California Peculiarities Employment Law Blog

Bay Area Voters Impose Local Requirements for Minimum Wage, Sick Leave, and Workplace Flexibility: Part 1 of 2

Posted in 2014 Cal-Peculiarities, San Francisco Ordinances, Sick Leave Series

By Jason Allen 

As the year winds down, we thought it wise to look back at what California’s busiest locality has done in developing local employment law. The folks in the Bay Area have been so busy flexing their employment law muscles that we’ve split this summary into two easily digestible posts to provide what you’ll need to hop on the trolley to compliance city.

Voter-approved measures addressed higher wages, more sick leave, and increasingly flexible work schedules for employees in Oakland, San Francisco, and Berkeley. While many have left their hearts in San Francisco, these measures will have some employers wanting to have their business elsewhere. Those measures require employers to provide wages and benefits that far exceed state and federal requirements. These new laws also may indicate what’s to come for the rest of the very active Bay Area.

Minimum Wage

As this blog has previously covered (e.g., here and here), California recently raised its minimum wage to $9 per hour, effective July 1, 2014—with an increase to $10 per hour scheduled for January 1, 2016. But the state was a bit late to this game, as several  cities had already mandated higher wages for local employees. Cities in the Bay Area have been particularly active here: San Jose ($10.15, effective March 2013, with an annual cost of living adjustment (COLA)), Richmond ($9.60, effective January 2015, with incremental increases to $12.30 by 2017, then an annual COLA), and Berkeley ($10.00, with planned incremental increases culminating at $12.53 by October 2016). 

On November 4, 2014, voters approved the following measures in Oakland and San Francisco that will raise wages in those cities to similar and even higher levels.

Oakland: Ballot Measure FF

Despite Gertrude Stein’s famous observation to the contrary, perhaps in Oakland there is some “there there: On November 4, Oakland voters passed Measure FF, adding provisions to the City’s municipal code regarding a “city minimum wage, sick leave, and other employment standards.” Effective March 2, 2015, Oakland’s minimum wage will increase to $12.25 for any employee who (a) is covered by state and federal minimum wage laws and (b) works at least two hours “[i]n a particular week … within the geographic boundaries of the City for an Employer.” Beginning January 1, 2016, and to celebrate New Year’s Day for every year that follows, the minimum wage will increase in line with a COLA.

The Oakland ordinance also includes a provision specific to employees in hospitality industries that impose “Service Charges” to collect separately for such items as banquets, deliveries, room service, or porterage. Under the new ordinance, Service Charges must be paid directly to the employees performing the relevant services. The section addressing Service Charges specifically exempts “any tip, gratuity, [or] money” given to hospitality workers “by customers over and above the actual amount due for services [or goods] rendered,” perhaps because state law already requires these payments to be provided to the employees.

San Francisco: Proposition J 

Attentive readers of this blog will recall the list of Bay Area cities with recent minimum wage ordinances. San Francisco does not appear on that list, because, as we’ve previously discussed, San Francisco set the standard for a higher minimum wage way back in 2003. That ordinance calls for annual COLA increases and, as of January 1, 2014, had set the floor for wages for San Francisco employees at $10.74.

Unwilling to let the full spotlight shine on the bright side of the Bay, Frisco’s voters, in November, passed Proposition J. This true San Francisco treat for employees has amended the existing ordinance to increase the minimum wage yet again. The local minimum wage now will increase to $11.05 per hour on January 1, 2015; will incrementally increase the minimum wage to $15 per hour by July 1, 2018; and thereafter will annually increase, in accordance with a COLA.1 

While the voters thus decided to ensure the Bay Area remains a pricey place to pay wages, they didn’t stop there. Stay tuned for next week when we walk you through two other areas where Bay Area voters let themselves be heard on behalf of employees: sick time and flexible schedules.


1 Note that “Government Supported Employees”—without getting into too many details, employees either younger than 18 or older than 55, whose positions are subsidized by federal, state, or local governments—will see increases of a different scale. Government Supported Employees must be paid a minimum wage of $12.25 effective May 1, 2015, with annual COLA increases thereafter.

San Francisco “Retail Workers’ Bill of Rights” Enacted—What Now?

Posted in San Francisco Ordinances

By Dana Peterson

Many know SFO as the code for the San Francisco airport. But to businesses employing workers in the City by the Bay, SFO has come to mean “San Francisco Ordinance.”

In this first of a three-part series on recent action by San Francisco’s labor friendly Board of Supervisors, we review two ordinances (here and here) that together have come to be known as the “Retail Workers’ Bill of Rights.”

Last August, we blogged about the initially proposed version of this legislation. The final version, as amended, was passed on November 25, 2014. Though some troubling provisions (such as giving employees and applicants the right to sue employers for violations) were removed prior to passage, the ordinances still impose burdensome new requirements on Formula Retail Employers.

But wait: I own some martial arts studios. So surely this new law doesn’t apply to me, right? 

Well, we hate to be the bearer of bad news, but yes, it absolutely could affect your business.

The ordinances cover employers with 20 or more employees in San Francisco who operate “Formula Retail Establishments.” These are businesses that engage in retail sales or services regulated as “Formula Retail Uses” under the San Francisco Planning Code, with one change: the ordinances apply only to establishments with at least 20 retail sales locations worldwide (the Planning Code definition requires fewer locations).

A “Formula Retail Use” is one that is, basically, standardized in terms of two or more of the following indicators: array of merchandise, façade, décor and color scheme, uniforms, signage, and trademark or service mark.

As outlined in greater detail here, the foregoing definition includes businesses that some may not consider to be “retail,” such as bars, health spas, dry cleaners, massage parlors, movie theatres, banks, credit unions, art studios, pet grooming establishments, and, yes, even martial arts studios. The Planning Code specifically identifies each such entity as a type of businesses considered to be engaging in “Formula Retail Use.”

Yikes, so what do I have to do to comply with these new laws?

We would need more space than we have here to fully explain each new requirement (hence the link to the more fulsome Management Alert). Suffice it here to say that covered employers: Continue Reading

California’s Anti-Pay Secrecy Law: It’s Not Just a Federal Contractor Problem

Posted in 2014 Cal-Peculiarities

By Cassandra Carroll

Earlier this year, the Paycheck Fairness Act, which would have functioned to ban “pay secrecy” policies in the workplace and prohibit retaliation against employees for disclosing compensation information, languished in Congress. President Barack Obama then sidestepped the Congress and signed Executive Order 13665: Non-Retaliation for Disclosure of Compensation Information. EO 13665 includes the same pay secrecy prohibitions previously set forth in the proposed Paycheck Fairness Act, but its scope is far more limited, as it applies only to federal contractors. Similar anti-pay secrecy protections have existed, under an interpretation of Section 7 of the National Labor Relations Act. And California employers have their own peculiar version of anti-pay secrecy rules to worry about.

California Labor Code section 232—banning pay secrecy policies and prohibiting discipline on the basis of wage disclosure—emerged on the scene way back in 1985. (That was when Marty McFly first introduced the “hover board”; you’re so late to the party, Tony Hawk.) Although Section 232 has rarely been litigated, President Obama’s hard push for anti-pay secrecy laws has raised employee consciousness of this issue, and we expect an uptick of related claims in this area.

Section 232 states that an employer must not: Continue Reading

CA Paid Sick Leave Update: Labor Commissioner Issues FAQs

Posted in 2014 Cal-Peculiarities, Sick Leave Series

By Kristina M. Launey

Speculate no more: the wait is over. No, we don’t know the details of the new Star Wars movie. Nor do we know the gender of the second royal baby. But we do have the Labor Commissioner’s just-issued FAQs, which can help guide employers in navigating California’s new Paid Sick Leave Law (AB 1522).

These FAQs come on the heels of the LC’s issuance of the highly anticipated Poster and Wage Theft Notice Template.

Of particular significance, the FAQs provide the following guidance and clarifications: Continue Reading

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