California Peculiarities Employment Law Blog

Show Me the Money! California’s Underfunded Courts

Posted in 2016 Cal-Peculiarities

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

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

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

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

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Recession have found themselves scrambling to pay for construction after court revenues declined and state funding was withdrawn.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

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

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

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

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

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

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

Edited by Coby M. Turner.

San Diego Implementing Ordinance Ameliorates Its Paid Sick Leave Law

Posted in 2016 Cal-Peculiarities, Sick Leave Series

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

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

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

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

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

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

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

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

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

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

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

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

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

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

[1] Here are the six:

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

Edited by Colleen Regan and David Kadue.

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

Posted in Workplace Investigation

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

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

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

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

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

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

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

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

A thorough pre-employment background check should include:

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

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

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

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

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

  1. Investigate … With Care and Document Results. 

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

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

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

  1. To Terminate or Not To Terminate?

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

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

Edited by Coby M. Turner.

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

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

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

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

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

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

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

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

So, what can employers do?

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

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

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

Implement Computer Use and Social Media Agreements and Policies

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

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

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

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

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

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

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

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

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

Edited by Michael A. Wahlander.

End of The Employment Road? Tips To Avoid a Collision

Posted in 2016 Cal-Peculiarities

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

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

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

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

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

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

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

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

Ruff CA Leave Laws: Pet Care and Other Peculiarities

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

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

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

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

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

Court Enjoins Enforcement of “Safe Harbor” Deadline for Piece Rate Law

Posted in 2015 Legislative Updates, 2016 Cal-Peculiarities, Case Update, Wage Order Series

Seyfarth Synopsis: A court has temporarily suspended the deadline for employers to elect the statutory “safe harbor” for purposes of complying with recent legislation that makes it even more difficult for employers that pay with a piece rate rather than an hourly rate for any portion of an employee’s work.  

As we previously reported, the California Legislature’s enactment of AB 1513 (commonly known as the “piece rate pay law”), which became effective on January 1, 2016, has created significant challenges for California employers that pay employees on a piece-rate basis for any part of their work. This new law requires employers to pay piece-rate employees separately for rest and recovery periods and for “other non-productive time,” based on a specific formula, and requires detailed disclosures in wage statements.

AB 1513’s “Safe Harbor” for Past Violations

AB 1513 creates an affirmative defense to wage claims for employers that follow the law’s very specific “safe harbor” provisions. To come within the safe harbor, employers must (1) provide written notice of their intent to utilize the safe harbor procedures by no later than July 1, 2016, and (2) pay employees for all previously uncompensated rest and recovery periods and other non-productive time, plus interest, for the period from July 1, 2012, through December 31, 2015, by December 15, 2016.

Challenge to the Piece Rate Pay Law

An agricultural employer group, Nisei Farmers League, filed a lawsuit challenging AB 1513 on constitutional grounds. The lawsuit argues that AB 1513 is unconstitutionally vague, fails to provide employers with fair notice of its requirements, and is impermissibly retroactive. The League sought to enjoin enforcement of certain provisions of AB 1513, including the safe harbor, pending a trial of their claims.

On June 30, 2016, one day before the deadline to elect the safe harbor, the court entered an Order to Show Cause re Preliminary Injunction and Temporary Restraining Order. This Order restrains the Department of Industrial Relations from enforcing the deadline until at least July 18, 2016, the date of the hearing on the Order to Show Cause. If the court enters a preliminary injunction at the hearing, the DIR will be enjoined from enforcing the deadline until thirty days after the preliminary injunction expires, and from enforcing the payment requirement until 197 days after the preliminary injunction expires. If the court does not enter a preliminary injunction, then the deadline will become effective ten days later (on July 28, 2016).

What Does This Mean for Piece Rate Employers?

The Order provides piece-rate employers with some additional time (at least until July 28, 2016, and longer if the court enters a preliminary injunction) to decide whether to invoke the safe harbor if they have not already done so. Employers that already made this election may have additional time to comply with the back-pay requirements if the court enters a preliminary injunction on July 18. In either case, the many California employers struggling to comply with the unclear and burdensome requirements of AB 1513 should watch this legal challenge closely.

Game of Groans? Third Parties Attending Interactions with Employees

Posted in 2016 Cal-Peculiarities

Seyfarth Synopsis: While employers usually deal with employees directly, sometimes an employer must engage with an employee’s representative. These circumstances vary, as do the potential consequences to the employer.

Employers typically expect to deal directly with their employees. But employers should think before using Hodor’s approach of “Hold the door!” to exclude any employee representative. The employer who emulates Hodor in this regard may find itself in an analogous situation: holding off costly litigation coming with all the ferocity of a horde of White Walkers.

Dealing with Employee Representatives Under the FEHA

The FEHA contemplates direct communications between employer and employee; the interactive process aims to help the parties work together to identify reasonable accommodations. The presence of a third party—whether it be the employee’s physician, attorney, or other representative—may help or hinder this process. Employers need to be careful whom they should admit into the conversation and how the conversation should proceed.

For example, because employers aren’t clairvoyant like Bran, and because employees are sometimes less than forthcoming regarding what actually might assist in removing workplace barriers, employers may find it helpful to work directly with a medical provider to determine reasonable accommodations. Employers must obtain express authorization from the employee before doing so, however, and should be careful about what information they request, as they may receive more than they bargained for in terms of diagnostic and genetic information.

As for dealing with an employee’s attorney in the interactive process, employers often can bar an attorney’s entrance into its fortress and insist on dealing directly with employee. But in “unusual circumstances” that insistence could be unreasonable. One case indicates that it might be unreasonable to deny an employee’s request to communicate through counsel where the employer had previously terminated the employee.

Dealing with Employee Representatives Under the Labor Code and the NLRA

Much like the gatekeepers of Castle Black, attorneys serve as gatekeepers in discussions between employers and employees. Labor Code section 923 recognizes  employees’ rights regarding “designation of representatives … to negotiate the terms and conditions of [their] employment.” Although Section 923 focuses on the concerted acts of employees to engage in collective action (like an uprising of the Unsullied), California courts have extended Section 923 rights to employees who are acting individually. These courts seem sympathetic to the view that the party in power (think the King or Queen on the Iron Throne) should give more dignity to the little guy, and have interpreted Section 923 to allow the individual employee to designate an attorney to negotiate terms and conditions of her employment.

California courts have found that “terms and conditions of employment” can cover discussion of wages and accommodations relating to a pregnancy. Courts have also found, however, that employees are not entitled to deal through their attorneys when it comes to discussions about an employee’s job performance. The wall of distinction here is not so high, though. The NLRA Weingarten right empowers an employee to have a union representative present at an investigatory interview where the employee reasonably apprehends discipline (think of Cersei’s concern as she contemplated a trial before the High Sparrow). California courts waiver here in their “loyalties”—some pay homage to the view that NLRA fully preempts Section 923, while others have concluded that preemption is unfitting. Complicating matters even further, public employers (and private employers whose conduct may be rendered governmental conduct) must heed an employee’s constitutional right to the presence of an attorney in a custodial interrogation. These contrary outcomes result in employers finding themselves in a dilemma, the likes of which Tyrion Lannister would love.

Gatekeeping Dilemma—What’s an Employer To Do?

So what is the confused employer to do? Much as the Mother of Dragons takes each conquest in step-by-step fashion to achieve her ultimate goal, so must an employer. Employers should carefully assess which law applies, and whether the situation permits or would be furthered by the designation of an employee representative. While neither the FEHA nor Section 923 necessarily obligates an employer to negotiate with a designated attorney or other third party, it may behoove the employer to engage in that process.

But employers should heed the lessons learned by the Westeros elite and remain mindful of the information exchanged with and obtained from an employee’s representative, as such discussions hinge on private information and the desires of the employee, not the representative. As usual, in California, an employer must proceed cautiously as an artfully pleaded complaint may give rise to liability under multiple statutes requiring differing actions.

Please let your favorite Seyfarth attorney know if you have any questions.

Edited by Chelsea D. Mesa.

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.