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.

It’s that time of year again. Time for holiday parties, ugly sweaters, and summaries of legal developments.

The #MeToo movement has resulted in a slew of new bills addressing sexual harassment in the workplace. They include:

  • 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.
  • 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.
  • SB 1300 significantly expands liability under the Fair Employment and Housing Act.  The law lowers the burden of proof to establish harassment and provides stricter guidance on what constitutes “severe or pervasive” conduct that rises to the level of unlawful harassment (e.g. rejecting the “stray remark” doctrine that previously required more than one offensive remark to succeed on a claim).  It expands FEHA protection to any harassment by contractors, rather than just sex harassment.  It bars a prevailing defendant from being awarded attorney’s fees and costs unless the court finds the action was frivolous, unreasonable, or groundless. This bill also prohibits release of claims under FEHA in exchange for a raise or a bonus or as a condition of employment or continued employment, but presumably not in separation agreements.  These changes take effect at the start of the new year and we will monitor interpretations or guidance of these new and expansive provisions.
  • SB 1343 expands the requirements relating to sexual harassment training. Current law requires all employers with 50 or more employees to provide two hours of sexual harassment prevention training only to supervisors. The new law now mandates training for all employers with five or more employees and becomes effective in 2020.
  • The FEHA already protects employees and applicants from harassment in the employment relationship. SB 224 expands that reach to individuals who may not be employers, but hold themselves “out as being able to help the plaintiff establish a business, service, or professional relationship with the defendant or a 3rd party.” This would potentially include doctors, lawyers, investors, landlords, elected officials, lobbyists, directors, and producers.
  • Defamation laws make certain communications privileged. In other words they cannot support a slander or libel claim unless they’re made with malice. AB 2770 says that those privileged communications include complaints of sexual harassment by an employee to an employer that are made without malice and are based on credible evidence. This bill would also protect employers who (again, without malice) answer questions about whether they would rehire an employee and whether that decision is based on a determination that the former employee engaged in sexual harassment.

Other bills that address sex, gender, and pregnancy discrimination include:

  • AB 1976 deals with lactation accommodation. Employers were already required to provide a reasonable amount of break time to accommodate an employee desiring to express breast milk for her baby and make reasonable efforts to provide a private place for the employee to do so, in close proximity to the employee’s work area, other than a toilet stall. AB 1976 says its not enough that the location is not a toilet stall. Now it can’t be in a bathroom.
  • AB 2282 clears up lingering issues from last year’s ban on salary history inquiries in the interview process. Our own Nancy Yaffe explains it all in this post.
  • While not strictly employment-related, SB 826 requires public companies based in California to have at least one woman on their board of directors by the end of next year. The requirement rises to two female board members by 2021 if the company has five directors, or to three if the company has six or more directors.

There were even some new employment related bills that had nothing whatsoever to do with sex harassment or discrimination.

  • SB 970 requires 20 minutes of classroom or other interactive training regarding human trafficking awareness to hotel and motel employees whom the law deems “likely to interact or come into contact with victims of human trafficking.” This includes any “employee who has reoccurring interactions with the public, including, but not limited to, an employee who works in a reception area, performs housekeeping duties, helps customers in moving their possessions, or drives customers.”
  • AB 2610 creates an exception to the rule that meal periods must begin before the end of the fifth (or in certain conditions sixth) hour for certain drivers transporting nutrients and byproducts from a licensed commercial feed manufacturer to a customer located in a remote rural location.
  • In November California voters approved Proposition 11, which was a reaction to the California Supreme Court’s 2016 decision in Augustus v. ABM Security Services, Inc. As we explained at the time, the decision announced that employees were not “relieved of all duties” for meal and rest breaks if they were required to carry a communications device. Under Proposition 11, the Augustus decision won’t apply to emergency ambulance workers in the private sector. Toni Vranjes wrote an article for the Society of Human Resource Management about Prop 11 in which she interviewed me and other employment lawyers.

What lies ahead? Last April’s California Supreme Court decision in Dynamex Operations West Inc. v. Superior Court threw employers for a loop by announcing a new test for determining independent contractor status. Competing bills seek either to roll back the decision (AB 71) or codify it (AB 5). This is an issue where many workers who appreciate the flexibility of their freelance status have sided with employers in seeking to return to the earlier test.

What else lies ahead? More change, more surprises, more unpredictability. That’s what makes California employment law both aggravating and fascinating.

No lazy Sunday for Governor Jerry Brown!  Today he signed four new bills into law, taking major steps to combat sexual harassment in the wake of the #MeToo and #TimesUp movements. Here is a brief overview of the new laws and what they mean for California employers:

  • Senate Bill 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 review by counsel to ensure compliance with the new restrictions.
  • Senate Bill 1300 significantly expands liability under the Fair Employment and Housing Act (“FEHA”).  The law lowers the burden of proof to establish harassment and provides stricter guidance on what constitutes “severe or pervasive” conduct that rises to the level of unlawful harassment (e.g. rejecting the “stray remark” doctrine that previously required more than one offensive remark to succeed on a claim).  It expands FEHA protection to any harassment by contractors, rather than just sex harassment.  It denies a prevailing defendant from being awarded attorney’s fees and costs unless the court finds the action was frivolous, unreasonable, or groundless. This bill also prohibits release of claims under FEHA in exchange for a raise or a bonus or as a condition of employment or continued employment, but presumably not in separation agreements.  These changes take effect at the start of the new year and we will monitor interpretations or guidance of these new and expansive provisions.
  • Senate Bill 1343 expands the requirements relating to sexual harassment training. Current law requires all employers with 50 or more employees to provide two hours of sexual harassment prevention training only to supervisors. The new law now mandates training for all employers with five or more employees and becomes effective in 2020.  In addition, employers must ensure similar training in multiple languages for all workers so they know what sexual harassment is and what their rights are under the law.
  • While not employment-related, Senate Bill 826 requires public companies based in California to have at least one woman on their board of directors by the end of next year. The requirement rises to two female board members by 2021 if the company has five directors, or to three if the company has six or more directors.

Governor Brown did veto one of the most high-profile sexual harassment measure of the year, Assembly Bill 3080, which would have banned mandatory arbitration agreements.  Brown vetoed similar legislation on 2015 and the law, if passed, likely would have faced challenges that it was preempted by the Federal Arbitration Act.

Stay tuned for more in-depth coverage of these new laws.

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.

Maybe Governor Jerry Brown read my January blog post on references because, last week, he signed AB 2770 into law.  Effective January 1, 2019, employers are protected by an expanded privilege when giving an employment reference.  The privilege protects employers from defamation claims when advising a prospective employer that the applicant was the subject of a credible sexual harassment claim.

The claim must be “without malice” and based on credible evidence in order to be covered by the privilege.

Employers are currently protected from non-malicious references regarding the job performance or qualifications of an applicant for employment. Existing law also authorizes an employer to answer whether or not the employer would rehire an employee.  However, many employers don’t use their privilege to speak out against bad actors in their workplace. The primary concerns in opting not to give a substantive reference is fear of a defamation lawsuit or tortious interference with a business opportunity claim under Labor Code section 1050.  In failing to give a truthful reference, we have created a system where alleged harassers (and other terminated employees) get to move on and become someone else’s (client’s) problem.

Now, employers who want to ensure alleged harassers don’t continue their bad behavior at their next employer can feel more secure in speaking up about employee performance and policy violations when the next reference check call comes in.

A few days ago, many companies celebrated ‘Take Your Dog To Work Day’.  At an increasing number of companies, employees take their pets to work every day.  At other companies, in the ever-changing quest to be the cool kid on the block offering the latest and greatest benefits, the newest perk appears to be puppy playtime.  Google, Aetna and Intel are among the companies that have partnered with a non-profit that brings trained pets into the workplace to reduce employee stress levels for a few hours a week, while Amazon, Google, Ticketmaster, Etsy and Salesforce allow employees to bring their pets to work on a routine basis.

Photo credit: Bruin Suddleson

Pets in the workplace has been a hot topic in various forms for a few years. The issue of therapy or service dogs specifically garnered attention from the DFEH in its 2016 amended regulations requiring businesses to individually assess whether allowing a support animal at work is a reasonable accommodation for a disabled employee. The regulations define a “support animal” as “one that provides emotional, cognitive, or other similar support to a person with a disability, including, but not limited to, traumatic brain injuries or mental disabilities, such as major depression.” Anecdotally, we’ve also had an increase in hospitality clients who have questions about service dogs in restaurants and hotels. Given the media coverage and public trend of pet-friendly workplaces, businesses may face an uphill battle in establishing that allowing a support animal at work would be an undue hardship, which is the threshold for denying an accommodation. However, because I’m an employment lawyer, before opening your doggy doors to your employees’ four-legged friends, consider the arguments against a pet-friendly workplace which include potential liability for asthma-related disabilities, stress-related disabilities for those who may have a fear of pets, and even potential workers’ compensation claims for pet-related injuries. If you’re considering adopting a pet-friendly workplace culture, be sure to consider these risks and to implement thoughtful guidelines around the privilege to bring a pet to work, whether as an everyday occurrence or as a reasonable accommodation.

This Tuesday, on April 24, 2018, Emily Yukich and I will be hosting a business and HR boot camp for emerging and growing companies.  This practical presentation will emphasize best practices for partnerships and newly formed corporations, with a focus on hiring, onboarding, performance management and wage and hour advice.

Register here for complimentary breakfast and networking on April 24th from 8:30 a.m until 10:00 a.m. at our Fox Rothschild offices in Century City or contact me via email to dial in by phone.

 

Over the past few months, I have read blogs and opinion columns about whether alleged sexual harassers have been proclaimed guilty by their employers and the media without due process.  That is, are companies rushing to fire bad actors in the wake of the “me too” movement unfairly?

Some accused harassers are taking a play from Twisted Sister, saying “We’re Not Gonna Take It” and are seeking legal counsel to help.  In the past, lawsuits filed by alleged harassers have been few and far between, but a new case filed against HSBC bank a few weeks ago in New York, plus few threatened lawsuits we have seen, make me wonder if this will be a new trend.

Let’s talk about what due process entails.  The term “due process” is a legal term found in the Fifth Amendment to the U.S. Constitution which states that the government cannot deprive citizens of “life, liberty, or property without due process of law.” As would be expected, dozens of Supreme Court cases clarify the procedural and substantive elements of “due process.”  Notably absent is a due process requirement in the private employment context.

Employers have more flexibility to set parameters for employees than, let’s say, a judge has in a criminal proceeding.  And that makes sense.  But employers can still face liability for an inadequate investigation as discussed by my colleague Jeff Polsky.  Specifically, the standard for investigating harassment claims in California was established in the 1998 case Cotran v. Rollins Hudig Hall International, Inc., 1998 Cal. LEXIS 1 (January 5, 1998).  The court established employers must simply have a “reasonable and good faith belief” supporting any adverse action taken against an employee.  Given that employment lawyers are seeing the number of harassment claims in the workplace rise, employers should also be prepared for increased push back by alleged harassers.  Some of the ways employers can protect themselves, their workplaces, and ensure an adequate investigation and their own version of “due process” are found here.

The Fair Labor Standards Act now permits back-of house employees to participate in mandatory tip pools, provided no tip credit is taken against minimum wage.  The Consolidated Appropriations Act, 2018 budget bill effectively amends the FLSA to clarify two important points: back of house employees MAY participate in certain tip pools however supervisor/manager/owners MAY NOT participate in tip pools.

How does that affect employers doing business in California?

Labor Code section 351 permits mandatory tip pooling for an employee who provides “direct table service” or who is in the “chain of service.”  In 2009, the court in Etheridge v. Reins International California, Inc. (2009) 172 Cal.App.4th 908, 922 held that kitchen staff contribute to the “chain of service” and could receive tips under section 351.

In 2011, the DOL issued a regulation prohibiting back of house employees from participating in tip pools regardless of whether a tip credit was taken.  There was litigation over whether the DOL had authority to issue such a regulation, however the Ninth Circuit in Oregon Restaurant and Lodging Association v. Perez, 816 F.3d 1080 (9th Cir. 2016) held that the DOL acted within the scope of their power, effectively invalidating Etheridge and Cumbie v. Woody Woo, Inc., 596 F.3d 577 (9th Cir. 2010).

Now that the DOL regulations have been reversed by the recently passed budget bill and FLSA amendment, it seems as though the holdings of Etheridge and Woody Woo are back, clearing the way for back of house employee inclusion in tip pools.

But, we are exercising caution before advising clients to change their tip pools.  Still pending is an appeal to the Supreme Court in the Oregon Restaurant and Lodging Association case as well as a still valid DLSE Opinion Letter from September 8, 2005 that does not include kitchen staff as part of the “chain of service.”  Making changes to your California tip pool at this juncture seems premature as we don’t want you to be the test case.

I read an article yesterday about a writer accused of sexual harassment.  So what, you are probably thinking? While articles like that are commonplace these days, what infuriated me was that the individual had been investigated multiple times for sexual harassment related misconduct.  The alleged harassment occurred at numerous companies, with prominent HR departments, yet each time he was fired or left for a new job, his new employer had no idea about his past behavior.  And I feel partly to blame for that.

As an employment lawyer, we advise our clients that best practices with regard to references is to establish a policy where the company simply confirms dates of employment and job title(s) held.  We used to allow salary confirmation upon request of the departed employee, but that is no longer advised under California’s Fair Pay Act.  So, we have inadvertently created a system where alleged harassers (and other terminated employees) get to move on and become someone else’s (client’s) problem. The primary concerns in opting not to give a substantive reference is fear of a defamation lawsuit or tortious interference with a business opportunity claim under Labor Code section 1050.  There are many resources on the intricacies of these claims, so I won’t get into them here.

While there is no duty to provide a reference and saying nothing is still the most conservative course of action, I think some employers will want to be more progressive in the #metoo era and I’d like to give some guidelines on how not to sweep this under the proverbial rug.

  • California employers are protected by a qualified “common interests” privilege against defamation claims as a result of giving reference checks. So long as statements are based on credible evidence and are made without malice, employer references are given a special privilege that forms the basis of a defense against defamation.  California courts have regularly supported this employer privilege in the interest of public policy, which is now more prominent than ever.
  • If you have an existing policy on references, be consistent in following it, or change it to something you are comfortable with.
  • Designate one person to handle all references so the conduct and statements of individual managers don’t become a liability for the company.
  • If you opt to provide a substantive reference, the reference should not be misleading. Don’t give a glowing reference for an employee terminated for misconduct or there could be liability for fraud or misrepresentation, plus the potential for a wrongful termination suit from the alleged harasser.  The best bet is to be truthful, without providing too many unnecessary details.
  • Some examples of how to give a negative reference without disclosing details include: ineligible for rehire, investigated for policy violations or was the subject of complaints by coworkers.
  • While the fear (and fear of the expense) of being sued is enough to chill employers into keeping their mouths shut, and consequently perpetuating a cycle of harassment or other bad behavior, the reality is there are very few published cases on this in California, leading me to believe that while the risk is real, this isn’t likely to be a money-maker for the plaintiff’s bar.

Finally, while there is pending California legislation in the form of SB 820 that would prohibit confidentiality clauses in any sexual harassment settlement agreements, so far there are no added protections for employers providing substantive references.

The decision of how much, if any, information to provide, involves an individualized risk assessment, but I can see California’s public policy interest as a strong driving force in changing the current “no comment” practices of many employers.