Labor and Employment

On May 9, 2016 the EEOC issued yet another “guide” – this time to outline its position on when and how leave must be granted for reasons related to an employee’s disability under the Americans
with Disabilities Act (“ADA”).  The publication, entitled “Employer-Provided Leave and the Americans with Disabilities Act,” contains information on the EEOC’s position in connection with six subject areas relating to leaves as a form of reasonable accommodation under the ADA, and contains various examples to illustrate those positions.   For a summary of the EEOC’s position on each of the six subject areas, please click here.

To sit or not to sit, that is the question.  And now the California Supreme Court has given us an answer.  Well, sort of.  They have told us how to find the answer.  Even that’s a stretch.  Pull up a seat and I will explain.

To help it resolve two class actions involving California Wage Order requirements that employers provide employees with suitable seats, the Ninth Circuit recently certified some questions for the California Supreme Court.  The Supreme Court responded in Kilby v. CVS Pharmacy, Inc.  As stated verbatim in the Supreme Court’s responsive opinion, these were the questions posed by the Ninth Circuit:

1. Does the phrase “nature of the work” refer to individual tasks performed throughout the workday, or to the entire range of an employee’s duties performed during a given day or shift?

2. When determining whether the nature of the work “reasonably permits” use of a seat, what factors should courts consider? Specifically, are an employer’s business judgment, the physical layout of the workplace, and the characteristics of a specific employee relevant factors?

3. If an employer has not provided any seat, must a plaintiff prove a suitable seat is available in order to show the employer has violated the seating provision?”

If you just want the short answers, the opinion was kind enough to give us those right up front as well.  Again, verbatim:

1. The “nature of the work” refers to an employee’s tasks performed at a given location for which a right to a suitable seat is claimed, rather than a “holistic” consideration of the entire range of an employee’s duties anywhere on the jobsite during a complete shift. If the tasks being performed at a given location reasonably permit sitting, and provision of a seat would not interfere with performance of any other tasks that may require standing, a seat is called for.

2. Whether the nature of the work reasonably permits sitting is a question to be determined objectively based on the totality of the circumstances. An employer’s business judgment and the physical layout of the workplace are relevant but not dispositive factors. The inquiry focuses on the nature of the work, not an individual employee’s characteristics.

3. The nature of the work aside, if an employer argues there is no suitable seat available, the burden is on the employer to prove unavailability.

So, there you go.  If you just wanted the answers, you can stop reading now.  But if you want a little elaboration and more background on how the Court arrived at those answers, and my thoughts on what employers should take away from the opinion, remain seated and continue ahead.

The Cases

The two class actions before the Ninth Circuit involved identical provisions of two separate Wage Orders.  InKilby v. CVS Pharmacy Inc., a former CVS customer service representative filed a class action alleging that CVS violated Wage Order No. 7-2001 (mercantile industry) by failing to provide employees seats during shifts.  In large part, the employees’ duties consisted of operating cash registers, straightening and stocking shelves, cleaning the register, gathering shopping baskets, and removing trash.

Similarly, in Henderson v. JP Morgan Chase Bank NA, a group of bank tellers sued Chase alleging it violated Wage Order No. 4-2001(professional/technical/mechanical occupations) by also failing to provide seats to its tellers.  The tellers’ duties consisted of a mix between those around their teller stations such as handling deposits and withdrawals, and those away from their stations such as escorting customers, servicing ATM machines and working the drive-up window.

Both cases turned on identical phrases in the two Wage Orders stating that “[a]ll working employees shall be provided with suitable seats when the nature of the work reasonably permits the use of seats.”  In both cases, the plaintiffs appealed to the Ninth Circuit after procedural losses in the respective district courts.  The Ninth Circuit punted (for now), instead asking the California Supreme Court to answer the above questions to aid in the Ninth Circuit’s analysis.  The Supreme Court did just that, as set forth above.   Here’s how they arrived at their answers.

The “Nature of the Work”

The defendants in the two cases argued that, when determining whether “the nature of the work reasonably permits the use of seats,” courts should examine “an employee’s job as a whole, i.e., a ‘holistic’ consideration of all of an employee’s tasks and duties throughout a shift.”  The plaintiffs, in turn, argued that the inquiry should involve a “task-by-task evaluation of whether a single task may feasibly be performed seated.”

After analyzing a long and tortured history of California wage law, which I will spare you here, the court rejected both arguments as inconsistent with the IWC’s intent in placing that language in the Wage Orders.  The court held that the defendants’ “all or nothing approach” ignored factors such as the duration, location, and frequency of tasks, and would unfairly deny a seat to an employee who spends a substantial portion of his workday performing tasks that can be done while seated merely because other aspects of the job required standing.  On the other hand, the plaintiff’s approach would have the opposite effect.  Employer’s would have to provide employees a seat if any single task could be performed while seated, even if the employee only briefly performs the task for negligible periods during each shift.

The court instead split the baby.  It held that “courts must examine subsets of an employee’s total tasks and duties by location,” and then determine whether it’s feasible to perform those tasks while seated.  If so, an employee is entitled to a seat at that location.  But the employee is not entitled to a seat during other parts of a shift while at locations where seating is not feasible.

“Reasonably Permits”

The California Supreme Court next set out to answer the Ninth Circuit’s questions whether the analysis involves consideration of the employer’s business judgment, the workplace layout, and/or the employee’s physical characteristics.

Chase and CVS argued that the court should consider, and even give deference to, the employer’s business judgment as to whether work should be performed standing or sitting.  The plaintiffs argued that the employer’s opinion should be irrelevant, with the focus instead being on the objective nature of the work.  The court again found middle ground. It held that providing a certain level of customer service is an objective job function that employers should be able to assess in determining whether use of a seat is permitted in a certain location.  The court did clarify, however, that “business judgment” does not encompass an employer’s “mere preference.”  So, while business judgment may be considered, so too may objective evidence that sheds light on the reasonableness of that judgment.

Like business judgment, the court held that the physical layout of the work location can be considered as a relevant factor in assessing whether the nature of the work reasonably permits use of a seat.  Again, though, the court cautioned that an employer cannot “unreasonably design a workspace to further a preference for standing.”  In other words, no cheating.

Finally, the court found that consideration of employee’s physical characteristics, rather than the nature of the work, was inconsistent with the IWC’s intent.  That is, if the job permits seating for one, it permits seating for all.

Burden to Show Seating is Available

Finally, the court cleared up any ambiguity about who bears the burden of proof in a suitable seating inquiry.  The defendants argued that, even if the nature of the work permitted suitable seating, the plaintiff must still show that a suitable seat was available but not provided.  The court rejected that argument, holding that an employer who seeks to be excused from the suitable seating requirement bears the burden of showing compliance is infeasible because no suitable seat exists.

Takeaway

If you’re still with me, here is the moral of the story: be careful.  The case leaves a lot of room for factual interpretation.  We are still waiting to see how the Ninth Circuit will treat these two specific cases in light of the Supreme Court’s opinion, let alone how various courts will interpret suitable seating cases under this analysis down the road.

But for now, the court found enough middle ground in its opinion for both plaintiff’s lawyers and employers to claim victories.  Employers can take comfort knowing that their business judgment and the layout of the workplace are relevant factors in assessing whether a given task permits suitable seating.  The court’s focus on all of the circumstances surrounding work performed at a given location, rather than a task-by-task approach, is also good news for employers.

On the flip side, employers now clearly bear the burden of showing that no suitable seat exists.  Employers must also examine all of the separate locations in which an employee performs tasks during a shift, and determine independently whether the nature of the work performed at each location reasonably permits the use of a seat.  If all of that leaves your head spinning, you may want to find a place to sit down.  That is, if doing so is reasonably permissible.

When companies sue their former employees for theft they often claim that the former employee’s new employer has conspired with the former employee to misappropriate trade secrets, or that that new employer has aided and abetted the former employee’s breach of duty he/she owed to his/her former employer.

Like Woodward and Bernstein, liability “follows the money.”  Current employers are often added to trade secret and breach of duty lawsuits because they have deeper pockets than former employees.  Conspiracy and aiding and abetting claims are more vague and less precise than are other business claims.  Often plaintiffs need only allege that the new employer benefitted from wrongful acts.  Employers should not believe that there is nothing they can do to reduce the chances of a successful conspiracy or aiding and abetting claim against them.  By adopting best practice policies and procedures, an employer can do a lot to reduce the likelihood that it will be found liable on these theories.  These policies and practices should be adopted well in advance of the hiring of a competitor’s employees.  Although there are many policies and practices that an employer can adopt, two of the most common (and most powerful) are: (1) a policy in the employment handbook that prohibits the use or importation of third party or prior employer information.  Such policies often read:

As a condition of employment, employees of the company agree and represent that during the course of their employment with the company, they will not use or disclose any confidential or proprietary information of any third party, including any prior employer, unless such third party has consented to the use or disclosure of that information in writing.

Moreover, as a condition of employment, employees of the company are required to comply with the terms of any agreements where any prior employer pertaining to confidential information, non-solicitation or non-competition to the extent that such agreements are enforceable under applicable law.

Second, employers can, in their offer letters, expressly condition employment upon the non-importation or use of any information from the former employer.  Such language often provides that:

This offer of employment is conditioned upon your agreement that you will not bring any proprietary, confidential or any other business information from any place or former employment to the company.  The company will provide everything you need to perform your work.

While nothing can guarantee that your company will not be named as a conspirator of abettor in a trade secret or breach of duty case, adoption of policies like this will help.

Many – maybe even most – contracts issued by major payroll processing services contain traps for the unwary. Many employers I speak with turn over all payroll processing responsibilities, including issuance of accurate checks and wage statements and record storage, to their payroll processing service.

This may be a big mistake.

When faced with an individual or a class-action wage and hour claim, many employers turn to their payroll processing service to produce records that evidence the Company’s compliance with California law. Yet many of these payroll processing services expressly disclaim any responsibility to maintain records or to ensure wage statements comply with the law.  Indeed, some of these contracts actually require employers to indemnify the payroll services company against any claims that wage statements or wages were not in paid compliance with applicable law.

Maybe it’s just me, but I think that this is outrageous. Most employers I talk to believe their payroll processing company is their partner in ensuring that the business complies with California law. Read your payroll processing contract carefully. You may not have a partner in your payroll processing company. In fact, your company may be completely on its own. Employers have statutory duties to ensure that they both pay their employees properly and keep records of those payments.  Additionally, the law requires that employers issue detailed wage statements explaining how the wages were calculated and paid.  Failure to comply with these wage statement, payment and record keeping requirements can result in breathtakingly large liability.

To my mind these common contract provisions in payroll processing contracts require employers to do two things:

1. Shop aggressively for a payroll service that will indemnify your business against the payroll service’s errors and that will agree to keep and maintain all records required under California law without additional charge.
2. Audit the performance of your payroll service company (to ensure compliance) and regularly download all records the employer is obligated to maintain.

PAGA and class action liability for failure to comply with these laws can be breathtaking. If you have any doubt about your Company’s obligations please contact your employment law advisor immediately.

On April 11, 2016, Governor Brown signed Assembly Bill (AB) 908 which amends certain provisions of California’s Unemployment Insurance Code as it relates to the State’s Paid Family Leave (PFL) program. Before explaining the amendments provided for under AB 908, I think it is important to clarify something that is too often misstated in the press. Despite its name, California’s PFL program is not a statutory leave of absence program that guarantees paid family leave to employees in California. Instead, it is a partial wage replacement benefit for eligible employees who are on some other authorized statutory or discretionary leave of absence from work. As such, employees do not have the right to “take leave” under the PFL program.Beth-West-15_web

The PFL program provides up to six (6) weeks of wage replacement benefits to employees who are on an authorized statutory or discretionary leave of absence to care for a seriously ill child, parent, parent-in-law, grandparent, grandchild, sibling, spouse, or registered domestic partner, or to bond with a minor child within one year of the birth or placement of a child in connection with foster care or adoption. Currently, the “weekly benefit amount” for purposes of the PFL program means the amount of benefits available to qualified disabled individuals under California’s unemployment compensation disability insurance law. In summary, the law currently provides that for an individual who has quarterly base wages of greater than $1,749.20, the weekly benefit is calculated by multiplying base wages by 55% and dividing the result by 13.

AB 908 revises the formula for determining benefits for periods commencing after January 1, 2018 but before January 1, 2022, to provide weekly benefit amounts as follows:

When the amount of wages paid to the employee for his/her highest income quarter is less than $929 – the weekly benefit is $50.00
When the amount of wages paid to the employee for his/her highest income quarter is $929 or more, but less than one-third of the amount of the state average quarterly wage – the weekly benefit is 70% of the amount of wages paid during such quarter divided by 13.
When the amount of wages paid to the employee for his/her highest quarter is one-third of the amount of the state average quarterly wage or more – the weekly benefit is the greater of:
23.3% of the state average weekly wage; or
60% of the amount of wages paid to the individual for employment by employers during the employee’s highest quarter divided by 13.
Also, the requirement that an eligible employee must meet a 7-day waiting period before collecting PFL benefits will become inoperative as of January 1, 2018.

Finally, after January 1, 2022, if an employee meets the eligibility requirements (e.g. has quarterly base wages of greater than $1,749.20) and is on an authorized leave to care for a seriously ill family member or bond with a baby or placed foster or adopted child, the weekly benefit amount shall again be equal to 55% of the employee’s wages during the highest income quarter divided by 13, but not exceeding the maximum workers’ compensation temporary disability indemnity weekly benefit amount established by California’s Department of Industrial Relations (“DIR”) pursuant to Labor Code section 4453.

By Jessica Schoendienst

California lawmakers, union supporters, and Governor Brown have come together to increase California minimum wage to $15.00 over the next several years.  Governor Brown signed the law only one week after he announced that legislators and labor leaders negotiated a deal behind the scenes.

The new law requires California employers with more than 25 employees to pay at least $15.00 per hour by 2022.  Employers will 25 or less employees have an additional year to increase their wages to at least $15.00 per hour.  The increase will be phased-in beginning next year when the minimum wage increases to $10.50 per hour.  Click here for a chart of the new minimum wage rates.

After January 1, 2023, the minimum wage will be increased annually from the adjusted U.S. Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), but no more than 3.5% in a year, with the resulting rate rounded to the nearest $0.10.  CPI-W is generally seen as a cost-of-living index for working individuals and families.

The Governor has the authority to suspend the increases based on economic conditions, such as declining state revenues from sales tax, declines here in labor markets, or budget deficits.  However, the Governor can only suspend the increase twice and the Governor does not have the authority to suspend the minimum wage increase once the minimum wage reaches $15.00 per hour.

The state minimum wage increases affects more than just those paid minimum wage.  Employers should consider these new minimum wage obligations for employees paid commissions and piece-rate compensation, are exempt employees, or those employees that are required to provide and maintain their own tools and equipment.

For example, exempt employees must satisfy both the duties and salary test to be properly classified as an exempt employee.  Generally this means that the employee must earn at least two times the state minimum wage.   Click here for a chart of the new minimum wage rates (minimum exempt salary).

Employers need to ensure they increase the minimum salaries for those whose status is dependent on minimum wage.  Employers who do not increase employee’s wages may risk liability for improperly classifying employees or risk liability for back wages or reimbursements.

Employers will also need to update their written notices provided to minimum wage employees, pursuant to Labor Code § 2810.5, because otherwise the rate of pay and overtime rates listed on the notice will not reflect the new increases.  Employers should also ensure that they display workplace posters that include the new minimum wage rates.

By:  Darrell P. White

On April 5, 2016, the San Francisco Board of Supervisors unanimously passed an ordinance requiring local businesses to effectively provide their employees with six-weeks of fully-paid parental leave.  Click here to view.  Under existing California law, employees may receive up to 55% of their wages for six weeks through the California’ State Disability Insurance (SDI) program.  San Francisco’s new law would require employers to cover the pre-existing, 45% gap.

Subject to a final board vote next week and signature into law by Mayor Ed Lee, the new legislation will take effect on January 1, 2017, for companies with more than 50 employees.  In a likely response to the concerns of small businesses, the law would not take effect until January 1, 2018, for companies with 20 or more employees.

Stay tuned to hear the final parameters of the law and compliance information for your business.

By: Labor and Employment Group

Don’t deny it: you scroll through your social media feeds past the mundane photos, click-bait, and “humble brags” in search of explosive drama. Eventually, you might land on a status update from one of the reliable “oversharers” on your friends list (we all have them). She was just terminated from her job and decided to air her grievances about her former employer in her status update. Would you be surprised if you saw the company shoot back at her from its own social media page? While it is pretty standard to hear about individual employees making poor choices with respect to their social media posts (an employee who is friends with his or her boss on social media is usually involved), it is less common to hear about employers oversharing on company social media pages.

The influence of social media is undeniable, and more companies are actively using it to market themselves. Last week, a well-known internet company that publishes crowd-sourced reviews and information on local businesses found itself in the midst of a social media fueled public relations nightmare. An ex-employee called out the company on a blog by alleging that the company was inflexible toward her situation as a single mother and that the company ultimately terminated her because she asked for leave to care for her boyfriend while he was recovering from a brain injury.

The company decided to fire back via its Twitter account, and in doing so, it disclosed the number of days the ex-employee worked for the company and the number of days that she was absent. It further went on to state that the ex-employee had multiple warnings and was subject to performance counseling because she was flaky and did not show up to work.

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The Department of Fair Employment and Housing (“DFEH”) recently issued new guidance for employers to prevent discrimination against transgender employees, who are protected under California’s Fair Employment & Housing Act (“FEHA”). Since 2012, FEHA protection has been extended to include gender identity and gender expression categories, and defines “gender expression” to mean a “person’s gender-related appearance and behavior whether or not stereotypically associated with the person’s assigned sex at birth.” The DFEH’s new brochure, called “Transgender Rights in the Workplace” (available here), makes clear that employers must allow transgender employees access to restroom, shower, locker room and other such facilities that correspond with their gender identity. It also suggests that providing individual or unisex restrooms, where possible, can enhance privacy for all employees.

Other takeaways from the brochure:

• Questions not to ask:
  • Employers should not ask questions designed to determine the person’s sexual orientation or gender identity.
  • Employers should not ask questions about a person’s body or whether they plan to have transgender surgery.
• Dress code and grooming standards:
  • Employees must be allowed to dress in a manner consistent with their gender identity. For example, a transgender woman must be allowed to dress in the same manner as a non-transgender woman.
• Consider use of individual unisex restrooms:
  • These can be used both transgender and non-transgender employees for employees wanting more privacy.
  • No employee should be forced to use an individual unisex restroom.

The guidance comes at a time when the issue of transgender people using the restroom consistent with their gender identity has become a controversial topic across the nation. Bills restricting access of transgender student to public restrooms are pending in state legislatures across the country, including South Dakota. Tico Almeida, president of the LGBT group Freedom to Work, hailed the new California DFEH guidance in a statement as a boon for transgender workers. “California is getting the law right while South Dakota is on the verge of harming transgender people with an enormous step backwards for basic fairness,” Almeida said. “We applaud Director Kish and the California agency for issuing important legal protections to make sure transgender employees get treated fairly at work.”

Although the guidance is based on California law, it’s consistent with the U.S. Equal Employment Opportunity Commission’s interpretation of Title VII of the Civil Rights Act of 1964. In April 2015, the EEOC in the case of Lusardi v. McHugh found prohibiting transgender people from using the bathroom in the workplace consistent with their gender identity amounts to gender discrimination under current law. The guidance also mirrors a June 2015 “Guide to Restroom Access for Transgender Workers” published by the Occupational Safety and Health Administration.

Given the evolving landscape regarding gender and gender-identity discrimination, employers should take affirmative steps to inform and train their employees regarding these new issues and prevent unlawful discrimination. Anti-discrimination/harassment training for all employees should incorporate transgender issues.