Labor and Employment

Figuring out how many employees to schedule each day can be an inexact science. Unexpected surges or lulls in customers, employee absences due to illness or emergencies, and various other circumstances can impact personnel needs.  Employers sometimes choose to navigate these situations by overscheduling and then cutting loose employees who are not ultimately needed.  That approach, however, triggers “reporting time” obligations, under which those employees are entitled to a minimum amount of pay for reporting for work. But what does it mean to “report for work”?  What if an employer allows employees to call in a few hours before a scheduled shift to determine whether they are needed? Are employees required to physically show up to trigger reporting time obligations, or do these phone calls constitute “reporting for work” for this purpose? The answer is the latter according to a recent California appellate court in Ward v. Tilly’s, Inc.

The Case

Tilly’s employed the plaintiff, Skylar Ward, as a sales clerk in one of its California stores.  Tilly’s often scheduled Ward and other employees on “call-in” shifts. Under these shifts, employees had a designated beginning and end time, but were required to call the store two hours beforehand to determine whether they were in fact needed. If the employees were needed, they would show up and work the shift. If they were not needed at the time of the call, they would not have to show up.

Ward alleged that the call-in shifts violated the “reporting time” requirements found in Industrial Welfare Commission Wage Order Number 7, which regulates the retail industry. She sued on behalf of herself and all other Tilly’s employees who worked call-in shifts.

The case turned on what it means to “report for work” under the Wage Orders.  In this case, Wage Order Number 7 provides that for each workday “an employee is required to report for work and does report, but is not put to work or is furnished less than half said employee’s usual or scheduled day’s work, the employee shall be paid for half the usual or scheduled day’s work, but in no event for less than two hours nor more than four hours.”  Boiled down, that means if an employee “reports for work” and is not needed, or is cut loose less than halfway through their shift, there is a legal minimum amount the employee must be paid.  Similar language can be found in almost all of the Wage Orders, which are broken down by industry and occupation.

Under Ward’s argument, she and other employees had “reported for work” each time they called in to see if they were needed. Therefore, for any shift that they called in and did not have to physically show up, Ward argued that the employees were entitled to reporting time pay.  Tilly’s countered that to “report for work” under the Wage Order requires that the employees physically show up at the job location at the beginning of the shift.

The court agreed with Ward, holding that if an employee is required to phone into work in advance of a shift, that call constitutes reporting for work under Wage Order 7. Specifically, the court held that to “report for work” within the meaning of the Wage Orders is best understood as “presenting oneself as ordered,” whether by physically showing up, calling in, or otherwise.

In reaching its decision, the court noted that call-in shifts provide a huge benefit to employers by allowing them to “create a large pool of contingent workers whom the employer can call on if a store’s traffic warrants it, or can tell not to come in if it does not, without any financial consequences to the employer.”  By contrast, the court held that such shifts “impose tremendous costs on employees,” who cannot commit to other responsibilities—such as working other jobs, scheduling classes, tending to childcare needs, and scheduling social activities—while on call. According to the court, these employer benefits and employee burdens are no different when an employee is required to physically show up or just call into the store in advance. Because the Wage Orders’ reporting pay obligations were intended to incentivize businesses to competently anticipate scheduling needs and not shift the burden of scheduling uncertainty to employees, the court held that the obligations are equally triggered by call-in requirements.

Next Steps for Employers

Employers who already utilize call-in shifts are going to need to immediately assess that practice. Unless the California Supreme Court decides to review or de-publish the Ward v. Tilly’s, Inc. opinion (which remains possible), then call-in scheduling without providing reporting time pay exposes employers to claims for unpaid wages and associated penalties. For medium and large-sized employers, a company-wide call-in policy could result in a class action lawsuit.

To avoid these risks, employers should consider eliminating call-in policies or committing to providing reporting time pay to employees who call in and are not needed. Alternatively, employers may consider ensuring that, even on slower shifts where some on-call employees are not needed, the employees report and work at least half of their scheduled shift before being let go. One other possible option would be for employers to predetermine a select group of employees who are available to work on short notice, and then contact those employees when it appears extra help is going to be needed. While none of these options present an ideal replacement for the convenience of call-in scheduling, the risk of liability associated with that practice mandates employers find the next best option.

For years, California courts have recognized the right of employers to use non-solicitation provisions in employment agreements to prevent employees from “soliciting” their coworkers to join them at a new employer.  For instance, in 1985, a California appellate court in Loral Corp v. Moyes, 174 Cal.App.3d 268 (1985), held that a non-solicitation of fellow employees provision in an employment agreement was lawful because the co-workers were free to seek employment with a competitor, they just couldn’t be contacted first by the departing employee.

The enforcement of non-solicitation of co-worker provisions remained relativity consistent until November 2018 when a court in AMN Healthcare, Inc. v. Aya HealthCare Services, Inc., 28 Cal.App.5th 923, enjoined an employer from enforcing a co-worker non-solicitation provision against former employees. The Court held that the co-worker non-solicitation provision violated section 16600 of the California Business and Professions Code, which provides that agreements that restrain a person’s trade or profession are unenforceable.  The AMN Healthcare Court relied heavily on the California Supreme Court’s ruling in Edwards v. Arthur Andersen LLP, 44 Cal.4th 937 (2008), which broadly struck down non-compete agreements preventing employees from competing with their former employer.

It remained an open question following the AMN Healthcare decision whether other courts would follow its holding concerning the unenforceability of an employee non-solicitation provision.  For instance, would other courts limit its holding and decline to follow it because:

(1) The former employees who were being sought to be restrained by AMN were recruiters such that any prohibition on solicitation would necessarily restrain them in their profession as recruiters; and

(2) The former co-workers they were targeting for recruitment were temporary nurses who served short assignments so that enforcing the non-solicitation provision could limit those employees’ ability to obtain new work after their temporary assignments ended.

Now, two months later, another court appears to be following the lead of the AMN Healthcare court and is allowing a claim to go forward attacking a co-worker non-solicitation provision.  In Barker v. Insight Global, LLC (Jan. 11, 2019 N.D. Cal.), Judge Beth Labson Freeman recently reversed herself and granted the plaintiff-employee’s motion for reconsideration to allow him to state a claim as a class representative against his former employer for the use of co-worker non-solicitation provisions in its employment agreements.  Judge Freeman held that the recent AMN Healthcare decision (her initial order dismissing the claim came three months prior to the AMN Healthcare decision) was likely consistent with the current state of California law regarding these non-solicitation provisions, especially in light of the Edwards v. Arthur Andersen decision. She denied the defendant-employer’s motion to dismiss the former employee’s claim and ruled that plaintiff should be allowed to present a claim that the use of an employee non-solicitation provision in his employment agreement violated section 16600 and was therefore an unfair business practice.

The Barker case is still in the early stages but employers should be concerned that a court has decided to follow the holding of the AMN Healthcare decision. In light of these recent developments, employers should carefully review any non-solicitation provisions in their employment agreements with their attorneys to determine whether they are at risk at facing claims similar to those asserted in the AMN Healthcare and Barker cases.

The Labor and Employment Law Blog

While it has always been good practice for employers of all sizes to train both their supervisory employees and non-supervisory employees on the prevention of harassment, California law now mandates such training by 1/1/20 (and every 2 years thereafter) for any employer with 5 or more employees.  The attorneys in Weintraub Tobin’s Labor & Employment Department have years of experience conducting energetic, compliant, and effective harassment prevention training for employers of all sizes and in all industries.  The Training Division of the Labor & Employment Department is headed up by Shareholder Beth West.  Feel free to reach out to her or Department assistant Ramona Carrillo if you are interested in scheduling training – we are available to discuss a training program that meets the specific needs of your workplace.

The Labor & Employment attorneys at Weintraub Tobin specialize in training supervisors on various workplace issues, including preventing harassment, discrimination, and retaliation; workplace health and safety; and managing leave laws.  For more information, please visit our Trainings page here

Effective January 1, 2019, California’s minimum wage rate increased to $12.00 per hour (from $11.00) for employers with 26 or more employees and $11.00 per hour (from $10.50) for employers with 25 or fewer employees. The minimum wage will continue to increase yearly until it reaches $15.00 per hour on January 1, 2022 for employers with 26 or more employees and January 1, 2023 for employers with 25 or fewer employees.

In California, many cities are increasing their minimum wages faster than the state. Click here for a city-by-city chart of increases set to take place in 2019.

On December 10, 2018, the Fourth Appellate Court decision in Kennedy Donohue v.  AMN Services, LLC  (“AMN”) was certified for publication and it brings good news for California employers who use a neutral rounding timekeeping system. The case involved a class action and PAGA action brought by Ms. Donohue on behalf of nurse recruiters who worked for AMN.  Ms. Donohue claimed that AMN had violated various California wage and hour laws and brought claims for: 1) failure to provide meal and rest periods in violation of Labor Code sections 226.7 and 1197.1; 2)  failure to pay overtime and minimum wage in violation of Labor Code sections 510 and 1197.1; 3) improper wage statements in violation of Labor Code section 226; 4) unreimbursed business expenses in violation of Labor Code section 2802; 5) waiting time penalties in violation of Labor Code sections 201-203; 6) unfair business practices in violation of Business and Professions Code section 17200; and 7) civil penalties authorized by the Labor Code Private Attorneys General Act of 2004  (PAGA), under Labor Code section 2698 et seq.

The parties brought cross motions for summary judgment and summary adjudication and, following oral argument, the trial court granted AMN’s motion for summary judgment and denied Ms. Donohue’s motion for summary adjudication. Ms. Donohue timely appealed and the Fourth Appellate Court sustained the trial court’s decision in favor or AMN.

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Well September 30, 2018 has come and gone.  As my September 19, 2018 article indicated, that was the deadline for Governor Brown to either sign or veto a large number of employment-related bills passed by the California Legislature during the 2017-2018 Term.  Out of the 21 employment-related bills I summarized in my September 19^th article, 12 were signed into law, and 9 were vetoed.  Below is a list of the new laws California employers must comply with, as well as a list of vetoed bills where employers dodged the bullet.

To read the full article, please click here

Bills Signed into Law.

1. SB820. Prohibition on Non-Disclosure Provisions re: Sexual Misconduct & Harassment.
2. AB3109. Right to Testify re: Sexual Misconduct.
3. SB1300. Significant Revisions and Additions to FEHA; Prohibiting Certain Release and Non-Disparagement Provisions re: FEHA Claims; Expanding Employer’s Liability for Harassment by Third-Parties; Authorizing Bystander Training; and Outlining Legislative Declarations re: Litigating Sexual Harassment Claims.
4. SB1343. Expansion of Training Requirements re: Sexual Harassment.
5. AB2338. Sexual Harassment Training Requirements for Talent Agencies.
6. AB1976. Acceptable Lactation Locations for Employees.
7. SB970. Required Training of Hotel and Motel Employees re: Human Trafficking.
8. AB2034. Required Training of Mass Transit Employees re: Human Trafficking.
9. SB224. Sexual Harassment in the Professional Relationship.
10. SB1123. Expansion of PFL Wage Replacement Benefits.
11. SB1412. Clarifications on “Ban the Box” Law re: Criminal History Inquiries of Particular Convictions.
12. SB826. Females on Board of Directors of Publicly Held Corporations.

Vetoed Bills.

1. AB3080. [Prohibition on Non-Disclosures re: Sexual Harassment & Prohibition on Mandatory Arbitration Agreements re: FEHA claims].
2. AB1867. [Records of Sexual Harassment Complaints].
3. AB1870. [Extension of FEHA Statute of Limitations].
4. AB3081. [Rebuttable Presumption of Retaliation against Sexual Harassment Complainant].
5. AB2079. [Sexual Harassment Trainer Qualifications for Janitorial Workers].
6. SB937. [Acceptable Lactation Locations for Employees].
7. SB1223. [Harassment & Discrimination Prevention Policy & Training in Construction Industry].
8. AB2496. [Rebuttable Presumption of Employment Status for Janitorial Workers].
9. AB2732. [Immigration Documents & “Workers Bill of Rights

Takeaway:  California employers should evaluate the new employment laws discussed above as well as others that were passed, and take necessary steps to ensure compliance. The employment attorneys at Weintraub Tobin are happy to discuss the new laws and assist employers in complying with their legal obligations.

The September 30^th deadline for Governor Brown to act on numerous employment-related bills passed by the California Legislature during the 2017-2018 Legislative Term is fast approaching. This Blog summarizes only 21 of the more than 40 employment-related bills currently on the Governor’s desk. Employers are encouraged to stay tuned to see which bills become law and which ones don’t make the cut.  NOTE: employment laws are constantly changing and employers must ensure that they make the necessary changes to policies and practices so that they are in compliance with current legal requirements.

1. SB820. [Prohibition on Non-Disclosure Provisions re: Sexual Misconduct & Harassment].
2. AB3080. [Prohibition on Non-Disclosures re: Sexual Harassment & Prohibition on Mandatory Arbitration Agreements re: FEHA claims].
3. AB3109. [Right to Testify re: Sexual Misconduct].
4. AB1867. [Records of Sexual Harassment Complaints].
5. AB1870. [Extension of FEHA Statute of Limitations].
6. SB1300. [Prohibition re: Release of Claims & Non-Disparagements re: Sexual Harassment].
7. SB1343. [Expansion of Training Requirements re: Sexual Harassment].
8. AB3081. [Rebuttable Presumption of Retaliation against Sexual Harassment Complainant].
9. AB2079. [Sexual Harassment Trainer Qualifications for Janitorial Workers].
10. AB2338. [Sexual Harassment Training Requirements for Talent Agencies].
11. AB1976. [Acceptable Lactation Locations for Employees].
12. SB937. [Acceptable Lactation Locations for Employees].
13. SB970. [Required Training of Hotel and Motel Employees re: Human Trafficking].
14. AB2034. [Required Training of Mass Transit Employees re: Human Trafficking].
15. SB224. [Sexual Harassment in the Professional Relationship].
16. SB1223. [Harassment & Discrimination Prevention Policy & Training in Construction Industry].
17. AB2496. [Rebuttable Presumption of Employment Status for Janitorial Workers].
18. AB2732. [Immigration Documents & “Workers Bill of Rights”].
19. SB1123. [Expansion of PFL Wage Replacement Benefits].
20. SB1412. [Clarifications on “Ban the Box” Law re: Criminal History Inquiries of Particular Convictions].
21. SB826. [Females on Board of Directors of Publicly Held Corporations].

To read the full article and summaries of each bill, please click here.

On July 18, 2018, Governor Brown signed Assembly Bill (AB) 2282 which provides answers and clarifications to a number of questions employers had about the new law that went into effect in January 2018 (Assembly Bill 168 – codified in Labor Code section 432.3). Section 432.3 prohibits employers from relying on the salary history information of an applicant for employment as a factor in determining whether to offer an applicant employment or what salary to offer an applicant, and also requires an employer, upon reasonable request, to provide the pay scale for a position to an applicant applying for employment.

Since its enactment, employers were questioning the scope of the restrictions contained in Section 432.3, and their obligations in connection with disclosing pay scale information upon request. In order to answer some of those questions, AB 2282 does the following:

1. It clarifies that the prohibitions under Section 432.3 do not apply when evaluating the salary of a current employee (e.g. if internal applications or employee promotions are being considered). Specifically, AB 2282 provides that: “For purposes of this section, the term “applicant” or “applicant for employment” means an individual who is seeking employment with the employer and is not currently employed with that employer in any capacity or position.”

2. In connection with an applicant’s right to seek the pay scale for a position upon reasonable request, AB 2282 defines the two terms as follows:

– “For purposes of this section, “pay scale” means a salary or hourly wage range.”

– “For purposes of this section “reasonable request” means a request made after an applicant has completed an initial interview with the employer.”

Based on these definitions, employers now only have to provide a range of what the salary or hourly wage would be for a position rather than some fixed or guaranteed pay scale. Further, employers only have to provide this information to an applicant once he or she has completed an initial interview with the employer.

3. Finally, Section 432.3 already provides that nothing in the section prohibits an applicant from voluntarily and without prompting disclosing salary history information to a prospective employer. However, the law was silent on whether an employer could ask an applicant about his or her salary expectations.

AB 2282 clarified that the law does not prohibit an employer from asking an applicant for his or her salary expectations. Specifically, AB 2282 states: “Nothing in this section shall prohibit an employer from asking an applicant about his or her salary expectation for the position being applied for.”

Takeaway: While AB 2282 provided some much needed clarification to the new law, employers must still be sure that anyone involved in the hiring process is aware of the restrictions contained in Section 432.3 in connection with an applicant’s prior salary history. The employment attorneys at Weintraub Tobin regularly counsel employers in all areas of employment law compliance, including wage and hour and equal pay issues. Feel free to contact us if we can be of assistance.