Timing is not everything. In Rope v. Auto-Chlor of Washington System of Washington, Inc., the employer fired an employee for purported performance reasons on December 30, 2010 – two days before California’s Michelle Malkin Donor Protection Act became effective. The timing was significant because when the employee was hired in October of 2010, he had told his employer that he needed to take leave in February of 2011 to donate a kidney to his sister, and he later requested 30 days of leave (the maximum involved under the new donor protection law) in February of 2011. The California Court of Appeals held that the employee could not state a claim under the Michelle Malkin Donor Protection Act because the Act was not yet in effect. However, the Court permitted the employee’s claim of “associational” disability discrimination to go forward, allowing the employee to litigate the question of whether the employer had terminated him due to his association with his sister. For more on this interesting case, click here.
On October 10, 2013, California Gov. Jerry Brown signed a bill, A.B. 556, to add “military and veteran status” to the list of categories protected from employment discrimination under the California Fair Employment and Housing Act (“FEHA”).
When this bill becomes operative on January 1, 2014, the FEHA will prohibit harassment and discrimination in employment because of:
• Religious Creed
• National Origin
• Physical Disability
• Mental Disability
• Medical Condition
• Genetic Information
• Marital Status
• Gender Identity
• Gender Expression
• Sexual Orientation
• Military and Veteran Status
“Military and veteran status” will be defined to mean any person who is “a member or veteran of the United States Armed Forces, United States Armed Forces Reserve, the United States National Guard, and the California National Guard.”
As a general reminder, any employer regularly employing five or more persons is covered by the FEHA. Employers subject to the provisions of the FEHA include private employers as well as state, city, county, and other government bodies. In fact, all governmental employers are covered under the FEHA regardless of size. Also covered are labor organizations, employment agencies, and apprenticeship programs. Furthermore, when harassment is at issue, every employer employing one or more persons or receiving the services of one or more independent contractor(s) is subject to the FEHA’s prohibition of harassment. Additionally, individual employees who harass another co-worker in violation of the FEHA can be held personally liable.
On September 26, 2013, California Gov. Jerry Brown signed a bill, A.B. 241, to give overtime pay to domestic workers such as caregivers, childcare providers, and housekeepers who work in private homes.
The bill enacts California Labor Code Sections 1450-1454 and will take effect on January 1, 2014. Under the new sections, domestic employees must be paid overtime pay at one-and-one-half times their regular pay rate after they work more than nine hours in one day or more than 45 hours in one week. The law is set to expire on January 1, 2017, unless lawmakers decide to extend it.
The new sections define “Domestic work” as “services related to the care of persons in private households or maintenance of private households or their premises. Domestic work occupations include childcare providers, caregivers of people with disabilities, sick, convalescing, or elderly persons, house cleaners, housekeepers, maids, and other household occupations.” Accordingly, “Domestic work employee” is defined as “an individual who performs domestic work and includes live-in domestic work employees and personal attendants.”
Employers subject to California Wage Order 15 regulating Household Occupations should review their practices where the employer is relying on the Personal Attendant overtime exemption (Section 1(B)). Wage Order 15 defines “Personal attendant” as including“baby sitters and means any person employed by a private householder or by any third partyemployer recognized in the health care industry to work in a private household, to supervise, feed, or dress a child or person whoby reason of advanced age, physical disability, or mental deficiency needs supervision.” Employers with employees exempt from overtime provisions based on the Personal Attendant exemption must determine whether the employees will still qualify.
Labor Code section 432.7 prohibits employers from considering, or asking applicants about, information concerning: (1) arrests or detentions not leading to conviction or (2) referral to, or participation in, a pretrial or post-trial diversion programs. Newly passed SB 530 adds to these restrictions, amending section 432.7 to prohibit employers from asking job applicants about criminal records that have been expunged, sealed or dismissed. Employers are exempt from these requirements if: (1) the employer is required by law to obtain such information; (2) the job would require the applicant to possess or use a firearm; (3) an individual who has been convicted of a crime is prohibited by law from holding the position sought by the applicant, regardless of whether that crime has been judicially dismissed, expunged, statutorily eradicated or ordered sealed; or (4) the employer is prohibited by law from hiring an applicant who has been convicted of a crime. Employers should review their job applications to confirm compliance with the new law, and they should review with legal counsel any questions regarding exemptions.
California Governor Signs SB 435 Which Expands the One Hour Pay Penalty in Labor Code 226.7 to Missed "Recovery Periods"
Labor Code 226.7 provides that an employee should receive one hour of pay as a penalty for not receiving rest or meal periods in accordance with California law. Yesterday, Governor Brown signed into law SB 435 which expands the one hour of pay penalty to missed “recovery periods.” The new law applies to any meal, rest or recovery period mandated by applicable statute, regulation, standard, or order of the California IWC, the Occupational Safety and Health Standards Board, or the Division of Occupational Safety and Health.
SB 435 defines “Recovery Period” as “a cool down period afforded an employee to prevent heat illness.” Employers may consider reviewing the CA OSHA resources for preventing heat illness. For example, when the outdoor temperature exceeds 85 degrees Fahrenheit, CA OSHA mandates a recovery period of not less than 5 minutes for employees who work outside to take a cool-down rest, in the shade, to protect themselves from overheating. The new law will likely lead to an increase in litigation. As a result, employers should review their procedures and policies.
On September 24, 2013, California Governor Jerry Brown signed into law a bill that expands the application of the Family Temporary Disability Insurance program beginning on July 1, 2014. Family Temporary Disability Insurance is also known as Paid Family Leave. Paid Family Leave is a paid benefit provided by California Employment Development Department (“CA EDD”) when an employee is on an authorized employer leave. Paid Family Leave does not create a new right to leave but instead provides a means for eligible employees to receive paid benefits from CA EDD when on an authorized leave. The new law (SB 770) amends Sections 2708, 3300, 3301, 3302, and 3303 of the Unemployment Insurance Code relating to unemployment insurance.Currently, the
Paid Family Leave program provides up to six (6) weeks of wage replacement benefits to workers who take time off work to care for a seriously ill child, spouse, parent, or domestic partner or to bond with a minor child within one year of the birth or placement of the child in connection with foster care or adoption.
The new law expands the scope to also include paid benefits when an employee is taking time off to care for a seriously ill grandparent, grandchild, sibling, or parent-in-law. The bill also makes conforming and clarifying changes in provisions relating to family temporary disability compensation. Employers should be sure to modify any related policies by July 1, 2014.
California Governor Brown has announced he will sign AB 10 tomorrow, in LA and Oakland, which will increase the CA state minimum wage effective July 1, 2014. See Brown’s statement: http://gov.ca.gov/news.php?id=18221. Since many employers are engaged in budgeting for 2014 and beyond, this new development should be factored into such plans.
A radio program employee who faced substantial liability arising from a tragic on-air “water drinking contest” that ended in a tragic death was named an individual defendant in the survivors’ lawsuit. The employer offered to defend the employee with a competent attorney of its choosing. However, the employee took the position that Labor Code section 2802 required his employer to pay him for the attorney of his choice, insisted on hiring his own attorney and proceeded to so. After a settlement and dismissal, he sought indemnity for more than $800,000 in costs and attorneys’ fees. The trial court declined his request and the Court of Appeal affirmed, holding that employees do not have an absolute right to pick the attorney of their choice to represent them at the expense of their employer under section 2802, and the mere fact the employee may face potential punitive damages or criminal charges does not change this rule. Thus, the employer met its burden by offering to defend the employee with competent independent counsel. Carter v. Entercom Sacramento, LLC, No. C066751 (Cal. Ct. App. Sept. 3, 2013). Click here for more information.
So asked a class of security guards who sought payment for all on-call time, including time spent on-call over weekend nights in company provided trailers. The company did not pay them for an 8 hour period during which employees could sleep and refresh while on-call unless they were directed to conduct investigations during the on-call period. In Mendiola v. CPS Security Solutions, Inc., No. B240519 (Cal. Ct. App. Jul. 3, 2013), the California Court of Appeal upheld much of the plaintiffs’ on-call claim but reversed part of the trial court’s judgment which would have required the employer to pay the guards for 24 hours of work performed during 24 hour weekend shifts even though they were free to sleep up to 8 hours during such shifts. California law permits employers and employees to agree to exclude up to 8 hours per day for sleep time when employees work 24 hour shifts, and the employees had entered an enforceable on-call agreement to do so. Click here for more information.
With increasing frequency, California courts (especially federal district courts) are enforcing binding arbitration agreements between employers and employees. In Richards v. Ernst & Young, No. 11-17530 (9th Cir. Aug. 21, 2013), the Ninth Circuit recently reversed a denial of the employer’s motion to compel arbitration of the employee's wage and hour claims. In so doing, the Court: (1) found the employee was not prejudiced by a significant delay by the employer in moving to compel arbitration; and (2) rejected the employee's argument that the Court should refuse arbitration based on the NLRB’s decision in D.R. Horton, 357 N.L.R.B. No. 184 (Jan. 3, 2012). The Court observed: “the only court of appeals, and the overwhelming majority of the district courts, to have considered the issue have determined that they should not defer to the NLRB’s decision in D.R. Horton because it conflicts with the explicit pronouncements of the Supreme Court concerning the policies undergirding the Federal Arbitration Act.” Click here for more information.
In another pro-arbitration decision, Vasquez v. Sears Roebuck & Co., Case No. 13cv680-WQH (S.D. Cal. 2013), the Southern District of California recently enforced an arbitration agreement, and made at least three significant holdings in doing so. First, the court severed unconscionable substantive provisions on the award of attorneys’ fees and confidentiality rather than invalidate the entire agreement. Second, the court found that the California Supreme Court’s decision in Gentry v. Superior Court, 42 Cal. 4th 443, 463 (2007), which had held class action waivers in employment arbitration agreements could not be enforced if a class action provided a significantly more effective tool for vindicating the plaintiffs’ rights, was no longer good law in California given the U.S. Supreme Court’s decision in Concepcion v. AT&T Mobility LLC, 131 S. Ct. 1740, 1745 (2011). Lastly, the Court enforced the plaintiff’s waiver of class action and Private Attorney General’s Act (“PAGA”) claims. The Court again cited the U.S. Supreme Court in Concepcion: “[w]hen state law prohibits outright the arbitration of a particular type of claim, the analysis is straightforward: The conflicting rule is displaced by the FAA.” Concepcion, 131 S. Ct. at 1747…. “States cannot require a procedure that is inconsistent with the FAA, even if it is desirable for unrelated reasons.” Id. at 1753; cf. Am. Exp. Co. v. Italian Colors Rest.,133 S. Ct. 2304, 2308 (2013) (holding that the FAA prohibits courts “to invalidate arbitration agreements on the ground that they do not permit class arbitration of a federal-law claim”). In ruling that the Federal Arbitration Act required enforcement of the plaintiff’s PAGA and class action waivers, the Court directly refuted a contrary state court decision in Brown v. Ralphs Grocery Co., 197 Cal. App. 4th 489 (2011).
In Bain v. Tax Reducers, Inc., 6th App. Dist. Case No. H037452 (2013), the Court of Appeals upheld most of a Santa Clara Superior Court judgment finding that Bain, who worked as a tax preparer and provided other bookkeeping services for clients of Tax Reducers, Inc., was an employee rather than an independent contractor. The Court applied the longstanding multi-factor test for independent contractor status set by the California Supreme Court in S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341. Companies who use independent contractors to provide such professional services should be familiar with the Borello factors, and consult legal counsel if they have questions about the proper classification of independent contractors. The Bain court also held that wage loss claims under Labor Code sections 202, 203 and 1194 were not time-barred because the limitations period was equitably tolled while Bain pursued his administrative claim before the Labor Commissioner. However, the Court reversed the award of statutory penalties to Bain under Labor Code section 1194.2 because the penalties were subject to a one-year limitations period and Bain's complaint was not filed within one year from the date his Labor Commissioner action became final.
In Harris v. City of Santa Monica, 56 Cal. 4th 203 (Cal. 2013), the California Supreme Court ruled that, to prevail in a mixed motive employment discrimination action, the employee must show that unlawful discrimination was a substantial factor motivating the adverse employment decision. Further, in mixed motive cases, if the employer proves that it would have made the same decision absent such discrimination, a court may not award damages, back pay, or order reinstatement, leaving only declaratory and injunctive relief, as well as attorney’s fees and costs as possible remedies. (For additional information regarding Harris, please see our article, California Supreme Court Requires Discrimination as Substantial Motivating Factor in Mixed Motive Cases, Limits Damages Available to Employees. One of the first post-Harris decisions teaches that Harris is a double-edged sword. In Alamo v. Practice Management Information Corp., the Court of Appeal followed Harris and held that the plaintiff was required to prove her pregnancy was a “substantial motivating reason” for her termination, not merely a “motivating reason.” Alamo v. Practice Management Information Corp., No. B230909 (Cal. Ct. App. Sept. 5, 2013). The Court thus reversed a verdict in favor of the plaintiff. However, the Court also ruled that the employer had waived its right to a Harris mixed motive instruction (i.e. that it would have taken the same employment action regardless of the employee’s pregnancy) because it failed to plead that defense in its answer. Thus, while Harris heightens the standard for discriminatory intent, employers must insure their answers affirmatively plead the mixed motive defense to make use of it at trial. Click here for more information.
If the California state minimum wage changes, are you ready? Employers may need to review the salaries of certain exempt employees to ensure compliance with the minimum salary basis test under the Executive, Administrative, and Professional overtime exemptions. On September 16, 2013, AB 10, the California state minimum wage increase legislation, was enrolled meaning it has passed both the California Senate and Assembly and is ready for signature by Governor Jerry Brown. AB 10 could soon amend Section 1182.12 of the California Labor Code to read:
“Notwithstanding any other provision of this part, on and after July 1, 2014, the minimum wage for all industries shall be not less than nine dollars ($9) per hour, and on and after January 1, 2016, the minimum wage for all industries shall be not less than ten dollars ($10) per hour."
In addition to possible implications for employers with collective bargaining agreements, all private employers with exempt employees in California must determine whether they will remain in compliance. For employees to be properly classified as exempt under the Executive, Administrative, and Professional Exemptions of most of the California Wage Orders, the employee must earn a monthly salary equivalent to no less than two (2) times the state minimum wage for full-time employment (40 hours per week). If this legislation is signed, the minimum salary test for the Executive, Administrative, and Professional Exemptions would increase from $33,280 to $37,440 annually. Employers should review whether their exempt employees will still meet the salary requirement by July 1, 2014 and again by January 1, 2016 if the bill is signed. Keep watch on whether the Governor will sign it this week or next.
A bill regarding an increase in the California state minimum wage could become a reality in the near future. On Thursday, September 12, 2013, the California state Senate approved AB 10, sending legislation back to the Assembly for a final vote before it goes to Governor Jerry Brown. There is a good chance the bill could become law as Governor Brown has already indicated he would sign the bill.
AB 10 would be the first increase in California’s state minimum wage in six years and would give California one of the highest statewide rates in the nation. If signed into law, the bill would raise California's minimum wage from the current $8.00 an hour to $9.00 by July 1, 2014 and to $10.00 by January 1, 2016.
Employers with collective bargaining agreements in California should be certain to determine whether they will remain in compliance in light of the pending rate change. Under most California Wage Orders, employers and unions are permitted to negotiate for overtime premiums different from those required by the Wage Order so long as their employees are covered by a valid collective bargaining agreement designating wages, hours of work, and working conditions and the employees’ regular hourly rate of pay is not less than 30 percent more than the state minimum wage. If AB 10 is signed into law, employers should be sure to review whether their union contracts or other procedures are affected.
Ketchikan Drywall Services v. Immigration and Customs Enforcement, No. 11-73105 (9th Cir. Aug. 6, 2013): Ouch, the U.S. Court of Appeals for the Ninth Circuit upheld $172,000 in penalties against the employer for failing to maintain correctly completed I-9 Forms. The employer argued that it substantially complied with the law by copying the relevant documents and attaching them to incomplete I-9 Forms. It argued: "it is senseless to require employer and employees to waste the time necessary to transcribe information onto I-9 Forms when that information is already available on an attached copy of the relevant document."
The Court did not see it that way, stating: "But requiring that the parties take the time to copy information onto the I-9 Form helps to ensure that they actually review the verification documents closely enough to ascertain that they are facially valid and authorize the individual to work in the United States . . . It is neither arbitrary nor capricious to require that employers actually complete their I-9 Forms."
For more on the Court’s decision, click here.