EMPLOYMENT AND LABOR LAW: LEGAL UPDATE FOR CALIFORNIA EMPLOYERS
Topics for this Month include:
– New Employment Legislation Introduced in California
– Congress’ Attempts to Block DOL Regulations
– A Possible National Right to Work Law
– Compensating Commission-Based Employees for Rest Breaks
– Updates on Challenges to Immigration Ban and DOL’s Fiduciary Rule
– Harassing Hugging
– Arbitration Clauses in Collective Bargaining Agreements
– And more!
California Bills to Watch
The new two-year legislative cycle has begun, and employment-related bills are already being introduced. Here are three that were proposed in December to keep an eye on:
- SB 62: Expands the persons and purposes for taking CFRA leave.
- SB 63: Expands the CFRA to employers with 20 or more employees within a 75 mile radius.
- AB 5 (Opportunity to Work Act): Requires employers with 10 or more employees to offer additional hours of work to an existing non-exempt employee before hiring another employee, unless it would require the employer to pay overtime.
Congress Seeks to Block DOL Regulations on State-Run Individual Retirement Accounts
On February 15, 2017, the U.S. House of Representatives passed two resolutions to block the U.S. Department of Labor’s rules issued in 2016 on states helping workers invest in state-run individual retirement account programs when their employers do not offer such plans. If the Senate passes the resolutions, then the rules will be nullified pursuant to the Congressional Review Act. These rules exempt states from having to meet ERISA requirements. California is in the process of implementing a state-sponsored program to automatically enroll qualified workers in an individual retirement plan using payroll deductions.
U.S. House of Representatives Seeks to Block Fair Play and Safe Workplace Executive Order
On February 2, 2017, the U.S. House of Representatives passed a resolution under the Congressional Review Act disapproving the regulations issued in 2016 by the Department of Labor and the Federal Acquisition Regulatory Council (FAR Council) implementing President Obama’s “Fair Pay and Safe Workplaces” Executive Order 13673. The Executive Order requires federal contractors to disclose labor law violations when bidding on federal contracts and to include certain information on employee paychecks. A federal judge in Texas issued an injunction against the disclosure rules on October 24, 2016, but not the paycheck transparency rules. If the Senate passes the resolution, and President Trump signs it into law, then the previous regulations will be invalidated permanently.
A National Right to Work Law?
On February 1, 2017, a bill was introduced into the U.S. House of Representatives to amend the National Labor Relations Act and the Railway Labor Act to let union members opt out of paying mandatory union dues. There are 28 states that already have “right to work” laws, prohibiting unions from requiring workers to join the union and/or pay union dues as a condition of employment. California is not one of those states.
SIGNIFICANT CASE LAW
Piece-Rate Rest Period Compensation Requirements Expanded to Commission-Only Employees
In 2013, a California appellate court held in Bluford v. Safeway Inc. that employees compensated on a piece-rate basis must be compensated separately for “non-productive time,” such as rest periods. This was later codified as Labor Code 226.2.
On February 28, 2017, this rule was extended to employees paid on a commission basis in Vaquero v. Stoneledge Furniture, LLC. In that case, if a furniture sales associate did not earn a sufficient amount of commissions to earn at least the equivalent of $12.01 per hour for all hours worked (including rest periods), then the sales associate would receive the minimum pay of $12.01 per hour for that time. This pay was considered a “draw,” and credited towards future commissions. When future commissions were earned, the minimum pay would be deducted from the commissions, as long as the employee earned a minimum of $12.01 per hour worked. Sales associates were required to record their hours worked.
The California appellate court held that this compensation scheme did not include a component that “directly compensated” sales associates for rest periods. Sales associates would earn the same amount in commissions, regardless of whether they took their rest periods. Although employees can be paid on a commission basis, such compensation plans must separately account and pay for rest periods to comply with California law.
Employer Takeaway: If you have employees who are paid on a commission-only basis (excluding employees who qualify for the outside salesperson exemption), review their compensation plans to ensure that they are separately compensated for their non-productive time.
Ninth Circuit Uphold Temporary Restraining Order on Immigration Executive Order
On February 9, 2017, after holding an expedited telephonic oral argument, the Ninth Circuit denied an emergency stay of a Washington federal district court’s temporary restraining order pending appeal of the order in State of Washington v. Trump. The Ninth Circuit held, among other things, that the plaintiffs were likely to prevail on their claims that Executive Order 13769, entitled “Protecting the Nation from Foreign Terrorist Entry Into the United States,” violates the U.S. Constitution’s Fifth Amendment Due Process Clause, and the First Amendment Establishment and Equal Protection Clauses. The executive branch asked for a stay of its appeal, pending a decision as to whether to continue to pursue the appeal or issue an alternative executive order. The Ninth Circuit denied the motion for stay on February 27, 2017.
The Challenge to DOL’s Fiduciary Rule Continues On
In 2016, the Department of Labor issued a set of instructions to financial advisors requiring that any investment advice for retirement accounts be given in the client’s best interest, and not based on the advisor’s benefit or financial gain. On February 8, 2017, in Chamber of Commerce v. U.S. Department of Labor, a Texas federal court upheld the Department of Labor’s fiduciary rule for retirement advisers, despite President Trump’s announced intent to review and possibly rescind the rule. On February 24, 2017, the U.S. Chamber of Commerce and others filed an appeal of the ruling to the Fifth Circuit.
In the February 23, 2017 Ninth Circuit decision Zetwick v. County of Yolo, a county correctional officer alleged that the county sheriff created a sexually hostile work environment by greeting her with hugs more than 100 times during a 12-year period (and one kiss to congratulate her on her marriage). The defendants contended that hugging does not constitute “severe or pervasive” harassment, but rather is innocuous, socially acceptable conduct. The plaintiff claimed that the sheriff hugged women, but not men; the sheriff claimed he hugged men occasionally too.
The lower court had granted the defendants summary judgment. The Ninth Circuit reversed. The appellate court noted that hugs and kisses on the cheek are not always within the realm of common workplace behavior. Such conduct can become hostile if it is unwelcome and pervasive. There is no “magic number,” but a reasonable person could conclude that the amount of hugging that occurred was abusive, especially given that the sheriff was her supervisor, he hugged and kissed other women, and even if he hugged men, there were “qualitative and quantitative differences” between the types of hugs given. Thus, whether the sheriff’s actions were within the scope of “ordinary workplace socializing” or spilled over into unwelcome hostile or abusive conduct was for the jury to decide.
A Collective Bargaining Agreement’s Arbitration Provisions Must Contain a “Clear and Unmistakable” Waiver of a Right to a Judicial Forum
In Vasserman v. Henry Mayo Newhall Memorial Hosp., the plaintiff filed a class action complaint against her former employer for various Labor Code violations. The plaintiff had been covered by a collective bargaining agreement, which included a mandatory grievance and arbitration process. The employer moved to compel arbitration under the CBA’s mandatory grievance and arbitration process. The appellate court held that arbitration could not be compelled because the CBA did not contain “an explicitly stated, clear and unmistakable intent to waive the right to a judicial forum for the statutory causes of action” raised by the plaintiff. Employers should take heed, and ensure that their CBAs contain explicit language that statutory Labor Code violations must be arbitrated.
Disclosing an Actor’s Age is Not Discriminatory
On February 22, 2017, a Northern District of California district court judge blocked enforcement of AB 1687, which went into effect on January 1, 2017 preventing online entertainment industry databases from including actors’ ages on their websites. In IMDb.com, Inc. v. Becerra, the judge concluded that prohibiting the industry from posting the actors’ ages violated free speech protections and does not do anything to prevent age discrimination.
U.S. Supreme Court Delays Resolving Split on Enforceability of Class Action Waivers in Employment Arbitration Agreements
Last month, we reported that the U.S. Supreme Court agreed to review several rulings on the enforceability of class action waivers in employment arbitration agreements, including the Ninth Circuit case, Morris v. Ernst & Young, LLP, which found a class action waiver to be unlawful. The Court has decided to push these cases until its next term, so a final word on class action waivers is at least a year away.
[This article is for informational purposes only and does not constitute legal advice. Do not act or rely upon any of the resources and information contained herein without seeking appropriate professional assistance.]