At Counsel Table: The Craft & Business of the Courtroom Lawyer

New California Law Prohibits Mandatory Arbitration for Employment Claims

Posted by on Nov 1, 2019 in Uncategorized | 0 comments

On October 10, 2019, California Governor Gavin Newsom signed a bill (AB 51) intended to prohibit employers from requiring employees to sign agreements that they will submit claims arising from their employment to binding arbitration (as opposed to resolution of the dispute in the civil court system, by judge or jury). The law takes effect January 1, 2020. The new law, if ultimately enforced, has important implications for any employer that requires employees to sign arbitration agreements.

What the Law Says

Assembly Bill 51 adds Section 432.6 to the California Labor Code. While it was packaged as a “sexual harassment” bill, AB 51 covers virtually any claim arising from the employment relationship (excluding workers’ compensation claims, which are not arbitrable in any event). The new law:

  • Prohibits any person (including employers) from requiring, as a condition of employment or employment-related benefits, that employees “waive any right, forum, or procedure” for violations of the California Fair Employment and Housing Act (FEHA) or the California Labor Code.
  • Prohibits employers from including arbitration agreements/clauses that provide an “opt-out” clause, requiring an employee to affirmatively opt-out of mandatory arbitration.
  • Creates a new private right of action (aka “claim”) against any employer that violates the new law. In addition to injunctive relief, the law permits a prevailing employee to recover her attorney’s fees.
  • Does not apply to any agreement entered into before January 1, 2020.
  • Is not intended to invalidate an agreement otherwise enforceable under the Federal Arbitration Act (FAA).
  • Does not apply to post-dispute settlement or severance agreements.

Why the New Law Might Ultimately Be Held Unenforceable

Most experts expect to see legal challenges to the new law, primarily on the grounds that it conflicts and is preempted by the FAA, which dates from 1925 and exists to further arbitration in cases involving interstate commerce. Individual state laws that “stand[] as an obstacle to” arbitration have been repeatedly struck down by the United States Supreme Court as preempted by the FAA. Whether the new law will survive these challenges is presently unclear.

What Employers Should Do

Given the uncertainty surrounding AB 51, it is important that employers who currently (or intend to) require workers to sign arbitration agreements take steps before the end of 2019 to ensure compliance if the law is ultimately enforced. No employer should want to be a “test case.”

Because the law specifically excludes FAA-governed agreements, certain employers (depending on industry) may still be able to require employees to sign an agreement to submit employment disputes to arbitration under the FAA (stating the basis for FAA jurisdiction).

Alternatively, employers could continue to include arbitration provisions, but exclude administrative charges that employees may file with the DFEH, EEOC, NLRB, DOL or the California Labor Commissioner from arbitration. Unfortunately, these exceptions would essentially remove the protections afforded by arbitration in the first place.

As the law in this area remains fluid, employers should not hesitate to consult with their qualified employment law professionals to ensure they remain compliant with all state and federal employment laws, including AB 51.

The Law Offices of Alex Craigie helps employers throughout California prevent, address and resolve employment disputes in a logical and cost-effective manner. Reach us at (323) 652-9451, (805) 845-1752 or at [email protected].

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July 1st Minimum Wage Hikes in Several California Locales

Posted by on Jun 28, 2019 in Uncategorized | 0 comments

Certain California cities and counties are increasing the minimum hourly wage for nonexempt employees effective July 1st! Please see the list below to determine if your business or California-situated employees are affected. Many regulations differentiate between businesses with 25 or fewer employees and those with 26 or more employees.

Location                          25 or fewer employees    26 or more employees

California statewide

(no change)                      $11.00                               $12.00

Los Angeles city              $13.25                               $14.25

Los Angeles county         $13.25                               $14.25

Malibu city                      $13.25                               $14.25

Pasadena city                   $13.25                               $14.25

San Diego (no change)    $12.00                               $12.00

San Francisco                  $15.59                               $15.59

Santa Monica                   $13.25                               $14.25

Palo Alto                          $15.00                               $15.00

What Employers Should Do

  • Make sure that, by July 1st, your nonexempt employees are paid at least the minimum wage applicable to your California city or county.
  • Make sure that any employees you classify as “exempt” are properly classified, based on the applicable state and federal criteria. If in doubt, consult with your qualified employment law counsel.
  • Be aware that, out-of-state employers with in-state employees must comply with California state, as well as any applicable county or city laws for those in-state employees.
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California Broadens Employer Obligations to Provide Sexual Harassment Training

Posted by on Jan 25, 2019 in Employment Law | 0 comments

Last fall, the California Legislature broadened the obligations of employers to provide sexual harassment and abusive conduct prevention training to their workforce. This Bulletin briefly explains these changes.

Expanded Scope for Sexual Harassment Prevention Training

For many years, only California employers with 50 or more employees were required to provide supervisors with sexual harassment and abusive conduct prevention training every 2 years. However, Senate Bill (SB) 1343, signed into law in 2018, changed this requirement in two important ways.

First, SB 1343 now requires employers with just five (5) or more employeesto provide sexual harassment and abusive conduct prevention training every two years.

Second, the law previously required only that supervisorsreceive sexual harassment prevention training. SB 1343 expands this requirement, as well, so that all employees, including seasonal and temporary workers, must receive sexual harassment and abusive conduct prevention training every two years.

What if You Provided Training to Supervisors in 2018?

Many employers reading this may have complied with the then-existing law and provided sexual harassment prevention training to their supervisors in 2018. Common sense would dictate that, at least as to these supervisors, these employers have met their obligation until 2020, right?

WRONG! In its FAQs, the California Department of Fair Employment and Housing (DFEH) states that, “[e]mployees who were trained in 2018 or before will need to be retrained.” “Employees” in this context applies to supervisors trained in 2018.

Additional Rules Regarding Sexual Harassment Prevention Training

  • SB 1343 also requires the DFEH to make online training courses available on the prevention of sexual harassment and abusive conduct in the workplace. The DFEH expects to have such trainings available by late 2019.
  • Employers are required to pay for all sexual harassment and abusive conduct prevention training. Gov. Code 12950.1(a)-(b).
  • Assembly Bill (AB) 2338 requires talent agencies to provide adult artists, parents or legal guardians of minors aged 14-17, and age-eligible minors, within 90 days of retention, educational materials on sexual harassment prevention, retaliation, and reporting resources.
  • AB 3082 requires the Department of Social Services to develop or identify educational materials addressing sexual harassment of in-home supportive services (IHSS) providers and recipients.
  • The DFEH provides an online Sexual Harassment and Abusive Conduct Prevention Training Toolkit at: https://www.dfeh.ca.gov/wp-content/uploads/sites/32/2018/12/SexualHarassmentandAbusiveConductPreventionTrainingToolkit.pdf

What Should Employers Do

Employers should take steps to ensure allemployees, including part-time, temporary and seasonal workers, receive the required sexual harassment and abusive conduct prevention training sometime this year. Employers with questions about these changes or needing help finding a sexual harassment and abusive conduct training provider should contact their qualified employment law counsel.

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New Calif Laws Expand Employees’ Rights to Sue for Sex Harassment

Posted by on Oct 26, 2018 in Employment Law | 0 comments

On September 30, 2018, Gov. Jerry Brown signed into law several bills that greatly expand the rights of employees to pursue sexual harassment lawsuits in California. The majority of these laws require immediate attention as they become effective January 1, 2019. This  discusses these laws and provides recommendations for how employers can act to avoid liability.

Expanded Liability for Sexual Harassment

SB 1300 makes numerous changes to existing law with regard to liability for alleged sexual harassment. In serial form, beginning on January 1, 2019, employers will:

• Be prohibited from requiring a release of Fair Employment and Housing Act (FEHA) claims in exchange for a bonus, raise, employment or continued employment;
• Be prohibited from recovering fees and enhanced costs through use of statutory (Cal. Code of Civil Procedure §998) offers to compromise, except where the employer can show (1) the lawsuit was frivolous, unreasonable and/or without merit; or (2) the employee continued to litigate a claim after becoming aware his/her case had no merit;
• Be potentially liable for any kind of unlawful harassment by nonemployees;
• Be potentially liable even where the harassment was a single instance or “stray remark” by a non-decision-maker;
• Be less likely to prevail on a sexual harassment case through a motion for summary judgment.

The statute of limitations refers to the “window” of time following an event within which an alleged victim can bring a civil action. Claims of sexual harassment can include a claim of sexual assault, in which the victim claims he/she was sexually touched without consent, or coerced or forced to engage in a sexual act. AB 1619 expands the limitations period for sexual assault claims to 10 years after the act, or 3 years after the alleged victim discovers the injury, whichever is later.

Expanded Definition of Sexual Harassment

SB 224 expands the list of professional relationships which can form the basis of a claim for sexual harassment. To the previous list, which included physician, psychotherapist, dentist and real estate agent, the bill adds individuals who present themselves as able to assist one in establishing a business, service or professional relationship. The law specifically identifies lobbyists, elected officials, directors, producers and investors.

Limits on Nondisclosure of Allegations and/or Settlements

Settlements of sexual harassment claims have historically included nondisclosure clauses, preventing the alleged victim from disclosing details about the claim and settlement. SB 820 prohibits provisions that prevent the disclosure of factual information relating to certain claims of sexual assault, sexual harassment, or discrimination based on sex, that are filed in a civil or administrative action.

The bill makes such provisions in a settlement agreement on or after January 1, 2019, void as a matter of law and against public policy. The bill creates a limited exception for a provision that shields the identity of the claimant and facts that could lead to the discovery of his or her identity, if that provision is included in the agreement at the claimant’s request.

Additionally, AB 3109 renders void and unenforceable any clause that prevents a party to a settlement agreement from testifying about alleged criminal conduct or sexual harassment in an administrative, legislative or judicial proceeding.

Additional Sexual Harassment Prevention Training

California law currently requires employers with 50+ employees to provide their supervisors with sexual harassment prevention training every 2 years. Effective January 1, 2020, SB 1343 requires any employer who employs 5 or more employees, including temporary or seasonal employees, to provide at least 2 hours of sexual harassment prevention training to all supervisory employees, and at least 1 hour of such training to all nonsupervisory employees, once every 2 years. The bill also requires the Department of Fair Employment and Housing (DFEH) to develop or obtain 1-hour and 2-hour online training courses on the prevention of sexual harassment in the workplace.

What Should Employers Do

Many of these new laws will impact how employment lawyers do their job, and will likely make it more difficult to resolve sexual harassment claims and lawsuits without a trial. However, employers remain primarily responsible and should examine their practices to ensure they maintain a harassment-free workplace.

Consideration should be given to getting a head start on sexual harassment prevention training, including for non-supervisory personnel. Employers with questions about how to reduce their chances of being targeted by a sexual harassment claim should contact their qualified employment law counsel.

 

 

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California Supreme Court Defines “Employee” vs. “Independent Contractor”

Posted by on Jun 7, 2018 in Employment Law, Uncategorized | 0 comments

On April 30, 2018, the California Supreme Court, in Dynamex Operations West, Inc. v. Superior Court, clarified the proper test for California companies to apply before treating any worker as an independent contractor. This post discusses this important new holding.

Background on “Employee” vs. “Independent Contractor”

For some businesses and their workers, the question whether the worker is properly classified as an “employee” or an “independent contractor” is both important and challenging. For employees, the hiring business pays federal Social Security and payroll taxes, unemployment insurance taxes and state employment taxes, provides worker’s compensation insurance and must comply with numerous state and federal statutes and regulations governing the wages, hours, and working conditions of employees. The worker obtains the protection of the applicable labor laws and regulations, including protections against unlawful discrimination, harassment and retaliation.

If, on the other hand, a worker should properly be classified as an independent contractor, the business avoids those costs and responsibilities, the worker obtains none of the numerous labor law benefits, and the public may be required in some circumstances to assume additional financial burdens with respect to such workers and their families.

The proper classification analysis is, in the first instance, up to the hiring business. The decision is often made without the assistance of counsel and, where the classification lands on independent contractor, is frequently wrong. The consequences may not become known for months or even years. However, disgruntled employees misclassified as independent contractors often ultimately bring claims or suits under wage-hour laws. Worse, the California Employment Development Department (EDD), which administers unemployment insurance claims, can audit a business suspected of widespread misclassification and, in extreme instances, impound funds without notice to the business. Therefore, it is critical before a business classifies any worker as an independent contractor that it ensures the classification is accurate.

The DynamexCase and the ABC Test

Since 1989, California courts were historically guided in deciding the independent contractor question by “the seminal California decision on the subject,” S.G. Borello & Sons, Inc. v. Dept. of Industrial Relations. This case provided employers, their lawyers, the state and the courts with several non-exclusive factors to consider in the employee/independent contractor analysis.

In the Dynamexlawsuit, two delivery drivers sued the company on behalf of themselves and similarly situated workers claiming that the company misclassified its drivers as independent contractors rather than employees. The California Supreme Court expressed the view that the multi-factor test previously announced in the S.G. Borellocase “makes it difficult for both hiring businesses and workers to determine in advance how a particular category of workers will be classified.” Therefore, the Supreme Court adopted a test previously adopted by some other courts known as the “ABC Test.”

Under the ABC Test, a worker is presumed to be an employee, unless the worker:

  1. Is free from the employer’s control and direction;
  2. Performs a service that is either outside the usual course of the business for which such service is performed or that such service is performed outside of all the places of business of the enterprise for which such service is performed; and
  3. Customarily engages in an independently established trade, occupation or business.

What Should Employers Do

If anything, the stakes get higher all the time for companies that misclassify workers as independent contractors. Claims brought before the Division of Labor Standards Enforcement (DLSE), as well as civil lawsuits, including class action and private attorney general (PAGA) lawsuits are on the rise.

Before classifying one or a class of workers as independent contractors, companies should be sure they meet the applicable criteria. Additionally, the role of workers currently classified as independent contractors should be evaluated under the ABC Test. Given the complexity of this area of employment law, employers should consider working with their employment counsel to make sure they are in compliance.

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Cal Supreme Ct Announces New “Regular Rate” When Paying Overtime in Pay Periods in Which a Flat Bonus is Paid

Posted by on Apr 9, 2018 in Employment Law | 0 comments

On March 5, 2018, the California Supreme Court, in Alvarado v. Dart Container Corp., announced a new formula to determine an employee’s “regular rate” for overtime purposes when the worker received a flat bonus during the pay period. This post discusses this important new holding.

Background on Overtime Compensation and the “Regular Rate”

Most employers understand that, in California, employees are entitled to be paid overtime after working eight hours in any workday, 40 hours in any workweek, and on the seventh consecutive day of work in any workweek. The overtime rate is calculated at 1.5 times the employee’s “regular rate” after 8 hours and 2 times the “regular rate” after 12 hours on any workday or after the eighth hour on the seventh consecutive day in any workweek.

But many employers do not have a strong grasp of the formula involved in determining an employee’s “regular rate” used to calculate her overtime premium pay. Many improperly assume it is simply the worker’s base hourly rate. However, when calculating the “regular rate,” employers must also consider “remuneration” for work performed, with specific payments excluded—such as reimbursed expenses, reporting-time premiums, vacation or holiday pay, or discretionary bonuses—divided in any pay period by the total number of hours actually worked.

The following example, drawn from a guide provided by the Society for Human Resources Management (SHRM) is instructive:

For example, if an employee works 32 hours at $12.00 per hour and 10 hours during the same workweek at $10.50 per hour, the weighted average (and thus the regular rate for that workweek) is $11.64. This amount is calculated by adding the employee’s $489 straight-time pay for the workweek ((32 hours x $12.00/hour) + (10 hours x $10.50/hour) = $489) and dividing it by the 42 hours the employee worked ($489 / 42 hours =$11.64 per hour regular rate). The overtime premium of $5.82 (half the regular rate) is added to the employee’s wages for each one and a half overtime hour worked, and an additional overtime premium of $11.64 is added to hourly wages for each hour of double time earned.

Against this background, we discuss the California Supreme Court’s holding in Alvarado v. Dart Container Corp.regarding how to calculate an employee’s “regular rate” when she has received a flat rate bonus during the pay period. 

The AlvaradoCase and the Flat Rate Bonus

The plaintiff, Hector Alvarado, worked in the warehouse of Dart Container Corporation. To incentivize employees to work on weekends, Dart offered a $15 attendance bonus when any employee worked a full shift on a weekend day. The $15 “flat rate” bonus was paid regardless whether the employee worked any overtime hours. Alvarado sued Dart, claiming it had used an improper formula to calculate his “regular rate” for overtime in those pay periods in which he received at least one $15 attendance bonus.

Dart moved for summary judgment, which was granted and affirmed on appeal. However, after considering the formula Dart applied, as well as the formula set forth in the Division of Labor Standards Enforcement (DLSE) Manual, the California Supreme Court reversed, and embraced the following calculation methodology:

  1. Calculate the overtime compensation attributable only to an employee’s hourly wages by multiplying the employee’s hourly rate by 1.5 and by the number of overtime hours worked.
  2. Calculate the overtime premium attributable only to the employee’s bonus by dividing the bonus amount by the total non-overtime hours worked and multiplying that value by 1.5.
  3. Multiply the bonus overtime premium by total overtime hours worked and pay that amount in addition to the amount in step 1 as total overtime compensation.

This formula differs from the method used by Dart solely in that Dart divided the bonus amount by the total hours worked—both overtime and non-overtime. While this difference appears trivial, a failure to apply the proper formula will support a claim or lawsuit for unpaid wages. To make matters worse, the Supreme Court, acknowledging the “liberal construction” of California’s labor laws, held the new formula would be applied retroactively, as well as going forward.

What Should Employers Do

Employers who provide any type of nondiscretionary “flat rate” bonus, should immediately review and ensure their overtime “regular rate” calculation methodology is consistent with the new formula announced by the Alvarado v. Dart Container Corp. court. Given the complexity of this area of employment law, employers should consider working with their employment counsel in revising policies and methodology.

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The Importance of Severance and Release When Terminating Employees

Posted by on Oct 12, 2017 in Employment Law | 0 comments

Employers often find it difficult to justify, practically or emotionally, paying severance to an employee being terminated for cause. After all, employers ask, why compensate and reward a worker who broke the rules? It may be easier when the separation is a layoff, yet even under these circumstances, the company’s financial condition may constrain its ability to offer money to a separating employee, getting nothing but goodwill in return.

This Employment Law Bulletin briefly discusses severance and its primary justification: obtaining a release of any future employment law-based claims. We explain why best practices dictate employers set emotions aside in order to secure the protection provided by a release in exchange for a severance payment. We also discuss important issues related to the drafting and implementation of an enforceable severance agreement.

Why Offer Severance

There are sundry reasons an employer may want to offer severance to a separating employee: to reward a worker for years of loyalty; to cushion the blow of an unexpected layoff; to maintain goodwill in the community; or to preserve standing as a competitive, quality employer in the industry.

These are all sound reasons. They explain why employers might consider offering severance in many instances. But the single best reason why employers should offer severance to every terminated employee (i.e., one who is not leaving by her own volition) is the protection that a severance payment, combined with a well-drafted severance agreement, provides against a future claim or lawsuit.

Let’s begin by defining “severance.” In order to support a binding agreement in which the employee waives any claims, the severance must be compensation to which the employee wasn’t already entitled by virtue of her employment. Many employers we work with are surprised to learn that severance does not need to equal several months’ or even several weeks’ pay. This can be a particularly helpful point when considering offering severance to an employee terminated for lying or theft. The investment can be minimal. The peace purchased for merely a few hundred dollars (or less!) is always well worth the investment.

What Severance Buys You

Provided the agreement is properly drafted, signed and otherwise enforceable, the severance payment purchases a promise by the separating employee that she will not bring any claim or lawsuit, in a court or with a government agency, arising out of the employment relationship. Our typical California severance agreement expressly protects against seventeen (17) separate common law causes of action, as well as claims that could potentially be brought under eighteen (18) separate state and federal statutory schemes and regulations.

In fact, the only employment-related claim that cannot be expressly released by way of a severance agreement is one for unpaid wages, which can include reimbursement of expenses, overtime and waiting time penalties. Perhaps most importantly, most reasonably competent lawyers will abandon a claim, regardless of its apparent merits, where a potential client has signed an enforceable severance agreement with the former employer. In this way, for an investment of as little as a few hundred dollars, an employer can avoid incurring attorney’s fees and costs fighting a spurious claim.

The Elements of an Enforceable Severance Agreement

We cannot overstate the importance of having a knowledgeable employment law attorney draft your severance agreement. A severance agreement is a contract. In addition to pitfalls common to every type of contract, there are crucial drafting considerations unique to a severance agreement. This is particularly true if the separating employee is over 40-years-old. An agreement waiving any claims under the Older Workers’ Benefit Protection Act (“OWBPA”) must meet eight (8) statutory requirements, including providing the separating worker a 21-45 day period within which to consider the Agreement before signing it. Even then, the employee has seven (7) days to revoke the agreement. If the employer pays the severance before the expiration of the 7-day period, and the employee revokes the agreement, she may keep the payment and the employer is without recourse to recoup the funds!

In addition to an explicit waiver of any claims that could be brought under federal, state, common law, county, city or local ordinances, a severance agreement can and should provide other protections. Among these, we recommend clauses requiring confidentiality of the severance and prohibiting future disparagement of the employer and its management. It is generally a good idea also to include a clause in which the employee agrees not to apply for employment at any future time; this protects against future claims of discrimination in hiring.

The employee should never be pressured to sign the severance agreement, or to sign it “right away,” as this can provide a duress defense which may undermine the effectiveness of the agreement. It is also a good idea to include a severability clause so that, if an issue arises, a court can later “sever” out any portions of the agreement that are unlawful, rather than rendering the entire agreement unenforceable. A merger clause is also advisable, to prevent a terminated employee from claiming additional terms that are not included on the agreement itself.

Conclusion

California employers should always consider offering a severance when terminating an employee, provided the employee signs a well-drafted severance agreement waiving any claims arising out of the employment relationship. The severance payment need not be sizeable. However, it is crucial that the agreement be drafted properly. Employers with lingering questions should not hesitate to contact their experienced employment law counsel.

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Employers Required to Use New Form I-9 by September 18, 2017

Posted by on Aug 23, 2017 in Employment Law, Uncategorized | 0 comments

Employers must begin using a new version of the Form I-9 issued by the U.S. Citizens and Immigration Services (USCIS) no later than September 18, 2017 or face potentially large fines. The Form I-9 is the document employers must use to verify the identity of new hires to ensure they are authorized to work in the United States.

What’s Different?

The changes to the Form are subtle. There are changes to the instructions and the list of documents approved to verify eligibility. A Consular Report of Birth Abroad (Form FS-240) was added as a List C document, and all the certifications of report of birth issued by the State Department (Form FS-545, Form DS-1350, and Form FS-240) have been combined.

The List C documents have been renumbered, except for the Social Security Card. All changes are described in detail in the newly revised Handbook for Employers: Guidance for Completing Form I-9 (M-274).

Storage and Retention Rules

Employers must be able to present the Forms to government officials for inspection within 3 business days of a request. Employers who choose to keep paper copies of the documents their employees present may store them with the employee’s Form I-9 or with the employees’ records. However, the USCIS recommends that employers keep Form I-9 separate from personnel records to facilitate an inspection request.

Employers are required to retain an employee’s Form I-9 until the later of (1) the date the employee began work for pay + 3 years, or (2) the date employment was terminated + 1 year.

Potential Penalties for Failure to Follow Form I-9 Rules

In 2016, Immigration and Customs Enforcement (ICE) announced increases for Form I-9 violations. For example, the minimum and maximum fines for simple Form I-9 violations increased to $216 and $2,156, respectively. Additionally, minimum and maximum fines for first offenses of Unlawful Employment of Unauthorized Workers has increased to $539 and $4,313 per worker, respectively.

Employers with lingering questions about the new Form I-9 should contact their employment counsel.

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The State of California Law with Regard to Considering an Applicant’s Criminal History

Posted by on May 25, 2017 in Employment Law | 0 comments

 

Employers may be already aware of the significant movement afoot to eliminate the consideration of an applicant’s criminal history, both from job applications and the interview, until a conditional offer of employment has been made. Variously termed “Ban the Box” or “fair chance” laws, the goal is to “ensure a fairer decision-making process” because, it is believed, anything that makes it harder for ex-offenders to find a job makes it more likely they will re-offend.

In California, the state of the law in this area is very much in flux. The purpose of this Bulletin is to discuss the current state of the law, including a new set of regulations issued in January, and provide a preview of pending legislation that is reasonably likely to be signed into law.

The Current Law

Under the current California laws and regulations, it is unlawful for an employer to consider the following from an applicant’s background record when hiring:

  • An arrest or detention that did not result in a conviction
  • A referral or participation in a pre/post-trial diversion program
  • A conviction that has been sealed, judicially dismissed, expunged or statutorily eradicated
  • An arrest, detention, etc. while the applicant was subject to the jurisdiction of a juvenile court (i.e., under 18 years of age)
  • Any non-felony conviction for possession of marijuana that is more than 2 years old
  • Any criminal history if it will result in an adverse impact on individuals within a protected class (commonly termed disparate impact discrimination)

Before an employer can refuse to hire based on an applicant’s criminal history, it must provide the applicant notice of the disqualifying conviction and an opportunity to show that it is factually inaccurate. If shown to be inaccurate, the conviction cannot be relied upon.

There are exceptions to these prohibitions for certain classes of employers, including health care facilities, that are required by law to screen prospective employees or prohibit hiring of individuals with criminal records.

Additionally, the cities of San Francisco and Los Angeles have enacted their own “Ban the Box”-type ordinances with more stringent requirements/limitations than those described above.

Pending Legislation

Assembly Bill 1008, introduced on February 16, 2017, proposes to add a section to California’s Fair Employment and Housing Act (FEHA), which would create new statewide restrictions on employers’ ability to make pre-hire decisions based on an applicant’s criminal history.

Under the proposed new law, employers:

  • Cannot include on an application any question that seeks disclosure of the applicant’s criminal history
  • Cannot inquire or consider an applicant’s criminal history before the applicant receives a conditional offer of employment
  • Cannot consider an applicant’s conviction of a misdemeanor where no jail time is possible
  • Cannot consider infractions or misdemeanor convictions older than 3 years
  • Cannot consider felony convictions older than 7 years
  • Must undertake an individualized assessment to determine whether a conviction has a “direct and adverse relationship” with the specific duties of the job sought before the applicant can be denied employment based on a conviction

If the employer decides, following this individualized assessment, to deny employment it must provide written notice that:

  • Identifies the specific conviction relied upon to deny employment
  • Provides a copy of the conviction history report
  • Provides examples of mitigation or rehabilitation evidence that the employer would consider
  • Provides notice of the applicant’s right to respond within 10 days

The applicant may then offer information that challenges the accuracy of the conviction or provide mitigation/rehabilitation evidence. In its current form, the bill requires the employer to consider any mitigation/rehabilitation evidence the applicant offers.

If the applicant does not respond to the first written notice, or upon receipt of the applicant’s response the employer still decides against hiring the applicant, it must provide a second written notice that:

  • Notifies the applicant of its final decision
  • Describes any existing internal procedure under which the applicant can challenge the employer’s decision
  • Discusses whether the applicant could be eligible for other positions at the company
  • Identifies the earliest date when the applicant can reapply to the employer for a position
  • Notifies the application of its right to file a complaint with the California Department of Fair Employment and Housing (DFEH)

What Should Employers Do?

California employers should ensure that their hiring practices fully comply with existing California laws, which must include consideration whether they are also governed by the separate ordinances for the cities of San Francisco and Los Angeles. Additionally, employers should monitor the progress and outcome of Assembly Bill 1008, and appropriately adjust their practices if it passes. Employers with lingering questions should not hesitate to contact their experienced employment law counsel.

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California Supreme Court Provides Clarification on Rest Periods

Posted by on Mar 23, 2017 in Employment Law | 0 comments

rest-periodThe California Supreme Court recently issued an important opinion clarifying employers’ obligations to provide employee rest periods. Specifically, in Augustus v. ABM Security Services, Inc., 2 Cal.5th 257, the Court reinstated a trial court order awarding approximately $90 million to a class of employee plaintiffs and held that employers (1) must relieve their employees of all duties during rest periods, and (2) must relinquish any control over how employees spend their break time. This Bulletin discusses the background and additional considerations addressed by the Augustus Court in this critical decision.

Case Background

ABM Security Services employs several thousand security guards throughout California. A large class of the guards sued, claiming ABM failed to provide proper rest periods in compliance with California law. More specifically, the guards claimed ABM required them to keep their pagers and radios on during rest periods and to “remain vigilant” and responsive to calls when needs arose, including escorting tenants to parking lots, notifying building managers of mechanical problems and responding to emergency situations.

The Los Angeles Superior Court granted a motion for summary judgment brought by the employees and awarded them approximately $90 million in damages. The Court of Appeal reversed this order, finding that simply being “on call” did not constitute “performing work” and therefore did not violate California’s rest period laws.

The Applicable Law

California law, set forth in Cal. Labor Code Sections 226.7, 512 and Industrial Welfare Commission (“IWC”) Wage Order No. 4-2001, requires that employers provide a paid 10-minute rest period every four (4) hours of work (or fraction thereof) to any employee who works more than three-and-one-one-half hours per day. The law stipulates that employees should not be required “to work” during this break.

The California Supreme Court Opinion

The Supreme Court disagreed with the reasoning of the Court of Appeal and reversed, reinstating the $90 million damages award. It did so by adhering to the plain language of the Wage Order, which simply requires employees be relieved of all work-related duties and employer control during 10-minute break periods. The Court also found support for its position in what it termed the “practical realities” of rest periods. While a policy requiring employees to remain on an employer’s premises during rest periods does not establish employer control, requiring employees to carry devices or otherwise remain reachable during a break suggests impermissible employer control.

The Court recognized that employers do have options if an exigency arises and the employee is needed during his or her break. First, it said, “Nothing in our holding circumscribes an employer’s ability to reschedule a rest period when the need arises.” Additionally, the employer may provide employees with another rest period to replace one that was interrupted or pay the employee the premium pay required under the applicable IWC Wage Order and Labor Code Section 226.7. This premium equates to one additional hour of pay at the employee’s regular rate of pay for each day that a rest period is not provided.

What Should Employers Do in Light of the Augustus Opinion?

California employers have collectively paid hundreds of millions of dollars in verdicts, settlements and administrative claims as a result of failing to strictly adhere to the rest period requirements. The Augustus opinion should serve as a wake-up call to any employer who does not already comply with this law. At a minimum, employers should not only review their policies to ensure that employees receive 10-minute rest periods free from duties and employer control, but also take steps to ensure that managers are properly trained to implement this policy.

Conclusion

Employers with lingering questions concerning their rest period policies should not hesitate to contact their experienced employment law counsel.

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