EMPLOYMENT AND LABOR LAW: LEGAL UPDATE FOR CALIFORNIA EMPLOYERS

July 17th, 2019/By Admin/In Blog, SBSBLOG, Uncategorized

Topics for this Month include:

• Reminder – de minimis doctrine generally doesn’t work in California
• Reminder – no magic words to be a whistleblower
• Undergoing Medical Testing to Determine Whether Have a Disability Protected
• Employers Don’t Have to Pay for Slip-Resistant Shoes
• Update on California Employment-Related Bills
• And more . . .

Recent Case Law

Ninth Circuit Confirms Federal De Minimis Doctrine Not a Defense to CA Wage and Hour Claims

Following the recent California Supreme Court decision Troester v. Starbucks Corp., the Ninth Circuit reversed the district court’s grant of summary judgment in Rodriguez v. Nike Retail Services, Inc., confirming that the federal de minimis doctrine – which prevents recovery for time worked that are small, irregular, or administratively difficult to record – generally cannot be raised by employers as a defense against wage and hour claims brought under the California Labor Code. Nike required its retail employees to undergo uncompensated “off the clock” exit inspections, which took up to several minutes, each time they left the store for a break and at the end of the workday. Although Troester carved out the possibility that tasks so minute or irregular possibly could be considered de minimis, Nike’s inspections did not qualify.

A PAGA Defense Upheld!

In a rare ruling in an employer’s favor on PAGA, the California Court of Appeal held in Esparza v. Safeway, Inc. that PAGA claims, which have a one-year statute of limitations, cannot “relate back” to the date an original complaint was filed that raised no PAGA claim and alleged no pre-filing notice with the LWDA. In this case, before June 17, 2007, Safeway did not pay employees premium wages for meal period violations. Plaintiff filed a complaint in April 2007 over this practice but did not include a PAGA claim. The statute of limitations began to run on June 17, 2007 and expired on July 17, 2008. Plaintiff eventually amended the complaint to add a PAGA claim on February 26, 2009. The California Court of Appeal refused to “relate back” the PAGA claim to June 17, 2007 and found it to be untimely because the doctrine cannot be used to frustrate the California Legislature’s interest of filing timely notice with the LWDA before bringing a PAGA claim.

Whistleblower Protection Law Does Not Require Express Disclosure of Unlawful Activity

The California Court of Appeal held in Ross v. County of Riverside that an employee is not required to expressly state an unlawful activity was committed in his or her disclosure in order for it to be considered protected activity. Labor Code section 1102.5 prohibits an employer from retaliating against an employee for disclosing information to a government agency that there was a violation of or noncompliance with a rule or regulation. The employee’s actions are protected if the employee discloses the information to a government agency and reasonably believes the information exposes unlawful activity.

Undergoing Medical Testing for Potential Physical Impairment Might Be a Physical Disability Protected under the FEHA

The California Court of Appeal also ruled in Ross v. County of Riverside that the plaintiff could bring disability discrimination claims under FEHA for a potential physical disability. The plaintiff had symptoms of and was being tested at an out-of-state clinic for a possible neurological disease or autoimmune disorder, which required him to periodically take time off work to travel to medical clinics. The Court held that the plaintiff had a temporary or short-term physical impairment that limited the major life activity of working because it required him to be absent from work to travel out-of-state for medical testing.

Employers are Not Required to Reimburse Employees for the Cost of Slip-Resistant Shoes

In Townley v. BJ’s Restaurants, Inc., BJ’s required all restaurant employees to wear black, slip-resistant, closed-toed shoes but did not reimburse employees for the cost of them. Although Labor Code §2802 and the IWC Wage Orders require employers to bear the cost of purchasing and maintaining employee “uniforms,” the California Court of Appeal found that slip resistant shoes do not qualify as a “uniform.”  Uniforms are considered to be items that are a specific brand, style, or design that are not generally usable in the employee’s occupation or industry.  Basic, non-uniform, slip-resistant shoes generally usable in the restaurant occupation do not qualify.

State-Employed Employees Are Not Always Subject to IWC Wage Orders

In Stoetzl v. Department of Human Resources, the California Supreme Court ruled that state government employees represented by a union, who entered a memorandum of understanding (“MOU”) through the collective bargaining process regarding their wages, hours, and terms of employment, were not entitled to additional compensation under California’s minimum wage and overtime laws. The MOU’s specific terms superseded the state’s general statute provisions and it would be unfair for these represented employees to rely on general state laws to bring minimum wage and overtime claims. The California Supreme Court in Stoetzl also held that the Legislature’s specific empowerment of the California Department of Human Resources (“CalHR”) to set the wages and hours of California government employees superseded the Industrial Welfare Commission’s (“IWC”) designation to generally regulate the wage and hours of public and private employees working in California. Therefore, state employees who were not represented in a union were subject to CalHR’s FLSA-based specific standards instead of the general standards of the IWC Wage Orders.

Legislative/Regulatory Update

The legislative committees are hard at work reviewing bills that made it through the originating house.  Here are the ones we are continuing to keep an eye on:

• AB 5: Codify the “ABC” test from Dynamex Operations West Inc. v. Superior Court and apply it to all Labor Code provisions, with exceptions for licensed insurance agents, certain licensed health care professionals, registered securities broker-dealers or investment advisers, direct sales salespeople, real estate licensees and workers providing hairstyling or barbering services, and those performing “work und a contract for professional services.” Passed Assembly; passed Senate Labor, Public Employment, and Retirement Committee; pending before Senate Appropriations Committee.
• AB 9: Increase time to file complaint with DFEH from one year to three years. Passed Assembly; passed Senate Judiciary Committee; pending before Senate Appropriations Committee.
• AB 51: Prohibit requiring arbitration agreements for FEHA claims as a condition of employment. Passed Assembly; passed Senate Labor, Public Employment, and Retirement Committee; passed Senate Judiciary Committee; pending before Senate Appropriations Committee.
• AB 160: Permit preferential treatment for veterans without running afoul of FEHA. Failed to pass out of Senate Judiciary Committee by 1 vote.
• AB 170: Client employer (as defined in bill) to share responsibility and liability for harassment of workers provided by a labor contractor (as defined in bill). Passed Assembly; passed Senate committees, pending Senate floor vote.
• AB 171: Prohibit discrimination and retaliation against a victim of sexual harassment; rebuttable presumption of retaliation if adverse employment action occurs within 90 days of reporting (or employer knowing of) being a victim of domestic violence, sexual assault, sexual harassment or stalking. Amended to define “sexual harassment” the same as under FEHA and add employer may overcome presumption by showing a valid business reason for the adverse employment action. Rebuttable presumption effective July 1, 2020. “Employer knowledge” excludes people/entities authorized to receive confidential complaints from harassment victims. Passed Assembly; passed two Senate committees; pending before Senate Appropriations Committee.
• AB 241, 242 & 243: Address implicit bias in the healing arts profession, judicial branch and law enforcement. All bills passed Assembly; pending before Senate committees.
• AB 372: Establishes two-year “Infant at Work” pilot program for state agencies to allow new parents or caregivers to bring an infant up to 6 months in age into the workplace. Passed Assembly; passed Senate Labor, Public Employment, and Retirement Committee; pending in Senate Appropriations Committee.
• AB 403: Increase time to file retaliation claim with DLSE from 6 months to two years and provide attorneys’ fees to plaintiffs who prevail on Labor Code 1102.5 claim. Passed Assembly; passed Senate Judiciary Committee; pending before Senate Appropriations Committee.
• AB 418: Creates a privilege for communications between union agents and represented employees or represented former employees. Passed Assembly; passed Senate Judiciary Committee; pending Senate floor vote.
• AB 673: Permits employee to file lawsuit to recover statutory penalties or enforce civil penalties in the same amount recovered by the DLSE for failure to pay wages in violation of the Labor Code and limits employee to recover either statutory or civil penalties, not both. Passed Assembly; passed two Senate committees; pending before Senate Appropriations Committee.
• AB 749: Prohibits settlement agreements from containing no re-hire clauses. Amended to clarify employer not required to employ or re-hire anyone when there is a legitimate non-discriminatory or non-retaliatory reason to terminate the employment relationship or not re-hire the person. Can agree to end current employment relationship. Passed Assembly; passed Senate Judiciary Committee; pending Senate floor vote.
• AB 1478: Allows employees to sue under PAGA for violations of Labor Code section 230. Passed Assembly; passed two Senate committees; pending before Senate Appropriations Committee.
• AB 1554: Requires employers to notify employees participating in a flexible spending account dependent care assistance program of any deadline to withdraw funds by the end of the plan year. Passed Assembly; passed Senate Labor, Public Employment, and Retirement Committee; pending before Senate Appropriations Committee.
• SB 41: Prohibit reducing lost earnings or impaired earnings capacity damages resulting from personal injury or wrongful death based on or considering race, ethnicity, or gender religion or sexual orientation. Passed Senate; passed Assembly; referred back to Senate to concur in amendments.
• SB 142: Further increase requirements for lactation rooms, including temporary rooms. Employers with less than 50 employees exempt if requirements cause employer significant expense or “difficulty” (as defined in the statute). Passed Senate; passed Assembly Labor & Employment Committee; passed Assembly Business and Professions Committee; pending before Assembly Appropriations Committee.
• SB 171: Require employers with 100+ employees to submit pay data to DFEH. Passed Senate; passed Assembly Labor & Employment Committee; passed Assembly Judiciary Committee; pending before Assembly Appropriations Committee.
• SB 188: Expands definition of race in FEHA and Education Code to include traits historically associated with race, including but not limited to hair texture and protective hairstyles (g., braids, locks and twists). Enacted on July 3, 2019.
• SB 707: Requires employers to pay arbitration fees within 30 days or else waive arbitration. Passed Senate; passed Assembly Judiciary Committee; pending Assembly floor vote.
• SB 778: Fix last year’s law on sex harassment training to state anyone trained on or after January 1, 2018 does not have to be trained again until after December 31, 2020; includes urgency clause. Passed Senate on May 2, 2019; passed Assembly Labor & Employment Committee; passed Assembly Appropriations Committee; pending Assembly floor vote.

DOL Opines on Factoring Nondiscretionary Bonuses into Employees’ Regular Rate of Pay

Employers who pay nondiscretionary bonuses to non-exempt employees must consider whether such payments affect the employee’s regular rate of pay for purposes of calculating overtime. In this particular situation, the DOL opined a bonus based on hours worked that already took overtime into consideration did not require the employer to go back and recalculate the employees’ overtime pay rate.  However, this opinion letter applies to federal law, and California may see things differently. The opinion letter can be found here: https://www.dol.gov/whd/opinion/FLSA/2019/2019_07_01_07_FLSA.pdf.

CalSavers Retirement Program Launched

On July 1, 2019, California launched its CalSavers retirement program.  Employers with five or more employees will need to provide employees with either a private retirement savings program or access to the CalSavers program.  The deadlines to comply are: June 30, 2020 for employers with 100+ employees; June 20, 2021 for employers with 50+ employees; and June 20, 2022 for employers with 5+ employees.

Also, don’t forget that minimum wage went up on July 1!

For more information regarding these topics or the related practice area contact:
Sherry B. Shavit

[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.]

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