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For more recent cases check our the Blog which is where I’ve been posting.

Here are a few short updates on important decisions affecting California employees:

Salas v. Sierra Chemical Co. (California Supreme Court, June 26, 2014) 2014 DJDAR 8334. Employees who are undocumented immigrants may recover all relief available under FEHA other than reinstatement and earnings lost after their employers discover they were undocumented.

Iskanian v. CLC Transportation Los Angeles, LLC (California Supreme Court, June 23, 2014) 2014 DJDAR 8037. Employees who entered into an arbitration agreement prohibiting class and collective actions may not pursue class actions in any forum, but may still prosecute PAGA actions in court.

Ayala v. Antelope Valley Newspapers, Inc. (California Supreme Court, June 30, 2014) 2014 DJDAR 8620. When deciding whether to certify class actions alleging misclassification of employees as independent contractors, courts should consider if there are common questions about the employer’s right to exercise control, and disregard individual variations in how that right was exercised.

Paratransit, Inc. V. Unemployment Insurance Appeals Board (California Supreme Court, July 3, 2014) 2014 DJDAR 8796. An employee who disobeys a lawful reasonable order because of a good faith error has not engaged in misconduct disqualifying the employee from getting unemployment insurance.

June 14, 2014
Dear Clients and Friends,

On July 1, 2014, the minimum wage in California will increase from $8.00 to $9.00 per hour. This wage hike will have a wide-ranging impact on all California employers. For example:

Non-exempt employees paid less than $9.00 per hour must receive an increase in pay.

Certain exempt employees (executive, administrative, professional) must receive a monthly salary of at least twice minimum wage on a salaried basis (as well as meet other exemption requirements). Effective July 1, 2014, the minimum monthly salary for exempt employees increases to $3,120. Employees paid less will no longer meet the exemption.

Inside sales employees under Wage Orders 4 and 7 must earn more than 1½ times minimum wage for all hours worked (they must also receive more than 50% of their compensation from commissions). As of July 1, 2014, to qualify as exempt, such employees must be paid at least $13.50 per hour.

If you email our office we will send you a revised California Minimum Wage Official Notice. This should be posted next to your IWC Wage Order and other required workplace postings.

Since 2012, California employers have been required to provide written notice to non-exempt employees containing certain information, including rate of pay. Attached is a Notice to Employee, which can be used for this purpose. Employers who have already issued this wage notice do not have to reissue as a result of the minimum wage increase provided the new wage rate is shown on the employee’s pay stub (itemized wage statement) with the next payment of wages.
Now is a good time for employers to audit their pay practices to ensure compliance with wage and hour laws. If you have questions or need assistance with an audit, please contact me at: 415-457-2668
Best regards,
Steve

PAGA Claims are not Class Actions for Removal to District Court

March 2014

Last week, in Baumann vs. Chase Investment Services Corporation the Ninth Circuit Court of Appeals held that representative actions brought under the California Labor Code Private Attorneys General Act (PAGA) are not sufficiently similar to Rule 23 class actions for removal to federal court under the Class Action Fairness Act.  The Ninth Circuit held that civil penalties in a PAGA  action could not be aggregated to establish diversity jurisdiction, removing that question from the appeal. The California Supreme Court held, in Arias vs. Superior Court, that a PAGA claim is essentially a law enforcement action, not a class action.

The court found that PAGA actions also do not have notice requirements or opt-out procedures like Rule 23. PAGA representative actions expressly allow employees to pursue their legal rights under state or federal law even after a judgment or settlement, unlike class actions under Rule 23 in which a final judgment precludes any other lawsuits.

New California Employment Laws for 2014

Wage & Hour

A.B. 10 — Increases the state minimum wage in stages.

$9 per hour on July 1, 2014

$10 per hour on January 1, 2016

Impacts split-shift premiums, meal and rest period penalties and other payments based on the state minimum wage.  Impacts minimum salary for exempt employees (pegged to two-times state minimum wage)

A.B. 241 — Requires employers to pay “personal attendants” for overtime.

Overtime applies to over 9 hours in a work day or 45 hours in a work week

“Personal attendant” = employed by a household or third-party recognized in the health care industry, to work in households supervising, feeding or dressing elderly, disabled individuals and/or children.  Known as the “Domestic Workers Bill of Rights”

A.B. 442 — Adds liquidated damages provision for minimum wage violations equal to amount

of wages that should have been paid.

S.B. 390 — Makes it a crime for an employer to fail to remit employee withholdings from an employee’s wages that were made pursuant to state, local or federal law.

S.B. 435 — Expands the one hour of pay “penalty” under Labor Code section 226.7 to missed“recovery periods required to prevent heat illness.

S.B. 462 — Restricts attorneys’ fee awards to prevailing defendants-employers in actions for nonpayment of wages.

Employer now must prove that action was brought in bad faith before it can recover defense costs.

EEO

A.B. 556 — Adds “military and veteran status” to list of categories protected from employment discrimination under the FEHA.

Also provides an exemption for an inquiry by an employer regarding military or veteran status for the

purpose of awarding a veteran’s preference as permitted by law

S.B. 292 — Clarifies that an employer can prevail on a claim of sexual harassment without a showing that the harasser was motivated by sexual desire.

In response to Kelley v. Conoco Companies, 196 Cal. App. 4th 191 (2011) (same-sex harassment case) –the new law realigns California law with the principles set forth by the U.S. Supreme Court in Oncale.

Leaves

A.B. 11 — Expands law requiring temporary leave of absence for voluntary firefighters to reserve peace officers and emergency rescue personnel, for purposes of engaging in fire, law enforcement or emergency rescue training. Applies to employers with 50 or more employees

S.B. 400 — Extends to victims of stalking the existing retaliation protections for domestic violence victims and sexual assault victims who:

Take time off for court appearances or to obtain other relief for the victim or the victim’s child (applies to all employers)

Take time off to obtain medical care, counseling or services (applies to employers with 25 or more employees)

Adds that an employer must provide reasonable accommodation, if requested, for the victim’s safety (applies to all employers).

S.B. 288 — Prohibits discrimination and retaliation against victims of certain serious crimes under Labor Code sections 230 and 230.2 for taking time off work to appear in court or for another related proceeding. The law requires reasonable advance notice of the need for time off, and the employee may use vacation or other PTO for the absence.

S.B. 770 — Expands scope of California’s Paid Family Leave benefits program to cover time off to care for seriously ill grandparent, grandchild, sibling or parent-in-law.  Effective July 1, 2014

S.B. 530 — Amends Labor Code section 432.7, which restricts asking about arrests, to prohibit asking an applicant to disclose, or using as a factor in determining any condition of employment, information regarding a conviction that has been judicially dismissed or ordered sealed.

A.B. 218 — State and local public employers cannot request information regarding criminal convictions until after the employer determines the applicant meets the minimum qualification standards for the position. Known as the “ban the box” law.  Effective July 1, 2014

Retaliation

A.B. 263 and S. B. 666 — Bills expanding grounds for a finding of retaliation, increasing penalties for retaliation and broadening protections for whistle blowers.

The bills create the following new retaliation protections:

Prohibit retaliating against an employee or applicant for making a bona fide complaint or claim, including written or oral complaints for unpaid wages, and provides for awards of reinstatement, back pay, and civil penalties up to $10,000

Prohibit any person acting on behalf of an employer from stopping an employee from disclosing information to the government, and includes civil penalties up to $10,000

Prohibit taking adverse action against employees for updating their personal information, unless the changes are directly related to the job

S.B. 496 — Expands existing law that prohibits retaliation against an employee for reporting suspected violations to a government or law enforcement agency to include employee reports regarding violations of local rules and regulations, and disclosures “to a person of authority over the employee or to another employee who has authority to investigate, discover or correct the violation.” Also prohibits retaliation based on belief that the employee disclosed or “may disclose” information

Immigration

A.B. 60 — Authorizes DMV to issue special driver’s licenses to undocumented individuals.

Merely having a drivers license will not satisfy work eligibility requirements for I-9 purposes!

A.B.263 — Prohibits engaging in unfair “immigration-related practices” intended to retaliatefor exercising rights protected under the Labor Code or local ordinances.

An unfair immigration-related practice is:

Requesting more or different documents than required under I-9 rules, or refusing to honor

documents that appear to be genuine

Using E-Verify when not required to do so by federal law

Threatening to file or filing a false police report

Threatening to contact or contacting immigration authorities

A.B. 524 — Subjects employer to liability for extortion for threatening to report an employee’s actual or suspected immigration status.

S.B. 666 — Prohibits employers from reporting or threatening to report an employee’s or employee’s family member’s suspected immigration status because that person has exercised a right protected under the Labor Code, Government Code or Civil Code.

Also provides for suspension/revocation of business license and a $10,000 fine for retaliation against employees on basis of citizenship or immigration status.

Laws Specific to San Francisco Employers

Minimum Wage Ordinance — $10.74 per hour (effective January 1, 2014).

Health Care Security Ordinance — Increase in required health care expenditure to $2.44 for large employers and $1.63 for medium employers (effective January 1, 2014).

Family Friendly Workplace Ordinance — Permits requests for flexible work arrangements to assist with child care (under age 18), elder care or caring for family members with a serious health condition. Employers have 21 days to respond — denials must be in writing, must explain bona-fide business reason for the denial, and must provide employee with notice of the right to request reconsideration.  Effective January 1, 2014

Applies to employers with 20 or more employees

Eligible employees must work in San Francisco, have been employed six months or more and work at least eight hours per week.

New poster — http://sfgsa.org/index.aspx?page=6305

 

2013

Greetings:

Ten years ago I attended a luncheon sponsored by the Marin County Bar Association. The guest speaker was then former Governor Jerry Brown. Governor Brown made many astute observations during his speech, but one item stands out in my memory. He said that since leaving his position as Governor of California, the State of California had added in excess of 25,000 new laws. As you can see, the pace of new legislation hasn’t abated in the ten years since Governor Brown addressed the Marin County Bar.

Happy holidays and best wishes for a healthy and prosperous new year.

Regards,

Steve

Commission Agreements Deadline

Employers must put all commission agreements in writing by January 1, 2013. Any employee hired to perform work for payment of a commission in California must receive a written contract that includes the method for calculating and paying the commissions.

Passed in 2011, this mandate of AB 1396 applies to employers located inside and outside California. It amended Labor Code Section 2751, which previously applied only to employers with no fixed California location. In 2012, the law was further clarified with respect to what types of plans are excluded from the written commission agreement requirement.

The new law appears simple and straightforward. However, with respect to employees that are paid both an hourly wage and a commission, a number of potential pitfalls within the law could result in wage-and-hour claims filed against employers.

Pregnancy Disability

The Office of Administrative Law (OAL) approved amendments to California’s pregnancy regulations proposed by the Fair Employment and Housing Commission (FEHC). The amendments take effect December 30, 2012.

The approved pregnancy disability regulations make significant changes to state law, including:

A change to the definition of “four months” An expanded definition of when a woman is “disabled by pregnancy” Clarification of an employer’s responsibilities regarding reasonable accommodation or transfer of employees affected by pregnancy, childbirth or related medical conditions

An expansion of protections to include that it is unlawful to discriminate against or harass an applicant or employee based on “perceived pregnancy”

Necessary changes to Notices “A” and “B,” which provide information for employees about their rights and responsibilities under pregnancy disability leave (Notice “A”) and the California Family Rights Act (Notice “B”). You will need to purchase new posters for each of your locations.

Workers’ Compensation Reform Requires Updates to Notice and Pamphlet

This year, California’s Legislature passed Senate Bill 863, containing wide-ranging workers’ compensation reform measures. SB 863 takes effect on Jan. 1, 2013.

Some of its provisions will be effective immediately, requiring changes to notices that explain employee rights and employer obligations. California employers must post a notice explaining employee rights and employer obligations under the state workers’ compensation system and must provide all employees with a workers’ compensation pamphlet at the time of hire.

Supreme Court Hears Harassment Case

The U.S. Supreme Court will hear an important case that is expected to determine who is a “supervisor” for purposes of employer liability in harassment cases.

The case, Vance v. Ball State University, is significant because, under previous decisions, an employer will be “strictly” liable when a supervisor harasses a subordinate.

Vance, the employee, argued that she was repeatedly harassed by her supervisor, Davis, on the basis of race. The lower court found there was not enough evidence that Davis was Vance’s supervisor and dismissed the case before trial.

Although Davis directed Vance’s daily activities, the lower court adopted a narrow reading of who constitutes a “supervisor” for liability purposes and refused to extend the definition to cover Davis.

The Supreme Court’s decision in Vance will either expand or limit the extent of employer liability in harassment cases. This is the time to evaluate who is and who is not a “supervisor” in your organization. If you have a problem employee in a supervisory position, it may be time to take action.

IRS Announces 2013 Mileage Reimbursement Rates

The Internal Revenue Service today issued the 2013 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

The rates take effect on January 1, 2013. According to the IRS, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

56.5 cents per mile for business miles driven 24 cents per mile driven for medical or moving purposes 14 cents per mile driven in service of charitable organizations

The rates for business miles driven and for medical and moving purposes during 2013 increase 1 cent from the 2012 rate. A taxpayer always has the option of calculating the actual costs of using his/her vehicle rather than using the standard mileage rates, the IRS said in its statement.

Under California Labor Code section 2802, employers must fully reimburse employees for all expenses actually and necessarily incurred. Many employers typically choose to use the IRS mileage reimbursement rate, but its use is optional.

The Division of Labor Standards Enforcement has stated that using the IRS mileage rate will generally satisfy an employer’s obligation to reimburse for business related vehicle expenses, absent evidence to the contrary. However, if an employee can show that the chosen mileage reimbursement rate, even the IRS rate, does not cover all actual expenses the employee has incurred, the employer must pay the difference.

Business vehicle expenses do not include only gasoline, but also wear and tear (depreciation), repairs, oil, insurance and other costs.

New 2013 Exempt Classification Rates

California’s Department of Industrial Relations (DIR) announced rate changes for the computer software employee exemption and the licensed physician or surgeon exemption.

The new rates take effect January 1, 2013.

For the computer software employees exemption:

The minimum hourly rate of pay exemption increased to $39.90 from its previous rate of $38.89

The minimum monthly salary increased to $6,927.75 from its previous rate of $6,752.19

The minimum annual salary exemption increased to $83,132.93 from its previous rate of $81,026.25.

For the licensed physician or surgeon exemption:

The minimum hourly pay for licensed physicians and surgeons increased to$72.70 from $70.86

These rates are tied to the California Consumer Price Index (CCPI) for Urban Wage Earners and Clerical Workers. The 2013 rate changes reflect the 2.6 percent increase in the CCPI. Appellate Court Agrees With See’s Candy: Rounding Policies OK in California

Last month, the Fourth District Court of Appeal issued an employer-friendly opinion by concluding that, under California law, employers may round employee timecard entries to the nearest-tenth of an hour.

This ruling is particularly important because there is no statute or prior case law that explicitly authorizes this common practice, a practice that is permissible under federal law and followed by California’s labor agency.

In the case, Silva v. See’s Candy Shops, Inc., See’s utilized a timekeeping software system to keep track of its employee’s working hours. The software system required employees to “punch” into the system at the beginning and end of their shift. Adjustments to the timecards were made only in accordance with two See’s policies:

The nearest-tenth rounding policy; and The grace period policy.

A class action lawsuit was brought by a former employee challenging these two policies. See’s was able to demonstrate that its nearest-tenth rounding policy went up and down and, that the policy, over time, did not result in a loss to the employee. Additionally, See’s was able to present evidence that employees knew about the rounding and grace period policies.

San Francisco Minimum Wage Increases in January

The minimum wage in San Francisco will increase to $10.55 per hour, effective January 1, 2013:

This increase applies to all employers that have employees who perform work in San Francisco, even of you aren’t based on San Francisco.

Any person who performs at least two hours of work in a particular week for an employer within the city of San Francisco’s geographic boundaries is entitled to be paid the San Francisco minimum wage.

This applies to all workers, regardless of whether they are legally authorized to work in the United States.

Two New Discrimination Laws Mean Changes for Policies, Posters

Employers will need to change notices, postings and employee handbook policies related to discrimination and harassment prevention to reflect two recently signed bills, AB 1964 and AB 2386.

Religious Dress/Grooming AB 1964 amends Government Code sections 12926 and 12940 and clarifies that the Fair Employment and Housing Act’s (FEHA) discrimination protections and reasonable accommodation requirements cover religious dress practices and religious grooming practices.

As stated in the analysis of the bill, the intent is to “provide clarity and ensure that all religions receive equal protection under the law.”

Importantly, the law specifies that an accommodation is “not reasonable” if the accommodation requires segregation of the individual from other employees or the public.

Breastfeeding AB 2386 amends California Government Code Section 12926 and makes it clear that breastfeeding is protected by law and discrimination on that basis is illegal.

The new legislation was enacted, in part, to reflect a decision by the Fair Employment and Housing Commission (FEHC) in 2009 in which an employee was terminated because she was nursing her baby during her lunchtime break. Because the FEHC’s decision was designated as having precedential authority, such discrimination is a violation of FEHA. California’s Anti-Discrimination Laws are Broadened to Expressly Prohibit Discrimination Based on “Gender Identity” and “Gender Expression” Various California laws have long outlawed discrimination based on a person’s “sex,” a term of art that includes a person’s “gender.” For example, the FEHA prohibits an employer from discriminating against an employee in the terms, conditions or privileges of employment based on that employee’s “sex.” (Gov. Code, § 12940, subd. (a).) In turn, the FEHA defines the term “sex” to include “pregnancy, childbirth” or “gender.” (Gov. Code, § 12926, subd. (p).) Recently, the California Legislature enacted AB 887, which makes broad across-the-board amendments to several California statutes, including FEHA, to address “gender” discrimination. AB 887 provides that “gender” includes a “person’s gender identity and gender expression.” Further, “gender expression” means a “persons gender-related appearance and behavior whether or not stereotypically associated with the person’s assigned sex at birth.” Although AB 887 does not define the term “gender identity,” legislative history reveals that the term “refers to a person’s deeply felt internal sense of being male or female.” (Assem. Com. on Judiciary, Analysis of Assem. Bill No. 887 (2010-2011 Reg. Sess.) Aug. 17, 2011, p. 3.) California laws, including the FEHA, will now expressly prohibit discrimination based on a person’s “gender identity” and “gender expression.” Social Media Privacy Legislation Signed Gov. Edmund G. Brown signed a bill in September prohibiting employers from requiring or requesting employees or job applicants to provide user names or passwords for personal social media accounts so employers can gain access to the accounts. The new law, AB 1844, also prohibits employers from discharging or disciplining employees who refuse to divulge user names or passwords associated with their personal social media accounts. The bill is not intended to infringe on an employer’s existing rights and obligations to investigate workplace misconduct. IRS Releases Guidance on Tip Withholding The Internal Revenue Service released a questions and answers document (Rev. Rule 2012-18) that provides guidance on how taxes are imposed on tips under the Federal Insurance Contributions Act (FICA). The guidance includes an explanation of employer and employee obligations. It is the employer’s obligation to withhold “the employee share of FICA taxes on the reported tips from the wages of the employee (other than tips) or from other funds made available by the employee for this purpose.” The guidance also includes information on: The difference between a tip and a service charge for FICA purposes What tips must be reported to an employer How tips are reported by the employee to the employer Liability for unreported tips Inspection of Personnel Records AB 2674 amends Labor Code 1198.5 relating to inspection and retention of employee personnel records. The new law changes who has access; deadlines for providing access, and penalties for failure to comply. The new Section 1198.5(b)(1) specifies that the personnel records must be made available no later than 30 calendar days from the date the employer receives a written request from a current or former employee (or his or her representative) unless the employee and employer agree to extend the deadline to 35 days. The employer must also provide a copy of the personnel records by this deadline. Under a new Section 1198.5(b)(2)(A), all requests to inspect or receive a copy of personnel records must now be in writing. Under the current law, employers have the option of (1) keeping a copy of personnel records at the place the employee reports to work, (2) making the records available at the place the employee reports to work within a reasonable time of the request for inspection, or (3) permitting inspection at the location where the employer stores the records. Under the amendments, employers must: Maintain a copy of each employee’s personnel records for no less than three years after termination. Make personnel records of current employees available for inspection (and provide a copy thereof) at the place where the employee reports to work, or another location if agreed upon. Make personnel records of former employees available for inspection (and provide a copy thereof) at the location is where the employer stores the records, unless the parties mutually agree in writing to a different location. (A requesting employee may receive the copy by mail if he or she reimburses the employer’s postal expenses.) If a former employee was terminated for a violation of law or employment-related policy involving harassment or workplace violence, the employer may instead (1) make the records available at a location other than the workplace that is within reasonable driving distance of the employee’s residence; or (2) provide a copy of the records by mail 1/14/12

http://itunes.apple.com/us/podcast/this-american-life/id201671138?ign-mpt=uo%3D6

What should we make of what Mike Daisey saw in China? Our staff did weeks of fact checking to corroborate Daisey’s findings. Ira talks with Ian Spaulding, founder and managing director of INFACT Global Partners, which goes into Chinese factories and helps them meet social responsibility standards set by Western companies (Apple’s Supplier Responsibility page is here), and with Nicholas Kristof, columnist for The New York Times who has reported in Asian factories. In the podcast and streaming versions of the program he also speaks with Debby Chan Sze Wan, a project manager at the advocacy group SACOM, Students and Scholars Against Corporate Misbehavior, based in Hong Kong. They’ve put out three reports investigating conditions at Foxconn (October 2010, May 2011, Sept 2011). Each report surveyed over 100 Foxconn workers, and they even had a researcher go undercover and take a job at the Shenzhen plant. (15 minutes)