On September 7, 2016, the California Department of Fair Employment and Housing (“DFEH”) announced modifications to its proposed regulations originally promulgated on February 19, 2016, governing the use of criminal history in employment decisions.  The new regulations are intended to prevent disparate impact discrimination against protected classes such as gender, race, and national origin.  If passed, the new modified regulations will impose more restrictions on employers, including a burden shifting test.

The September 2016 proposed regulations provide that a policy or practice of basing employment decisions on criminal records having an “adverse impact” on an applicant or employee must be “both job-related and consistent with business necessity.”

The Applicant or Employee’s Burden: “Adverse Impact”

Under the proposed regulations, the applicant or employee must show “adverse impact.”  “Adverse impact” is defined as “disparate impact” under the EEOC (i.e., a disproportionately adverse effect on members of a protected class compared to non-members of the class).  The proposed regulations add that, if the applicant or employee can show “substantial disparities in the conviction records of one or more” protected categories such as gender, race, or national origin, those statistics are “presumptively sufficient to establish an adverse impact.”

The Employer’s Burden: Job Relationship and Business Necessity

Under the proposed regulations, once the affected individual shows adverse impact, the burden shifts to the employer to prove the decision is both job-related and consistent with business necessity.  The employer must show the policy or practice bears a “demonstrable relationship to successful performance on the job and in the workplace and measure the person’s fitness for the specific job, not merely to evaluate the person in the abstract.”

To establish job-relatedness and business necessity, the employer must demonstrate that the policy or practice is “appropriately tailored to the job for which it is used as an evaluation factor.”  This requires taking into account at least the following three factors:

(1) the nature and gravity of the offense;
(2) the time passed since the offence or completion of the sentence; and
(3) the nature of the job held or sought.

The employer must also use one of the two following tests to determine whether the policy or practice is “appropriately tailored:”

(1) a “bright-line, across the board” conviction disqualification which would not depend on individual circumstances; or
(2) an individualized assessment of the circumstances and qualifications of the individuals excluded by the conviction screen.

Under the “bright line” test, the employer must show (1) that its test can properly distinguish between individuals who do and do not pose an unacceptable level of risk, and (2) that the convictions being used as the basis have a direct and specific negative bearing on the person’s ability to perform the duties or responsibilities necessarily related to the employment position.  The “bright line” test is subject to a rebuttable presumption if the conviction is over 7 years old.

Under the individualized assessment method, the employer must investigate the circumstances or qualifications of individuals excluded by the conviction screen.  After conducting the individualized assessment, the employer must then take three additional steps:

(1) provide specific notice to the affected individuals that they have been screened out because of a criminal conviction;
(2) provide a reasonable opportunity for the individuals to demonstrate that the exclusion should not be applied to their particular circumstances; and
(3) consider any additional information provided.

Under both the “bright-line” and “individualized assessment” tests, the employer must give impacted individuals notice of the disqualifying conviction and a reasonable opportunity to present evidence that the information is factually inaccurate.  If inaccuracy is demonstrated, that record cannot be used in an employment decision.

The inquiry does not end there.  Even if an employer demonstrates that its policy or practice is job-related and consistent with business necessity, impacted individuals may still prevail if they can demonstrate that there is a less discriminatory policy or practice that serves the employer’s goals as effectively as the conviction screen.  These may include, for example, a more narrowly targeted list of convictions or another form of inquiry that evaluates job qualification or risk as accurately without significantly increasing the cost or burden on the employer.

Jackson Lewis attorneys are available to help employers navigate these issues.  Should you have any questions about the proposed regulations, please feel free to contact Heath Havey at heath.havey@jacksonlewis.com, or the Jackson Lewis attorney with whom you regularly work.

For employers with California employees, there seems to be no way to avoid California’s complicated and protective employment laws, and things just got a bit more complicated.

On September 25, 2016, Governor Brown signed into law SB 1241, which prohibits employers from requiring California employees to litigate or arbitrate employment disputes outside of California or under the laws of another state.

SB 1241 applies to any contract entered into, modified, or extended on or after January 1, 2017. The new law prohibits so called “choice of law” and “forum selection” clauses that require employees who live and work in California to bring their employment claims in jurisdictions other than California or under the laws of another state.  Any provisions of a contract that contain prohibited choice of law and forum selection clauses are voidable by an employee, meaning that the dispute will be decided in California under California law.  The law also provides that the court can award the employee attorney’s fees, in addition to an injunction, when an employee successfully challenges the prohibited choice of law and forum selection clauses.

Key Limitations of SB 1241

Despite its broad impact, the law is subject to a number of key limitations.

  1. It does not apply to existing contracts unless they are modified or extended on or after January 1, 2017.
  2. It only applies to employees who “primarily” reside and work in California.
  3. Therefore, non-California choice of law and forum selection clauses may be permissible for employees who primarily reside outside of California even though they do work in California.
  4. It only applies when agreement to the choice of law and forum selection clauses are a “condition of employment.”
  5. Although the law is not clear, presumably contracts dealing with ancillary issues such as job benefits, bonus programs, etc., may not be covered.
  6. Only the choice of law and forum selection provisions, not the entire contract, are voidable.
  7. The law does not apply to contracts where the employee is individually represented by an attorney in negotiating the terms of the agreement.

Best Practices for Employers

Employers should review their employee agreements to determine if they require, as a condition of employment, choice of law and forum selection clauses, which are prohibited by the new law. If so, employers should modify those agreements to provide an express exemption for California employees with respect to the choice of law and forum selection clauses and ensure that the remaining portions of the agreements are consistent with California law.

Jackson Lewis attorneys are available to help employers navigate these issues.  Should you have any questions about the new law, please feel free to contact Sander van der Heide at sander.vdheide@jacksonlewis.com, Dale R. Kuykendall at Kuykendd@jacksonlewis.com, or the Jackson Lewis attorney with whom you regularly work.

On September 30, 2016, California Governor Jerry Brown signed into law two bills designed to address ongoing concern of pay inequity. A.B. 1676 amends the California Fair Pay Act by prohibiting employers from relying on an employee’s prior salary to justify a disparity between the salaries of similarly situated employees.  S.B. 1063 extends the Fair Pay Act by providing additional protections on the basis of race and ethnicity.  A.B. 1676 and S.B. 1063 are effective January 1, 2017.

The Legislature was concerned that the practice of using an applicant’s salary history as a basis for current salary unfairly affects women candidates who may have taken time out of the workforce, or who are already unfairly affected by the gender pay gap. Left unaddressed, the Legislature believes such practices will, even unintentionally, perpetuate pay disparity between men and women who perform substantially similar work.  Accordingly, under A.B. 1676, prior salary history alone is no longer sufficient to justify pay disparity between men and women who perform substantially similar work.

Along with A.B. 1676, Governor Brown signed S.B. 1063, the Wage and Equality Act of 2016. S.B. 1063 prohibits employers from paying employees of one race or ethnicity less than employees of different races or ethnicities who perform substantially similar work.  S.B. 1063 is an extension of the requirements of last year’s Fair Pay Act.

Under the Fair Pay Act, employers can no longer rely on the notion of equal pay for equal work. Instead, employees alleging pay disparity must now only show “substantially similar work when viewed as a composite of skill, effort and responsibility.”  This allows employees and the courts to compare wages of employees who perform similar work, even if the job title is different.  Likewise, comparisons are no longer limited to the “same establishment,” but rather may be a comparison at any of the employer’s locations. While the Fair Pay Act specifically addressed gender, its requirements now apply equally to race and ethnicity under S.B. 1063.

California already has stringent laws regarding equal pay. Employers should review their policies and practices to ensure compliance with the Fair Pay Act.  With the passage of A.B. 1676 and S.B. 1063, California employers must be careful in assessing employee salary.

Jackson Lewis attorneys are available to help employers navigate these issues.  Should you have any questions about the new law, please feel free to contact Shane R. Larsen at shane.larsen@jacksonlewis.com, Cary G. Palmer at palmerc@jacksonlewis.com, or the Jackson Lewis attorneys with whom you regularly work.

On September 27, 2016, Governor Jerry Brown signed Assembly Bill 1843, which prohibits certain inquiries into the criminal past of applicants for employment.  The new law now adds a prohibition against asking about, considering as part of the hiring process, or attempting to discover, information relating to any “arrest, detention, processing, diversion, supervision, adjudication, or court disposition” that occurred while the applicant was subject to the “process and jurisdiction” of the juvenile court.   

The new law contains a carve out for healthcare facilities seeking to employ applicants who will have regular access to patients and/or drugs and medication.  For these applicants, the healthcare facility may seek disclosure of their relevant history, but first must furnish a list describing the particular types of offenses that must be disclosed.  Healthcare facilities also must be cautious that they limit the scope of their juvenile criminal inquiries to information related only to unsealed felony and misdemeanor offenses that occurred within the preceding five years.   

This law will apply to all public and private employers, except as noted above.  This law will become effective January 1, 2017.    

Employers should review their employment applications and hiring process to ensure compliance with this new law.  If you have any questions about the new law, please contact Dale Kuykendall or Evan Beecher in Jackson Lewis’ Sacramento office, or the Jackson Lewis attorney with whom you regularly work.

Beginning January 1, 2017, employers with 50 or more employees who have employees in San Francisco will need to begin providing payments to eligible employees who take time off to bond with a newborn child.  Employers with 35 or more employees become subject to the ordinance on July 1, 2017 and employers with 20 or more employees become subject to the ordinance on January 1, 2018. Click here to read this full article written by Cepideh Roufougar.

With holiday hiring in full swing, it’s a good time to review what should and should not be asked on employment applications.

What Not to Ask

Any questions designed to elicit information about an employee’s protected characteristics or status should be avoided. Exceptions exist for bona fide occupational qualifications.  A BFOQ is a work requirement reasonably necessary to the operation of the business or the performance of a job.  Examples include a requirement that the individual be over age 21 for a bartender position, requirements for a certain age, gender, race or ethnicity for acting roles, or having the ability to lift a certain amount of weight.

Unless there is a BFOQ in play, an application should not ask questions which would elicit information about the following:

  • Gender
  • Sexual orientation
  • Gender identity or expression
  • Race
  • Ancestry, national origin, birthplace, or citizenship (can require proof to work in United States after hire)
  • Marital status, maiden name, whether any relatives are employed by the employer
  • Pregnancy status, intent to have children or whether applicant has children
  • Age, dates of attendance at educational institutions and graduation dates
  • Religion or days of religious observance
  • Medical conditions
  • Genetic history or characteristics
  • Any prior worker’s compensation claims
  • Arrest records
  • Military or veteran status (however, applicants should be notified they permitted to disclose information about military service voluntarily in the job experience portion of the application and to disclose skills or knowledge acquired during military service)
  • Memberships or participation in organizations or clubs that might disclose a protected status (however, applicants should be provided the opportunity to disclose such memberships or participation if relevant to the job or their experience)
  • Name, contact information, and relationship of a relative to be notified in case of an accident or emergency ask for the name and contact information of a person to be contacted)
  • Educational background if not a requirement for the job

Because of the advent of identity theft, an application should not ask for the applicant’s social security number or driver’s license number (obtain when necessary after hire or in connection with background check after conditional offer has been made).

Inquiries about Criminal Convictions

Employers cannot ask about criminal convictions that involved a juvenile proceeding, a conviction that has been sealed or expunged or otherwise statutorily eradicated, a conviction which resulted in a referral to or participation in a pre-trial or post-trial diversion program, or convictions for marijuana offenses if the conviction occurred more than two years prior to the date of the application.The application should also state that a conviction does not necessarily bar employment and that other factors such as time/seriousness of offense, age, and rehabilitation will also be considered. The application should provide a space for the applicant to describe the nature of the crime and any rehabilitation efforts.

What to Ask

Employers will want to make sure applicants have the opportunity to disclose participation in activities that may be relevant to their skills, experience and knowledge without requiring disclosure of any protected status. Here is one way to do this.

Do you have any other knowledge, experience, abilities, special skills or credentials which you feel add to your qualifications for the position(s) you are applying for? You may exclude information or affiliations which might indicate race, color, religion, ancestry, sex, sexual orientation, gender identity or expression, national origin, age, disability, military service or veteran’s status, marital status, genetic information, or any other protected classification.

Applicants should also have the opportunity to disclose their experience as a volunteer or in military service. Here is one way to ask this question safely:

You may include as part of your employment history any verified work performed on a volunteer basis, in an internship, or in military service.

Other Recommended Disclosures and Statements

  • Employer is an equal employment opportunity employer and provides reasonable accommodations to applications during the hiring process as long as the accommodation does not constitute an undue hardship. State who to contact to request accommodations.
  • Whether the applicant will be subject to drug testing if a conditional offer is made
  • At-will nature of employment
  • Applicant authorization to contact references (if employer will check references using its employees, special language is required)
  • Whether a background check will be required after a conditional offer is made (make sure to have the applicant sign a stand-alone authorization which complies with California and federal law

This article provides a general overview of the most common issues that arise with respect to employment applications. To ensure your application complies with applicable law, we recommend a consultation with legal counsel.

On September 29, 2016, California Governor Jerry Brown signed AB 1732, which will require single-user restrooms in California business establishments, government buildings, and places of public accommodation, to be universally accessible to all genders, and identified by signage as all gender. A “single-user” restroom is defined by statute as a toilet facility with no more than one water closet and one urinal with a locking mechanism controlled by the user.  The new law, which takes effect on March 1, 2017, authorizes public inspectors or building officials to check for compliance during any inspection.

The signing of AB 1732, considered the most progressive statewide restroom access policy in the nation, follows a trend of greater protections for gender identity. Earlier this year, the California Department of Fair Employment and Housing issued guidelines for protecting transgender rights in the workplace. Similarly, the U.S. Department of Labor’s Occupational Safety and Health Administration (OSHA), has taken the position that all employees, including transgender employees, should have access to restrooms consistent with their gender identity.

Should you have any questions about the new law or other workplace developments, please feel free to contact Cary Palmer or Nick Poper in Jackson Lewis’ Sacramento office, or the Jackson Lewis attorney with whom you regularly work.

The DOL’s final rule on paid sick leave is not the only recent news-making event in the world of leave management.  While additional time off was being lauded by the federal government, additional protected leave was rejected in California.  Click here to read the full article written Susan E. Groff and A. Scott Ruygrok.

On September 14, 2016, Governor Jerry Brown signed AB 2337 into law which expands the employer notice requirements regarding domestic violence employee protections provided by Labor Code section 230.1. Despite the protections under current law, many employees remain uninformed about their employment-related rights when it comes to domestic violence.  This new bill requires employers of 25 or more to provide written notice to employees of their rights to take protected leave for domestic violence, sexual assault or stalking.  Employers must inform each employee of his or her rights upon hire and at any time upon request.  The Labor Commissioner must develop and post online a form that employers may use to satisfy these new notice requirements by July 1, 2017.  An employer’s obligation to comply with these new disclosure requirements will become effective when the Labor Commissioner posts the new form.

In the interim, employers should review their handbook policies and ensure that employees’ existing rights to take time off for domestic violence, sexual assault or stalking are adequately set forth. This includes notifying employees that are victims of domestic violence, sexual assault, or stalking that they may take time off from work to (1) seek medical attention for injuries; (2) obtain services from a domestic violence shelter, program, or rape crisis center; (3) obtain psychological counseling; or (4) participate in safety planning and take other actions to increase safety, including temporary or permanent relocation. Employers are prohibited from discharging, discriminating, or retaliating against an employee because of the employee’s known status as a victim of domestic violence, sexual assault, or stalking or for taking domestic violence leave.

Ms. Silverman is a volunteer attorney with the San Diego Center for Community Solutions, assisting victims of domestic violence in their efforts to obtain restraining orders against abusive individuals with whom the victims have a relationship.

The Department of Labor (DOL) has made it clear. Regardless of the reason, classification errors can be costly for employers, as the error often affects a number of employees having similar job titles and therefore lends itself to class treatment of the claim.  Furthermore, if you are on the unlucky end of a DOL audit, you will likely be stuck paying payroll taxes, unemployment taxes, overtime, as well as a host of fines, fees and other costs.

The complex details of what you need to know for proper worker classification can be found in the 2016 Employers Supplemental Tax Guide, published by the IRS.  The IRS guide, however, is not only complex, but often times, confusing.  Identified below are the five most common employee classification mistakes.

Mistake 1: Going by the written contract

Despite what the agreement with the individual worker provides, the nature of the work relationship between the company and the worker determines how he or she is classified.  Some employers believe that having a written contract that provides for the independent contractor status supersedes all other considerations. This is untrue.  If the “independent contractor” is doing the same type of work as someone else (who is classified as an employee and is issued a W2), the “independent contractor” is misclassified.  If, however, the worker provides the same or similar services to other companies, they are more likely to be deemed an independent contractor.

Mistake 2: Allowing the Worker to Classify the Relationship

 Even if the worker requests or even agrees to be treated as an independent contractor, this does not mean that it is appropriate, legal or ethical.

 Mistake 3: Trying to Control When and How the Work Gets Completed

A key factor in considering whether a worker is an independent contractor or an employee is the amount of control over the details of the work being performed. If the relationship is intended to be long term and the company tells the worker how to complete the work, the worker is likely an employee, not an independent contractor.  True independent contractors typically perform services for a brief period of time.  True independent contractors are also typically given an objective and then are free to fulfill it using their own tools, methods and where and when they choose.  Generally, if you tell your workers where to work, when to work or to perform the work in a specified manner, you have an employee, not an independent contractor.

Mistake 4: Method of Payment

Independent contractors are typically paid a flat fee for a job, however, confusion arises in situations where independent contractors are paid hourly. Employees are usually offered benefits.  Just because you do not offer a worker benefits (such as sick days, retirement plans, etc.) does not mean they are properly classified.  Some employers mistakenly believe they have the choice (or allow the employee the choice) of providing the worker with benefits and calling them an employee, or not offering benefits, but paying a higher rate and treating the worker as a contractor.

Mistake 5: Improperly defining an investment in job training and equipment

Independent contractors typically have significant investments in both job training, as well as in their equipment. However, employees may also invest to some degree in the tools and materials they use for their jobs.  The difference in classification depends upon the size of the investment and factors such as whether or not the company offers reimbursement of expenses to the worker.  If the company reimburses, the worker is more likely to be deemed an employee.

Consequences for Misclassifying 

If the DOL or IRS performs an audit, you will be required to expend significant and valuable time away from your business to respond to their inquiries. While some leniency may be provided if an honest mistake was made, possible penalties still include significant fines, paying back taxes and wages for the misclassified employees.  In addition, workers that were misclassified can come back after you for unpaid overtime, missed meal and rest breaks, and other benefits.