Labor and Employment

Happy New Year!   The new year frequently marks new changes in the law, and this year is no exception.  There are several important changes that went into effect on January 1^st.  Here are some of the major changes that went into effect on January 1, 2017:

• Minimum Wage Change: On January 1^st, for employers with 26 or more employees, the California minimum wage will increase to $10.50/hour.   The minimum wage remains at $10.00 for employers with 25 or fewer employees.  Employers with 26 or more employees should use the $10.50 rate to determine the “salary basis” for exempt employees.
• Arbitration Agreements: Beginning January 1^st, California employees cannot be required to enter into agreements (including employment and arbitration agreements) requiring them to apply another state’s laws to their disputes, or agree to litigate in any venue outside of California, unless the employee had advice of counsel.
• Immigration Verification: Existing law prohibits an employer for engaging in certain actions related to immigration, like refusing to honor immigration documents that appear to be genuine.  Under the new law, it is unlawful for an employer to refuse to honor documents based on the status or term of the person’s work authorization.  Additionally, it is unlawful to reinvestigate or re-verify an incumbent employee’s authorization to work.  For more information on this law, contact one of our attorneys to make sure you are in compliance.
• Wage Discrimination: Existing law generally prohibits employers from paying an employee lower wages than those paid to employee of the opposite sex for the same job and requires the same skill, effort, and responsibility.  A pay difference can, however, be based on several factors including seniority, merit, quantity/quality of production, or a bona fide factor other than sex (like education, training, or experience).  This new law provides that, effective January 1, an employee’s prior salary alone cannot justify a difference in compensation as a bona fide factor.    Additionally, these requirements were expanded to include differences in race as well as sex.
• Asking about Juvenile Proceedings on Job Application: The  new law prohibits an employer from asking an applicant for employment to disclose, or from utilizing as a factor in determining any condition of employment, information related to an arrest, detention, adjudication, or court disposition that occurred while the person was subject to juvenile court.  Some exceptions apply for certain employers, like health facilities.

If you have any questions about whether your particular business practices are compliant with these laws, or need assistance updating your employment and arbitration agreements, please contact one of our labor and employment attorneys.

Liability arising from serious workplace injury can be divided into four general categories: (1) worker’s compensation; (2) administrative agency (OSHA); (3) criminal liability; and (4) other civil liabilities.

1. Worker’s Compensation
   
   Worker’s compensation is, for the most part, a strict liability system -any bona fide workplace injury, regardless of cause – is covered.

The worker’s compensation system provides medical treatment, wage replacement and, in some cases, vocational rehabilitation.  Civil claims against an employer as a result of a workplace injury are, with only a few narrow exceptions, prohibited. Those civil claims (negligence, etc.) are barred by the worker’s compensation exclusivity preemption rule, which makes the worker’s compensation system the exclusive forum for all claims resulting from worker injury – including serious injury and death.

In certain cases, an employee may seek an enhancement of these benefits by claiming that the injury resulted from the employer’s serious and willful violation of worker safety (“S&W claim”). If successful, the injured worker’s benefits will be enhanced up to 150 percent of the underlying worker’s compensation award. For example, three million in medical and wage replacement could result in up to $1.5 million in S&W liability. There is also a corollary provision allowing for some reduction in worker’s compensation benefits in cases where the injured worker engaged in serious and willful misconduct causing the injury.

Your worker’s compensation carrier will process and administer the claim and, if necessary, defend the company (and appoint counsel) in the event that its claim decisions are appealed or if there are other claim proceedings before the Worker’s Compensation Appeals Board (“WCAB”).

Worker’s Compensation Insurance Carriers are barred by law from defending employers in S&W claims or indemnifying them for any S&W award. This is like the rule that punitive damages and fines are not insurable.

If an S&W claim is brought against your company, the company will be required to defend itself (by retaining counsel) and cover any penalty from its own resources and revenues.

2. Administrative Agency Liability (Cal-OSHA).
   

Cal-OSHA is responsible for worker safety regulation and enforcement.  Cal-OSHA is required to investigate all employer reports of workplace injury or death.

Cal-OSHA has specific regulations and permitting requirements for industries and hazardous activities. For an overview, see: https://www.dir.ca.gov.

Noncompliance with OSHA regulations can result in civil and criminal penalties. An explanation of the citation levels and civil and criminal penalties can be found on page ten of the following OSHA pamphlet: http://www.dir.ca.gov/dosh/dosh_publications/osha_userguide.pdf.

In sum, violations of OSHA regulations can result in issuance of a citation. These citations range from” regulatory” violation (least serious) through “general”, “serious”, “accident related serious, “willful” and “repeat” violations.  The last types of citation are the most serious.   If a citation is issued there is an opportunity to discuss the citation with the investigator and OSHA staff. Following citation issuance, the citation (and associated fines/penalties) may be appealed to a hearing before an administrative law judge within OSHA. In turn, those decisions may further appealed and reviewed on the record by the Cal-OSHA appeals board.

3. Criminal Liability

A willful violation that results in death or permanent or prolonged impairment of the body of an employee may result in criminal liability. (This liability is also discussed on page ten of the OSHA pamphlet linked above.)  Both fines and imprisonment are possible.

There are also separate criminal liabilities for making false statements in the course of a workplace accident investigation.

4. Civil Claims.

As stated above, almost all civil claims against an employer (for workplace injury) are preempted by the worker’s compensation remedy. This includes actions for negligence/wrongful death by a worker’s family against the employer.  Workers may sue non employer third parties for injuries. These non-employer parties can include manufactures of products that caused (or may have caused) the injury or (non workplace) operators of vehicles that cause injury.

The attorneys in Weintraub Tobin’s Employment Law Group assist employers in all areas of employment law.  To read more articles like this, visit the Labor and Employment blog at http://www.thelelawblog.com/

On August 6, 2016, the Arizona State Legislature enacted the “Declaration of Independent Business Status” law (“DIBS”). The DIBS added Chapter 10 to Title 23 of the Arizona Revised Statutes (Arizona’s “Labor” statute). In short, DIBS allows certain Arizona companies (referred to in the statute as an “employing unit”) to obtain a declaration from those individuals they deem “independent contractors” (rather than employees) so that a rebuttable presumption exists that the relationship is in fact one of independence. Obtaining a declaration under the DIBS is discretionary and the statute states expressly that compliance with the law and the execution of a declaration of independent business status are not mandatory in order to establish the existence of an independent contractor relationship. Further, the failure of a party to execute a declaration in compliance with the DIBS does not create any presumptions and is not admissible to deny the existence of an independent contractor relationship.

Read the rest of the blog post at http://blog.hrusa.com/blog/arizonas-new-independent-contractor-declaration-law/.

The White House has issued new information about its policy position on non-competes, including a call to action from President Obama to state and federal lawmakers to curb and limit non-compete agreements. To read the Fact Sheet, please click here.

Perhaps because of the unfortunate social tensions arising after the U.S. Presidential election which include some inappropriate threats against immigrants and people of color, the EEOC issued its Enforcement Guidance on National Origin Discrimination last week.  The Enforcement Guidance replaces the EEOC Compliance Manual, Volume II, Section 13: National Origin Discrimination (2002).

National origin discrimination is prohibited under Title VII of the Civil Rights Act of 1964 (Title VII) which applies to employers with 15 or more employees, employment agencies, the federal government, state and local government employers, and unions. Under Title VII, discrimination in employment based on national origin, race, color, religion, and sex is illegal.  Title VII also prohibits employers from retaliating against people who oppose workplace discrimination or who participate in an EEO complaint process.

What is National Origin Discrimination?

According to the EEOC, national origin discrimination means discrimination because an individual (or his or her ancestors) is from a certain place or shares the physical, cultural, or language characteristics of a national origin (ethnic) group.   For example:

• An individual’s place of origin may be a country (such as Mexico), a former country (such as Yugoslavia), or a place that is closely associated with an ethnic group but is not a country (such as Kurdistan).
• A national origin group is a group of people who share a common language, culture, ancestry, and/or other social characteristics (such as Hispanics/Latinos or Arabs).

Generally, national origin discrimination refers to:

• Treating an individual less favorably because he or she is from a certain place or has the physical, cultural, or linguistic characteristics of a particular national origin (ethnic) group;
• Treating an employee less favorably because of the perception he or she belongs to a certain ethnic group or nationality (e.g. that the person is Hispanic/Latino even if he or she is not in fact Hispanic/Latino).
• Using an employment policy or practice that disproportionately impacts people on the basis of national origin and is not shown to be job related and consistent with business necessity.
• Treating someone less favorably at work because he or she associates with (for example, marries) someone of a particular national origin.

Harassment on the Basis of National Origin is Also Prohibited.

Title VII prohibits harassment on the basis of national origin.  Unlawful harassment is conduct that is severe or pervasive enough to create a work environment that an individual perceives as hostile, and a reasonable person would find intimidating, hostile, or abusive.   According to the EEOC, harassment based on national origin can take different forms, including ethnic slurs, ridicule, intimidation, workplace graffiti, physical violence, or other offensive conduct directed toward an individual because of his birthplace, ethnicity, culture, language, dress, or accent. Employer liability can result from the actions of supervisors, employees, or non-employees, such as clients, customers, or commercial contacts.

Takeaway for Employers.

Just as in the case of any other protected class, employers must take proactive steps to prevent and promptly respond to any form of discrimination or harassment on the basis of national origin.

A copy of the EEOC’s Guidance on National Origin Discrimination can be found at https://www.eeoc.gov/laws/guidance/national-origin-guidance.cfm.

As previously reported here, earlier this year a federal district court in Texas issued a preliminary injunction preventing the Department of Labor (“DOL”) from enforcing the new Persuader Rule, which was to go into effect as of July 1, 2016. Last week, the court issued a ruling converting its preliminary injunction into a permanent one, which now imposes a nationwide ban on implementation of the new rule.

By way of a refresher, the new Persuader Rule, proposed in March earlier this year, sought to require employers to report highly detailed information regarding their “indirect persuader activities.” Such indirect activities potentially included attorneys advising employers on how to respond to employees attempting to unionize or what actions might discourage unionization. Several experts in the district court proceedings provided evidence that the new reporting requirements effectively restricted employers’ ability to obtain any advice concerning unionization-related issues. Prior to the new rule, employers were simply required to report “direct persuader activities,” which only included activity where there was direct contact with employees to persuade them regarding their rights to unionize.

To read the rest of this article, please visit the HRUSA blog at http://blog.hrusa.com/blog/texas-federal-court-permanently-blocks-persuader-rule/

By Jessica Schoendienst

Thanksgiving comes two days early for employers across the country who anticipated the new Department of Labor (“DOL”) overtime Final Rule creating significant pre-holiday expenses.  For those employers, who have been living in denial or under a rock for the last six months, the DOL Final Rule increased the minimum salary level for exempt employees from $455 per week ($23,660 annually) to $921 per week ($47,892 annually).  Although California exempt employees expected a slightly smaller increase, given that California exempt employees’ minimum salary level is currently $800 per week ($41,600 annually), California and national employers alike viewed the DOL Final Rule as an attack on their businesses.

In late September, a lawsuit was filed in the Eastern District of Texas by the Nevada attorney general and joined by 20 other states, including Arizona, Texas, Georgia, Nevada, Utah, and others.  Shortly afterwards, over 50 business organizations also filed a lawsuit challenging the Final Rule.  Both lawsuits ask for preliminary and permanent injunctions preventing the Final Rule from taking effect.  The Court consolidated the actions and heard oral arguments on the preliminary injunction on November 16, 2016.

Today, the Court granted the Plaintiffs’ motion for a preliminary injunction.  The injunction applies nationwide and prevents the DOL from implementing the Final Rule pending further order of the Court.  The Court granted the preliminary injunction on the basis that (1) the Final Rule exceeded the DOL’s rule making authority; (2) the Plaintiffs will suffer irreparable harm, including increased costs and detrimental effect on government programs and services; (3) the DOL failed to articulate any harm in delaying the implementation of the Final Rule; and (4) the injunction serves the public interest because it will maintain the status quo for the Court to render a meaningful decision on the merits without forcing employers and states nationwide to incur the expense and burden of complying with a potentially invalid rule.

The Court supported its decision on the basis that the Final Rule created an improper salary-based test rather than focusing on the duties employees perform to determine exempt status.  The Court found that Congress unambiguously expressed its intent for employees doing “bona fide executive, administrative, and professional capacity” duties to be exempt from overtime, but that Congress did not intend the exemption to depend on the employees’ salary.  The court held that although the DOL has the authority to define the types of duties that may qualify an employee for the exemption, nothing indicates that the DOL had the authority to raise the minimum salary level such that it supersedes the duties test. In essence, the Court held that because the new rule increased the salary so significantly, it constituted a fundamental change to the statutes operations – effectively creating a de facto salary-only test.

What Employers Should Do

Employers across the country may be wondering “What should I do now”?  If you are an employer that planned to reclassify your employees based only on the salary increase, you can now postpone (and possibly cancel) that reclassification at least until the Court issues a permanent injunction or until the preliminary injunction is appealed (and overturned).  If you are an employer that used the impending salary increase to reevaluate your exempt employees’ job duties and reclassify those employees who were unlikely to be truly exempt, we encourage you to reconsider postponing or cancelling the reclassification and to consult with legal counsel to determine the best approach for your business.  Misclassifying employees can expose your business to significant risk of unpaid wage and penalty liability.  The time may still be right for you to reclassify those employees!  After all, it may be only a matter of time until the injunction is lifted and the Final Rule is enforceable against all employers.

By: Melissa M. Whitehead

Last week, voters in seven states passed new laws relating to marijuana use, both recreational and medical, which has left many employers wondering what this means to them. Can employers still enforce “zero tolerance” drug use policies? Do they have to allow employees to use marijuana in the workplace or during work hours, if they have a medical prescription? Some, but not all, state marijuana laws include specific provisions guiding employers in their handling of these issues. Take, for example, two of the laws passed last week, in Florida and Nevada.

To read Florida and Nevada’s new marijuana laws, visit the HRUSA blog at http://blog.hrusa.com/blog/new-marijuana-laws-and-the-workplace/