Seyfarth Synopsis: Employment-related cases pending before the California Supreme Court concern various questions that sometimes seem technical, but the answers they elicit will have big consequences. Questions raised by the current crop of cases include standing to sue, the availability of certain claims and remedies, federal preemption of California laws, what counts as compensable time, and—that perennial favorite—how to interpret the infernal PAGA statute.

We expect the California Supreme Court in 2019 to issue decisions addressing many important issues in private employment. Some topics easily warrant their own article or blog post, and will receive that treatment as the Supreme Court’s decisions emerge. But it’s not too soon to highlight some coming attractions.

Anti-SLAPP and Alleged Employer Motive

  • Is an employer’s anti-SLAPP motion to strike an employee’s suit affected by the employer’s alleged discriminatory motive? In Wilson v. Cable News Network, Inc., the Supreme Court has agreed to decide “whether an employee’s claims for discrimination, retaliation, wrongful termination, and defamation arise from protected activity for purposes of a special motion to strike,” and “what is the relevance of an allegation that the employer acted with a discriminatory or retaliatory motive?”

Application of CA Wage-Hour Law to Out-of-State Employers

  • Does California employment law apply to non-California residents who work in California on a transitory basis? In Ward v. United Airlines and Oman v. Delta Air Lines, the Supreme Court has accepted the Ninth Circuit’s request to address five questions:
    • (1) “Does California Labor Code section 226 apply to wage statements provided by an out-of-state employer to an employee who resides in California, receives pay in California, and pays California income tax on her wages, but who does not work principally in California or any other state?”
    • (2) Does the exemption in Wage Order 9 for collective bargaining agreements (CBA) under the Railway Labor Act bar a wage statement claim brought under California Labor Code section 226 by an employee who is covered by such a CBA?
    • (3) “Do California Labor Code sections 204 and 226 apply to wage payments and wage statements provided by an out-of-state employer to an employee who, in the relevant pay period, works in California only episodically and for less than a day at a time?”
    • (4) “Does California minimum wage law apply to all work performed in California for an out-of-state employer by an employee who works in California only episodically and for less than a day at a time?”
    • (5) “Does the Armenta/Gonzalez bar on averaging wages apply to a pay formula that generally awards credit for all hours on duty, but which, in certain situations resulting in higher pay, does not award credit for all hours on duty?

Arbitration

  • When is an arbitration remedy broad enough to preclude an employee’s resort to a Berman hearing? Under existing law, employers cannot necessarily compel employees to arbitrate wage claims unless and until employees have had the chance to bring those claims before the Labor Commissioner in a “Berman hearing.” In OTO, L.L.C. v. Kho, the Supreme Court has agreed to decide these issues:
    • “(1) Was the arbitration remedy at issue in this case sufficiently affordable and accessible within the meaning of Sonic-Calabasas A, Inc. v. Moreno (2013) … to require the company’s employees to forego the right to an administrative Berman hearing on wage claims?
    • (2) Did the employer waive its right to bypass the Berman hearing by waiting until the morning of that hearing, serving a demand for arbitration, and refusing to participate in the hearing?”

Compensability

  • Does an employee engage in compensable work while waiting for the employer to inspect a bag the employee chose to bring to work? In Frlekin v. Apple, Inc., the Supreme Court has accepted the Ninth Circuit’s request to decide this issue: “Is time spent on the employer’s premises waiting for, and undergoing, required exit searches of packages or bags voluntarily brought to work purely for personal convenience by employees compensable as ‘hours worked’ within the meaning of California Industrial Welfare Commission Wage Order No. 7?”
  • Is walking to and from a time clock compensable hours worked? In Stoetzl v. State of California, the Supreme Court has agreed to decide this issue: “Does the definition of ‘hours worked’ found in the Industrial Wage Commission’s Wage Order 4, as opposed to the definition of that term found in the federal Labor Standards Act, constitute the controlling legal standard for determining the compensability of time that correctional employees spend after signing in for duty and before signing out but before they arrive at and after they leave their actual work posts within a correctional facility?”

Liability for Wage Payment

Preemption—By the FAA and the LMRA

  • Is a PAGA suit for unpaid wages immune from arbitration? In its 2014 Iskanian case, the California Supreme Court acknowledged that the Federal Arbitration Act (FAA) preempts state laws against class-action waivers in arbitration agreements, but also held that representative PAGA actions are not subject to mandatory arbitration. Now, in Lawson v. Z.B., N.A., the Supreme Court has decide to whether a representative action under PAGA, seeking recovery of individualized lost wages as civil penalties under Labor Code section 558, falls within the preemptive scope of the FAA.
  • Does federal labor law preempt a claim for termination wages? In Melendez v. San Francisco Baseball Associates, the Supreme Court has agreed to decide this issue: “Is plaintiffs’ statutory wage claim under Labor Code section 201 subject to mandatory arbitration pursuant to section 301 of the Labor Management Relations Act because it requires the interpretation of a collective bargaining agreement?”

Remedies

  • Can an employee seeking unpaid wages use the tort of conversion? In Voris v. Lampert, the Supreme Court has agreed to decide this issue: “Is conversion of earned but unpaid wages a valid cause of action?”

Rest Breaks & Meal Periods

  • Rest breaks for ambulance attendants on 24-hours shifts. In Stewart v. San Luis Ambulance, Inc., the Supreme Court accepted the Ninth Circuit’s request to decide these issues: (1) “Under the California Labor Code and applicable regulations, is an employer of ambulance attendants working twenty-four hour shifts required to relieve attendants of all duties during rest breaks, including the duty to be available to respond to an emergency call if one arises during a rest period?: (2) “Under the California Labor Code and applicable regulations, may an employer of ambulance attendants working twenty-four hour shifts require attendants to be available to respond to emergency calls during their meal periods without a written agreement that contains an on-duty meal period revocation clause? If such a clause is required, will a general at-will employment clause satisfy this requirement?” (3) “Do violations of meal period regulations, which require payment of a ‘premium wage’ for each improper meal period, give rise to claims under sections 203 and 226 of the California Labor Code where the employer does not include the premium wage in the employee’s pay or pay statements during the course of the violations?”

Standing for PAGA Claims

  • Can a PAGA plaintiff settle his individual wage and hour claims and still pursue his PAGA action as an “aggrieved employee”? In Kim v. Reins International California, Inc., the Supreme Court has agreed to decide whether an employee bringing an action under PAGA loses standing to pursue representative claims as an “aggrieved employee” by dismissing his or her individual claims against the employer.

Workplace solution. Some of the issues raised by the above cases may seem relatively minor, technical, or limited to particular industries. Yet many a significant class action has turned upon issues no more monumental. We will keep our eyes and ears on the Court’s progress and keep readers updated with the latest developments.

Seyfarth Synopsis: Plaintiffs’ lawyers routinely invoke Labor Code provisions to conduct pre-litigation discovery by seeking employment records. For employers that scramble to comply with these often burdensome demands, we offer some practical tips on how to utilize the protections the law provides for employers and for the (perhaps) unsuspecting employees on whose purported behalf the request is made.

Have you received a lawyer’s letter containing a seemingly endless list of employment records demanded on behalf of a current or former employee? If so, count yourself in the majority. It is now commonplace for plaintiffs’ attorneys to bombard employers with demands for employment records before they launch a legal action against the company. The letter may also list a long series of alleged statutory violations, in search of a quick settlement and a big pay day.

This blog highlights some protections that employers have and shares some creative ways to respond the next time you receive a pre-litigation document demand.

A Quick Recap of the Law

Labor Code §§ 1198.5 and 226 are the two statutes most commonly used to seek employment records. Section 1198.5 entitles an employee, former employee, or her representative (usually an attorney) to inspect or receive a copy of personnel records relating to the employee’s performance or any grievance concerning the employee. The DLSE’s non-exhaustive list of examples of covered documents includes these items: applications for employment, performance reviews, commendations, warnings, disciplinary actions, and complaints about the employee.

Section 226 entitles an employee or an employee’s representative to seek the employee’s wage statement records. Employers responding to a Section 226 request may provide “a computer-generated record” in lieu of actual wage statement copies, provided that record contains all nine specified items of information, such as all hourly rates, hours worked, gross wages earned, etc. And, as of January 1, 2019, employers must provide the employee a copy of the wage statements or computer-generated record upon request, rather than just providing an opportunity for an “inspection.”

Employer must provide responsive documents within certain time limits—personnel records within 30 days and wage statement records within 21 days. A failure to timely respond to these requests could lead to penalties, civil litigation, and, in some cases, criminal liabilities.

We’ve previously written an in-depth analysis of these provisions and how to comply with record requests under them.

Is There Anything I Can Do Before Producing the Records?

Before blindly complying with requests and producing all the responsive documents, employers should consider verifying the identity of the person seeking the records and whether the individual is truly entitled to obtain them. Sections 1198.5 and 226 both expressly permit a company to take “reasonable steps” to verify the identity of the employee or the representative seeking the employment records. Under Section 1198.5(e), the employer “may take reasonable steps to verify the identity of a current or former employee or his or her authorized representative.” Under Section 226(b), the employer “may take reasonable steps to ensure the identity of a current or former employee.”

Why Should I Seek Verification Before Producing the Records?

There are several reasons to implement a verification process:

  • Employment records often contain sensitive and private information, such as social security numbers, financial data, and contact information. With the burgeoning threat of identity theft, employers should be mindful about producing sensitive employment records to strangers who claim to be the employee or the employee’s representative.
  • Employment record requests often put companies in a time crunch to compile and respond. By seeking verification, the company develops a basis for an argument that it should have more time to gather the requested information and complete its review of responsive documents.
  • The verification process helps ensure there is an existing relationship between the attorney and the current or former employee and that the employee has authorized the attorney to get the records on her behalf.
  • The verification process forces the attorney making the demand to re-engage with the client. In some cases, the employee may develop a change of heart and no longer wish to sue the company. When that happens, the attorney who claims to represent the employee cannot complete the verification request, and the company may never hear back from the attorney (or the employee) again.

So the next time you receive a letter from an employment lawyer, consider taking a moment to consider the best approach for your response. Because each request should be examined and evaluated on a case-by-case basis, please make sure you seek proper legal advice from a qualified employment lawyer.

If you would like assistance or have questions about the strategies for responding to employment records requests, please contact the authors or your favorite Seyfarth attorney.

October 11, 2015, was Governor Brown’s last day to sign bills the California Legislature presented to him following the first year of the 2015-2016 Legislative Session. Below is a summary of what did and did not make Governor Brown’s final cut, and some practical tips for California employers to prepare themselves for compliance with these new California peculiarities.

SIGNED BY THE GOVERNOR

Piece Rate. AB 1513, adding Labor Code section 226.2 and repealing sections 77.7, 127.6, and 138.65, will make it even more difficult for California employers to pay employees on a piece-rate basis. Effective January 1, 2016, employers must pay piece-rate employees for rest and recovery periods (and all other periods of “nonproductive” time) separately from (and in addition to) their piece-rate compensation. Specifically, employers will need to pay the following rates for rest and recovery periods and “other nonproductive time”:

  • Rest and recovery periods. Employers must pay a piece-rate employee for rest and recovery periods at an average hourly rate that is determined by dividing the employee’s total compensation for the workweek (not including compensation for rest and recovery periods and overtime premiums) by the total hours worked during the workweek (not including rest and recovery periods).
  • Other nonproductive time. Employers must pay piece-rate employees for other nonproductive time at a rate that is no less than the minimum wage. If employers pay an hourly rate for all hours worked in addition to piece-rate wages, then those employers would not need to pay amounts in addition to that hourly rate for the other nonproductive time.

Employers must specify additional categories of information on a piece-rate employee’s itemized wage statement: (i) the total hours of compensable rest and recovery periods, (ii) the rate of compensation paid for those periods, and (iii) the gross wages paid for those periods during the pay period. If employers do not pay a separate hourly rate for all hours worked (in addition to piece-rate wages), then the employer must also list (i) the total hours of other non-productive time, (ii) the rate of compensation for that time, and (iii) the gross wages paid for that time during the pay period. Signed October 10, 2015.

PAGA. AB 1506, amending California’s Private Attorneys General Act (“PAGA”) codified in Labor Code sections 2699, 2699.3, and 2699.5, became effective upon the Governor’s signature on October 2, 2015. PAGA, as thus amended, now gives employers a limited right to cure certain wage-statement violations before an aggrieved employee may sue under PAGA. Specifically, an employer can cure violations of the wage-statement statute (Labor Code section 226(a)) with respect to providing either the inclusive dates of the pay period or the name and address of the legal entity that is the employer. An employer can take advantage of this provision only once for the same violation of the statute during each 12-month period.

Employer Liability: Employee Family Member Protected Complaints & Labor Contractor Joint Liability. AB 1509, effective January 1, 2016, amends Labor Code sections 98.6, 1102.5, and 6310 to forbid employers from retaliating against employees for being a family member of an employee who has, or is perceived to have, engaged in activities protected under those Labor Code sections (i.e., generally, making complaints about working conditions or pay, or whistleblowing). The bill also amends Labor Code section 2810.3—added to the Labor Code in January 2015 to impose joint liability on client employers for employees supplied by a labor contractor (our analysis of that law is here)—to exclude from that law client employers that use Public Utilities Commission-permitted third-party household goods carriers, as specified. Signed October 11, 2015.

Expansion of Labor Commissioner Enforcement Authority. AB 970, effective January 1, 2016, amends Labor Code sections 558, 1197, and 1197.1 to authorize the Labor Commissioner to enforce local laws regarding overtime and minimum wage provisions and to issue citations and penalties for violations, provided the local entity has not already cited the employer for the same violation. The bill also authorizes the Labor Commissioner to issue citations and penalties to employers who violate the expense reimbursement provisions of Labor Code section 2802. Signed October 11, 2015.

Labor Commissioner: Judgment Enforcement. SB 588, effective January 1, 2016,  makes various changes and additions to the Labor Code relating to the Labor Commissioner’s enforcement authority. Among other things, it authorizes the Labor Commissioner to file a lien on the employer’s property in California for unpaid wages, and other compensation, penalties, and interest owed to an employee. Signed October 11, 2015.

Industrial Welfare Commission: Wage Orders—Hospital Meal Periods. SB 327 clarifies that existing law regarding a health care employee’s ability to waive voluntarily one of the two meal periods on shifts exceeding 12 hours remains in effect. The bill states that the rules remain the same as they have been since 1993 (as expressly embraced by the Industrial Welfare Commission in 2000). The legislation was adopted to remove any uncertainty caused by the decision in Gerard v. Orange Coast Mem. Med. Ctr., 234 Cal. App. 4th 285 (2015). Signed by the Governor on October 5, 2015, the bill took effect immediately as an urgency measure.

Gender Wage Equality. As we discussed in detail immediately after the Governor’s October 6 signing of SB 358, the bill, effective January 1, 2016, amends Labor Code section 1197.5 to prohibit employers from paying any employee at a wage rate less than that paid to employees of the opposite sex for doing substantially similar work—when viewed as a composite of skill, effort, and responsibility. The new legislation also requires employers to affirmatively demonstrate that a wage differential is based entirely and reasonably upon enumerated factors, such as a seniority system, a merit system, a system that measures earnings by quantity or quality of production, or a bona fide factor that is not based on or derived from a sex-based differential in compensation and that is consistent with a business necessity. The bill contains anti-retaliation provisions and provides a private right of action to enforce its provisions.

Kin Care. SB 579, effective January 1, 2016, amends California’s Kin Care law (Labor Code section 233) to tie its protections to the reasons and definition of “family member” specified in the Healthy Workplaces, Healthy Families Act of 2014 (i.e., paid sick leave law). The bill also expands coverage of California’s school activities leave (Family School Partnership Act, Labor Code section 230.8) to include day care facilities and cover child care provider emergencies, and the finding, enrolling, or reenrolling of a child in a school or day care, and would extend protections to an employee who is a step-parent or foster parent or who stands in loco parentis to a child. Signed October 11, 2015.

Annual E-Verify Bill. AB 622, effective January 1, 2016, adds section 2814 to the Labor Code to prohibit an employer from using E-Verify to check the employment authorization status of an existing employee or an applicant who has not received an offer of employment, except as required by federal law or as a condition of receiving federal funds. Each employer that uses E-Verify in violation of this new section is liable for $10,000 per violation. Signed October 9, 2015.

Paid Sick Leave Amendments. AB 304, signed by the Governor July 13, 2015, and effective on that date, amends provisions of the Healthy Workplaces, Healthy Families Act of 2014 codified in Labor Code sections 245.5, 246, and 247.5. Read our detailed analysis of this legislation.

Accommodation Request as Protected Activity. AB 987, effective January 1, 2016, amends Government Code section 12940 to overturn the interpretation in Rope v. Auto-Chlor Sys. of Washington, Inc., 220 Cal. App. 4th 635 (2013), that an accommodation request is not a protected activity. The Legislature thus intended to clarify that a request for reasonable accommodation based on religion or disability constitutes protected activity. The Fair Employment and Housing Act, thus amended, will now expressly prohibit retaliation and discrimination against a person for requesting accommodation, regardless of whether the request is granted.  Signed July 16, 2015.

Professional Sports Team Cheerleaders as Employees. AB 202, effective January 1, 2016, requires California-based professional major and minor league baseball, basketball, football, ice hockey, and soccer teams to classify and treat cheerleaders who perform during those teams’ exhibitions, events, or games as employees and not independent contractors.

90-Day Retention of Grocery Workers Following Change of Ownership. AB 359 and AB 897, effective January 1, 2016, adds Labor Code sections 2500-2522 to require a “successor grocery store employer” to retain the current grocery workers for 90 days upon the “change in control” of a grocery store. The new law, previously discussed here also imposes specific requirements on the incumbent grocery store. Governor Brown noted in his signing message an ambiguity in how the law applies if an incumbent grocery employer has ceased operations, and noted the author and sponsor have committed to clarify that the law would not apply to a grocery store that has ceased operations for six months or more. The Legislature responded with AB 897, which will exclude from the definition of “grocery establishment” a retail store that has ceased operations for six months or more. AB 897 signed September 21, 2015.

VETOED: BILLS THE GOVERNOR REJECTED (i.e., “it coulda been worse”)

Arbitration and Pre-Employment Waiver Restrictions. As we recently wrote, AB 465 would have added section 925 to the Labor Code to (i) prohibit companies from conditioning employment offers (or renewals) on the waiver of any Labor Code-related right, (ii) require that any waiver of Labor Code protections be knowing, voluntary, and in writing, (iii) deem any waiver of Labor Code rights conditioned on employment to be “involuntary, unconscionable, against public policy, and unenforceable,” (iv) prohibit retaliation against any person who refuses to waive Labor Code-related rights, and (v) authorize an attorneys’ fees recovery for a plaintiff who enforces rights under the newly created section 925. The Governor vetoed the bill on October 11, 2015. His signing statement says that arbitration is not necessarily less fair to employees, and even if it were, Armendariz provides protections for employees in arbitration proceedings. Any remaining abuses should be addressed by targeted, not blanket legislation. And Governor Brown wants to see the outcome of two pending FAA-preemption cases before considering such a broad blanket prohibition.

Other Pay Equity Bills. AB 1017 (enrolled and presented to the Governor September 15) and AB 1354 (enrolled September 10). AB 1017 would have added section 432.3 to the Labor Code to prohibit an employer from seeking salary history information about an applicant for employment. AB 1354 would have amended Government Code section 12990 to require, of each employer with over 100 employees that is or wishes to be a state contractor or subcontractor, a nondiscrimination program that includes policies and procedures designed to ensure equal employment opportunities for all applicants and employees, an analysis of employment selection procedures, and a workforce analysis that contains the total number of workers, the total wages, and the total hours worked annually, within a specific job category identified by worker race, ethnicity, and sex. On October 11, the Governor vetoed both bills. In vetoing AB 1017, he stated we should wait to see if SB 358—the strongest equal pay law in the country—covers the issue, and did not think this bill’s broad prohibition on employers obtaining relevant information would have any effect on pay equity. In vetoing AB 1354, he stated that the DFEH’s current requirements and powers made the legislation unnecessary.

CFRA Leave. SB 406 would have extended the protections of the California Family Rights Act (“CFRA”), Government Code section 12945.2, to care for grandparents, all children (removing any age restriction), and grandchildren, as well as siblings, domestic partners, and in-laws. Vetoed October 11, 2015, because the bill would have created a disparity between FMLA and CFRA.

Athletic Trainers. AB 161 would have made it unlawful and an unfair business practice for any person to use the title of athletic trainer, unless the trainer is certified by the Board of Certification and has completed specified educational or training requirements. Exempt from these provisions were persons who have worked as athletic trainers in California for a period of 20 consecutive years prior to January 1, 2016. AB 161 would have added sections 18898 and 18899 to the Business and Professions Code. Vetoed on September 28,  for the same reasons as the nearly identical measure the Governor vetoed last year—he believes that the conditions set forth in the bill impose unnecessary burdens on athletic trainers without sufficient evidence that changes are needed.

ALRA. AB 561 was this year’s Agricultural Labor Relations Act bill. It would have required the Agricultural Labor Relations Board to process within one year all board orders finding an employer liable for benefits due to unfair labor practices. It also would have required an employer who appeals an order of the Board involving certain awards to employees to post a bond in the amount of the entire value of the order. The Governor vetoed this bill on October 11, because he does not believe the one-year timeline allows for unexpected delays or litigation—even expedited awards take about 18 months. He also noted that, as he did in SB 28 last year, a balanced approach to ALRA enforcement reforms is needed, and encouraged the ALRB to explore internal reforms for more timely awards.

Unemployed. Undeterred by the Governor’s 2014 veto of similar legislation in AB 2271, the Legislature put AB 676 on the Governor’s desk, which would have added section 432.4 to the Labor Code to prohibit employers from publishing an announcement for a job that states or indicates an unemployed person is not eligible for the job, and to prohibit employers from asking applicants to disclose, orally or in writing, the applicant’s current employment status. The Governor vetoed the bill on October 10, because “nothing has changed. I still believe that the author’s approach does not provide a proper or even effective path to get unemployed people back to work.”

Public Employees. AB 883 would have added section 432.6 to the Labor Code to prohibit a state or local agency from discriminating against current or former public employees in publishing job advertisements, in establishing qualifications for job eligibility, and in making adverse employment decisions. The bill would also have prohibited persons who operate job posting websites from publishing any job advertisement or announcement that indicates the applicant must not be a current or former public employee. The bill removed private employers from its scope and removes damages and penalty recovery provisions. Vetoed October 10, 2015.

BILLS THAT FAILED TO MAKE THE FINAL LEGISLATIVE CUT (i.e., “it coulda been a lot worse”)

Minimum Wage Increase. SB 3 would have increased the minimum wage to $11 per hour in 2016 and $13 per hour in 2017. The bill would have also, beginning January 1, 2019, automatically adjusted the minimum wage on each January 1 to maintain employee purchasing power diminished by the rate of inflation in the prior year. Other minimum wage bills on which we previously reported, AB 1007 and AB 669, failed to make it out of the Assembly. This bill, likewise, stalled in appropriations.

Retail Scheduling. The much-feared “Fair Scheduling Act of 2015,” AB 357, based upon the recent San Francisco Retail Workers’ Bill of Rights, was held in the Assembly and ordered inactive in June. Watch for its provisions to reappear in 2016.

OT Exemption. AB 1470 was held in the Assembly at the author’s election. It would have established a rebuttable presumption that employees with gross annual compensation of $100,000 or greater (at least $1,000 per week paid on a salary or fee basis) who regularly perform any exempt duties of an executive, administrative, or professional employee are exempt from overtime pay.

Double Pay on the Holiday Act of 2015. AB 67, Assembly Member Gonzalez’s attempt to require employers to pay employees double pay on Christmas and Thanksgiving, failed passage out of the Assembly. The bill then was ordered to the inactive file by the author.

Workplace Flexibility Act(s) of 2015. AB 1038 would have amended the Labor Code to permit nonexempt employees to request employee-selected flexible work schedules providing for workdays up to 10 hours per day without obligating the employer to pay overtime for those additional hours. The bill did not make it out of its first committee hearing. SB 368 similarly would have allowed a nonexempt employee to request a flexible work schedule up to 10-hour work days, and entitled the employee to overtime for hours worked greater than 10 hours in a work day or 40 hours in a work week.

Voluntary Veterans’ Preference Employment Policy Act. AB 1383 would have amended the FEHA to ensure that none of its nondiscrimination provisions affect the hiring decisions of an employer that maintains a veterans’ preference employment policy established in accordance with the Voluntary Veterans’ Preference Employment Policy Act (Government Code section 12958 et seq.), which this bill would have also created.

Age Information. AB 984, which would have prohibited an employer from using information obtained on a website regarding an employee or applicant’s age in making any employment decision regarding that person, failed in committee.

Unfair Immigration-Related Practices. AB 1065 was also held in committee. This bill would have made it an unlawful employment practice for an employer to request more or different documents than are required under federal law relating to verification that an individual is not an unauthorized alien, or to refuse to honor documents tendered that on their face reasonably appear to be genuine, or to attempt to reinvestigate or re-verify an incumbent employee’s authorization to work unless required to do so by federal law.

Paid Family Leave Benefit Extension. AB 908 would have required the family temporary disability insurance program to provide up to eight weeks, rather than the existing six weeks, of wage replacement benefits to workers who take time off work to care for specified persons, or to bond with a minor child within one year of the birth or placement of the child. This bill also would have required the weekly benefit amount under this program to be calculated using a specified formula.

Workplace Solutions

Follow our Cal Pecs blog www.calpecs.com for more in-depth analysis of how some of the new legislation may affect employers doing business in California.

California State Capitol in Sacramento

The California Legislature adjourned Friday evening, September 11, to close its 2015-16 Legislative Session. It sent a number of employment-related bills to Governor Brown for consideration by his October 11, 2015 deadline to sign or veto the bills. Below is a summary of those before him for consideration, as well as some significant bills he has already signed or that did not make it to his desk. Which private labor and employment bills will the Governor sign into law? We’ll keep you updated…

PENDING BILLS:

Wage and Hour

Piece Rate. AB 1513, if approved, would make it even more difficult for California employers to pay employees on a piece-rate basis. The bill provides that employers must pay piece-rate employees for rest and recovery periods (and all other periods of “nonproductive” time) separately from (and in addition to) their piece-rate compensation. Specifically, the bill would require that employers pay the following rates for rest and recovery periods and “other nonproductive time.”

  • Rest and recovery periods. Employers must pay piece-rate employees for rest and recovery periods at an average hourly rate that is determined by dividing the employee’s total compensation for the workweek (not including compensation for rest and recovery periods and overtime premiums) by the total hours worked during the workweek (not including rest and recovery periods).
  • Other nonproductive time. Employers would have to pay piece-rate employees for other nonproductive time at a rate that is no less than the applicable minimum wage. If employers pay an hourly rate for all hours worked in addition to piece-rate wages, then those employers would not need to pay amounts in addition to that hourly rate for the other nonproductive time.

The bill also would specify additional categories of information that must appear on a piece-rate employee’s itemized wage statement: (i) the total hours of compensable rest and recovery periods, the rate of compensation paid for those periods, and the gross wages paid for those periods during the pay period. If employers do not pay a separate hourly rate for all hours worked (in addition to piece-rate wages), then the employer must also list the total hours of other non-productive time, the rate of compensation for that time, and the gross wages paid for that time during the pay period.

AB 1513 would add Section 226.2 to the Labor Code, and repeal Sections 77.7, 127.6, and 138.65 of the Labor Code. Enrolled on September 16, 2015.

Gender Wage Equality, SB 358, AB 1017, AB 1354. As we recently wrote, there are a few important gender pay equality bills making their way through the Legislature. First, representing what media observers call the nation’s most aggressive attempt yet to close the salary gap between men and women, SB 358 would substantially broaden California gender pay differential law. SB 358 (enrolled and presented to the Governor September 15) would prohibit an employer from paying any employee at a wage rate less than that paid to employees of the opposite sex for doing substantially similar work—when viewed as a composite of skill, effort, and responsibility—and require the employer to affirmatively demonstrate that a wage differential is based entirely and reasonably upon one or more enumerated factors, such as a seniority system, a merit system, a system that measures earnings by quantity or quality of production, or a bona fide factor that is not based on or derived from a sex-based differential in compensation and that is consistent with a business necessity. The bill contains anti-retaliation provisions and provides a private right of action to enforce its provisions.

AB 1017 (enrolled and presented to the Governor September 15) and AB 1354 (enrolled September 10). AB 1017 would add section 432.3 to the Labor Code, to prohibit an employer from seeking salary history information about an applicant for employment. AB 1354 would amend Government Code section 12990 to require, of each employer with over 100 employees that is or wishes to be a state contractor or subcontractor, a nondiscrimination program that includes policies and procedures designed to ensure equal employment opportunities for all applicants and employees, an analysis of employment selection procedures, and a workforce analysis that contains the total number of workers, the total wages, and the total hours worked annually, with a specific job category identified by worker race, ethnicity, and sex.

PAGA. AB 1506 would amend California’s Private Attorneys General Act (“PAGA”), now codified in Labor Code sections 2699, 2699.3, and 2699.5, to give employers a limited right to cure certain wage-statement violations, before an employee may bring a civil action under PAGA. Specifically an employer would be able to cure a violation of the requirement in Labor Code section 226(a) that an employer provide employees with the inclusive dates of the pay period and the name and address of the legal entity that is the employer. The employer would be allowed to take advantage of this provision only once for the same violation of the statute during each 12-month period. The bill’s provisions would become effective immediately upon the Governor’s signing the bill. Enrolled September 11, 2015.

Leaves of Absence

Kin Care. SB 579 would amend California’s Kin Care law (Labor Code Section 233) to tie its protections to the reasons and definition of “family member” specified in the Healthy Workplaces, Healthy Families Act of 2014. The bill also would expand coverage of California’s school activities leave (Family School Partnership Act, Labor Code Section 230.8) to include day care facilities and cover child care provider emergencies, and the finding, enrolling, or reenrolling of a child in a school or day care, and would extend protections to an employee who is a step-parent or foster parent or who stands in loco parentis to a child. Enrolled and presented to the Governor September 8, 2015.

CFRA Leave. SB 406 would extend the protections of the California Family Rights Act (“CFRA”), Government Code Section 12945.2, to care for grandparents, all children (removing any age restriction), and grandchildren, as well as siblings, domestic partners, and in-laws. Enrolled September 16, 2015.

Hiring/Applicants

Unemployed. Undeterred by the Governor’s 2014 veto of similar legislation in AB 2271, AB 676 was introduced and made its way to the Governor’s desk. The bill would add section 432.4 to the Labor Code, beginning July 1, 2016 to prohibit employers from publishing an announcement for a job that states or indicates an unemployed person is not eligible for the job, and from asking applicants to disclose, orally or in writing, the applicant’s current employment status. Enrolled and presented to the Governor September 16, 2015.

Public Employees. AB 883 would add section 432.6 to the Labor Code to prohibit a state or local agency from discriminating against current or former public employees in publishing job advertisements, in establishing qualifications for job eligibility, and in making adverse employment decisions. The bill would also prohibit persons who operate job posting websites from publishing any job advertisement or announcement that indicates the applicant must not be a current or former public employee. The current version of the bill removes private employers from its scope and removes damages and penalty recovery provisions. Enrolled September 14, 2015.

Annual E-Verify Bill. AB 622 would add section 2814 to the Labor Code to prohibit an employer from using E-Verify to check the employment authorization status of an existing employee or an applicant who has not received an offer of employment, except as required by federal law or as a condition of receiving federal funds. The bill would subject each employer that uses E-Verify in violation of this new section to $10,000 per violation. Enrolled and presented to the Governor September 16, 2015.

Other

Employer Liability: Employee Family Member Protected Complaints & Labor Contractor Joint Liability. AB 1509 would amend Labor Code sections 98.6, 1102.5, and 6310, to make it unlawful for an employer to retaliate against an employee for being a family member of an employee who has, or is perceived to have, engaged in activities protected under those Labor Code sections. The bill would also amend Labor Code section 2810.3, which was added to the Labor Code January 1, 2015 to impose joint liability on client employers for employees supplied by a labor contractor (our analysis of that law is here), to exclude from that law client employers that use Public Utilities Commission-permitted third-party household goods carriers, as specified. Enrolled and presented to Governor September 16, 2015.

Expansion of Labor Commissioner Enforcement Authority. AB 970 would amend Labor Code sections 558, 1197, and 1197.1 to authorize the Labor Commissioner to enforce local laws regarding overtime and minimum wage provisions and to issue citations and penalties for violations, provided the local entity has not already cited the employer for the same violation. The bill would also authorize the Labor Commissioner to issue citations and penalties to employers who violate the expense reimbursement provisions of Labor Code section 2802. Enrolled and presented to the Governor September 15, 2015.

Arbitration and Pre-Employment Waiver Restrictions. As we recently wrote, AB 465 would add section 925 to the Labor Code to (i) prohibit companies from conditioning employment offers (or renewals) on the waiver of any Labor Code-related right, (ii) require that any waiver of Labor Code protections be knowing, voluntary, and in writing, (iii) deem any waiver of Labor Code rights conditioned on employment to be “involuntary, unconscionable, against public policy, and unenforceable,” (iv) prohibit retaliation against any person who refuses to waive Labor Code-related rights, and (v) authorize an attorneys’ fees recovery for a plaintiff who enforces rights under the newly created section 925. Enrolled and presented to the Governor September 3, 2015.

Athletic trainers. AB 161 would make it unlawful and an unfair business practice for any person to use the title of athletic trainer, unless the trainer is certified by the Board of Certification and has completed specified educational or training requirements. Exempt from these provisions are persons who have worked as athletic trainers in California for a period of 20 consecutive years prior to January 1, 2016. AB161 would add sections 18898 and 18899 to the Business and Professions Code. Enrolled and presented to the Governor September 16, 2015.

SIGNED BY THE GOVERNOR

Paid Sick Leave Amendments. AB 304. Read our detailed analysis of this legislation and its effect on the Healthy Workplaces, Healthy Families Act of 2014 provisions it amended (Labor Code sections 245.5, 246, 247.5). The bill was signed by the Governor July 13, 2015, and became effective on that date, as Chapter 67 of the Statutes of 2015. AB 11, which would have included in-home support services under the definition of “employees” under the Healthy Workplaces, Healthy Families Act, did not make it out of the Assembly.

Accommodation Request as Protected Activity. AB 987 was intended to overturn any contrary interpretation in Rope v. Auto-Chlor Sys. of Washington, Inc. (2013) 220 Cal. App. 4th 635 that an accommodation request is not a protected activity. By amending Government Code section 12940, the Legislature intended to clarify that a request for reasonable accommodation based on religion or disability constitutes protected activity. With the amendments, the statute, effective January 1, 2016, will expressly prohibit retaliation and discrimination against a person for requesting accommodation, regardless of whether the request is granted. Signed by the Governor on July 16, 2015. Chapter 122 of the Statutes 2015.

Professional Sports Team Cheerleaders as Employees. AB 202 requires California-based professional major and minor league baseball, basketball, football, ice hockey, and soccer teams to classify and treat cheerleaders who perform during those teams’ exhibitions, events, or games as employees and not independent contractors. Adds section 2754 to the Labor Code. Signed by the Governor on July 15, 2015. Chapter 102 of the Statutes 2015.

90-Day Retention of Grocery Workers Following Change of Ownership. AB 359 and AB 897. AB 359 would require a “successor grocery store employer” to retain the current grocery workers for 90 days upon the “change in control” of a grocery store. It also imposes specific requirements on the incumbent grocery store. Look for a separate blog devoted to this important piece of legislation for the grocery industry on www.calpecs.com. Adds §§ 2500-2522 to the Labor Code. Signed by the Governor on August 17, 2015. Chapter 21 of the Statutes 2015.

Governor Brown noted in his signing message an ambiguity in how the law applies if an incumbent grocery employer has ceased operations, and noted the author and sponsor have committed to clarify that the law would not apply to a grocery store that has ceased operations for six months or more. On August 20, Assembly Member Gonzalez gutted and amended AB 897, which previously related to court records, to amend provisions that will be put in place by AB 359 on January 1, 2016 to exclude from the definition of “grocery establishment” a retail store that has ceased operations for six months or more. AB 897 was presented to the Governor on September 15.

BILLS THAT FAILED TO MAKE THE CUT (i.e., “it coulda been worse”)

Minimum Wage Increase. SB 3 would have increased the minimum wage to $11 per hour in 2016 and $13 per hour in 2017. The bill would have also, beginning January 1, 2019 automatically adjusted the minimum wage on each January 1 to maintain employee purchasing power diminished by the rate of inflation in the prior year. Other minimum wage bills on which we previously reported, AB 1007 and AB 669, failed to make it out of the Assembly. This bill, likewise, stalled in appropriations.

Retail Scheduling. The much-feared “Fair Scheduling Act of 2015,” AB 357, based upon the recent San Francisco Retail Workers’ Bill of Rights, was held in the Assembly and ordered inactive in June. Watch for its provisions to reappear in 2016.

OT Exemption. AB 1470 was held in the Assembly at the author’s election. It would have established a rebuttable presumption that employees with gross annual compensation of $100,000 or greater (at least $1,000 per week paid on a salary or fee basis) who regularly perform any exempt duties of an executive, administrative, or professional employee are exempt from overtime pay.

Double Pay on the Holiday Act of 2015. AB 67, Assembly Member Gonzalez’s attempt to require employers to pay employees double pay on Christmas and Thanksgiving failed passage out of the Assembly. The bill then was ordered to the inactive file by the author.

Workplace Flexibility Act(s) of 2015. AB 1038 would have amended the Labor Code to permit nonexempt employees to request employee-selected flexible work schedules providing for workdays up to 10 hours per day without obligating the employer to pay overtime for those additional hours. The bill did not make it out of its first committee hearing. SB 368 similarly would have allowed a nonexempt employee to request a flexible work schedule up to 10-hour work days, and, entitled the employee to overtime for hours worked greater than 10 hours in a work day or 40 hours in a work week.

Voluntary Veterans’ Preference Employment Policy Act. AB 1383 would have amended the FEHA to ensure that none of its nondiscrimination provisions affect the hiring decisions of an employer that maintains a veterans’ preference employment policy established in accordance with the Voluntary Veterans’ Preference Employment Policy Act (Gov. C. Section 12958 et seq.), which this bill would have also created.

Age Information. AB 984, which would have prohibited an employer from using information obtained on a website regarding an employee’s or applicant’s age in making any employment decision regarding that person, failed in committee.

Unfair Immigration-Related Practices. AB 1065 was also held in committee. This bill would have made it an unlawful employment practice for an employer to request more or different documents than are required under federal law relating to verification that an individual is not an unauthorized alien, or to refuse to honor documents tendered that on their face reasonably appear to be genuine, or to attempt to reinvestigate or re-verify an incumbent employee’s authorization to work unless required to do so by federal law.

Paid Family Leave Benefit Extension. AB 908 would have required the family temporary disability insurance program to provide up to eight weeks, rather than the existing six weeks, of wage replacement benefits to workers who take time off work to care for specified persons, or to bond with a minor child within one year of the birth or placement of the child. This bill also would have required the weekly benefit amount under this program to be calculated using a specified formula.

Workplace Solutions

We will continue to monitor and report on these potential sources of annoyance for California employers, as well as any other significant legislative developments of interest. Follow our Cal Pecs blog www.calpecs.com for more in-depth analysis of how some of the new legislation may affect employers doing business in California.