Seyfarth Synopsis: California Legislators sent Governor Jerry Brown 1,217 bills to consider in his final bill-signing period as Governor—more than any California governor has seen since 2004. The final tally: 1016 signed, 201 vetoed. Below is our full, final roundup of new laws that employers must comply with, bills that fell to the Governor’s veto pen, and bills that never made it to the Governor’s desk. Even though the Governor’s veto saved California employers from some truly awful legislation (such as AB 3080’s attempted ban on employment arbitration agreements), 2019 may well bring a new Legislature just as hostile to business, and a new Governor not known for the practical caution that sometimes has characterized Governor Brown. We expect that the vetoed bills will re-emerge, and may receive a more favorable gubernatorial consideration.

Sign up for our webinar on October 10, 2018 for a discussion of these results and implications for employers.

APPROVED

Sexual Harassment Bills

Human Trafficking Awareness. SB 970 requires hotel and motel employers (excluding bed and breakfast inns), to provide—by January 1, 2020, and once every two years thereafter—at least 20 minutes of interactive human trafficking awareness training to employees likely to interact with human trafficking victims. The Department of Fair Employment and Housing can seek an order requiring an employer comply with these requirements. Adds section 12950.3 to the Government Code.

Sexual Harassment Omnibus Bill. SB 1300 adds a section to the Government Code that declares the purpose of harassment laws is to provide all Californians with equal opportunity to succeed in the workplace. To that end, the bill expressly affirms or rejects specified judicial decisions in:

  • Harris v. Forklift Systems: approving the standard in Justice Ruth Bader Ginsburg’s concurrence that in a workplace harassment suit “the plaintiff need not prove that his or her tangible productivity has declined as a result of the harassment. It suffices to prove that a reasonable person subjected to the discriminatory conduct would find, as the plaintiff did, that the harassment so altered working conditions as to make it more difficult to do the job.”
  • Brooks v. City of San Mateo: prohibiting reliance on Judge Alex Kozinksi’s Ninth Circuit opinion to determine what conduct is sufficiently severe or pervasive to constitute actionable harassment under FEHA.
  • Reid v. Google, Inc.: affirming the California Supreme Court’s rejection of the “stray remarks doctrine,” because the “existence of a hostile work environment depends on the totality of the circumstances and a discriminatory remark, even if made not directly in the context of an employment decision or uttered by a nondecisionmaker, may be relevant, circumstantial evidence of discrimination.”
  • Kelley v. Conco Companies: disapproving use of this case to support different standards for hostile work environment harassment depending on the type of workplace.
  • Nazir v. United Airlines, Inc: affirming this case’s observation that “hostile working environment cases involve issues ‘not determinable on paper.’ ”

SB 1300 also:

  • Expands an employer’s potential FEHA liability for acts of nonemployees to all forms of unlawful harassment (removing the “sexual” limitation).
  • Prohibits employers from requiring an employee to sign (as a condition of employment, raise, or bonus): (1) a release of FEHA claims or rights or (2) a document prohibiting disclosure of information about unlawful acts in the workplace, including nondisparagement agreements. This provision does not apply to negotiated settlement agreements to resolve FEHA claims filed in court, before administrative agencies, alternative dispute resolution, or though the employer’s internal complaint process.
  • Prohibits a prevailing defendant from being awarded attorney’s fees and costs unless the court finds the action was frivolous, unreasonable, or groundless when brought or that the plaintiff continued to litigate after it clearly became so.
  • Authorizes (but does not require) employers to provide bystander intervention training to its employees.

SB 1300 would have—contingent upon SB 1038 also passing—subjected employees alleged to have engaged in harassment to personal liability for retaliation, discrimination, and other adverse employment actions taken against any person who has opposed practices forbidden by FEHA or participated in a FEHA action. As SB 1038, discussed below, failed to make it out of the Legislature, this proposed amendment in SB 1300 does not become operative.

SB 1300 amends Government Code sections 12940, 12965 and adds Government Code sections 12923, 12950.2, 12964.5.

Sex Harassment Settlement Agreement Confidentiality Restrictions. For settlement agreements entered into on or after January 1, 2019, SB 820 will prohibit and make void any provision that prevents the disclosure of information related to civil or administrative complaints of sexual assault, sexual harassment, and workplace harassment or discrimination based on sex. SB 820 expressly authorizes provisions that (1) preclude the disclosure of the amount paid in settlement and (2) protect the claimant’s identity and any fact that could reveal the identity, so long as the claimant has requested anonymity and the opposing party is not a government agency or public official. SB 820 suggests that a violation of its provisions would give rise to a cause of action for civil damages. Adds section 1001 to the Code of Civil Procedure.

Banning Waivers of Rights to Testify. As to any contract or settlement agreement entered into on or after January 1, 2019, SB 3109 makes void and unenforceable any provision that waives a party’s right to testify in a legal proceeding (if required or requested by court order, subpoena or administrative or legislative request) regarding criminal conduct or sexual harassment on the part of the other contracting party, or the other party’s agents or employees.  Adds section 1670.11 to the Civil Code.

Strengthening Prohibitions Against Harassment With Respect to Professional Relationships. SB 224 gives additional examples of professional relationships where liability for claims of sexual harassment may arise and authorizes the DFEH to investigate those circumstances. Amends section 51.9 of the Civil Code and section 12930 and 12948 of the Government Code.

Requiring Sexual Harassment Education by Talent Agencies. AB 2338 requires talent agencies to provide adult artists, parents or legal guardians of minors aged 14-17, and age-eligible minors, within 90 days of retention, educational materials on sexual harassment prevention, retaliation, and reporting resources. For adult model artists only, the talent agency will be required to provide materials on nutrition and eating disorders. Talent agencies will also have to retain, for three years, records showing that those educational materials were provided. Adds Article 4 (commencing with Section 1700.50) to Chapter 4 of Part 6 of Division 2 of the Labor Code.

Expanding Scope of Required Sexual Harassment Training. SB 1343 requires an employer of five or more employees—including seasonal and temporary employees—to provide certain sexual harassment training by January 1, 2020. Within six months of their assuming their position (and once every two years thereafter), all supervisors must receive at least two hours of training, and all nonsupervisory employees must receive at least one hour. SB 1343 also requires the DFEH to make available a one-hour and a two-hour online training course employers may use and to make the training videos, existing informational posters, fact sheets, and online training courses available in multiple languages. Amends sections 12950 and 12950.1 of the Government Code.

Requiring Sexual Harassment Education for In-Home Support Services. AB 3082 requires the Department of Social Services to develop or identify—and provide a copy and description to the Legislature by September 30, 2019—(1) educational materials addressing sexual harassment of in-home supportive services (IHSS) providers and recipients, and (2) a method to collect data on the prevalence of sexual harassment in the IHSS program. Adds section 12318 to the Welfare & Institutions Code.

Non-Harassment Bills

Lactation Location. AB 1976 requires employers to make reasonable efforts to provide a room or location (that is not a bathroom, deleting “toilet stall” and inserting “bathroom”) for lactation. The also bill authorizes a temporary lactation location if certain conditions are met and provides a narrow undue hardship exemption. The Governor vetoed the similar, more onerous, SB 937, discussed below. Amends section 1031 of the Labor Code.

Pay Statement: Right to Receive. Stating it is declaratory of existing law, SB 1252 provides employees the right “to receive” a copy of—not just inspect or copy—their pay statements. Amends section 226 of the Labor Code.

Rest Breaks in Petroleum Facilities. AB 2605 exempts from rest-period requirements certain workers who hold “safety-sensitive positions,” defined as a position whose duties reasonably include responding to emergencies in the facility and carry communication devices. The exemption applies only to workers covered by a collective bargaining agreement and subject to Industrial Wage Commission Wage Order No. 1. But employers must pay exempted workers one hour of pay at the regular rate if the rest period is interrupted to respond to an emergency. Because AB 2605 is an urgency statute, these provisions took effect immediately when approved by the Governor on September 20, 2018 and will sunset on January 1, 2021. The author of this bill sought to carve out an exemption for these positions in light of the recent Augustus v. ABM Security Services, Inc. case. Adds section 226.75 to the Labor Code.

Port Drayage Motor Carries. SB 1402 requires the DLSE to post a list on its website of port drayage motor carriers with any unsatisfied judgment or assessment or any “order, decision, or award” finding illegal conduct as to various wage/hour issues, specifically including independent contractor misclassification and derivative claims. This bill also extends joint and several liability to the customers of these drayage motor carriers for their future wage violations of the same nature. Adds section 2810.4 to the Labor Code.

Contractor Liability. Passed as an urgency statute to make clarifying changes to last year’s AB 1701—which created joint liability for construction contractors and subcontractors—AB 1565 immediately repeals the express provision that relieved direct contractors for liability for anything other than unpaid wages and fringe or other benefit payments or contributions including interest owed. For contracts entered into on or after January 1, 2019,  the direct contractor must specify what documents and information the subcontractor must provide in order to withhold a disputed payment. Amends section 218.7 of the Labor Code.

Criminal History. SB 1412 requires employers to consider only a “particular conviction” (“for specific criminal conduct or a category of criminal offenses prescribed by any federal law, federal regulation, or state law that contains requirements, exclusions, or both, expressly based on that specific criminal conduct or category of criminal offenses”) relevant to the job when screening applicants using a criminal background check. Amends section 432.7 of the Labor Code.

Women on Boards. SB 826 requires California-based publicly held corporations to have on their board of directors at least one female—defined as people who self-identify as women, regardless of their designated sex at birth. The deadline for compliance is December 31, 2019. A corporation may need to increase its authorized number of directors to comply with this requirement. The bill imposes minimum seat requirements that must be filled by women, proportional to the total number of seats, by December 31, 2021. The Secretary of State must publish a report by July 1, 2019 of the number of corporations whose principal executive offices are in California and have at least one female director, and an annual report beginning March 1, 2020, detailing the number of corporations that (1) complied with requirements in 2019, (2) moved their headquarters in or out of California, and (3) were subject to these provisions during 2019, but no longer publicly traded.

For each director’s seat not held by a female during at least a portion of the calendar year—when by law it should have been—the corporation will be subject to a $100,000 fine for the first violation and a $300,000 fine for further violations. Corporations that fail to timely file board member information with the Secretary of State will also be subject to a $100,000 fine. Adds sections 301.3 and 2115.5 to the Corporations Code.

Mediation Confidentiality. SB 954 requires attorneys, except in class actions, to provide their mediating clients with a written disclosure containing the confidentiality restrictions provided in Section 1119 of the Evidence Code and obtain the client’s written acknowledgment that the client has read and understands the confidentiality restrictions. This duty arises as soon as reasonably possible before the client agrees to participate in mediation or a mediation consultation. The bill is of little consequence as an attorney’s failure to comply is not a basis to set aside an agreement prepared in or pursuant to a mediation. Amends Evidence Code section 1122 and adds Evidence Code section 1129.

Class Action Settlements. Among many other changes not directly relevant to this blog, AB 3250 revises amendments to Code of Civil Procedure section 384, which took effect immediately upon the Governor’s signing SB 847 on June 27, 2018 (SB 847 also added relevant Code of Civil Procedure sections 382.4 and 384.5). By virtue of SB 847, Section 384 requires a court, before the entry of a judgment (including consent judgment, decree, settlement agreement approved by the court) in a class action, to determine the total amount that will be payable to all class members, and set a date when the parties are to report to the court the total amount that was actually paid to the class. After the report is received, the court must amend the judgment to direct the defendant to pay the sum of the unpaid residue, plus interest on that sum at the legal rate of interest from the date of entry of the initial judgment (AB 3250 deletes this italicized language and replaces it with “that has accrued thereon”), to nonprofit organizations or foundations to support projects that will benefit the class or similarly situated persons, or that promote the law consistent with the underlying cause of action, or to child advocacy programs, or to nonprofit organizations providing civil legal services to the indigent. An attorney for a party to a class action must notify the court if the attorney has a connection to a proposed nonparty recipient of class action settlement funds that could reasonably create the appearance of impropriety. The court must transmit a copy of the judgment to the Judicial Council, identifying nonparty recipients of class action settlement funds. Amends Business and Professions Code section 6402.2, Civil Code sections 51.7, 52.1, and 54.8, Code of Civil Procedure sections 384, 1013b, 1276, 1277, and 1277.5, Health & Safety Code section 103430, and Insurance Code section 10861.03. Repeals Code of Civil Procedure section 630.30.

VETOED

Banning Contractual Limits on Disclosure and Arbitration Agreements. AB 3080 would have prohibited businesses from requiring, as a condition of employment, employment benefit, or contract (1) that a job applicant or employee waive any right, forum, or procedure (e.g., arbitration) for a violation of FEHA or the Labor Code, and (2) that a job applicant, employee, or independent contractor not disclose instances of sexual harassment suffered, witnessed, or discovered in the work place or in performance of the contract, opposing unlawful practices, or participating in harassment and discrimination related investigations or proceedings. Biting their fingernails into the night on the Governor’s signing deadline, to employers’ relief, Governor Brown vetoed the bill. The Governor stated he was compelled to veto this bill because it “plainly violates federal law.” He remained consistent with his veto of a similar bill in 2015, in which he referred to recent court decisions that invalidated state policies that impeded arbitration and stated his desire to watch future US Supreme Court decisions on the topic before “endorsing a broad ban on mandatory arbitration agreements.” He stated that the “direction from the Supreme Court since my earlier veto has been clear—states must follow the Federal Arbitration Act and the Supreme Court’s interpretation of the Act,” citing DIRECTV, Inc. v. Imburgia; and Kindred Nursing Centers Ltd. Partnership v. Clark to reject this bill’s premise “that the Act governs only the enforcement and not the initial formation of arbitration agreements.”

Expanding Record Retention. AB 1867 would have required employers with 50 or more employees to maintain records of complaints alleging sexual harassment for at least five years after the last date of employment of the complainant or alleged harasser, whichever is later. In his veto message, the Governor sagely noted this bill could lead to the retention of records for decades and could require complaints alleging sexual harassment to be maintained for the same amount of time regardless of the result of the investigative process. For those reasons, and because existing law requires personnel records, including records of complaints, be maintained “for suitable periods of time,” the Governor found the time expansion of this bill unwarranted.

Expanding Administrative Charge Filing Deadlines. AB 1870 would have extended a complainant’s time to file an administrative charge with the DFEH from one year to three years after the alleged incident for all types of FEHA-prohibited conduct, including sexual harassment. In vetoing this bill, Governor Brown found the current filing deadline, in place since 1963, “not only encourages prompt resolution while memories and evidence are fresh, but also ensures that unwelcome behavior is promptly reported and halted.”

Extending Liability for Employers and for Businesses Using Labor Contractors. AB 3081 would have amended the FEHA and Labor Code to (1) add status as a sexual harassment victim to existing prohibitions on discrimination against employees who are victims of domestic violence, sexual assault, or stalking, (2) create a rebuttable presumption of unlawful retaliation if an employer—within 30 days of notice of the victim’s status—discharges or threatens to discharge, demotes, suspends, or otherwise discriminates against a victim employee, (3) make a business jointly liable for harassment of workers supplied by the business’s labor contractor (existing law similarly extends liability for the contractor’s failure to pay wages and obtain valid workers’ compensation coverage), (4) prohibit businesses from shifting to their labor contractors duties or liabilities under the Labor Code workers’ compensation insurance provisions. Governor Brown rejected the bill on the basis that most of its provisions are unnecessary as already contained in current law, or, if new, are confusing.

Immigration Documents. AB 2732 would have subjected to penalties employers that destroy or withhold passports or other immigration documents, and required all employers to provide a “Worker’s Bill of Rights” (to be developed by the DIR) to all employees. AB 2732 also would have made various changes to the Property Service Worker Protection Act, contingent upon this bill’s and AB 2079’s passing. In a lesson to narrowly tailor bills, Governor Brown found the “provision of this bill that prohibits employers from withholding immigration documents from workers is very appropriate,” but still struck down this entire bill due to its “burdensome and unwarranted” mandate that all employers, even those having nothing to do with labor trafficking, provide the “Worker’s Bill of Rights’ to every employee in California. “This goes too far.”

Lactation Accommodations. SB 937 would have required employers to (1) provide a lactation room with prescribed features and access to a sink and refrigerator (or another cooling device suitable for storing milk) in close proximity to the employee’s workspace, (2) develop and distribute to employees a lactation accommodation policy, and (3) maintain accommodation request records for three years and allow the employee and Labor Commissioner access to the records. SB 937 would have also deemed the denial of time or space for lactation a failure to provide a rest period under Labor Code section 226.7, and required the DLSE to create a model lactation policy and a model lactation accommodation request form. Having signed AB 1976 to further “the state’s ongoing effort to support working mothers and their families,” Governor Brown vetoed this bill as not necessary.

Property Service Worker Protection Act Amendments. Governor Brown vetoed two bills (AB 2732, discussed above, and AB 2079) to amend the Property Service Worker Protection Act, which went into effect July 1, 2018 (AB 1978), and imposes requirements to combat wage theft and sexual harassment for the janitorial industry. In his veto message, the Governor urged AB 2079’s authors and sponsors to allow the Act—“the first of its kind in the country”—to be fully implemented before proposing significant changes. AB 2079 would have required (1) all employers applying for new or renewed registration to demonstrate completion of sexual harassment violence prevention requirements and provide an attestation to the Labor Commissioner, (2) the Department of Industrial Relations (DIR) to convene an advisory committee to develop requirements for, and maintain a list of, qualified organizations and peer-trainers for employers to use in providing training, and (3) employers, upon request, to provide requesting employees a copy of all training materials. AB 2079 would have also prohibited the Labor Commissioner from approving a janitorial service employer’s request for registration or for renewal if the employer had not fully satisfied a final judgment to a current or former employee for a violation of the FEHA.

Janitorial Workers Employment Classification. AB 2496 would have established a rebuttable presumption that janitorial workers who perform services for property service employers are employees, not independent contractors. Governor Brown vetoed the bill as premature, pending Legislature review of the California Supreme Court decision in in Dynamex Operations West, Inc. v. Superior Court, which recently established a new test to determine whether a worker is properly classified as an employee or independent contractor.

Veterans and Military Personnel. Governor Brown vetoed SB 1427, which would have added veterans and military personnel as a protected class under the FEHA, because the bill’s other, non-employment-related provisions went “too far.”

Construction Industry Harassment and Discrimination. SB 1223 would have required the DIR to convene an advisory committee to recommend minimum standards for a harassment and discrimination prevention policy and training program specific to the construction industry, and to report to the Legislature specific implementation recommendations. Governor Brown vetoed this bill as better placed with the DFEH—responsible for enforcing the FEHA and its harassment and discrimination prevention and training requirements—not the Labor Commissioner.

FAILED TO PASS BOTH HOUSES OF THE LEGISLATURE

Personal Liability for Retaliation. SB 1038 proposed the same amendment to FEHA as SB 1300 to impose personally liability upon an employee for retaliating against a person who has filed a complaint against the employee, testified against the employee, assisted in any proceeding, or opposed any prohibited practice. As discussed, above, since SB 1038 failed, so did the same proposed amendment in SB 1300.

Hotel Panic Button. AB 1761 would have required hotel employers to provide employees with a “panic button” to call for help in case of an emergency, post a notice of these provisions in each guestroom, provided paid time off or a reasonable accommodation to an employee who is the victim of an assault, required an employer—upon the employee’s request—to contact police, prohibited employers from taking action against any employee who exercises the protections, and imposed penalties for violations of the proposed provisions.

Employers Pay Data. SB 1284 would have required private employers with 100 or more employees and required to file an EEO-1 report to submit a pay data report to the DFEH containing specified information. This bill would have also authorized fines to be imposed on employers who fail to report, authorized the DFEH to seek an order requiring the employer to comply, and require the DFEH to maintain the records for 10 years, though no individually identifiable information could be made public.

FAILED TO PASS THE HOUSE OF ORIGIN

Victims of Sexual Harassment. AB 2366 would have extended existing law that protects employees who take time off work due to being victims of domestic violence, sexual assault and stalking, to include victims of sexual harassment. This bill would have also extended job-protected leave to family members of such victims.

DLSE Time to File Extension. AB 2946 would have extended the time to file a complaint with the DLSE from six months to three years from the date of the violation and amended California’s whistleblower provision to authorize a court to award reasonable attorney’s fees to a prevailing plaintiff.

Familial Status. AB 1938 would have limited employer inquiries about familial status during the hiring or promotional process and made it unlawful to make any non-job related inquiry about an individual’s real or perceived responsibility to care for family members.

Pay Statements. AB 2223 would have provided employers the option to provide itemized pay statements on a monthly basis and extended the time an employer has to respond to a request to inspect or copy pay statements from 21 to 28 calendar days. AB 2613 would have imposed penalties on employers who violate Labor Code provisions requiring payment of wages twice per month on designated paydays, and once per month for exempt employees.

Flexible Work Schedules. AB 2482 would have allowed private non-exempt employees, not subject to collective bargaining agreements, to request a flexible work schedule to work ten hours per day within a 40-hour workweek without overtime compensation.

Marijuana. AB 2069 would have provided that the medical use of cannabis by a qualified patient with an identification card is subject to a reasonable accommodation by an employer.

Another Failed PAGA Effort. AB 2016 would have required an employee’s required written PAGA notice to the employer include a more in-depth statement of facts, legal contentions, and authorities supporting each allegation, and include an estimate of the number of current and former employees against whom the alleged violations were committed and on whose behalf relief is sought. AB 2016 would have prescribed specified notice procedures if the employee or employee representative seeks relief on behalf of ten or more employees. The bill excluded health and safety violations from PAGA’s right-to-cure provisions, increased the time the employer had to cure violations from 33 to 65 calendar days, and provided an employee may be awarded civil penalties based only on a violation actually suffered by the employee.

Sick Leave. AB 2841 would have increased an employer’s alternate sick leave accrual method from 24 hours by the 120th calendar day of employment to 40 hours of accrued sick leave or paid time off by the 200th calendar day of employment—but not needing to exceed 80 hours. An employer would have been able to limit the amount sick leave carried over to the following year to 40 hours. This provision would have applied to IHSS providers on January 1, 2026.

Criminal History. AB 2680 would have required the CA Department of Justice to adopt a standard form that employers would have to use when seeking the consent of an applicant for employment to conduct a conviction history background check on that applicant by the department. SB 1298 would have placed limits on the criminal history reporting that DOJ would provide to employers and required DOJ to provide the subject with a copy of the information and at least five days to challenge its accuracy before releasing it to the employer. AB 2647 would have prohibited evidence of a current or former employee’s criminal history from being admitted, under specified circumstances, in a civil action based on the current or former employee’s conduct against an employer, an employer’s agents, or an employer’s employees.

With this summary, our legislative team bids you, and Governor Jerry Brown, adieu. But don’t forget to sign up and attend our upcoming webinar for our verbal tribute to this year’s L&E legislation and Governor Brown’s final acts.

Seyfarth Synopsis: With the widespread use of direct deposit, the thought of an employee regularly reviewing wage statements may seem inconceivable. Still, employers must ensure that their wage statements strictly comply with California law, as even trivial, inadvertent failures to do so can lead to heavy penalties. We highlight here the information to include on wage statements while pointing out some of the legal landmines trod upon by unwary employers.

Labor Code Section 226(a) Is Pain. Anyone Who Says Differently Is Selling Something.

Much like The Princess Bride, wage statements remain incredibly relevant. Section 226(a) forces employers to report nine items of information on each itemized statement that accompanies a payment of wages:

  1. gross wages earned by the employee,
  2. total hours worked by the employee,
  3. all applicable hourly rates during the pay period,
  4. all deductions taken from the employee’s wages,
  5. the net wages the employee earned,
  6. the pay period that the wage statement reflects, including the start and end date,
  7. the employee’s name and ID number (which can be the last four digits of the Social Security number (SSN)),
  8. the name and address of the legal employer, and
  9. if the employee earns a piece rate, then the number of piece-rate units earned and the applicable piece rate.

(Note that employers must also report available paid sick leave, either on the wage statement or on another document issued at the time of each wage payment.)

Avoiding the Fire Swamp: Wage Statement Line Mines to Avoid

  • If you use a payroll service to prepare the itemized wage statement, can you just “set it and forget it”? No, you can’t. Many excellent payroll services do get it just right. Meanwhile, other companies, operating nationally, have not always heeded each California-specific requirement. And they do not feel it’s their responsibility; it’s yours. They do not offer legal advice or indemnification to prevent and correct wage-statement mistakes. If you are the typical California employer, you are on your own to ensure that your wage statements are sufficiently “Cal-peculiar.”
  • If you create in-house wage statements, can you rely on your IT department to capture all the right payroll information in the format that HR has designed? No, you can’t. Many companies have lamented the discovery that the perfect wage statement designed by the legal or HR department did not emerge quite as envisioned once IT completed all the necessary programming. In the world of wage statements, for every ugly duckling turning into a swan there is a swan turning into an ugly duckling.
  • Many well-regarded employers—national behemoths and local start-ups alike—have tripped over innocent, often trivial wage-statement mistakes to fall into a pit of despair, where they’ve found themselves inundated by millions of dollars in penalties that bear little or no relation to any actual employee harm.
  • Among the alleged hyper-technical violations causing employers to spend heavily to defend themselves—and sometimes causing them to incur huge penalties—have been these:
    • Neglecting to total all the hours worked, even though the wage statement lists all the various types of hours individually.
    • Accidentally showing net wages as “zero” where an employee gets direct deposit.
    • Leaving off either the start or end date of the pay period.
    • Not showing the number of hours worked at each applicable rate.
    • Recording an incomplete employer name (“Summit” instead of “Summit Logistics, Inc.”).
    • Recording an incomplete employer address.
    • Failing to provide an employee ID number, or reporting a full nine-digit SSN instead of a four-digit SSN.
  • And remember to keep a copy of your wage statements (or to have the capability to recreate what the employees have received).

Reaching the Cliffs of Insanity: How Recent Case Law Intensifies the Impact of Section 226

By now, you surely ask, “Can it possibly get any worse than that?” Yes, it can. It has been bad enough, of course, that hyper-technical failures to show an item required by Section 226(a) could create large liability unrelated to any real harm. But, until recently, employers at least had the defense that no penalty was available absent a “knowing and intentional” violation, because that was what a plaintiff had to prove to get penalties ($50 or $100 per employee per pay period) under Section 226(e).

But now, if a recent Court of Appeal decision stands, that defense has been stripped away. Lopez v. Friant & Associates, LLC held that an employer whose wage statement failed to record an employee ID number could be subject to penalties under California’s Private Attorneys General Act (PAGA), even though the mistake was inadvertent and promptly corrected, and even though the employee admittedly suffered no injury by his employer reminding him each pay period what the last four digits of his SSN are. Lopez permitted the employee to sue for PAGA penalties without needing to prove the “injury” and “knowing and intentional” elements of a Section 226(e) claim. In short, Lopez is about as appealing as a Rodent Of Unusual Size (R.O.U.S.). See our detailed client alert on Lopez here.

Workplace Solutions: What Would Miracle Max Do

Though the exact impact of Lopez is unclear at this point (Lopez did not decide whether the extra PAGA penalty would be $250 per employee, under Section 226.3, or $100 per employee per pay period, under Section 2699(f)), Lopez rings the alarm that employers must proactively ensure that their itemized wage statements strictly comply with Section 226(a), lest they be the next to fall in the pit of despair. When is the last time you did your self-audit? Don’t hesitate to reach out to Seyfarth to help you ensure your wage statements are compliant.

Seyfarth Synopsis: California courts are often hostile towards defendants that seek to require litigious employees to honor their arbitration agreements. The defendant’s plight might seem more stark still if the defendant has not itself signed the agreement. But defendant employers still have means of enforcing such agreements, which can be especially significant in class actions claiming joint employment. 

Despite the strong federal policy favoring arbitration, it is no secret that enforcing arbitration agreements in California can be tough. The task is tougher yet for the defendant that finds itself being sued by someone with whom the defendant has never had a contractual relationship, although she has signed an employment arbitration agreement with a co-defendant. This is because, under the general rule, one must be a party to an arbitration agreement in order to invoke it.

With recent waves of litigation seeking to expand the scope of joint employment, the issue of enforcing arbitration agreements on behalf of nonsignatories has become increasingly important. One typical situation involves a staffing company being sued by an employee who, looking for a deeper pocket, also sues the staffing company’s client. In another typical situation, a franchisee’s employee sues both the franchisee and the franchisor. Suppose, in both situations, the employer and the employee have agreed to arbitrate any claims between them. But in both situations, the upstream defendant (in our situations, the client or the franchisor) has never had a chance to negotiate an arbitration agreement with the plaintiff, as the plaintiff and the upstream defendant have never had any contractual relationship at all. In those cases, the upstream defendant experiences the worst of both worlds: it is being sued as the plaintiff’s “employer” and yet, not really being the plaintiff’s employer, the upstream defendant has never had the chance to implement an arbitration agreement with the plaintiff.

As it turns out, there is hope for enforcing the arbitration agreement on behalf of the upstream defendant in these situations, even though it never signed the agreement. There are three exceptions to the nonsignatory rule. Application of the first two can depend on how the claim is pleaded. Application of the third is relatively sure, if the upstream defendant plans properly to assure itself that the arbitration agreement in place is adequate. We discuss each of the three exceptions below.

Agency

Nonsignatories may enforce an arbitration agreement under an agency theory. If the plaintiff claims that a defendant acted as the agent of a party to an arbitration agreement, then the non-party defendant may enforce the agreement. This claim often arises where the plaintiff alleges that the non-signatory defendant was a joint employer. Earlier this year, a California appellate case upheld the enforcement of an arbitration agreement under this very theory. Employers seeking to avail themselves of this theory should carefully evaluate the allegations in the complaint against them. If they meet these standards, then asserting an agency theory may be a successful way to enforce the agreement.

Equitable Estoppel

A lesser known exception available to nonsignatories seeking to enforce an arbitration agreement is equitable estoppel: a nonsignatory defendant can compel the signatory plaintiff into arbitration when the claims against the nonsignatory are “intimately founded and inextricably intertwined” with the underlying contract obligations. Equitable estoppel applies when the claims are based on the same facts and inherently inseparable from the arbitrable claims against the signatory defendant. A California court recently acknowledged this theory in the employment context, particularly because the plaintiff made no effort to distinguish between his claims against his employer (the signatory) and the non-signatory defendant.

Again, when considering raising this argument, it is important to carefully analyze the allegations in the complaint. Should they be the same against all defendants, equitable estoppel may be an option for enforcing the agreement.

Third Party Beneficiary

While the first two ways for a nonsignatory to enforce an arbitration agreement may depend on how the plaintiff pleads the case, a more certain basis for enforcement exists where the language of the arbitration agreement clearly expresses an intent to allow nonsignatories to enforce it. The intent to thus benefit a third party can appear even if the agreement does not specifically identify the third party by name. It would be enough if the third party belongs to the class of clearly identified beneficiaries.

The third-party beneficiary exception places a premium on the adequacy of the arbitration agreement’s language. The employer that signed the agreement—the staffing agency, for example, or the franchisee—will have every incentive, as a good corporate citizen, to see that its arbitration agreement benefits not just itself but also potential upstream defendants, such as the staffing agency’s client or the franchisee’s franchisor. And the potential upstream defendant, of course, will be more inclined to deal with a potential joint employer if that employer has in place an adequate arbitration agreement that properly addresses issues of enforcement and that provides, where appropriate, for waiver of class or collective or representative arbitration.

Navigating issues enforcing arbitration agreements in California can be complicated. If you would like assistance in drafting an agreement or help enforcing an agreement in the defense of a lawsuit, please contact one of Seyfarth Shaw’s attorneys.

Seyfarth Synopsis:  As if high rent and California’s peculiar laws were not enough to worry about, San Francisco employers must also comply with City-specific ordinances. Trailblazing City requirements often exceed state laws and have sometimes been harbingers of state-level enactments. One might say that San Francisco, with its distinctive laws, is to California what California is to the rest of the country. We highlight the Big Eight SFO peculiarities, below.

Minimum Wage

Minimum wage is an example of San Francisco taking the lead and inspiring changes to state law. On July 1, 2017, San Francisco’s minimum wage officially increased to $14.00 per hour; on July 1, 2018, it will jump to $15.00. The rates apply to all employees who work at least two hours per week within the City or County of SF. The City approved these rate increases years before the California Legislature followed suit in passing the Fair Wage Act of 2016, which mandated an annual state-wide increase until it reaches $15.00 in 2020. Might the City then push to exceed this amount come 2020?

Paid Sick Leave

Paid sick leave is another area where City entitlements differ from those available under state law. San Francisco says that all employees, including part-time and temporary workers, are entitled to paid sick leave when they are ill, require medical care, or need to care for their family members or designated person. While state law currently provides employees with three days (24 hours) of paid sick leave for most of the same reasons, the City offers employees significantly more protected paid time off.

San Francisco employers with fewer than 10 employees must allow workers to accrue up to 40 hours, and those with 10 or more employees must allow accrual up to 72 hours. Not only are employees thus entitled to two to three times what the state mandates, but any unused days also carry over year to year (subject to the above accrual caps). Remember that employers must comply with both state and City laws, as satisfying one does not satisfy the other. Originally enacted in 2007, the City amended its paid sick law as of January 1, 2017, so check out the City’s FAQs for additional updates.

Paid Parental Leave & Family Friendly Workplace

San Francisco has its own take on California’s family-related leave programs—with two separate but related ordinances. You may recall that California’s Paid Family Leave offers six weeks of partial pay/wage replacement (after an eight-day waiting period) to employees who are otherwise entitled or permitted to take time off to bond with a new child or to care for a seriously ill family member. The California Family Rights Act (“CFRA”) also mandates that covered employers give 12 weeks of unpaid, protected leave within a year to eligible employees for a child’s birth, adoption, or foster placement, for the employee’s own serious medical condition, or to care for a seriously ill or injured family member. To be eligible for CFRA leave, an employee must have worked for the covered employer for at least a year and have clocked 1250+ hours.

In San Francisco, by contrast, an employee needs only eight hours per week on a regular basis for six months before taking advantage of its Paid Parental Leave benefits. While matching the state’s six weeks of state (EDD) paid time for new child bonding, San Francisco requires that the employer also pay the leave in the form of supplemental compensation that, in conjunction with California’s Paid Family Leave benefits, equals 100% of the employee’s gross weekly wages. Currently, this law applies to employers with 35 or more employees (regardless of location) and employees working 40% or more of their hours in San Francisco. Beginning January 1, 2018, this law will expand to include all employers with 20 or more employees.

San Francisco has a separate ordinance that attempts to make what is often a difficult time easier for individuals who have family caregiving obligations. Employees who have worked eight hours per week for six months can request a flexible or predictable schedule to assist with these responsibilities. Specifically, the law applies to employers with 20 or more workers (regardless of location) and covers caring for children under 18, seriously ill family members, and parents of the employee who are over 65. San Francisco wants the state to know that family friendliness begins here!

Health Care Security

San Francisco’s mandatory health care law ensures that employees are cared for, too. Employers must make health care expenditure payments each quarter for every employee who has been working more than 90 days. Employers with fewer than 20 employees are exempt altogether, but employers with 20-99 employees must spend $1.76 per hour payable per each employee, while those with 100+ must spend $2.64 per hour. The City allows these payments to be made to the employee directly, to the City, or as a contribution to a reimbursement program. Under this ordinance, the City may impose several different penalties for non-compliance, so getting caught not paying these expenditures would certainly be worse than catching a cold!

Fair Chance (SF’s Version of “Ban-the-Box”)

The City does not believe that having been behind bars should necessarily bar the employment of qualified individuals. The Fair Chance ordinance aims to make work more accessible and put applicants with prior arrests or convictions on an even playing field. All employers with more than 20 employees must state in job solicitations that qualified applicants with arrest or conviction records will be considered. Employers also must not ask about such records until after a live interview or a conditional offer, at which time only arrests or convictions directly related to the ability to perform a given job may be considered in the hiring decision. An employer that chooses not to employ an applicant with a record must first allow the individual a chance to respond with evidence of inaccurate information, rehabilitation, or other mitigating factors.

California currently prohibits employers from asking about certain criminal records, including arrests that did not result in criminal convictions and convictions that have been dismissed or expunged. As of July 1, 2017 (per new FEHC regulations that we discussed here that are similar to San Francisco’s law), California employers may not consider criminal records in hiring decisions that would adversely affect individuals belonging to a protected class. If there is a disparate impact, then employers must show that their background check policy is “job-related and consistent with business necessity.” Before making a decision based on criminal records, employers must conduct an individualized assessment that allows anyone screened out by the policy to respond with proof that the background check is inaccurate or with reasons why adverse action should not be taken.

Formula Retail Employee Rights

Whether it be disrupted budgeting, inconvenience, or some other reason, employees can get upset when their work schedule suddenly changes; San Francisco has a law for that. Chain stores with 40+ locations worldwide and 20 or more people working in San Francisco must provide notice of the work schedule two weeks in advance. In addition, employers must provide “predictability pay” whenever an employee’s schedule changes with less than a week’s notice, and if an on-call employee is required to be available but is not called into work during the shift, the employer must still pay them for that time.

These same employers must offer (in writing) any available extra hours to current qualified part-time employees before they can hire someone new to cover the workload. If an establishment is sold, the successor employer must retain, for 90 days, any eligible employee who worked longer than six months before the sale. San Jose voters passed a comparable ordinance, and new legislation was recently introduced in the California legislature with aims to enact a similar law. Beware of these special laws that apply “within the City and County” soon getting a California-sized expansion!

Lactation Accommodation

In June 2017, the San Francisco Board of Supervisors approved specific legislation requiring employers to provide a private space for new mothers to pump their milk. The ordinance goes into effect January 1, 2018, and calls for a clean space that contains a chair, access to electricity, and surface space for a breast pump. In addition, the employee’s workspace must be in close proximity to a sink with running water as well as a refrigerator. Subject to certain exceptions, if such a space does not exist, then one must be constructed. Employers will be required to distribute the company’s lactation accommodation policy to all employees at the time of hiring.

While state and federal law mandate that employers make reasonable efforts to provide new mothers with lactation breaks throughout the workday, San Francisco’s more expansive legislation may very well be a predictor of what’s next to come on the state level.

We will keep you informed of updates and changes to these ordinances as violations can come with hefty penalties or result in administrative investigations and civil suits. It should be noted that some exceptions and exemptions apply, and those details and additional requirements can be found on the San Francisco Office of Labor Standards Enforcement website. To ensure your company is compliant, or if you have questions about anything mentioned here, Seyfarth’s Labor and Employment attorneys are available to assist you.

Edited by Michael A. Wahlander.

Seyfarth Synopsis: Social media information—pictures, status updates, location markers, “likes,” groups, and associated friends, all from the owner’s perspective and documented in real time—can be a  goldmine of information to defend employment lawsuits. Read on for thoughts on how to extract and refine this information, and what limits to observe in using it.

Social media and discovery is an area rife with potential drama: pictures of a plaintiff vacationing in Hawaii after he’s called in sick? Yes, please! How and should we access such juicy information?

Litigation-related discovery of social media content is generally permissible. The main problem is that—both in formal discovery and in other forms of fact-finding—there isn’t a complete picture on how far one can go to obtain it. Below are some tips to help employers stay in the friend-zone while using social media to their advantage in litigation.

Go Narrow! (At Least At First)

In a frequently cited case on the matter, Mailhoit v. Home Depot U.S.A. (C.D. Cal. 2012), the court debated how a defendant could use social media in litigation, and ultimately decided that there is a limited right to discover a party’s social media content. Mailhoit allowed an employer to make “particularized requests”—in that case all social media communications between the plaintiff and her current or former co-workers in any way referring to the lawsuit. But Mailhot said the employer was not entitled to look through the entirety of the plaintiff’s social media information in the hope of “concocting some inference about her state of mind,” and refused to permit other proposed, broader, discovery requests.

But even this limited discovery can be important: once relevance is shown, courts may be more likely to permit additional discovery. Mailhoit suggested that if social media posts are relevant, additional discovery may proceed.

At least one non-California court has already taken this step. In Crowe v. Marquette Transportation Company Gulf-Inland, LLC (E.D. La. 2015), the court ordered an employee to produce an unredacted copy of his entire Facebook page, even though the employee protested that he had deactivated his account. The employer was even entitled to analyze his Facebook messages, which potentially contained a lot of useful information! If a California court can be persuaded that social media communications in some way relate to claims or defenses in the litigation, then they, too, may yield to discovery.

Private vs. Public: Gimme, Gimme!

We know that in California, since 2013, we cannot force employees or job applicants to turn over social media passwords. The California legislation on this point reflects a public policy that recognizes our unique constitutional right of privacy.

But what about publicly available information? California courts agree that there can be no expectation of privacy in publicly posted information on social media websites. See Moreno v. Hanford Sentinel, Inc. (Cal. App. 2009).

This means if the privacy setting on an employee’s Facebook posts is “Public”(i.e., available to anyone on or off Facebook), then anything posted is fair game for discovery. The same goes for publicly available Twitter tweets, publicly available Instagram posts, publicly available LinkedIn info, MySpace page information, etc. Presumably, if someone publicly posts elsewhere (e.g., Reddit, 4Chan, personal blogs), with a link it to the poster’s identity, then those posts may also be accessed and used.

Save, Save, Save!

Social media, like life itself, is evanescent.  Publicly available, incredibly useful information can be here one day, gone the next. Do not rely on information staying up once it is up. To best preserve currently available information, screenshot the information, or print to .pdf. Then save and wait. It doesn’t get much better than seeing the face of a plaintiff when confronted with a photo he thought he had deleted. You know the one: featuring the plaintiff himself, bleary eyed and hoisting a beer, an hour before his scheduled work shift. Or the one showing him wearing stolen merchandise. Or the one showing him partying it up while supposedly suffering from “emotional distress.”

Fake-Friending and Professional Responsibility: Don’t Be a 🙁 

“Fake-friending” is when one creates a fake profile to add a person on Facebook or other social media with the aim of gaining full access to the person’s more limited profile. Rules of professional responsibility for lawyers discourage this practice—(the American Bar Association has recognized at least four areas of concern: (1) confidentiality, (2) truthfulness in statements to others, (3) responsibility regarding non-lawyer assistants, and (4) misconduct). Conducting covert research through fake-friending may also violate California Rules of Professional Conduct, such as Rule 2-100, which forbids “communication with a represented party.” Non-attorneys may be subject to similar ethical responsibilities.  So leave intentional fake-friending out of your litigation arsenal.

Nonetheless, it is not always clear what the limits of these rules mean in practice. For example, would it be OK to accept the help of a third party who has access to shared information (for example, the plaintiff’s co-worker, who has added the plaintiff as a friend online)?

The San Diego County Bar Association released an Opinion (2011-2), stating: represented “parties shouldn’t have ‘friends’ like that and no one – represented or not, party or non-party – should be misled into accepting such a friendship.” Specifically, the opinion states that if the motive is to obtain information about the litigation, then this conduct can violate Rule 2-100 and constitute deceptive conduct forbidden by the California Business and Professions Code.

Outside of California, other jurisdictions have found that it would be unethical even to ask a third person, whose name a hostile witness will not recognize, to obtain social media information, even if the person states only truthful information.

The Future of Social Media and Regulation: “It’s Complicated”

New apps, social media websites, and ways to share information emerge every day. Unfortunately, the law and public policy often lag behind advances in technology. In some states, we’re already seeing some peculiar stuff going on. In New York, courts have since 2013 held that some service via social media can satisfy due process. In one early case, Federal Trade Comm. v. PCCare247 Inc. (S.D.N.Y. Mar. 7, 2013), the court noted: “history teaches that, as technology advances and modes of communication progress, courts must be open to considering requests to authorize service via technological means of then-recent vintage, rather than dismissing them out of hand as novel.” New York courts have also indicated that social media may be considered an effective means of providing notice to potential class members in class actions. See Mark v. Gawker Media, LLC (S.D.N.Y. 2016).

Workplace Solutions

If you find yourself in a pickle—“to like or not to like?”, “to friend or not to friend?”, “to snoop or not to snoop?”—remember that a friendly neighborhood Seyfarth attorney is just a poke away.

Edited by Coby M. Turner.

Seyfarth Synopsis: Employers in California: be aware and prepare for new laws increasing minimum wages and mandating overtime pay for agricultural employees; expanding the California Fair Pay Act to race and ethnicity and to address prior salary consideration; imposing new restrictions on background checks and gig economy workers; and more. Small employers will be relieved the Governor vetoed expanded unpaid parental leave, but it will likely return in future sessions.

Friday, September 30, was Governor Jerry Brown’s deadline to sign or veto bills approved during the 2015-2016 Legislative Session. We summarize below this year’s bills that did and did not receive the Governor’s signature. Read on to prepare for our October 6 webinar offering Workplace Solutions for these pesky new Cal-peculiarities and register here.

SIGNED

Pay Equity

Fair Pay Act: Prior Salary & Race/Ethnicity. Saving some high-profile approvals to the last day, on Friday the Governor signed into law AB 1676 and SB 1063.  AB 1676 amends last year’s Fair Pay Act, Section 1197.5 of the Labor Code, to prohibit employers from considering prior salary as the sole justification for any disparity in compensation. SB 1063 expands the Fair Pay Act to race and ethnicity, and responds to critics that the pay equity issue is not limited to gender.  Specifically, it would prohibit employers from paying employees a wage less than the wage paid to employees of a different race or ethnicity for substantially similar work. Since both bills were signed by the Governor, both bills’ substantive changes will become law, though only the last-chaptered bill will be that which officially becomes law.

Before amendments applied in the legislative process, AB 1676 would have prohibited employers from seeking an applicant’s salary history information just as its vetoed predecessor, AB 1017, attempted to do last year. In vetoing AB 1017, Governor Brown stated that we should wait to see whether last year’s momentous Fair Pay Act, SB 358, addressed the pay equity issue before making further changes.  The amendments likely made this amendment palatable to the Governor, and kept California from matching the new Massachusetts law prohibiting Massachusetts employers from requesting the compensation history of a prospective employee before making an offer, unless the prospective employee has “voluntarily” disclosed that information. Amends Labor Code Sections 1197.5 and 1199.5. Effective January 1, 2017.

Wage and Hour

Agricultural Workers. AB 1066  enacts the “Phase-In Overtime for Agricultural Workers Act of 2016,” which requires employers to pay agricultural workers overtime over a four-year phase-in process. Beginning January 1, 2019, employers are required to pay overtime for any hours worked over 9.5 hours per day or 55 hours per workweek. Each year the hours worked triggering overtime pay will reduce, until reaching 8 hours per day, 40 hours per week, beginning January 1, 2022. Also beginning on January 1, 2022, any employee who works over 12 hours per day must be paid at a rate no less than double the regular rate of pay. The Governor may temporarily suspend the scheduled overtime requirement but only if the minimum wage increases are suspended as well. Employers that employ 25 or fewer employees will have an extra three years to comply with the phase-in and must begin paying overtime by January 1, 2022.  This bill began as AB 2757, which failed to pass the house of origin in June.  Undeterred, author Assembly Member Lorena Gonzales resurrected it with the legislative “gut and amend” trick, putting its contents into a bill formerly relating to educational employees.  Amends Labor Code Section 554 and adds Chapter 6 (commencing with Section 857) to Part 2 of Division 2 of the Labor Code.  Effective January 1, 2017.

Minimum Wage Violation Challenges. AB 2899 requires that any employer, before appealing a decision by the Labor Commissioner (LC) relating to a violation of wage laws, must file a bond—in favor of the unpaid employee—with the LC that covers the total amount of any minimum wages, liquidated damages, and overtime compensation owed. The bill also provides that the total amount of the bond is to be forfeited to the employee if the employer fails to pay the amounts owed within 10 days from the conclusion of the proceedings. Amends Labor Code Section 1197.1. Effective January 1, 2017.

Itemized Wage Statements. AB 2535 comes on the heels of the recent federal decision, Garnett v. ADT,  and clarifies Labor Code section 226. This bill specifies that employers need not list the number of hours worked on wage statements for any employee who is exempt from minimum wage and overtime requirements under the applicable IWC Wage Order or under statutes specified in Labor Code Section 226(j). Amends Labor Code Section 226.  Effective January 1, 2017.

Leaves of Absence

Paid Family Leave Expansion.  AB 908, which the Governor signed on April 11, 2016, increases the amount of benefits paid to employees on paid family leave and state disability leave from the current level of 55 percent to either 60 or 70 percent depending on the applicant’s income.  Read our report on AB 908 hereAffects Sections 2655, 3303, and 2655.1 of the Unemployment Insurance Code. Effective January 1, 2017, but provisions of the bill not operative until January 1, 2018.

Background Checks

Criminal History. AB 1843 prohibits employers from asking an applicant for employment to disclose any information regarding juvenile convictions and seeking or utilizing any information related to juvenile arrests, detentions, or court dispositions as a factor in employment determination. The bill does specify that an employer at a health facility can inquire into an applicant’s juvenile criminal background if a juvenile court made a final ruling or adjudication, that the applicant had committed a felony or misdemeanor relating to sex crimes or certain controlled substances crimes within five years prior to applying for employment. Still, these employers cannot inquire into an applicant’s sealed juvenile criminal records. Read more about existing California law on background checks hereAmends Labor Code Section 432.7.  Effective January 1, 2017.

Unfair Immigration-Related Practices. SB 1001 is a redux of 2015’s AB 1065, which was held in committee (and which we reported on here). SB 1001, like AB 1065, makes it an unlawful employment practice to request more or different documents than required under federal law to verify that an individual is not an unauthorized immigrant, or to refuse to honor documents tendered that on their face reasonably appear to be genuine, refuse to honor documents or work authorization based on specific status or term that accompanies the authorization to work, or to attempt to reinvestigate or re-verify an incumbent employee’s authorization to work using an unfair immigration-related practice. This year’s bill provision states that job applicants and employees who suffer an “unfair immigration-related practice” can file a complaint with the DLSE for enforcement. The bill provides that a violation of these provisions can result in a penalty of up to $10,000. Adds Section 1019.1 to the Labor Code.  Effective January 1, 2017.

Transportation Network Companies

Background Checks. AB 1289 requires a transportation network company (“TNC”; e.g., Uber) to conduct, or have a third party conduct, criminal background checks on each participating driver. This bill follows a 2014 lawsuit that accused TNCs of misleading customers by suggesting their background checks were the toughest in the industry. The bill also prohibits a TNC from contracting with a driver who is currently registered on the DOJ’s National Sex Offender Public Website; has been convicted of specified felonies within the past seven years; and/or has been convicted, within the past seven years, of misdemeanor assault or battery, domestic violence, or driving under the influence of drugs or alcohol. Adds Section 5445.2 to the Public Utilities Code.  Effective January 1, 2017.

Driving Under the Influence. AB 2687 makes it unlawful for a person to drive a vehicle with a blood alcohol level (BAC) of 0.04% or more when a passenger for hire is in the vehicle. The bill comes as an effort to lower taxi cab and ride sharing service driver’s BAC limit—currently at 0.08%—to the BAC limit of 0.04% as required for commercial motor vehicle drivers. Amends Vehicle Code Sections 23152 and 23153.  Effective July 1, 2018.

Personal Vehicles. AB 2763 defines a personal vehicle, used by a participating driver in a transportation network company, as one that has a passenger capacity of eight persons or less, (including the driver) and is owned, leased, or rented for a term that does not exceed 30 days, or otherwise authorized for use by the participating driver. Amends Public Utilities Code Section 5431.  Effective January 1, 2017.

Discrimination/Harassment

Employment Protections. AB 2337 expands the notice requirement employers with twenty-five or more employees must give to employees regarding domestic violence protections. Specifically, this bill provides that an employer must inform each new employee—and other employees upon request—of the rights protecting employees affected by domestic violence in writing. The Labor Commissioner is charged with developing the form providing notice by July 1, 2017.  Employers are not required to provide notice until the Labor Commissioner posts the form. Amends Labor Code Section 230.1.  Effective July 1, 2017.

Sexual Harassment Prevention Training. AB 1661 requires local agency officials to receive two hours of training and education on sexual harassment prevention within the first six months of taking office or commencing employment. To meet the requirements of this bill, local agency officials, including any member of a legislative body and any elected official of cities and counties, and special districts, must continue to receive this training once every two years. While AB 1661 is specific to local agency officials, AB 1825, enacted in 2004, established the same provisions for the workplace. AB 1661 comes on the heels of various high-profile sexual harassment cases against elected officials. Adds Article 2.4.5 (commencing with Section 53237) to Chapter 2 of Part 1 of Division 2 of Title 5 of the Government code.  Effective January 1, 2017.

Employment Discrimination. AB 488 allows individuals employed under a special license in a nonprofit sheltered workshop or rehabilitation facility to bring an action under the Fair Employment and Housing Act (FEHA) for prohibited harassment or discrimination. This bill came as an expansion of AB 1443, enacted in 2014, which extended FEHA’s protections to unpaid interns and volunteers. AB 488 now extends FEHA’s protections to workers with disabilities. Amends Section 12926, and adds Section 12926.05 to, the Government Code. Effective January 1, 2017.

Other Employee Protections

Employment Contracts—Choice of Law and Forum. SB 1241 prohibits an employer from requiring an employee, who resides and works in California, as a condition of employment, to agree to a provision that would either require the employee to litigate or arbitrate employment disputes (1) outside of California or (2) under the laws of another state. The only exception is where the employee was individually represented by a lawyer in negotiating an employment contract. The bill provides that any contract that violates these provisions is voidable by the employee. A court may award an employee reasonable attorney’s fees, among other remedies, for enforcing rights under the act. Read our in-depth report on SB 1241 hereAdds Section 925 to the Labor Code.  Effective January 1, 2017.

Employment Heat Safety. SB 1167 provides that the Division of Occupational Safety and Health (DOSH) shall propose to the Occupational Safety and Health Standards Board (Standards Board) for review and adoption, a standard that minimizes heat-related illness and injury among workers working in indoor places of employment by January 1, 2019. This bill comes as a response to a 2012 OSHA decision, upheld in 2015 by the Cal/OSHA appeals board, in which a staffing company and warehouse operator were fined for the heat illness suffered by an employee who was working inside a metal freight contained in over 100 degree heat. Adds Section 6720 to the Labor Code.  Effective January 1, 2019.

Employee Contact Information. AB 2843 expands an existing provision of the California Public Records Act (CPRA) that exempts the homes addresses and home telephone numbers of certain public employees from public disclosure to now cover all public employees, including persons paid by the state to provide in-home support services. Additionally, this bill extends the CPRA exemption to include the employee’s personal cell phone number and birth date. However, telephone numbers will be made available to bargaining agents for those employees. Amends Government Code Sections 6253.2 and 6254.3.  Effective January 1, 2017.

Industry Specific

Property Service Workers. AB 1978 creates the Property Services Workers Protection Act by establishing various requirements for the janitorial industry, including registering annually with the DLSE, to protect janitorial employees from wage theft and sexual harassment. The provisions of this bill apply to employers that employ at least one “covered worker” who enters into a contract, subcontract, or franchise agreement to provide janitorial services. This bill also requires the DLSE to maintain a database of property service employers and to develop a biennial sexual harassment and violence prevention training. This bill prohibits an employer from registering or renewing its registration if it has not fully satisfied any final judgment for unpaid wages or made appropriate tax contributions. “Successor employers” are also liable for any wages and penalties owed to the predecessor’s employees. The bill was signed while janitors were fasting outside of the CapitolAdds Part 4.2 (commencing with Section 1420) to Division 2 of the Labor Code.  Effective July 1, 2018.

Talent Services. AB 2068 updates the Talent Service Act’s existing communication and contractual protections to include new technologies, such as mobile applications. Specifically, AB 2068 strengthens the protection for an artist’s information or image to include information posted on an online service, online application, mobile application, or website. AB 2068 also updates the communication and advertisement protections between talent agencies and artists by including communication through the use of a telecommunication device, in print, on the Internet, or through the use of a mobile or online application or other electronic communication. AB 2068 also adds “text message” and other “electronic communication” to the list of methods by which an artist may ask that photographs and other information about the artist be removed from a website, online service, online application, or mobile application owned or serviced by the talent service. Amends Labor Code Sections 1703 and 1703.4.  Effective January 1, 2017.

Work Experience Education. AB 2063 provides an additional option for a student, at least 14 years old, to participate in work experience education. The bill also increases the number of hours per week a student may participate in job shadowing from 25 to 40 hours per semester, if the principal of the school where the student is enrolled certifies that it is necessary for the student’s participation in a career technical education program. Amends Education Code Section 51760.3 and 51769.  Effective January 1, 2017.

Commercial Online Entertainment Employment Services. AB 1687 addresses age discrimination in the entertainment industry by prohibiting a commercial online entertainment employment service (i.e., IMDb) that enters into a contract, from publishing a subscriber’s age or date of birth in an online profile. Proponents of this legislation cited cases such as Hoang v. Amazon.com, Inc, et al, in which a subscriber sued for having her age published on her profile page. The bill also requires that a service provider—upon request by the subscriber—remove age information from public view in any online profile under its control. Adds Section 1798.83.5 to the Civil Code. Effective January 1, 2017.

Other

Single-User Restrooms. AB 1732 requires all single-user toilet facilities in any business establishment, place of accommodation, or government agency to be identified as all-gender toilet facilities. The bill also provides that local officials responsible for code enforcement are to inspect for compliance. Adds Article 5 (commencing with Section 118600) to Chapter 2 of Part 15 of Division 104 of the Health and Safety Code.  Effective March 1, 2017.

VETOED (i.e., “it coulda been worse”)

Parental Leave. SB 654 would have significantly expanded California’s parental leave laws by requiring employers with 20 to 49 employees to provide up to six weeks of unpaid, job-protected parental leave and paid health benefits to bond with a new child within one year of the child’s birth, adoption, or foster care placement. Existing law—the California Family Rights Act—applies only to employers with 50 or more employees, and provides for at least 12 weeks of job-protected parental leave. The Governor vetoed this bill on September 30, stating: “It goes without saying that allowing new parents to bond with a child is very important and the state has a number of paid and unpaid benefit programs to provide for that leave.  I am concerned, however, about the impact of this leave particularly on small businesses and the potential liability that could result.  As I understand, an amendment was offered that would allow an employee and employer to pursue mediation prior to a lawsuit being brought.  I believe this is a viable option that should be explored by the author.”  In other words, we likely have not seen the last of this proposal.

Examination of Jurors. AB 1766 would have required that prospective jurors be referred to by either an identification number or abbreviation during voir dire in criminal trials. In his August 29 veto message, the Governor stated: “The open nature of criminal trials preserves both the defendant’s right to a fair and open trial, as well as the public’s faith in the court’s impartial application of the law. Under existing law, there are adequate remedies available if the court finds good cause to deny public access to the voir dire process or to specific juror information. These situations are best addressed on a case by case basis, and I do not believe there is a demonstrated need for a wholesale change at this time.”

BILLS THAT DIDN’T MAKE THE LEGISLATIVE CUT (i.e., “it coulda been a lot worse”)

Double Pay on the Holiday—2016 Edition. The Double Pay on Holiday Act of 2015 failed to make its way to the Governor for the second year in a row. AB 67 would have required 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 Thanksgiving.

Employee Time Off. AB 2405 would have required an employer to provide an employee at least eight hours annually of paid, job-protected, time off for an absence under the Family School Partnership Act. This bill came on the heels of SB 579, chaptered in 2015, which expanded the authorized reasons an employee can take job-protected time off under the Act and specified the definition of ‘family member” under California’s Kin Care. Read our report on SB 579 here.

Work Hours. SB 878 was similar to AB 357, the Fair Scheduling Act of 2015, which did not make it out of the Assembly. SB 878, the Reliable Scheduling Act of 2016, would have required 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. SB 878 would have required at least seven days advance notice. SB 878 would have required 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.

Meal and Rest or Recovery Periods. AB 1948 would have provided a statutory remedy for an employer’s failure to provide a meal or rest or recovery period. The bill would have specified that the entire “penalty amount” was an additional hour or pay for each day that a meal or rest or recovery period was not provided to the employee.

California Workplace Flexibility Act. SB 985, SB 368’s predecessor, would have allowed employees to submit a written request for a flexible work schedule of up to four 10-hour days per week without obligating the employer to pay overtime for the 9th and 10th hours worked per day. The employer would have been obligated to pay overtime for any hours worked over 10 hours per workday or 40 hours per workweek.

Age Information in Employment. AB 984 would have prohibited an employer from using information obtained via websites regarding a person’s age to discriminate against an employee or applicant for employment. The bill also would have specified that a service provider is considered as doing business in this state and subject to California’s antidiscrimination laws when they knowingly accept payment from persons in California in exchange for posting their resumes and professional photos online.

Voluntary Veterans Preference Policy. AB 1383 would have created the Voluntary Veterans’ Preference Employment Policy Act to authorize a private employer to establish a written veterans’ preference employment policy. The bill also would have specified that granting a veteran preference, in and of itself, would not violate any local or state equal employment opportunity law or regulation, including, but not limited to, FEHA; and would have prohibited a veterans’ preference employment policy from being established or applied for the purpose of discriminating against an employment applicant on the basis of a protected classification.

Independent Contractors. AB 1727 would have established rights for independent contractors to organize and negotiate with “hosting platforms.” This bill would have provided a right for independent contractors to engage in “group activities” in an effort to negotiate through activities such as withholding work and boycotting or critiquing labor practices. The bill would have authorized an independent contractor or a representative of independent contractors claiming a violation under this bill to bring an action in superior court and to seek injunctive relief.

Employment Arbitration Agreements Discrimination. AB 2879, the “Service Member Employment Protection Act,” brought back the language of 2015’s AB 465, which the Governor vetoed (read our summary here), but 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 was “knowing and voluntary and not made as a condition of employment.”

DLSE Enforcement. AB 2261 would have provided the Department of Labor Standards Enforcement (DLSE) with new independent authority to, with or without an employee complaint, bring an action against an employer that it suspects may have terminated or otherwise discriminated against an employee in violation of any law under the jurisdiction of the Labor Commissioner. The authors of this bill argued that despite laws providing employees protection and encouragement to report abuse, the reality is that many workers do not report out of fear of losing their jobs. AB 2261 was built upon AB 970, which the Governor signed into law last year, and which we wrote about here.

Employee Safety. AB 2895 would have required an employer to keep at each worksite with three or more employees a complete, updated copy of the currently required written injury prevention program and make it available for inspection by any employee or by the Division of Occupational Safety and Health upon request. The bill would have also required an employer to inform each employee of the availability, and employee’s rights, to inspect and receive a copy of the injury prevention program. Additionally, an employer that received a written request would have had to  comply within a specified timeframe. The bill would have also entitled the employee to injunctive relief if the employer did not timely respond to the request.

Human Trafficking Training. AB 1595 would have required public and private mass transportation providers (bus, train, light rail, etc.) to provide training to recognize and report the signs of human-trafficking to employees who were likely to interact with victims of human trafficking. AB 1942 would have required the same training as AB 1595 but it was specific to hotels and motels that provide lodging services.

Sexual Offenses Against Minors. AB 2199 would have defined a two-year sentence enhancement where a defendant who committed a sex crime against a minor held a position of authority over the minor. The bill specifically provided that a person in a “position of authority” included, but was not limited to, a stepparent, foster parent, partner of the parent, youth leader, recreational director, athletic manager, coach, teacher, counselor, therapist, religious leader, doctor, or employer, or employee of one of the aforementioned persons.

PAGA. AB 1317 expanded on last year’s bill, AB 1506, which was signed by the Governor, that gave employers a limited right to cure certain wage-statement violations before an aggrieved employee could sue under PAGA. This bill would have provided an employer a right to cure any violation of the Labor Code before an employee could sue and would have provided an appropriation to the Labor and Workforce Development Agency to establish new positions to review and investigate PAGA cases. This bill was stuck in the Senate committee on rules.

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 the violations an aggrieved employee was authorized to bring and required specific procedures before suing.
  • AB 2462 would have provided employers with a right to cure before an employee brought 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 found 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 was a reasonable basis for a civil action.

Workplace Solutions.

Head spinning?  We’ll summarize all the new and almost-laws and give you practical tips to prepare for them in our webinar on October 6.  Register here.  Or feel free to contact any of the authors or your favorite Seyfarth attorney with any questions.

HiResYou’re reading a blog post, and thus need no primer on the prevalence of social media. But you may not be aware of the pitfalls facing employers that use, monitor, or implement policies regarding social media.

Employers can face liability for a wide variety of social media-related practices. For example, if you thought employers generally could prohibit employees from picking fights online or that there isn’t anything wrong with an employer friending an applicant before extending a job offer … well, think again.

Big Brother The NLRB Is Watching

In recent years, the National Labor Relations Board has increasingly scrutinized social media employment policies to see if they would deter the rights of employees to engage in concerted activities, including the rights to discuss their terms and conditions of their employment.

We previously lamented the lack of clarity regarding what constitutes an acceptable social media policy in the jaundiced eyes of the NLRB. The good news is that the NLRB’s General Counsel has issued guidelines regarding social media policies.  The bad news is that the guidelines sometimes offer insufficient guidance, or guidance that the courts may not accept. Further, the views expressed in the guidelines are those of the General Counsel, and may or may not be accepted by the NLRB.

For example, the NLRB guidelines advise that the following seemingly innocuous rules are likely unlawful:

  • prohibiting employees from engaging in disrespectful, negative, inappropriate or rude conduct towards employers or management;
  • generally prohibiting employees from sending unwanted, offensive or inappropriate emails;
  • banning, across the board, picking fights online; and
  • requiring employees to get approval before creating a blog or discussion group.

The NLRB guidelines disapprove of such generally stated policies because they could have the effect of curbing protected activity.

In contrast, the NLRB explained that the following, more specific, rules would likely be lawful:

  • prohibiting employees from being disrespectful, negative or rude to customers;
  • prohibiting conduct that threatens, intimidates, coerces, or otherwise interferes with the job performance of fellow employees or visitors; and
  • requiring employees to get approval before creating an online forum that does not relate to wages, terms, and conditions of employment or other protected activity.

The NLRB guidelines suggest that these rules likely would be permissible because they are drafted with sufficient specificity to demonstrate that they won’t impede the right of employees to discuss the terms and conditions of their employment.

The main takeaway from the NLRB guidelines is that context is key. A rule that might come across as ambiguous (and unlawful) in isolation may take on a whole new meaning with carve outs or examples that demonstrate how the rule won’t prevent an employee from engaging in a protected activity.

Pandora’s Box of Potential Pitfalls

The NLRB is not the only policer of social media employment policies. California and a growing number of other states prohibit employers from (1) requiring job applicants to provide social media passwords, (2) requiring job applicants to “friend” employees, or (3) requiring applicants’ friends to disclose what the applicants posted online. [Keep an eye out for Part 2 of our Social Media article, with its link to Seyfarth’s Social Media Privacy Legislation Desktop Reference Guide.]

It remains true, of course, that California employers are not explicitly prohibited from viewing publicly available information. But just because it’s not unlawful doesn’t mean it’s advisable.

In addition to social media revealing trivial information like what someone just listened to on Spotify, social media can also reveal a host of personal information that employers cannot ask for during the hiring process (and may be better off not knowing). By viewing this information and then deciding not to hire an applicant, employers can inadvertently expose themselves to litigation risk. For example, if a rejected applicant’s Instagram or Facebook postings contain pregnancy-related pictures, or photographs of church-related functions, or show that the applicant has a disabled child or spouse, a potential employer might later find itself embroiled in a discrimination claim.

So while California has not (yet) forbidden you to check out your potential employee pool online, the potential problems caused by doing so may mean you might want to skip the Facebook stalking and stick with Candy Crush. (The uninitiated who find this reference obscure may wish to consult https://apps.facebook.com/candycrush.)

Workplace Solutions

Given the trove of personal information available online, the best practice is to avoid using social media during the hiring process. And it might seem harmless to prevent an employee from being rude to a supervisor on Twitter, or to look up a potential employee on your Facebook app, in this case what you inadvertently know might hurt you. So steer clear if you can—knowing how many Grumpy Cat memes an applicant or employee posted is not worth it!

If you have any questions regarding your workplace’s social media policies or practices, please contact the author, or another Seyfarth attorney.