SHRM Quotes Adam Belzberg and Wes Miliband on the Effects of Drought on California’s Agricultural Labor Market

Stoel Rives labor and employment attorney Adam Belzberg and water resources attorney Wes Miliband were quoted in a Society for Human Resources Management (SHRM) article titled “California Drought Has Wide-Ranging Effects in Business Community.” The article examines the effects of California’s long-lasting drought on the state’s job market, specifically on the agricultural and food manufacturing sectors.

Belzberg describes how overall farm employment has actually been increasing, as producers have shifted to crops that are more labor intensive, with some growers resorting to the H-2A guest worker program because of the resulting labor shortage.

Miliband, meanwhile, discusses the potential impact of the Sustainable Groundwater Management Act, enacted in 2014, on farm employment. He notes it could affect growers using groundwater from basins that haven’t been adjudicated–but that are deemed to be either high-priority or medium-priority. Employment levels might decline if these growers have less water and, in turn, fewer acres to harvest. Even under those conditions, Miliband added, employment levels could remain stable or grow if more labor-intensive crops are used.

Read “California Drought Has Wide-Ranging Effects in Business Community,” published November 11, 2015.


The Federal Budget Deal Will Mean Higher OSHA Penalties for Employers

The Bipartisan Budget Act of 2015, signed by President Obama on November 2nd, contains a buried provision with the potential to substantially impact employers. Section 701 of the Act significantly increases the maximum civil penalties that may be imposed for violations of the Occupational Safety and Health Act. OSHA penalties — which have not changed since 1990 — must now be adjusted annually based on the Consumer Price Index. In addition, the penalties are subject to a “catch up” calculation intended to reflect changes in the CPI since 1996. The maximum allowable penalties for OSHA citations in 2016 are anticipated to increase as follows: penalties for “willful” violations are anticipated to increase from $70,000 to $106,158, and penalties for “serious” and “other than serious” violations are anticipated to increase from $7,000 to $10,616.

These numbers will only grow larger in coming years, as annual adjustments are made in relation to changes in the CPI.

Sacramento Becomes the Latest City in California to Adopt a Local Minimum Wage

Joining over a dozen other California cities that have adopted or are considering adopting a local minimum wage, the Sacramento City Council has voted to approve an ordinance that will raise the City’s minimum wage. Under the ordinance, the minimum wage in Sacramento will increase to $10.50 by 2017, $11.00 by 2018, $11.75 by 2019, and $12.50 by 2020. After 2020, minimum wage increases will be tied to the Consumer Price Index. Companies with fewer than 100 employees will be given an extra year to phase in the increased minimum wage increments. Employers will receive a credit of up to $2.00 an hour if they provide healthcare benefits to their employees.

Sacramento’s decision to adopt a local minimum wage adds to the growing patchwork of local minimum wages in California (and elsewhere). Companies with employees throughout California must take steps to ensure that they comply with the differing minimum wage requirements in localities up and down the state.

What Employers Can and Cannot Say During a Union Organizing Campaign

Employers probably are aware of the “quickie” election rules implemented earlier this year by the National Labor Relations Board (“the Board”), but they may not have considered all of the rules’ consequences. With as little as 15 to 20 days to respond to an organizing drive, employers must be prepared to educate employees about the risks and consequences of union representation on very short notice. While many employers have prepared as we described here, some still may not be ready to answer questions from workers and explain the consequences of unionizing the workplace. Responding to workers’ questions about a union without being properly prepared can make a mess of things, even if employers speak the truth.

A recent case from the Sixth Circuit Court of Appeals upheld a Board decision provides a good reminder that managers must be extremely careful even when speaking the truth to workers during an organizing campaign.

Be Careful What You Say

When a car dealership in Illinois learned that some employees were stirring up interest in unionizing, the plant’s general manager met with workers to discuss unions and answer their questions. The manager answered their questions honestly, but his answers still violated labor law, according to the Board and the Sixth Circuit.

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Affirmative Action Update: Challenging the Pay Gap

According to government studies, last year women overall made approximately 77 cents to the dollar in compensation compared to men. Black women made 64 cents to the dollar. Hispanic women made even less—55 cents to the dollar. Most pay disparity isn’t due to base salaries; it’s due to other forms of compensation such as bonuses, incentive pay, commissions, and overtime.

Attempting to scrutinize the pay gap in bonuses, incentive pay, commissions, and overtime, the Office of Federal Contract Compliance Programs (OFCCP), part of the U.S. Department of Labor (DOL), has issued and proposed two new rules that increase pay transparency and change reporting requirements. Although the OFCCP helps make employment opportunities generated by federal dollars available to everyone regardless of race, gender, sexual orientation, or other non-merit-based considerations, its stringent compliance requirements are making doing business as a federal contractor more difficult.

Pay Transparency Rule

Effective January 11, 2016, the Pay Transparency Rule prohibits federal contractor and subcontractor employers from discriminating or retaliating against employees (or applicants for employment) who ask about, discuss, or disclose pay information.  The text of the OFCCP’s final Pay Transparancy Rule from the Federal Register is here.  Although employers are not required to affirmatively disclose pay information to employees and applicants, the Pay Transparency Rule prohibits adverse action against those who ask about or discuss pay.

Section 7 of the National Labor Relations Act already protects employees who discuss their wages and working conditions, but the Pay Transparency Rule extends these protections to applicants of federal contractors and all federal contractor employees, including supervisors. It also requires a Pay Transparency Policy Statement to be included in existing employee handbooks and disseminated either electronically or by posting it in conspicuous places for all employees and job applicants to view. The Policy Statement is available here.

Employers should start to prepare for compliance now by carefully reviewing company policies and handbooks and to amend provisions that tend to prohibit applicants or employees from discussing pay. It’s also time to train managers that adverse action cannot be taken against employees or applicants who inquire about, discuss, or disclose their pay.

Equal Pay Report (proposed rule)

Under this proposed rule, which is expected to be finalized by the end of 2015 and effective starting early 2017, covered employers–(with more than 100 employees and a federal contract, subcontract, or purchase order amounting to $50,000 or more that covers a period of at least 30 days) will be required to supplement their annual Employer Information Report (EEO-1 Report). The text of the Equal Pay Report notice of proposed rulemaking from the Federal Register can be found here.

While these employers are already required to report their total number of workers within a specific EEO-1 job category by race, ethnicity, and sex, the Equal Pay Report will require additional information: (1) total W-2 earnings for all workers in each job category by race, ethnicity, and sex; and (2) total hours worked for all workers in each job category by race, ethnicity, and sex. The OFCCP will use these reports to select employers for audits and investigations. These audits will compare not only base pay, but bonuses, incentive pay, commissions, and overtime as well.

Now is the time for employers to look at pay disparities (based on total W-2 earnings, not just base salaries) and conduct proactive pay analyses. Do not wait until the new EEO-1 Report is due. Can pay disparities be explained by education, performance, or tenure? If not, employers should look at performance ratings and other factors before bonuses are finalized. Conducting a pay analysis through counsel will help keep these reports privileged and out of the hands of the OFCCP, EEOC, and plaintiffs’ counsel.

Tacoma, Washington Paid Employee Sick Leave Law Goes Into Effect in February 2016

Flu season is fast approaching, and this winter, Tacoma employers will join Seattle employers in being required to provide paid sick leave. On February 1, 2016, Tacoma’s new paid sick leave ordinance goes into effect.  As we have blogged about before, Tacoma is just the latest of a number of state and local jurisdictions around the country to enact a paid employee sick leave law over the last few years.

You can read the full text of the ordinance here.  Employers with employees in both Seattle and Tacoma should be aware of the nuances of both cities’ paid leave ordinances, as compared below:


Who is covered? Any employee who works in Seattle for an employer with at least 4 full-time equivalent employees (regardless of the location of the employer), excluding government employees (except City of Seattle employees) and students enrolled in work study programs.   Employees who only occasionally work in Seattle must work at least 240 hours in Seattle in a calendar year to be eligible. Any employee who works in Tacoma at least 80 hours in a calendar year (regardless of the location of the employer)
How much paid leave does an employee accrue? If the employer has 4-249 employees: 1 hour for every 40 hours worked

If the employer has 250+ employees: 1 hour for every 30 hours worked

1 hour for every 40 hours worked
When does an employee begin to accrue paid leave? Immediately upon hire Immediately upon hire (as of February 1, 2016)
When can an employee begin to use accrued leave? 180 days after the employee’s hire date 180 days after the employee’s hire date (as of February 1, 2016)
How much accrued leave can an employee use in a calendar year? If the employer has 4-49 employees: 40 hours

If the employer has 50-249 employees: 56 hours

If the employer has 250+ employees: 72 hours

40 hours
How much accrued leave can an employee carry over to the following calendar year? If the employer has 4-49 employees: 40 hours

If the employer has 50-249 employees: 56 hours

If the employer has 250+ employees: 72 hours

24 hours
Can the employer create its own “calendar year?” No. The calendar year must begin January 1st. Yes. The calendar year can begin on January 1st, the employee’s hire date, or the first day of the employer’s fiscal year.

Employers with employees in Tacoma should begin reviewing their policies to prepare for compliance.

NCAA Dodges Judicial Bullet in Federal Case Challenging Amateurism Rules

Football helmet on gridironAs a lifelong Boise State University fan, and gamer who pre-ordered the EA Sports NCAA Football 2008 game (with Jared Zabransky on the cover), I was probably more excited than your average legal beagle to read last week’s Ninth Circuit Court of Appeals decision in O’Bannon v. NCAA, et al. Case No 14-16601. However, the decision ultimately fell short of expectation, leaving me disappointed, just like most Broncos opponents.

Defending the Amateurism Status Quo

The case before the Ninth Circuit pits Ed O’Bannon, a former UCLA basketball player and defender of the collegiate athlete, against the NCAA, the staunch defender of amateurism in collegiate athletics, seeking to retain what it believes is a carte blanche exemption from the antitrust rules contained within the Sherman Antitrust Act of 1890.

At trial, the basic dispute was the one-hundred year old NCAA rule prohibiting student-athletes from being compensated for the use of their names, images and likenesses. For an athlete like Jared Zabransky, who graced the cover of that EA Sports game in 2008 following an unbeaten season and an MVP performance in the Fiesta Bowl, but with limited success in the NFL, those amateurism rules are harsh. In sum, it means that athletes who were primarily successful in college receive no compensation for sales of jersey with their number, appearances in video games, appearances in highlight reels and other marketing done by the NCAA and universities that involve the athletes’ likeness.

Ultimately, the trial judge in the O’Bannon matter concluded that the NCAA was indeed subject to antitrust rules and that the prohibition from any payment to student athletes in football and basketball was a violation of the Sherman Act. The trial court did not go so far as to fully unleash universities, but rather concluded that the so-called cost of attendance scholarship was appropriate and that schools could elect to pay athletes up to $5,000.00 per year in deferred compensation.

Ninth Circuit Plays Catch and Release

The Ninth Circuit, in what it describes as a “momentous case”, ultimately concluded that the NCAA amateurism rules are not exempt from antitrust scrutiny and must be analyzed pursuant to the “Rule of Reason.” However, by effectively rubber stamping the NCAA’s continued use of student-athlete likenesses without compensation, the Court greatly watered down the impact of its ruling.

To begin, the Ninth Circuit specifically concluded that the United States Supreme Court decision in NCAA v. Board of Regents of the University of Oklahoma, 468 U.S. 85 (1984) did not bless the NCAA amateurism rules as a matter of law. Thus, the Ninth Circuit applied the Rule of Reason factors. The Rule of Reason, a fact often lost in commentary on this issue, requires a three step burden shifting analysis in which the Plaintiff bears the burden of showing that a restraint produces an anticompetitive effect. In response, the Defendant must show that the restraint has procompetitive effects. And then, the plaintiff must show that any legitimate objectives can be accomplished in a substantially less restrictive manner. See Tanaka v. University of Southern California, 252 F.3d 1059, 1063 (9th Cir. 2001). The Ninth Circuit held that the amateurism rules satisfy the first two prongs of the Rule of Reason and then went on to make its own determination of whether less restrictive alternatives had been established by O’Bannon and his class members. In sum, the Ninth Circuit was offered the opportunity to legislate what it believed were less restrictive restraints on student-athletes. The Ninth Circuit upheld cost of attendance scholarships but struck down the $5,000.00 per year deferred compensation describing such payments as vitiating the amateurism rules. The simple impact of the decision was to apply the Sherman Act to the amateurism rules in name, but provide only cost of attendance scholarships to student-athletes as a remedy. This author finds the dissent authored by Chief Judge Thomas the more reasoned approach. Judge Thomas argues that the $5,000.00 deferred compensation payment is exactly the correct mechanism to compensate student-athletes and respond to the concerns of the NCAA.

In Boise, Idaho, the number 99 is synonymous with a player that many believe to have begun the renaissance of Boise State Football. Alex Guerrero, a defensive lineman on the 2006 Liberty Bowl team (then the biggest game the upstart team had ever been to) graduated before the heroics of the Fiesta Bowl. But Guerrero, a member of several NFL scout teams and now the CEO of Elite Sports Society, a sports marketing and brand management company, was one of the first to grab the hearts of Boise State fans. His number 99 flew off the shelves. And, that number 99 will always be connected to Guerrero. Guerrero has never received compensation for this connection. In response to the O’Bannon decision, Guerrero said “perhaps the NCAA wants to retain the simplicity of amateurism, but the NCAA and its member schools made the decision to commercialize this issue long ago. They made the decision to let the sport be driven by ESPN timeslots, marketing arrangements, Nike uniform deals and licensing.” When pressed on this point, Guerrero said “this issue should be dealt with on the school administration level. If the jersey becomes popular enough to merchandise, and is connected to the player or the player’s image, and the image is on the stadium or billboard to advertise, the athlete should be paid a reasonable amount for that effort.” Guerrero also balked at the notion that this overly commercializes the NCAA or destroys amateurism by saying “the athlete still has to perform. Maybe some schools offer more exposure or more marketing potential, but that is already true and the schools are recruiting on that very notion. But, none of this matters if the athlete does not perform.” Guerrero agreed with the Judge Thomas dissent and suggested that the majority opinion let the NCAA off the hook.

Next Stop, US Supreme Court?

The O’Bannon decision leaves a number of issues up for debate and for legal challenge. Even halfway through the decision, issues clearly exist that set up an appeal to the United States Supreme Court. The Ninth Circuit has now limited the scope of a previous decision and has created a conflict in precedent with three other circuits. The simple reality is that one-hundred year old amateurism rules are difficult to apply in this information age. It is unlikely that the Courts will get the final word and more likely that the NCAA will have to change its amateurism approach that has the effect of profiting a few favored institutions and its business partners.

Anti-Arbitration Bill Approved by California Legislature

* October 11, 2015 Update: Governor Brown announced he has vetoed AB 465

On August 27, 2015, the California Assembly approved AB 465. The bill, which was approved by the California Senate on August 24, would prohibit California employers from requiring most individuals to enter into arbitration agreements as a condition of their employment.

For years, California employees have primarily relied on the doctrine of unconscionability to argue against the enforceability of arbitration agreements. This argument typically requires two things: first, a showing that the agreement is procedurally unconscionable, meaning that there was some unfairness in the procedure or method in which the agreement was presented to the employee, and second, a showing that the agreement was substantively unconscionable, meaning that its terms were overly harsh or one-sided. If signed by Governor Brown, AB 465 would change that analysis.

AB 465 provides that arbitration agreements, and other waivers of legal rights, must be “knowing and voluntary and in writing, and expressly not made as a condition of employment.” This would represent a shift in California law as it would allow employees to invalidate arbitration agreements without a showing of both procedural and substantive unconscionability. In addition to this change, AB 465 makes several other changes, including (1) placing the burden of proving that an arbitration agreement was proper on the employer, (2) making arbitration agreements required as a condition of employment per se invalid, and (3) providing employees who are successful in invalidating these types of agreements the right to recover their attorneys’ fees.

With its passage by the California Assembly, the bill now goes to Governor Brown for his signature. Even if Governor Brown chooses not to sign the measure, employers should make sure that their arbitration agreements are in compliance with the current state of California law. If the bill is signed, however, then employers with operations in California should immediately take steps to ensure that their arbitration agreements comply with the new law or risk an influx in lawsuits brought by both individual and classes of employees.


Northwestern University Football Players Can’t Vote for Union Representation …but it’s not over until it’s over…

Depending on your allegiance, “the Play” was one of either the most memorable or the most infamous moments in the history of college football. It happened in the final seconds of 1982’s annual “Big Game” between the Stanford Cardinal and U.C. Berkeley’s Golden Bears. As the fourth quarter was winding down, the Bears had taken a 19-17 lead over the Cardinal, but Stanford quarterback John Elway would have none of it: he overcame a dire 4th-and-17 and drove the Cardinal into field goal range. The field goal was good, giving Stanford a 20-19 lead with just seconds left in the game. As Stanford prepared to kick off, Cal announcer Joe Starkey observed, presciently, that “only a miracle can save the Bears now!” Continue Reading

California Court Limits Defenses Available to Employers Requesting Employee Background Checks

Background checks can provide California employers with vital information concerning their employees. In order to protect individual privacy rights, however, the California legislature has created two separate laws governing the procedure for such checks: the Investigative Consumer Reporting Agencies Act (“ICRAA”), which generally governs reports concerning “character information,” and the Consumer Credit Reporting Agencies Act (“CCRAA”), which generally governs consumer credit reports. In a 2007 decision, Ortiz v. Lyon Management Group, Inc., the California Court of Appeal determined that the ICRAA was “unconstitutionally vague” if the report in question was arguably governed by both acts. On August 12, 2015, the California Court of Appeal for the Second Appellate District issued its opinion calling that 2007 decision into question.

In Connor v. First Student Inc., the employee alleged that her employer’s background check violated the ICRAA. Based on the Fourth Appellate District’s decision in Ortiz, the lower court dismissed the action after determining that the background report in question was arguably governed by both the ICRAA and the CCRAA. The employee appealed. The Second Appellate District reversed the lower court’s ruling, determining that Ortiz was wrongly decided because there was nothing in either the ICRAA or the CCRAA precluding the application of both acts to reports pertaining to both “character information” and creditworthiness.

With the decision in Connor, California employers must be sure that any background reports they obtain comply with all applicable law, including the ICRAA and the CCRAA as well as the other applicable federal laws and local ordinances. More importantly, and to the extent there was any need, Connor is yet another reminder that California employers must continue to be diligent as they traverse California’s complex legal landscape. Failing to do so risks not only statutory liability but also substantial legal costs.