EMPLOYMENT AND LABOR LAW: LEGAL UPDATE FOR CALIFORNIA EMPLOYERS
October 06th, 2016/By Admin/In Blog
The following legal 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.
LEGISLATIVE/REGULATORY UPDATE
New Employment Laws Approved by Governor Brown
The two-year legislative cycle has now ended in California. The legislature and Governor Brown were busy these last two months enacting/vetoing bills. Here is a summary of employment-related bills recently signed into law:
- Senate Bill 3 – Minimum Wage Law: California’s minimum wage will gradually increase to $15.00 per hour by 2022 for employers with 26+ employees and by 2023 for employers with 25 or less employees. (But, watch out for local ordinances that have different minimum wage requirements!)
- Senate Bill 1063/Assembly Bill 1676 – Expansion of Fair Pay Act: California’s Equal Pay Act has been expanded from just gender wage disparity to also race/ethnicity, and declaring that past salary history cannot, in and of itself, justify a wage disparity for substantially similar work.
- Assembly Bill 1843 – Juvenile Convictions: Employers will be prohibited from asking applicants about, or considering in employment decisions, any juvenile criminal history, including convictions, except for limited circumstances for health facilities.
- Assembly Bill 1732 – Gender-Neutral Bathrooms: Effective March 1, 2017, all single-user restrooms in business establishments and places of public accommodation must be gender-neutral.
- Assembly Bill 2337 – Informing Employees of Rights for Victims of Domestic Violence, Sexual Assault and Stalking: Employers will be required to provide new hires information regarding the rights of victims of domestic violence, sexual assault and stalking. The Labor Commissioner is tasked with creating a sample notice by July 1, 2017. Employers do not need to comply with this law until the Labor Commissioner creates the notice.
- Senate Bill 1234 – Retirement Savings Plans: Eligible employers (with five or more employees) who do not provide a retirement savings plan to its employees will be required to have a payroll deposit retirement savings arrangement so that employees may be able to participate in the state-run California Secure Choice Retirement Savings Program. The Program is supposed to be implemented on January 1, 2017.
- Senate Bill 1241 – Choice of Law/Jurisdiction Provisions in Arbitration Agreements: Contracts entered into, modified or extended on or after January 1, 2017 cannot require employees working and residing primarily in California to adjudicate claims outside of California, or be deprived of substantive rights under California law. However, it remains to be seen whether courts find that the Federal Arbitration Act preempts this new law for interstate contracts.
- Assembly Bill 1066 – Phase-In Overtime for Agricultural Workers Act: Agricultural workers will now receive the same overtime and meal/rest period benefits as other hourly employees. Currently under Wage Order 14-2001, overtime does not kick in until after ten (10) hours for agricultural workers, and there is no eligibility for double time. This bill will gradually conform overtime rules for agricultural workers to the same rules for other occupations, starting January 1, 2019. This bill also eliminates the exemption from meal and rest period requirements for agricultural workers.
- Senate Bill 1015 – Repeal of Expiration of Domestic Worker Bill of Rights: The Domestic Worker Bill of Rights, which provides overtime for domestic workers, was scheduled to be repealed on January 1, 2017. This bill removes the repeal date, making the Bill of Rights permanent.
- Senate Bill 1001 – Work Authorization Documents: Employers are prohibited from asking for more work authorization documents than required under federal law, cannot refuse to honor documents that reasonably appear genuine on their face, and cannot reinvestigate or re-verify a current employee’s authorization to work using an unfair immigration-related practice.
- Senate Bill 1167 – Indoor Heat Regulations: By January 1, 2019, the Division of Occupational Safety and Health is to propose heat illness and injury prevention standards for employees working indoors.
The EEOC Has Overhauled its Enforcement Guidance on Retaliation
On August 29, 2016, the EEOC replaced its aging retaliation guidelines with new ones, as well as implemented guidance on the Americans with Disabilities Act’s prohibition on interfering with the ability to exercise one’s ADA rights. The retaliation guidelines had not been updated since 1998. The new guidelines incorporate case law that has been issued since then and provides concrete examples of various issues.
The Guidance provides that “protected activity” includes playing any role in an internal investigation, making a broad or ambiguous complaint of unfair treatment (or threat to make such a complaint) if it can be reasonably interpreted as opposition to employment discrimination, and making complaints not only to an employer but also to co-workers, an attorney, others outside the company or even publicly. An employee need only have a reasonable good faith belief that unlawful conduct occurred, even if in the end no unlawful conduct is found to have taken place. The Guidance also broadens the term “materially adverse action” to include any activity that could be reasonably likely to deter protected activity regardless of whether it has a tangible effect on one’s employment. Such actions can include non-work related activities, inside or outside of work, and even acts taken against a third party closely linked to the complaining employee. The Guidance also states that the retaliation only needs to be one of the “but-for” causes to establish a causal connection, and can be established with a “convincing mosaic” demonstrating retaliatory intent, including events that occurred years before the alleged retaliatory act.
The Guidance also gives employers suggested “promising practices” to implement that may help reduce the risk of violations. These include: a written anti-retaliation policy with practical guidance on the employer’s expectations and examples of what to do and not to do; training all employees on the employer’s anti-retaliation policy; reminding employees of the anti-retaliation policy during EEO investigations, how to report it and how to avoid it; following up proactively on EEO complaints; and reviewing employment decisions to ensure they are based on legitimate, non-retaliatory reasons.
Although the regulations are broad, the EEOC also makes clear that employees cannot protect themselves from discipline for poor performance simply by making a complaint. It all depends on the facts, and an employer can reduce its chances of being found retaliatory by independently evaluating whether the adverse action is appropriate.
The Guidance’s full text is here: https://www.eeoc.gov/laws/guidance/retaliation-guidance.cfm?utm_content=&utm_medium=email&utm_name=&utm_source=govdelivery&utm_term=.
Attention Federal Contractors!
EEOC Pay Data Disclosure Rules Finalized
The EEOC has finalized its highly anticipated pay data disclosure rules. The 2017 EEO-1 report will be due by March 31, 2018. Private federal contractors and subcontractors with 100 or more employees will be required to report summary pay data (no individual pay data will be required). Federal contractors and subcontractors with 50-99 employees will continue to report employees by job categories as they already do. Federal contractors and subcontractors with less than 50 employees will not have to file EEO-1 reports.
The EEOC will have free webinars on the new rules on October 20 and 26. For more information, go to https://www.eeoc.gov/employers/eeo1survey/2017survey.cfm.
Final Regulations Implemented for Paid Sick Leave and the Fair Pay and Safe Workplaces Executive Orders
On September 7, 2015, President Obama signed Executive Order 13706, requiring federal contractors to provide their employees paid sick leave. The Department of Labor released its final rule implementing this Executive Order. This requirement will be for all federal contracts entered into on or after January 1, 2017.
Employers will be required to provide one (1) hour of sick leave for every 30 hours worked, up to a maximum of seven (7) paid sick days (56 hours) per year. Employees will be permitted to carry over up to 56 hours to the following year. Employers do not have to pay out accrued and unused sick leave upon termination of employment. Employers must allow employees use a minimum increment of one (1) hour. More details can be found at https://www.dol.gov/whd/govcontracts/eo13706/.
In July 2014, President Obama signed the Fair Pay and Safe Workplaces Executive Order to require prospective federal contractors to disclose labor law violations, and for federal agencies to consider such labor violations when awarding federal contracts.
The regulations implementing the executive order have now been finalized. Prospective contractors will be required to disclose three years’ worth of violations of 14 different workplace protections, including wage and hour, safety and health, collective bargaining, family and medical leave, and civil rights. These disclosures will be phased in, starting with only looking back one year, until reaching the three-year look back by October, 2018. At this time, contractors also only have to disclose violations of federal statutes – a list of covered state laws has not yet been implemented.
These regulations go into effect on October 25, 2016. However, only contractors bidding on contracts over $50 million will have to make these disclosures for the first six months; all other contractors can wait until April 24, 2017. Subcontractors will have to start making disclosures on October 25, 2017. More information can be found at https://www.dol.gov/asp/fairpayandsafeworkplaces/.
Will the New DOL Overtime Exemption Rules Go Into Effect?
The Department of Labor’s new overtime exemption salary requirements are scheduled to go into effect on December 1, 2016. However, the U.S. House of Representatives passed a bill to delay the regulations for six months. There are also two lawsuits pending challenging the new regulations. Stay tuned!
SIGNIFICANT CASE LAW
Class Action Waivers in Arbitration Agreements – Valid or Not?
The debate continues over whether provisions in arbitration agreements that require employees to sue on an individual basis – and not on a class or representative basis – are enforceable. Most thought the issue had been resolved back in 2011 when the U.S. Supreme Court held such provisions to be enforceable in AT&T Mobility, LLC v. Concepcion. But, the following year the National Labor Relations Board disagreed, and found that such provisions violate an individual’s right to engage in protected concerted activity under the National Labor Relations Act in D.R. Horton and again in Murphy Oil USA, Inc. in 2014.
Since then, the majority of federal circuits have rejected D.R. Horton and upheld class action waivers. The California Supreme Court also rejected the holding in Iskanian v. CLS Transportation Los Angeles, LLC. So, class action waivers are enforceable in California, right? Not so fast. On August 22, 2016, the Ninth Circuit decided to follow the NLRB’s position that mandatory class action waivers violate the NLRA, and struck down such a waiver in Morris v. Ernst & Young, LLP. Now California federal courts are bound to follow Morris and not enforce mandatory class action waivers, while it remains an open question whether California state courts will feel compelled to follow Morris or Iskanian.
Many practitioners are hoping that the U.S. Supreme Court will once again take up the issue and decide, once and for all, whether class action waivers in arbitration agreements are enforceable. In the meantime, the Morris court noted that voluntary class action waivers are still enforceable, so if an employee has a choice whether to be bound to an arbitration agreement with a class action waiver, a California court – state or federal – can still enforce it.
California Supreme Court to Decide Whether the De Minimis Doctrine Applies to State Wage Laws
The California Supreme Court has agreed to determine whether the federal de minimis doctrine (i.e., that employers do not have to compensate employees for insignificant amounts of time that are difficult to track) applies to claims for unpaid wages under California law. In Troester v. Starbucks Corp., the Ninth Circuit asked, and the California Supreme Court has agreed, to resolve this question.
Be Careful What You Promise!
Employee handbooks are essential for employers, in part to help prevent lawsuits. However, the content of a handbook’s policies, or failing to enforce those policies, can also lead an employer into trouble. The August 2, 2016 unpublished Eastern District of California case Shepherd v. Kohl’s Dept. Stores, Inc. is a great example.
In that case, an employee was fired for using medicinal marijuana to treat his disability. The district court granted summary judgment in the employer’s favor on disability discrimination and related claims, because in California an employer has the right to terminate an employee’s employment for marijuana use. However, the employee also sued for breach of the implied covenant of good faith and fair dealing because the employer’s handbook stated that California employees would not be discriminated against based upon being a registered medical marijuana cardholder. The district court denied Kohl’s motion for summary judgment on this claim because a reasonable jury could find that, because of this policy, Kohl’s agreed the employee would not be discriminated against for his medical marijuana use, and breached the implied agreement by firing the employee.
[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.]
