LEGAL UPDATE FOR CALIFORNIA EMPLOYERS
June 02nd, 2016/By Admin/In Blog
The following update for California employers is brought to you by Firm Partner Sherry B. Shavit. If you have any questions or comments about the information presented, please contact Ms. Shavit direct at telephone number (818) 205-9955; or via email to sshavit@tharpe-howell.com.
It’s Finally Here… The Moment You Have All Been Waiting For (or Not)
The mystery is now over. The Department of Labor has finally issued its final overtime regulations, ever so slightly easing the originally proposed requirements, which employers must comply with by December 1, 2016. The regulations increase the minimum salary for exempt employees to $47,476 (or $913 per week). The minimum salary for the FLSA’s highly compensated employee exemption will be increased to $134,004. These thresholds are subject to increase every three years, starting January 1, 2020. The regulations also permit employers to use non-discretionary bonuses, incentive payments and commissions paid at least quarterly to employees to satisfy up to 10% of the minimum salary threshold. The regulations also permit employers to make last-minute adjustments, so that if at the end of the quarter, the employee has not hit the minimum threshold, the employer can make one final payment to meet that threshold no later than the next pay period after the end of the quarter. No changes were made to the duties tests.
What does this mean for California employers? Employers should review their exempt employee salaries now, before these new regulations go into effect. The federal minimum salary threshold will be higher than California’s exempt salary threshold (except for employees working in San Francisco), which currently is at $41,600 and will go up to $43,680 on January 1, 2017. Once California’s minimum wage is increased to $12.00 per hour (on July 1, 2017 for employers with 26+ employees working in Los Angeles; July 1, 2018 for employers with 25 or less employees working in Los Angeles; January 1, 2019 for all other employers with 26+ employees, and January 1, 2020 for all other employers with 25 or less employees), then California’s salary threshold will exceed the federal level. Whether that remains the case starting on January 1, 2020 will depend on how much the DOL increases the federal salary threshold every three years.
California also does not recognize applying non-discretionary bonuses and incentive payments towards satisfying the minimum salary threshold; thus, while these payments can be used to meet the FLSA’s higher minimum salary, they cannot be used to meet California’s lower minimum salary requirements. California also does not recognize a “highly compensated employee exemption.” Employees must still satisfy the duties required for either the managerial, professional, administrative, or outside salesperson exemptions.
ACA Subsidy Notices
This month, the U.S. Department of Health and Human Services will begin sending notices to employers about employees receiving Advance Premium Tax Credits (“APTC”), also known as subsidies from the exchange. If you receive one of these notices, and you have been offering qualified health coverage to the employee, then you will want to consult your benefits counsel about whether to file an appeal with the HHS and/or notify the employee. Further guidance on this issue also can be found at http://blog.ifebp.org/index.php/how-to-tell-an-employee-you-are-appealing-their-aca-subsidy.
EEOC Issues Final Rules on Wellness Programs and Resource Document on Reasonable Accommodation
On May 16, 2016, the EEOC issued its final rules on the propriety of employer wellness programs under the Americans with Disabilities Act (“ADA”) and the Genetic Information Nondiscrimination Act (“GINA”). For more information on the do’s and don’ts of employer wellness programs, you can consult your employment counsel and/or review the details of the new rules and find Questions and Answers at https://www.eeoc.gov/laws/regulations/index.cfm. These rules become effective on July 18, 2016, but apply prospectively to employer-sponsored wellness programs starting January 1, 2017.
Additionally, on May 9, 2016, the EEOC published a resource document for employers on providing leaves of absence as an accommodation, engaging in the interactive process with respect to providing leaves of absence, maximum leave policies, returning to work from a leave of absence, and providing a leave of absence being an undue hardship. The guidance does not promulgate any new requirements. The resource document can be found at https://www.eeoc.gov/eeoc/publications/ada-leave.cfm.
OSHA to Provide Public Access to Employer Injury and Illness Records
On May 11, 2016, OSHA issued a final rule updating the collection and access to injury and illness data, and barring employers from retaliating against employees who report such incidents. Employers in high-hazard industries will be required to send injury and illness data to OSHA electronically, for the agency to post on its website. The new requirements take effect on August 10, 2016, and the data submission will be phased in starting in 2017. The final rule can be found at https://www.federalregister.gov/articles/2016/05/20/2016-11817/improve-tracking-of-workplace-injuries-and-illnesses-correction.
Defend Trade Secrets Act is Now Law
On May 11, 2016, President Obama signed the first federal trade secrets law, Defend Trade Secrets Act (“DTSA”). The DTSA provides uniformity across the country as to what is and is not a “trade secret,” and gives companies access to federal courts to protect their trade secrets. The law also provides immunity to employees who turn over trade secrets to the government to investigate potential illegal activity and who disclose trade secrets confidentially as part of an anti-retaliation lawsuit against their employer. Employers are required to disclose this safe harbor provision in any confidentiality agreement with its employees.
SIGNIFICANT CASE LAW
Statute of Limitations for Constructive Discharge Claims Begins to Run Upon Resignation
The U.S. Supreme Court has clarified that the statute of limitations for constructive discharge claims begins to run on the date the employee resigns from employment, not when the events that led to the constructive discharge occurred. In Green v. Brennan (May 23, 2016), a US Postal Service employee agreed to resign his employment on December 16, 2009, submitted his formal resignation notice on February 9, 2010, and the resignation was effective March 31, 2010. Disagreeing with the trial court and the Tenth Circuit, the U.S. Supreme Court found that a constructive discharge claim does not become a “complete and present cause of action” until resignation actually occurs, which triggers the start of the running of the statute of limitations.
SCOTUS May Revisit the Enforceability of Employment Arbitration Agreements
In a surprise decision, the Seventh Circuit ruled in Lewis v. Epic Systems Corp. (May 26, 2016) that an employer’s arbitration agreement containing a class and collective action waiver violated the employee’s rights under Section 7 of the National Labor Relations Act to engage in concerted activity, and therefore was unenforceable. This is the first federal appellate decision to follow the NLRB’s position in D.R. Horton striking down class and collective action waivers in arbitration agreements. Now that there is a split among the circuits, it is possible that the U.S. Supreme Court will take up the issue
[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.]
