Labor and Employment

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.

Read More

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.

By: Vida L. Thomas

Conducting workplace investigations is not easy.  The process is filled with land mines that can trip up even the most experienced investigator.  Although there are many mistakes I’ve seen investigators make, these are the three most common.

Trap #1: Failing To Define The Investigation’s Scope Before You Begin.

Investigations are tricky things, and can take many unexpected twists and turns.  The complaining employee often may make one allegation in his/her verbal complaint to a supervisor, an additional allegation in his/her written complaint, and more allegations to you in the interview.  That complainant, or one of the witnesses, may produce a “laundry list” of issues they wish you to look into.   Are you obligated to investigate every complaint raised by employees?  Doing so would certainly increase the time and cost of the investigation.

This is why, before you begin the investigation, it is important that you establish the investigation’s scope.  It is just as important to know what you are not investigating as what you are investigating.  What issues does the employee wish you to investigate?  On the other hand, what issues is the employer hiring you to investigate?  You may need to confer with the employer’s legal counsel for direction on which issues to look into.  If you don’t go through this sorting process at the beginning of the investigation, you run the risk of learning much later (possibly after you turn in your written report) that you did not investigate the matters the employer hired you to look into.

Trap #2: Reaching A Conclusion Too Soon (Also Known As “Confirmation Bias”).

It happens to the best of us: after talking to the complaining employee and a few of the percipient witnesses, a pretty clear picture begins to emerge.  You have a reliable hunch about what occurred but, of course, you’ll talk to the accused to get his/her side of the story.  The problem is, although you think you’re withholding judgment until after your interview with the accused, you’re already leaning toward a particular outcome.  And that predisposition may influence how you question, perceive and assess the accused.  That is the essence of “confirmation bias”: the tendency to interpret new evidence as confirmation of one’s existing beliefs or theories.  We all engage in confirmation bias to some extent; indeed, taking mental shortcuts in decision making is efficient and sometimes necessary.  When conducting a workplace investigation, however, confirmation bias can lead us to an incorrect conclusion.  Without realizing it, we may overlook or discount evidence that contradicts our early hunch or gut instinct.

How can you minimize confirmation bias?  Keep an open mind throughout the investigation.  Accept, review and weigh all of the evidence.  When you reach a conclusion, ask yourself: Did I come across any evidence that contradicts this conclusion?  If so, what is the reason for discounting that contradictory evidence?  Taking these steps will go a long way to help ensure that your conclusion is based on the evidence, not your preconceptions.

Trap #3: Failing To Follow Up.

Investigations are almost always conducted under a tight timeline.  You will feel under constant pressure to “wrap things up” quickly.  So what do you do if the witnesses contradict each other on a key issue, or if the respondent gives you information that undermines the complainant’s credibility or raises further questions that need to be answered?  With looming deadlines in mind, you may be tempted to simply leave these contradictions or unanswered questions unresolved in order to reach a conclusion sooner.

Remember, however, that you have a legal obligation to conduct a thorough investigation.  This means that you may need to conduct follow-up interviews with witnesses to see if you can clear up the contradiction.  Or you may need to follow-up with the complainant, to give him/her the opportunity to respond to the new information.  Follow-up interviews can be a very helpful tool.  They can give you a deeper understanding of the evidence, and strengthen your findings.

Improve Your Investigation Skills

Delve into these three investigation traps, and much more, in our upcoming training class.  Attorneys from Weintraub Tobin’s Workplace Investigations Unit (Vida Thomas and Beth West) will conduct a one-day, in-depth training on conducting effective workplace investigations on March 3, 2016.  For more details and the cost of this training session, please click here.

Training new employees is expensive.  That is particularly true when an employer offers to pay for an employee’s educational training.  The benefits of doing so include a more educated and well-trained workforce, as well as increased morale and employee loyalty.  The risk, of course, is that an employee may decide to take his or her employer-funded education and use it to find another job somewhere else.  Employers sometimes offset that risk by requiring the employee to sign an agreement to pay the employer back if he or she leaves for another job shortly after completing the education.  But what if the employee refuses to pay?  Is the repayment agreement enforceable?  Yes, according to a California Court of Appeal.

The Case

USS-POSCO Industries v. Case involved the above scenario.  Floyd Case entered into a voluntary three-year, employer-sponsored educational program that would allow him to become a Maintenance Technical Engineer (MTE).  He signed an agreement with his employer, USS-POSCO, that he would repay a prorated portion of the education costs if he quit his job within 30 months of completing the program.  Sure enough, two months after he finished, he quit.  USS-POSCO asked him to pay back $28,000 of the $46,000 it spent on his educational training.  Case refused, so USS-POSCO sued to collect the money.  Case responded with a cross-complaint, claiming that his fingers were crossed when he signed the repayment agreement.  Well, not really, but he did try every other argument his lawyer could imagine.  He claimed the agreement was unenforceable for lack of consideration, that it was basically an unlawful non-compete agreement, and that it violated Labor Code provisions preventing employers from passing operating expenses on to employees and mandating that employers reimburse necessary employee expenses.  Yes, the kitchen-sink defense.

The trial court rejected Case’s arguments and granted summary judgment in USS-POSCO’s favor on both the complaint and cross-complaint.  The Court of Appeal affirmed both rulings. It denied his Labor Code claims because Case’s participation in the training program was voluntary, not mandatory, in that there were other alternatives to obtaining the promotion beyond entering the training program.  For example, Case could have taken a test in lieu of the training program.  The Court also rejected Case’s claim that the agreement was effectively a non-compete agreement because Case could and, in fact, did find another job.  Makes sense, right?  Finally, the court rejected the claim that the contract lacked consideration because Case obtained valuable training and wages in exchange for agreeing to repay if he left early.

The Takeaway

Chalk this one up as a win for employers.  Repayment agreements for employer-sponsored education programs are still enforceable.  Well, usually at least.  The Court of Appeal did distinguish this case from another line of cases, In re Acknowledgment Cases, in which the same Court denied the City of Los Angeles’ attempt to recover some employer-mandated training expenses from police officers who quit early.  The key distinctions were that L.A.’s program was both mandatory and specific to the job, whereas USS-POSCO’s program was voluntary and the training was transferable to other jobs.  So, here’s the takeaway: employers can require employees to pay back educational costs if the employee quits early, so long as the educational program was both voluntary and not specific to the employer’s operations.

I should also note that the case was only partially employer-friendly.  There was one other component of the case involving attorney’s fees, and it went the other way.  Labor Code section 218.5 used to provide that the prevailing party in a wage-and-hour lawsuit was entitled to fees.  That statute was amended in 2014 so that, now, employers can only recover fees when the employee brought the claims in bad faith.  The trial court granted USS-POSCO the fees because the case predated the amended version of section 218.5.  But the appellate court through the award out, holding that the statute is to be applied retroactively.   This means that employers must still show bad faith to get fees even if a lawsuit was filed prior to the 2014 amendment.  That’s a tough break for any employers who are still defending older wage-and-hour cases.

Employers who wish to offer to pay for employees’ educational training should consider such agreements to protect themselves in the event the employees seek other jobs.  Given the nuanced rule described above, employers should consult with their legal professional before drafting or implementing a repayment agreement.

In an effort to clarify the circumstances that may create a joint-employment relationship, the U.S. Department of Labor issued an Administrator’s Interpretation this week.  This Administrator’s Interpretation, which can be found at this link, analyzes joint employment under the Fair Labor Standards Act (“FLSA”) and the Migrant and Seasonal Agricultural Worker Protection Act.

Joint employment may occur under various circumstances; for example, where separate entities share employees, or where one entity uses a third-party management company, staffing agency or labor provider.  The National Labor Relations Board ruled last year that a franchisor may also be considered a joint employer of a franchisee’s employees in some circumstances.  According to the Administrator’s Interpretation, “the possibility that a worker is jointly employed by two or more employers has become more common in recent years.”

The question of whether one entity is the joint employer can be critical in cases where an employee files an administrative claim or a lawsuit alleging some type of unlawful employment practice; for instance, unpaid overtime in violation of the FLSA.  If joint employment is found in such a case, the employee may be able to obtain recovery from either or both of the joint employers; e.g., the entity that directed the work, or the staffing agency that dispatched the employee, or both.

The Administrator’s Interpretation advises that “the possibility of joint employment should be regularly considered” to ensure compliance with the FLSA.  It “particularly” recommends taking such possibilities into consideration “where (1) the employee works for two employers who are associated or related in some way with respect to the employee; or (2) the employee’s employer is an intermediary or otherwise provides labor to another employer.”

Therefore, individuals or entities who are concerned that they may be considered a joint employer should review the Administrator’s Interpretation and consult legal counsel to discuss options to reduce their exposure to liability.

By: Melissa M. Whitehead

Effective January 1, 2016, California has increased its minimum wage from $9 per hour to $10 per hour. This is the second increase to the state minimum wage in the past year and a half. Remember, the obligation to pay minimum wage cannot be waived by any agreement, including collective bargaining agreements.

Employers must examine all pay practices that may be affected by the minimum wage increase – and there are almost certainly more practices that may be impacted than you may think! For example, in addition to increasing the pay of any employees being paid a minimum wage rate, employers should review the following pay practices, which may be affected by the minimum wage increase:

• Overtime rates of pay: Employees who work for minimum wage and perform work that qualifies for overtime wages must now be paid $15 per hour for time and one-half (previously $13.50 per hour) or $20 per hour for double-time (previously $18 per hour).
• Exempt/Nonexempt classifications: In California, exempt employees generally must (among other things) earn no less than twice the state minimum wage for a full time employee. This now means that employees must earn a salary of $41,600 per year (or $800 per week) to qualify as exempt employees (in addition to an examination of requirements).
• Meal and lodging credits: Most of California’s Wage Orders allow employers to credit meals and lodging furnished by the employer toward the employer’s minimum wage obligation. The new credit amounts for meals and lodging are listed on the official Minimum Wage Order (MW-2014).
• Commission issues: A commissioned employee can receive a sum of money that is intended as an advance, draw or guarantee against the employee’s expected commission earnings. In California, employers must pay these sums at least twice per month. If an employee receives a draw against commissions to be earned at a future date, the “draw” must be equal to at least the minimum wage and overtime due to the employee for each pay period (unless the employee is exempt).
• Notice requirements: Mandatory minimum wage postings, itemized wage statements, and wage notices will all be affected.
• Piece-Rate Employees: Piece-rate workers must receive at least minimum wage for each hour worked. Separate legislation effective January 1, 2016, requires payment of rest and recovery periods or other nonproductive time at a specified hourly rate. [NOTE: Employers with piece-rate employees are advised to consult with an experienced labor and employment attorney to review their piece-rate policies in light of recently enacted legislation, which imposes significant restrictions and obligations on piece-rate compensation policies.]
• Tools/Equipment: Employees whose wages are at least two times the minimum wage can be required to provide and maintain hand tools and equipment customarily required by the trade or craft in which they work.
• Subminimum wage: The subminimum wage for “learners” increased effective January 1, 2016, from $7.65 per hour to $8.50 per hour (85% of the state minimum wage).

This list is not intended to be all-inclusive, but is intended to alert employers the broad impact of the change in California’s minimum wage. This article does not address proposed changes to the federal minimum wage (expected to be decided in Spring 2016) or minimum wage raises in specific cities/counties. Because of the complexity of these issues, it is recommended that employers consult with experienced labor and employment counsel to ensure that all pay policies and practices are in compliance with the applicable minimum wage laws.

The year-end holidays tend to be a time when employers and employees are either winding down for the year or making one last big push to close the year strongly.  California employers should make time this week, though, to ensure they are ready for the new laws which will take effect in California this Friday – New Year’s Day – that will directly and immediately impact the workplace.

As a reminder, there are some notable employment-related laws which take effect January 1, 2016.  Click here to view a copy of those laws.  The list includes minimum wage hikes, other wage and hour amendments, expanded time off and sick leave, and expanded enforcement of state and local wage and hour laws conferred upon the Labor Commissioner.  For information on additional new laws and legislation, please see our previous blog titled: California Governor Signs a Bevy of Employment Laws, Vetoes a Few Others.

Companies should ensure that their pay practices, handbooks, job descriptions and records retention practices are compliant with the new laws and ensure that internal or third party payroll processors, supervisors, and human resources personnel are up to date, particularly regarding the new equal pay and leave laws and whistleblower, discrimination, and retaliation protections.  (The following is not an exhaustive list of the hundreds of new laws that take effect in 2016 and is only a summary of the laws listed.  Please consult your employment attorneys at Weintraub Tobin to answer questions and provide the details and nuances as applied to your company.)