On Friday, Governor Jerry Brown signed AB 1506, which is intended to lessen certain types of employer liability under California’s Private Attorneys General Act. PAGA allows private employees to sue to recover penalties that the state labor commissioner could have collected. It’s been a huge headache for employers. In addition to drastically expanding the ways they could be sued, PAGA provides a cause of action that certain courts say is exempt from an employee’s agreement to arbitrate.
One way that employees have used PAGA claims is to sue if their wage statements don’t contain all the required information. Under the new law, an employer would have an opportunity to cure a PAGA violation based on failure to include the beginning and end dates of the pay period and the employer’s proper name and address. Before suing, an employee would have to give notice of the violation and then the employer would have 33 days to cure the violation. To do so, the employer needs to provide corrected wage statements to all employee who received inaccurate information during the three years before the notice.
Is this the answer to employers’ dreams? No. But it’s a tiny step in the right direction. Moreover, you glass-half-full types may be able to take comfort in the fact that the Governor has not yet signed AB 465 (to ban employment arbitration), SB 588 (to expand liability for wage and hour violations to “persons acting on behalf of an employer”), or AB 1017 (to ban employer inquiries about prior compensation).
Are you worried about the threat posed by prior-salary-question-askers? Well then you can sleep soundly knowing that your California Legislature has tackled this thorny issue.
AB 1017, one of the bills sitting on the Governor’s desk from the last legislative session, would add language to the California Labor Code saying:
An employer shall not, orally or in writing, personally or through an agent, seek salary history information, including, but not limited to, compensation and benefits, about an applicant for employment.
Proponents of the measure say that such questions can continue the effects of past discrimination. But so can questions about job titles, job duties, and even where someone worked. Besides, it’s already illegal to pay someone less for substantially similar work and saying that their prior employer paid them comparably is not a defense.
On the other hand, asking about past compensation helps employers assess how prior employers valued the applicant’s contribution, whether an applicant’s salary expectations are realistic, whether the compensation the employer is offering is competitive, whether the applicant’s skills are valued in the marketplace, and whether the applicant has been successful in his or her prior jobs.
Many of us were taught it was rude to ask someone what they made. But no one ever said it was criminal! We’ll offer recommendations for employers if the bill becomes law.
Update (October 5, 2015): The bill still hasn’t been signed. But a proponent of the measure has shown me that a violation of the statute would not be a misdemeanor. I apologize for the error.
I was recently reviewing the Department of Fair Employment and Housing’s Annual Report (don’t you wish you were me?), and saw that the DFEH received 17,632 complaints of employment discrimination in 2014. Of those, 12,344 (70%) alleged retaliation. Why is retaliation such a popular claim?
Some of it involves the way people perceive their interactions. An employee who has complained about discrimination will likely be vigilant in watching for some sort of adverse treatment. Any perceived slight, real or imagined, can give rise to a retaliation complaint. On the other side of the coin, someone who has been accused of discrimination or harassment may greatly resent having their professionalism and integrity attacked and find it very difficult to treat the accuser as if nothing happened.
So what can employers do?
- Make sure your policies on discrimination and harassment specifically prohibit retaliation.
- Make it easy for employees to raise concerns in the first place. This requires identifying multiple individuals that workers can turn to if they believe they’re a victim. The sooner an employee raises an issue, the easier it is to resolve.
- If an employee raises an issue, make sure that the complaining employee and the accused understand the policy against retaliation and when and how to report concerns. The accused may well want to avoid the accuser completely, but that can give rise to a claim, too. Encourage the accused to seek guidance from HR if he or she has questions about workplace interactions going forward.
- Avoid any changes in the complaining party’s duties, compensation, benefits, title, or anything else that can be characterized as an adverse action, especially during the period right after the employee complains.
- Monitor the situation closely. Have a senior manager periodically follow up with the complaining party. This is not passing the person in the hall and asking “How’s it going?” This is private, closed-door conversation in which the complaining party is encouraged to discuss any ongoing concerns, with periodic follow-up.
- Document. Document. Document.
As long as there are complaints of workplace discrimination and harassment, there will be complaints of retaliation. But these steps can help to minimize the risk.
A bill passed by the legislature and awaiting the governor’s signature would drastically expand individual and successor liability for wage and hour violations. SB 588 (which its sponsor, Senate President pro Tem Kevin De León, would like you to call “A Fair Day’s Pay Act“) purportedly intends to help employees who can’t collect judgments because their employers change their names or hide their assets.
But the bill isn’t limited to those situations. It allows the Labor Commissioner to conduct hearings to determine whether a “person acting on behalf of an employer” should be held personally liable for an employer’s violations. The Labor Commissioner would also be able to levy those individuals’ accounts or property to enforce a judgment. It also allows the Labor Commissioner to seek payment from a successor employer if:
- It does “substantially the same work in substantially the same working conditions under substantially the same supervisors;” or
- It “produces substantially the same products or offers substantially the same services, and has substantially the same body of customers.”
That’s an awfully tenuous link between companies and one that would have led to widespread litigation even with four fewer substantiallys.
In the long-term care industry, failure to pay a judgment for wages or to obtain a bond can lead to a facility’s license being denied.
I don’t oppose any law that holds accountable companies that victimize their employees. But as I’ve said before, not understanding ridiculously complicated payroll laws is not “wage theft.” These draconian measures should not be used to pressure legitimate employers into resolving questionable claims to avoid their executives being subjected to levies and criminal penalties.
While some people view hugs as a way to “spread the love,” in the workplace, they can be a way to spread the liability. So here are some things that lawyers who defend sexual harassment claims would like you to know about hugging in the workplace.
- All hugs are not created equal. They differ in terms of duration, force, hand placement, and extent of body contact. If you must hug, consider a side hug, where your physical contact is limited to an arm around the person’s upper back and shoulders.
- Not everyone likes to be touched.
- Some people who like to be touched don’t like to be touched by their boss or co-workers.
- Understand the subtle and not-so-subtle cues that someone may not want a hug. These include:
- They make a point of having a pile of folders in their arms whenever they encounter you.
- They not only don’t hug you back, but look panic stricken when you approach.
- When you wrap them in a comforting embrace they become rigid, sob uncontrollably, or attempt to escape.
- They scream: “Get your dirty paws off me!”
- Make sure it’s consensual. Implied consent – they’ve hugged you before or they’re standing there with their arms open – is probably fine. Oral consent – they’ve said they’d like a hug – is better. Written, notarized consent is the gold standard.
- If in doubt, keep your hands to yourself.
Remember, under California law, employers with 50 or more employees must train their California supervisors on sexual harassment every 2 years. Is your company current?
California’s state minimum wage — currently $9/hr — is poised to bump up to $10/hr on January 1, 2016. Last June, the state Senate passed a bill to increase the minimum wage further (to $11/hr in 2016 and $13/hr is 2017). With the legislative session ending tomorrow and the measure stuck in the Assembly, the bill has no chance of passing. Of course, a number of cities in California, including San Francisco, Oakland, and Los Angeles, have enacted their own minimum wages.
On this topic, want to know a surefire way to avoid having to pay your California workers the state minimum wage? Have them work as sheepherders. But this exemption doesn’t apply to herding goats, cattle, or any other livestock. Just sheep. I have no idea why and I’m not the least bit sheepish to admit that.
Labor laws are not keeping pace with the new economy. Right now there are only two options for employers.
Option one is to hire employees, and comply with the myriad complicated wage-and-hour laws, including very strict rules about monitoring an employee’s work hours. In California, an employer must ensure a non-exempt employee works no more than 8 hours per day (even if the employee wants to stay late one or two days and leave early another) or pay overtime. Any time over 8 hours in one day must be paid at an overtime rate that must be calculated to include extra non-discretionary pay (such as commissions, service charges, and shift premium pay). An employer must ensure meal breaks are taken (even if the employee prefers not to take them), and make sure they are taken before the end of the 5th hour of work. Any lack of proof of compliant meal breaks (typically punch records) requires the employer to pay an extra hour of “premium” pay. Both daily overtime and meal premium pay can blow up a business’ labor costs and put a large dent in what are often already slim profit margins.
Option two is to retain workers as independent contractors and have them agree (preferably in writing), that they are contractors and not employees. Independent contractors are not entitled to overtime or meal premium pay. They also aren’t covered by workers’ compensation and don’t get employee benefits (such as paid sick leave or employer-sponsored health care or unemployment benefits). But independent contractors have freedom. They can work hours as needed to achieve the scope of work agreed upon. They have the opportunity for profit (by working efficiently) or loss (by working less efficiently). And they can work for more than one employer and have a more fluid work/life balance.
The problem is that many jobs in the new economy do not fit neatly into either option. The new rideshare technology is a prime example, but there are many others (including many types of semi-professional services, such as movers, tech/HR consultants, fitness instructors, hair stylists, etc.). And with the DOL’s new guidance the federal government is now joining the California trend in going after both businesses who engage contractors, as well as individuals who work as contractors. The goal? Some might say to protect workers. Others might say to ensure payroll tax revenue streams are intact. Whatever the goal, retaining contractors to run an integral part of your business is just plain risky.
So what we need is an option three – dependent contractors. A dependent contractor would be a worker who works exclusively (or semi-exclusively) for one business, but still retains the freedom to work flexible hours, to take a meal break when hungry, to accept or reject assignments, and to take time off when desired. A dependent contractor would still be self-employed, but could avoid the rigid lifestyle that regulations require employers to impose on employees, and could work at their own pace without feeling the pressure to perform in an outdated 8 hour workday / five day workweek model.
As the cases about rideshare technology work their way through our state agencies and court systems, expect to hear more about this idea of dependent contractors. Maybe the law will eventually catch up with the needs of businesses and the new generation of workers who want some freedom to redefine the work experience. One can only hope.
Last week, the state legislature passed AB 465 — a bill that prohibits employers from asking employees to agree to arbitrate employment claims unless the employees have their own attorneys negotiate the terms. Passing the bill looks like a futile exercise. The Federal Arbitration Act preempts state law in this area. In 2011, when the U.S. Supreme Court decided AT&T Mobility v. Concepcion, it said:
When state law prohibits outright the arbitration of a particular type of claim, the analysis is straightforward: The conflicting rule is displaced by the FAA.
Let’s break that down. “When state law [like AB 465] prohibits outright arbitration of a particular type of claim [like employment claims], the analysis is straightfoward: The conflicting rule is displaced by the FAA.” Seems pretty clear. So what’s the point?
The introductory language to AB 465 expresses concern about contracts that are coerced or involuntary. But coercion and lack of consent have always been grounds to invalidate contracts. Also, California law on employment arbitration agreements already requires the employer to foot the bill, prohibits any limitations on employees’ remedies, and imposes numerous other requirements to ensure fairness. So why go to the trouble of passing a law that relatively recent Supreme Court precedent says is invalid?
Some, like Maryann Maloney of California Citizens Against Lawsuit Abuse, say its so that “trial lawyers” (a shorthand term that overlooks the fact that we defense lawyers try cases too) know that they can make more money trying cases before juries than before arbitrators. (She’s saying it. Not me. I have to work with these people.)
Whatever the reason, if Governor Brown signs the law, it will create a great deal of unnecessary litigation as employers go through the time-consuming and expensive steps of getting it declared invalid. It will also give businesses that have a choice of where to locate yet another reason to avoid California
Even with this added uncertainty, for reasons I’ve described before, I still believe arbitration makes sense for most employers with California operations.
Currently, California Labor Code § 1197.5 requires that men and women working at the same location receive equal pay for equal work. But according to an all-but-enacted amendment to that statute, men and women must receive equal pay for substantially similar work, regardless of whether they work at the same location.
Controversial stuff? Apparently not. SB 358 passed both houses of the state legislature unanimously and the governor broke with his tradition of not commenting on pending legislation to announce that he’ll sign it. The bill even had support from the California Chamber of Commerce.
Here are 5 steps employers can take now to minimize their exposure to claims of pay discrimination.
- Make sure your equal employment opportunity policy and compensation guidelines specifically prohibits pay discrimination.
- Understand what factors can legitimately be used to justify pay disparities. These include education, training, and experience. Systems that base compensation on seniority, merit, and production are also acceptable.
- Evaluate your compensation system to make sure that any pay disparities can be explained using legitimate factors. Even where those factors are present, employers need to be prepared to show that they were applied reasonably and that they account for the entire differential in wages. If you have attorneys oversee the process, you can often protect the analysis under the attorney-client privilege.
- Provide guidelines and training to those making compensation decisions so that they understand their legal obligations and what factors are permissible.
- Don’t prohibit employees from discussing their compensation. That was illegal in California before, but the new law reinforces that prohibition.
According to SB 358, women in California earn 84 cents for each dollar earned by a man. So if women in your workplace earn say 86 cents, should you expect special recognition? Not unless your definition of “special recognition” includes getting sued.
If you advise employers, then you’re probably used to giving advice that derives more from good HR practices than from what the law requires. However, does that extend to advising clients how to avoid or address potential workplace violence situations? Obviously we want to protect our clients. But do we have the knowledge to identify and respond to these situations or is that better left to law enforcement and security companies?
I believe that we have an obligation to identify for our clients situations that put them at risk. While there’s no single profile for workers who turn violent, factors that frequently turn up are obsession over perceived wrongs, unusual changes in behavior, and excessive thoughts about violence. Unfortunately, those factors also show up in people who never do any harm. So what do we do?
When I see a situation that concerns me, I tell the client that I don’t have any special insight or training in identifying these behaviors, but this seems like a situation where they may want to talk to the police and/or whomever provides their workplace security. Of course, clients also need legal advice in these situations, such as the extent of their right to search employees’ persons, vehicles, or work areas; what information they can disclose to others without violating privacy rights; and sometimes whether and how to get an injunction. And who better to provide that advice than their employment lawyers?
If you have other thoughts on how to handle these situations, I welcome your comments.