California Peculiarities Employment Law Blog

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

Posted in 2014 Cal-Peculiarities, San Francisco Ordinances

By Duwayne A. Carr and Laura J. Maechtlen

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

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

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

Stay tuned for updates regarding any new developments.

Edited by Julie Yap 

Thanks to YOU, Cal Pecs Blog Receives BLAWG-Worthy ABA Recognition

Posted in 2014 Cal-Peculiarities

During this special time of giving thanks, we want to thank YOU, our loyal readers. Yesterday, ABA editors chose our little enterprise as one of the ABA Journal’s 2014 “Blawg 100,” an accomplishment we could not have achieved without your support.  We take great pride in working hard to stay on top of the trends and issues that make California employment law so wonderfully peculiar.  We are pleased as pumpkin pie, then, to see those efforts recognized!

Now that the editors have made their picks, the ABA Journal is asking readers to weigh in and vote on their favorites in each of the 13 categories.  If you would like to vote for our blog to be named to the Best of the Best (Hall of Fame), please visit http://www.abajournal.com/blawg100 to register and vote!  (It should take less than a minute, and the site is worth visiting for many other reasons as well.)  Voting ends at close of business on Dec. 19, 2014.  We would appreciate your further support.

We thank you, and wish you a Happy Holiday!

CA Paid Sick Leave Law Update: Labor Commissioner Issues Poster and Wage Theft Notice Templates and Sets Leave Accrual Date

Posted in 2014 Cal-Peculiarities, Sick Leave Series

By Kristina Launey and Ann Marie Zaletel

Just over a month before the January 1, 2015 effective date of AB 1522, the Labor Commissioner has issued two advisories of immediate interest to California employers.  One is a template poster for employer compliance and the other is a revised Wage Theft Notice.  

Employers may choose to use the template poster, or create their own, but must display a poster containing the information specified in new Labor Code section 247 in a conspicuous place in each workplace.  Some employers may be interested in preparing their own posters: those employers that have their own policies which are more generous than the new law requires; and those employers that provide employees with a “lump sum grant” of leave rather than following the accrual method.  An employer preparing its own poster will want it to contain the Section 247 requirements but also accurately describe the employer’s own practice.

Although the Labor Commissioner has not yet issued an official interpretation or FAQs on the new law—and it is uncertain whether it will—the template poster does clarify the law’s accrual requirement.  New Labor Code section 246(b)(1) will provide: “An employee shall accrue paid sick days at the rate of not less than one hour per every 30 hours worked, beginning at the commencement of employment or the operative date of this article, whichever is later.”  As we previously noted, this language does not provide much clarity as to when employees begin to accrue sick leave.  Thus, the conservative advice was to start accrual January 1, 2015—the “operative date of [the] article.”  Now, however, the Labor Commissioner’s position, as stated in the template poster, appears to be that accrual starts on July 1, 2015, or the employee’s first date of employment, whichever is later (“Accrual shall begin on the first day of employment or July 1, 2015, whichever is later.”) In other words, the Labor Commissioner’s position is that the earliest accrual begins is July 1, not January 1.

The new template for the Labor Code Section 2810.5 Wage Theft Notice includes the additional information that AB 1522 now requires.  The Labor Commissioner’s additions to the Wage Theft Notice exceed what the AB 1522 amendments expressly require, but subsection (a)(1)(I) of section 2810.5 empowers the Labor Commission to have the notice contain “any other information the Labor Commissioner deems material and necessary.”  We thus assume the Labor Commissioner deems everything included in its template Wage Theft Notice to be material and necessary.  Employers who do not use the template notice should ensure their notices include all information appearing in the template notice, though the employer would not be precluded from using a bit more plain language in addition to the statutory references.

Don’t forget that while January 1, 2015 is the date to comply with the posting requirement and use the new Wage Theft Notice, an employee’s entitlement to use paid sick leave does not begin until at least July 1, 2015, and now, according to the Labor Commissioner, that is the date that sick-pay accrual begins as well.

San Francisco Board of Supervisors Tentatively Passes “Retail Workers Bill Of Rights” – Final Vote Expected On November 25

Posted in 2014 Cal-Peculiarities, San Francisco Ordinances

By Duwayne A. Carr and Laura J. Maechtlen

We previously blogged about pending legislation in San Francisco titled the “Retail Workers Bill of Rights,” a comprehensive set of policies introduced as two separate pieces of legislation (here and here) by San Francisco Supervisors Eric Mar and David Chiu

We learned that the Board of Supervisors tentatively—and unanimously—passed both  pieces of proposed legislation this week.  A confirmation vote is scheduled to occur on November 25, 2014, and, if the legislation passes at that time, the ordinances will become law in San Francisco 180 days after the effective date. 

While amendments might be considered prior to the final confirmation vote, we summarize the notable aspects of the two pieces of legislation here, in anticipation of that vote.  Of particular note to employers, the legislation provides a private right of action.  Any person aggrieved by a violation of the ordinance, any entity a member of which is aggrieved by a violation, or any other person or entity acting on behalf of the public, may bring a civil action in court against an employer for violating the ordinance.

Board of Supervisors File No. 140880:  Hours and Retention Protections for Formula Retail Employees

This proposed ordinance would apply to Formula Retail employers with 20 or more employees in the City.  “Formula Retail” establishments are defined for purposes of the new legislation as businesses with at least 20 retail sales establishments located worldwide. 

The proposed ordinance would require employers to: Continue Reading

Gobble, Gobble … When Providing Employees With Food, Is There Such A Thing As A Free Lunch?

Posted in 2014 Cal-Peculiarities

By John R. Giovannone and Aaron Lubeley

“Let me get this straight. To the delight of our workers, we’ve been providing free meals. But now someone is claiming that I owe unpaid overtime to account for the value of the free meals? Really??” 

We have been hearing this kind of exasperated response from clients with more frequency, as many employers have made the business choice to provide their employees with lunch at no cost. Many of these same employers are being accused of underpaying overtime by failing to incorporate the value of free food in calculating the regular, overtime, and double-time rates of pay. Talk about a funny way to give thanks!

Companies provide free food to employees for many legitimate business reasons: to help limit lunch breaks to 30 minutes, to encourage employees stay close to the job site during lunch breaks in case of emergencies, to avoid food waste and related disposal costs in industries where more food is prepared than the customers will consume (i.e., menu options), and to build workforce camaraderie by encouraging employees to take their lunch breaks together. This just a small sampling of reasons an employer might decide to feed its workforce. And not all free food needs to be considered in the computation of overtime.  But sometimes companies enact such free lunch policies without due consideration of the rules and possible legal ramifications.

As the plaintiffs’ bar clearly understands, California defines wages as “all amounts for labor performed by employees.” California overtime and double time are computed based on an employee’s regular rate of pay, which includes cash and other types of remuneration. Labor Code §§ 200, 510.

Increasingly, employers are seeing complaints that argue, essentially, if an employee earns $9 an hour and gets a free turkey sandwich for lunch, the sandwich is part of the “amounts for labor performed.” Therefore, plaintiffs argue, the value of the food should be factored into the employee’s regular rate, so that the corresponding rate of payment for any overtime worked should be increased by the per-hour value of a couple slices of turkey and bread! For example, if the value of the sandwich is $4.00, and is provided five days a week, the employee is getting an extra $20 per week in “other remuneration” that, plaintiffs argue, would make the regular rate for overtime computation not just $9/hour, but something more (depending on the number of hours worked in the week).

Unfortunately, this is no Thanksgiving prank. Free food regular rate miscalculation cases have actually been around in California since the Seventies (e.g., Marshall v. Valhalla Inn, 9th Cir. 1979: “The regular remuneration … consisted of the wages … plus the value of the meal provided … . The amount of such payments must therefore be included in determining the overtime rate.”). But this “gotcha” category of lawsuits, which defy common sense, have recently come into vogue. Worse still, theoretically similar claim types have evolved in response to similar food-related company policies.

Some lawsuits, for example, attack the practice of giving employees a discount on cafeteria food, claiming that the value of the discount should be included in calculating overtime rates (“If you charge me $1 for a $4 sandwich, that’s $3 more to my regular rate computation.”).

Other lawsuits claim that employers miscalculate overtime when they incorporate the employer’s cost of the food provided into the overtime calculation rather than incorporating the fair market value of the food provided to the employee into the overtime calculation.

These lawsuits actually work against the interests of employees, as they inspire an unsurprising employer response: cancellation of free and discounted meal policies. Are there effective alternatives to the drastic cancel-the-policy solution to this problem? Yes, but only careful consideration of each employer’s relevant facts and circumstances, coupled with careful drafting of free-lunch policies and procedures, will avoid liability for miscalculating overtime and double time rates: Continue Reading

Managing the Two P’s: Profanity and Politics in the Workplace

Posted in 2014 Cal-Peculiarities

By Nick Geannacopulos and Emily Barker

With the election upon us, political expression at work likely has intensified and at times may have led to disharmony. We all understand that political speech receives the highest protection in the civil arena—but how far does that protection extend in the California workplace? What if your at-will employee goes on the radio to assert a political stance directly adverse to your company’s interests? Can you stop the company-wide email that asks for contributions to the local independent candidate? Can you require your nostalgic baby boomer to take down his “Nixon’s The One” poster in his office?

A reasonable employer might think that it can regulate, or stop entirely, potentially disruptive workplace conduct that occurs on company premises. But let’s remember once again that California is peculiar: employers here must navigate around strong protections for political activities that apply both in and outside the workplace. Specifically, California Labor Code sections 1101 and 1102 prevent private employers from controlling or attempting to restrict employees from participating in political actions or activities.

Now let’s revisit the examples we mentioned above: Continue Reading

When it comes to paying final wages, ti-i-i-ime is NOT on your side: A Refresher on Labor Code 203

Posted in 2014 Cal-Peculiarities

By Brian P. Long

When you dismiss an employee for poor performance, or when he beats you to the punch by quitting on you, you rarely feel the urge to rush that slacker his final check. But you should. Under the California Labor Code, you must pay all wages due at the time of an involuntary termination. And you must pay resigning employees within 72 hours if they suddenly quit on you. Further, if they are kind enough to toss at least 72 hours’ notice of resignation your way, then you must pay final wages to the resigning employee on the last day of employment.

Because these rules sometimes get lost in the heat of a termination moment, now seems the time to provide some reminders:

If an employee is terminated mid-pay period, can’t I just treat the former employee like everyone else and pay him in the regular payroll cycle?

No. Welcome to another California peculiarity; employers must pay wages to terminated employees on their last day of employment, even if that’s smack dab in the middle of the payroll cycle, or even the very next day after the last paycheck.

This may seem like an unnecessary trouble, but recall that Labor Code Section 203 imposes daily penalties for any willful failure to pay according to the schedule we described above. The penalty is measured in terms of the amount of daily wages, from the date the final wages were due until the date they are paid, up to a total of 30 days.

What kind of money are we talking about?

Suppose an employee who made $20 per hour is fired after working only two hours into the new payroll period. And suppose the employer then observes the normal payroll cycle and waits 13 days to pay the $40 in earned wages. The penalties for this seeming trivial infraction could be a startling $2,080 ($20 per hour x 8 hours per day x 13 days). In other words, waiting less than two weeks in this situation to pay the final wages could ultimately cost more than 50 times what the employee was actually owed. And yes, all days of delay are counted, including weekend days. The penalties just keep on rolling.

I fired an employee and now she claims she is due additional wages for dates that she did not actually work. I don’t want to face these pesky waiting time penalties, but do I have to pay?

Not necessarily. You need only pay the wages you concededly owe. If you have a good faith dispute as to whether you actually owe wages, then you have a defense to a claim for waiting time penalties. This is because assessment of the penalty is not automatic, and a “good faith dispute” that any wages are due is a defense to a penalty claim.

An employee on his way out the door just handed me 27 pages of business expense reimbursements. There’s no way I can verify and process these in 72 hours! Will I owe waiting time penalties?

No. The penalty is for failing to pay “wages.” A wage is money owed for labor performed. Expense reimbursements are not wages. Obviously, you don’t want to drag your heels on paying any expenses you owe. But no waiting time penalties should accrue while you work that number out.

An employee who just quit says, “Oh, by the way, I was denied meal breaks.” Will waiting time penalties accrue if I do not pay premium wages for missed meal breaks?

Some might argue Yes, but the best answer is No. While some argue that waiting time penalties can accrue solely for a failure to make premium payments for missed meal or rest breaks, the California Supreme Court, in Kirby v. Imoos Fire Protection, Inc., 53 Cal. 4th 1244, 1255 (2012), undermined that argument. The Kirby court said that meal and rest payments are not “wages” for the purpose of Labor Code section 218.5, which permits recovery of attorney’s fees in an action brought for nonpayment of wages. Rather, Kirby said, those payments are a form of a penalty, for purposes of that statute. Kirby’s language supports an argument that premium payments, if not “wages” for purposes of Section 218.5, are also not “wages” for purposes of Section 203. At least some courts have recognized the common sense of applying Kirby’s language in this context. Accordingly, employers have at least a good-faith argument that non-payment of meal and rest premiums would not be non-payment of “wages,” and a good-faith argument is all you need to avoid penalties under Section 203.

Workplace solutions:  If it’s been a while since you’ve checked in on those who process your California terminations, it’s a good idea to remind them of the rules and the consequences for ignoring them. Also, ensure you have a practice in place whereby you can process a payroll the same day, just in case an immediate termination occurs. And, of course, if you have any questions about any final pay issues, reach out to your favorite member of the California Workplace Solutions team.

Regarding the Title: In apologizing for this obscure temporal allusion, we invite the culturally challenged to consult http://en.wikipedia.org/wiki/Time_Is_on_My_Side.

Edited by Chelsea Mesa

Managing the Two P’s: Profanity and Politics in the Workplace

Posted in 2014 Cal-Peculiarities

By Nick Geannacopulos and Emily Barker

You have likely noticed that business interactions and the way people communicate professionally have declined in formality over recent years.  The “Friday Casual” day has become the casual week.  Formal letters have turned into short emails.  Even slang has devolved to emoticons and language unheard of in the workplace a decade ago.  Navigating through these trends in the working environment is not always easy.  This is especially true given California’s unique employment laws.

Two categories of communication stand out in California as traps for the unwary employer: profanity and politics.  This post covers the first of those topics—profanity at work.  For a more detailed look at issues surrounding politics in the workplace, please stay tuned for a future blog post.

Profanity in the Workplace:

Profanity is not rare in the work environment but employers do not always know how to respond.  For example,

  • Can you terminate and or discipline an employee who directs the F-word to his supervisor?

  • What if it is the supervisor who is using profanity?  Can the employer ignore it?

The answer is:  “It depends.”  Traditionally, one would expect that cussing out your boss would constitute good cause for termination.  But the context of the offensive language is key.

Any workplace is populated by a range of employees.  It’s only natural that a supervisor might wish to give benefit of the doubt to a good employee who makes a linguistic slip-up, but may terminate a less good employee whose unsavory comment is the “last straw.”  However, any time you terminate someone for use of foul language, you should consider the history and the available evidence.  Was one employee treated differently than another for the same conduct?  Discipline in one instance and not the other may put the company at risk for claims that the off-color language was a pretext for discrimination under the FEHA.  Further, an employee could be found to have a right to express himself or herself in a heated manner, depending on the context.

On the other hand, a supervisor’s use of profanity in the workplace could be found to create a hostile work environment, depending on the frequency and—you guessed it—context.  For this reason, all employee complaints about profanity must be taken seriously.

  • And, bring on the California Peculiarities!  In California, profanity should also now be considered in light of new legislative standards on “abusive conduct” under AB 2053, which will become effective January 1, 2015.  That law [see our Legislative Update post here] will require employers operating in California who provide anti-harassment training to supervisors every two years (under Gov’t Code § 12950.1) to include “prevention of abusive conduct” as a component of that training.  While the law does not create any new cause of action under the FEHA, or mandate that employers adopt an anti-bullying policy, it does define “abusive conduct” as “conduct of an employer or employee in the workplace, with malice, that a reasonable person would find hostile, offensive and unrelated to an employer’s legitimate business interests.  Abusive conduct may include repeated infliction of verbal abuse, such as the use of derogatory remarks, insults, and epithets, verbal or physical conduct that a reasonable person would find threatening, intimidating, or humiliating, or the gratuitous sabotage or undermining of a person’s work performance.”  It is a fair guess that profanity may fall under that definition.

  • Also, in what seems to be a trend in this area, the National Labor Relations Board has come out fairly strongly against employers in the union environment, as well:  an employee who called his boss a “f++++ mother f*****” and an “A**hole” was found entitled to reinstatement and back pay because the Board determined his words were a protected complaint about working conditions.  The Board has also found broad civility and code of conduct policies prohibiting vulgar language unenforceable and illegal on the ground they may chill protected speech.  The struggle for employers in union environments is that virtually all swearing outbursts at work can be seen as either directly or indirectly related to “terms and conditions of employment.”

Workplace Solutions:  If you’re wondering what to do with your foul-mouthed employees, consider the above government moves toward legislating civility in the workplace, and contact your Seyfarth attorney to give you advice for these unique situations.  In addition, Seyfarth Shaw at Work has put together some great training materials on the new law about “abusive conduct” training that should help employers stay in compliance.  You can contact us for more information on those trainings here.  Last but not least, keep your eye out for our California Legislative Update webinar, where members of the California Workplace Solutions group will dig deep on the new laws and how they’re affecting California employers.

Edited by Coby Turner

When Do Employers Get a Break From Meal Period Rules?

Posted in 2014 Cal-Peculiarities, Exemption Series, The Battle After Brinker, Work Time Series

By Colleen M. Regan

Over the past decade, plaintiffs have filed hundreds of class actions alleging that California employers have failed to “provide” meal breaks.  The California Supreme court finally handed down some rules in 2012, in Brinker Restaurant Corp. v. Superior Court, 53 Cal. 4th 1004: 

  • An employer may not employ a person for more than 5 hours in a day without providing a meal break of at least 30 minutes, or more than 10 hours without providing a second 30 minute meal break. 
  • An employer must relieve the employee of all duty for a required meal break, but the employer need not ensure that the employee does no work:  “The employer satisfies this obligation if it relieves its employees of all duty, relinquishes control over their activities and permits them a reasonable opportunity to take an uninterrupted 30–minute break, and does not impede or discourage them from doing so.”  Brinker, 53 Cal. 4th at 1040. 
  • Absent a waiver by the employee, a first meal break must begin no later than the start of an employee’s sixth hour of work.
  • Absent a waiver by the employee, a second meal break must begin no later than the start of the 11th hour of work, but the second meal break may begin later than 5 hours after the end of the first meal period.

But, you may ask, does the government mandate over employee eating schedules know no bounds?  Are there no exceptions? Continue Reading

CA Legislature and Governor Pass More Employment Laws: End of 2014 Session Summary

Posted in 2014 Legislative Updates

By Kristina Launey, Dana Howells, and Christina Jackson

The California Legislature adjourned in the wee hours of the morning on August 30, in advance of the official August 31 close of the 2013-14 Legislative Session.  It sent a number of employment-related bills to Governor Brown for consideration by his September 30, 2014 deadline to sign or veto the bills.

View a full summary of each of the approved, vetoed, and failed bills here

In the coming weeks, we’ll blog about how more of the new laws, including the following, may affect employers doing business in California, and our thoughts for Workplace Solutions.

The most notable bills include:

  • New paid sick days law;
  • Harassment prohibition for unpaid interns;
  • Nondiscrimination law regarding drivers licenses;
  • Changes to mandatory sexual harassment training and education for supervisory employees;
  • New Child Labor Protection Act;
  • Changes to notice regarding health care coverage waiting periods;
  • Changes to wage and hour laws including:
    • Mandatory rest or recovery period counted as hours worked;
    • Clarification of statute of limitations affecting recovery of liquidated damages for failure to pay minimum wage; and
    • Changes to Labor Commissioner’s authority regarding citations for failure to pay minimum wage.

Stay Tuned.

Edited by Julie Yap