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

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

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

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

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

Avoiding the Fire Swamp: Wage Statement Line Mines to Avoid

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

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

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

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

Workplace Solutions: What Would Miracle Max Do

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

Seyfarth Synopsis: On October 1, 2017, after more than a year of waiting, the Berkeley, CA paid sick leave ordinance goes into effect. The ordinance provides extraordinarily generous paid sick leave benefits to employees beyond those provided by the California statewide paid sick leave law.

A little over a year ago, on August 31, 2016, the City of Berkeley, California enacted the “Paid Sick Leave Ordinance.” Berkeley will be the eighth California city with such an ordinance.[1] Because California’s statewide paid sick leave law does not supersede local ordinances, employers must reckon with both the state and local laws, and follow the one that most favors employees. With the October 1 effective date fast approaching, employers with employees in Berkeley should take steps now to ensure their policies and practices comply with the impending law.

Below is a detailed summary of the Berkeley Ordinance and the obligations it imposes. Among its most significant provisions are these: (i) there is no permissible cap on how much earned paid sick leave employees can use in a year, (ii) there is a 72-hour accrual cap (likely a “point-in-time” cap) for large employers, and (iii) employees without a spouse or registered domestic partner can designate an individual as to whom the employee will be eligible to take paid sick leave.

Which Employers Are Covered by the Ordinance?

The Ordinance covers all employers with at least one eligible employee working in Berkeley, and broadly defines “employers” to include anyone who—whether directly or through a staffing agency—exercises control over the wages, hours, or working conditions of any employee.

Covered employers need not provide additional earned sick leave if they provide employees with paid leave that meets or exceeds the Ordinance’s minimum standards. And Ordinance requirements may be waived in a bona fide collective bargaining agreement if the waiver appears in clear terms.

Which Employees are Covered by the Ordinance?

The Ordinance broadly defines covered employee as an individual who performs at least two hours of work within the geographic boundaries of the City of Berkeley in a calendar week and who qualifies as an individual entitled to minimum wage under the California minimum wage law.

How Much Sick Leave Can Employees Accrue?

Employees accrue one hour of paid sick leave for every 30 hours worked. Employees will begin accruing earned sick leave on the later of the Ordinance’s effective date (Oct. 1, 2017) or the employee’s commencement of employment, and can begin using accrued paid sick leave 90 calendar days thereafter.

The cap on accruals depends on how many employees the employer has. For employers with at least 25 employees working in a given week,[2] the cap on accrual is 72 hours. For employers with fewer than 25 employees working in a given week, the cap is 48 hours. While not explicitly stated in the Ordinance, it is likely that this accrual cap is a “point-in-time” or “rolling” cap, meaning that accruals cease whenever an employee’s bank of accrued, unused paid sick leave reaches 72 (or 48) hours and begin again when the employee uses sick leave.

How Much Sick Leave Can Employees Carry Over?

The amount of earned, unused paid sick leave that an employee is entitled to carry over to the next calendar year is the same as the caps on accrual: 72 hours for employers with at least 25 employees and 48 hours for employers with fewer than 25 employees.

While the Ordinance is silent on whether employers can adopt a frontloading program to avoid accrual and year-end carryover obligations, the city’s paid sick leave FAQs provide some relevant information. The FAQs state that employers can provide a lump sum of paid sick leave at the start of each year of employment. But employees must be entitled to accrue additional paid sick leave if they work enough hours to accrue the amount that was initially allocated upfront. In other words, Berkeley employers can “advance” paid sick leave accrual to their employees, but cannot adopt a frontloading system that wholly avoids accrual and removes year-end carryover of unused time.

How Much Sick Leave Can Employees Use in a Year?

The Berkeley FAQs state that employers can establish an initial one hour minimum increment of using paid sick leave. Thereafter, employees must be permitted to use paid sick leave in 15-minute increments. Both of these standards are more generous for employees (and more onerous for employers) than those under the California statewide paid sick leave law.

For employers with at least 25 employees, there is no cap on the number of accrued hours that an employee may use in a benefit year. But employers with fewer than 25 employees may limit an employee’s annual use of paid sick days to 48 hours. The interplay between unlimited paid sick leave usage and a 72-hour “point-in-time” accrual cap could mean that Berkeley employees working for employers with at least 25 employees could use more than three weeks of paid sick leave in a single benefit year.

Under What Circumstances May Employees Use Sick Leave?

After working for an employer for 90 calendar days, Berkeley employees can use paid sick leave earned under the Ordinance for any of the following reasons:

  • when the employee is ill or injured,
  • for the purpose of the employee’s receiving medical care, treatment, or diagnosis (as specified more fully in California Labor Code section 233(b)(4)), or
  • to aid or care for a covered family member who is ill or injured or receiving medical care, treatment, or diagnosis.

A “covered family member” means a child, parent, legal guardian or ward, sibling, grandparent, grandchild, spouse or registered domestic partner. A “child” includes a child of a domestic partner and a child of a person standing in loco parentis. Child, parent, sibling, grandparent, and grandchild relationships include biological relationships as well as adoptive, step, and foster care relationships.

An employee who has no spouse or registered domestic partner can designate one person as to whom the employee may use paid sick leave, to aid or care for that person. Employers must notify the employee of this right to designate by the time that the employee has worked 30 hours after paid sick leave begins to accrue. The employee then has 10 workdays to make the designation. Thereafter, the opportunity to make such a designation, including the opportunity to change a designation previously made, must be extended on an annual basis, giving employees 10 workdays to designate.

Although the California statewide paid sick leave law allows a covered employee to use paid sick leave for reasons related to domestic violence, sexual assault, or stalking, the Berkeley ordinance does not. But because Berkeley employers must comply with both the Ordinance and state law, Berkeley employees  will be able to use accrued paid sick leave for these additional purposes as well.

What Notice Must Employees Provide When Using Sick Leave?

If the need for paid sick leave is foreseeable (e.g., scheduled doctor’s appointments), then the employee must provide the employer with reasonable advance notice. But if the need for leave is unforeseeable (e.g., sudden illness), then the employee must provide notice of the need for the leave as soon as practicable.

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

Employers may take only reasonable measures to verify or document that an employee’s use of paid sick leave is lawful. Moreover, employers may not require employees to incur expenses that exceed $15 in order to prove their eligibility for paid sick leave.

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

No. Employers are not required to cash out an employee’s accrued sick leave balance upon separation from employment. But the Berkeley FAQs state that if an employee separates from employment and returns to the employer within 12 months, then previously accrued, unused paid sick leave shall be restored.

Employer Notice Requirements

Employers must report the number of hours of paid sick leave accrued to date in any records they provide to employees at the end of each pay period.

Employers also must post in a conspicuous place at the workplace a notice published by the City, to inform employees of their paid sick leave rights under the Ordinance. The notice must be posted in any language spoken by at least 5% of the employees at the workplace or job site.

If employees do not have a regular physical location where they perform their work, the employer must provide a copy of the City notice to the employees when they are hired or assigned to complete work within the City of Berkeley.

Records Maintenance Requirements

Employers must retain payroll records pertaining to all employees for a period of four years. These records must include the amount of hours worked, wages paid, and paid sick leave accrued.

What Employers Cannot Do

Employers must not:

  • require, as a condition of taking paid sick leave, that the employee secure a replacement worker to cover the hours the employee will miss on paid sick leave,
  • interfere with, restrain, or deny the exercise of—or the attempt to exercise—any right provided under the Ordinance, or
  • discriminate in any manner or take any adverse action against any person in retaliation for exercising rights protected under the Ordinance.

Remedies and Penalties

Administrative fines range from $500 for failing to (a) post the notice, (b) maintain payroll records or allow the City access to those records, or (c) provide a wage statement to $1,000 for each employee against whom retaliatory action was taken. Repeat offenders may be subject to additional fines.

The Ordinance also gives employees a private right of action, entitling them to sue for back wages, civil penalties, reinstatement, injunctive relief, and, of course, attorney’s fees. The City itself may recover administrative costs of enforcement, reasonable attorney’s fees and any civil penalties, and may order an employer to post a notice of non-compliance.

What Should Employers Do Now?

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

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

With the paid sick leave landscape continuing to expand and grow in complexity, companies should reach out to their Seyfarth contact for solutions and recommendations on addressing compliance with this law and sick leave requirements generally. To stay up-to-date on Paid Sick Leave developments, click here to sign up for Seyfarth’s Paid Sick Leave mailing list.

[1] Berkeley joins Emeryville, Long Beach, Los Angeles, Oakland, San Diego, San Francisco, and Santa Monica as California cities with paid sick leave ordinances. The Long Beach ordinance establishes paid sick leave for certain hotel employers. Los Angeles has two paid sick leave ordinances, one of which—the Los Angeles Citywide Hotel Worker Minimum Wage Ordinance—applies only to certain hotel employers.

[2] The Ordinance determines the size of an employer by counting all persons performing work for compensation on a full-time, part-time, or temporary basis, including individuals made available to work through the services of a temporary services or staffing agency or similar entity.

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: Our mission here at Cal-Pecs is to illuminate how California employment law differs from the law that employers generally experience throughout America. In this back-to-basics piece, we provide some background and a brief catalog of stark contrasts.

In 1846, American settlers in Mexican Alta California staged the Bear Flag Revolt. They declared an independent republic, seeking freedom from Mexico. The rebels got lucky: the Mexican-American War soon intervened to dislodge the California territory from Mexican control. California, in 1850, became our thirty-first state.

The legacy of the Bear Flag Revolt continues: the state flag depicts a grizzly bear astride a patch of grass, above the logo “California Republic.” The underlying rebellious attitude has persisted as well. State politicians—especially since the 2016 election—have defiantly proclaimed California’s right to chart its own course on such vital matters as the environment, health care, immigration, and the right to use marijuana.

Perhaps nowhere is California’s independence more prominent than in the area of employment law. Federal labor law hit high tide in the 1930s, with the National Labor Relations Act and the Fair Labor Standards Act. The high tide returned in the 1960s—bringing us the Equal Pay Act, Title VII, and the Age Discrimination in Employment Act—and returned yet again in the 1990s, bringing us the Americans with Disabilities Act and the Family and Medical Leave Act.

In the Golden State, meanwhile, the waves of employment regulation have risen ever higher, even when federal regulations have ebbed. The chart below spots differences between federal and California law in key areas of interest to employers that operate both in California and in the rest of America. In each case, of course, the California version favors employees, plaintiffs, and unions, while never favoring the employer.

Issue U.S. Law & State Law Generally California Law
What’s the minimum wage? $7.25, and higher in a few states $10.50, rising to $15 by July 2022
Must that wage be paid separately for all work, including unproductive tasks? No. Employers generally can comply with an average wage that meets the minimum. Yes. This result has surprised some employers that pay piece rate or commissions.
Must employers pay non-exempt piece-rate and commission workers separately for rest breaks? No Yes
Must employers pay non-exempt employees for required travel outside regular hours? No Yes
What overtime hours generally require premium pay? Only hours worked in excess of 40 per week. Weekly overtime plus daily overtime (over 8 hours per day) plus any time on seventh consecutive workday in a workweek.
Can employers use the “fluctuating workweek method” to compute overtime pay for salaried non-exempt employees? Yes. The regular rate is salary divided by all hours worked, with a 0.5 multiplier for overtime hours. No. The regular rate is deemed to be weekly salary divided by 40, and the overtime multiplier is 1.5, not 0.50.
Is doubletime ever required? No Yes, for hours exceeding 12 per day or 8 hours on a seventh consecutive workday.
Are there civil penalties for labor law violations? Often no, and penalties that do apply are relatively modest. Yes: for many Labor Code violations penalties are typically $100 per employee per pay period.
Can plaintiffs personally sue supervisors and co-workers under anti-harassment statutes? No Yes
Are middle managers, pharmacists, and nurses typically exempt from overtime rules? Yes No
Are employees entitled to reimbursement for routine business expenses? No Yes
What statuses do employment discrimination laws protect? Race, color, religion, sex, national origin, age over 40, disability (and sexual orientation by some judicial readings of Title VII) Those plus sexual orientation, gender identity, transgender status, political affiliation, marital status, breastfeeding, HIV status, requests for disability accommodation, etc.
Can employers invoke the “undue hardship defense” for religious accommodations simply by showing a cost > de minimis, and can they accommodate grooming and dress practices by transferring employees to a more remote location? Yes and yes. No and no. The “undue hardship” defense must meet the same tough test required in disability cases. And it is categorically unreasonable to accommodate a religious dress or grooming practice by moving the employee away from the public.
Can undocumented workers recover back pay on a claim for wrongful termination? No Yes; immigration status of a worker is irrelevant to any California remedy, except reinstatement of employment if prohibited by federal law.
Can an employer fire a worker who provided a false name, SSN or information about legal status to work? Yes No; an employer cannot discharge, discriminate, retaliate or take any adverse action against an employee who updates such information based on a lawful change.
What consequences do employers suffer for denying meal or rest breaks? Breaks that are too short are counted as working time. Failure to provide specified, timely breaks can result in up to two extra hours of premium pay per day.
Are “use it or lose it” vacation plans acceptable? Yes, generally. No
Is paid sick pay required? No Yes
Do farmworkers have the right to unionize, and do unions enjoy special protections with respect to their mass picketing? No and no. Yes and yes. California’s Agricultural Labor Relations Act protects farmworkers, and its Moscone Act limits judicial power to prohibit mass picketing.

As this limited sample of comparisons might suggest, an employer used to doing business elsewhere can find California employment law a real bear. For more detailed treatment, see the 2017 edition of our Cal-Peculiarities: How California Employment Law is Different.

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.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Edited by Coby M. Turner.

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


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


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

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

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

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

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

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

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

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

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 ( for updates, frequently asked questions (FAQs), and other publications that provide guidance on how to comply with the Ordinance’s requirements.


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.

Quintessential early adapters and always on the go, we Californians love change, and we start trends. That’s good. There has been plenty of change this past year in the world of California labor and employment law. As Father Time prepares to tender his timekeeping duties to Baby New Year, let’s take a moment off the clock to look back at the old year’s most significant legal developments.

2015 saw changes in wage and hour law (notably how to compensate piece rate workers), the continued battle over enforceability of arbitration agreements, and expanded kin care leave rights. But the biggest news was an increase in fundamental employee workplace rights and protections, such as equality in pay and entitlement to paid time away from work. The State Legislature also gave us a new definition of what it means to be a “joint employer” (as opposed to a contractor or other user of task or project-based services), which will likely have long-term ramifications.

What is not new is that California remains the most challenging jurisdiction in which to employ workers. Read on for a brief round-up of what we see as the most trend-making changes of the past year.

California Fair Pay Act

Effective January 1, 2016, the California Fair Pay Act, which commentators have called the nation’s most aggressive equal pay law, will require employers with California-based employees to increase their vigilance to avoid discriminating in pay and benefits based on sex. Discussed previously in more detail here, the Fair Pay Act expands upon existing state and federal laws that prohibit gender-based pay discrimination, and essentially blows the discriminatory intent and disparate impact tests out of the water.

The Fair Pay Act permits the direct comparison of pay of employees of different genders who work in different locations, even if they do not hold the same or substantially equal jobs. As long as workers are engaged in “substantially similar work, when viewed as a composite of skill, effort and responsibility, and performed under similar working conditions,” their pay and benefits must be the same. Unless, that is, the employer can demonstrate that any pay differences are based on seniority, merit, quality or quantity of production, or on a bona fide factor other than sex (such as education, experience, or training, so long as the other factor is job-related and consistent with business necessity).

Note: The phrases “job-related” and “consistent with business necessity” are familiar to most employers from the state and federal protections for disabled employees. That is, an employer can inquire about a disabled employee’s medical condition or require a medical examination to determine ability to perform a job only if it is “job related and consistent with business necessity.” We could conclude that the California Legislature intended the fair pay analysis to use the same meanings of these terms when considering whether a “bona fide factor” other than sex is sufficient to avoid a finding of illegal discrimination.

In any event, if you have not already done so, now may be the time to conduct a fair pay audit to ensure appropriate distribution of your company payroll among the workforce.

Paid Sick Leave Implementation and Amendments

Beginning on July 1, 2015, California employees began using the new mandatory paid sick time and many employers began experiencing nausea over it. They discovered, as many had feared, that if you give employees a right, they will use it. Whether the paid time sick is conferred in an annual grant or per the accrual method, employees are tending to use it as soon as it becomes available, wreaking havoc on work schedules, especially in occupations or industries that rely heavily on shift workers.

California is hardly alone in implementing mandatory paid sick time (now required in several other states and cities), but it was still one of the first. Eventually, we will forget that there was ever a time when employees did not get paid sick time. But until then, it is one more item to consider in the already heavy cost of doing business in the Golden State.

Joint Liability with Labor Contractors

2015 also brought us a statutory change in the manner in which companies that either are, or who do business with, temporary staffing agencies relate to one another and their employees. As of January 1, 2015, Labor Code section 2810.3 requires “client employers” to share liability with “labor contractors” (e.g., payroll, temporary staffing, or employee leasing agencies) for payment of wages of non-exempt workers, and for providing them with workers’ compensation insurance. The California Legislature was concerned that workers supplied by shady or underfunded agencies would end up getting stiffed for work they performed. But the new law has left some “client employers” wondering exactly what benefits or protections they get from using contingent workers rather than direct hires. Contractual indemnification clauses are on the rise.

What about 2016 and beyond?

Time will tell what else the California lawmakers and courts will dream up for 2016. We predict renewed efforts to increase the minimum wage, grant additional leave rights to all employees, and improve the lot of the unemployed. We can also always count on the plaintiffs’ employment bar to be cooking up some new theories of liability for workplace class actions. Until then, we wish you each a very happy and successful New Year, and look forward to sharing next year’s California peculiarities with you.