2019: A Year to Forget for California Employers

Employees at work

From the California Supreme Court’s landmark decision in Dynamex to the passage of dozens of new employment laws, 2019 was an important year for California employers.  While some of these new laws were discussed here, this blog discusses some additional laws (there are a lot) and provides some updates on legal challenges to AB 5 and AB 51.

  • Pursuant to previously enacted laws, on January 1, 2020 California’s annual minimum wage increased to $13 per hour ($12 per hour for employees with 25 or fewer employees).
  • SB 778 clarifies California employers’ duties to provide harassment training to employees. Pursuant to previously enacted SB 1343, employers had a duty to provide harassment training to both supervisory and nonsupervisory employees once every two years.  SB 778 extends the initial deadline for providing new training to employees from January 1, 2020 to January 1, 2021.  It also clarifies that employees who completed harassment training in 2019 do not need to retrained for another two years and then every two years thereafter.

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Goodbye 2019, Hello 2020

As 2019 comes to an end, employers should know about important new obligations that will ring in their new year.  Our Labor & Employment experts offer some guidance on critical developments in Oregon, Washington, California, and Idaho that employers should be prepared for in 2020.

Oregon

  • The statute of limitations for discrimination and harassment claims is now five years, not one. This is a huge change and will greatly expand the number of discrimination claims against employers.  It may also impact employers’ retention policies; we recommend consulting with legal on what, if any, changes you should make going forward.
  • Starting January 1, 2020, employers should incorporate into their termination checklists a provision to provide the employee with a signed, written copy of the employee’s non-competition agreement within 30 days of the employee’s termination date.  Failure to do so will render the non-compete voidable and unenforceable.  This new law will apply only to non-competition agreements entered on or after January 1, 2020. There may be more changes afoot for Oregon’s non-competition law in the 2020 legislative session, such as limiting the restrictive period from 18 months to six months.  We encourage all employers to weigh in with key industry groups and the state legislature on this critical topic.  Contact us for more information.
  • Starting January 1, 2020, employees will be entitled to reasonable accommodations for pregnancy-related conditions, in addition to the time off already provided by the Oregon Family Leave Act. Reasonable accommodations might include modification of equipment or workstations, assistance with manual labor, more frequent or longer breaks, and modification of work schedules or job assignments.  Employers cannot require pregnant employees to take family medical leave if they can reasonably accommodate the employee’s limitations.  The new law also makes it unlawful to fail to hire an applicant or discriminate against an employee because of the need for an accommodation.  There is also a posting requirement (we expect BOLI to issue a poster before the law goes into effect).
  • Starting October 1, 2020, employee handbooks will be required to contain anti-harassment policies. Several specific provisions must be included.  See our blog post here for those requirements.
  • Also starting October 1, 2020, confidentiality, nondisparagement, and no-rehire provisions in a settlement agreement relating to discrimination or harassment will be prohibited, unless an employee requests it.
  • Starting in 2023 – yes, 2023 – Oregon’s paid family leave program kicks in and Oregon employers with at least 25 employees must provide eligible employees with up to 12 weeks of paid leave for a covered purpose (family, medical, or “safe” leave). The program will be funded with payroll contributions (40% employer/60% employee), the amount of which depends on an employee’s wages.  Employers do not need to begin collecting and remitting contributions until 2022, and benefits will not be available until January 1, 2023.  Employers that already provide benefits equivalent to or greater than the state program may be exempt from Oregon’s new requirements.  Click here for a more complete summary of the new program.  Contact your Stoel Rives attorney if you have any questions about these new requirements.

Washington

  • Beginning January 1, 2020, benefits under the Washington Paid Family and Medical Leave (“WPFML”) law will be available to eligible Washington employees. Employees may apply to the Washington Employment Security Department (“ESD”) for benefits representing a percentage of their wages when taking covered family or medical leave.  While the benefits are administered and paid by ESD, Washington employers are responsible for collecting and paying premiums to ESD, making quarterly reports to ESD, notifying employees of their WPFML rights, and holding employees’ positions and maintaining their medical benefits under certain circumstances.  For more detailed information, see our full blog post.

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Benefits Kick in for Washington Employees Under the New Paid Family and Medical Leave Act

Beginning January 1, 2020, Washington employees will have access to the benefits of Washington’s Paid Family and Medical Leave (“WPFML”) law, administered by the Washington Employment Security Department (“ESD”). Nearly all Washington employees will be eligible, with limited exceptions for self-employed, federal, and tribal employees, as well as employees who perform only occasional and incidental work in Washington.

The WPFML program is similar to worker’s compensation in that employers and employees pay premiums to ESD, and ESD administers and pays the actual benefits to eligible employees.  As of January 1st, covered employees who have worked at least 820 hours in Washington during either the first four of the last five completed calendar quarters or the most recent four completed calendar quarters will be eligible for WPFML benefits.  In contrast to federal FMLA leave requirements, those 820 hours do not need to be at the employee’s current employer; rather, they need only be with any employer in Washington.

If the employee meets the minimum hour requirements, he or she may apply to ESD for WPFML benefits for Family Leave (bonding with the employee’s child after birth, adoption, or foster placement; caring for a family member with a serious health condition; or leave for military exigency purposes akin to the federal FMLA) or Medical Leave (for the employee’s own serious health condition).  An employee may be eligible for up to 12 weeks of benefits for either Family Leave or Medical Leave or up to 16 weeks of benefits for a combination of Family Leave and Medical Leave.  Employees who experience an incapacitating health condition resulting from pregnancy are allowed an additional 2 weeks of benefits, up to a maximum of 18 weeks. ESD benefits will represent a specified percentage of the employee’s wages, up to a maximum of $1,000/week.  There is a 7-day waiting period for collection of benefits, with the exception of Family Leave for child bonding.

Employers’ responsibilities related to WPFM include the following:

  • Premiums & Quarterly Reports — The employer is required to collect and pay premiums representing .4% of employees’ wages. Employers must either pay themselves or collect from employees’ paychecks the Employee Portion: 63.333% of the premium, which may be deducted from employees’ paychecks.  Employers with more than 50 employees must pay the Employer Portion (36.667% of the premium). Employers with fewer than 50 employees need not pay the Employer Portion, but still must either pay or collect from employees the Employee Portion.  These premiums must be submitted to ESD quarterly, accompanied by quarterly reports.
  • Notice to Employees — The employer is responsible for putting up a workplace poster explaining WPFML benefits. If an employee goes out on leave for 7 consecutive days for a reason potentially covered by WPFML, the employer must notify the employee of the ability to apply for WPFML benefits.
  • Job Protection & Benefits Continuation Under Certain Circumstances — The employer must hold open the employee’s job (or an equivalent position) and maintain medical benefits if the employer has at least 50 employees, the employee has worked at least 12 months for that employer, and the employee has worked at least 1,250 hours in those 12 months preceding the leave. Federal FMLA can run concurrently with WPFML where applicable.  Employers cannot mandate that employees apply for WPFML benefits or use paid leave prior to or in conjunction with collecting WPFML benefits (though employees may elect to do so).

 

 

What You Need to Know About Balance Billing

On November 19, 2019, at 11 a.m. PT, I will be co-presenting a webinar with HMA’s Senior Manager, Compliance Services, Jessica Rothe, in which we will outline legislative efforts being made at the state and federal levels to protect patients from surprise balance billing by out-of-network providers. We will also discuss how health plan out-of-network cost containment strategies are impacted by these developments.

Topics Jessica and I will cover include:

  • The evolution of current surprise billing legislative policy.
  • The elements of state and federal policy proposals.
  • Pending surprise billing legislation and its impact on providers, patients, employers and payers.
  • What this means for Health Plans and plan design strategies in 2020.

For more information or to register, click here.

U.S. Supreme Court Hears Argument on LGBTQ Rights

This week the United States Supreme Court commenced its 2019-2020 term, during which it will examine significant questions related to the scope of Title VII of the Civil Rights Act of 1964.  Yesterday, on October 8th, the Court heard oral argument in a trio of cases on whether Title VII, the federal law that prohibits workplace discrimination “on the basis of sex,” prohibits discrimination based on sexual orientation and gender identity.  The issue is whether “sex” as used in Title VII is limited to gender or also includes sexual orientation or gender identity.  Currently, federal courts around the country are split on that question.  State laws are equally split, with 25 states (including Oregon, Washington, and California) protecting the rights of LGBTQ individuals and expressly prohibiting discrimination on the bases of sexual orientation or gender identity.  The Supreme Court’s ruling – expected sometime in 2020 – will shape the federal landscape on LGBTQ rights and, if it finds that Title VII prohibits discrimination against LGBTQ individuals, dramatically expand the rights of LGBTQ individuals in states that currently do not afford such protections.

We will keep you updated when the Court issues its ruling.

Department of Labor Announces Expanded Overtime Protection for over 1 Million Workers Beginning January 1, 2020

The U.S. Department of Labor announced today that an estimated 1.3 million workers will soon be eligible to receive overtime or be in line for a raise. Effective January 1, 2020, the minimum salary threshold for the “white-collar” exemptions under the Fair Labor Standards Act will be $684 per week or $35,568 per year, an increase from $455 per week and $23,660 per year. This rule comes more than three years after a similar rule was proposed by the Obama administration, but which raised the salary threshold significantly higher to $913 per week and $47,476 per year and ultimately was blocked by a federal court.

What Happened?

After the Obama rule was blocked, the Trump administration engaged in a prolonged rulemaking process to develop the current rule. Employers and other stakeholders weighed in, often with strong feedback that the Obama threshold was simply too high. Responding to those and other concerns, the current administration issued this new rule providing a smaller increase. The new rule also:

  • Raises the total annual compensation level for “highly compensated employees” from the currently enforced level of $100,000 to $107,432 per year; and
  • Allows employers to use nondiscretionary bonuses and incentive payments (including commissions) that are paid at least annually to satisfy up to 10 percent of the standard salary level, in recognition of evolving pay practices.

Importantly, the new rule does not change the “duties” tests under the “white collar” exemptions (for example, to meet the executive duties test, the employee must supervise at least two other full-time workers, exercise independent judgment on significant matters, have authority to hire and fire, etc.). The new rule also does not come with an automatic update to the salary threshold, unlike the 2016 proposal.

What Should Employers Do Now?

With an impending January 1, 2020 effective date, employers should not delay in reviewing their workforce classifications before year-end to determine whether any employees currently categorized as an exempt executive, administrative, or professional employee are paid less than $684 per week or $35,568 per year. (It also presents an opportunity to double-check that employees also meet the requisite duties test.) If so, employers need to begin preparations to either bump those individuals’ salaries to comply with the new thresholds or pay them overtime as appropriate. Budgetary, employee morale, and other considerations will factor into this decision. If employees are re-classified to non-exempt status, then other changes will follow, such as the requirement that employees track their time worked as well as the employer managing or limiting potential overtime to be worked.

California Codifies Dynamex – Now What?

On September 18, 2019, California Governor Gavin Newsom signed Assembly Bill (“AB”) 5, thereby codifying the California Supreme Court’s landmark decision in Dynamex Operations West, Inc. v. Lee.  This represents the culmination of a seismic shift in California employment law that began a little over a year ago.

To refresh, starting in 1989, the leading test in California for distinguishing employees and independent contractors was the multifactor standard set forth in S.G. Borello & Songs, Inc. v. Department of Industrial Relations.  Under Borello, the key question was whether the employer “[had] the right to control the manner and means of accomplishing the result desired.”  In addition to this factor, the Borello test also endorsed multiple “secondary” indicia in analyzing and determining the employment relationship.

In April 2018, the California Supreme Court issued its decision in Dynamex.  In Dynamex, the Court announced a new, more objective standard for determining worker classification for the purposes of the California wage orders.  Under this new standard, the burden is on the hiring entity to establish that the worker is an independent contractor who was not intended to be included within the coverage of the California wage orders.  In order to satisfy this burden, the hiring entity must establish all of the following:  (1) that the worker is free from the control and direction of the hiring entity in connection with the performance of work, (2) that the worker performs work that is outside the usual course of the hiring entity’s business, and (3) that the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed. Continue Reading

Oregon Supreme Court Affirms That Employers Can Be Liable for Post-Employment Retaliation

Oregon employers should be aware of the Oregon Supreme Court’s recent decision in McLaughlin v. Wilson, 365 Or 535, __ P3d __ (2019).  In McLaughlin, the court was asked to decide the scope of ORS 659A.030(1)(f), which makes it unlawful “[f]or any person to discharge, expel or otherwise discriminate against any other person because that other person” has opposed or reported harassment or discrimination.

The court broadly interpreted the statute in two key ways. First, the court held that any person can be liable for retaliation under the statute and that liability is not limited to employers. This means that supervisors, HR personnel, and other individuals may be held liable under the statute. This differs from federal Title VII, under which only employers can be liable for retaliation. Second, and perhaps of most interest to employers, the court held that the phrase “otherwise discriminate against” extends beyond discrimination that affects that terms and conditions of employment to certain post-employment acts such as, in this particular case, providing a negative reference. Although the court’s reading of the statute was broad, the court was careful to limit its holding to retaliation that has “a nexus to past or future employment.”

What does this mean for employers? Employers need to be cautious that potential liability does not stop after an individual’s employment ends. Providing a negative reference or impeding future employment prospects can give rise to a retaliation claim if it is done because the employee opposed discrimination or harassment.

California Employers Gain Time to Meet New Training Requirements for Employees

On August 30, 2019, California’s Governor Gavin Newsom signed SB 778, extending for one year the deadline for providing harassment prevention training to employees.  California employers now have until January 1, 2021 to provide the sexual harassment prevention training mandated by SB 1343, which took effect on January 1, 2019.

SB 1343 requires an employer with five or more employees to provide at least two hours of classroom or other effective interactive training and education regarding sexual harassment prevention to all supervisory employees, and at least one hour of such training to all nonsupervisory employees in California within six months of their assumption of a position.  That statute gave employers until January 1, 2020 to provide that training.

SB 778 was introduced as “clean-up” legislation, meant to address unintended consequences of SB 1343 that were making it difficult for employers to provide the newly mandated training by the January 1, 2020 deadline.  First, the language of SB 1343 made it unclear whether employers who had already trained employees in 2018 were required to re-train those employees by January 1, 2020.  Second, although SB 1343 gave employers the option of using online training created by the Department of Fair Employment and Housing (DFEH) to satisfy the new training requirements, DFEH made it clear that its online training would not be available until late 2019, making it difficult for employers to get their employees trained by January 1, 2020.

In addition to giving employers until January 1, 2021 to provide training, SB 778 also gives the DFEH more time to prepare and make its online harassment training available.  It also gives the DFEH more time to update its regulations on harassment prevention training to better define what is required for the new one-hour nonsupervisory harassment training.

For more information on the training requirements and Stoel Rives’ employee training services, please contact Vida Thomas at (916) 319-4669 or vida.thomas@stoel.com.

Ninth Circuit Requires Proof of “But For” Causation for Claims Under Americans with Disabilities Act

On Tuesday, August 20, the Ninth Circuit Court of Appeals in a case entitled Murray v. Mayo Clinic, joined four other Circuit Courts of Appeal in holding that a “but for” causation standard applies in ADA discrimination claims.  This standard is considered to make it more difficult for employees to prove discrimination claims than what had been applied previously and is referred to as “a motivating factor standard.”  The court reasoned that this change was required to comport with two earlier United States Supreme Court rulings that had adopted a similar standard based on similar statutory language found in the federal law prohibiting age discrimination in employment.

Using this new standard, ADA discrimination plaintiffs bringing a claim under 42 U.S.C. § 12112, which bars discrimination “on the basis of disability,” must now show that the adverse employment action would not have occurred but for the disability discrimination.  Under the former standard, a jury could have found an employer had violated the ADA even if the employer proved that it had a “mixed motive” for the adverse action, i.e., both legitimate and illegitimate reasons.

While employers can rejoice about this important change, any celebration should await review of their applicable state disability discrimination practice.  Many states have adopted standards that are different from what is afforded by this recent interpretation of federal law.  Indeed, employees in those states may eschew federal claims in favor of a more liberal state law cause of action.   Because employees can, and most often do bring claims under both federal and state law, juries will now face the unenviable task of applying two different legal standards that could yield different results:  no liability under federal law, but liability under state law.

We asked the lawyers in some of Stoel Rives’ offices to explain how this change might impact state law regarding disability discrimination is in their respective states:

Amy Joseph Pedersen in our Portland office notes that Oregon’s disability statute is construed consistently with the ADA and Oregon law uses language identical to Title I of the ADA—barring discrimination “on the basis of disability.”  Historically, Oregon courts have used a “substantial factor” test for these types of claims.  Amy does not believe that Oregon courts will adopt the “but for” standard for state disability claims, and because a “substantial factor” test is easier for plaintiffs to meet, plaintiffs will be more likely to prevail on state law disability claims than those made under federal law.

Chris Wall in our Seattle office says that the Murray decision is unlikely to have much day-to-day impact for Washington employers, because few claims in Washington are brought under the ADA—most plaintiffs rely on state law.  Washington courts have expressly rejected a “but for” standard for claims brought under the Washington Law Against Discrimination (“WLAD”).  Washington courts require plaintiffs to prove only that their protected characteristic was “a substantial factor” in the allegedly discriminatory employment action.  While Washington courts consider federal decisions as “persuasive,” Washington courts have noted that some WLAD provisions are “radically different” from federal law.  Washington courts interpret the WLAD with “liberal construction” and find that “the WLAD provides greater employee protections than its federal counterparts.”  Accordingly, Washington employers should take little solace in the Murray decision.

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