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 Originally enacted in 2007, the City amended its paid sick law as of January 1, 2017, so check out the City’s FAQs for additional updates.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: Although there’s no right or wrong time to do a handbook update, we recommend them annually. Might as well take the opportunity when operations are typically slower, summertime, to give your handbook a shine. We’ve highlighted a few areas upon which to focus when you do so.

Ah, the joys of summer. Maybe it’s the heat, but everything seems a little harder in the summer. The sun is melting everything in sight, and sometimes it seems everyone is on vacation, leaving a little opportunity for the rest of us to have some *gasp* free time? This is the time of year, after all, when everything just seems to slooooooooooooooow dooooooooooooooooooown.

But because we’re all looking for an excuse to spend a little more time in nice air conditioned comfort, and we need to cure that summer boredom, when was the last time you updated your handbook?

Here are a few areas you may want to check while you enjoy that recycled air:

Did you update when the FEHA Regulations were amended last year?

As we discussed here, the FEHA Regulations now include many new requirements for employer policies on harassment, discrimination, and retaliation. If you haven’t had an opportunity to do so, we recommend you dust off those old policies and go through the amended regulations with a fine-toothed comb to see where improvements can be made.

How about breaks?

As we reported here, the end of 2016 saw some developments in the world of rest breaks. Some traditional policies may exert a little too much control over how employees take breaks. We’d definitely use that occasional summer thunderstorm as an excuse to spend time carefully perusing that policy.

What am I wearing?

If your dress code includes gender-specific information, now is a good time to review and make some potential modifications in light of the FEHC regulations on transgender rights, described here.

Sick of sick time yet?

Not that anyone gets sick in the summer, but if your company operates in multiple jurisdictions, it’s a great time to make sure no new sick law affects your employees. California now has six jurisdictions (San Francisco, Oakland, Emeryville, Santa Monica, San Diego, and Los Angeles, summarized here) with sick leave laws for private employers, with Berkeley right around the corner. Take this time to compare these ordinances and the state law with your current policy to make sure you’re in great shape for the upcoming flu season.

It’s also a great opportunity to spruce up your attendance policies to make sure you’re not punishing your employees from properly taking absences covered by these or other leave laws.

Who’s on leave?

A few years back, the California Legislature expanded those activities covered by the Family School Partnership Act, described here. So if you haven’t taken a look at this policy in a while, might as well get that out of the way before school starts up this fall.

For your San Francisco folks, if you haven’t had an opportunity to put together a policy/protocol covering the responsibilities of the San Francisco Paid Parental Leave Ordinance, described here, now is as good a time as any.

Also, as we discussed here, we know the law requiring the notice and posting on Domestic Violence issues became effective on July 1. Perhaps now would be a good time to consider implementing a policy on this if you don’t already have one in place.

Workplace Solution?

Although not every change in the law will make you toss out that old handbook, we do think an annual review, whether over a relaxing summer break or as you shiver indoors this winter, is a great opportunity to ensure you’re complying with the ever-evolving California and local laws. It can also serve as a reminder to compare your handbook with any benefit documents referred to inside.

Go ahead and spend a few minutes with a nice icy glass of lemonade and curl up with your favorite summer read: the company handbook! And contact your favorite Seyfarth counselor to get yours in ship shape before the kiddos come home from camp, and everything gets crazy for back to school.

Seyfarth Synopsis: The California Assembly Committee on Labor and Employment yesterday heard and approved AB 5, The Opportunity to Work Act, as it continues to move through the legislative process.

iStock_000000642401_LargeThe Opportunity to Work Act, which would require employers to offer hours to part-time employees before hiring new employees or temporary workers, yesterday cleared its first hurdle in the legislative process, receiving a go-ahead vote from the Assembly Committee on Labor and Employment. Read and watch our summaries of the bill. Next stop: Assembly Appropriations.

The bill’s co-author, Assembly member Gonzalez-Fletcher, kicked off Wednesday’s hearing by touting AB 5’s purported benefits and protections for employees in the retail and fast food industries. Conceding that the bill leaves much to be desired among members of the business community, she emphasized her desire to work with businesses to refine the bill’s language.

Opponents highlighted the ambiguities in AB 5’s language and the difficulties employers would likely face in implementing its provisions. They presented surveys and statistics that conflicted with those presented by the bill’s proponents. For example, the proponents stated that most part-time workers want to work full time, while opponents claimed that 5% of all part-time workers harbor such a desire.

Opponents posed questions such as: How exactly are employers supposed to offer additional hours in a non-discriminatory fashion? Must employers offer hours to all employees (in the same or similar position)? How are employers supposed to notify employees of the additional hours? Do the hours get awarded to the first employee to respond? What if an employee wants to work only a portion (e.g., one or two hours) of the offered shift? Must the employer then ask other employees to cover the remaining hours? Does the bill’s requirement that employers document their offers of additional hours to current employees mean that employers must keep copies of all employee communications, or require employees to sign written acknowledgements of each offer of additional hours?

These questions, Gonzalez-Fletcher assured, arise from intentional ambiguities that she wants to clarify with the help of business owners. She’s already considering amendments that would

  • delay implementation of the bill (for one year) for 501(c)(3) organizations,
  • create a carve-out for collective bargaining agreements that expressly define work hours,
  • limit the bill’s application to only the location where the additional hours are available, if the employer has locations throughout the state, and
  • provide an employee opt-out provision.

We’ll keep monitoring this bill’s progress through the legislative process and keep you updated.

Seyfarth Synopsis: Back from Spring Break, and Back to Work: Our List of L&E Bills to Watch in the remainder of the 2017-2018 California Legislative Session.

New LegislationCalifornia Legislators were, as always, very busy in the first few months of the 2017-18 Legislative Session, introducing well over 2000 bills by the February 17th bill introduction deadline. But, in comparison to prior years, the calendar has been surprisingly light for heavy-hitter labor and employment bills. The Legislature returned to work on April 17, after its spring break, and continued to push bills out of the house of origin in advance of the June 2nd deadline.

Here’s what we’re watching:

Opportunity to Work Act. Modeled after the City of San Jose’s November 2016 voter-approved Opportunity to Work Ordinance (effective April 1, 2017), AB 5 would require employers with 10 or more employees in California to offer additional hours of work to existing nonexempt employees in California before the employer may hire additional employees or temporary employees. The employer would not have to offer the hours to existing employees if those hours would result in the payment of overtime compensation to those employees. The bill would require employers to retain documents, including work schedules of all employees and documentation of offering additional hours to existing employees, prior to hiring new employees or subcontractors. The bill would also require employers to post a notice to be created by the Division of Labor Standards Enforcement (DLSE) outlining employee rights under this (proposed) new law. This Act would create a new Labor Code section, and provide for enforcement by the DLSE on its own accord or via complaint by an employee, or via employee private right of action. The Act would allow for an express CBA carve-out. The bill is scheduled for its initial hearing in the Assembly Committee on Labor and Employment on April 19. Stay tuned for an update on this bill following the hearing.

Rest Breaks. AB 817 would carve out an exception to Labor Code section 226.7’s off-duty “rest period” requirement for employers providing emergency medical services to the public. The bill would authorize those EMS employers to require employees to monitor and respond to calls for emergency response purposes during rest or recovery periods without penalty, as long as the rest break is rescheduled. The bill expressly states that it is declaratory of existing law. Likely in response to the California Supreme Court’s December 22, 2016 ruling in Augustus v. ABM Security Services, Inc. (holding that no true rest break was permitted when security guards were required to carry radios or pagers and respond to calls during rest breaks), this bill is one to watch.

Retail employees: Holiday Overtime. AB 1173 would establish an overtime exemption for “a holiday season employee-selected flexible work schedule,” requested in writing by individual nonexempt retail employees and approved by the employer. The exemption would allow the employee to work up to 10 hours per workday with no overtime pay. Hours worked between 10 and 12 in a workday, or over 40 hours in a workweek would be paid at one and one-half the regular rate of pay. All hours over 12 in a workday and over eight on a fifth, sixth, or seventh day in a workweek would be paid at double time. This bill contains a CBA carve-out, and clearly has many details to still be ironed out, as it contains a blank in the bill text for the definition of “retail industry.”

Pay Equity: salary inquiry ban. Once again, AB 168 seeks to ban employers, including state and local government employers, from asking job applicants about their salary history, as well as compensation and benefit information. The bill would also require that private employers, upon reasonable request, provide the applicant with the position’s pay scale. AB 168 brings back language that was shot down twice—first by Governor Brown in his October 2015 veto of AB 1017, then removed from 2016’s AB 1676 (fair pay legislation) before it received the Governor’s approval in September 2016.

Pay Equity: Gender Pay Gap Transparency Act. Dubbed the “Gender Pay Gap Transparency Act,” by author Assembly Member Gonzalez-Fletcher in her April 4, 2017 Equal Pay Day press release, AB 1209 would “require companies with more than 250 employees to include gender pay data as part of their annual reporting to the Secretary of State.” If passed, AB 1209 would require employers, beginning July 1, 2020, to publish and update yearly the difference between the mean salary and median salary of male exempt employees and female exempt employees broken down by job classification or title and the difference between the mean compensation and median compensation for male board members and female board members. Arguments against this bill will likely mirror those made in response to the EEOC’s revised EEO-1 rule.

Voluntary Veterans’ Preference Employment Policy Act. Dubbed the “Voluntary Veterans’ Preference Employment Policy Act,” AB 353 and AB 1477 would allow private employers to establish a veterans’ preference policy  and uniformly grant a hiring preference to veteran applicants, regardless of when the veteran served. These bills would expand Government code section 12940(a)(4), which currently allows for a veterans’ preference policy for Vietnam-era veterans only. The bill would provide that the granting of a veterans’ preference will not violate any local or state equal employment opportunity law or regulation, including FEHA, as long as the policy is not applied for the purpose of discriminating against an employment applicant on the basis of any protected classification.

Applicants: prior criminal history. The Legislature is joining the flurry of “Ban-the-Box” initiatives throughout California with AB 1008, which would make it unlawful for an employer to: 1) include on any job application questions that seek the disclosure of an applicant’s criminal history; 2) inquire or consider an applicant’s prior convictions before extending a conditional offer; and 3) when conducting a background check, to consider or disclose  various information. The bill would also require employers that intend to deny employment to an applicant because of prior convictions to perform an individualized assessment of whether the applicant’s conviction history has a direct and adverse relationship to the specific job duties, considering the nature and gravity of the offense, the time passed since the completion of the sentence, and the nature of the job. Then, the employer must notify the applicant of the reasons for the decision and provide the applicant 10 days to respond and challenge the accuracy of that information or provide evidence of rehabilitation which it must consider before making a final employment decision, in writing. This bill is substantially similar to the recent Fair Employment and Housing Council regulations, which go into effect in July 2017; and would thus largely codify what will soon be required by regulation.

Health professional interns: minimum wage. Following the recent increases in minimum wage, AB 387 would expand the definition of “employer” to include a person who employs any person engaged in supervised work experience (i.e., clinical hours) to satisfy the requirements for licensure, registration, or certification as an allied health professional. Cal Chamber opposes this bill, as it could cause internships provided for educational credit to be eliminated.

Resident apartment manager wages. AB 543 would authorize, under a voluntary written agreement, an employer that doesn’t charge a resident apartment manager monthly rent, to apply up to one-half of the fair market rental value of the apartment to meet minimum wage obligations to the apartment manager. Existing law allows employers to take a credit against minimum wage for two-thirds of the ordinary rental value, up to $564.81 per month for a single occupant and $835.49 per month for couples.

Credit Card gratuities. AB 1099 would require employers that are lodging establishments, car washes, barber shops and beauty salons, massage parlors, restaurants, and on-demand service providers such as transportation network companies that allow debit or credit card payment for services to also accept a debit or credit card for gratuities or tips. This bill would require the tip payment to be made to the employee by the next regular payday following the date the credit card authorized payment.

Overtime compensation: executive, administrative, or professional employees. AB 1565 would exempt from overtime compensation an executive, administrative, or professional employee, if the employee earns a monthly salary of either $3,956 or no less than twice the state minimum wage for full-time employment, whichever amount is higher.

Labor organizations: compulsory fee payments. AB 1174 would, beginning January 1, 2018, prohibit a person from requiring employees, as a condition of employment, to pay union dues or contribute financially to any charity sponsored by or at the behest of a labor organization.

Employer liability: small business and microbusiness. AB 442 would prohibit Cal OSHA from bringing an enforcement action for any “nonserious violation” against any employers with 100 or fewer employees and an average gross of $10,000,000 or less over the past three years, or microbusinesses  with 25 or fewer employees and an average gross of $2,500,000 or less over the past three years, without first giving the employer written notice of the violation and providing 30 days to cure. AB 442 would authorize Cal OSHA to assess a reasonable fee, up to $50, to cover its costs for enforcement.

Immigration: worksite enforcement actions. AB 450, the “Immigrant Worker Protection Act,” would impose several requirements on public and private employers dealing with federal ICE workplace raids or enforcement actions. Assemblymember Chiu has described the key components as:

  • Requiring employers to ask for a warrant before granting ICE access to a worksite.
  • Preventing employers from releasing employee records without a subpoena.
  • Requiring employers to notify the Labor Commissioner and employee representative of a worksite raid and notifying the Labor Commissioner, employees, and employee representatives of an I-9 audit (i.e., employment eligibility verification).
  • Preventing retaliation by enabling workers crucial to a labor claim investigation to receive certification from the Labor Commissioner that employee complainant or employee witness has submitted a valid complaint for violations of the Code and is cooperating in the investigation and prosecution of the violations.

The bill would authorize the Labor Commissioner to asses penalties of at least $10,000 to $25,000 for each violation against employers for failure to satisfy the bill’s requirements and prohibitions.

FEHA enforcement expansion. SB 491 would expand Government Code section 12993 and allow local jurisdictions, such as cities and counties, to enforce FEHA discrimination regulations. Cal Chamber opposes this bill.

Good faith defense: employment violations. SB 524 would permit an employer to raise an affirmative defense that, at the time of a violation, the employer was acting in good faith when the employer relied upon a valid published DLSE opinion letter or enforcement policy. SB 524 would only apply after January 1, 2018 to DLSE opinion letters or enforcement policies that are still in effect at the time of the violation. Employers would not be able to claim an affirmative defense when a DLSE opinion letter or enforcement policy has been modified, rescinded, or deemed invalid. Cal Chamber supports this bill but hearings for SB 524 have been canceled at the request of the author, Senator Vidak. We’ll keep our eye on this to see if there is any further movement.

Reproductive health. AB 569 would prohibit employers from taking any adverse employment action against an employee based on the employee or employee’s dependent’s reproductive health decisions. The bill would also prohibit employers from requiring employees to sign a waiver or any document denying an employee the right to make his or her own reproductive health care decisions, including the use of a particular drug, device, or medical service (e.g., in vitro fertilization). The bill would require an employer to include in its handbook a notice of the employee rights and remedies under this bill.

New Parent Leave Act. Likely DOA, but resurrected for another go from its 2016 veto, SB 63, the “New Parent Leave Act,” would prohibit employers with at least 20 employees within 75 miles, from refusing to allow an employee to take up to 12 weeks of parental leave to bond with a new child within one year of the child’s birth, adoption, or foster care placement. Like under CFRA, to be eligible, the employee must have more than 12 months and at least 1,250 hours of service with the employer during the previous 12-month period. The bill would require the employer to maintain and pay for the employee’s coverage under a group health plan during this leave. SB 63 would also allow—but not require—an employer to grant simultaneous leave when two employees are entitled to leave for the same birth, adoption, or foster care placement. This bill is almost identical to 2016’s SB 654, which Governor Brown vetoed, and only provided for 6 weeks of leave, rather than the 12 weeks SB 63 would provide. The Governor’s veto message expressed his concerns for impact the leave would have on small business and pointed lawmakers to explore an amendment that would have made mediation an option—which the SB 63 does not have.

PAGA: Three New Valiant Efforts. AB 281 attempts to reform PAGA by: 1)  requiring an actual injury for an aggrieved employee to be awarded civil penalties; 2) excluding health and safety violations from the employer right to cure provisions; and 3) increasing employers’ cure period to 65 calendar days from 33.

AB 1429 would limit the violations an aggrieved employee can bring, require the employee follow specific procedural prerequisites to filing suit, limit civil penalties recoverable to $10,000 per claimant and exclude the recovery of filing fees, and require the superior court to review any penalties sought as part of a settlement agreement.

AB 1430 would require the Labor and Workforce Development Agency (LWDA) to investigate alleged Labor Code violations and issue a citation or determination regarding a reasonable basis for a claim within 120 calendar days; and allow an employee private action only after the LWDA’s reasonable basis notification or the expiration of the 120 day period. Read our further analysis of PAGA proposed amendments here.

Workplace Solutions

We will continue to monitor and report on these potential Peculiarities, as well as any other significant legislative developments over the course of the 2017 Legislative Session. Contact your favorite Seyfarth attorney with any questions.

Edited by Colleen Regan.

Seyfarth Synopsis: On March 13, 2017, San Jose’s new “Opportunity to Work Ordinance” takes effect, requiring covered employers to offer additional hours to part-time employees before hiring new or temporary employees. As the law’s effective date looms, the City has issued guidance clarifying portions of the ordinance and has released the notice form that employers must post.

An earlier post detailed the obligations that San Jose’s new voter-approved ordinance creates for San Jose private employers. The ordinance requires certain employers to:

  • offer additional work hours to existing, qualified part-time employees before hiring new employees, through a “transparent and non-discriminatory process,”
  • post a notice of the rights created by the ordinance, and
  • retain, for four years, relevant records such as work schedules, payroll records, and offers to current and former part-time employees.

With the ordinance’s March 13th effective date now knocking, the City has issued guidance on how to comply. We provide some highlights below.

For starters, employers can stop banging on the City’s door for the ordinance’s required notice. The City has issued the notice for employers to post with their other employment notices (click here for the notice in English, Spanish, Chinese, and Vietnamese).

The City has also published Frequently Asked Questions to shed some light on how the City interprets the ordinance. Perhaps most importantly, the FAQs define a “full-time” employee as an employee who works at least 35 hours a week, which means that “part-time” employees (who must be offered extra hours) are those who work fewer than 35 hours a week.

The FAQs also remind us that a “covered employer” is an employer that has at least 36 employees and that is subject to San Jose’s business tax (i.e., the ordinance doesn’t apply to government employers). The FAQs also explain that the employer’s total number of employees includes employees who work in locations outside of San Jose.

The FAQs go on to explain that only non-exempt employees count towards the 36-person threshold required to become a covered employer (this number includes part-time and full-time employees). Administrative and professional employees will not affect an employer’s coverage under the law; in fact, the FAQs explain that they are exempt from the law.

Further, the FAQs details how employers can comply. First, employers need to offer additional hours to part-time employees only at a particular location. Employers do not need to reach out to employees at other locations.

Second, employers can decide how to offer additional hours to part-time employees, provided that the employers adopt a process that is transparent and non-discriminatory. For example, an employer can give employees a limited window to accept additional hours of work before bringing on new labor. And employers need not rearrange their shift schedules to give more hours to part-time workers; the part-time worker must be able to work during the employer’s regularly scheduled shift.

Finally, for those covered employers who feel like the ordinance might knock them out, the City has provided a hardship application. On a case-by-case basis, the City will grant renewable twelve-month exemptions where a covered employer’s “work or need is unpredictable or requires a specialized skill and there is a need to essentially have Employees ‘on call.’ ”

This recent guidance, while not removing all uncertainty, certainly gives employers a better understanding of what lurks behind the Opportunity to Work Ordinance door, which will open on March 13.

Workplace Solutions. Compliance with new city ordinances can be tricky, especially since they are often relatively obscure. Knowledge is the first step. Compliance efforts are the next. If you would like assistance with ensuring compliance with this new ordinance, then please contact the authors or another attorney from Seyfarth’s Labor and Employment Group.

Edited by Michael Cross.

Seyfarth Synopsis: On November 8, 2016, San Jose voters approved the most recent local effort to dictate employment scheduling practices. Beginning in March 2017, San Jose employers must offer existing part-time employees additional work hours before hiring any temporary, part-time, or new worker. Violations of the ordinance can trigger city fines and private law suits.

Temporary, part-time, and contract employees are important segments of the economy, particularly around the holidays. Retailers and logistics companies often rely on these workers to meet customers’ holiday wishes. And outside of the holidays, temporary and part-time employees provide important scheduling flexibility in an increasingly on-demand economy. The new year, however, will bring new restrictions on the ability of San Jose employers to use these important staffing tools.

Ok, so what do I need to know?  On November 8, 2016, San Jose voters approved Ballot Measure E, called the “Opportunity to Work Ordinance,” which requires an employer to offer part-time employees additional hours before the employer hires any new or temporary employees. Sponsored by a coalition of labor unions, the new ordinance limits employers’ ability to bring on new workers by forcing them to first offer existing “employees” the opportunity to work the additional hours. The ordinance also saddles employers with new record retention and notice requirements.

The restrictions will take effect on March 8, 2017 and, as covered here, continue a trend seen in other California cities, such as San Francisco, of local regulation of employers’ scheduling and hiring practices.

What if I employ only two people in San Jose? You still may be covered. The ordinance covers employers if they employ more than 35 employees and are subject to San Jose’s business tax. But employers can be covered even if they employ 35 or fewer employees in San Jose. For chain businesses, the ordinance counts every employee of the business, whether or not located in San Jose. For franchisees, the ordinance counts all employees of the franchisee, again, without regard for where the employees work.

The ordinance also broadly defines “employee.” Companies “employ” an individual if they exercise direct or indirect control over the individual’s wages, hours, or working conditions. For an employee to fall under the ordinance, the employee must have worked two hours within the last calendar week or be entitled to California’s minimum wage.

How can I comply? The short answer is that it is not entirely clear. We know that the ordinance:

  • requires employers to offer qualifying employees the extra hours before looking to temporary labor solutions (obviously),
  • requires employers to post notice to their employees about their rights under the new ordinance,
  • requires employers to “use a transparent and non-discriminatory processes” to distribute hours among existing employees,
  • only requires employers to offer additional hours to employees who “in the employer’s good faith and reasonable judgment, have the skills and experience to perform the work,” and
  • stops short of requiring employers to pay existing employees overtime.

Employers need not offer additional hours to employees if those hours would entitle the employee to a premium rate of pay.

Aside from these guidelines, however, the ordinance provides no additional detail on how employers must distribute hours among existing employees or when an employer can send work to a contractor or temporary staffing company. For more guidance, we must wait on the City or the courts. The ordinance grants the City authority to issue guidelines and rules, as well as to make non-substantive changes to the ordinance itself.

Is there anything else I need to do? Yes, and you may need another file cabinet. In addition to its scheduling component, the ordinance burdens employers with record retention and notice requirements. Employers must retain records for new hires that show the employer’s efforts to first offer the additional work to existing part-time employees. Employers must also preserve employee work schedules and “any other records the City requires for employers to demonstrate compliance with the ordinance.” All of these records must be maintained for four years. Failure to comply will create a presumption that the employee’s account as to scheduling practices is accurate.

Further, the ordinance requires employers to display a poster outlining the rights created by the ordinance.  The City’s Office of Equality Assurance will publish a bulletin outlining the required notice, but has not done so yet.

What are the consequences if I stick to my old scheduling practices? Ignoring the ordinance could result in significant liability. Although the ordinance exempts employers for their first violation, the ordinance authorizes the City to issue administrative fines up to $50 per violation and to seek civil penalties in court for noncompliance.

More alarming yet, the ordinance authorizes private actions. Any person not offered work under the ordinance can bring a private suit in court. If successful, the individual would be entitled to lost wages, penalties, and attorneys’ fees.

The ordinance also adopts the San Jose minimum wage law’s employee-friendly retaliation language.  Employees who claim they suffered an adverse employment action within 90 days of complaining about a violation of the ordinance will enjoy a rebuttable presumption that retaliation has occurred.

What if I have a collective bargaining agreement or just can’t comply? Perhaps as a nod to its sponsors, the ordinance provides a carve-out for CBA scheduling provisions. But to invoke the carve-out, the CBA must explicitly waive the ordinance in clear and unambiguous terms.

The City has the authority to exempt businesses from complying with the ordinance where the business works in good faith to comply but compliance is impracticable, impossible, or futile. The City has yet, however, to outline the procedures for requesting this exemption.

Stay tuned. The ordinance takes effect on March 8, 2017. Be sure to check this site in the coming weeks for updates on the City’s plans for rolling out the ordinance and any guidelines it might issue to help clarify the burden San Jose employers must bear in the new year.

Workplace Solutions. Compliance with new city ordinances can be tricky, especially since they are often unknown to employers. Knowledge is the first step. Compliance efforts are the next. If you would like assistance with ensuring compliance with this new ordinance, please contact the authors or another attorney from Seyfarth’s Labor and Employment Group.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

[1] Here are the six:

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

Edited by Colleen Regan and David Kadue.

We’ve previously covered California’s sweeping Paid Sick Leave Law that took effect July 1, 2015 here and here. Now Santa Monica – not to be outdone by Bay Area sister municipalities in San Francisco, Oakland, and Emeryville – enacted its own paid sick leave ordinance (“Ordinance”) on January 26, 2016 – just two weeks after it was initially proposed.

The Santa Monica Ordinance, like its Northern California counterparts, mandates that most employers provide paid sick leave well in excess of California requirements, and allows covered employees of employers with 26 or more employees to accrue up to 72 hours of paid sick leave. Further, unlike California law, the Ordinance does not place an annual use limit on accrued sick leave.

Because the Ordinance is not preempted by California law, covered Santa Monica employers must comply with both the California Paid Sick Leave Law and the Ordinance. When the two conflict, the employer must follow the provision that is more generous to the employee.

Unless there is a referendum, the Ordinance will become law after 30 days, on February 25, 2016. The Ordinance provides that paid sick leave begins to accrue as of the “operative date” of the Ordinance. That term is not defined. According to the Santa Monica City Council’s office, the effective date of the Ordinance’s paid sick leave provisions is July 1, 2016.

And now, the key provisions of the Ordinance:

Who Is Covered?

The Ordinance generally covers any employee who works at least two hours a week in Santa Monica, subject to limited exceptions noted below. “Hotel workers” (excluding those employed in a managerial, supervisory, or confidential role) whose primary place of employment is at a Santa Monica hotel are covered by the paid sick leave provision of the Ordinance, regardless of how many hours they work in Santa Monica in a particular week.

Employees excluded from coverage are federal, state, county, and city government employees (including those employed by government agencies, school districts, and all other public entities). The Ordinance also does not cover employees who have waived their paid sick leave rights in a collective bargaining agreement (CBA) if the waiver is explicitly set forth in the agreement in clear and unambiguous terms.

How Much Sick Leave Must Be Provided? (Accrual, Accrual Caps, and Carry Over)

The Ordinance mandates paid sick leave in excess of the state requirement. Like the California Paid Sick Leave Law, the Ordinance provides that employees accrue one hour of paid sick leave for every 30 hours worked (including overtime hours). Significantly, however, the Ordinance’s accrual cap for employers with 26 or more employees far exceeds the state law’s 48-hour accrual cap. Specifically, employers with 26 or more employees must permit employees to accrue up to 72 hours of paid sick leave. Employers with 25 or fewer employees must allow employees to accrue up to 40 hours of paid sick leave.

These accrual caps are point-in-time caps – not annual accrual caps. Also, all accrued, unused paid sick leave (up to the maximum cap) carries over from year to year. And unlike the California law, which permits employers to limit paid sick leave use to 24 hours or three days per year, the Ordinance does not place an annual use limit on accrued paid sick leave.

As a result, employees may be entitled to use more than 72 hours of paid sick leave in a year. For example, suppose an employee’s paid sick leave balance is at the 72-hour accrual cap on December 31 of a particular year. The employee’s entire balance carries over to the following year. The employee is ill in February and uses all 72 hours. Accordingly, she resumes accruing paid sick leave in February and continues to accrue paid sick leave throughout the year until she again reaches the 72-hour cap. And, because there is no annual use limit, she may use paid sick leave after it has accrued even though she used 72 hours earlier in the year.

The Ordinance provides that employees are entitled to use paid sick leave after the first 90 days of employment.

What about Frontloading?

Unlike the California Paid Sick Leave Law, the Ordinance does not expressly allow for frontloading of paid sick leave at the beginning of each year. And because there is no annual paid sick leave accrual cap (only a point-in-time cap) and no annual use limit, frontloading very likely is not an option under the Ordinance.

When Does Paid Sick Leave Accrual Begin?

If an employee works for an employer on or before July 1, 2016, then the employee begins accruing paid sick leave on the “operative date” of the Ordinance (presumably July 1, 2016). Under the Ordinance, new employees begin to accrue paid sick leave 90 days after the commencement of employment. But recall that new employees, under the California Paid Sick Leave Law, begin to accrue paid sick leave immediately upon hire, although an employer may forbid new employees from using any accrued paid sick leave until their 90th day of employment. Accordingly, a Santa Monica employer cannot limit accrual during the first 90 days under the Ordinance and, instead, must comply with the state law’s more generous provision.

What Are Other Key Provisions?

Other than the accrual caps and the absence of an annual use limit, the Ordinance essentially mirrors the California Paid Sick Leave Law’s notice, usage, and anti-retaliation provisions. For example, the Ordinance states that employers may require reasonable notification for use of paid sick leave. The Ordinance also provides that employees may use paid sick leave consistent with state sick leave laws. And like the state law, the Ordinance does not require employers to pay out accrued, unused sick leave upon separation from employment.

The Ordinance does not contain posting or recordkeeping requirements, so Santa Monica employers should continue to comply with the state law’s requirements.

What Do I Do Now? (Proactive Next Steps)

Employers with employees who perform work in Santa Monica should take steps now to ensure they can achieve full compliance with the Ordinance by the July 1, 2016 operative date. These are among the actions to consider:

  • Review and, as necessary, revise existing paid sick leave or PTO policies and procedures to ensure they meet the Ordinance’s requirements or, alternatively, establish a separate paid sick leave policy that complies with both the California Paid Sick Leave Law and the Santa Monica Ordinance.
  • If applicable, update internal systems so that they allow for paid sick leave accrual of up to 72 hours (for employers with 26 or more employees).
  • Take this opportunity to review and, as necessary, revise anti-retaliation, attendance, conduct, and discipline policies to prevent retaliation and interference claims under the Ordinance or the California Paid Sick Leave Law.
  • Train Santa Monica supervisory and managerial employees, as well as HR and payroll personnel, on the Ordinance’s requirements.
  • Monitor the City of Santa Monica’s website (http://www.smgov.net) for updates, frequently asked questions (FAQs), and other publications that provide guidance on how to comply with the Ordinance’s requirements.

Questions

If you have any questions about the new Santa Monica Ordinance or about California’s Paid Sick Leave Law, please reach out to Ann Marie Zaletel or another member of our California Workplace Solutions group for additional guidance.

Edited by David D. Kadue, Colleen M. Regan, and Coby M. Turner.

By Colleen M. Regan

Most employees in San Francisco are about to enjoy greater family care flextime rights than any other city in California.

The San Francisco Family Friendly Workplace Ordinance, approved last week by the Board of Supervisors and signed by the mayor on October 14, 2013, permits employees to request “flexible or predictable working arrangements” so they can assist with care giving responsibilities.  Employers must review and respond to such requests in a defined formal way.

Here are the basics.  The law:

  • is effective January 1, 2014.
  • applies to employers of 20 or more employees, including full-time and part-time
    employees.
  • grants an employee who works within the City limits and who has worked for 6 months or more and regularly works at least 8 hours per week the right to request a flexible working arrangement when needed to assist:
    — with child care
    — a family member with a serious health condition, or
    — a parent age 65 or older.
  • requires the employer to meet with the employee within 21 days of the request, and respond in writing within 21 days of the meeting. 
  • allows the employer to deny the request for bona fide business reasons, such as identifiable costs, inability to meet customer demands, and insufficiency of work to give the employee during the period of proposed work.  Any denial must explain in detail the business reasons, and also inform the employee of the right to request reconsideration.

Flextime arrangements may include modified work schedules, job sharing, changes in start and end times, working from home and telecommuting.

Retaliation for requesting a flexible arrangement is expressly prohibited, and notice and posting requirements are specified.  The requirements of the law can be waived in a valid collective bargaining agreement.  To read the text of the Ordinance, click here.

Workplace Solution:  Anyone with employees in San Francisco should become familiar with this new law and the required procedures.  The San Francisco Office of Labor Standards Enforcement is supposed to publish the form of required Notice before January 1, so we will be on the lookout for that.  Meanwhile, be aware that starting next year, your staffing requirements will likely be affected by yet another unpredictable wrinkle.