California Supreme Court Clarifies What Constitutes “Hours Worked” Under California Law

In Amanda Frlekin v. Apple Inc., No. S243805 (Feb. 13, 2020), the California Supreme Court responded to a request by the United States Court of Appeal for the Ninth Circuit to answer the following question:

Is time spent on the employer’s premises waiting for, and undergoing, required exit searches of packages, bags, or personal technology devices voluntarily brought to work purely for personal convenience by employees compensable as “hours worked” within the meaning of [California law]?

The Supreme Court answered the question and, so as not to bury the lead, the answer is an emphatic YES. Continue Reading

Federal Court Rejects Assembly Bill 51

Assembly Bill 51 (“AB 51”) prohibits employers from requiring employees to execute arbitration agreements as a condition of employment.  After being signed by California Governor Gavin Newsom on October 10, 2019, AB 51 was set to go into effect on January 1, 2020; however, on December 30, 2019, the Honorable Kimberly J. Mueller, Chief Judge in the Eastern District of California, granted a temporary restraining order enjoining its enforcement in a case brought by certain business groups, including the Chamber of Commerce of the United States of America and the California Chamber of Commerce.

On January 31, 2020, Judge Mueller issued a preliminary injunction enjoining the enforcement of AB 51 during the pendency of the litigation.  On February 7, 2020, Judge Mueller issued her full 36-page order.  In that order she provided a detailed analysis of the text of AB 51 along with its legislative history and the history of prior California legislation aimed at curtailing an employer’s ability to compel employees to waive certain rights.  The heart of the order, however, is Judge Mueller’s conclusion that AB 51 was likely preempted by the Federal Arbitration Act (“FAA”) because AB 51 (1) “singled out arbitration by placing uncommon barriers on employers who required contractual waivers of dispute resolution options that bear the defining features of arbitration” and (2) interferes with the goals of the FAA.

The parties to the action will assuredly continue their fight in the courts.  In the meantime, California employers can continue to require their employees to execute arbitration agreements as a requirement of employment.

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.

Continue Reading

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.

Continue Reading

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.

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