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The Court rejected an argument advanced by the job applicants that, because the tests were administered under the control of WinCo, they must be categorized as employees under California’s “control test” used to determine whether an employment relationship exists.

The Court held the control test did not apply because drug testing was a way to secure employment rather than a responsibility for those already employed.

Recognizing that small businesses with employees using PFL experience increased ancillary costs such as cross-training existing staff and hiring and training new or temporary employees to cover for the employees on leave, the California Employment Training Panel and California Labor and Workforce Development Agency have funded a grant program for small employers.

Small businesses in California with 1 to 100 employees who have at least one employee on PFL on or after June 1, 2022, may be eligible for grant monies, up to $2,000 per employee. A grant recipient must be registered to do business in the State of California, on an active status with the California Secretary of State and have an active California Employer Account Number under which employees are listed for payroll.

Employers interested in applying for the grant can apply through the grant website: Californiapfl.com.

The reimbursement requirement can be satisfied in different ways, including actual expense, mileage reimbursement or a stipend method, provided the employer can establish the employee was fully reimbursed.

The most common method is to reimburse based on mileage. The California Labor Commissioner issued an opinion that using the IRS mileage rate as a multiplier establishes adequate reimbursement of work-related auto expenses, in the absence of evidence to the contrary.

In response to the recent drastic increases in fuel prices, the IRS announced on June 9, 2022, that it would increase the business travel rate to 62.5 cents per mile,effective July 1, 2022. This is a special adjustment for the final six months of 2022. Employers tying reimbursement to the IRS rate should consider increasing their reimbursement to 62.5 cents/mile for the near term.

By way of background, PAGA permits an “aggrieved” employee who allegedly had their Labor Code rights violated, to step into the shoes of the state Labor Commissioner and enforce certain violations of California labor law. PAGA allows for civil penalties against employers on behalf of the state. Further, only an individual employee brings a claim under PAGA, while other allegedly “aggrieved” employees do not participate in the lawsuit. The default PAGA civil penalty is $100 per employee per pay period for an initial violation and $200 per pay period for subsequent violations.

Prior to Viking River Cruises, PAGA claims could not be compelled into arbitration. In those cases in which an employee was bound by an arbitration agreement, the lawsuit would be split, with non-PAGA claims submitted to arbitration first and PAGA claims decided after the arbitration was completed, essentially subjecting the employer to multiple trials and no benefit of arbitration of PAGA claims.

A second important thrust of Viking River Cruises is that, because an employee bound to arbitrate her PAGA claims lacks standing to prosecute claims on behalf of other similarly “aggrieved” employees, the remaining PAGA claims must be dismissed upon submission of the case to arbitration.

It is important to remember that, based on the current status of California’s Assembly Bill (AB) 51, it remains unclear whether an employer can require a new hire to sign an arbitration agreement as a condition of employment. It remains to be seen how the Supreme Court will address this issue. At this time, it is safest to make an agreement to arbitrate employment claims voluntary.

Additionally, it is critical to understand both the costs and benefits of binding arbitration of employment claims in California, as employers are required to shoulder 100% of the arbitration fees, which can be quite substantial. Employers contemplating adopting an arbitration policy or who wish to fully understand the costs vs. benefits of employment arbitration, should contact us for further information.

California employers must also be mindful of the likelihood that the statewide minimum wage may climb faster than expected due to rising inflation. In 2017, California initiated an annual planned increase of the statewide minimum wage, with all employers, regardless of size, scheduled to reach $15.00 per hour effective January 1, 2023.

However, the minimum wage ordinance included an exception triggering an accelerated increase if the U.S. Consumer Price Index (CPI-W) exceeds 7 percent over a specified period of time. Based on current projections, the CPI-W will have risen by 7.6 percent in the period ending in July. On May 12, 2022, when Governor Gavin Newsom announced his proposal for a state inflation relief package, he also announced that California’s minimum wage is now projected to increase to $15.50 per hour, rather than $15.00 per hour, on January 1, 2023, for all businesses regardless of size. Of course, a business operating in any of the listed municipalities must ensure compliance with the higher local minimum wage.

Employers with exempt employees must remember that certain exempt employees must receive a salary of at least twice the state minimum wage (the “Salary Threshold”), in addition to meeting the general duties and other requirements. Whenever the state minimum wage increases, this impacts the Salary Threshold and may cause exempt employees to suddenly become improperly classified. To be clear, the Salary Threshold is tied to the California state minimum wage, not any city or county minimum wage ordinance.

We are surprised, not because the standards for determination of Exempt status are straightforward and easy to apply (Sometimes they are not!), but because the consequences of misclassifying an employee as Exempt can be major, including administrative claims or civil lawsuits for unpaid wages, unpaid overtime, failure to provide rest/meal breaks, liquidated damages, waiting time penalties and related damages (including the employee’s attorney’s fees). Have we got your attention?

The Labor Commissioner applies two (2) standards to determine when an employee can be properly classified as Exempt: (1) the Duties Test; and (2) the Salary Threshold. Exempt employees must fit within one of the following limited list of categories: Executive, Administrative, Professional, Computer/Software, Outside Sales, state or county employees, and a few others.

The Duties Test examines the work performed by the employee during the workweek. For example, the Executive Exemption is limited to an employee whose “duties and responsibilities involve the management of the enterprise or a department or subdivision of the enterprise, who customarily and regularly directs the work of two or more other employees, and who has authority to hire or fire other employees or whose views as to the hiring, firing, advancement, promotion or any other change of status of other employees will be given weight, and who customarily and regularly exercises discretion and independent judgment. There is a different Duties Test for each category of Exempt employee.

The Salary Threshold requires one exempt under the Executive Exemption to earn a monthly salary equivalent to no less than two times the state minimum wage for full-time employment. Full-time employment means 40 hours per week. There is a similar Salary Threshold for most other Exempt categories.

Depending on the circumstances, these tests may be easy or difficult to apply regarding a given employee. Additionally, there are traps for unwary with regard to the Salary Threshold where the worker, for example, meets the Salary Threshold most weeks, but falls below it on a given week.

Employers looking to follow best practices should have their Exempt classification decisions reviewed by employment law counsel or, at minimum, someone with significant Human Resources experience, such as an HR Consultant or a member of the Society for Human Resource Management (SHRM) or its affiliate, Professionals in Human Resources Association (PIHRA).

By way of background, most California Industrial Wage (IWC) orders require employers to provide workers “suitable seating” under two circumstances: (1) when the nature of the work reasonably permits the use of seats; and (2) when an employee is not actively engaged in duties that require standing, or during “lulls in operation.”

Former Ralphs employee Jill LaFace sued Ralphs, arguing that cashiers could reasonably perform their cashiering duties while seated and that the company was also obligated to provide seats for cashiers to use during “lulls in operation.” Following a nonjury trial, Los Angeles Superior Court Judge Patricia Nieto held that the nature of LaFace’s work did not permit sitting because “Ralphs cashiers continuously perform work that should or even must be performed while standing.” She also held that Ralphs had no obligation to provide seating for use during “lulls in operation” because the cashiers were expected to remain busy between customers.

LaFace appealed. The appellate court ruled that an employer does not have to provide seating where the employer expects employees to keep busy and not stand, which functionally means there is no “lull” in duties. The court also held that employees bringing suitable seating claims and other claims for penalties under California’s Private Attorneys General Act (PAGA) are not entitled to a jury trial, which may also be seen as a victory for California employers.

For employers of workers where there is some question whether seating may be required, this case highlights the need for an established, clearly comunicated policy. Either employees may be permitted to sit while performing their job or during lulls, in which case suitable seating should be provided, or written policies communicated to workers should make it clear that employees are expected to remain busy, even during lulls in operation.

The new law also requires that a court—not an arbitrator—decide whether a claim constitutes sexual harassment or sexual assault, even if the arbitration agreement requires such decision be made by the arbitrator.

In light of this development, we suggest employers who require employees to sign mandatory arbitration agreements include a “carve-out” for claims of workplace sexual assault or harassment. At a minimum, any arbitration agreement should contain a carve-out for disputes that are barred by applicable federal or state law.

This version of SPSL took effect February 19, 2022, however, it applies retroactively to January 1, 2022. It expires September 30, 2022. Employers with more than 25 employees are covered.

The following are covered reasons for using SPSL:

SPSL benefits:

Additional Facts About SPSL: