It is that time of year.  We continue to wait for the Governor to sign or veto some controversial bills such as:

  • The Stand Act (prohibiting confidentiality in harassment and sexual assault settlements); and
  • AB 3080 (prohibiting mandatory arbitration for new and current employees, but presumably allowing arbitration with an opt out, and prohibiting nondisclosure of harassment issues to protect future employees going forward).

As we wait, there was one bill recently passed that clarifies a few things about California’s salary history ban that is worthy of a quick mention.

As you may recall, effective this year, employers were prohibited from asking an applicant about his/her salary history.  Employers are also required to provide pay scale information to an applicant on the position applied for upon reasonable request.  Recently, some of those terms have been clarified, as follows:

  1. First, an applicant is now defined as an individual seeking employment who is not currently employed with that employer in any capacity or position.  So current employees are not entitled to pay scale information.
  2. Second, a reasonable request, is now defined as a request made after an applicant has completed an initial interview with the employer.  This would prevent someone not qualified for a position from obtaining salary range information about it.
  3. Third, pay scale is defined as a salary or hourly wage range for the position.  Not quite sure what the confusion was there.
  4. Fourth, as most of us already surmised, it is perfectly acceptable to ask an applicant about his/her salary expectations.
  5. And finally, while prior salary cannot justify any disparity in compensation, an employer can consider current salary as a factor to justify a wage differential as long as it is based on:
    • A seniority system;
    • A merit system;
    • A system that measures quality or quantity of production; or
    • A bona fide factor other than sex, race or ethnicity (such as education, training, or experience).

Now if only the legislature would take up some very serious issues facing employers, especially after Dyanmex (and the resulting war against contractor status), such as my personal favorite idea, to create a new category of workers called “dependent contractors”.  Maybe next term.  One can always hope.

In July, the California Supreme Court announced that various provisions of the Labor Code and the IWC Wage Orders did not incorporate the de minimis doctrine. According to that doctrine, some alleged wrongs are so trivial or hard to measure that courts will disregard them. The de minimis doctrine applies to the federal Fair Labor Standards Act, so under that law, employers can disregard small amounts of time (a few minutes) in calculating what employees are owed. The California Supreme Court announced, however, that that was not the case under corresponding state laws.

On August 29, 2018, the court slightly modified its earlier opinion, stating that:

“The opinion herein is modified as follows: The final paragraph of the opinion … is modified to read: We hold that the relevant California statutes and wage order have not incorporated the de minimis doctrine found in the FLSA. We further conclude that although California has a de minimis rule that is a background principle of state law, the rule is not applicable to the regularly reoccurring activities that are principally at issue here. The relevant statutes and wage order do not allow employers to require employees to routinely work for minutes off the clock without compensation. We leave open whether there are wage claims involving employee activities that are so irregular or brief in duration that employers may not be reasonably required to compensate employees for the time spent on them. The petition for rehearing is denied.” (emphasis added)

The reference to “reoccurring activities” and employees “routinely” working for minutes off the clock indicates that the court is addressing situations where employees are required to perform some off-the-clock work on a repeated or regular basis, such as closing shop or shutting down systems. So a different rule may apply to activities that are more irregular or isolated. In fact, the court said as much in its earlier version of the opinion by noting that there may be employee activities “where compensable time is so minute or irregular that it is unreasonable to expect the time to be recorded.” The more recent modification simply clarifies that that is still the case. 

Our recommendations for employers remain the same:

  1. Do everything possible to ensure that employees don’t clock out until they’ve completed all work-related tasks. This includes security checks, closing shop, and exiting the work premises.
  2. If you use fixed time clocks, locate them as close as practicable to the exits. Or better yet, look at more advanced systems that employees can operate remotely, The court specifically referred to “advances in technology … shaping our understanding of what fractions of time can be reliably measured.”
  3. Ensure that whatever policy you use to round off workers’ time entries is facially neutral (i.e., you’re just as likely to round up as to round down).
  4. Require non-exempt employees to report any time they work after hours. Seemingly trivial tasks like checking e-mail or an online schedule could be compensable.
  5. Train managers on how and when to communicate with non-exempt staff after hours.
  6. If employees do after-hours work without authorization, discipline them, but pay for the time.

Is this modification good news for employers? No. But it may be slightly less awful than it was before.

All employers face challenges in navigating issues surrounding legalized marijuana. For construction industry employers, the challenges are particularly difficult given the necessary emphasis on safety. Last week, I recorded a 90-minute webinar for Lorman addressing the issues construction employers face in jurisdictions that have legalized medical or recreational marijuana. I discussed developments in state law, conflicts between state and federal laws, drug testing, maintaining a drug-free workplace, and responding to employees’ requests for accommodation of marijuana-related disabilities. You can purchase the webinar here.

ICE workplace audits are on the rise.  And if you didn’t know, the federal government and California are not harmonious in their views on immigration issues.  That means that ICE raids on California employers are likely to continue, especially in target industries such as hospitality, construction, agriculture, tech, and manufacturing.  And if you want to minimize your company’s exposure to massive fines and possible criminal prosecution, this issue should be on your radar.

One of the biggest recent traps of late seems to be the I-9 form.  Under federal law, all employers in the US are required to complete the I-9 in order to verify the identity and employment eligibility of new hires.  Employers are required to have a completed I-9 on file for every employee.  The employee must complete Section 1 of the I-9 at the time of hire (and absolutely not before acceptance of a job offer).  The employer must complete Section 2 of the I-9 within three business days of the hire date.  I-9s must be retained for three years after the date of hire, or one year after the date employment ends, whichever is later.  Failure to abide by these rules can lead to very severe penalties and fines.

When ICE wants to examine your workforce, it provides a Notice of Inspection that gives you just three days to get your I-9s and payroll records ready for review.  Once that happens, it is very hard to fix any problems you may have.  There just isn’t time and ICE has discretion to disregard any remediation efforts after the service of the NOI.

What can be wrong with an I-9 you ask?  Well if our audits of I-9s are indicative, close to 50% if not more, usually have problems, including:

88144554 – hand with pen fills in a paper form us immigration visa
  • Incomplete, with information, signatures, and dates missing.
  • Incorrect information, such as a document for List B or C in the List A column.
  • Signatures that don’t match the names on the documents.
  • Blank Section 2 with the List A or B and C documents simply attached.
  • Documents that don’t match the names on the form.
  • Older or incorrect versions of the I-9 used.
  • And on and on and on….

The I-9 may look like a simple form, but it is not and can cost the employer significant cash in fines … and possible criminal prosecution!  So if the person completing your new hire paperwork isn’t skilled or trained on how to complete this form, chances are your I-9s are imperfect.  It is not uncommon when we perform I-9 audits to see the same mistake(s) repeated over the course of thousands of I-9s!  That means risk, and these days, big risk.

The other problem is that you can’t just ask specific employees to re-verify their status, for example if there is a rumor that the employee may be undocumented, because that can lead to claims of discrimination.  Remember national origin and citizenship status are protected categories.  So the only way to fix the I-9s is to audit all of them, fix all of the mistakes that you can, and do it before any audit or notice of inspection from a government agency.

Oh, and please do not audit without the attorney-client privilege protection.  The last thing you want are emails indicating that your I-9s are wrong, or your employees are illegal, and you knew about it and didn’t fix it.  Knowingly employing, hiring, or continuing to employ undocumented workers is a crime.  Employers are subject to criminal prosecution—yes, that means possible jail time.

This is budget planning season for many employers.  Our advice is to add an 1-9 audit to your budget for 2019.

Many thanks to Ali Brodie for her assistance with this post!

Guest Blog Post by Summer Associate Josie Lopez

As the millennial generation becomes the majority of the workforce, the composition of the workplace is changing significantly, and companies are starting to realize they are going to have to keep up with the times. Growing up in the age of social media, information and feedback have become instantaneous, and no one expects continuous feedback more than millennials. Not only do they expect it, they need it. That’s why so many companies are moving away from the annual employee review, and opting to get in touch with their employees more often. The Gap, for example, does monthly coaching sessions between employees and management—known internally as “GPS” (Grow, Perform, Succeed)—instead of annual reviews. These more frequent meetings allow managers to give better feedback with real examples and solutions that can be implemented immediately.

It’s also time to ditch the old-school rating systems. Asking managers to rate employees on a 1 to 5 scale focuses on what the employee has done wrong, instead of focusing on who the employee is and how they can improve. To get better insight into its employees, companies are now using multi-rater feedback systems, which gather the input of managers, peers, coworkers, and clients. These questionnaires are also getting a more holistic view of employees by asking more in-depth questions. For example, instead of asking whether Sam “exceeded expectations,” individuals are being asked to rate a statement like, “I can always go to Sam for creative input.”

As the workforce changes, so too must the workplace. As we pass the mid-point of 2018, now is the time to revamp your old-school performance reviews and adopt a more continuous system that gives millennial employees what they want and what they need to stay engaged and successful in the workplace.

I was in court last week for a status conference in a wage-and-hour class action, and was talking to my opposing counsel, an active litigator in this arena.  I asked him if the new California Supreme Court case rejecting the de minimis standard was going to be big business for him.

His candid response surprised me, so I thought I’d share it.  He opined that it really isn’t hard to prevent class action lawsuits in California and the de minimis argument really isn’t necessary.  All an employer has to do is:

  • Pay per actual time punches; don’t round at all.
  • Require a 45 minute or one hour meal break; don’t bother with 30 minutes.
  • Provide meal breaks at the 4th hour (always way before the end of the 5th hour worked).
  • Have a fully compliant rest break policy and a strict policy against working off the clock.

To his list I would add:

  • Don’t schedule 6-hour shifts with a 6-hour or less meal wavier; schedule 5 hour shifts or just schedule the meal break.
  • Don’t rely on-duty meal waivers.
  • Update your handbooks every year, it really is cost effective in the long run.
  • Train your managers not to mess things up (even inadvertently), and keep records of that training.

He said that an employer who consistently does all of these things makes taking a class action case very un-interesting for plaintiff’s attorneys like him.

58097900 – class action, 3d rendering, rough street sign collection

Easy enough, right?  Well, it sounds a little bit expensive to me, and it also might create some employee relations issues.  But then again, it might  be worth a try….

Thermometer and pills on paper marked with Sick Leave labelAs employers know all too well, it is no small task keeping up with California’s State and Local Sick Leave laws. Just as frustrating are California’s many paystub requirements under Labor Code section 226. One paystub requirement that often gets forgotten is the need to include employees’ accrued sick time on paystubs.

Inclusion of sick time on paystubs is not governed by Labor Code section 226.  Instead, it is Labor Code section 246(i) which requires employers to list an employee’s accrued sick time on their wage statements or in a separate writing.  Luckily for employers, violations of this particular subdivision also do not trigger Labor Code section 226’s dreaded penalties.

The enforcement of the provisions from the Healthy Workplaces, Healthy Families Act of 2014 is governed by Labor Code section 248.5.  Section 248.5 makes clear that there is no private right of action to enforce the Act’s provisions.  Only the Labor Commissioner or Attorney General may bring a civil action against the employer for alleged violations.  Further, the section explicitly makes clear that “any person or entity enforcing this article on behalf of the public as provided for under applicable state law shall, upon prevailing, be entitled only to equitable, injunctive, or restitutionary relief, and reasonable attorney’s fees and costs.”  (Labor Code section 248.5(e))  Thus, individual employees cannot collect penalties for themselves, or for others pursuant to a dreaded PAGA claim.

Since employees cannot sue to collect individual penalties and cannot sue to collect PAGA penalties, is there any risk to employers who do not include accrued sick time on paystubs?  The answer is yes.  Even though an individual cannot seek penalties, the California Labor Commissioner can take action to recover penalties in the amount of $50 for “each employee or person whose rights under this article were violated for each day or portion thereof that the violation occurred” with a cap of $4,000.  Further, a claim for injunctive action still allows for recovery of reasonable attorney’s fees and costs.

Businessman handing over paycheck at desk in officeSo California employers, check those paystubs.  In addition to ensuring that they include all of the information required under Labor Code 226, add accrued sick time to the list of necessary information provided to your California employees.

 

An ancient maxim of jurisprudence states that “the law disregards trifles.” Or in Latin: De minimis non curat lex. The underlying principle is that some alleged wrongs are so trivial or hard to measure that courts don’t want to be bothered with them. At least, that’s true of most courts. In an opinion issued today, the California Supreme Court said that the “de minimis” doctrine is not part of California wage and hour Law.

The opinion arose from a federal case in which a class-action plaintiff claimed that nonmanagers were shortchanged for the time between when they clocked out and when they left the store. The evidence showed that, had the plaintiff been paid for this time, he would have earned an additional $102.67 over a 17-month period (or approximately 29¢ per workday). The federal court granted summary judgment for the employer based on the de minimis doctrine and plaintiff appealed to the Ninth Circuit. The Ninth Circuit asked the California Supreme Court to advise it as to whether California applied the de minimis doctrine to wage claims.

In today’s decision, the court answered the question in the negative, stating that there is no convincing evidence that California wage and hour laws incorporate the de minimis standard. That should be a surprise to the Division of Labor Standards Enforcement, whose Enforcement Policies and Interpretations Manual and opinion letters expressly adopted the standard. But the court explained that those aren’t binding. In knee-jerk fashion, the court again trotted out the principle that the Labor Code and wage orders must be construed liberally to protect employees and issued a unanimous opinion that should have plaintiffs’ class action lawyers celebrating all over the state. The court left open the possibility that there may be employee activities that are so brief or irregular that they don’t require compensation, but the four to ten minutes at issue in this case didn’t fit into that category.

What should employers do now?

  1. Do everything possible to ensure that employees don’t clock out until they’ve completed all work-related tasks. This includes security checks, closing shop, and exiting the work premises.
  2. If you use fixed time clocks, ensure that they are as close as possible to the exits. Or better yet, look at more advanced systems that employees can operate remotely, The court specifically referred to “advances in technology … shaping our understanding of what fractions of time can be reliably measured.”
  3. Ensure that whatever policy you use to round off workers’ time entries is facially neutral (i.e., you’re just as likely to round up as to round down).
  4. Require non-exempt employees to report any time they work after hours. Seemingly trivial tasks like checking e-mail or an online schedule could be compensable.
  5. Train managers on how and when to communicate with non-exempt staff after hours.
  6. If employees do after-hours work without authorization, discipline them, but pay for the time.
  7. Stop being surprised when the California Supreme Court rejects seemingly well-established legal principles on the basis that it needs to protect the most thoroughly protected employees on the planet.

On Fox’s Immigration View blog, partner Alka Bahal provides a detailed exploration of the I-9 inspection process, in the wake of a recent surge in I-9 audits carried out by the U.S. Immigration and Customs Enforcement (ICE) agency. All employers in the United States are required to have a Form I-9 on file for all employees to verify their identity and authorization to work in the United States.

We invite you to read Alka’s information-packed post addressing concerns facing employers:

Employers Beware: ICE Is Ramping Up I-9 Audits to Record Levels

E-Book Cover: Employment Compliance in the Age of Legalized MarijuanaThough cannabis is illegal under federal law, at least 30 states and the District of Columbia have legalized cannabis for medical use and nine states, as well as D.C., have legalized it for recreational use—a dichotomy that presents a unique and complex challenge for employers. In a new e-book, Fox attorneys Joseph A. McNelis III, Lee Szor, William Bogot and Joshua Horn provide an overview of federal and state marijuana laws, discuss specific aspects of the employment relationship affected by the legalization of marijuana in certain states, and offer practical guidance for employers on how to navigate this new and developing area of the law.

We invite you to download a PDF of the e-book.