Do you remember all of the hoopla back in 2016 when the Department of Labor published new overtime rules, and then at the last minute, after everyone did audits (and many reclassified), the rule was halted?  We wrote about it here.

Now the Department of Labor has proposed a new set of rules, setting the minimum salary threshold for white-collar exemptions at $35,308 (up from $23,660).  The new rules do not include many of the more controversial elements, including automatic increases, regional salary levels, or changes to the duties tests.  Here is a helpful alert that summarizes the new rules.

Despite what will like be a lot of press, these federal changes won’t have any effect on employers in California employers who already need to pay twice the state’s minimum wage to satisfy the requirements for exempt status.  With a minimum wage of $12 an hour (for employer’s with 26 or more employees), that is $49,920 in 2019.  And that amount goes up as the minimum wage increases a dollar a year until it hits $15 for all employers in January 1, 2023; at that time the minimum salary level for exempt status in California will be $62,400.

Even though many cities have their own minimum wages, it is still the state’s minimum wage that triggers the minimum salary threshold.

The highly compensated exemption threshold also went up from $100,000 to $147,414, but that doesn’t apply in California either.

Bottomline, since California’s minimum wage is already so much higher than the federal minimum wage, these proposed DOL changes won’t impact the golden state.

The Federal Motor Carrier Safety Administration (FMCSA) recently announced that it was exercising its authority under federal law to rule that California’s meal and rest break laws are preempted and cannot be enforced against interstate motor carriers. The FMCSA’s ruling was in response to a petition filed by the American Trucking Associations (ATA) and the Specialized Carriers and Rigging Association (SC&RA).  A big win for the trucking industry, this decision helps define regulatory standards for interstate carriers.

California state laws require employers to provide breaks for their employees for meals and rest. Employees working more than five hours in a day are entitled to receive a 30 minute meal break and, if work extends beyond 10 hours a day, they must receive an additional 30 minute break. Further, every four hours the employee must receive a 15 minute break. For years, interstate motor carriers have argued that these laws, as well as other similar state laws, should not be enforced against them because they are governed by separate hours of service regulations set by the FMCSA.

The ATA and SC&RA first fought the state laws in court, arguing that the provisions of the FAAAA, 49 USC 14501(c), which generally preempts state laws that regulate the routes, prices and services of motor carriers. These cases failed in the Ninth Circuit. See, e.g., Dilts v. Penske Logistics, LLC. The carriers advanced their arguments to Congress, supporting a bill that would have expressly confirmed that California’s laws are preempted. This bill passed in the House but failed in the Senate. Finally, the ATA and SC&RA petitioned FMCSA to use its authority under 49 U.S.C. 31141 to find that the state laws are preempted because they (1) have no safety benefit; (2) are incompatible with federal regulations; or (3) would cause an unreasonable burden on interstate commerce.

On December 21, 2018, the FMCSA announced that it would grant the petition and find the meal and rest break laws preempted. The agency concluded that the laws met all three criteria— they had no safety benefit, were incompatible with federal regulations and caused an unreasonable burden on interstate commerce. The FMCSA’s action was a big win for the ATA and SC&RA, who, in addition to filing the petition that led to the agency’s action, also lobbied extensively for it to be granted. With California’s meal and rest break laws preempted, carriers now have one standard to comply with: federal hours of service. Additionally, carriers are freed from the extensive damages they have faced in cases such as Dilts, in which class action plaintiff attorneys have collected for alleged violation of the now-preempted labor laws.

Unsurprisingly, not everyone is happy with the FMCSA’s decision. The Teamsters Union has already filed suit to block its implementation, arguing that the agency’s findings are arbitrary and not supported by facts. The Teamsters specifically characterized FMCSA’s finding that California’s laws have no safety benefit as “ludicrous.” Notably, the union’s suit is filed in the same court—the Ninth Circuit—that previously ruled in Dilts that federal law did not preempt the state laws. However, that decision was on a blank slate, while the new ruling by the FMCSA must be upheld unless deemed entirely unreasonable.

If they can keep it, the FMCSA’s decision is undoubtedly a win for carriers and another recognition that transportation is a national industry that should not be subject to a patchwork of inconsistent state laws and regulations.

What is considered “work time” that requires pay?  Well, that definition keeps on getting broader for California employers.

  • Can you let individuals “volunteer” and provide comps/trade for their time?  No.
  • Can you let non-exempt employees check emails at night or on weekends and assume that the time is so small it is not compensable?  No.
  • Can you require a non-exempt employee to wait around at home and check in throughout the day to determine when/if needed at work (i.e. be engaged to wait)?  No.

And now per a new California Supreme Court case (Ward v. Tilly’s), can a California employer require an employee to call-in two hours before a shift, yet only pay that employee if actually required to come into work?  Also, no.

If you are a California based retailer, spa, salon, or restaurant that relies on an on-call system to adjust your California workforce based on last minute fluctuating operational needs, then think again.  Based on this ruling, your on-call policy is likely creating unnecessary risk.

The Court found that an on-call employee really isn’t free from work if required to call-in and then report in as needed.  In fact, such a call-in responsibility really requires that employee to keep the day free.  The employee can’t make plans, go to the beach or a movie, commit to another job, or secure child care.  And in the opinion of the Court, that isn’t particularly fair.

So what can you do if you are a California business that relies on an on-call workforce?

  • You can still have on-call employees, you just can’t discipline them for not calling or not showing up when needed (not very helpful, I know); or
  • You can still have on-call employees, but make the call-in time more than 2 hours before the shift (but note, with predictive scheduling laws in some cities, and more pending in the state legislature, how much on-call time is okay is still an open question); or
  • Ask for volunteers for any last minute extra shifts; or
  • Keep a list of employees who want extra shifts, and notify them when you need people last minute; or
  • Post open shifts and invite employees to sign up for them (and you can even put limits on taking extra shifts if it triggers overtime); or
  • Have employees show up, and if you don’t need them, send them home after 2-4 hours (but beware of strict reporting time pay requirements).

Was this case over-reaching by California courts?  According to the dissenting judge, this was an issue for the legislature, not the courts.  Maybe the legislature will take this issue up, or impose even more restrictions for on-call shifts with more predictive scheduling laws.  In the meantime, the lesson:  If you schedule on-call (especially in retail in California), beware.

Join Ali Brodie, co-chair of Fox Rothschild’s Immigration practice, for an overview of immigration and workplace compliance, including Form I-9 and government inspections.

Tuesday, March 5, 2019 | 8:30 – 10 am
Fox Rothschild LLP
345 California St.
Suite 2200
San Francisco, CA 94104

Agenda:
8:30 am         Registration & Breakfast
9 am              Presentation

Topics:

  • Specifics about executing the I-9 under current rules
  • Documenting employees without violating anti-discrimination laws
  • Identifying and reviewing documents for authenticity
  • Auditing and correcting I-9 forms
  • Navigating pitfalls in the process
  • Understanding the penalties for noncompliance, including simple clerical errors
  • Handling the receipt of Social Security no-match letters
  • Best practices for developing a company-wide compliance program
  • Live Q&A

HRCI credits are pending.

Register here by March 1

Questions? Contact 1.877.778.7369 or events@foxrothschild.com.

Anyone who pays attention can tell you that California employment law changes constantly. So we’re continually updating Doing Business in California: A Guide for Employers. This 15-page guide provides clear summaries of California’s unique requirements for employers. You can download a PDF of the Guide here. If you subscribe to that whole “ounce of prevention” theory, this is a great way to see if your company is complying with California’s overly complicated employment law requirements. On the other hand, if you’re more of the “ignorance is bliss” type, well, good luck in court.

Special thanks to Nancy Yaffe, Tyreen Torner, Sahara Pynes, and Cristina Armstrong for their work on earlier versions of this guide.

I’ve been doing a lot of harassment prevention training lately.

One reason is because it is an odd year (2019), and the requirement to train managers & supervisors started in 2005, so many California businesses are on an odd year cycle for in-person training (with online options in between).

Another reason is that such training is top of mind for many employers given the new #MeToo inspired laws (summarized succinctly here), including a need to train all employees, not just managers and supervisors, by January 1, 2020.

One theme in these trainings is that things that used to be okay just aren’t anymore.  There is a spotlight on these issues right now.  And as the news shows us, behaviors from many years ago are coming back to haunt people today.

One of those behaviors involves dating (or hooking up) with work colleagues.  Lots of people have done it.  Many still do.  But in today’s world, that is pretty darn risky behavior.

A question I often pose in training is “can you have a consensual relationship with your boss?”  Of course it feels consensual to the supervisor, and may feel consensual to the subordinate at the time…. but what about later?  How can the supervisor prove it was consensual if the subordinate later changes their mind?

For Valentine’s Day, we lawyers can consider a love contract, a document that both parties sign to indicate the relationship is voluntary, consensual, and if it ever is not, the subordinate has avenues for raising any concerns.  This may serve as a deterrent, but it is not a perfect solution.

What is?  Well, here is where we get to the maxims:

  • Don’t get your meat where you get your bread
  • Don’t fish off the company pier
  • Don’t dip your pen in company ink
  • And don’t [expletive] where you eat

Happy harassment-free Valentine’s Day!

A number of new requirements for California settlement and separation agreements took effect on January 1, 2019. Two of them stem from the #MeToo movement. These are:

  • Assembly Bill (AB) 3109 prohibits language in contracts or settlement agreements that bars anyone from testifying in administrative, legislative or judicial proceedings concerning alleged criminal conduct or sexual harassment. I think that those provisions would have been void under prior law, but there’s no doubt that they’re void now.
  • Senate Bill (SB) 820 prohibits non-disclosure provisions in settlement agreements related to civil or administrative complaints of sexual assault, sexual harassment, and workplace harassment or discrimination based on sex. The bill expressly authorizes provisions that (i) preclude the disclosure of the amount paid in settlement and (ii) protect the claimant’s identity and any fact that could reveal the identity, so long as the claimant has requested anonymity and the opposing party is not a government agency or public official. Settlement agreements signed after January 1, 2019 should be reviewed by counsel to ensure compliance with the new restrictions.

A third bill (SB 1431) has received less attention. This bill changes the language of the ubiquitous Civil Code § 1542 waiver. As of January 1, 2019, the language required to waive unknown claims is:

 

“A general release does not extend to claims that the creditor or releasing party does not know or suspect to exist in his or her favor at the time of executing the release and that, if known by him or her, would have materially affected his or her settlement with the debtor or released party.”

It’s not a huge change (adding “or releasing party” and “or released party”). But if you plan to ask anyone to release claims, you should include the current language.

As the new year begins and I trade my ski boots for my office heels, I’m committed to getting organized for 2019. Specifically, I have compiled a list of issues to keep on my radar for the upcoming year, and I thought I would share them.

1) Keeping up with Local Developments- Though California municipalities, especially San Francisco, have led the way in passing more employee-protective local laws, such ordinances are popping up all over the country…and in unexpected places. If you hire outside the state, don’t assume California’s protective laws will automatically cover you.  Do the research or find local counsel to assist, so you don’t botch the fact that, for example, Michigan has a new sick leave law, Philadelphia passed a new fair workweek bill or Connecticut prohibits salary history inquiries!

2) Independent Contractor Classification- This is a widespread issue across industries that is still evolving.  The effects of the Dynamex case still remain to be seen, as under the Dynamex court’s ABC test, very few workers typically classified as contractors will pass the test.  Unless all three prongs of the new test are met, employers are at risk for misclassification penalties.  Last month alone, several clients have called lamenting that workers they classified as 1099 contractors filed for unemployment, thereby putting the Employment Development Department on notice of a potential misclassification issue and potentially triggering an audit.

3) Addressing Marijuana at Work- While marijuana is still an illegal substance under federal law and the Americans with Disabilities Act does not protect its use, even for medicinal purposes, state laws are in flux and new case law is trickling in. In 2018, courts in Rhode Island, Massachusetts and Connecticut have offered workplace protections for employees utilizing medical marijuana and I expect this trend to continue.

4) Leave law Interactions- We get calls on the intricacies of leave law interactions every day.  With the plethora of local paid sick leave laws, the new Parental Leave Act and the old, but always confusing, PDL, CFRA and FMLA leaves, every leave of absence is unique.  The growing trend of expansive reasonable accommodations that can extend an employee’s leave of absence is another reason to keep this issue top of mind and keep current on emerging case law.

5) New Anti-Harassment Training- All California employers with five or more employees need to conduct mandatory harassment prevention training in 2019.  Even if your supervisors completed training in 2018, the new law requires both supervisory and non-supervisory employees to be trained (or retrained) by January 1, 2020.  Find out how to book one of our Fox attorneys to satisfy your interactive training requirement.

6) Adequate Investigations Post #MeToo- The past year, a side effect of the #TimesUp initiative has resulted in cases of wrongful termination following an inadequate investigation.  As detailed here, employers have certain obligations to both an accuser and an accused when investigating claims of harassment in the workplace.  Failure to complete a fair, prompt and thorough investigation could lead to liability beyond the initial harassment complaint.

Every year in December I get the same wave of client calls.  What can we do to prevent everyone from calling in sick during the holidays?

Why is this such a problem?  It’s not just flu season or hangovers from too many holiday cocktails.  California has mandatory sick leave, many cities have additional requirements, and employees realize that sick days not used will be lost.  So what do they do?  No surprise — they use them!

And employers can’t really prevent them from doing so.  If the employee says s/he is sick (or a family member is sick), you can’t discipline the employee for calling out at the last minute or using the time.  It is essentially statutorily protected; there is certainly risk if you require a doctor’s note for time used within the statutory period.

What can you do?  Here are some suggestions:

  • Make sure employees use up their allotted sick time and aren’t allowed to take unpaid time off in lieu of sick time.  Once statutory sick time is used, you can discipline for taking additional time off (i.e. caveat, beware of ADA and intermittent FMLA/CFRA issues).
  • Take good notes of why someone is calling off. If the time off is for a flat tire, or the DMV, or a sick pet (not an assistance animal), then it isn’t a sick day.
  • If someone has a doctor’s appointment that was pre-scheduled, and just forgot to tell you, you can discipline for not giving proper notice (although be consistent).
  • Consider rewarding employees who don’t use sick leave by paying it out at year-end (although if you are making an exception to your policy, clearly explain it as a one-time issue due to year-end staffing that is not intended to be precedent setting).  Or change your policy to allow unused sick time to roll-over to discourage year-end use.
  • Or, the practical solution, which is ask your employees to tell you when they plan to be sick (if they can), to avoid putting too much pressure on co-workers with last minute call-outs.

Just one more California law issue without a terrific solution.

California employers know to expect that the law sometimes takes some crazy turns. But the changes to the rules for healthcare worker meal waivers have been particularly insane. Try to keep up.

  1. In 2000, the legislature enacted AB 60, which included provisions saying that if you worked more than 12 hours, you could not waive a second meal period. The law also gave the Industrial Welfare Commission authority to issue regulations.
  2. The IWC issued amended Wage Orders that same year. Wage Orders 4 (Professional, Technical, Clerical, Mechanical & Similar Occupations) and 5 (Public Housekeeping Industry – which includes hospitals) specifically allow healthcare employees working 12–15 hours to waive a second meal period.
  3. A group of plaintiffs sued their employer arguing that the IWC exceeded its authority and that the Wage Orders were illegal to the extent that they allowed waiver of the second meal period. The case was Jazmina Gerard v. Orange Coast Memorial Medical Center. In that case, the trial judge granted summary judgment for the employer, the employees appealed, and the appellate court reversed. So as of February 2015, employers who had followed the Wage Orders were suddenly subject to class-wide liability going back at least three years.
  4. In October 2015, the state legislature enacted a statute specifically permitting healthcare workers working over 12 hours to waive the second meal period. Still, the litigation continued because it raised questions about how to interpret the law before that enactment.
  5. In March 2017, after being told by the California Supreme Court to take another look, the appellate court reversed itself. It recognized that it was mistaken on the timing and concluded that the IWC acted appropriately.
  6. The California Supreme Court agreed to hear the case. In a decision issued earlier this week, the California Supreme Court agreed that the IWC acted within its rights in issuing the Wage Orders. So we’re back where we started. Healthcare employees working 12-15 hours are allowed (and have been allowed since 2000) to waive a second meal period.

Throughout this process, healthcare workers and their employers both wanted the same thing. Neither benefited from a rule that said that, after working over 12 hours, you couldn’t go home until you took an unpaid, 30-minute meal break. It didn’t need to be this complicated.