California Peculiarities Employment Law Blog

Post-Cochran BYOD Class Actions: Who’s an Employer To Call?

Posted in 2015 Cal-Peculiarities

Keyboard Illustration BYODBy Kristen Verrastro and Michele Haydel Gehrke

Loyal readers will recall our discussion of the perplexing Cochran v. Schwan’s Home Services, Inc. cell phone reimbursement case in this space (initially here, and then again here).

We’ve yet to see any other California appellate decision that confirms or challenges Cochran’s holding that, under California Labor Code section 2802, employees are entitled to reimbursement for “some reasonable percentage” of their personal cell phone bill if they must use their personal cell phone for work. And that “reasonable percentage” seems to apply irrespective of whether (1) the employee actually incurs any additional charges for the work-related portion of the total cell phone use, (2) a third party pays the employee’s bill, or (3) the employee has made any voice, text, or data plan changes because of the employee’s work-related usage.

But hold the phone—though California appellate courts have not addressed employer reimbursement for personal mobile device usage post-Cochran, we have seen Cochran-inspired class actions. In Araiza v. The Scotts Company, LLC, Los Angeles Superior Court Case No. BC570350 (filed January 26, 2015), the plaintiffs bring class claims alleging a failure to reimburse employee business expenses, in violation of Section 2802, and also allege a violation of Section 17200 of the Business and Professions Code. The plaintiffs expressly cite Cochran, arguing that Cochran requires the defendant employer to “maintain an expense reimbursement policy and/or practice stating that Defendant will affirmatively reimburse Class Members for a reasonable portion of their monthly personal cell phone bills and expenses necessarily incurred in their discharge of their duties.”

This case joins the many pre-Cochran class actions already invoking Section 2802 to claim expense reimbursement for work-related personal mobile device usage.

Cochran and cases of its ilk have many employers calling for guidance on how to reconcile their California expense reimbursement practice with their Bring Your Own Device (BYOD) policy.

We are here to help. We track all of these developments, so continue to check back here. In the meantime, we continue to encourage employers to assess their current expense reimbursement and cell phone policies and practices in light of this evolving legal landscape.

Additionally, join the authors of this post as they present a Seyfarth Shaw webinar on June 23, 2015, when they will discuss the impact of Cochran and highlight compliance issues for California employers to consider when crafting their BYOD and reimbursement policies.

Edited by Chelsea Mesa

CA Paid Sick Leave Update: Labor Commissioner Issues More FAQs

Posted in 2015 Cal-Peculiarities, 2015 Legislative Updates, California Leaves, Sick Leave Series

(Illustration) Sick PayBy Kristina M Launey

The Labor Commissioner has issued a new and updated set of FAQs interpreting California’s new Paid Sick Leave Law (AB 1522 of 2014).

If you’ve been following along, you know that after passage of the new law last year, the Labor Commissioner issued a template Poster and Wage Theft Prevention Notice for employers to use and post, as well as a first set of FAQs.

The new FAQs obligate employers to inform existing employees of the new sick pay law and changes in policy via the Wage Theft Notice, provide guidance regarding when such notice must be given to existing employees, and provide guidance regarding sick leave eligibility for seasonal or break-in-service employees, as well as part-time and alternative work schedule employees.

Wage Theft Prevention Notices: Employees hired before January 1, 2015 must receive a new Notice that contains the new information regarding paid sick time under amended Labor Code section 2810.5, even if there is no change in employer policy.

Employers must give all employees (not just those hired after January 1, 2015) a new Wage Theft Prevention Notice, announcing any change to paid sick leave, within seven days of the actual change. Although the FAQs are silent on this point, note that Labor Code section 2810.5,  which requires Wage Theft Prevention Notices, applies only to non-exempt employees.

The “date of actual change” would depend on when the employer either establishes a paid sick program under the paid sick leave law or changes an existing paid leave program to comply with this law, but would be no later than July 1, 2015. Thus, the last date to provide notice of changes would be no later than July 8, 2015 (seven days after the July 1 sick leave entitlement effective date).

Employers who do not want to issue new Wage Theft Prevention Notices to all current employees may instead inform those employees of the change to paid sick leave by using an alternative method authorized by Labor Code section 2810.5(b)(1) or (b)(2) (e.g., giving notice of change in a pay stub or itemized wage statement). Employers who choose this route should take care to follow the requirements of these alternatives and keep records of having provided those employees with the notice.

Even employers whose existing policy satisfies the minimum requirements of the law must still provide notice—via the new Wage Theft Prevention Notice or an alternative method—regarding the new paid sick leave law. The notice must contain information about the new paid sick leave law and how the employer intends to meet its requirements for the particular employee. For example, a timely writing provided to each employee that refers to or summarizes the existing policy and contains the points of information specified in the revised Wage Theft Prevention Notice would comply with the individual notice requirement. Continue Reading

More Alphabet Soup: A SF-Style Retail Workers Bills of Rights, A Proposed OSHA Regulation for Healthcare Workers, and an Update to the ABCs of the ACA

Posted in 2015 Cal-Peculiarities, 2015 Legislative Updates, San Francisco Ordinances

ABC Soup


California legislators and regulators continue their efforts to expand employee protections, and the IRS permits a temporary subsidy for separating employees who want to sample the small business exchanges for health care.  Read on for highlights.



San Francisco Retail Workers Bill Of Rights Redux: The State Legislature Is Cooking Up Trouble Outside Of San Francisco

By Kristen Verrastro and Jason Allen

The same old soup, just reheated?  State Assemblymember né San Francisco Supervisor David Chiu, along with Assemblymember Dr. Shirley Weber, recently introduced statewide legislation called the Fair Scheduling Act (AB 357), a bill meant to provide more predictable and stable work schedules to food and retail workers throughout California.  The full language of AB 357 has not yet been released, but the bill is expected to require food and retail establishments with 500 or more California employees to give at least two weeks’ notice of employee scheduling and provide extra pay for schedule changes made last minute.

As our loyal CalPecs blog readers know, San Francisco recently passed two ordinances—“Hours and Retention Protections for Formula Retail Employees” and “Fair Scheduling and Treatment of Formula Retail Employees”—which, together, are informally known as the “San Francisco Retail Workers’ Bill of Rights.”  (Click here, here, here, and here for our previous coverage.)  Then-Supervisor Chiu introduced the latter of the two ordinances.  Is Assemblymember Chiu simply modifying his recipe for statewide consumption?

Stay tuned and we will keep you posted as more information is released about this proposed legislation.

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This just posted by our Seyfarth Shaw’s Environmental and Safety Law Update:

CA Proposes New Workplace Violence Regulations for Health Care Employers, Home Health Providers and Emergency Responders

By Meagan Newman, Brent I. Clark, and Mark A. Lies, II

A draft proposed regulation from the California Division of Occupational Safety and Health (Cal/OSHA) would require health-care employers, home health and hospice providers and emergency responders to develop workplace violence-prevention plans, train their employees and keep records related to workplace violence incidents.  To read on, click here.

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The Separation Anxiety Continues, But A New IRS Regulation Answers One Question

By Dana Howells and Ben Conley

On February 18, we noted in this space (“Separation Anxiety:  The ABCs of Affordable Care Act & Covered California at Separation From Employment”) that employers are prohibited, in almost every instance, from reimbursing employees for individual health insurance premiums (either through the Covered California marketplace or otherwise).  This is in stark contrast to employers subsidizing COBRA, which is not only permitted but encouraged by being tax free to employers and employees (subject to IRS rules prohibiting discrimination in favor of highly compensated employees, where applicable).  Wouldn’t you know it, the same day we published, the IRS released additional guidance relaxing this limitation for some employers, albeit temporarily.

Specifically, the IRS created a limited transition period during which small employers (generally, those with no more than 50 full-time equivalent employees) may reimburse employees (or former employees) on a pre-tax basis for individual insurance market premiums.  The transition relief only extends through the end of 2015 when, as the IRS notes, the small business exchanges should be operating more smoothly, which provides an alternative to this practice.

For larger employers wishing to subsidize individual exchange coverage for departing employees, options are limited and complex.  Plans covering fewer than two participants who are current employees on the first day of the plan year are exempt from these prohibitions (meaning a plan covering only former employees could reimburse those former employees for individual insurance premiums).  Employers exploring this approach should exercise caution to ensure they have established a truly separate ERISA plan (including a plan document, summary plan description and, although unlikely, an annual report where applicable) to cover this population.  The exemption is not available if the reimbursements are treated as part of the active employee health plan (either intentionally or by default because the employer failed to establish a separate plan).

Separation Anxiety: The ABCs of Affordable Care Act & Covered California at Separation From Employment

Posted in 2015 Cal-Peculiarities

cartoon businessman run away from vaccinationBy Dana Howells and Ben Conley

Post-termination medical coverage costs can be a powerful inducement for some employees losing their jobs to sign a separation agreement releasing legal claims. In the past, it has been common for employers to offer to pay all or part of the ex-employee’s COBRA premium for a fixed period of time, such as 3 months. With the Affordable Care Act and Covered California (the Golden State’s insurance marketplace) now part of the landscape, there are more options—but more complications.

Coverage through Covered California can be much less expensive than COBRA. But, there are key differences between traditional COBRA and Covered California that both ex-employees (making coverage choices) and employers (drafting separation agreements) should consider. Moreover, the Affordable Care Act prohibits, in almost every circumstance, employers from reimbursing employees for individual insurance premiums (for policies issued through Covered California or otherwise). Thus, an employer wishing to include payment for continued medical coverage as part of a severance package must consider whether it is willing to offer (i) payment or reimbursement for COBRA, or (ii) an unconditional cash payment that the employee can choose to apply to the cost of Covered California, or COBRA, or some other non-health care related purpose.

So how do the Affordable Care Act and Covered California impact separation agreements with a traditional COBRA reimbursement or subsidy feature?  Unlike some states, California embraced healthcare reform. California’s insurance exchange, Covered California, is on line, in storefronts and functioning. Anecdotally, paying for Covered California is potentially much cheaper than paying an ex-employee’s COBRA premium. (Both COBRA and Covered California plans qualify as coverage for avoiding the new tax penalties for failing to purchase coverage at all.)

But comparing COBRA to Covered California is like comparing a Washington apple to a California orange, especially when you are talking about potential gaps in coverage. This is virtually impossible to avoid when the event that triggers special enrollment in Covered California is loss of employer coverage. Consider the following: Continue Reading

California Supreme Court: What It Did To Employers In 2014 And What’s Pending

Posted in 2015 Cal-Peculiarities, Case Update

By Daniel Whang

In plaintiff-friendly California, it may be surprising to learn that the California Supreme Court threw a few bones to employers during 2014. First, although lower courts seem determined to make it easier for plaintiffs to obtain certification in wage and hour class actions, the California Supreme Court’s decision in Duran v. U.S. Bank signaled that certification of wage and hour claims has become too perfunctory.

The Duran decision, covered in far more detail in a client alert, requires trial courts to consider an often neglected requirement for class certification: that the trial of the certified claims would be manageable. Duran is one of the few wage and hour class actions that went to trial, and the disastrous consequences of a poorly planned trial provided a powerful lesson that courts need to be far more careful in certifying class actions.

If Duran provided a useful weapon to oppose class certification, the California Supreme Court threw employers another bone by solidifying an employer’s ability to enforce class action waivers in arbitration agreements. In Iskanian v. CLS Transportation Los Angeles, LLC, the California Supreme Court acknowledged that, under the United States Supreme Court’s decision in AT&T Mobility LLC v. Concepcion, class action waivers in arbitration agreements are enforceable.

But this was not a total employer victory. The California Supreme Court also held that claims under the Private Attorneys General Act of 2004 (“PAGA”) are not subject to mandatory arbitration, because the State (and not the employee) is the real party in interest and the State is not a party to an employer’s arbitration agreement. While employers were hopeful that the United States Supreme Court would grant the petition to review the PAGA exception that the California Supreme Court had created, the U.S. Supreme Court declined to hear the petition, leaving Iskanian good law for now, and permitting employees to pursue PAGA claims in court even if they have signed arbitration agreements that waive the right to pursue class and representative actions.

Continue Reading

SF Retail Workers’ Bill of Rights Update – Operative Date is July 3, 2015!

Posted in San Francisco Ordinances

By Dana Peterson, Laura Maechtlen, Kristen Verrastro, and Duwayne Carr

As our loyal readers know, we have been writing about the comments and activities surrounding the San Francisco ordinances known as the “Retail Workers’ Bill of Rights” for a few months, with our most recent blog post here and our Management Alert here.  As promised, we have our first update to share regarding the implementation of these ordinances.

The San Francisco Office of Labor Standards Enforcement (OLSE) has released a preliminary information page on its website.  So far, no new specifics have been provided (stay tuned), but the OLSE has confirmed the operative date for the Retail Workers’ Bill of Rights is July 3, 2015.  Therefore, all affected employers must be in compliance with the ordinances by July 3rd, just in time for the long holiday weekend.  

Contact your Seyfarth attorney if you have questions about compliance with the ordinances.  We can help ensure that the only fireworks you’re apt to encounter are those in celebration of July 4th! 

We will continue to provide further updates as new information becomes available.

Edited by Julie Yap

U.S. Supreme Court Declines to Referee Slugfest Between Federal and California Courts on Enforceability of Arbitration Agreements

Posted in 2015 Cal-Peculiarities, Case Update, PAGA Series

By David Kadue

On Tuesday, January 20, 2015, the Court declined to take the case of CLS Transportation Los Angeles, LLC v. Iskanian, in which an employer asked the Court to reverse a ruling of the California Supreme Court. At issue was whether an employee who has agreed to submit all employment-related claims to arbitration, and who has also agreed to waive participation in class and representative actions, can evade that agreement and sue the employer under California’s Private Attorney General Act (“PAGA”). The California Supreme Court in June 2014 had sided with the suing employee.

Many observers expected that the case would be the latest episode in a drama that features a complicated relationship between two supreme courts. To simplify a bit, the U.S. Supreme Court traditionally has read the Federal Arbitration Act (“FAA”) to require the enforcement of private arbitration agreements by their terms. The California Supreme Court, meanwhile, has often searched creatively for some Cal-centric reason to deny enforcement to arbitration agreements.

Recent examples of the contrasting supreme viewpoints have occurred in the context of arbitration agreements that waive the procedural right to proceed or participate in a class action. The California Supreme Court once held, in both the consumer-claim context and in the employee-claim context, that a class-action waiver in an arbitration agreement is unenforceable, because any such waiver offends the California public policy favoring class actions. But then the U.S. Supreme Court, in Concepion v. AT&T Mobility, ruled in 2011 that the FAA preempts the California ban on class-action waivers. Concepion involved a consumer complaint. For several years, California courts resisted the clear implication that Concepcion also applies to employee complaints. Finally, in Iskanian, the California Supreme Court relented, acknowledging that, under the FAA, class-action waivers in arbitration agreements are enforceable, even in California. Continue Reading

COMING IN 2015: REVISED CFRA REGULATIONS, or “How To Comply With Mandatory Family Leaves in the Golden State”

Posted in 2015 Cal-Peculiarities

By Colleen Regan

New guidance on how to comply with the California Family Rights Act (CFRA) is nigh. 

On January 13, 2015, the California Fair Employment & Housing Council approved revised regulations interpreting the CFRA, attached here. Procedurally, the regulations now go to the Office of Administrative Law (OAL) for additional consideration and eventual approval. We have it on good authority that the text of these proposed regulations will not change unless the OAL requires changes; however, given the vagaries of the process, we are not expecting the final revised CFRA regulations to be promulgated until about July 2015.

As most readers know, the CFRA is the California analog to the federal Family & Medical Leave Act (FMLA). While the CFRA and the FMLA are consistent to a large degree, there are some important differences. Significantly, the revised CFRA regulations, as proposed, would:  

  • interpret the CFRA more consistently with the FMLA (for example, with respect to retroactive designation of CFRA leave after the employee has returned to work),
  • clarify employer and employee rights and responsibilities (for example, prohibiting employers from contacting health care providers except to authenticate a medical certification), and
  • prescribe a new medical certification form that should help employers who would otherwise be tempted to use the DOL’s form for FMLA leaves. Using the DOL form is not a good idea in California because it requests “medical facts,” including diagnosis. That kind of request is generally impermissible in California given our constitutional right to privacy. 

Helpfully, the proposed changes to the CFRA regulations are called out in the attached in underscore, strike-through, italics and boldface

Workplace Solution:  Although these new regulations are still just proposed, the wise employer will become familiar with them now to avoid any surprises when they (or a closely similar version) are finally adopted later this year.

Next week:  We expect the United States Supreme Court to soon decide whether to grant certiorari in the Iskanian case. If you are following the issue of mandatory arbitration of PAGA claims, stay tuned to this space for further developments.

Edited by Jonathan Brophy and Chelsea Mesa

Thanks for Making Us A Fan Favorite!!! . . . and a Couple of Nitty Gritty Wage Hour Decisions

Posted in 2015 Cal-Peculiarities

By Michele Haydel Gehrke and Colleen M. Regan

Cal Pecs Blog is a BLAWG 100 Fan Favorite!!!!

In November, we announced that our Cal Pecs blog was selected as one of the ABA Journal’s 2014 “BLAWG 100.”  Today, we are thrilled to further proclaim that we earned the most votes from YOU, our devoted readers, in the ABA Journal BLAWG 100’s Labor & Employment category, making us the top Employment Law Blog vote-getter.  THANK YOU!  Your support of our beloved enterprise has us over-the-moon with gratitude and delight.  We promise to continue to earn your loyalty and readership as we work to develop content that keeps you abreast of California’s peculiar—and ever-changing—employment laws.

Click here to see vote totals for all 100 blogs featured in the ABA Journal’s December 2014 cover story, and click here to see a list of the winners of each category.  This victory will also be announced in the February issue of the ABA Journal.

Court of Appeal Permits “On-Call” Rest Breaks for Workers

Worth noting is a favorable, if unpublished, decision from the California Court of Appeal that was filed on December 31, 2014.  In Augustus v. ABM Security Services, Inc., the appellate panel overturned a troubling decision by the LA County Superior Court.  The trial court had granted summary judgment to a class of security guard plaintiffs and awarded them almost $135 million in damages, attorneys’ fees and costs.  The trial court’s award was based on a finding that carrying a pager and being “on call” during paid rest breaks violated the Labor Code and required one-hour wage penalties for each and every rest break, whether or not the guard’s rest was interrupted. 

Applying some welcome common sense, the Court of Appeal reversed, and held that being “on call” subject to interruption did not constitute “work.”  Although this decision is not citable, we are glad to know that at least one court recognizes the difference between being required to work (i.e., being under the control of the employer) and being relieved of all duties (such as the duty to remain on call). 

California Supreme Court Hangs Up On Employers And Denies Petition for Review In Controversial Cell Phone Expense Reimbursement Case

You may recall that in Cochran v. Schwan’s Home Services, Inc., the Court of Appeal held that, under California Labor Code § 2802, employees who must use personal cell phones for work are entitled to reimbursement for “some reasonable percentage” of the personal cell phone bill.  This appears to be the rule irrespective of whether the employee has incurred additional charges for the work use, whether a third party has paid the bill, or whether the employee has changed plans to accommodate work-related cell phone usage.  

On November 25, 2014, the California Supreme Court denied a petition for review filed by Schwan’s requesting that the high court review this controversial appellate decision, and also denied its request to depublish the Court of Appeal decision.  The petition had wide support among the employer community, which has questioned the broad holding in Cochran and what it means for employers. 

Now that we know the Cochran decision will not be overturned, it remains to be seen whether other California courts will follow Cochran’s lead.  In the interim, employers are left to wonder what the Cochran ruling means for them, and how they  may need to implement or update their Bring Your Own Device (“BYOD”) and expense reimbursement policies to avoid potential claims (particularly potential-expensive class actions). 

We suggest that employers consult with counsel to evaluate their technology and expense reimbursement policies and practices to ensure compliance with this evolving area of law.  Please reach out to your favorite Seyfarth attorney for more guidance. 

Happy New Year! And a Look Back at 2014

Posted in 2014 Cal-Peculiarities

Our readers will be happy to see the end of 2014, from an employment law point of view. With the exception of the Iskanian case, in which the California Supremes finally agreed that most workplace disputes can be subject to mandatory arbitration, employers had little to cheer about. This past year the Golden State brought us a new crop of employee entitlements—also known as employer mandates—requiring significant changes in how companies hire, schedule labor, monitor hours of work, and give employees time off.

Clothed in the language of worker rights and positive societal goals (e.g., the “Healthy Workplaces/Healthy Families Act”), the new laws increasingly cover areas that traditionally have been the subject of collective bargaining (e.g., mandatory paid time off and rates of pay). There is also a trend toward preventing job loss that might result from personal life circumstances, such as requiring paid time off for an employee to seek help for domestic violence, and forbidding questions about an applicant’s criminal or credit history. In short, government protectionism is alive and well in California.

What were the biggest headlines of the year?  Let’s focus on three: Continue Reading