant legislative developments of interest. Let your favorite Seyfarth attorney know if you have any questions.

Show Me the Money! California’s Underfunded Courts

Posted in 2016 Cal-Peculiarities

Seyfarth Synopsis: Sustained cuts to California’s court system have strained access to justice across the state, and not enough is being done to fix the situation.  But, you can help!

Since the “Great Recession” of 2008, California’s court system has seen unprecedented reductions in funding, further straining the resources of an already overburdened court system.  A 2013 report from the California Judicial Council (“CJC”) estimated that the budget crisis had resulted in the closing of 50 courthouses, 175 courtrooms, and more than 25 branch courts. Accompanying these closings were 4,000 staff layoffs, imposition of furlough days and reduced hours of service, and significant other service reductions, affecting self-help services and the availability of  court reporting services (in civil cases), and court interpreters.

As a result, those seeking access to justice during the last eight years have found themselves waiting longer to get all kinds of cases heard and filings processed. The matters affected have included motions for summary judgment to resolve cases without trial, restraining orders, family court mediations, and even criminal trials. The CJC estimates that more than two million Californians have lost access to justice in their communities. Attorneys report waiting several months for hearings that could be heard in 16 court days under the Code of Civil Procedure, and sometimes find that their first available hearing date is a date after the date set for trial. Some attorneys have been in trial for weeks in matters that called for only a number of days, because of shortened court hours and increased judicial caseloads. One retired judge predicted that, without additional funding, cases filed in 2014 could take 5 years to get to trial.

Other courts have decaying infrastructure and facilities that can create unsafe environments, including infestations of rats, mold, ADA access issues, and shootouts due to inadequate security.

Counties that have decided to improve facilities despite the Great Recession have found themselves scrambling to pay for construction after court revenues declined and state funding was withdrawn. And even where courts can find the money, it has not been that simple…The Santa Clara County Superior Court recently saw its 400 employees strike for 8 days because they had gone eight years without a raise. The strike effectively paralyzed the court. Employees criticized the County for going forward with a $208-million-dollar Family Justice Center courthouse instead of increasing their pay.

Some modest improvements in court operations have occurred since the CJC’s report, but most courts still operate under a significant budget shortage. Details for each county are available in County Budget Snapshots.

What’s being done to fix this situation? The CJC has instituted measures to manage the impact of underfunding on the courts, but the major “fix” involves taking from “donor” counties who already have scarce resources. The “Workload Allocation and Funding Methodology,” instituted by the CJC in April 2013, allocates practically unchanged amounts of funding to counties pursuant to a formula based on case quantity, type, staffing needs, operating expenses, special expenditures, and “unique factors.” A recent budget proposal to similarly reallocate vacant but needed judgeships in Alameda and Santa Clara County to San Bernardino and Riverside counties was rejected, as was a bill that would have funded 12 new judgeships throughout the state.

In the recently passed 2016-2017 California Budget, the courts obtained $146.3 million in new funding, some of which was allocated to boost the number of court interpreters and replace case management systems in Orange, Sacramento, San Diego, and Ventura counties.

Regardless of how creative judges and legislators might get, the bottom line is that the funding of the state’s courts need to be substantially increased. The Judicial Branch budget makes up just over 1% of the funds allocated from the state’s General Fund— as Chief Justice Tani Cantil-Sakauye stated, “a penny on the dollar is insufficient to provide justice.”

So, what can I do? If you believe the courts should have more funding so that individuals, businesses, and employers have more access to have their cases timely heard and decided, you can contact Governor Jerry Brown here, and find the contact information for your  local legislators in the State Assembly and Senate.  The Bar Association of San Francisco also has templates and talking points for advocating for improved and adequate funding for California’s courts.

Further information regarding the 2016-17, and prior years’, California Budget can be found here.

Edited by Coby M. Turner.

San Diego Implementing Ordinance Ameliorates Its Paid Sick Leave Law

Posted in 2016 Cal-Peculiarities, Sick Leave Series

Seyfarth Synopsis: We’ve regularly reported on California’s peculiar paid sick leave laws. Not counting industry-specific paid sick laws (e.g., the Long Beach and Los Angeles ordinances regulating hotel employers), there are now six California city ordinances mandating paid sick leave.[1] This week’s focus is on changes to the San Diego law, effective September 2, 2016.

The San Diego ordinance, originally proposed in 2014, had been put on hold pending a voter referendum. Voters passed the referendum on June 16, 2016. As passed, the referendum lacked key details. Conspicuously absent were permissible caps on annual accrual and carryover. As passed, the referendum did not allow employers to “front load” sick leave once per year (in an “annual grant”). The California Healthy Workplaces, Healthy Families Act of 2014 made annual front-loading a popular option. The referendum also failed to state an effective date.

By action of the S.D. City Council, the effective date became July 11, 2016. On that same day, the City Council passed the first reading of a 21-page Implementing Ordinance available here making amendments and clarifications. The Implementing Ordinance did not go into effect immediately, but faced the normal implementation process: a second reading, mayoral signature, and a 30-day waiting period before taking effect. The Implementing Ordinance was signed by the mayor on August 3, 2016, and will become effective on September 2, 2016.

The Good News. Effective Friday, September 2, 2016, San Diego will:

  • Allow employers to cap an employee’s total accrual of sick leave at 80 hours (80 hours is the maximum carryover);
  • Allow employers to front-load no fewer than 40 hours of sick leave at the beginning of each “benefit year” (a regular and consecutive twelve-month period, determined by the employer);
  • Clarify the enforcement process, including a civil penalty cap for employers with no previous violations. The Office of the City Treasurer has been designated as the enforcing agency.

The Implementing Ordinance language seemingly still provides for carryover of earned sick leave for up to 80 hours. The Implementing Ordinance provides: “Employers may limit an Employee’s use of Earned Sick Leave to 40 Hours in a Benefit Year, but unused, accrued Earned Sick Leave must be carried over to the following Benefit Year.” An FAQ available here states that carryover is not required if the employer uses an annual grant (frontloading). The FAQ states:

Can an employer “front load” 40 hours of sick leave rather than award it through the accrual method?

The ordinance provides only for the accrual of paid sick time at the rate of one hour of sick time for every 30 hours worked. The ordinance does not provide for any other method of awarding earned sick leave; however, the Implementing Ordinance, once effective on September 2, 2106, will allow employers to front load no less than 40 hours of sick leave to an employee at the beginning of each benefit year. Front loading at least 40 hours of leave each benefit year will excuse an employer from the accrual and carryover provisions of the Ordinance.

Under this FAQ interpretation, life would be easier for San Diego employers who administer sick leave via annual grants. Carryover will not need to be tracked and annual grants can be uniform.

The Bad News. Ambiguity remains in the San Diego Ordinance, including on the issue of how employers comply in the gap period between the effective date of July 11, 2016 and the effective date of the Implementing Ordinance (September 2, 2016). Also, there are open issues on the rate of pay. On the one hand, it seems that San Diego intended to swing closer to the California paid sick law. On the other hand, San Diego appears to be at odds with the state law on the rate of sick leave pay. Per the Implementing Ordinance, non-exempt employees are paid “at the same regular rate of pay for the work week in which the Employee uses Earned Sick Leave.” Does “regular rate of pay” mean the “regular rate of pay” for the purposes of the overtime laws (a legally complex calculation that includes certain types of bonuses, different rates of pay, commissions, etc.), as required by California law? Per the FAQ, it appears San Diego’s intent is to require pay at the hourly rate in effect at the time the sick pay is used, not the more complex “regular rate of pay” used for overtime. The FAQ says: “Employees accrue leave by the hour, not by a specific wage rate. When used, these hours must be paid at the hourly rate the employee earns at the time the employee uses the earned sick leave.” Unfortunately for employers subject to The California Healthy Workplaces, Healthy Families Act of 2014, San Diego is at odds with how the Division of Labor Standards Enforcement has interpreted the California paid sick leave law for non-exempts. DLSE’s FAQ, available here, says the employer may either:

Calculate your regular, non-overtime rate of pay for the workweek in which you used paid sick leave, whether or not you actually worked overtime in that workweek (in general terms, this is usually done by dividing your total non-overtime compensation by the total non-overtime hours worked), or

Divide your total compensation for the previous 90 days (excluding overtime premium pay) by the total number of non-overtime hours worked in the full pay periods of the prior 90 days of employment

Even on sick leave pay for exempt employees, there is a San Diego peculiarity, although it is probably not consequential for most employers. For exempt employees, the San Diego Implementing Ordinance says to pay sick time at the “same rate and in the same manner as the Employer compensates working time.” The DLSE, in contrast, says to pay California sick leave at the rate paid for time off: “For exempt employees, paid sick leave is calculated in the same manner the employer calculates wages for other forms of paid leave time (for example, vacation pay, paid-time off.)” The DLSE’s FAQ is available here. This picayune peculiarity could, in some cases, make a difference in exempt pay.

Our practical suggestion: pay San Diego sick leave at whichever rate is more generous. For non-exempts, the state calculation will be more generous in most cases. For exempts, base salary will work in most, but not all, cases.

[1] Here are the six:

  • San Francisco (Proposition F, passed in November 2006)
  • Oakland, summary here
  • Emeryville, with paid sick time to care for guide dogs, signal dogs and service dogs, summarized here
  • Los Angeles, summary here
  • San Diego, summary here
  • Santa Monica (coming in 2017), summary here

Edited by Colleen Regan and David Kadue.

What To Do About Employee Thieves—Catch Them If You Can!

Posted in Workplace Investigation

Seyfarth Synopsis: When employee theft occurs, employers must be cautious in investigating, avoiding self-help, and in deciding if and how to terminate the offending employee.

Companies work hard to hire trustworthy employees, but employee theft can occur in any business. Employee theft takes different shapes—you may discover an employee is stealing products, supplies, confidential information or money from the company; an employee may steal more surreptitiously by padding time on a time sheet; or an employee may intentionally fail to enter vacation time taken in order to get paid for that time when they quit. Whether subtle, or as brazen as a famous thief (see https://en.wikipedia.org/wiki/Catch_Me_If_You_Can), any form of employee theft hurts your business and can present you with a difficult management situation.That’s why we’re here to help with the following tips.

  1. “An Honest Man Has Nothing to Fear”—Background Checks:

Inquiring into an applicant’s history can be a useful tool to identify people with a propensity toward dishonesty, but if you use background checks, make sure you follow the rules about collection and use of information.

a) California law prohibits use of consumer credit reports for employment purposes except when hiring for certain specified positions, such as managers, peace officers, positions that involve regular access to personal and banking information of individuals, access to $10,000 or more of cash, or access to confidential or proprietary information of the employer. (Labor Code § 1024.5.)

b) State and local agencies (as well as employers in San Francisco and Richmond) cannot use information about criminal history unless and until a decision about the candidate’s minimum qualifications has already occurred. (See. e.g., Labor Code 432.9 and San Francisco Fair Chance Ordinance.)

c) In addition, under federal law, criminal history may not present an automatic barrier to employment; there must be a relationship between the criminal activity and the important elements of the job, and employers should consider the number of convictions, their nature and seriousness, how recent they are, and evidence of rehabilitation.

For the kinds of background inquiries that are permitted, make sure that you provide the appropriate disclosures, get permission from the prospective employee, and provide a copy of the background check report if requested. See our prior posts on California background check requirements here.

A thorough pre-employment background check should include:

  • criminal history (if permitted) for crimes involving violence, theft, and fraud (in California you can only check back 7 years; you cannot ask about marijuana-related convictions that are more than 2 years old, or arrests that did not result in conviction)
  • civil history for lawsuits involving collections, restraining orders, and fraud
  • driver’s license check for numerous or serious violations
  • education verification for degrees from accredited institutions
  • employment verification of positions, length of employment, and reasons for leaving.
  1. “People Only Know What You Tell Them”—Verify Past Employment:

Even though most employers will verify only position and dates of employment, a prospective employer may be able to tell by the tone of voice whether the former employer had issues with the employee. A prospective employer should consistently ask previous employers whether the applicant is eligible for rehire.

  1. “Don’t Break the Rules”—Provide Clear Written Policies Prohibiting Theft:

Develop a written policy regarding timekeeping, with specific instructions on the duty of honesty and prohibition against timekeeping fraud. You should also have an employee handbook that covers the policy and the penalties for theft. In addition, it is a good idea to have clear written policies posted in the workplace regarding stealing, what types of acts constitute stealing and the consequences that will be enforced if an employee is caught stealing. Translate your policies into the languages spoken by your workforce. Have your employees acknowledge in writing that they have read and know the policies.

What to Do (and Not Do) If You Think an Employee Is Stealing

  1. Investigate … With Care and Document Results. 

An allegation of theft is serious and an employer should be very careful in planning, carrying out and documenting the investigation. There should always be at least two individuals involved in the investigation and, ideally, at least one of the investigators should not know the accused. If the company has a protocol for an investigation, follow it closely. Let the accused employee tell his or her story and include it as part of the record of investigation.

  1. Do Not Withhold Missing Amounts of Money From the Employee’s Paycheck.

An employer can lawfully withhold amounts from an employee’s wages only under very limited circumstances, and employee theft or suspected theft is not one of them.  (Labor Code Sections 221 and 224.) In fact, court decisions and the IWC Wage Orders specifically regulate an employer’s ability to deduct amounts from an employee’s wages due to cash shortages, breakage or loss of equipment. So, if you lose some equipment or merchandise, or find that cash is missing, resist the urge to take an offset against the suspected offending employee’s wages, and instead find out how to respond correctly.

  1. To Terminate or Not To Terminate?

This determination depends heavily on how strong the evidence is against the employee. If the evidence is not conclusive, you may want to be careful about telling an employee that he or she is being fired for theft, dishonesty, or suspicion of theft. Accusing an employee of a crime may be considered defamatory and should not be done unless the employer is 100% certain. Instead, the cautious employer will cite to lack of trust, or loss of confidence as the reason for termination. Or, even better, connect the termination to a violation of policy or procedure. Even this less dangerous road can contains land mines, as inconsistent enforcement of a work rule could potentially lead to claims of discrimination.

Workplace Solutions: “Don’t Be a Stranger” when it comes to consulting your counsel regarding the appropriate response to employee theft, including whether to terminate an employee for stealing. In the event you find yourself depending against any resulting claims, you will want to make sure your actions were well thought out and well documented.

Edited by Coby M. Turner.

About That Trade Secret Leak: It’s From Inside The Business!

Posted in The Latest in California Trade Secrets and Non-Compete Issues, Workplace Investigation

Seyfarth Synopsis:  Protecting trade secrets from employee theft requires more than using an NDA when onboarding employees. If businesses want to protect confidential information, they need a cradle-to-grave approach, reiterating employee obligations regularly, including during exit interviews. (Yes, you need to do exit interviews!)

Headline stories in intellectual property theft tend to involve foreign hackers engaged in high-tech attacks to pilfer vast troves of data stored by big businesses or government entities, such as those involving Russian government hackers or the Chinese military. The losses are staggering. In 2009, McAfee estimated that cybercrime cost worldwide economies $1 Trillion. That number was cited by (a then-youthful) President Obama in his first speech on cybersecurity. Since that time, attacks by professionals and nation states have remained at the forefront of both news reports and the public perception. Since then, hack attacks have remained at the forefront of both news reports and the public perception.

But despite the disproportionate attention given to high value, high-tech attacks by outsiders, many U.S. businesses recognize that threats from the inside are just as costly as revealed by a 2014 PricewaterhouseCoopers survey. Nevertheless, “only 49%” of organizations surveyed had “a plan for responding to insider threats.”

Trade secrets are particularly susceptible to theft because they, by definition, consist of secret information with economic value. Company insiders often find that information too tempting to be leave behind when changing employers, or when seeking new employment. Therein lies the problem.

Trade secret theft by employees may not grab as many headlines as neo-Cold War espionage, but the data suggest that employees, not outsiders, pose the greatest threat of loss from trade secret theft. The good news is that a little proactivity by employers will go a long way toward keeping them out of the 49% who lack a plan to prevent leaks.

Of course, in California, obtaining protection is not all that simple. Non-compete agreements are, with very limited exceptions, a non-starter under Business and Professions Code § 16600, so you need special steps to keep your trade secret house in order. And because a California trade secret plaintiff (e.g., a former employer suing its former employee) likely must identify its trade secrets with reasonable particularity before commencing discovery, it pays to invest time on the front end to identify and inventory your trade secret information before litigation arises.

So, what can employers do?

Update Non-Disclosure Agreements to Comply With the DTSA, and See That Employees Know Why NDAs Are Important

Almost all employers (we hope) have confidential/non-disclosure and trade secret protection provisions in their employment agreements. But have these agreements been updated to comply with the recently enacted Defend Trade Secrets Act (“DTSA”) and its important employee/whistleblower notification provisions? And what are employers doing to help ensure compliance with their agreements? Rolling out new agreements is relatively easy. Making sure they are effective takes some doing.

Remember, your organization will not even have trade secrets to protect unless it has made  “efforts reasonable under the circumstances” (under the California Uniform Trade Secrets Act) or has taken “reasonable measures” (under the DTSA) to maintain the secrecy of the information it claims to be a trade secret. Cal. Civ. Code § 3426.1(d); 18 U.S.C. § 1839(3)(A).

Implement Computer Use and Social Media Agreements and Policies

Most trade secret theft occurs via electronic device. Make sure your company has computer use and access policies and agreements that:

  • Set forth that company computers, network, related devices, and information stored therein belong to the company;
  • Indicate that access to company computers and networks are password-protected, with access authorized only for work-related purposes;
  • Make use of data storage/access hierarchies, with the most valuable information being accessible on only a need-to-know basis, with security access redundancies (housed in a highly secure database that requires unique user credentials distinct from the log-in credentials the employee uses to access a computer workstation);
  • Identify which devices are allowed in the workplace—BYOD practices have become popular, but also present challenges in regulating information flow and return. If employees use their own devices to perform work for the company, make clear that the company data on those devices belong to the company;
  • Notify employees that the company reserves the right to inspect devices used for work to ensure that no company data exist on the devices upon termination of employment;
  • Define whether cloud storage may be used by employees, under what terms, and what happens when employment ends;
  • Define whether external storage devices (e.g., thumb drives) are allowed and under what terms; and
  • Identify whether and how employees may use social media associated with their work—trade secrets must never be publicly disclosed, but beware of any overreach that would suppress employee communications protected by the National Labor Relations Act.

Build a Culture of Confidentiality—Make Sure Employees Know What The Company Regards as Confidential and Then Remind Them Routinely

Employees need to understand what information your company considers confidential.  Educating employees on this subject should start at the beginning of employment, continue  throughout employment,  and recur at the end of employment. Tools that can help in this regard include:

  • Onboarding procedures to emphasize the importance of company confidential information;
  • Including in NDAs an express representation that the employee does not possess and will not use while in your employ confidential information belonging to any former employer or other third party;
  • Using yearly (or more frequent) brief interactive e-modules emphasizing the importance of maintaining the confidentiality of company information;
  • Requiring that the employee sit for an exit interview; and
  • Requiring that the employee certify in writing, during exit interviews, that they have returned all company information and property (the employee may provide property on the spot or make statements about what will be returned—you should inventory all such indicated property and information).

Properly Exiting Employees—Particularly for High Risk Employees—Matters!

Not all employees present the same risk of loss. Generally, the loftier an employee is in the corporate hierarchy the greater the threat that that employee will expose company confidential information. The following recommendations are for mid-to-high risk departing employees:

  • The person conducting the exit interview must be prepared—use a checklist;
  • “Preparedness” for higher-risk employees will include (1) identifying, before the exit interview, the trade secret and confidential information the employee routinely accessed and used during employment, (2) reviewing for unusual activity the departing employee’s computer and work activities (including card key facility access data, where available) in the days and weeks leading up to their exit, (3) using an exit certification as noted above, and (4) inquiring where the employee is going and what position the employee will hold;
  • Where initial investigation warrants, discreetly interview company-friendly co-workers of the departing employee to identify potentially suspicious conduct;
  • Immediately shut down the departing employee’s access to company computers, networks, and other data repositories (e.g., cloud or other off-site storage). Cutting off access to company computer and data may be warranted before exiting the employee, depending on the perceived risk of data theft;
  • Send a reminder-of-obligations letter to the now former employee, reciting ongoing obligations to the company and attaching, where useful, a copy of the NDA the employee has signed;
  • Consider notifying the new employer, but tread carefully here to avoid overstepping or providing a basis to be accused of interfering with the employment relationship between your former employee and the new employer; and
  • Depending on the threat level you perceive, consider having a departing employees’ emails preserved and their electronic devices forensically imaged.

With best practices in place, protecting your company’s trade secrets should be more like routine, but vigilant maintenance, than preparing to do cyber battle with foreign states. Organizations understandably focus on creating the next “big thing,” increasing sales, and building investor value, but slowing down enough to be purposeful in protecting intellectual property is a must.

Edited by Michael A. Wahlander.

End of The Employment Road? Tips To Avoid a Collision

Posted in 2016 Cal-Peculiarities

Seyfarth Synopsis: When the decision is to terminate, getting the basics right can go a long way toward preventing claims down the road by departing employees. 

Inevitably, at some point, every employment relationship comes to an end. For many people, where they work and what they do is a source of pride and self-worth, as well as livelihood. People generally like to drive their own destinies. This includes deciding when and for whom they will work. Therefore, when it is the company, rather than the worker, who decides to terminate employment, shock, dismay and injured feelings may result.

In 2015, the California Department of Fair Employment & Housing received over 16,000 complaints of employment discrimination. (See DFEH 2015 Annual Report, released in June 2016.) Most alleged disability discrimination or retaliation. Although the DFEH does not analyze the complaints based on job action (i.e., termination, demotion, or some other negative employment event), it is safe to assume that most of the employment claims filed with the DFEH are based on lost employment.

This post offers some suggestions for how to try to minimize risks when the employer has made the decision to call it quits with a worker. We assume for purposes of this discussion that there is no employment agreement or collective bargaining agreement that promises discharges only for cause or that specifies what steps an employer must follow to implement a termination. Even without those contractual restrictions on the employer’s ability to terminate employment, it will behoove the employer to act in a manner that others will see as fair and just.

Accordingly, even if  the employer had made no promises at all about continued employment, its tactical goal should always be to conduct a fair and just termination, every time. Striving for this ideal should result in consistency in approach that, in turn, should result in equal treatment of employees. This approach is important to an employer charged with illegal discrimination or retaliation, because juries often equate what they perceive to be unfair treatment with illegal treatment.

What is the road to fairness and justice, you ask? Because the reasons for letting someone go can be as varied as the individuals, there is no one answer. But, the following tips may help smooth the way:

  • Appreciate the context and be consistent in process. Is the decision performance or “cause” related, or is it a company-wide reduction in force? A position elimination? The employee is just not working out? The more the termination is based on performance issues, the more important it is to document that the employee was (1) placed on notice of the issues and the employer’s expectations, and (2) depending on the circumstances, given sufficient time to improve. If an investigation into performance is called for, even in response to a concern that surfaces just before termination, it should be thorough. People who engaged in similar conduct should be treated similarly. To the extent feasible, everyone should be subject to the same process. “On the spot” firings are usually best avoided.
  • Respect the employee. Whoever conducts the termination conversation should show respect for the employee’s feelings, confidentiality, and rights. Conversations should be conducted in private, usually at a time when other employees will not necessarily be alerted to the fact. A respectful tone and manner can go a long way toward helping an employee feel better about the termination decision.
  • Get the basics right. Countless termination-related claims are based on the employer failing to observe the technicalities of timing or the amount of final pay. Use the correct forms. Pay all wages and accrued but unused vacation or PTO when due, with no unauthorized deductions. Give the employee the required brochures and documents (e.g., Notice of Separation, EDD pamphlet about unemployment benefits, COBRA notice, information about pension or other benefits).
  • Special cases. A separating employee may be on leave when the decision to terminate is made or is implemented. The employee may have already made a claim when termination occurs. If so, it will be important to have evidence that the decision was made prior to the claim being received, or that the decision would have been the same even if the employee had not been on leave or had not complained. Sometimes, for a variety of reasons (including if the separation is part of a reduction in force), the employer will decide to pay severance in exchange for a release. In each of these situations, the employer may be well-served by an internal or external legal consultation, before implementing the termination.

In summary, employers who wish to avoid life in the fast lane and want to try to minimize risk resulting from terminations should try to ensure that their employees are treated fairly in the beginning, middle, and end of their journey together. Approaching the termination decision and communications with this approach in mind can help smooth the road to the parting of the ways, and ultimately prevent meritorious claims.

Ruff CA Leave Laws: Pet Care and Other Peculiarities

Posted in 2016 Cal-Peculiarities, California Leaves, Sick Leave Series

Seyfarth Synopsis: In leaves of absence, as in employment law generally, California can be peculiar. We examine at a few examples, including particular city ordinances in Emeryville and San Francisco, and other statewide oddities such as voting, organ/tissue donation, and reckless student leave.

In the weird, wonderful, and often complex world of California leave laws, there are many familiar species. However, alongside the more commonplace military, disability, and medical leaves, California and its municipalities also recognize a wide array of strange, surprising, and uncommon leave categories:

  • “The Secret Life of Pets,” in Emeryville: Fortunately for employers (although perhaps unfortunately, for those of us who are dog and cat lovers), California has not exactly mandated “paw-ternity” leave just yet… But, we’re clawing our way closer! In June 2015, the city of Emeryville passed a paid sick leave ordinance allowing employees to use paid sick leave to care for a designated individual, if the employee has no spouse or registered domestic partner. Even Fido can be covered since the ordinance allows employees to use paid sick leave to provide care for a guide dog, signal dog, or service dog.
  • “Homeward Bound,” in San Francisco: San Francisco recently passed paid parental leave for most employees. And, San Francisco also has a different ordinance granting expansive paid sick leave, which allows workers to take time off to care for both family members and a “designated person” when they need medical care or attention. The designated person can be anyone the employee chooses, as long as their name is on file with the employer before the employee uses the leave. San Francisco’s paid sick leave ordinance covers almost any type of employee, including undocumented workers and household employees, such as caregivers, cooks, and house cleaners.
  • The “Shaggy” Troublemaker Student: Does your employee have a kid who has been sent to the principal’s office one too many times? According to California Labor Code § 230.7 and California Education Code § 48900.1, that employee is entitled to protected unpaid time off work if their child faces suspension from school. This applies to all employers regardless of the number of employees, as long as the employee provides reasonable notice to the employer.
  • Voting—“An American Tail”: Does your employee need to leave early to partake in the democratic process? California Election Code §14000 provides that an employee without sufficient time outside of his or her normal working hours to vote may take up to two hours off work to vote without loss of pay. The time off should be during the beginning or end of a regular working shift, and the employee is required to provide notice to their employer at least two working days in advance to arrange for voting time.
  • All Donators “Go to Heaven”: If your employee decides to help save a life and donate an organ or bone marrow, the employee is likely to need time off of work. In 2011, as the winner of a state senator’s “There Ought to Be a Law” contest, a new law was passed requiring employers to provide employees the opportunity to take leave to donate their own human tissue. Thus, California Labor Code § 1510 requires private employers with more than 15 employees to provide paid leaves of absence for organ and bone marrow donation.

These are just a few of the unusual protected leaves you may be faced with as an employer in California. And these bizarre rules are a good reminder that when dealing with employees and leaves in California, it may be best to tread cautiously. If reading this post sparked any questions, musings, or ponderings in your mind about California leave laws, your friendly neighborhood Seyfarth attorneys are available to advise on potential workplace solutions.