California law requires employers with five or more employees to provide pregnancy disability leave (PDL) to employees who are disabled by pregnancy, childbirth or related medical conditions. New revisions to the PDL regulations have taken effect and include some notable substantive changes, including the following:
- Expansion of definition of “disabled by pregnancy.” The regulations now define the term “disabled by pregnancy” to include needing time off for prenatal or postnatal care, gestational diabetes, pregnancy-induced hypertension, preeclampsia, post-partum depression, and loss or end of pregnancy. The regulations indicate that the list of conditions is intended to be non-exclusive and illustrative only, so employers should take a broad view of the term “disabled by pregnancy.”
- Prohibition of discrimination based on “perceived pregnancy.” It is now unlawful to discriminate or harass an employee based on “perceived pregnancy,” which the regulations define as being regarded or treated by an employer as being pregnant or having a related medical condition.
The California Legislature was again busy in 2012 thinking of new ways to make it more difficult to do business in the Golden State. Here’s our annual overview of key changes to employment laws in California (see last year's summary here). Companies with operations in California should ring in the new year by ensuring their familiarity and compliance with these laws, which took effect on January 1, 2013.
- Computing Regular Rate of Pay for Nonexempt Salaried Employees (AB 2103): AB 2103 amends the California Labor Code to provide that for the purpose of computing the overtime rate of compensation required to be paid to a salaried, nonexempt employee, the employee’s regular hourly rate shall be 1/40th of the employee’s weekly salary, regardless of any agreement between the employer and the employee to the contrary. The Legislature made clear in the bill that its intent is to overturn Arechiga v. Dolores Press (2011) 192 Cal.App.4th 567, in which a California Court of Appeal upheld a written wage agreement that predetermined a nonexempt employee’s overtime compensation and included it as part of the employee’s salary. AB 2103 means that the method of calculating overtime for salaried, nonexempt employees cannot be modified by any agreement between the employer and the employee.
As we blogged about earlier this week, there have been a lot of recent cases before the National Labor Relations Board ("NLRB") testing the validity under federal labor laws of employer policies seeking to restrict employee use of social media.
The NLRB isn't the only place action is happening recently in this developing clash between employment law and social media. Responding to an emerging controversy about whether employers can require disclosure of social media passwords during the hiring process, the California Legislature has passed Assembly Bill 1844, which Governor Jerry Brown signed in late September. It takes effect on January 1, 2013.
This legislation prohibits an employer from requiring or requesting that an employee or job applicant disclose a user name or password for the purpose of accessing personal social media. AB 1844 also prohibits requiring or requesting that an employee or applicant access personal social media in the presence of the employer, or divulge any personal social media. Finally, it also prohibits retaliation against an employee or applicant for not complying with an employer's request for such information.
The law does contain a few limited exceptions. An employer may request that an employee divulge personal social media that the employer reasonably believes to be relevant to an investigation of allegations of employee misconduct or employee violation of law, provided that the social media is used solely for purposes of that investigation. Additionally, the law does not preclude an employer from requiring or requesting that an employee disclose a user name, password or other method for the purpose of accessing an employer-issued electronic device.
With the passage of this law, California becomes the third state (along with Maryland and Illinois) to legislatively limit employer access to social media accounts. Companies with employees in California should assess their hiring and employment practices to make sure they are in compliance with these new restrictions.
Companies with employees in California who are paid on commission should be aware of a new law requiring commission agreements to be in writing. As we've blogged about previously, California AB 1396 was enacted last year with a deferred effective date of January 1, 2013. That deadline is now coming up quickly, and affected employers should therefore begin to prepare for compliance.
The new law requires all contracts for employment involving commissions as a method of payment to be in writing and to set forth a method by which the commissions are required to be computed and paid. The employee must be given a signed copy of the agreement, and the employer must obtain a signed receipt from the employee. If the contract expires and the parties continue to work under the terms of the expired contract, the contract terms are presumed to remain in full force and effect until the contract is superseded or employment is terminated by either party.
California law defines commission wages as compensation paid for services rendered in the sale of the employer's property or services and based proportionately on the price of the service or product sold. The definition of “commissions” does not include short-term productivity bonuses such as those paid to retail clerks, and it does not include bonus and profit-sharing plans unless there has been an offer by the employer to pay a fixed percentage of sales or profits as compensation for work to be performed.
With the January 1, 2013 effective date of AB 1396 fast approaching, now is the time to ensure that agreements and procedures that comply with the new requirements are in place with respect to each of your commissioned employees in California.
In its long-anticipated decision in Brinker v. Superior Court, a unanimous California Supreme Court has clarified the scope of an employer’s obligation to provide meal and rest breaks to non-exempt employees in California. The Court's full opinion is available here.
California law requires employers to provide employees with a meal period of not less than 30 minutes for workdays lasting more than five hours, and to provide two meal periods for workdays in excess of ten hours, subject to waiver in certain circumstances. At issue in Brinker was whether an employer must ensure that an employee’s work stops for the required 30 minutes, or whether an employer is only obligated to make meal periods available, with no responsibility for whether they are taken. The Court concluded that an employer’s obligation is to relieve its employee of all duty, with the employee thereafter at liberty to use the meal period for whatever purpose he or she desires. The employer must relinquish control over its employee’s activities and give the employee a reasonable opportunity to take an uninterrupted 30 minute break, and the employer may not impede or discourage the employee from doing so. However, the employer is not obligated to police meal breaks and ensure no work is performed.
Timing of Meal Breaks
The Court held that an employer must provide a first meal period no later than the end of an employee’s fifth hour of work, and a second meal period no later than the end of an employee’s tenth hour of work. The Court found that there are no additional timing requirements, such as rolling five hour meal periods.
Under California law, employers must authorize and permit employees to take rest periods based on the total hours worked daily, at the rate of ten minutes net rest time per four hours worked or major fraction thereof. A rest period need not be authorized for employees whose total daily work time is less than three and one-half hours. The Court summarized the rest period obligation as follows: employees are entitled to ten minutes’ rest for shifts from three and one-half hours to six hours in length, 20 minutes for shifts of more than six hours up to ten hours, 30 minutes for shifts of more than ten hours up to 14 hours, and so on. The 10-minute breaks must fall within the middle of a four hour period of work, to the extent practicable.
Timing of Rest Periods
The Court held that employers do not have a duty to permit their employees a rest period before any meal period.
What Brinker Means For Employers
Brinker is generally regarded as a favorable ruling for employers, and the decision provides a roadmap for employers to reduce the risk of claims arising from alleged meal and rest period violations. Post-Brinker, it is essential that California employers carefully review and, if necessary, revise policies to state that meal periods are duty-free, 30 minutes in length and are to be taken before the end of the fifth hour of work. Rest period policies should now detail that rest periods are authorized and permitted in accordance with the specific standards set forth above.
Employers should continue to require employees to clock out and in for meal breaks, and to carefully monitor and manage whether employees are working through their meal periods. Employers are liable for straight time or overtime pay if they know or should have known employees have worked through meal breaks. If an employee is not clocking out for meals, an employer would likely be found to be on notice that the employee continued to work and thus should be paid for that time. Additionally, if there is a pattern of employees not taking meal periods, or taking meal periods of less than 30 minutes in length or after the end of the fifth hour of work, management should look into whether the employees are really being given the opportunity to take timely 30-minute off-duty meal periods.
Finally, supervisors and managers should be trained on the importance of allowing employees to take meal and rest periods as prescribed in Brinker. While the outcome in Brinker is good news for employers, managers who discourage or prevent employees from taking meal or rest breaks will expose the company to substantial liability.
Seasons' Greetings From The California Legislature--New Laws That Apply To Employers In January 2012
The California legislature has done plenty this year to leave in employers' stockings for the holidays--new employment laws that will become effective January 1, 2012. In addition to the new California Transparency in Supply Chains Act we blogged about earlier, after some eggnog and holiday cheer, employers will need to be aware of new legal obligations that will kick in as we kick off 2012. Here are the highlights.
“Anti-Wage Theft” Law (AB 469). The Wage Theft Prevention Act of 2011 requires employers to provide non-exempt employees, at the time of hiring, a notice specifying the employee’s rate or rates of pay and the basis on which the employee’s wages are to be calculated (such as hourly, daily, piece, salary, commission, etc.). The notice must also include applicable overtime rates, allowances (if any) claimed as part of the minimum wage, the employer’s designated regular payday, the name of the employer (including any “doing business as” names), the employer’s physical and mailing addresses, and contact information for the employer’s workers’ compensation carrier. The Act also requires the employer to notify employees in writing of any changes made to any of this information within seven days of the implementation of such changes, unless the changes are reflected on a timely wage statement or other writing required by law. The Act adds an element of criminal liability by providing that any employer who willfully fails to pay wage-related Labor Commissioner orders or court judgments is guilty of a misdemeanor.
Independent Contractors (SB 459). This new law cracks down on employers who misclassify their employees as independent contractors by imposing a fine of between $5,000 and $25,000 for “willfully” misclassifying a worker as an independent contractor. “Willful misclassification” means avoiding employee status for an individual by voluntarily and knowingly misclassifying that individual as an independent contractor. The law also imposes joint and several liability for a non-attorney consultant to advise an employer to willfully misclassify someone as an independent contractor.
Background Checks (AB 22). This law prohibits most employers from obtaining or relying on consumer credit reports regarding employees or job applicants, except in certain specified limited circumstances. The law does not apply to financial institutions or entities required by law to perform credit checks. Under the new law, employers may still obtain and rely upon credit reports for managerial employees covered by the executive exemption.
Pregnancy Disability Leave (AB 592 and SB 299). This law expressly prohibits “interference” with the exercise of any right provided under the California Family Rights Act, or due to disability by pregnancy, childbirth or related medical conditions. In a provision that may prove to be preempted by ERISA, the law also requires employers to maintain and pay for health coverage under a group health plan for any eligible female employee who takes up to four months of leave due to pregnancy, childbirth or a related medical condition in a twelve month period.
Gender Identity and Expression (AB 887). Existing law prohibits discrimination and harassment based on gender. This law expands the definition of “gender” to include both gender identity (how the person sees him or herself) and gender expression (how other people view the person). Under the new law, an employee must be permitted to dress consistent with the employee’s gender identity and expression.
Genetic Information Discrimination (SB 559). Discrimination in hiring or employment based on genetic information is now unlawful under the Fair Employment and Housing Act. Genetic information is defined to include the individual employee’s genetic tests, the genetic tests of the employee’s family members, and the manifestation of a disease or disorder in the employee’s family members.
Commission Agreements (AB 1396). This law requires all contracts for employment involving commissions as a method of payment to be in writing and to set forth a method by which the commissions are required to be computed and paid. The employee must be given a signed copy, and the employer must obtain a signed receipt from each employee. This law does not take effect until January 1, 2013, so employers have a year to prepare for compliance.
Agricultural Labor Relations (SB 126). This law authorizes the California Agricultural Labor Relations Board to certify union elections when employer misconduct affects the outcomes.
Under the California Transparency in Supply Chains Act, beginning January 1, 2012, large retailers and manufacturers that do business in California must disclose information on their websites about what they do to eradicate slavery and human trafficking from their supply chains. The new law applies to companies with worldwide gross receipts of over $100 million.
The law provides that if a covered company has a website, it must disclose certain information via a “conspicuous and easily understood link” on the homepage. The company must disclose to what extent, if any, it does each of the following:
- Engages in verification of product supply chains to evaluate and address risks of human trafficking and slavery, specifying if the verification was not conducted by a third party.
- Conducts audits of suppliers to evaluate supplier compliance with company standards for trafficking and slavery in supply chains.
- Requires direct suppliers to certify that materials incorporated into the product comply with the laws regarding slavery and human trafficking.
- Maintains internal accountability standards and procedures for employees or contractors failing to meet company standards regarding slavery and trafficking.
- Provides company employees and management, who have direct responsibility for supply chain management, training on human trafficking and slavery, particularly with respect to mitigating risks within the supply chain of products.
Notably, the law does not require companies to do anything to combat slavery and human trafficking. The law simply requires disclosure of the above information.
Although the law’s exclusive remedy for noncompliance is an action for injunctive relief brought by the Attorney General, the law does not limit remedies available for a violation of any other state or federal law. On an annual basis, the California Franchise Tax Board will submit to the Attorney General a list of companies required to make the disclosure.
California employers need to be mindful of a new kind of wage-hour class action – class claims arising from the “suitable seating” requirements of the California Industrial Welfare Commission’s wage orders.
The wage orders set forth what employers must do with respect to employees’ wages, hours and working conditions. There are 17 wage orders, applying to every industry and occupation. Most of the wage orders provide that “all working employees shall be provided with suitable seats when the nature of the work reasonably permits the use of such seats.” Unfortunately, the wage orders do not define “suitable seats” or “reasonably permits.”
In Bright v. 99 Cents Only Stores, a cashier at a discount retail chain filed a class action against her employer alleging that the company did not provide cashiers with “suitable seating.” Unlike the typical wage-hour class action, this case does not involve a claim that employees were underpaid. Instead, the plaintiff seeks to use the alleged wage order violation to trigger the penalty provisions of the California Private Attorney General Act (PAGA), which amount to $100 for each aggrieved employee for the first violation and $200 per pay period for each aggrieved employee for subsequent violations. The Court of Appeal recently ruled that the plaintiff can proceed with her case and, if she proves the employer did not provide suitable seating, recover PAGA penalties.
The retail industry is the first industry in the cross-hairs of the plaintiffs’ bar for seating violation class actions, but employers in the hospitality and manufacturing industries should expect to be targeted soon. The decision of the Bright court permitting PAGA penalties for seating violations may lead to class actions for violations of other obscure provisions of the wage orders, such as requirements relating to changing rooms, resting facilities and workplace temperatures. California employers should take immediate measures to ensure they are in compliance with the seating requirements and other provisions of the California wage orders.
The California Supreme Court has ruled that California’s daily overtime requirements apply to work performed in California by non-residents. In Sullivan v. Oracle Corp., three employees of Oracle who were not residents of California worked as “instructors” and trained Oracle’s customers in the use of the company’s products. Required by Oracle to travel, the plaintiffs worked primarily in their home states but also in California and several other states. California is one of the few states that requires payment of daily overtime for hours worked in excess of eight in a day. At issue in the case was whether these non-residents of California were entitled to daily overtime for days they worked in California.
In a unanimous decision, California Supreme Court held that the California Labor Code does apply to overtime work performed in California for a California-based employer by out-of-state employees, such that overtime pay is required for work in excess of eight hours in a day. In reaching this conclusion, the Court noted California’s strong interest in applying its overtime law to all non-exempt workers, and all work performed, within the state’s borders. The Court stated that to permit non-residents to work in California without the protection of the state’s overtime law would completely sacrifice, as to those employees, California’s important public policy goals of protecting health and safety and preventing the evils associated with overwork. Additionally, not applying California law would encourage employers to substitute lower paid temporary employees from other states for California employees, thus threatening California’s legitimate interest in expanding the job market.
While not great news for employers, this decision provides guidance to multi-state employers about how to pay non-exempt employees who work occasionally in California. However, the Court left some important questions unanswered. First, the decision does not directly apply to employers that are based outside of California. The Court specifically limited its holding to out-of-state employees working for California-based employers. The question remains whether an employer based outside of California must comply with California’s overtime rules for those days its non-California employees work in California. Even though the ruling does not specifically address this scenario, the reasoning the Court employed in reaching its decision leaves the door open for an argument that its holding applies to employers based outside of California. Also, the Court was not asked to address, and did not address, whether other provisions of California’s wage law -- such as the contents of pay stubs, meal period requirements, the compensability of travel time, the accrual and forfeiture of vacation time, and the timing of payment to employees who quit or are discharged -- apply to work performed in California by non-resident employees.
California-based employers with non-exempt employees in other states who occasionally work in California should immediately confirm that all such employees are paid overtime in conformity with California law when working in California.
A clear and comprehensive computer policy is an essential component of any employee handbook. Last week, a California appellate court ruled that when such a policy is in place, an employee who uses the company computer to e-mail her attorney about perceived harassment and discrimination in the workplace waives the attorney-client privilege.
In Holmes v. Petrovich Development Company, the plaintiff alleged that she was the victim of sexual harassment and retaliation arising from her employer’s response to her pregnancy. Before quitting her job, the plaintiff used her work computer to send e-mails to her attorney regarding possible legal action. As might be expected, the employer subsequently located these e-mails on its computer system, and used the e-mails as part of its defense of the employee’s lawsuit.
Ordinarily, communications between a client and her attorney are confidential and privileged. In this case, however, the employer’s policies provided that: (1) company computers were to be used only for company business, (2) the company would monitor its computers for compliance with this policy and thus might “inspect all files and messages … at any time,” and (3) employees using company computers to create or maintain personal information or messages “have no right of privacy with respect to that information or message.”
The court ruled that when the plaintiff used a company computer to e-mail her attorney about an employment action against her boss, with knowledge of her employer’s computer monitoring policy, the employee knowingly disclosed the information to the company, and her communications with her attorney lost their privileged character. Summing it up neatly, the court said that sending the e-mails via company computer “was akin to consulting her lawyer in her employer’s conference room, in a loud voice, with the door open, so that any reasonable person would expect that their discussion of her complaints about her employer would be overheard by him.” The defendants prevailed on all of plaintiff's claims.
This case reinforces that there are many benefits to an employer’s implementation of a well-written computer policy.