California Peculiarities Employment Law Blog

Barflies or Worker Bees: Alcohol at Work, What’s the Deal?

Posted in 2016 Cal-Peculiarities

Seyfarth Synopsis: Is the glass half full (of perks) or half empty (with liabilities) for employers who serve alcohol in the workplace? Various California laws implicate the practice of providing alcohol for employees at work, and employers should consider whether the benefits to company culture justify the legal risks.

Many California workplaces try to make the office a “happy place” where employees want to linger, both to work and to play. To that end, many employers offer employees perks such as free food, games, free dry-cleaning, hip lounges, neck massages, and yes, even alcohol. Employers embracing this approach do so to reward employees for long hours, to encourage longer hours, and  to create a collegial or creative workplace. But are these perks really worth it? What potential legal risks arise in a euphorically boozy workplace?

I’m an Alcoholic!

The Fair Employment and Housing Act (applying to California employers with five or more employees) treats alcoholism as a disability. California liberally defines protected “disability” to include impairments that only “limit” (rather than “substantially limit”) the ability to work. And the Family Rights Act  entitles employees to up to 12 weeks of job-protected leave for alcohol-related disabilities. After the 12 weeks, extended leaves of absence can be a further, reasonable accommodation under both California and federal law.

Employers may also have to accommodate alcoholic employees when they return to (or remain in) the workplace. What if an alcoholic employee presents a doctor’s note requesting non-exposure to alcoholic temptations at work? Could that request ruin the weekly drinking games and force the employer to go dry?  Employers also need to be alert for co-workers’ teasing, taunting, or retaliating against an employee with the disability of alcoholism.

It’s Against My Religion!

Some religions expect their adherents to abstain from alcohol. Employers that encourage alcohol consumption by making it readily available in the workplace might thus prompt complaints by employees who feel excluded, segregated, or discriminated against for their non-participation in alcoholic activities. Both California and federal law protect employees from being treated differently based on one’s religion, or from being a target of offensive remarks on the basis of religious beliefs or practices, such as abstaining from alcohol. Employers should be attentive to employees’ religious needs and be vigilant in listening for complaints about employees being uncomfortable with alcohol in the workplace.

Ouch! I’m Hurt!

Personal injuries stemming from workplace drinking can create employer liability. Will worker’s compensation cover alcohol-related injuries? Maybe, if the accident happened during regular business hours or in the course and scope of employment. But employers run an additional risk of tort liability for injuries that follow employer-sponsored alcoholic events and that occur after working hours and off employer premises.

I’m Only 19!

Many employees have not reached the legal-drinking age. Considerations should include how to prevent underage drinking, as furnishing alcohol to a minor can trigger both civil and criminal penalties. This risk may be difficult to manage in a workplace with a refrigerator stocked with tempting adult beverages, free for the taking.

I’ve Been Sexually Harassed!

Some call alcohol “liquid courage,” and for a reason: it can result in loose lips and wandering hands. Although employers may escape liability for sexual harassment by co-workers if they didn’t know (or had no reason to know) of bad behavior, and if they promptly investigate and remedy any harassment brought to their attention, California employers are still strictly liable for supervisor harassment. Because work-related gatherings with alcohol around are potential trouble spots, employers must be watchful for inappropriate conduct.

Proposed Workplace Solution.  

As companies continue to pursue innovative ways to attract, reward, and retain employees, employers that add alcohol to the workplace mix should be aware of the potential criminal and civil liabilities associated with tapping kegs at the office. Company policies that clearly address issues of harassment, discrimination, and retaliation are a must, and other policies should address company expectations around employees’ consumption of alcohol and their behavior in the workplace.

Food (or drink) for thought.

Edited by: Michael A. Wahlander.

San Diego Voters Enact Paid Sick Leave, Higher Minimum Wage

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

Seyfarth Synopsis: After hitting some major roadblocks, the San Diego Earned Sick Leave and Minimum Wage Ordinance has now been enacted. The Ordinance is to take effect this summer, most likely by the end of July. The Ordinance adds another perplexing piece to California’s paid sick leave patchwork.

After taking a nearly two-year hiatus, the San Diego Earned Sick Leave and Minimum Wage Ordinance was finally enacted on June 7, 2016, by San Diego voters. The Ordinance, originally approved by the San Diego City Council on August 18, 2014, hit a major snag when opponents sought a referendum. The City Council responded by suspending the Ordinance pending voter approval. The voters have now spoken.

San Diego joins six other California municipalities—San Francisco,[1] Oakland, Emeryville, Los Angeles,[2] Santa Monica,[3] and Long Beach[4]—that now supplement California sick pay law with additional paid sick leave entitlements. Because the statewide paid sick leave law does not supersede local ordinances, employers must comply with both the state and local laws, whichever most favors employees.

While the Ordinance’s effective date is currently unclear, signs point to a July 2016 effective date. We, of course, will keep you posted on any developments. In the meantime, employers should take steps now to ensure their policies and practices comply with the impending law.

Below is a detailed summary of the Ordinance and the key obligations it imposes on employers. Most notably, the Ordinance does not set a cap on either the amount of earned sick leave that employees can accrue in a year or the amount of unused earned sick leave that employees can carry over from year to year. The Ordinance also increases the minimum wage that San Diego employers must pay. The minimum wage will increase to $10.50 once the Ordinance goes into effect and will increase to $11.50 per hour on January 1, 2017. Starting January 1, 2019, the minimum wage will increase to an amount correlating with the cost of living.

Which Employers Are Covered by the Ordinance?

The Ordinance will cover all employers with at least one eligible employee working in San Diego, and defines “employers” as any person (including any association, organization, partnership, business trust, limited liability company, or corporation) who exercises control over the wages, hours, or working conditions of any employee, who engages an employee, or who permits an employee to work. Employers do not include persons who receive in-home supportive services care, under state law.

The Ordinance notes that covered employers need not provide additional earned sick leave where they provide their employees with an amount of paid leave under either a paid time off or other paid leave policy that meets or exceeds the Ordinance’s minimum standards and requirements, including the protected conditions and reasons for using sick leave.

Which Employees Are Covered by the Ordinance?

The Ordinance broadly defines a covered employee as one who performs at least two hours of work within the City of San Diego in one or more calendar weeks of the year and who qualifies as an individual entitled to minimum wage under California minimum wage law.

The following individuals are not subject to earned sick leave or the minimum wage increase:

  • Individuals authorized to obtain less than the minimum wage under a special license pursuant to California Labor Code sections 1191 or 1191.5.
  • Persons employed on a publicly subsidized summer or short term youth employment program.
  • Any student employee, camp counselor, or program counselor of an organized camp.
  • Independent contractors.

Earned Sick Leave Overview

How Much Sick Time Can Employees Accrue, Use, and Carry Over?

Employees accrue one hour of paid, earned sick leave for every 30 hours worked, at the same hourly rate or other measure of compensation that the employee earns. Accrual for employees exempt from California’s overtime laws is based on a 40-hour workweek, unless the employee’s regular workweek is less than 40 hours, in which case accrual is based on the regular work week. Employees will begin accruing earned sick leave on the later of the Ordinance’s effective date or the employee’s commencement of employment, and employees can begin using their accrued time 90 days thereafter.

Employers may limit use of sick leave to 40 hours in a 12-month period and can set a reasonable minimum increment for using sick leave, not to exceed two hours. Importantly, and as noted above, while the Ordinance sets an annual usage cap, accrual itself cannot be capped. In other words, employees must be allowed to accrue as much earned sick leave as possible based on their hours worked. Making matters worse for employers, unused leave, in whatever amount, must be carried over at year-end. In essence, employees can carry over an unlimited amount of accrued, unused sick leave, but may be limited to using 40 hours per calendar year. This accrual provision of the Ordinance is much more expansive than California’s statewide paid sick leave law, which provides that employers may cap the amount of accrued leave at 48 hours or six days, whichever is greater.

This distinction is problematic because it increases the risk of employee confusion. California law requires employers to provide employees with notice of their available number of sick leave hours either on the employees’ pay stubs, or in separate writings issued the same day as the employees’ paychecks. An employee who has, for example, 140 hours of accrued leave may not understand why only 40 hours of leave is available to use within a 12-month period.

The Ordinance’s unlimited accrual and carryover caps also make it risky for employers who seek to front-load earned sick leave in the form of an annual lump grant. Unlike the California statewide sick leave law, the Ordinance is silent on whether front-loading removes an employer’s accrual and year-end carryover obligations. As a result—and barring any future guidance from the City—this alternative sick leave delivery method may be unavailable to San Diego employers.

Under What Circumstances May Employees Use Sick Leave?

Qualified employees may use their earned sick leave for any of the following reasons:

  • If an employee is physically or mentally incapable of performing duties because of an illness, injury or medical condition, or is absent for the purpose of obtaining professional diagnosis or treatment of a medical condition or for other medical reasons, such as pregnancy or obtaining a physical examination.
  • If an employee is absent from work due to a family member’s[5] need to obtain treatment or professional diagnosis of a medical condition, or to provide care or assistance to a family member with an injury, illness or medical condition.
  • If, under certain circumstances, the employee or the employee’s family members are absent because of domestic violence, sexual assault or stalking.
  • If, by order of a public official because of a public health emergency, there is a closure of the employee’s place of business or the employee’s child’s school or child care provider.

What Notice Must Employees Provide When Using Sick Leave?

If the use of earned sick leave is foreseeable (e.g., scheduled doctor’s appointments), then an employer may require employees to provide up to seven days’ notice. But if use of sick leave is not foreseeable (e.g., a sudden illness), then an employer may require only as much notice as is practicable.

What Documents Can Employers Ask Employees to Provide When Using Sick Leave?

If employees are going to be absent for more than three consecutive work days then an employer may require employees to provide reasonable documentation that the employee used earned sick leave for a permitted purpose. Employers must accept doctor’s notes or other documentation signed by licensed health care providers indicating the need for the amount of leave taken. An employer however, may not require that the note specify the nature of the injury, illness or medical condition.

Is an Employer Required to Pay Unused Time upon Employment Separation?

No. Employers are not required to pay an employee for unused accrued sick leave upon termination. However,when an employee is rehired within six months of separation, the employer must reinstate the employee’s previously accrued, unused sick leave that was not paid upon separation, and the employee is entitled to use said leave.

Minimum Wage Increase Overview

What is the New Minimum Wage and When does it Go Into Effect?

Employees must be paid a minimum wage of $10.50 an hour upon the Ordinance’s effective date, which, again, we anticipate will occur in July 2016. Starting January 1, 2017, the minimum wage will increase to $11.50 an hour. Starting January 1, 2019, the minimum wage will increase by an amount corresponding to the prior year’s increase, if any, in the cost of living, as defined by the Consumer Price Index. If however, California or federal laws provide a higher minimum wage rate, then the minimum wage under this Ordinance will be increased to match the higher California or federal wage, effective on the same date that the increased California or federal wage takes effect.

Employer Obligations under the Ordinance

Employer Notice Requirements

Employers must post notices published by the City in a conspicuous place in the workplace informing employees of the current minimum wage, their right to the minimum wage, and their right to earned sick leave. The notice must also include information about the accrual and use of sick leave, the right to be free from retaliation, and the right to file a complaint with the designated enforcement office. The posted notice must be in English, Spanish and any other language spoken by at least five percent of employees at the employer’s job site.

In addition, at the time of hire or on the Ordinance’s effective date, employers are required to provide employees with written notice of the employer’s requirements under the Ordinance, and the employers name, address, and telephone number. Electronic notice is permitted.

Records Maintenance Requirement

Employers must create written or electronic records documenting employees’ wages earned, and accrual and use of sick leave, and retain these records for at least three years.

Prohibitions

Employers are prohibited from (1) requiring employees seeking to use their sick leave to search for or find a replacement worker, (2) disclosing the medical condition of the employee or his or her family member unless ordered to do so by the employee or authorized by federal or state law, and (3) retaliating against an employee who exercises his or her rights under the Ordinance.

Remedies/Penalties

An employer that violates any requirement of the Ordinance is subject to a civil penalty for each violation of up to, but not to exceed, $1,000 per violation. An employer failing to comply with the notice and posting requirements is subject to a civil penalty of $100 for each employee who was not given appropriate notice, up to a maximum of $2,000. Additionally, employees may file a complaint with the designated enforcement office or in court. Notably, filing a complaint with the enforcement office is not a prerequisite to filing a claim in court.

What Should Employers do Now?

With the Ordinance’s effective date looming, San Diego employers should take steps now, including the following, to achieve compliance:

  • Review existing sick leave policies and either implement new policies or revise existing policies so that they satisfy the Ordinance.
  • Post the required notices in all applicable languages.
  • Prepare notices in all applicable languages to provide to employees at the time of hire or once the Ordinance is implemented.
  • Review policies on attendance, anti-retaliation, conduct, and discipline.
  • Train supervisory and managerial employees, as well as HR, on the new requirements.
  • Ensure that payroll records adequately reflect accrual and use of earned sick leave and the increase in minimum wage.

[1] On June 7, 2016, San Francisco voters approved an amendment to the San Francisco Paid Sick Leave Ordinance.  The amended San Francisco law becomes effective on January 1, 2017.

[2] As discussed here and here, the Los Angeles City Council in April 2016 voted for 48 hours of paid sick leave for Los Angeles employees as an amendment to an LA City minimum wage ordinance. The LA ordinance is effective July 1, 2016.  Further, certain hotel employers must comply with additional compensated time off obligations set forth in the Los Angeles Citywide Hotel Worker Minimum Wage Ordinance.

[3] The Santa Monica paid sick leave law is effective January 1, 2017.

[4] Long Beach Resolution No. RES-12-0049 establishes paid sick leave and minimum wage requirements for certain hotel employers.

[5] Family members include an employee’s child, spouse, parent, grandparent, grandchild, sibling (including step-siblings), whether biological or not, or the child or parent of a spouse.

Phishing: Data Breach Is “Chalkdust Torture”

Posted in 2016 Cal-Peculiarities, Case Update, Updates in the Complicated World of Employee Privacy

Seyfarth Synopsis: Hernandez v. Sprouts Farmers Market, Inc., a case stemming from a phishing scam, emphasizes the need for California employers to implement comprehensive data protection and data breach notification policies and practices for personal employee information under the CDPA.

A story of a company suffering a data breach tops newspaper headlines almost daily. So how can you stay out of the “fuego,” and stay compliant with California laws about your employees’ and customers’ data?

California’s Data Protection Act—“Army Of One”

In 2003 California passed the nation’s first data breach notification statute: the CDPA. Since then, over 30 states have enacted similar statutes, but California remains the national leader in privacy and data security standards.

The CDPA mandates that any business that “owns or licenses personal information about a California resident shall implement and maintain reasonable security procedures and practices appropriate to the nature of the information, to protect the personal information from unauthorized access, destruction, use, modification, or disclosure.” And it requires a company to notify affected individuals of a data breach “in the most expedient time possible and without unreasonable delay.”

The CDPA takes a very broad view of personal information, defining the term to include:

  • An individual’s signature,
  • A person’s physical characteristics or description,
  • Information collected through an automated license plate recognition system, and
  • An individual’s employment and employment history.

The CDPA also requires that if a company experiences a data breach and decides to offer “identity theft prevention and mitigation services” to affected persons, then it must provide these services to affected persons for at least 12 months and at no cost. Additionally, unlike many other state laws about data breaches, the CDPA requires a company affected by a data breach to submit a sample of the data breach notification letter to the California Attorney General.

“Vultures” Go Phishing At Sprouts

What’s Phishing? In a phishing scam, a fraudulent email message appears to be legitimate, and often directs one to a spoofed website in order to dupe the recipient into divulging private personal information. The perpetrators then use this information to commit identity theft.

In March 2016, a Sprouts employee received an email purportedly from a Sprouts senior executive, asking for the 2015 W-2 statements of all Sprouts employees (which contain social security numbers). In reality, the email was sent by a third-party and was a phishing scam.

When the Sprouts employee received the phishing email, the W-2 forms of thousands of current and former employees were compiled and sent to the third-party. Sprouts later realized the error and notified the affected individuals of the data breach.

Shortly afterwards, a former Sprouts employee filed a class action lawsuit against the company, alleging violations of the CDPA and the California Unfair Competition law. The suit alleges essentially that the employer should have had procedures and policies in place to protect employee information from a phishing attack because such attacks are commonplace in the information age. A First Amended Complaint was filed on May 25, 2016, and Sprouts has not yet filed its response.

Sprouts highlights that it is important for California employers to have a data protection and data breach notification plan. Such a plan is instrumental to head off attacks by hackers and bad actors seeking private employee data to commit identity theft.

“Anything But Me”—What’s An Employer To Do?

The California Attorney General has issued annual reports analyzing data breach notices and providing recommendations to companies and employers for implementing data breach plans, including recommending that companies and employers:

  • Implement the Center for Internet Security’s Critical Security Controls as the “minimum level of information security” if they handle personal data.
    • The Attorney General has stated that“[t]he failure to implement all the Controls that apply to an organization’s environment constitutes a lack of reasonable security.”
  • Implement “strong encryption” for personal information on laptops and other portable devices, and consider full encryption on desktop computers when not in use.
  • Encrypt digital personal information when moving or sending personal information out of their secure network.
  • Encourage individuals affected by a breach of Social Security numbers or driver’s license numbers to place a fraud alert on their credit files and make this option very prominent in their breach notices.
  • Make multi-factor authentication available on consumer-facing online accounts that contain sensitive personal information.
  • Provide training to employees and contractors on data security controls.
  • Improve the readability of breach notification letters.

Seyfarth has ample experience assisting companies and employers to develop these protocols. If you have any questions about implementing a CDPA compliant data protection and data breach notification plan for employee personal information, please reach out to a member of Seyfarth’s Global Privacy and Security (GPS) Team.

Edited by Coby M. Turner.

2016 Employment Bills Moving Through The CA Legislative Process

Posted in 2015 Legislative Updates

Seyfarth Synopsis: Pending new bills that have now passed their house of origin would (i) expand DLSE enforcement authority, (ii) impose advance scheduling requirements on restaurant, grocery, and retail employers, (iii) extend Fair Pay Act provisions to additional protected classes, (iv) require employers to disclose pay scales to applicants while prohibiting employers to ask about salary history, (v) forbid employers to obtain or consider certain criminal history in their employment decisions, (vi) require retail and grocery establishments to pay double wages on Thanksgiving, (vii) forbid employers to require extra documents to verify authorization to work and create a new right of action for victims of “unfair immigration-related practices,” and (viii) expand the scope of parental leave. We will continue to monitor these bills to see if they reach the Governor’s desk.

Gideon Tucker, a 19th century jurist, once famously observed: “No man’s life, liberty or property are safe while the Legislature is in session.” Can California employers be blamed for harboring similar sentiments now? Friday, June 3rd, marked the last day for bills to pass out of their house of origin in the California Legislature. Here is a summary of some key employment bills that made it through (followed by some significant bills that did not). Each will pose further challenges to California businesses if it becomes law.

DLSE Enforcement Actions. AB 2261 would grant the Department of Labor Standards Enforcement (DLSE) new independent authority to, without an employee complaint, bring an action against an employer who terminates or otherwise discriminates against an employee in violation of any law under the jurisdiction of the Labor Commissioner. AB 2261 builds upon AB 970, which the Governor signed into law last year, and which we wrote about here.

Work Hours. SB 878 is similar to AB 357, the Fair Scheduling Act of 2015, which did not make it out of the Assembly, and which sought to build upon the San Francisco Retail Workers’ Bill of Rights.  SB 878, dubbed the Reliable Scheduling Act of 2016, would require 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. While AB 357 would have required 14 days’ advance notice, SB 878 would require at least seven days advance notice. SB 878 would require 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. The bill would require employers to post a poster—to be created by the Labor Commissioner—publicizing this right to modification pay.

Pay Equity Expansion. SB 1063, which we discussed here, is dubbed the “Wage Equality Act of 2016.” The bill would build upon the gender-based amendments to Labor Code section 1197.5 made by last year’s highly publicized Fair Pay Act. The bill would extend Fair Pay Act provisions, virtually verbatim, to pay differentials relating to race and ethnicity. As such, SB 1063 would prohibit employers from paying employees a wage rate less than the rate paid to employees of a different race or ethnicity for “substantially similar work”— as determined by skills, effort, responsibility, and working conditions—unless the employer demonstrates the wage differential is based entirely upon one or more specifically enumerated factors.

Salary Information. AB 1676 is a redux of 2015’s AB 1017, which the Governor vetoed (and we discussed here). AB 1676, just like the vetoed bill, would prohibit employers—including state and local governments—to seek an applicant’s salary history information.The Governor’s veto message on AB 1017 stated that we should wait to see if the Fair Pay Act addresses the issue, and that he did not think AB 1017’s broad prohibition on employers obtaining relevant information would have any effect on pay equity. AB 1676 not only calls the Governor’s bluff in this game of legislative poker; AB 1676 would also raise the stakes by requiring employers—other than state and local governments—to, upon reasonable request, disclose to job applicants the pay scale for a position being filled. If AB 1676 makes its way to the Governor’s desk, then we will see if he has had a change of heart. Similar provisions appear in new and pending pay equity legislation in Maryland and Massachusetts.

Criminal Records. AB 1843 would prohibit an employer from asking an employment applicant to disclose, or from utilizing as a factor in determining any condition of employment, information concerning specific juvenile court actions or custodial detentions.  Read more about existing California law on background checks here.

Double Pay on Holiday – 2016 Edition. As we reported, the Double Pay on the Holiday Act of 2015 failed passage out of the Assembly. Its author, Assembly Member Gonzalez, ordered it to the inactive file. It now has lurched back into life.  AB 67 is moving again, with one limb removed. The Double Pay on the Holiday Act of 2016 eliminates the prior version’s proposed application to Christmas and now would apply only to Thanksgiving. AB 67 would require 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 a “family holiday,” defined as the fourth Thursday of November of each year. Most of us know that day as Thanksgiving.

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 relating to verification that an individual is not an unauthorized alien, or to refuse to honor documents tendered that on their face reasonably appear to be genuine, or to attempt to reinvestigate or re-verify an incumbent employee’s authorization to work unless required to do so by federal law. New in this year’s bill would be a private right of action for job applicants and employees who suffer an “unfair immigration-related practice.”

Parental Leave. SB 1166 would prohibit state and local governments and small private employers (those with as few as ten employees) from refusing to allow employees to take up to 12 weeks of parental leave to bond with a new child within one year of the child’s birth, adoption, or foster care placement. This bill would also prohibit employers from refusing to maintain and pay for coverage under a group health plan for employees who take this leave. This bill comes on the heels of AB 908, signed by the Governor earlier this year, which increases the amount of benefits paid to employees on paid family leave and state disability leave. Read our report on AB 908 here.

Significant Bills Stuck in The House of Origin

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 is 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.

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 is authorized to bring and would have required specific procedures before bringing an action.
  • AB 2462 would have provided employers with a right to cure before an employee brings 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 finds 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 is a reasonable basis for a civil action.

Workplace Solutions.

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

L.A. Gets Sick—Paid Sick Leave Coming as Soon as July 1, 2016

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

Seyfarth Synopsis: The Los Angeles City Council has voted and the Mayor has signed the ordinance.  As of July 1, 2016, many employees within the City of Los Angeles will be entitled to accrue 48 hours of paid sick leave per year. The ordinance has a number of unusual and specific provisions that employers need to be aware of, described in detail below.  Link to the Ordinance here.

Not content with California paid sick leave law (discussed here, here and here), several California municipalities have piled on. Their local ordinances require employers with employees working within their geographical boundaries to provide paid sick leave over and above what California law requires (California Labor Code Sections 245-249). The City of Angels is now poised to put a peculiar L.A. spin on paid sick time. The state paid sick leave law does not supersede local ordinances, and employers must comply with both the state and the local laws, whichever is more favorable to employees.

By a 13-1 vote on April 19, 2016, the Los Angeles City Council voted in favor of 48 hours of paid sick leave for Los Angeles employees as an amendment to a L.A. City minimum wage ordinance. That amount is double the annual amount of paid sick leave available under California’s state-wide sick pay law (24 hours/3 days). Following the initial vote, the City Council asked the City Attorney to draft the ordinance. Two versions of the ordinance were drafted and after confusing repeated voting on June 1, 2016, we are informed that one version has passed. The paid sick leave provisions are found in Article 7 of Chapter XVIII of the Los Angeles Municipal Code, Section 187.04 (A)-(I)). We are informed that one version has passed.

Coverage. Unlike state law, which contains exceptions for construction workers, certain home health workers, flight crews, and workers covered by union agreements (if certain conditions are met), the L.A. ordinance has no exceptions. The minimum wage provisions of the ordinance distinguish between larger employers (26 or more employees) and smaller employers (25 or fewer employees) for implementation timing—smaller employers have until July 1, 2017. It is uncertain from the text whether a similar grace period before implementation of paid sick leave for exists for smaller employers; at least one City Council member’s office confirmed the grace period for small employers applies to sick leave. Employees who work 30 days in Los Angeles within a year “from the commencement of employment” are covered (similar to the California state paid sick leave law).

  • Employee” is defined to include all individuals who perform two or more hours per week within the geographic boundaries of the City.
  • Employer” is defined as including “a corporate officer or executive, who directly or indirectly or through an agent or any other person, including through the services of a temporary service or staffing agency or similar entity, employs or exercises control over the wages, hours or working conditions of any Employee.” Thus, the ordinance appears to hold corporate officers and executives individually accountable.

Accrual and Use. Current employees must begin accruing or receive a grant of sick leave on July 1, 2016. Employees hired after July 1, 2016, will begin to accrue or will be granted paid sick leave on their date of hire. Employees may use paid sick leave beginning on the 90th day of employment or July 1, 2016, whichever is later. L.A. employees will be entitled to use up to 48 hours of sick leave in “each year of employment, calendar year or 12-month period.” Accrued unused paid sick leave shall carry over to the following year of employment, but may be capped at 72 hours. Employers may set a higher cap or no cap at all (having no cap is not recommended).

Employers have a choice of either (1) providing the entire 48 hours to an employee at the beginning of each year of employment, calendar year, or 12-month period (“lump grant”) or (2) having sick leave accrue at the rate of one hour of sick leave per every thirty 30 hours worked (“accrual”). While both the “lump grant” method and the same accrual rate are allowed by the state law (the state law has additional accrual options not allowed by the L.A. ordinance), state law provides that if an employer uses the “lump grant” design, then unused sick leave does not carry over and unused balance is simply replaced by the new lump grant. L.A. is different. Under the L.A. ordinance, up to 72 hours must carry over year to year. So, while an L.A. employee can use only 48 hours of sick pay in a year, the employee can carry over 72 hours of paid sick leave (or more, if the employer allows it).

L.A. employers need not pay out unused L.A. sick days upon termination. If an employee separates and is rehired within one year, then previously accrued and unused paid sick time must be reinstated. Unlike state law, the L.A. ordinance has no exception to reinstatement of sick time if paid sick leave was paid out on termination (as undifferentiated paid time off or “PTO” must be paid out).

Family Members and Equivalents. Sick leave under the L.A. ordinance can be used on the employee’s written or verbal request for all of the reasons stated in the California state paid sick leave law:

  • the employee’s own health care needs (including treatment of an existing health condition and preventative care) or
  • a covered family member’s health care needs (includes treatment and preventative care), or
  • to seek aid, treatment, or related assistance for domestic violence, sexual assault, or stalking.

The universe of family members is broader under the L.A. ordinance, however. Family includes not only children (biological, adopted, step, loco parentis), siblings, spouses, registered domestic partners, parents (including parents of the spouse or domestic partner), grandparents, or grandchildren, but also “any individual related by blood or affinity whose close association with the employee is the equivalent of a family relationship.” No clarification is provided about what it takes to be equivalent to family or how an employer can verify family equivalency.

Documentation.  The version of the L.A. ordinance which passed states, “An Employer may require an Employee to provide reasonable documentation of an absence from work for which paid sick leave is or will be used.” The other version omits any reference to the employers’ ability to obtain documentation (like the California state law).

Other L.A. Peculiarities. The L.A. ordinance has a number of specific additional provisions, such as:

  • It contains an urgency provision that would make the ordinance effective immediately; but provisions in the ordinance start accrual and use of sick leave no earlier than July 1, 2016.
  • It also contains a provision that if an employer “has a paid leave or paid time off policy or provides payment for compensated time off, that is equal to or no less than 48 hours, no additional time is required.”
  • It does not address advance notice for using sick time.
  • It has an anti-retaliation provision that appears to apply to employees who mistakenly but in good faith allege noncompliance and to create a rebuttable presumption of retaliation when adverse action is taken against an employee within 90 days of protected activity. A separate article provides for agency enforcement by fines and having to post “a notice of correction,” as well as traditional remedies in civil courts such as restitution, injunctions, reinstatement and back pay.
  • It designates an administrative agency, the Office of Wage Standards of the Bureau of Contract Administration, as bearing administrative/enforcement responsibilities and states that this agency “may promulgate guidelines and rules for the implementation” of the ordinance. Worthy of note: this agency may “allow an Employer’s established paid leave or paid time off policy or one which provides payment for compensated time off to remain in place and comply with this article even though it does not meet all the requirements in Section 187.04, if [the agency] determines that the Employer’s established policy is overall more generous.”

Most existing paid sick leave policies will need significant changes to make them compliant with this new L.A. ordinance. Possibly, more interpretive guidance and rules will be forthcoming from a designated administrative agency.

Questions?  Don’t hesitate to reach out to your Seyfarth attorneys if you need assistance bringing your company into compliance with this new ordinance.  July 1st is not far away!

Edited by Coby M. Turner.

Think You Are Exempt? New FLSA Salary Thresholds Affect California Employers, Too.

Posted in 2016 Cal-Peculiarities, Wage Order Series

Seyfarth Synopsis:  Changes to the FLSA regulations increasing the minimum weekly salary for exempt employees will impact California employees who currently are being paid less than $47,476 per year. Wise employers will start planning now to make the adjustments required to ensure compliance with both state and federal exemption laws. 

If you have white-collar exempt employees in California, you know that to qualify as an exempt executive, administrative or professional employee, an employee must (among other things) be paid by a salary that is at least twice the state minimum wage. With the California minimum wage currently set at $10 per hour (at least until next January, when it will increase to $10.50/hour), a little math tells us that the California salary threshold for white-collar exempt employees is $41,600/year [40 hours per week x $10.00 = $400/week x 52 weeks = $20,800; times 2 = $41,600].

If you have been catching the national news on the Department of Labor’s recent amendments to the FLSA regulations, you know that the federal salary threshold for white-collar exemptions is going up dramatically—to $913 per week, or $47,476/year.

The federal changes will go into effect on December 1, 2016. There are a number of options for responding to the new regulations, ranging from simply raising salaries to the federally-required level to re-classifying positions to non-exempt. You can access tons of relevant, helpful and interesting information here at Seyfarth’s FLSA Exemption Resource Center.

Until now, we in the Golden State did not often worry about the federal salary minimum for exemptions, because it was so much lower than what was required here. Now, however, we must take note—and make adjustments—for any employees who are currently classified as exempt and who are not being paid at least the equivalent of $47,476 per year.

What types of employees are we talking about? Employees who are likely to fall into this category in California include the ranks of a company’s exempt staff currently being compensated at or close to the current state minimum allowable salary; in other words, those being paid at or above $41,600, but less than $47,476. Examples might include some managers, executive assistants, human resources professionals, business development or marketing professionals, teachers, accountants, engineers, and creative professionals.

Even though the FLSA amendments will not go into effect until December 1, one question has already surfaced as a Cal-Peculiarity:  what to do with part-time exempt employees? It was, and remains, permissible (if perhaps uncommon) to have exempt employees who work part-time schedules, as long as they are paid at least the salary minimum (federal and CA) for each week of work, as the federal regulations do not allow pro-ration of weekly salary. As of December 1, 2016, any part-time exempt employees will have to be paid at least $913 per week.

If paying the higher weekly amount to part-time exempt folks is not a good option for the employer, a solution (in theory) under federal law would be to convert the employee to salaried non-exempt, and pay the employee for any overtime incurred according to the fluctuating workweek method (a method of calculating the regular rate of pay that varies according to the number of hours worked in a particular week). Not so fast. This method is not permitted in California, and converting California part-time exempt to salaried non-exempt employees could have expensive, unintended consequences if overtime were incurred. So, that solution may not be your best bet under California law.

Employers in California, as elsewhere, still have time to consider their workforces and make and implement plans for any necessary adjustments to their current exempt positions. But, we recommend that you begin your review and planning now.

It’s Not Just the Bathrooms: Look Out for Amended FEHC Regulations re Transgender Employees

Posted in 2016 Cal-Peculiarities

Seyfarth Synopsis:  The California Fair Employment and Housing Council (“FEHC”) is currently drafting new regulations that define employment practices that constitute discrimination against transgender applicants and employees. On April 7, 2016, the FEHC met in Oakland to discuss and hear public comment on its new, draft proposed regulations, which are in their early stages of development. The next hearing will be on June 27, in Los Angeles.

The DFEH already publishes a guidance document, “Transgender Rights in the Workplace,” defining certain terms and answering employers’ Frequently Asked Questions about transgender employees in the workplace. (See February 24, 2016 Client Alert, “DFEH Issues Guidelines Regarding Transgender Employees”). And the new FEHA regulations that went into effect on April 1, 2016, added protections for transgender employees and applicants. Now, in a further step toward providing direction to employers and to increase protections for transgender workers, the FEHC proposes to amend the FEHA regulations again with proposed Regulations Regarding Transgender Identity and Expression. These will affirmatively require employers to make workplaces non-discriminatory by:

–     Providing “comparable, safe, and adequate” facilities (such as restrooms and locker rooms) to employees without regard to the sex of the employees;

–     Permitting employees to use the facilities that correspond to the employee’s gender identity or gender expression;

–     Using gender-neutral signage on single occupancy facilities under their control; and

–     Addressing and referring to an employee with their preferred name, gender, and pronoun.

Likewise, the proposed regs would expand discrimination against transgender workers beyond overt discrimination, such as failing to hire or terminating a transgender employee. Employers would also be in violation of the FEHA’s prohibition of discrimination against transgender workers by:

–     Requiring an employee to use a particular facility, or undergo or provide proof of any particular medical treatment to use facilities designated for use by a particular gender;

–     Requiring an employee to dress or groom themselves in a manner inconsistent with their gender identity or gender expression;

–     Requiring an applicant or employee to state whether they are transgender;

–     Considering an applicant to have been untruthful by identifying themselves on an employment application in a manner inconsistent with their assigned sex at birth;

–     Enquiring as to or requiring proof of an individual’s sex, gender, gender identity, or gender expression as a condition of employment, unless the employer demonstrates a bona fide occupational qualification or the employee initiates communication with the employer regarding adjustments to their working conditions; and

–     Discriminating against an employee for undergoing a social transition (changing their gender presentation) or a physical transition (receiving medical treatment including hormone therapy or gender reassignment surgeries).

The regulations also propose to revise current regulations regarding Bona Fide Occupational Qualifications, workplace safety, fringe benefits, and working conditions, by replacing binary gender language (i.e., “male” and “female”) with gender neutral language to indicate that the same regulations apply to transgender and gender non-conforming employees and applicants.

These new regulations are scheduled for their next round of public hearing and comment on June 27, 2016. We will provide an update on the latest developments. In the meantime, employers should familiarize themselves and their supervisors with the current guidance and proposed regulations to answer questions they may have about transgender applicants and employees and to understand the emerging standards to avoid liability for discrimination. Attorneys in Seyfarth’s California Workplace Solutions Group are available to help.

Edited by Michael Wahlander.

FEHC Proposed Criminal History Regulations Put Employers in Hot Seat

Posted in 2016 Cal-Peculiarities

iStock_000076923915_LargeSeyfarth Synopsis:  The Fair Employment and Housing Council is vetting proposed regulations to prevent employers from discriminating against applicants or employees with criminal histories. Our colleague Kate Svinarich attended a recent public hearing and filed this report. And stay tuned for a later dispatch, featuring proposed regulations on Transgender Identity and Expression, which the FEHC considered at the same meeting.  

The California FEHC appears to want to make it easier for applicants and employees with criminal histories to sue for violations of the Fair Employment and Housing Act. On April 7, 2016, the FEHC met in Oakland to hear significant public comment from advocacy groups and the formerly incarcerated about Proposed Regulations Concerning the Use of Criminal History in Employment Decisions.

The proposed regs largely incorporate federal case law and EEOC guidance holding that the use of criminal history in employment decisions (including hiring) can constitute “disparate impact” discrimination against protected groups. Promulgating the proposed regs would be consistent with the Department of Fair Employment and Housing’s increased enforcement efforts to deter discrimination based on criminal records checks (see our previous blog on the subject of “Handling Applicant Criminal Records to Avoid Disability Discrimination Claims”).

The stated objective of the proposed regs is to describe how use of criminal history in employment decisions may violate the FEHA if it has an adverse impact on applicants or employees based on a FEHA-protected category (race, religious creed, color, national origin, ancestry, physical disability, mental disability, medical condition, genetic information, marital status, sex, gender, gender identity, gender expression, age, sexual orientation, and military or veteran status).

Two important clarifications. The proposed criminal history regs make two important clarifications to existing California law:    

          Adverse impact. The proposed regs say that, under the FEHA, “adverse impact” is synonymous with “disparate impact” as defined by the federal EEOC: even though a policy or practice is neutral on its face, it can still have discriminatory impact if it adversely affects the employment opportunities of a protected class. Historically, categorical use of rules regarding criminal history (e.g., we will not hire anyone who has ever been convicted of any crime) may result in adverse impact based on, for example, race, color, or national origin.

          Business necessity. The proposed changes also clarify that business necessity, as well as job-relatedness, is necessary to justify a policy or practice that has an adverse impact on a protected class. Although this is no change from existing law, the proposed regulations spell out that employers, to avoid liability, must consider each applicant or employee with a criminal history individually, as well as the nature and gravity of the offense, the time that has passed since the offense, when the individual completed their sentence, and the nature of the job held or sought.

Additional Obstacles to Avoiding Liability. The proposed regs would place a few more potential stumbling blocks in the path of employers than already exist by virtue of the current federal and state guidelines:

          Plaintiffs could establish a prima facie case of discrimination relying on statewide evidence correlating protected characteristics, criminal history, and failure to hire. A representative for the California Employment Lawyers Association (a group of plaintiffs’ lawyers) advocated for—and the FEHC was inclined to include in the regs—provisions that would allow a plaintiff to meet the initial burden of proving discrimination based on statewide statistics, rather than on local, regional, or industry-specific statistics. Given the stark statistics correlating protected characteristics, criminal history, and employment, the plaintiff’s burden would likely be easily met.

          Employers may be required to inform an applicant of the reason for an adverse decision by written correspondence and provide an opportunity to respond. As advocated by the National Employment Law Project, the FEHC was inclined to strengthen portions of the proposed regulations requiring employers to make individual evaluations of candidates with criminal histories by notifying individuals of the conviction that disqualified them from a position of employment, and by providing them with a reasonable opportunity for that person to respond with evidence of a factually incorrect record, with evidence of significant rehabilitation, or with evidence of other indicators that recidivism is unlikely. If the employee were to establish that the record was factually incorrect, then that record could not be used in the employment decision.

          Employers with a “bright line” policy that disqualifies candidates with a criminal history or certain type of conviction would be presumed to have violated the FEHA. The proposed regulations also would likely hamper an employer’s ability to rely on any “bright line” rule about the qualifications of candidates and employees with criminal histories. Such a “bright line” rule presumptively would not be considered “job related” or “consistent with business necessity,” and would therefore be considered unlawful. To avoid liability, the employer would then need to prove that its policy can properly distinguish candidates who “do and do not pose an unacceptable level of risk” and that the convictions “have a direct and specific negative bearing” on the applicant’s ability to perform the position’s job duties.

These new regulations are not yet in effect. It seems likely that the FEHC will adopt its final regulations regarding criminal history at its next meeting, on June 27, 2016. In light of these new proposals and the DFEH’s more proactive enforcement efforts, employers should reevaluate any practice that uses criminal history as a disqualification from employment.

Things Are About to Get Cal-Peculiar! The 2016 Edition of Cal-Peculiarities is Here

Posted in 2016 Cal-Peculiarities

#16-3380 2016 Cal Pecs Cover ImageSeyfarth synopsis:  It’s here: the 2016 edition of the popular and informative Cal-Peculiarities: How California Employment Law is Different. Order it here. Also, we report the results of our recent reader survey. Wage-hour Issues and Employment Termination were top of mind. Read on for more results.

FLEX YOUR PECS!  

We are thrilled to announce that the 2016 edition of Cal-Peculiarities: How California Employment Law is Different is available NOW! This edition, like its predecessors, aims to help California employers understand what’s different about California employment law. We continue to highlight recent court decisions and legislative developments for private employers who do business in California. The book is available in a convenient, searchable eBook format. Click here to order your copy today!

READER SURVEY RESULTS

Back in January, we surveyed you, dear readers, to capture your preferences in blog topics. The results are in! In addition to your continued desire to be equipped with the Cal-peculiar basics,  you also find it important to be on the cutting edge of everything peculiar!

90% of respondents want to read more about CA Wage-Hour Issues and Terminations of Employment.  We hear you (and are not surprised!) given the amount of litigation these areas generate.

In second place, tied at 80%, were CA Handbooks and CA Leaves (including Paid Sick Leave). Certainly, there will be more to come on these topics.

Also popular (tied at 70%), were Case Updates and New Legal Developments.

Next, at 65% of the vote, came Overtime Exemptions and Recordkeeping & Retention, followed closely by Workplace Investigations. 

No other topic garnered more than 50% of the vote. Of least interest to respondents was Arbitration, which rated a paltry 35%. Perhaps we are all a little burned out on the seemingly endless changes in judicial perspective surrounding mandatory arbitration in the employment setting.

We also received a few write in topics. Be on the lookout for future posts on drug & alcohol/medical marijuana (see also our previous blog on marijuana in the workplace and our Seyfarth blog THE BLUNT TRUTH, which chronicles the evolution and implementation of marijuana laws in the U.S.), workers’ comp/stress claims, and any California angle on use of genetic information.

Thank you for responding and thank you for your continued interest in the blog. We always love to hear from you!

UPDATE: Santa Monica Amends Minimum Wage Ordinance, Delays Sick Pay Implementation.

Posted in 2016 Cal-Peculiarities, Sick Leave Series, Work Time Series

Seyfarth Synopsis:  Santa Monica has amended its Minimum Wage Ordinance to postpone implementation of its paid sick leave entitlements, now starting January 1, 2017 instead of July 1, 2016, and create a two phase implementation process for both small and large employers.

Like many a trip to the beach, the journey of the paid sick leave portion of Santa Monica’s Minimum Wage Ordinance[1] has hit some last-minute snags. On Tuesday, April 26, the City Council accepted a package of amendment proposals. Within those proposals, instead of rushing to a July 1, 2016 implementation date of the previously adopted San Francisco-like 72-hour sick leave cap, the Council has decided that everyone should just chill out. The amended Ordinance will allow implementation to roll in like the tide, with the first wave of changes delayed to January 1, 2017, and a second wave coming in on January 1, 2018.

Under the first wave, small businesses (employers with 25 or fewer employees) must allow a rolling cap of 32 hours of paid sick time for employees, with larger businesses capped at 40 hours. The second wave will increase these caps to 40 hours for small businesses and 72 hours for larger businesses. Until January 1, 2017, Santa Monica employers can relax and continue to follow California law.

The accrual rate remains the same as required under California law (one hour for every 30 hours worked), but these accrual caps act as “point in time” caps, similar to the San Francisco ordinance. That is, Santa Monica employers would no longer be able to limit employee annual use to 24 hours after Jan 1, 2017. Instead, they will have to allow the use of whatever an employee has in his or her bank at any given time. The Ordinance also does not eliminate an employer’s obligations to follow the California statute where the California statute is more generous. So, at least until January 1, 2018 (when the accrual cap will increase to 72 hours for large employers), Santa Monica employers who provide sick time by the accrual method should still follow the 48-hour minimum accrual caps under state law. The updated proposal does imply that some kind of frontloading would be acceptable, but it’s not apparent yet how that would work. We hope that once the Ordinance itself is published, this issue will be made clear.

The Council has also reduced the period of time in which retaliation against an employee for exercising rights under the Ordinance will be presumed. The time, once 180 days, will now be 90 days (that that’s still three times longer than under the California law). So employers should be very cautious in taking actions against employees who take sick days, no matter how totally bodacious the surf report was for that day.

Please see here and here for more information.  We expect the amended Ordinance to be available at any moment.  In the meantime, please see your most tubular Seyfarth attorney for more information.

[1] The Ordinance is entitled “An Ordinance of the City Council of the City of Santa Monica Adding Chapter 4.62 to the Santa Monica Municipal Code Requiring a Minimum Wage for Employees, and Adding Chapter 4.63 to the Santa Monica Municipal Code Requiring a Living Wage to Hotel Workers.”