EMPLOYMENT AND LABOR LAW: LEGAL UPDATE FOR CALIFORNIA EMPLOYERS
Topics for this Month include:
– Pending Employment Legislation
– Department of Labor and NLRB Appointments
– Federal Equal Pay Act and Past Salary History
– Effect of Resigning While in a Temporary Altered Mental State
– Arbitration Agreements Prohibiting Public Injunctive Relief
California Bills to Watch
The following is a list of bills pending in California and the U.S. Legislature that could have a significant impact on employers. Don’t let these bills pass you by – if any of these bills could affect your company and/or your employees – whether good or bad – have your voice heard and let your legislators know how you feel!
- SB 63: Expands the CFRA to employers with 20 or more employees within a 75- mile radius.
- SB 524: Gives employers a “good faith defense” for relying on written advice received from or published by the Labor Commissioner.
- 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.
- AB 168: Prohibits employers from inquiring about salary history during the hiring process.
- AB 281, 1429, 1430: Amends PAGA to extend the time to cure certain Labor Code violations from 33 to 65 days; caps penalties at $10,000 per employee; requires the LWDA to investigate all alleged violations.
- AB 353: Allows employers to voluntarily choose to preferentially hire veterans without running afoul of FEHA.
- AB 442: Gives “small businesses” and “microbusinesses” 30 days to cure non-serious OSHA violations before commencement of an enforcement action.
- AB 450: Prohibits employers from allowing federal immigration authorities onto their non-public worksite without a valid subpoena or warrant; requires employers to notify the Labor Commissioner and employees within 24 hours of an impending immigration worksite enforcement action; requires employers to notify employees of the results of the enforcement action; requires employers to notify the Labor Commissioner prior to conducting an I-9 self-audit; fines of up to $25,000 per violation.
- AB 569: Prohibits discrimination against an employee due to the employee’s or employee’s dependent’s reproductive health decisions; narrows the “ministerial” exception.
- AB 978: Permits employees to request a copy of an employer’s injury prevention program.
- AB 1008: Extends “ban the box” statewide, prohibiting employers from asking about applicants’ criminal convictions until after a conditional offer of employment.
- AB 1173: Establishes an overtime exemption for employee-selected holiday season flexible work schedules, allowing employees to work up to 10 hours without overtime pay within a 40-hour workweek.
- AB 1209: Requires employers with 250+ employees to collect information on gender pay differentials in exempt and board positions, and publish the information on a publicly available website.
- AB 1565: Raises the minimum salary to qualify as an exempt employee to $47,472 or twice the state’s minimum wage rate, whichever is higher. This bill is an attempt to implement the DOL’s overtime regulations that were put on hiatus.
- R.1180/S.801 (Working Families Flexibility Act): Allows compensatory time off in lieu of overtime compensation under FLSA.
- 337 (Family and Medical Insurance Leave Act): Provides employees paid family leave on a federal level, similar to California’s PFL benefits.
Alexander Acosta Approved as Secretary of Labor
On April 27, 2017, the Senate confirmed Alexander Acosta to be President Trump’s Secretary of Labor. Secretary Acosta is the son of Cuban refugees, and earned his undergraduate and law school degrees at Harvard University. He has previously served as a member of the NLRB, Assistant Attorney General for the Civil Rights Division of the U.S. Department of Justice, and U.S. Attorney for the Southern District of Florida. Prior to his confirmation, Secretary Acosta was the dean of the FIU College of Law.
Philip Miscimarra Appointed Chair of National Labor Relations Board
On April 24, 2017, President Trump appointed acting chair of the NLRB, Philip Miscimarra, to be the Board’s Chairman. Two board positions are still vacant.
SIGNIFICANT CASE LAW
Federal Equal Pay Act Permits Salary Differentials Based Purely on Past Salary History
As California debates whether and when to prohibit employers from inquiring into an applicant’s past salary history, the Ninth Circuit held in Rizo v. Yovino that Fresno County’s policy to use prior salary information as a basis to calculate starting pay is lawful, even though it resulted in less pay for women than men. Under the Equal Pay Act, an employer can pay its employees different pay for the same position as long as it is based on “any other factor other than sex.” Prior salary history does not automatically qualify as “any other factor other than sex,” but it can qualify if it effectuates “some” business policy and is reasonable in light of the employer’s stated purpose and its other practices. The Ninth Circuit remanded the case back to the district court to consider the County’s four justifications for its policy to pay new hires 5% above their most recent salary, which were: (1) the policy is objective, as the new employee’s subjective value is not a factor in the starting salary calculation; (2) the policy encourages people to apply for positions because the County always will give them a 5% pay increase over their current salary; (3) the policy prevents favoritism and ensures consistency in application; and (4) the policy is a judicious use of taxpayer dollars.
Being Temporarily Out of Your Mind is Not a Basis to Get Your Job Back
In Featherstone v. Southern Calif. Permanente Medical Group, the plaintiff suffered from chronic sinusitis, and underwent several surgeries for a sinus tumor. About a week after she had returned from a medical leave, the plaintiff announced that “God had told [her] to do something else,” and she abruptly resigned. She confirmed her resignation three days later. The following week, the plaintiff informed the company’s Human Resources department that at the time of her resignation, she had been suffering from an adverse drug reaction that caused an altered mental state, and requested that her resignation be rescinded. The company denied her request.
The trial court granted the employer summary judgment, and the Second Appellate District affirmed. Even assuming the employee’s “temporary disability” (i.e., the adverse drug reaction) qualified as a “disability” under FEHA, the appellate court held that refusing to rescind a resignation is not an “adverse employment action,” absent evidence of a constructive discharge or a contractual obligation, which did not exist in this case. The employer also was not obligated to accommodate the employee because it had no knowledge that she was suffering from a temporary disability or an “altered mental state.” Her reference to God was not out of character for her.
Arbitration Agreement Cannot Waive the Right to Public Injunctive Relief
The battle over arbitration agreements continues. In McGill v. Citibank, N.A., the California Supreme Court held that a consumer arbitration agreement which included a waiver of the right to seek injunctive relief on behalf of the public violates California public policy, and is not preempted by the Federal Arbitration Act (“FAA”). A credit card account agreement between Plaintiff Sharon McGill and Citibank stated that claims may only be sought on an individual basis in arbitration, and the arbitrator could not “award relief for or against anyone who is not a party [to the agreement].”
McGill filed a lawsuit in part based on violations of the Unfair Competition Law (“UCL”) and Consumer Legal Remedies Act (“CLRA”), both of which provide for public injunctive relief as a remedy. In 1999 and 2003, the California Supreme Court held that claims for injunctive relief on behalf of the public could not be waived in an arbitration agreement (known as the “Broughton-Cruz” rule). However, in 2011, the U.S. Supreme Court held in AT&T Mobility, LLC v. Concepcion that another California Supreme Court decision barring consumer class action waivers in arbitration agreements (the “Discover Bank” rule) was preempted by the FAA. The McGill case addressed whether the Concepcion decision also trumped the Broughton-Cruz rule.
The California Supreme Court somewhat skirted the issue, by finding that the Broughton-Cruz rule did not apply in this case because the arbitration agreement prohibited the ability to obtain public injunctive relief in any forum, not just in court. The Court held that precluding the ability to obtain injunctive relief entirely violates California’s public policy, and is not preempted by the FAA.
How this will affect employment arbitration agreements is unknown. The McGill case focuses on consumer arbitration agreements and public injunctive relief. Whether this will be extended to employment arbitration agreements and private and/or quasi-public injunctive relief remains to be seen.
[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.]