California employers are not alone as they wrestle with AB 51’s January 1, 2020 new law on mandatory arbitration agreements. (For background on AB 51 see our article). On December 6, 2019, the U.S. Chamber of Commerce and other business organizations filed suit against the State of California to have AB 51 declared preempted by the Federal Arbitration Act (FAA). Alternatively, the lawsuit seeks a declaration that AB 51’s express FAA carve out provision, which protects arbitration agreements otherwise valid under the FAA, applies to both enforcement and formation. The case is filed in the Eastern District of California as Chamber of Commerce of the United States v. Becerra, Case No. 2:19-cv-2456 KJM DB.

What happens next? The lawsuit seeks both a preliminary and permanent injunction. The motion for preliminary injunction has already been filed and is set for hearing on January 10, 2020. If the court grants the motion for preliminary injunction, AB 51 will be placed on hold and employers will be spared from its enforcement during the lifetime of the preliminary injunction and until the case can be decided on the merits. Stay tuned here for updates. Jackson Lewis will continue to monitor all developments.

The California Supreme Court announced that it would decide whether its April 30, 2018 landmark Dynamex decision is retroactive. The Supreme Court’s determination will have a significant impact on companies utilizing independent contractors in California.

In Dynamex Operations West, Inc. v. Superior Court of Los Angeles County, the California Supreme Court adopted the “ABC Test” to for evaluating contractor classifications under California law. On June 20, 2018, the California Supreme Court denied a petition for rehearing to address retroactivity. A summary of the ABC Test can be found in our article here. Since the decision, state and federal courts have grappled with the issue, with lower state and federal courts primarily finding that Dynamex should be applied retroactively.

In September 2019, Assembly Bill (AB 5) was  passed codifying the ABC Test and providing exemptions for certain occupations. If an exemption applies, the hiring entity is not home free as it must still satisfy the pre-Dynamex multi-factor test set forth in S.G. Borello & Sons, Inc. v. Department of Industrial Relations, 48 Cal. 3d 341 (1989).

AB 5, which is effective January 1, 2020, explicitly indicates that it is declaratory of existing law and that the exemptions are retroactive. However, it does not address whether Dynamex itself is retroactive. Accordingly, the question facing the California Supreme Court is whether the ABC Test should apply to contractor relationships before April 30, 2018 (and thus before the ABC Test was adopted by the California Supreme Court).

Soon after AB 5 was passed, the Ninth Circuit Court of Appeals certified the question to the California Supreme Court in Vazquez v. Jan-Pro Franchising International, Inc., 939 F.3d 1045 (9th Cir. Sept. 24, 2019). In May, the Ninth Circuit found that the ABC Test should be applied retroactively. The hiring entity asked the court to reconsider the question and on September 26, the court certified the question to California’s high court, which finally decided to hear the issue on November 20.

The court has yet to schedule oral argument. We will continue to monitor the status of the high court’s review as well as all AB 5-related developments.

On July 30, 2019, California Governor Gavin Newsom signed SB 30 into law, changing existing law to permit opposite-sex couples under the age of 62 years old to register as domestic partners. Those who enter into domestic partnerships have the same rights, protections, and benefits as spouses under California law, including the right, if otherwise eligible, to use sick time, take protected leave pursuant to the California Family Rights Act, or receive Paid Family Leave benefits from the State, in order to care for a spouse with a qualifying health issue, among other rights.

Existing law within the California Family Code section 297 provided, among other requirements, that a domestic partnership could be entered into between two individuals who were either: (1) members of the same sex; or (2) if members of the opposite sex, at least one of the two individuals were over 62 years old and meet the eligibility criteria for certain federal benefits under the Social Security Act.

Please find the rest of this article on our Disability, Leave & Health Management Blog here.

On October 10, 2019, Governor Gavin Newsom signed AB 673 into law, expanding an employee’s right to collect penalties for an employer’s failure to timely pay wages.

Prior to the enactment of AB 673, Labor Code section 210 provided a penalty that was directly recoverable by the Labor Commissioner or by an employee authorized to bring a claim under California’s Private Attorneys’ General Act (PAGA). A recovery by the Labor Commissioner resulted in the penalties being paid directly to the State Treasury and California’s Labor and Workforce Development Agency (LWDA). A recovery by an employee under PAGA resulted in the employees (and their attorneys) keeping 25 percent of the penalty, with the remaining 75 percent being paid to the LWDA. The penalties are $100 for each initial violation, $200 for each subsequent violation, plus 25 percent of the withheld wages.

Pursuant to AB 673, employees are now authorized to recover these penalties as part of a claim filed with the Labor Commissioner to recover unpaid wages or in civil court complaint filed under PAGA, but not both.  The Labor Commissioner is no longer authorized to collect these penalties in an independent civil action.  While the amounts of the penalties remain the same, AB 673 removes the requirement that the penalties recovered by the Labor Commissioner be paid to the LWDA and State Treasury.

With the signing of AB 673 employers may experience an increase in claims filed with the Labor Commissioner seeking unpaid wages and these statutory penalties.

Jackson Lewis attorneys are available for any questions or concerns an employer may have regarding this new law.

 

A California state appellate court has ruled that the correct rate for paying meal and rest period premiums is one hour of pay at an employee’s base hourly rate, not the regular rate of pay used for calculating overtime wages. This is the first published California case to make this distinction.

Pursuant to § 226.7 of the California Labor Code and the applicable Wage Orders of the Industrial Welfare Commission, an employer that fails to provide an employee a meal or rest period in accordance with a state law shall pay the employee one additional hour of pay at the employee’s “regular rate of compensation” for each workday that the meal or rest period is not provided. In Ferra v. Loews Hollywood Hotel, LLC, it was undisputed that the employer paid meal and rest period premiums at each employee’s base hourly wage (i.e., straight time rate), but the plaintiff argued this practice resulted in an underpayment of break premiums. Specifically, the plaintiff claimed that the “regular rate of compensation” at which break premiums must be paid is the same as the “regular rate of pay” used in Labor Code § 510 for calculating overtime premiums, which includes upward adjustments to the straight time rate reflecting the per-hour value of any non-hourly compensation the employee has earned during the pay period.

Holding that the premium for missed meal and rest periods is one hour at an employee’s base hourly rate, the Second Appellate District Court agreed with the employer that the statutory terms “regular rate of pay” and “regular rate of compensation” are not synonymous. In so ruling, the appellate court reasoned that the legislature could have simply used “regular rate of pay” in both statutes had it intended for the premiums to be calculated the same way, but instead chose to add different qualifiers to establish the proper rates for each premium. Thus, construing the phrases as interchangeable would render meaningless the legislature’s presumably deliberate act to use “of compensation” in one statute and “of pay” in the other. The appellate court further concluded that equating “regular rate of pay” and “regular rate of compensation” would ignore the difference between requiring an employer to pay overtime for the time an employee spends working more than 8 hours a day and/or 40 hours a week, which pays the employee for extra work, and requiring an employer to pay a premium for missed meal and rest hour periods, which compensates an employee for the loss of a benefit. While acknowledging that the Labor Code is to be construed in favor of protecting employees, the appellate court held that requiring employers to compensate employees with a full extra hour at their base hourly rate for working through a 30-minute meal period, or for working through a 10-minute rest break provides a premium that favors the protection of employees.

Importantly, however, the rate at which premiums for missed meal and rest periods should be paid may not be fully settled. Though Ferra is the first published state court decision to distinguish “regular rate of compensation” from “regular rate of pay,” federal district courts in California have been split in their rulings on this issue. Further, as noted in Justice Edmon’s lengthy dissenting opinion in Ferra, the California Division of Labor Standards Enforcement (“DLSE”) has concluded that the two rates are synonymous and that premiums for missed meal and rest breaks should be paid at an employee’s regular rate of pay. Therefore, while Ferra is currently binding authority as to California state courts, employers should be mindful of whether the decision is taken up for review by the California Supreme Court (of if a similar question is certified to the Supreme Court by the Ninth Circuit Court of Appeal).

Jackson Lewis will continue to monitor developments under the law.  Please contact a Jackson Lewis attorney if you have any questions about this case or other employment law issues.

To ensure your business complies with the law and gets a dose of wellness, Jackson Lewis attorney Pamela Palpallatoc, RYT 200, and certified OfficeYogaTM instructor provides sexual harassment training integrated with yoga stretching, breathing and meditation. Yoga mats, fancy yoga pants, and sweating are all optional. Pamela has experience teaching in workplaces, where employees have never practiced yoga or do not have time to change and shower, and makes the practice accessible for all. Proactively prevent harassment. Shift workplace culture. Build inclusive teams. Have fun!

Reminder to employers: SB 1343 amended the FEHA regulations and requires businesses with five or more employees to provide sexual-harassment-prevention training to all workers beginning January 1, 2020, and every two years thereafter. SB 778 later extended this deadline to January 1, 2021.

Please contact Jackson Lewis at 619-573-4900 to schedule your workplace training in time to meet the compliance deadlines.

#StopHarassment #YogaForEveryBODY

Currently, state law mandates private employers with 15 or more employees to provide employees 30 days of paid leave in a one-year period when an employee participates in an organ donation. Employers also are required to provide bone marrow donors five days of paid leave.

Now, Governor Gavin Newsom has signed AB 1223, which extends the amount of leave an organ donor may take. Private employers must now provide a maximum of an additional 30 business days of unpaid leave. The new law takes effect on January 1, 2020.

Employees are still required to provide their employers with written verification of their participation in either organ donation or bone marrow donation. The verification also must include that the procedure is medically necessary.

Jackson Lewis attorneys are available to discuss the new legislation, policy updates, and other information regarding organ donor leave. Please contact your Jackson Lewis attorney with questions.

Presently, an employee alleging harassment, discrimination, or other claim under California’s Fair Employment and Housing Act (“FEHA”) has one year from the alleged act to file a complaint with the Department of Fair Employment and Housing (“DFEH”). Filing such a complaint is a prerequisite to filing a civil action. The employee can either request that the DFEH immediately issue a Right to Sue Notice, or can opt to have the DFEH investigate the claim, which can take a year or even longer if the parties elect to participate in the DFEH’s mediation program. The employee will receive a Right to Sue Notice at the conclusion of the DFEH’s investigation. The employee then has one year to file a lawsuit.

On October 10, 2019, California Governor Gavin Newson signed AB9, also known as the Stop Harassment and Reporting Extension (SHARE) Act. The SHARE Act extends the one-year deadline to file a DFEH complaint to three years. Because the employee has one year to file a lawsuit after receiving the Right to Suit Notice, it could be four years or more before the potential lawsuit is filed.

The AB9 extension was purportedly designed to protect #MeToo litigants but extends to all forms of discrimination, harassment, and retaliation prohibited by FEHA. Former Governor Jerry Brown vetoed the same legislation last year, reasoning that the one-year statute of limitations “not only encourages prompt resolution while memories and evidence are fresh, but also ensures that unwelcome behavior is promptly reported and halted.”

AB 9 will not revive claims that already have lapsed under the current one-year rule. It appears that claims that were set to expire in the coming months may have an extended life.

Please contact the Jackson Lewis attorney with whom you normally work with any questions.

California employers may face harsh consequences for failing to pay arbitration fees on time under a bill (Senate Bill 707) signed by Governor Gavin Newsom on October 13, 2019. The new law go into effect on January 1, 2020.

Under the new law, if an employer fails to pay fees required for the commencement or continuation of an arbitration within 30 days of the payment’s due date, the employer’s conduct is deemed a material breach of the arbitration agreement.

Please find the rest of this article on the Jackson Lewis Publications page here.

California has joined a number of states in passing legislation purporting to prohibit mandatory arbitration agreements for sexual harassment and other claims. Such laws have gained popularity in the wake of the #MeToo movement, but are subject to challenge under Federal Arbitration Act (FAA) preemption principles.

Under Assembly Bill 51, signed by Governor Gavin Newsom on October 10, 2019, California employers might be prohibited from requiring employees to sign new mandatory arbitration agreements concerning disputes arising under the California Fair Employment and Housing Act (FEHA) or California Labor Code — that is, if the FAA does not apply.

Please find the full article on the Jackson Lewis Publications page here.