California Labor & Employment Law Blog

By Kent Sprinkle

After witnessing the birth and maturation of the wage and hour class action industry, now entering its late teens, California employers justifiably wonder whether these enormously costly lawsuits will ever slow down.  The answer is probably no, since the question of whether a class should be certified remains an unpredictable matter, and the current law does not provide any assurance that a trial court will decide the issue in a particular way.  Under the current state of the law, trial courts have enormous discretion in whether to certify a class.  Because of this, inconsistent results abound, notwithstanding almost identical factual and legal issues in cases with conflicting certification results.  Employers frequently feel compelled to pay out large settlements just to avoid the risky unknowns of class certification, since settlement demands often skyrocket once a class has been certified and the plaintiffs' attorneys can assert the claims of an entire class, rather than just threaten the possibility of a certified class.  Because so few class actions ever go to trial, judges remain free to declare class actions to be "manageable" even based on passing references to methodologies that are, as a practical matter, unproven, untried and often amount to pure speculation as to whether such methods would properly or effectively manage the issues in the case at trial.  However, absent a clear set of rules to apply, employers are left to roll the dice on each trial court's view of the certification question under a highly discretionary standard. Presumably, only a change in the law - either legislatively or by groundbreaking precedent - can provide the much-needed clarification and predictability for such cases.

On February 10, 2010, California Assemblywoman Audra Strickland introduced a bill, ABX8 38, that proposes substantial revisions to California's class action procedures.  Specifically, the bill "would create a comprehensive set of procedures to be followed in all class actions," and, among other things, "would establish the prerequisites for a class action and would prohibit the maintenance of a class action unless other criteria are met."  The proposed statutory language states that "the lack of clear standards for certifying and managing class actions in California has led to abuses of the class action device," and that "these abuses have undermined public respect for our judicial system."  The bill therefore proposes the implementation of "a uniform set of standards for the certification and management of all class actions in California that is modeled on Rule 23 of the Federal Rules of Civil Procedure and that will provide judges with adequate guidelines and tools for the fair and efficient oversight of class actions."  Perhaps most significantly, the bill proposes that the legislature explicitly "eliminate any presumption or policy in favor of class certification and allow class certification only when all requirements set forth in this act are satisfied."  On a practical level, the bill urges that its purpose is to rectify the economic harm caused by frivolous class action lawsuits, noting its purpose in seeking to "create jobs and promote a more robust economy by creating some guidelines for class action litigation." The proposed text asserts that "too often, frivolous lawsuits clog courts, harming businesses and consumers and draining California's economy" and that "the growing number of abusive cases has cost businesses millions of dollars."  In an attempt to prevent such costly abuses, the bill endeavors to "provide a balanced and fair set of standards and rules for class action lawsuits."

Were this proposed bill enacted, California employers would surely be relieved even at the possibility of increased predictability and clarity with respect to class certification rulings.  However, employers can expect aggressive opposition from trial lawyers' organizations and similarly interested groups who profit in the current climate of unpredictability and conflicting results.  We will continue to monitor the status of this proposed legislation and will report on any developments.

 

By Robin E. Weideman

The EEOC recently issued a proposed rule explaining the “reasonable factors other than age” (RFOA) defense under the Age Discrimination in Employment Act (ADEA).  The RFOA defense shields an employer from liability in a disparate impact age discrimination case where the employer establishes that the challenged practice, even though shown to have a disparate impact on older workers, was facially neutral and based on reasonable factors other than age.

Under the EEOC’s proposed rule, for the RFOA defense to apply, the challenged practice must be found to be objectively reasonable in the eyes of a reasonable employer in similar circumstances. The proposed rule lists several factors to be considered in evaluating whether the employer relied on reasonable factors other than age, including (1) the commonality of the business practice used by the employer; (2) the manner in which the practice was administered; (3) the employer’s awareness of the possible adverse impact of the decision on older workers; (4) steps the employer took to assess and mitigate the impact of the decision on older workers; (5) the existence of less discriminatory alternatives; (6) the extent to which management engaged in age-related stereotyping; and (7) the extent to which the employer trained management on how to avoid discrimination.

The EEOC is accepting public comment on the proposed rule until April 19, 2010.  To access the proposed rule, click here.
 

By Harley Bjelland

Here we go again.  The 65% government subsidy provided to individuals who lost their jobs between September 1, 2008 and February 28, 2010 has again been extended to March 31, 2010.  Under the Temporary Extension Act of 2010 employees who lose their jobs through March 31, 2010 may be eligible for the COBRA subsidy.  The Act  further provides that persons who experience a reduction in hours during the period from September 1, 2008 through March 31, 2010 may qualify for the subsidy.  This change will require a new notice to those experiencing a reduction of hours.  Stay tuned for safe harbor notices.  Guidance is not yet out.

By Mark Spring

The Arbitration Fairness Act (HR 1020) (http://www.govtrack.us/congress/bill.xpd?bill=h111-1020), which would ban pre-dispute mandatory arbitration agreements in non-union employment, remains stalled in Congress.  It likely will not get looked at further until the healthcare bill debate is resolved.

However, Congress and President Obama did act last month to restrict pre-dispute mandatory arbitration for non-union workers employed by certain government contractors. Buried in the Fiscal Year 2010 Department of Defense Appropriations Act (HR 3326)(http://www.govtrack.us/congress/bill.xpd?bill=h111-3326), signed by Obama in mid-December, is language that prohibits any employer that receives more than one million dollars from the Department of Defense from requiring employees or independent contractors working for them to sign agreements that require that disputes under Title VII of the Civil Rights Act of 1964 be subject to mandatory binding arbitration.  Section 8116 of the Act provides

(a) None of the funds appropriated or otherwise made available by this Act may be expended for any Federal contract for an amount in excess of $1,000,000 that is awarded more than 60 days after the effective date of this Act, unless the contractor agrees not to:

(1) enter into any agreement with any of its employees or independent contractors that requires, as a condition of employment, that the employee or independent contractor agree to resolve through arbitration any claim under title VII of the Civil Rights Act of 1964 or any tort related to or arising out of sexual assault or harassment, including assault and battery, intentional infliction of emotional distress, false imprisonment, or negligent hiring, supervision, or retention; or

(2) take any action to enforce any provision of an existing agreement with an employee or independent contractor that mandates that the employee or independent contractor resolve through arbitration any claim under title VII of the Civil Rights Act of 1964 or any tort related to or arising out of sexual assault or harassment, including assault and battery, intentional infliction of emotional distress, false imprisonment, or negligent hiring, supervision, or retention.

In addition, there is also language requiring contractors that are covered by this provision to certify that their subcontractors also will abide by these restrictions. The Act gives the DOD the ability to waive these requirements, but only if waiver is necessary for national security interests.

This amendment was added by Senator Al Franken of Minnesota.  In a clear example of bad facts make bad law, the motivating factor for this amendment was the case of Jamie Leigh Jones.  Jones worked for Halliburton in Iraq and alleged that she was gang raped by co-workers in 2005.  A pre-dispute mandatory arbitration agreement was used by Halliburton to try to keep Jones from filing a Title VII claim.  Although the 5th Circuit Court of Appeals ultimately ruled that the arbitration agreement did not apply to the gang rape, it took almost three years of court battles for Jones to simply be able to move forward with her claims.  For a complete copy of the Court of Appeals opinion, issued in September, click here:  http://www.ca5.uscourts.gov/opinions%5Cpub%5C08/08-20380-CV0.wpd.pdf

By Mark S. Spring

For many of us in California, Tuesday is the first day back from a three day holiday weekend.  However, in Massachusetts, it is also an election day.   Massachusetts citizens today will choose a replacement for the late Senator Ted Kennedy.

Most people believe it is a very close race between Democrat Martha Coakley and Republican Scott Brown.  The result of this race is much bigger than Massachusetts politics.  If Brown wins, the Senate will then have 41 Republicans, enough to fillibuster any Democratic sponsored legislation, including the Employee Free Choice Act (EFCA).  In reality, the success of many of the pro-employee legislation now sitting in Congress (FMLA expansion, WARN Act expansion, mandatory sick leave, EFCA, Arbitration Fairness Act, and many other bills) may be riding on Martha Coakley's ability to keep both Massachusetts Senate seats with the Democrats.

It may not be an election day in California, but California employers should pay close attention to what is happening in Massachusetts Tuesday.

By Robin E. Weideman

President Obama recently signed legislation enacted by Congress to extend the eligibility period for the COBRA subsidy by two months, to February 28, 2010.  The legislation also extends the maximum period for receiving the subsidy to 15 months (the maximum was previously 9 months).  The Department of Labor has issued a new fact sheet regarding COBRA subsidies, which is available here.  Additional reference material is available on the Department of Labor website at www.dol.gov/cobra.  Employers should review their employee notices and practices for compliance with the new legislation and extended eligibility and coverage periods.

By Harley Bjelland 

The U.S. Department of Health & Human Services has issued regulations expanding the obligations of employers, Covered Entities and Business Associates when a Breach occurs releasing Unsecured Protected Health Information (UPHI) inappropriately.  The regulations are available at the Department of Health & Human Services website here.  All employers with HIPAA Security Policies and Procedures need to update those Policies to include the new definitions and rules requiring notification of affected employees, the media and the U.S. Department of Health & Human Services when UPHI is impermissibly released.  The changes are highly technical, but have an effective date of September 23, 2009.  If you have any questions, contact Harley Bjelland at hbjelland@cdflaborlaw.com.

By Mark Spring

This month, legislation is being introduced in both houses that would guarantee paid sick leave for employees infected by the H1N1 virus or other flu like illnesses, where the employee works for a business with at least 15 employees.  The legislation is being considered on an emergency basis and if passed as such would take effect 15 days days after being signed into law.  The bills are currently contemplated to be temporary bills designed principally to combat the H1N1 virus and the leave provisions would automatically expire after two years.

The key sponsor of the broader Senate side legislation, Senator Chris Dodd, is quoted on his website as stating "Families in Connecticut—and across the country—shouldn’t have to choose between staying healthy and making ends meet. H1N1 flu is a public health emergency—and slowing the spread of the disease must be one of our top priorities. This bill will allow individuals with the H1N1 flu to follow the recommendations of the CDC and stay home instead of coming to work while sick, and will also make it easier for parents to care for children who must stay home due to the flu or school and child care closings. This is not simply a matter of workers’ rights—this is the right thing to do for families, and for the sake of everyone’s health."

The Senate Bill, which has yet to be introduced and will be sponsored by Senator Dodd, would allow employees to earn up to seven paid sick days to use for:

(a) to care for a child who is sick with the H1N1 virus or has flu like symptoms;

(b) to care for a child whose school or child care facility is closed because of the spread of contagious illness;

(c) issues related to their own flu symptoms or care.

The House bill, referred to as the Emergency Influenza Containment Act, is much narrower than the Senate version being considered. The House Bill, H.R. 3991, which was introduced by California Congress members George Miller and Lynn Woolsey, limits the leave to five days, provides that the leave will only be paid if the employer requires the employee to stay home, and provides for leave only for the employee's own illness.

A hearing was held on HR 3991 on November 17 before the House Committee on Education and Labor, a committee which Congressmember Miller chairs.  At the hearing, concern was expressed regarding limiting paid leave to situations where the employer requires the employee to stay home, with various member of Congress worried that by limiting the paid leave to situations where the employer mandates that the employee stay home, the legislation will force employers to get into the medical diagnosis business.

Currently the bill remains in Committee and the Senate bill has yet to be formerly introduced. We will continue to keep you updated on the status of these bills.

By Robin E. Weideman

Yesterday Governor Schwarzenegger signed SB 54 into law, granting same-sex couples legally married outside of California the same basic rights, benefits and obligations as married couples living in California.  This new law ameliorates some of the effects of the voter-approved ban on same-sex marriage that was passed in November 2008 and later upheld by the California Supreme Court.  SB 54 amends Section 308 of the California Family Code to provide that California will recognize same-sex marriages validly contracted outside of California, by ensuring that these same-sex couples will have the same rights, protections and benefits, and shall be subject to the same responsibilities, duties and obligations under law as married couples--with the sole exception of having the designation of "marriage" in California.

For California employers, this means that same-sex couples legally married outside of California will need to be afforded the same rights and benefits as registered domestic partners (in 2003, California enacted a law affording registered domestic partners many of the same rights and benefits as married couples).  This includes, of course, access to family health insurance plans and the ability to use certain types of leave to attend to the illness of a partner.

To view the text of SB 54, click here. 

By Robin E. Weideman

The EEOC has issued its long awaited proposed regulations interpreting the Americans With Disabilities Amendments Act of 2008.  The proposed regulations explain the new broad standard for determining whether an individual is disabled.  Under the proposed regulations, mitigating measures, such as medication or assistive devices, must be disregarded when determining whether an individual is disabled.  (The only specific exception is that eyeglasses/contact lenses can be considered.)  Thus, it generally is the individual’s non-medicated condition that must be considered in analyzing whether the condition substantially limits a major life activity.  Furthermore, the meaning of the term “substantially limits” has been relaxed such that it is no longer necessary to show that the condition prevents or even “significantly” or “severely” restricts the individual’s ability to perform a major life activity.  Instead, it appears to be enough if the individual is limited in ability to perform a major life activity when compared to most people in the general population.  

Where work is the major life activity at issue, the proposed regulations explain that the individual need not show that she is limited in her ability to perform a wide range of jobs, but rather that the individual is limited in her ability to perform her job and jobs with similar physical requirements.

Significantly, under the proposed regulations, a condition that is episodic or in remission (such as cancer or epilepsy) is still a disability if it would substantially limit a major life activity when active.

The proposed regulations list several conditions that “will consistently meet the definition of disability:” deafness, blindness, intellectual disability (formerly referred to as mental retardation), partially or completely missing limbs, mobility impairments requiring the use of a wheelchair, autism, cancer, cerebral palsy, diabetes, epilepsy, HIV or AIDS, multiple sclerosis and muscular dystrophy, major depression, bipolar disorder, post-traumatic stress disorder, obsessive compulsive disorder, and schizophrenia.

Conditions that ordinarily will not be considered disabilities are temporary, non-chronic impairments of short duration with little or no residual effects, such as the common cold or flu, or a sprain or broken bone that is expected to heal completely.

The proposed regulations also expand the meaning of the term “regarded as disabled.”  To succeed on a claim that the employer discriminated against an employee because the employer “regarded” the employee as disabled, the employee need only show that the employer took adverse action against the employee because the employer regarded the employee as having an impairment.  The employee does not have to prove that the employer believed the impairment “substantially limited” the employee’s ability to perform major life activities.  However, the impairment must be more than minor or transitory (such as a cold or the flu).  The proposed regulations provide, by way of example, that if an employer refuses to hire an applicant with a facial tic (even though the employer does not know the facial tic is caused by Tourette’s Syndrome), the EEOC would consider the employer to have regarded the applicant as disabled.

The ADAAA and its accompanying proposed regulations greatly expand the meaning of the term disabled under federal law.  This change does not greatly impact California employers who are already covered by California’s historically broad definition of disability under California’s Fair Employment and Housing Act.  However, multi-state employers will be impacted.  The change is also likely to change the focus of disability discrimination litigation such that there will be much less focus on litigating the issue of whether or not an employee is disabled (most will be) and more focus on the issue of whether the motivation for the employer’s adverse action was discrimination or a legitimate, non-discriminatory reason.

The proposed regulations can be accessed here.  The proposed regulations are open for a public comment period through November 23, 2009.  In addition, the EEOC will be holding four town hall meetings this November in Chicago, San Francisco, New Orleans, and Philadelphia, to share information and gather comments about the proposed regulations.  For more information, visit the EEOC website at www.eeoc.gov. 

Although the proposed regulations are not final yet, the ADAAA is final and is current law.  As a result, covered employers should ensure that management and/or human resource personnel are trained in understanding and applying the new law when addressing disability issues in the workplace.

By Robin E. Weideman

Yesterday California Governor Arnold Schwarzenegger vetoed several employment-related bills that would have caused more headaches for California employers.  The California Legislature had passed the following bills and sent them to the Governor for signature:  (1) AB 335, which would have prohibited forum selection and choice of law clauses in employment agreements, if the clauses provided for a forum other than California or the law of a state other than California for resolution of disputes between a California employee and the employer; (2) AB 793, which would have increased the statute of limitations and recovery period for compensation-related claims; (3) AB 943, which would have prohibited employers in most instances from obtaining credit reports for use in hiring decisions; and (4) AB 527, which would have created a presumption in Labor Commissioner proceedings that all pay records relating to the claim would be presumed false if the Labor Commissioner found that two or more records for any pay period were falsified.  The Governor vetoed each of these bills yesterday.

  

By Mark S. Spring

Last week, President Obama attended the AFL-CIO convention in Pittsburgh.  After that appearance, he attended a fundraiser for Senator Arlen Spector.  Earlier this year, Spector switched his party affiliation from Republican to Democrat in anticipation of his Senate seat being up for reelection in 2010.

 

As we have mentioned here in earlier articles on the EFCA, Spector is a key factor in the EFCA puzzle as he was the only Republican to vote for passage of the original EFCA bill in 2008.  Subsequently, earlier this year, before jumping parties, he said he could not support card check or the EFCA.  Now that he has switched parties, he appears to be waffling again according to the Wall Street Journal.  Apparently, Spector now favors card check and the EFCA.  Click here for a link to the WSJ editorial on the issue.

 

Another key issue in the EFCA debate is the open Massachusetts Senate seat.  Senator Edward Kennedy was a key supporter of the EFCA.  Under current Massachusetts law, Kennedy’s vacant seat will not be filled until a special election is held, which cannot occur until mid-January, 2010.  Massachusetts Democrats are considering changing this law to allow Democratic Governor Patrick to appoint an interim senator to the fill the vacant seat in the meantime.  Whether this occurs could greatly impact a vote on EFCA if the bill is considered before the Massachusetts special election.

 

Where does this leave us? Well we don't know for sure other than as follows:

 

1.    There have been rumblings about a compromise bill that eliminates or softens the card check provisions of the original bill for several months, but nothing has been introduced in either house of Congress.

 

2.    The original bill with 50% card check and no election at all appears to be close to dead and will be difficult to revive.  While it is not clear how the card check provision will be revised, all the discussions seem to indicate that mandatory arbitration will remain in any compromise bill.

 

3.    Until a compromise bill is introduced, many conservative democratic senators are sitting on the sidelines and are not voicing their positions.

 

4.    Healthcare reform is at the top of the agenda and until that issue gets resolved or buried, EFCA will likely remain on the back burner.

 

5.    Even though EFCA is on the back burner, the unions and their lobbyists are continuing to get in front of the key senators to push their position aggressively and make it known that they will not support re-election of those who do not support the EFCA.

 

In this author's opinion, politics and the economy will probably have the final say.  With many Senate seats up for re-election in 2010, there is no question that a number of Senators will cast their ballot on this issue by taking the position that they believe will garner them the most election support.  In addition, the economy will likely play a role in that some Senators will be more likely to approve the EFCA if they believe that the economy is on its way to recovery and that American businesses can absorb the additional costs that will likely follow the passage of EFCA. 

 

We will continue to keep you updated.

By Ryan McCoy and Mark S. Spring

Earlier this summer, Gov. Schwarzenegger signed the California Electronic Discovery Act into law.  The Act implements new rules for electronic discovery in California civil cases. Fortunately for parties that are called into both California and federal courts, the Act tracks closely the Federal Rules of Civil Procedure relating to electronic discovery.  The Act became effective immediately upon passage, as an urgency statute.

 

The Act extends the Civil Discovery Act - which regulates the production of hard-copy documents in civil litigation - to the production of electronically stored information ("ESI").  The Act defines ESI as "information that is stored in an electronic medium."  This covers potentially a sweeping category, including e-mail, voice-mail, instant messages, text messages, web stored information, documents, spreadsheets, databases, digital images, diagrams, and other digital forms requiring the use of computer hardware or software or other electronic storage means.

 

Federal law had gotten in front of the electronic discovery issues, amending the Federal Rules of Civil Procedure in 2006 to add provisions related to electronic discovery.  However, California lagged behind the feds and many other states.  In fact, prior to the passage of the Act, there was very little guidance for California judges on how to handle issues related to electronic discovery and rulings were very unpredictable.  The Act will now allow litigants and their attorneys to rely on basic standards that the courts will now be required to follow.

A complete copy of the Act is available by clicking here.

 

Some of the highlights of the Act include:

 

1. ESI, when demanded, must be produced in the form in which it is ordinarily maintained, or in a form that is reasonably usable, unless otherwise agreed between the parties.

 

2. Where a demand for production does not specify the form for producing ESI, the responding party must produce the information in a form in which the information is ordinarily maintained or in a form that is reasonably usable, but need not produce the same ESI in more than one form.

 

3. The Act starts with the presumption that all ESI is accessible.  Although the responding party may object to production on the grounds that the material is not reasonably accessible because of undue burden or expense, the objecting party bears the burden of demonstrating the validity of the objection.  If the objecting party establishes that the ESI is from a source that is not reasonably accessible because of undue burden or expense, the court may nonetheless order discovery if the demanding party can show good cause.  

 

4. Where a party responding to a production request for ESI objects to a specified form of production, or if no production form is specified in the demand, the responding party shall state in its response the form in which it intends to produce each type of requested information.

 

5. The Act prohibits imposition of sanctions for failure to provide ESI that has been lost, damaged, or otherwise destroyed as the result of the "routine, good-faith operation of an electronic information system."  Future case law will likely flesh out what this means.

 

6. With some limitations, the procedures for production of ESI apply to third parties who are compelled to produce information in response to valid subpoenas.

If you are involved in civil litigation being handled in the California state court system, you will want to become familiar with the California Electronic Discovery Act and your requirements under it as well as how you can use it to obtain information from your opponent.

Employers are reminded that effective July 24, 2009, the federal minimum wage has increased from $6.55 per hour to $7.25 per hour.  The increase will not impact California employers, who are already bound to comply with California's higher minimum wage of $8.00 per hour.  However, multistate employers need to be mindful of the federal minimum wage increase and ensure compliance.

By Mark S. Spring

Recognizing that there is not sufficient support in the Senate to pass the Employee Free Choice Act in its original form, Democratic legislators have been working behind closed doors on a compromise bill.  The exact terms of that bill or the exact timing of when it will be introduced remain a mystery.  However, information has started to leak out indicating the following:

 

1.    The compromise bill will eliminate the "card check" recognition provisions of the EFCA and will not allow union's to gain representation simply by presenting authorization cards.

 

2.    Under the compromise bills, the requirement of a secret ballot union election would be preserved but modified as follows:

      a.    The election period would be significantly shortened and required to be completed within no more than ten business days after the union presents authorization cards with at least 30% of the potential bargaining unit employees signing that they desire union representation;

      b.    Union organizers and campaign workers would have greater access to employees during the campaign period (details still being worked out);

      c.    Employers would be barred from requiring employees to attend anti-union meetings, but still could request their attendance at such meetings;

      d.    The mediation and arbitration provisions of the original EFCA would not be materially modified.

 

We expect that the bill will be formally introduced in the Senate either this week or next.  At that time, we will offer a more detailed analysis, but there is no question that even in its modified format, the EFCA is likely to significantly modify union organizing, union election campaigning and first contract bargaining process.

By Mark S. Spring

With a variety of Democrats publically coming out over the last two months and stating that they will not support the current version of the Employee Free Choice Act (which includes both card check and mandatory interest arbitration provisions), it is fairly clear that the current EFCA bill, introduced in both houses on March 10 (S. 560 and H.R. 1409), will not pass.  Various legislators are now considering introducing a compromise bill that would likely contain some concessions to the Democratic legislators that are not eager to support card check recognition and mandatory interest arbitration of the initial labor contract in this difficult business environment. 

  

Senators Tom Harkin and Arlen Spector seem to be leading the charge in trying to settle on a compromise bill.  The specific details of what such a bill would actually contain remain a mystery, as the negotiations have not been made public.  However, it is expected that any compromise bill is likely to:

 

      a) eliminate card check procedures, or only allow card check recognition only if a supermajority of bargaining agent employees signed card as opposed to the strict majority rule in the current bills; and/or

 

      b) eliminate interest arbitration for the first contract or modify the interest arbitration procedures to give the parties more time and discretion to reach a first contract through the collective bargaining/negotiation process.

 

As Congress continues to debate and negotiate the next steps for EFCA, we will continue to keep you updated. 

 

If you wish to review a recent article from the Wall Street Journal discussing the mandatory interest arbitration provisions of the bill, please click here.

By Robin E. Weideman

Below is a list of notable employment-related bills pending before the California Legislature for the 2009-2010 session.

AB 335 (Choice of Law/Forum Selection Clauses):  This bill would make void and unenforceable any provision in an employment contract that requires an employee to agree to a forum other than California, or to the laws of any state other than California, for the resolution of employment-related disputes.

AB 1000 (Paid Sick Leave):  This bill would require employers to provide paid sick leave of at least one hour for every 30 hours worked to all employees who work in California for 7 or more days in a calendar year.  An employee would be entitled to use accrued paid sick days beginning on the 90^th calendar day of employment.  Accrued, unused sick days would carry over to the following year, though small employers (10 or fewer employees) could limit an employee’s use to 40 hours in a calendar year and larger employers (more than 10 employees) could limit an employee’s use to 72 hours in a calendar year.  AB 1000 would also create a rebuttable presumption of unlawful retaliation in circumstances where an employer takes adverse action against an employee within 90 days of the employee (1) opposing a policy, practice or act that is in violation of the sick leave laws, (2) filing a complaint with the Labor Commissioner alleging a violation, or (3) cooperating in an investigation of an alleged violation.

AB 353 (Statute of Limitations/Libel and Slander):  This bill would extend the statute of limitations for a cause of action for libel or slander from one year to three years.

AB 793 (Statute of Limitations/Claims Relating to Discriminatory Compensation):  This bill would follow the recent United States Supreme Court decision in Ledbetter v. Goodyear Tire & Rubber Co., 550 U.S. 618 (2009), by providing that for any unlawful employment practice with respect to compensation, including discrimination claims and Labor Code violations, an employee’s cause of action accrues when any of the following occur:  (1) a compensation decision or other practice is adopted; (2) an individual becomes subject to a compensation decision or other practice; or (3) an individual is affected by the application of a compensation decision or other practice, including each time when wages, benefits, or other compensation is paid.

AB 514 (Lactation Accommodation):  This bill would expand an employer’s existing obligation to provide a reasonable amount of break time to employees for lactation purposes, by requiring that employers provide a 20-minute paid rest period for lactation purposes during each four-hour work period, immediately preceding or following the employee’s rest period.  These 20-minute paid rest periods for lactation purposes would be separate and in addition to the employer’s obligation to provide meal and rest periods to the employee.

AB 527 (Falsified Payroll Records):  This bill would provide that in circumstances where an employee files a complaint or claim with the Labor Commissioner, if the Labor Commissioner finds that payroll records submitted for any pay period relating to the claim have been intentionally falsified, all payroll records relating to that claim must be presumed false and disregarded.

AB 569 (Meal Periods/Exemptions):  This bill would provide an exemption from California’s meal period requirements for construction employees and for commercial drivers in the transportation industry who are covered by a collective bargaining agreement containing meal period provisions. 

AB 842 (WARN Act):  This bill would extend the period of notice required for a qualifying layoff, from 60 days to 90 days, under the California WARN Act.

AB 943 (Consumer Credit Reports):  This bill would prohibit employers from obtaining and utilizing consumer credit reports for employment purposes, except in limited circumstances such as where the information is substantially job related and the employee is in a managerial position and/or the information is required to be disclosed to the employer under law.  The bill exempts certain financial institutions.

AB 1001 (FEHA Protections):  This bill would add “familial status” as a protected class under the Fair Employment and Housing Act, thereby protecting individuals from employment discrimination based on familial status.  “Familial status” is defined as having or providing care for a child, domestic partner, grandchild, grandparent, parent, parent-in-law, sibling, or spouse.

SB 187 (Alternative Workweek Schedules):  This bill would allow an individual employee to request an alternative workweek schedule of up to 10 hours per day, 40 hours per week with employer approval, without the requirement of overtime compensation for hours worked in excess of 8 hours per day.

AB 849 (CFRA Leave):  This bill would expand leave rights under the California Family Rights Act by broadening the definitions of “child” and “parent” and by adding additional categories of family members for whom an employee could take leave to care for a serious health condition.

AB 5 (Electronic Discovery):  This bill would add provisions to the Code of Civil Procedure addressing electronic discovery in civil litigation.  This bill is intended to implement electronic discovery rules in California similar to those recently implemented under federal law by amendments to the Federal Rules of Civil Procedure.

We will continue to monitor the progress of these bills and post significant developments.  In the meantime, more information regarding the content and status of the bills may be found at www.leginfo.ca.gov.

By Mark S. Spring

Over the last few weeks, several key Democratic Senators have withdrawn their support for the current version of the Employee Free Choice Act.  Senators Feinstein (CA) and Carper (DEL) announced earlier this month that they will not support the bill.  Previous Republican supporter Arlen Spector announced in March that he is withdrawing his support.  Several other key Democratic Senators are also wavering and word is that Senator Kohl (WI) has removed his name as one of the Act's co-sponsors. 

 

The Act now looks like it is unlikely to pass through the Senate without some material compromise by the pro-union supporters.  Such a compromise would probably have include removal of the card check provisions or some substantial amendment to it (for example requiring a supermajority of cards to avoid election) to have a likely shot at passage. Congressman Sestak has already introduced one amended bill in the House, which contains virtually all the provisions of the EFCA, except for the card check recognition provisions.  That bill, HR 1355, is called the "National Labor Relations Modernization Act" and can be found by clicking here: http://thomas.loc.gov/home/gpoxmlc111/h1355_ih.xml

 

 

In any case, a Senate vote on the current EFCA bill, S 560 (http://www.govtrack.us/congress/billtext.xpd?bill=s111-560) is unlikely until the situation with the Minnesota Senate seat is resolved and the final senator (likely to be Democrat Al Franken) is officially seated.

By Chris Carlton

A week after President Obama sent a video message to the leaders of the AFL-CIO assuring them that "[w]e will pass the Employee Free Choice Act," the bill was re-introduced in both houses of Congress yesterday (March 10).  The bills, S. 560 and H.R. 1409, are essentially the same version of EFCA that was passed by the House in 2007 but then failed to get the 60 votes needed to defeat a Republican-led filibuster in the Senate.  The legislation would eliminate secret-ballot elections during union organizing drives and replace them with a "card check" scheme and, amongst other things, would allow a panel of federal arbitrators to decide the terms of the first labor contract if a newly-certified union and an employer could not agree on the terms within 120 days.

There is near-unanimous agreement that the prospects for EFCA becoming law in 2009 will depend on whether President Obama, the Democrat leadership, organized labor, and other supporters of EFCA can muster the 60 votes needed in the Senate to overcome another Republican-led filibuster.  (The bill is expected to pass easily in the House, and President Obama has repeatedly pledged to sign the bill into law if it makes it to his desk.)  At this point in time, however, there is much debate and speculation about whether the pro-EFCA forces will be able to get the 60 votes they need in the Senate.  While there are currently 56 Democrats in the Senate (and this number would increase to 57 if Al Franken prevails in the contested election in Minnesota) and two Independents who vote with the Democrats, it is unclear whether all of the Senators in the Democratic caucus will vote in favor of EFCA.  It is also unclear whether any of the 41 Republican Senators will vote to enact EFCA.

Yesterday, the Wall Street Journal reported that at least six Senators who previously supported EFCA -- five Democrats and one Republican -- "now say they are opposed or not sure."  The Journal article is here.  The Journal article specifically identified three Democrats who may now be "on the fence" -- Mary Landrieu (D-LA), Blanche Lincoln (D-AR), and Mark Pryor (D-AR) -- although just last week Bill Samuel, the AFL-CIO's legislative director, was quoted as saying that he was "confident" that all three of these Senators would vote in favor of EFCA.  The Journal article does not identify the other two Democrats who may be wavering, but it has been reported elsewhere that Senator Ben Nelson (D-NE) is now opposed to EFCA.

Yesterday's Journal article also identified Arlen Specter (R-PA) as the Republican Senator who may be wavering in his prior support for EFCA.  Even if Senator Specter withdraws his support for EFCA, however, there is still speculation that some "moderate" Republicans, such as Susan Collins (R-ME) and Olympia Snowe (R-ME), may succumb to lobbying from organized labor and support the passage of EFCA.

Democratic leaders in Congress have said that the Senate will vote on EFCA before the House takes it up.  Senator Tom Harkin (D-IA) said earlier this week that he hopes that the bill will be on the floor of the Senate by May.  In the meantime, expect the lobbying and public relations efforts of proponents and opponents of EFCA to intensify.

For quite some time, we have been recommending that employers should take proactive steps to ensure that they are ready in the event EFCA is passed into law.  Employers still seeking guidance should not hesitate to contact us. 

By Mark S. Spring

In late January, Republican Assemblyman Van Tran introduced AB 141, the Workplace Flexibility Act of 2009.  If passed in its current form, this bill would permit an individual non-exempt employee in California to request an employee-selected flexible work schedule providing for workdays up to 10 hours per day within a 40-hour workweek, and would allow an employer to implement this schedule without any obligation to pay overtime compensation unless the employee works more than 40 hours in a workweek or more than 10 in a workday.

Currently, unionized employees can have their union and employer agree to an alternative workweek schedule without complying with all the alternative workweek election requirements of the California Wage Order.  However, right now, the only way for a non-union, nonexempt California employee to work an alternative workweek that involves hours more than 8 in a day without daily overtime is through an alternative workweek agreement and election which would involve his/her entire work unit.  This bill is designed to give employees and employers more flexibility to work together individually to design an alternative workweek that the employee desires.

The bill does not allow an employer to force an employee to work an alternative workweek that the employee does not want to work.  The request for the alternative workweek must come from the employee under this bill.

Traditionally, the Democratic legislators have rejected legislation like this.  However, with the current economic climate, there may be a more reasonable chance that this bill gains traction.  Of course, we will continue to monitor the progress of this bill and provide updates.

For a copy of the bill click here.
 

By Robin E. Weideman

The EEOC has published proposed regulations implementing Title II of the Genetic Information Nondiscrimination Act of 2008 (“GINA”).  The text of the proposed regulations is here.  A public comment period is open through May 1, 2009.

GINA was enacted last year to prohibit discrimination in health insurance and in employment on the basis of a person’s genetic information.  The Act was passed in acknowledgement of the increasing prevalence of medical tests that exist to inform individuals whether they are at risk for developing certain diseases and disorders.  Along with the increased availability of such tests comes increased concern among the public that they may be at risk of losing health insurance and/or employment if insurers or employers know the results of these tests.  GINA was enacted to address these concerns and prevent discrimination based on genetic information.  Title I of the Act covers discrimination in group and individual health care premiums.  Title II covers discrimination in employment.  The proposed regulations issued by the EEOC pertain solely to Title II and discrimination in employment.

GINA restricts employers, with few exceptions, from deliberately acquiring genetic information about applicants and employees, and prohibits the use of such information in employment decision-making.  GINA also requires that any genetic information be kept confidential, and places strict limits on the disclosure of genetic information.  The proposed regulations explain these restrictions and provide detailed guidance on scenarios that would be considered unlawful deliberate acquisition of genetic information.  The proposed regulations also provide guidance on the exceptions to the rule, where employers are permitted to acquire genetic information in certain circumstances.  For example, an employer does not violate GINA if it inadvertently acquires genetic information (e.g. overhearing conversation with an employee about a family member who died of a genetic disease and/or obtaining genetic information in response to a valid request for medical certification to support a leave request or a request for reasonable accommodation).  The regulations make clear, however, that if an employer’s request for medical information is overbroad and the employer obtains genetic information because of the overbreadth of its request, the acquisition of such information violates GINA.

The proposed regulations also make clear that even if there is a statutory exception that allows the acquisition of genetic information, such information must still be maintained confidentially (as is the case with other employee medical information) and must not be used to discriminate against the employee.
 

By Robin E. Weideman

On February 20, 2009, legislation was enacted to amend California Labor Code section 511 and provide slightly more flexibility surrounding alternative workweek schedules.  As most California employers are aware, California law permits alternative workweek schedules that provide for shifts of up to 10 hours per day (without the necessity of paying daily overtime).  However, the requirements and parameters for adoption of alternative workweeks are so onerous that many employers choose not to consider alternative workweek schedules. 

In response to much criticism regarding the lack of flexibility afforded both employers and employees by California’s alternative workweek law, the State Legislature passed legislation (AB 5) that is at least a baby step toward providing more flexibility.  Although the new law retains the same burdensome election process for adoption of an alternative workweek, the law recognizes that if an employer offers employees a “menu of options” for alternative workweek schedules, the options may include a regular 8 hour per day/5 day per week work schedule among the menu of options.  Under the former law, California’s Department of Labor Standards Enforcement took the position that a regular 8 hour per day/5 day per week schedule could not be among the menu of options for an alternative workweek.  The intended effect of the new law is that allowing a standard workweek schedule among the menu of options will increase the likelihood that a sufficient number of employees will vote to adopt an alternative workweek schedule.  In reality, however, this is a change without a lot of substance because even under the prior law, employers had to accommodate any employee who could not work an alternative workweek schedule and instead needed to work a regular 8 hour per day/5 day per week schedule.

The new law also provides that employees can move from one alternative workweek schedule option to another from week to week, with the employer’s consent.  This is the most significant change to the alternative workweek rules, as the DLSE has previously taken the position that employees may not move from one schedule to another week to week and that doing so would invalidate the alternative workweek schedule.  Under the new law, employees could, for example, work a normal workweek schedule one week and a 4/10 schedule another week, so long as both schedules were among the menu of options adopted by employees under the alternative workweek proposal and the employer consented.

Finally, the new law defines the term “work unit,” which was previously undefined in the Labor Code.  In order to adopt an alternative workweek, two-thirds of the affected employees in a “readily identifiable work unit” must first vote to adopt the proposed schedule.  The new law defines “work unit” to mean a division, a department, a job classification, a shift, a separate physical location, or a recognized subdivision thereof.  A “work unit” may also consist of an individual employee as long as the criteria for an identifiable work unit are met.

Although the new law provides some increased flexibility for employers and employees in adopting alternative workweeks, California’s alternative workweek requirements remain fairly complicated, both in terms of adoption and administration.  This is a common area for employers to fall short on in terms of full compliance, and the new law does not go far enough in easing the ability of employers to comply.
 

By Robin E. Weideman

Marking what may be a bad sign of things to come for employers, President Obama signed his first bill into law Thursday--the Lilly Ledbetter Fair Pay Act.  The Act overturns a 2007 United States Supreme Court decision addressing the statute of limitations for claims of alleged discriminatory pay practices under Title VII.  In order to pursue a claim for discrimination under Title VII, an employee must first file an administrative charge with the EEOC within 180 days of the discriminatory act.  Failure to timely file an administrative charge bars the employee from filing a lawsuit.

Lilly Ledbetter worked for Goodyear Tire & Rubber for 19 years, until retiring in 1998.  Shortly before retiring, Ledbetter filed a claim with the EEOC alleging that she had been paid less than male employees as a result of unfair performance evaluations during her 19 years of employment. Ledbetter ultimately filed suit on her claim, and a jury found in her favor.  Goodyear appealed, arguing that the statute of limitations barred Ledbetter’s discriminatory pay claim because all of the alleged discriminatory pay decisions were made more than 180 days prior to Ledbetter’s EEOC charge.  Ledbetter argued that because she continued to receive pay checks during the relevant 180-day period, each pay check was a discriminatory act that started the 180-day clock running anew.  In essence, Ledbetter argued that because she continued to suffer the effects of the allegedly discriminatory pay decisions up until the end of her employment, the statute of limitations had not yet run.  The case eventually made its way to the United States Supreme Court, which ruled in favor of Goodyear and held that Ledbetter’s claim was indeed barred by the statute of limitations. The Court held that Title VII’s statute of limitations required Ledbetter to bring her charge within 180 days of the alleged discriminatory pay decision being made and communicated to her.  The Court rejected the argument that each subsequent paycheck Ledbetter received re-started the statute of limitations.  The Court reasoned that the paychecks were not themselves acts of intentional discrimination; if anything, they were effects of a prior decision and “current effects alone cannot breathe life into prior uncharged discrimination.”

Shortly after the Ledbetter decision was issued in May 2007, Congress began work on a bill to overturn the Court’s decision.  The bill did not have sufficient support in the Senate during the Bush administration, and Bush had vowed to veto the bill in any event, referring to it as a job-killer bill. Following the election of Barack Obama as President, the Lilly Ledbetter Fair Pay Act sailed through Congress and has now been signed into law.  Under the Act, an unlawful employment practice “occurs” every time an employee is affected by application of a discriminatory decision or practice.  This includes each time wages are paid following a discriminatory pay decision.  In effect, employers may have exposure for pay decisions made many years before any allegation of discrimination is made by an employee.

Interestingly, the effective date of the Act is May 28, 2007—the day before the United States Supreme Court issued its decision in the Ledbetter case—meaning that the Act operates retroactively and would apply to all cases pending since then.

In light of this new law, employers have even more reason than before to carefully analyze, substantiate and document pay decisions, and to ensure sufficient mechanisms are in place to retain such information for a sufficient period of time.

By Christopher W. Carlton

In the past few days, U.S. Senator Harry Reid (D-Nev.), the majority leader in the Senate, has given public assurances to organized labor that the Senate will get to the Employee Free Choice Act (EFCA) no later than this summer.

As discussed in prior blog posts, EFCA is proposed federal legislation that would radically change long-standing labor laws.  Most significantly, EFCA would make it much easier for labor unions to organize employers by eliminating the traditional requirement of a secret-ballot election to determine whether a union is favored by a majority of employees.  Organized labor has repeatedly proclaimed that enactment of EFCA is its top priority for 2009 and views this legislation as the required "pay back" for its support of Democrat candidates in 2008.  The Senate is considered the key battleground for EFCA because the House of Representatives has previously passed the Act. President Obama co-sponsored this legislation as a U.S. Senator and has publicly vowed to make passage of EFCA a priority in his Administration.  The primary obstacle to passage of EFCA appears to be whether Senator Reid and other Democrats can muster the 60 votes needed to defeat a filibuster in the Senate.  In his first public pronouncement since President Obama's inauguration, Senator Reid called EFCA an "important piece of legislation" and promised that the Senate would "get to it by sometime this summer."

As a reminder, to help employers prepare for this new legislation, CDF will be conducting workshops in each of our five California offices during the week of February 2-6, 2009, to aid pro-active employers who want to be prepared for the potential impact of EFCA.  If you are interested in attending one of these workshops, click here for our more detailed brochure and the registration form.  Spots still remain for all five sessions.
 

By Robin E. Weideman

The DOL has issued a revised FMLA poster, incorporating the new military family leave provisions under federal law and reflecting changes under the recently published final regulations, which take effect January 16, 2009.  All employers covered by the FMLA are required to post this information.  The new DOL poster is available here. 

By Robin E. Weideman

Last week, the IRS announced the standard mileage rates for 2009.  Effective January 1, 2009, the standard mileage rate for business miles driven will be 55 cents per mile.  This is a slight decrease from the current rate of 58.5 cents per mile, which was implemented in response to rising gas prices in the second half of 2008. 

As a reminder, it is generally recommended that California employers utilize the IRS mileage rate to reimburse employees who drive in the course of their job duties.  California Labor Code section 2802 requires employers to indemnify employees for all expenses necessarily incurred in the performance of their jobs.  California's Department of Labor Standards Enforcement takes the position that where driving expenses are involved, reimbursement at the IRS standard mileage rate creates a presumption of compliance with section 2802.  Reimbursement at a rate less than the IRS standard rate creates a presumption of non-compliance.  If faced with a claim for failure to reimburse expenses, the burden would be on the employer to prove that its mileage reimbursement rate adequately covered all of the employee's actual costs of operating a vehicle for employment purposes.

Employers should review their mileage reimbursement policies for the new year to ensure compliance with California law.  

By Mark S. Spring

This is a follow up to my blog posting last week on the Employee Free Choice Act.  Since Tuesday, I have received a number of questions about the election and the Employee Free Choice Act.  I wanted to provide you with my latest thoughts.

We know a number of things we did not know last week:

1.    Obama is our President Elect and he was a sponsor of the Employee Free Choice Act.
2.    The Senate looks like it will be made up of about 56-57 Democrats, plus two independents (plus Senator Spector who previously supported the legislation).
3.    The House of Representatives is so overwhelmingly Democratic that it would be very surprising if they did not continue to vigorously support the Employee Free Choice Act and its current provisions.  The real questions center around the Senate and our new President.

Here are a number of the key remaining questions/issues:

1.    Will the newly elected Senators from traditional Republican states (some who were elected by the slimmest of margains) be willing to alienate the Republicans and business owners who supported them in the election by supporting the Act?
2.    What do the Democrats plan to do about Independent Senator Joe Lieberman, who has supported the Act and other Democrat sponsored legislation but aligned himself directly with McCain in the election?  If they punish him and kick him out of the Democratic caucus, will he still support the Act?
3.    The economy is much worse than it was earlier this year.  Will Senator Spector and perhaps some Democratic Senators decide to withdraw support for the Act at this time, given the economic conditions?  What about Obama - does he really want to pursue such divisive legislation right out of the box when most feel he needs to spend time bringing the country together and taking a more moderate approach to do so?
4.    At least two Senate seats are still up for grabs (Minnesota and Georgia). How will the outcome of these races (and perhaps Oregon and Alaska, too) influence the issues.
5.    After all the money the unions provided to elect more Democrats, would the Democrats and Obama consider watering down the bill to try to reach a middle ground to appease the business community, but perhaps anger their more ardent pro-union supporters?

Right now, there are many more questions than answers and I doubt anyone, including our next President, can predict with any reasonable certainty how this will all shake out.  Perhaps the best analysis I have seen since the election is the November 6 article in the Wall Street Journal which can be found here. 

In any case, these are my thoughts and we will continue to keep you updated on any developments related to this very important piece of federal legislation.
 

By Robin E. Weideman

The Golden Gate Restaurant Association has filed a petition with the Ninth Circuit Court of Appeals requesting en banc review of the court’s September 30 decision holding that San Francisco’s employer mandated healthcare ordinance is not preempted by ERISA.  The City of San Francisco has until approximately November 12 to file a response to the petition.  The Ninth Circuit previously ordered that the City could enforce the healthcare mandate while the appeals process was pending.  It is expected that the mandate will continue to remain in effect during the pendency of any en banc review by the Ninth Circuit.  To read the Golden Gate Restaurant Association’s updates regarding the litigation, click here.

By Robin E. Weideman

Last week, the Department of Homeland Security issued a Supplemental Final Rule regarding the procedures employers should follow in responding to “no-match” letters from the Social Security Administration.  Employers may recall that last year a federal judge in the Northern District of California enjoined implementation of the DHS’ no-match rule.  This Supplemental Final Rule was crafted in response to the injunction in an effort to address the court’s concerns.  The Supplemental Final Rule provides explanation and background for the DHS’ no-match rule, but does not substantively change the procedures previously proposed by the DHS for responding to no-match letters.  The DHS has stated that “in the coming days” it will be appearing before the Northern District of California to request that the injunction be lifted so that implementation of the rule may proceed.  To read the DHS press release regarding the Supplemental Final Rule, click here.  To read our past blog entry explaining the no-match rule, see our August 15, 2007 entry under New Laws and Legislation.
 

By Mark S. Spring

Besides determining who our next president will be, November 4 will also play a huge role in determining the future of labor relations in this country.  The Employee Free Choice Act (EFCA) is pending in Congress.  The bill, which was co-sponsored by Barack Obama, would make sweeping pro-union changes to the National Labor Relations Act and will change labor relations in the United States if enacted.

If the EFCA is enacted in its current form, representative elections would be eliminated and unions would have automatic recognition/certification simply by presenting valid signed authorization cards from over 50% of the bargaining unit.  Most believe that union representation in the United States would skyrocket based on this change alone.  In Canada, where five of the ten provinces provide for card majority recognition, union membership is almost triple the rate of the United States (depending on the survey used, most estimate Canadian unionization rates at around 33% and the United States around 12%, with almost half of the United States number coming from the public sector).

The EFCA would also change the bargaining process.  The EFCA would require parties to meet and begin collective bargaining within ten (10) days of a certified union's request to do so.  If the parties fail to reach agreement after ninety (90) days of bargaining, either party may request mediation.  If the parties do not reach agreement within thirty (30) days of the mediation request, the collective bargaining agreement shall be determined by interest arbitration and the initial contract would be imposed for two (2) full years, without any ratification from the employees or the employer.

Finally, the EFCA ratchets up penalties against employers without any corresponding increase for unions that violate the terms of the National Labor Relations Act.

The House of Representatives already passed the EFCA by a vote of 241 to 185.  51 Senators support the bill.  All Democrats have voted for the bill and were joined by Republican Senator Arlen Spector.  All other Republicans, including John McCain, voted against it. Sixty (60) votes are needed for cloture to avoid filibuster of the bill.  Thus, in order for the EFCA to pass through the Senate, 9 more senators must vote for the bill.  Whether the bill passes through Congress will thus turn on one issue:  How many Republican Senators are voted out of office and replaced with Democrats?

There are currently ten states where it is reasonably possible that this can happen.  Therefore, if you are interested in figuring out whether the EFCA will become a reality, besides watching the Presidential returns, you will want to keep track of the following Senate races next Tuesday:

State	Republican Incumbent
New Hampshire	John Sununu
North Carolina	Elizabeth Dole
Colorado	Wayne Allred
Oregon	Gordon Smith
Georgia	Saxby Chambliss
Mississippi	Roger Wicker
Minnesota	Norm Coleman
Virginia	John Warner
New Mexico	Pete Domenici
Alaska	Ted Stevens

If nine of these ten seats turn over to Democratic senators, or there is a major upset in another jurisdiction leading to a Republican seat turning over to a Democrat, it is very likely that the EFCA will pass through Congress in its current form or in a very similar form.  If it passes, there is little question that Barack Obama will sign the bill and that John McCain will veto it.

This election will not only determine whether we have our first African-American President or first female Vice-President, but will also determine the future of labor relations in the United States. Catch up on your sleep this weekend because Tuesday may be a very late night.
 

By Robin E. Weideman

The San Francisco Office of Labor Standards Enforcement announced last Friday that the City’s minimum wage will increase from $9.36 per hour to $9.79 per hour effective January 1, 2009.  The increase is triggered by the San Francisco Minimum Wage Ordinance, which was passed by voters in 2003 and calls for annual rate adjustments.

The federal minimum wage still stands at $6.55 per hour, while the California State minimum wage is currently $8.00 per hour.  For more information on San Francisco’s Minimum Wage Ordinance and required posters, click here.
 

By Robin E. Weideman

Effective January 19, 2009, San Francisco employers with 20 or more employees (including full-time, part-time, temporary employees, and employees who perform work outside of San Francisco) are required to offer commuter benefits to employees who work an average of at least 10 hours per week in San Francisco.  An employer may comply with this new City Ordinance in one of three ways:  (1) allowing employees to elect to exclude from taxable wages commuting costs incurred for transit passes (MUNI, BART, AMTRAK, CALTRAIN, SAMTRANS, or GOLDEN GATE TRANSIT) or vanpool charges, up to a maximum of $110 per month; (2) supplying the employees with paid transit passes for the public transit of the employee’s choosing, or reimbursing the employee for such costs, up to a current maximum of $45 per month; or (3) furnishing employees with employer-provided and funded transportation in a vanpool, bus or similar vehicle operated by or for the employer and at no cost to the employee.

Employers who fail to comply may be issued administrative citations and fines by San Francisco’s Department of the Environment.  You can find more information on the Commuter Benefits Ordinance on San Francisco's Department of Environment website by clicking here.
 

By Robin E. Weideman

On September 25, 2008, President Bush signed the ADA Amendments Act of 2008 into law.  The Act overturns prior United States Supreme Court precedent interpreting the meaning of “disabilities” under the ADA, and greatly expands the scope of covered disabilities. 

Prior to its amendment, the ADA defined a “disability” as a physical or mental impairment that substantially limits one or more major life activities.  In a series of cases, the United States Supreme Court held that determining whether a condition substantially limits a major life activity depends on consideration of whether “mitigating measures,” such as medication or medical devices, ameliorate the individual’s impairment.  The Supreme Court also held that the terms “substantially limited” and “major life activities” were to be strictly construed and that only individuals who are not prevented or severely restricted in their ability to engage in activities that of central importance to most people’s lives, will qualify as “disabled” under the ADA.  The new Act reverses this Supreme Court precedent by specifying that the Act’s definition of “disability” is intended to be interpreted broadly and in favor of coverage.  In addition, the Act specifies that the determination of whether an impairment substantially limits a major life activity generally is to be made without regard to the presence of mitigating measures (e.g. prosthetics, hearing aids, medication) that may ameliorate the impact of the impairment.  Furthermore, the Act makes clear that an impairment need only limit one major life activity in order to qualify as a disability.  The Act specifically defines “major life activities” to include “caring for oneself, performing manual tasks, seeing, hearing, eating, sleeping, walking, standing, lifting, bending, speaking, breathing, learning, reading, concentrating, thinking, communicating, and working.”  It also includes “the operation of a major bodily function.”

Also of significance, the Act newly specifies that an impairment that is only episodic or is in remission (such as epilepsy or cancer) still qualifies as a “disability” if it would substantially limit a major life activity in its active state.

Impact of the Act on California Employers

Although the Act greatly expands the definition of “disability” under the ADA, this will not have much impact on California employers, who are already covered by California’s Fair Employment and Housing Act and its historically broad definition of “disability.”  However, for multi-state employers who are only covered by the ADA in some states, they will need to examine their policies and practices to ensure they are complying with the new law.  Whereas much of the litigation under the ADA has historically focused on the issue of whether the employee was actually “disabled” under the ADA, it should be expected that under the new law, that issue will be much more easily decided in favor of the employee.  As a result, the litigation focus will be on the employer’s action and whether it was truly discriminatory or whether it was taken for legitimate, non-discriminatory business reasons.
 

By Sarah Drechsler

Governor Schwarzenegger has signed into law a landmark disability bill which attempts to both provide increased equal access to individuals with disabilities and to reduce disability-access litigation against employers.  Senate Bill 1608 attempts to strike a fair and reasonable balance between these two goals by providing:

• A 19-member state advisory committee on disability access.

• Improved continuing education in disability access laws for building inspectors and architects.

• Incentives for building owners to use state-certified access specialists to ensure compliance.

• A new court procedure to encourage early resolution of disability access lawsuits.

• Clarifications in the law to help reduce unwarranted damages and attorneys’ fees.  Particularly important is a provision clarifying that plaintiffs may recover damages only for a violation they personally encountered or that deterred access on a particular occasion.  Also, the bill clarifies that a court can consider reasonable written settlement offers made and rejected in determining the amount of reasonable attorneys fees to be awarded at the end of a case.

Portions of Senate Bill 1608’s provisions will go into effect on January 1, 2009, while implementation of other provisions will be delayed until July 1, 2009.  A full version of the bill is available here.  This bill is good news for California employers, who have faced a proliferation of lawsuits capitalizing on flaws in the disability laws and inconsistent interpretations by the courts to seek monetary profits rather than to gain access for the disabled.  The bill also serves as a good reminder that employers need to regularly evaluate their businesses to ensure that they are complying with disability access laws.
 

By Robin E. Weideman

Earlier this week, California Governor Arnold Scwharzenegger signed AB 10 into law, amending California Labor Code section 515.5 as it relates to the overtime exemption for certain computer professionals.  Prior to AB 10’s enactment, computer professionals had to be paid at least $36 per hour to qualify for exemption under section 515.5.  Furthermore, since the exemption was based on an hourly rate, employers were not relieved of the obligation to track hours worked for these employees in order to ensure that the employees’ compensation met the minimum threshold of $36/hour for all hours worked.  With the enactment of AB 10, computer professionals who are paid a salary of at least $75,000 for full-time employment qualify for the exemption.  The bill relieves affected employers and employees of the obligation of tracking hours worked. 

The new law was enacted as urgency legislation and takes effect immediately.

Of note, the minimum hourly rate and salary level applicable to the computer employee exemption will be adjusted annually by California’s Division of Labor Statistics and Research.  Employers relying on this exemption are also cautioned that it is not applicable to every type of computer occupation.  The computer professional exemption under Labor Code section 515.5 is limited to specified types of computer employees whose jobs primarily involve duties such as systems analysis, development, design, and documentation.  The exemption generally does not apply to entry-level computer employees or employees engaged in the manufacture, maintenance or repair of computer hardware and related equipment.  Additional details regarding the types of computer duties that satisfy and do not satisfy the exemption are provided in the text of section 515.5.  Employers must be mindful that applicability of the exemption depends not only on an employee’s level of compensation, but also on the nature of the employee’s specific job duties.

By Robin E. Weideman

Earlier this week, Governor Schwarzenegger vetoed a bill that would have provided certain employment protections to users of medical marijuana.  AB 2279, sponsored by San Francisco Assemblyman Mark Leno, sought to overturn a recent California Supreme Court decision (Ross v. Ragingwire Telecommunications, Inc., 42 Cal.4^th 920 (2008) holding that employers may lawfully terminate an employee who tests positive for marijuana, regardless of whether the employee claims the marijuana usage was medically prescribed.  If the Governor had signed AB 2279 into law, employers would have been generally prohibited from firing or discriminating against applicants or employees for their use of medical marijuana.  In vetoing the bill, Gov. Schwarzenegger indicated that he was concerned with interfering in employment decisions relating to marijuana use and that employment protection was not the purpose or goal of the 1996 ballot measure that legalized medical marijuana use in California. 

By Candice F. Boyd

Gov. Schwarzenegger has signed a law making it illegal to read or send text messages while driving in California.  The bill imposes a $20 fine for a first offense and $50 for repeat offenders "using an electronic wireless communications device to write, send, or read a text-based communication," which includes e-mails.

 

Schwarzenegger says the law he signed Wednesday encourages drivers to keep their hands on the wheel and eyes on the road.  It follows previous laws restricting the use of cell phones while driving.  Since July, motorists have been required to use hands-free devices, and drivers under age 18 can't use any electronic devices.

Employers with employees who drive as part of their job duties should review their driving policies to ensure they are in full compliance with the new law.

By Robin E. Weideman

Earlier this month, Governor Schwarzenneger signed into law AB 2075, which amends California Labor Code section 206.5 and makes it a misdemeanor for an employer to require an employee, as a condition of payment of wages, to sign a statement of hours worked that the employer knows is false.

Prior to amendment, Labor Code section 206.5 prohibited employers from requiring an employee to execute a release of wage claims, unless payment of the wages has been made. The amendment extends this protection by defining “execution of a release” to expressly include requiring an employee to execute a statement of hours worked during a pay period which the employer knows to be false. Proponents of the legislation argued that the new law was needed because some employers are attempting to guard against wage and hour litigation by requiring their employees to certify records of hours worked that are false and do not accurately reflect overtime and other hours worked. The new law goes into effect January 1, 2009.

California employers who require their employees to certify their timesheets each pay period in order to be paid should evaluate their practices. Employers who knowingly permit employees to record “default” hours as opposed to actual hours worked, and/or who know employees are recording inaccurate hours, may be subject to new risk and liability under California law.

By Mark S. Spring

California law is likely to get even stricter regarding the use of electronic devices while driving.  SB 28, sponsored by California Senator Joe Simitian, makes it illegal to send or read a text message or email while driving.  California law already prohibits such conduct for drivers under 18. This bill would extend those prohibitions to all drivers.  The bill adds a new section to the California Vehicle Code and if signed that section would provide:

 

(a) A person shall not drive a motor vehicle while using
an electronic wireless communications device to write, send, or read
a text-based communication.

(b) As used in this section "write, send, or read a text-based
communication" means using an electronic wireless communications
device to manually communicate with any person using a text-based
communication, including, but not limited to, communications referred
to as a text message, instant message, or electronic mail.

 (c) For purposes of this section, a person shall not be deemed to
be writing, reading, or sending a text-based communication if the
person reads, selects, or enters a telephone number or name in an
electronic wireless communications device for the purpose of making
or receiving a telephone call.

 (d) A violation of this section is an infraction punishable by a
base fine of twenty dollars ($20) for a first offense and fifty
dollars ($50) for each subsequent offense.

 (e) This section does not apply to an emergency services
professional using an electronic wireless communications device while
operating an authorized emergency vehicle, as defined in Section
165, in the course and scope of his or her duties.  

The bill was approved by the Assembly last week.  Most believe that Governor Schwarzenegger will sign this bill. 

 

If signed, this bill would have some ramifications in the California workplace, particularly in situations where employees are involved in accidents as a result of violating the provisions of this bill and the employer did not have adequate policies and procedures in place discouraging such conduct.

 

By Jeremy T. Naftel

California employers can breathe a sigh of relief today knowing that AB 2716, the mandatory sick leave bill, has died in the Senate Appropriations Committee.  This bill, which provided that all full and part time employees who work in California for at least seven days in a calendar year would earn mandatory sick leave, passed through the California Assembly in May.  See our May 29 entry (under New Laws and Legislation) for details.  A study by the National Federation of Independent Business Research Foundation had predicted the loss of approximately 370,000 jobs within five years in California should Assembly Bill 2716 become law. 

The decision by the Committee was likely motivated by Senate analysis estimating that implementing and enforcing AB 2716 would have cost the state nearly $900,000 next year.  This number could have ballooned to millions if the state were ordered to reimburse counties for the sick leave of workers providing in-home services for the aged, blind and disabled.   However, assemblywoman Fiona Ma has vowed to reintroduce the bill next year.

By Candice Boyd

The outcome of the November 2008 election may provide the necessary support for the Employee Free Choice Act (EFCA), aka the Card-check bill, to become federal law.

The EFCA would simplify and speed labor's ability to unionize companies. Under the bill, unions could become certified once a majority of employees have signed union authorization cards. Companies would no longer have the right to insist on one secret ballot.  The bill also designates a time line for first contracts to be drawn up between unions and employees.  Additionally, the bill would increase the fines employers must pay if found guilty of violating their employees' rights to unionize.

Introduced in 2003, the bill came to a vote last year and was passed by a Democratic-controlled House of Representatives, but was blocked in the Senate and faced a veto threat by the White House.  The bill's backers took it off the floor, but vowed to reintroduce it as soon as they garnered more support.  The November election could provide that extra support - Senator Barack Obama co-sponsored the legislation and has said he would sign it into law if elected president. Senator John McCain opposes the EFCA and voted against it last year.

Employers argue that the card system could lead to workers being pressured to sign by pro-union colleagues and organizers.  Unions counter that it shields workers from pressure from their employers.

Concern about the passage of the bill has some companies walking a fine line between advocating for a specific candidate to its hourly employees and disseminating information about candidates' voting records/positions on issues - federal election rules prohibit the former. According to an August 1 article in the Wall Street Journal, Wal-Mart has held mandatory meetings for its store managers and department heads during which the retailer stressed the downside for workers if stores were to be unionized.  A Wal-Mart customer-service supervisor from Missouri reported that, "The meeting leader said, 'I am not telling you how to vote, but if the Democrats win, this bill will pass and you won't have a vote on whether you want a union.' I am not a stupid person. They were telling me how to vote."

According to the Wall Street Journal article, other companies and groups such as Cintas Corp., the Employee Freedom Action Committee, and the Coalition for a Democratic Workplace are also speaking against the legislation to workers.

In the wake of the November 2008 election, employers must be careful not to advocate for specific candidates to hourly employees (employers may advocate for specific political candidates to its executives, stockholders and salaried managers), however, providing employees with information about candidates' voting records and/or positions on issues is allowed.  When in doubt, err on the side of caution.

Anyone who doubts that California is looking to crack down on companies that are improperly using independent contractors needs to review SB 1583, which is now being debated in the California Legislature.  This bill has passed through the California Senate and is now being heard by the Assembly.  The bill, if passed in its current form, would add section 2753 to the California Labor Code.  The new section 2753 would provide that anybody who, for money or other valuable consideration, knowingly advises an employer to treat an individual as an independent contractor to avoid employee status is jointly and severally liable with the employer if the individual is ultimately found not to be an independent contractor.  The bill specifically exempts attorneys providing advice in the course of practicing law and anyone who provides advice to his or her employer. 

If this bill is passed look for outside accountants and consultants who provide advice on this issue to be roped in to any lawsuits or claims by the state for back taxes or fees for mislabeling a worker as an independent contractor.  We expect this bill to pass through the legislature and land on the Governor's desk.  To the best of our knowledge, Governor Schwarzenegger has yet to take a position on the bill.

By Brent M. Giddens

After years of lobbying, Governor Schwarzenegger has signed a bill (SB 940, effective January 1, 2009) clarifying the wage payment obligations of staffing firms doing business in California.  It amends various provisions of the California Labor Code dealing with final payment of wages.

The new law clarifies an issue left open by the California Supreme Court in Smith v. L'Oreal (2006).  That ruling was construed by some to mean that temporary employees are discharged from employment, thus triggering the obligation to provide final pay immediately upon the conclusion of the temporary assignment, regardless of whether they remained eligible for reassignment.  Given the unpredictable nature of temporary assignments, which are often ended by staffing firm clients without any prior notice to the firm, it was often practically impossible to issue a timely final check.  Without this legislative action, California staffing firms faced significant potential liability in wage penalties.

The Labor Code amendment provides that the end of a temporary assignment is not a discharge from employment requiring immediate payment of wages.  Instead, such employees may be paid on a weekly basis.  There is an exception to the weekly pay requirement--staffing firms need not pay weekly for employees on assignment in excess of 90 consecutive calendar days.  Certain day laborers and labor dispute replacements must be paid daily.  Temporary employees who are discharged from the staffing agency, or who are not eligible for reassignment, are not affected by this amendment and still must be paid immediately upon such termination, or within 72 hours of a voluntary resignation.

In the wake of the good news about the Brinker meal and rest break decision, a number of our readers and our clients have inquired about the status of AB 2716, the mandatory sick leave bill.  This bill, which provides that all full and part time employees who work in California for at least seven days in a calendar year would earn mandatory sick leave, passed through the California Assembly in May.  See our May 29 entry (under New Laws and Legislation) for details.  The bill is now making its way through the California Senate.  An important hearing is set for this bill on August 4, when the bill will be debated and voted on by the California Senate's Appropriations Committee.  We will continue to keep you posted on the status of this very important bill including the results of the August 4 hearing.

By Mark Spring

Basics of the Bill

Two United States Supreme Court Case interpretations of the Americans with Disabilities Act (ADA), Sutton v. United Air Lines, 527 U.S. 471 (1999), and Toyota Motor Mfg. v. Williams, 534 U.S. 184 (2002), took a relatively narrow view of the ADA that Congress may not agree with.  As a result a House sponsored bill, the ADA Amendments Act of 2008, was proposed and was widely approved by the House (402-17) in late June.  The bill is now awaiting consideration by the Senate and has bipartisan support in both houses.  It is expected to pass the Senate.  President Bush has hinted at a veto, but it remains unclear what his actual response would be. 

If passed in its current form, the bill would make a number of substantial changes to the ADA, including:

1)  To be disabled, the ADA provides that a person must be substantially limited in a major life activity. The bill would define "substantially limited" to mean "materially restricted" and provides that one would still be considered disabled when the limiting activity is in remission.

2)  Reversing Sutton v. UAL by providing that the courts would be obligated to analyze the disability question without consideration of any prosthetics, medications etc.

3)  Expands the definition of "major life activity" by providing that it includes certain specific bodily functions.

4)  Specifically provides that the law must interpret the definition of disability broadly when analyzing cases under the ADA.

5)  Expands the definition of who is "regarded as" disabled and provides that one does not have to be regarded as having a function that substantially limits a major life activity to be protected under the Act.

For a complete copy of the bill, click here http://www.govtrack.us/congress/billtext.xpd?bill=h110-3195

What Does it Mean in California

The definition of "disability" in California has historically been broader than the ADA definition.  Many of the additional protections offered by this bill are already offered under California's Fair Employment and Housing Act.  In large part, this bill would bring the ADA definition in line with California's FEHA definition and would probably be interpreted by the courts to be even a bit broader than the FEHA definition.  Although the passage of this legislation would not have as material effect in California as it would in most other states, the following would likely occur if this bill is enacted:

1)   More ADA discrimination lawsuits would be filed in California.

2)   Currently, most employment disability discrimination lawsuits in California are brought under FEHA.  If this bill passed, more California disability discrimination suits would be brought under the ADA.

3)   The number of lawsuits for disability discrimination brought by individuals without actual disabilities but who claim to be "regarded as" disabled would increase materially.

4)   California employers would have a broader duty to accommodate employees limited by physical or mental impairment.

5)   It would be more difficult for California employers to obtain summary judgment of employment disability discrimination lawsuits.

We will continue to keep you updated on the status of this bill. 

By Jennifer Barrera

On June 6, 2008, President Bush signed an amendment to Executive Order 12989 that directed all federal departments and agencies to require contractors, as a condition of future federal contracts, to use E-Verify.  E-Verify is a free, internet-based system that allows employers who are enrolled in the E-Verify program to confirm the legal status of new employees.  On June 9, 2008, pursuant to the President’s executive order, the Department of Homeland Security (“DHS”) designated E-Verify as the electronic employment eligibility verification system that all federal contractors must use.  In order to finalize the issue and make this requirement an actual law, notice of this proposed rule requiring federal contractors to use E-Verify was published in the Federal Register on June 12, 2008.  The regulation is currently open for public comment until August 12, 2008.  Once the public comment period expires, the rule will either be implemented in its current form, or modified based upon the public comments received.  Until the regulation is actually enacted, however, federal contractors are not legally required to use E-Verify.

The current form of the proposed regulation provides that any entity who provides the federal government with over $3,000 worth of goods or services in the United States must use E-Verify for all new employees, even those who do not actually work on the federal contract.  It also requires such entities to identify all employees who currently work on any federal contract and verify their legal status through E-Verify as well.  The only entities excluded from this regulation are those who perform work for the federal government outside of the United States, provide less than $3,000 of goods or services, or provide contracts for commercial off the shelf supplies.  Once the regulation is implemented, the included entities will have 30 days to enroll in the E-Verify program and then another 30 days to verify all current employees working on federal contracts in addition to all new hires.  Thereafter, such entities must verify the legal status of all new employees through E-Verify within three days after the new employees are hired.  The mandatory use of E-Verify will be a provision included in all federal contracts. 

In the event the proposed regulation is implemented after the public comment period expires and federal contractors are required to use E-Verify, this does not alleviate their responsibility to still complete the I-9 form for all new hires.  If federal contractors complete both the I-9 form and thereafter verify the employee’s legal status through E-Verify, it will create a rebuttable presumption that the employer did not knowingly hire an unauthorized alien.  Once the public comment period expires for the proposed regulation, we will provide an update on the status of the regulation.

We have previously posted information and status updates on Senate Bill 2716 (see our March 12 and May 29 entries).  SB 2716 is the mandatory sick leave bill that is modeled after the San Francisco city ordinance.  In its current form, the bill would mandate that all employers provide sick leave at a rate of no less than one (1) hour for every thirty (30) hours worked for any employee that works in California for at least seven (7) days per year. 

A study released yesterday by the National Federation of Independent Business Research Foundation shows the loss of approximately 370,000 jobs within five years in California should Assembly Bill 2716 become law.  The study also demonstrates how this bill would have the most negative consequences for small and medium sized businesses.  In fact, the study predicts that small businesses in California will lose almost 200,000 in jobs in the five years following enactment.  The study also points out that California employers would face a distinct competitive disadvantage if this bill is enacted. 

Many California employers remain very puzzled and frustrated that the legislature would consider enacting this bill, particularly given the current economic climate that exists in California.  The Senate Labor Committee is scheduled to vote on the bill today.  If passed through the California Legislature, it is unclear what position Governor Schwarzenegger would take on the bill.

For a link to the NFIB website where you can download complete PDF copy of this NFIB study click here http://www.nfib.com/object/IO_37724.html

By Mark S. Spring

July 1 will be a day of change for California employers with employees who drive as part of their duties.  Not only will such employees be required to utilize hands free devices when operating cell phones while driving (see our June 20 post on this subject), employers will also have to pay more to employees to properly reimburse them for their driving costs. 

Section 2802 of the California Labor Code requires all California employers to reimburse their employees for all costs incurred in performing their duties, including driving and transportation costs (other than regular commuting).  The California Labor Commissioner has taken the position that any employer who reimburses at less than the IRS mileage rate will have to prove that the actual expenses are less than the going rate or be subject to liability for the difference.  In almost all cases, we recommend that California employers reimburse at the standard IRS mileage rate to minimize liability under section 2802 for driving expenses. 

The IRS just announced that it will increase the standard mileage reimbursement rate to 58.5 cents per mile for the period July 1 through Dec. 31.  The current mileage rate is 50.5 cents per mile.  This eight cent increase represents an increase of almost sixteen percent (16%) and is the largest jump in mileage rates in recent history.  Obviously it is fueled by the increasing cost of gasoline. 

California employers should review their expense reimbursement policies and consider making modifications before the end of the month.  

By Jeremy Naftel

Effective July 1, 2008, Senate Bill 1613 requires drivers in California to use a hands-free device when using a cell phone while driving.  What does this mean for employers?  If employees are expected to use a cell phone while driving, the employer must provide them with a hands-free device so they can perform their work and comply with the law.  The device can be purchased by the company and distributed to employees, or the company can agree to reimburse employees for the reasonable cost.  If employees are not expected to use cell phones while driving but choose to do so solely for their own convenience, then the employer is not required to provide or pay for a device.  As with any equipment issued to employees, they can be required to return it upon termination of their employment.  Rules regarding deposits and wage deductions for equipment are highly technical.  Employers should consult with their employment counsel before requiring a deposit or deducting the cost of a lost device from an employee’s wages.

If a company has any employees who drive, even occasionally, in the performance of their work duties, it should immediately adopt a policy requiring safe driving habits.   Implementing such a policy can reduce the likelihood that an employer will have to pay for an employee’s tickets and reduce the potential liability if an employee is involved in a traffic accident.  A sample policy is below.

SAFE DRIVING POLICY

Any employee operating a company vehicle must immediately report any accident(s), fine(s) and/or violations incurred and provide any and all paperwork associated with the incident(s) to Human Resources.

Any change in license status or driving record must be reported to Human Resources immediately.  It is your responsibility to drive safely and obey all traffic, vehicle safety, and parking laws or regulations.  The company will reimburse you for eligible miles driven for business purposes using your personal vehicle in accordance with IRS regulations and applicable reimbursement rates.  To the extent that you drive motor vehicles in connection with performing your job responsibilities, you must exercise all caution necessary to avoid injury to yourself, to others and to property.  You must obey all traffic and other driving regulations, including regulations regarding the use of hand-held cell phone devices and personal digital assistants (PDAs), and must minimize the opportunity to be distracted while driving.  To the extent that it is necessary to make or receive cell phone calls when driving, you should always be using a hands-free device.  Operating PDAs, text messaging or engaging in other similar conduct while operating a vehicle on company business is strictly prohibited.

By John Anthony

On June 25, 2008, The California State Senate Committee on Labor and Industrial Relations will hold hearings on Assembly Bill 1711.  Assembly Bill 1711 proposes a number of changes to sections of the California Labor Code regulating, among other rules, the meal break requirements imposed on the state’s employers as part of AB 1711.  Some of the bill's more important provisions are summarized below.

Meal Break Timing and On Duty Meal Periods

The proposed legislation requires that the meal period shall be completed before the end of the sixth hour of work.  The current interpretation is that the meal period must be commenced before the end of the fifth hour, so this bill would provide greater flexibility in the scheduling of meal breaks if enacted.

The bill also contains significant modifications to Labor Code section 512(b), regulating provision of an on-duty meal period.  Current regulations are vague about when an on-duty meal period is permitted.  The proposed amendments clarify that on-duty meal periods are permissible when the “nature of the work” prevents an employee from being relieved of all duties, namely when the employee works alone, or “is the only person in his or her job classification who is on duty and there are no other employees who can reasonably relieve him or her of all duties.”  Another condition is when the work requires a licensed employee, and the employee in question is the only licensed person on duty.  These proposed changes clarify when an on duty meal period would be permitted, but do not expand such meal periods in a way likely to be useful for most employers. 

Collective Bargaining Agreements

Under the proposed changes, the meal period requirements of Labor Code section 512 will not apply to employees covered by a collective bargaining agreement if the agreement expressly provides for meal periods and provides final and binding arbitration of disputes concerning application of its meal period provisions.  This would lead to much greater flexibility for unions and employers to negotiate their own meal and rest period provisions, and would likely be very helpful to unionized employers and their employees.  

What Next?

At some point after the scheduled hearing, the Senate Committee will vote on whether the bill should be sent to the Senate floor for a vote.  If the bill is passed by the Senate without amendment, the bill will be sent to Governor Schwarzenegger for his signature to become law.  If the bill is amended by the Senate, it will be sent back to the Assembly and if the Assembly concurs with any amendments, the bill will likewise be sent to the Governor.  We will continue to follow the progress of this bill. 

By Ursula R. Kubal

If passed into law, AB 2716 would make California the first state to require employers to provide paid sick days.  The bill was approved by the California Assembly yesterday.  Governor Arnold Schwarzenegger has taken no position on the legislation, which now goes to the Senate for approval.

AB 2716 would allow sick days to be used for a personal illness, to care for a sick family member, or to recover from domestic violence or sexual assault.  It provides that any employee who works in California for seven or more days in a calendar year is entitled to paid sick days. 

Under AB 2716, businesses with more than 10 employees would be required to provide up to nine days of sick leave per year.  Smaller companies, with 10 or fewer employees, would be required to provide up to five days of sick leave per year.

Full-time and part-time workers would earn at least one hour of sick leave for every 30 hours worked.  The benefit could be used after 90 days of employment.  Under the bill, exempt employees are deemed to work 40 hours per workweek unless the employee's normal workweek is less than 40 hours, in which case the employee would accrue paid sick based upon that normal workweek.

The bill would also require employers to satisfy specified posting and notice, and recordkeeping requirements.

The bill would not require employers to provide compensation to an employee for accrued, unused paid sick leave days upon termination of employment.

If signed into law, the requirement would be overseen by the Department of Industrial Relations, but could be enforced through civil lawsuits.  The law would make available legal and/or equitable relief including reinstatement, back pay, the payment of any sick days unlawfully withheld, penalties, and reasonable attorneys’ fees.

By Robin E. Weideman

Earlier this year, the California Supreme Court delivered its decision in Ross v. RagingWire Telecommunications, Inc., holding that an employer could properly terminate an employee who failed a drug test due to use of medically prescribed marijuana.  The Court reasoned that California’s Compassionate Use Act, which protects medical marijuana users from criminal prosecution, does not contain any provision protecting employment or limiting employers’ ability to terminate applicants or employees who test positive for marijuana.  In response to this decision, Assemblyman Mark Leno authored legislation (AB 2279) aimed at overturning the Ross v. RagingWire decision and protecting the employment of medical marijuana users in California.  AB 2279 was introduced in February and was approved by the Assembly Judiciary Committee and the Assembly Labor and Employment Committee, prior to moving to the Assembly floor for a vote this past week.  The final vote was 38-34 in favor of passage.  However, the bill needs 41 votes (a majority of the Assembly) in order to pass.  As a result, the bill is expected to be voted on by the Assembly again in the coming days.

California employers who utilize drug testing for applicants and/or current employees should monitor the progress of AB 2279, and may want to promptly voice their opposition to, or support for, AB 2279 to their local Assembly member.  

By Marie D. DiSante and Conner J. Moyle

On April 16, 2008, we posted information regarding Senate Bill 1539, which expressed the legislative intent to clarify the requirements of California law as they relate to employee meal periods.  See April 16, 2008 Blog Post.  Since that time, many clients and friends of the firm have requested that we prepare a sample letter that they may send to various legislative representatives showing their support for additional clarity and flexibility in the meal period rules.  We have prepared such a sample, and you may access the sample letter by clicking here.  We encourage you to modify the letter as necessary so that it reflects your own particular beliefs about the manner in which the meal period rules should be clarified or changed.

Please note that SB 1539 originally was sent to the Senate Appropriations Committee for further action.  Since that time, SB 1539 has been withdrawn from hearing before the Senate Appropriations Committee and re-referred to the Rules Committee.  See http://www.leginfo.ca.gov/pub/07-08/bill/sen/sb_1501-1550/sb_1539_bill_20080421_history.html.  The Rules Committee most likely will refer the bill back out to an appropriate policy committee prior to further substantive action.  Because the bill is not yet sitting before a particular policy committee for substantive action, we recommend sending letters in support of SB 1539 either to the Rules Committee or to the State Senator and/or Assemblyperson for the geographic area in which your business is located.  As an alternative, once the bill makes its way to a particular policy committee for substantive action, letters may be sent directly to that committee.  We will keep you posted on further developments in connection with SB 1539.

For more information on how you can get involved in helping to ensure that the legislature makes appropriate changes to California's meal period regulations, please contact Marie DiSante or Connor Moyle

By Marianne C. Koepf

Employers are soon to be prohibited from discriminating against individuals on the basis of their genetic information. 

Last week, the U.S. House of Representatives passed a bill on a vote of 414-1, called the Genetic Information Nondiscrimination Act (GINA), which prohibits employers from using genetic data in hiring, firing, and other workplace decisions affecting employment.  GINA also requires employers to maintain genetic information strictly confidential in compliance with the ADA and HIPAA.  The bill also forbids insurance companies from using an individual's genetic information to deny or limit coverage, or establish different rates.  The same bill unanimously passed the Senate on April 24.  

Genetic tests are now regularly used to determine an individual's predisposition for diseases such as cystic fibrosis, breast and prostate cancer, diabetes and Lou Gehrig's disease.  As genetic testing has become more prevalent in society, the U.S. Congress has enacted GINA to address widespread concern that such information would be misused, especially in the health care and employment arenas.   

President George W. Bush is expected to sign the bill.  The employer provisions of the bill will take effect in November 2009, after the U.S. Department of Labor has had an opportunity to enact implementing regulations.

By Alison L. Tsao

On April 15, 2008, the California Senate Labor and Industrial Relations Committee unanimously approved SB 1539 as amended to “declare the intent of the Legislature to enact legislation to address issues related to meal periods in employment.”   SB 1539, authored by Senator Ron Calderon (D-Montebello), sponsored and supported by the California Chamber of Commerce, California Restaurant Association, and approximately 40 trade and professional organizations, was introduced to provide a comprehensive solution to compliance with and enforcement of California’s meal period laws.

SB 1539 has generated bipartisan support from Committee members who have expressed concern over the inflexibility and ambiguity of meal period laws in California that have spawned a tidal wave of expensive litigation and liability for California employers.  As a result, Committee members have recognized the need for clarity and greater flexibility to meet the needs of both employers and employees.  SB 1539, as originally drafted, would have provided for the following changes to existing meal period law (among others):  (1) allowing the employee to waive either the first or second meal period if the employee is otherwise entitled to two meal periods in a day; (2) expanding conditions for employees to take on-duty meal periods; (3) allowing collective bargaining agreements to override provisions of the meal period rules; and (4) defining “providing an employee with” a meal period to mean “giving the employee an opportunity to take” a meal period.  The Committee amended SB 1539 to delete all of the substantive changes to the meal period laws, and amended the bill to simply declare the intent of the Legislature to enact legislation to address issues related to meal periods in employment.  While the meal period laws have not been changed, the Legislature’s declaration of intent is a good sign that lawmakers recognize the need for change and will continue to have further discussions to try to find consensus on a solution that contains adequate protections for employers and employees.  SB 1539 has been referred to the Senate Appropriations Committee.  Employers and employees are encouraged to contact the Senate Appropriations Committee to voice their opinions regarding SB 1539 to continue to build the momentum for change in meal period laws.  We will continue to monitor this legislation and apprise you of any developments.

Posted by Connor J. Moyle

San Francisco Assemblywoman Fiona Ma recently introduced a bill that, if passed, would make California the first state in the nation to force employers to provide sick leave benefits to their employees. 

Under Assembly Bill 2716 (“AB 2716”) (which is modeled after the San Francisco Paid Sick Leave Ordinance that has been discussed in numerous entries on our blog), any employee who works in California for 7 or more days in a calendar year – even those not necessarily based in California – would be entitled to paid sick time.  Employees would accrue sick leave at a rate of at least one hour for every thirty hours worked, and would be eligible to use accrued sick time beginning on their 90th calendar day of employment.  Small business employers (defined as those with 10 or fewer employees during at least 20 calendar weeks of the current or preceding year) could limit an employee’s use of paid sick time to 40 hours or 5 days in each calendar year.  All other employers would be allowed to cap usage at 72 hours or nine days per year. 

AB 2716 also contains provisions prohibiting retaliation against employees for requesting and/or using paid sick leave.  Much like the San Francisco law, the new bill imposes posting, notice, and recordkeeping requirements on employers.  Note that under AB 2716, employees may use their paid sick time for the diagnosis, care or treatment of health conditions of the employee or an employee's family member, or for leave related to domestic violence or sexual assault.  Unused sick leave may be carried over from year to year.

If passed, this bill would be extremely harmful to California employers, placing yet another burden on them that does not exist in the majority of other states, which is likely to help accelerate the exodus of California employers that have the ability to move to more business-friendly states.  The timing of this bill is particularly puzzling as many California employers, particularly small employers, are struggling to survive in today's difficult economic market.  Because this bill was only recently introduced, it is difficult to determine if it will pass through the Legislature, and whether its form and requirements will change along the way.  Please contact us directly if you have any questions regarding AB 2716 and its potential impact on your business.  We also urge you to make your lobbyists aware of this legislation so that your views can be heard. 

Earlier this week President Bush signed into law HR 4986, the National Defense Authorization Act for 2008.  Section 585 of this statute amends the Family and Medical Leave Act ("FMLA") in a number of significant ways.

Effective immediately, a spouse, child, parent or next of kin of a member of the Armed Forces (including a member of the National Guard or Reserves) may take up to 26 work-weeks of leave to care for the soldier if he is "undergoing medical treatment, recuperation, or therapy, is otherwise in outpatient status, or is otherwise on the temporary disability retired list, for a serious injury or illness."  A "serious injury or illness" is defined as one that was incurred in the line of duty and may render the soldier medically unfit to perform the duties of his office, grade, rank or rating.  The U.S. Department of Labor ("DOL") is expected to issue comprehensive guidance regarding the rights and responsibilities of parties under this new legislation in the not-too-distant future.

The new legislation also permits an employee to take FMLA leave for any "qualifying exigency" – as that term will be defined by the DOL in forthcoming regulations – arising out of the fact that the employee's spouse, child or parent is on active duty, or has been notified of an impending call or order to active duty, in the Armed Forces.  Note that this provision of the statute is not effective until the DOL issues final regulations defining "qualifying exigency."  Although the DOL has stated that it is still preparing these regulations, it has encouraged employers to provide this type of leave to qualifying employees in the interim, even in the absence of such guidance.

Please contact us directly if you have any questions regarding steps you must take to comply with HR 4986.

Posted by Connor J. Moyle

As employers prepare to distribute W-2 and 1099 forms to their workers, they should keep the requirements imposed by Assembly Bill 650 in mind.  This bill, which went into effect on January 1, 2008, requires California employers to provide notice to all employees of their potential right to an Earned Income Tax Credit (“EITC”) on their federal tax returns.  The notice must be hand-delivered or mailed within one week before or after, or at the same time as, the employees’ annual wage summaries are provided, and should include the following language:

NOTICE TO EMPLOYEES

Based on your annual earnings, you may be eligible to receive the earned income tax credit from the federal government.  The earned income tax credit is a refundable federal income tax credit for low-income working individuals and families.  The earned income tax credit has no effect on certain welfare benefits.  In most cases, earned income tax credit payments will not be used to determine eligibility for Medicaid, supplemental security income, food stamps, low-income housing or most temporary assistance for needy families payments.  Even if you do not owe federal taxes, you must file a tax return to receive the earned income tax credit.  Be sure to fill out the earned income tax credit form in the federal income tax return booklet.  For information regarding your eligibility to receive the earned income tax credit, including information on how to obtain the IRS Notice 797 or Form W-5, or any other necessary forms and instructions, contact the Internal Revenue Service at 1-800-829-3676 or through its Web site at www.irs.gov.

This notice must be provided to all employees (meaning any person who is covered by his employer's unemployment insurance pursuant to the Unemployment Insurance Code) regardless of whether they actually qualify for the EITC.  Employers should also note that they may not satisfy the requirements of Assembly Bill 650 by posting a notice on an employee bulletin board or by delivering the notices through interoffice mail.  The bill also requires employers, upon request by the employee, to process an employee’s IRS Form W-5 for advance EITC payments. 

Please contact us directly if you have any questions regarding steps you must take to comply with Assembly Bill 650.

Posted by Nancy G. Berner

New Year's Day also brought with it minimum wage increases in California.  As of January 1, 2008, employees in California must be paid no less than $8.00 per hour. However, employees working in San Francisco must be paid at least $9.36 per hour. New posters, advising employees of these change, are available at: http://www.sfgov.org/site/uploadedfiles/olse/mwo/2008_MWO_Poster.pdf and http://www.dir.ca.gov/IWC/Minwage2007.pdf. 

 

 

Mark S. Spring, our Firm Managing Partner, was the featured guest expert for the most recent "In the Know" podcast series.  In this podcast, Mr. Spring outlines all of the key developments in California employment law for 2008 and provides some suggestions on how California employers can best ensure compliance.  Mr. Spring also discusses some recent trends in the law and what to expect for 2008.  Click here to listen to the podcast.

Effective January 1, 2008, the Internal Revenue Service is increasing the standard mileage rate used by many employers to reimburse their employees for business use of a car (which includes vans, pickups and panel trucks) – the rate will increase to 50.5 cents per mile, up from 48.5 cents in 2007.  Click here to view the IRS press release on this topic.  Note that employers who reimburse mileage at the IRS rate are presumed by California's Labor Commissioner to have appropriately reimbursed their employees for expenses incurred in the use of their vehicles.

Please contact us directly to discuss any questions you may have regarding this issue.

In addition to the new laws going into effect on January 1, 2008 that were described in our blog entry of November 20th, employers need to be aware of the following:

--Assembly Bill 650:     Effective January 1, 2008, this law requires California employers (meaning those subject to and required to provide unemployment insurance to their employees under the Unemployment Insurance Code) to provide a new notice to employees along with their annual wage summaries (i.e., 1099 or W-2 forms). The new written notice provides information about employees' possible right to take an Earned Income Tax Credit on their federal tax returns, and must be hand-delivered or mailed to employees within one week before or after, or at the same time, that the annual wage summaries are provided. Note that employers may not satisfy this obligation by posting the notice on an employee bulletin board or delivering it through interoffice mail, although those methods may be used to supplement the hand-delivered or mailed notice. Click here to view the language that must be included in this notice.

--Senate Bill 1618:     Pursuant to California Labor Code section 226, California employers are required to provide certain information on employees' pay stubs, including the employees' names and social security numbers. This law, enacted in 2004, mandates that effective January 1, 2008, only the last four digits of an employee's social security number, or an employee identification number other than a social security number, be shown on the paystubs.  Click here to view amended Labor Code section 226, which describes this requirement in detail. 

The Sacramento City Council voted yesterday to make the city's trial living wage pilot program, enacted in 2003, permanent.  Under this program, companies that provide certain services to or for the city must pay workers a minimum wage of $10 per hour, adjusted annually for inflation. 

According to the Living Wage Ordinance ("LWO"), this minimum wage applies only to contracts for non-professional services including, but not limited to, tree trimming services, repair services for motor vehicles and office equipment, vehicle towing and security services.  The LWO does not apply to incidental services (i.e., delivery, installation or maintenance provided under contracts for the purchase or lease of equipment, supplies or other personal property); contracts that are subject to city, state or federal prevailing-wage requirements; contracts for professional services (i.e., services provided by engineers, architects, auditors, banks, consultants, actuaries and attorneys); and contracts with certain non-profit corporations. 

Note that the LWO is only applicable to contracts that provide compensation from the city of $100,000 or more (individually or in the aggregate) and to contractors with at least 25 employees; it is also applicable to subcontractors providing services under a covered contract if the amount of the subcontract is at least 25% of the contract amount. 

Please contact us directly to discuss any questions you have regarding the effect the LWO may have on your workplace. 

Posted by Nancy G. Berner and Connor J. Moyle

Once again, the past year provided fertile ground for the growth of additional legislation impacting California’s employers.  The following list highlights these developments and provides links to sites with additional details.

     a.  Leave for Soldier’s Partner:  Assembly Bill 392 requires employers with 25+ employees to grant unpaid leave to spouses or domestic partners of combatants on leave from deployment in a combat zone. 

     b.  Minimum Wage Goes Up:  Effective January 1, 2008, California’s minimum wage increases to $8.00/hour; San Francisco employers should note that the City's minimum wage will increase to $9.36/hour.

     c.  Minimum Wage for Exempt Computer Professionals Goes Down:  Effective January 1, 2008, Senate Bill 929 reduces the minimum hourly wage for computer professionals to not less than $36.00 per hour ($74,880.00 per year).  This is a reduction from the previous version of the statute, which placed the minimum hourly wage at $49.77 per hour and will allow greater application of this exemption.  The DLSE anticipates that it will continue to adjust this pay rate every October.

     d.  Use of Hands-Free Devices While Driving:  Note that effective July 1, 2008, Senate Bill 1613 requires drivers to use a hands-free device when using a cell phone while driving.  Employers should implement policies in accord with this new provision.

     e.  Existing Medical Privacy Laws Extended:  Assembly Bill 1298 includes certain medical and health insurance information as triggers for notification in the case of unauthorized access. 

     f.  Sexual Harassment Prevention Training:  Employers who have been making a “good faith” effort to provide the required sexual harassment prevention training every two years must now refer to specific requirements to ensure that they are in compliance.  See our prior blog entry on this topic for additional information.

     g.  San Francisco Paid Sick Leave:  Any person or company employing a person in San Francisco will be required to provide paid sick leave.  Click here for San Francisco’s answers to frequently asked questions, and here to review our prior blog entry on this topic.

     h.  San Francisco Health Care Security Ordinance:  If the current challenge by the Golden Gate Restaurant Association does not result in a stay of this legislation, effective January 1, 2008, medium and large employers in San Francisco will be required to spend a minimum amount per hour on employee health care.  Click here for an overview of the requirements.

     i.  HIPPA Extension:  California’s Health Insurance Portability and Accountability Implementation Act of 2001 has been extended through 2010 by Assembly Bill 1302.

     j.  Work-Week for Pharmacists:  Senate Bill 812 modifies the Labor Code to create an alternative work week schedule for pharmacists.  In practice, this means that pharmacists’ schedules need no longer provide no less than two consecutive days off in a given work-week.

     k.  Whistleblower Protection:  The Health and Safety Code has been modified by Assembly Bill 632 to add whistleblower protection to doctors who complain to government agencies of unsafe patient conditions in healthcare facilities.

     l.  Workers’ Compensation and Disability:  Assembly Bill 338 addresses employee injuries occurring on or after April 19, 2004 so that, effective January 1, 2008, Labor Code section 4656 extends the time period over which 104 weeks of aggregate disability payments may be collected from a two year period from the date of injury to five years after the date of injury.  (Labor Code section 4656 sets certain limits on the maximum number of compensable weeks disability benefits may be claimed under California’s workers compensation laws and the maximum time period (in years) over which those benefits may be claimed.  These limits are different for injuries occurring on different dates.) 

     m.  Crack Down on Workers Compensation “Deadbeats”:  Senate Bill 869 authorizes the Labor Commissioner to identify employers who are not providing workers’ compensation insurance for their employees, and post the information to a website.  Expect the Labor Commissioner to begin more aggressive efforts in cracking down on employers who do not have proper workers’ compensation coverage in place, as well as on those employers who improperly misclassify employees as independent contractors.

     n.  EEOC Revises Age Discrimination Regulations:  The EEOC has made explicit that the ADEA prohibits only age discrimination against employees that are older than their co-employees.  Thus, favoring an older individual over a younger individual, based on age, is not an ADEA violation, even if the younger individual is at least 40 years old.

     o.  2007 Civil Rights Act:  California law includes 51 provisions prohibiting discrimination against members of protected classes, but the list of protected classes varies from statute to statute.  Assembly Bill 14 amends the existing nondiscriminatory provisions to be consistent with the Unruh Civil Rights Act (Civil Code section 51, et seq.) and Government Code section 11135.  In addition to adding consistency, AB 14 automatically updates other non-discriminatory provisions whenever either the Unruh Civil Rights Act or Government Code section 11135 modify their lists of protected classes.

Posted by Mark S. Spring

Yesterday, the House of Representatives in Washington D.C. passed the Employment Non-discrimination Act, a bill that provides protections against discrimination in the workplace for gay men, lesbians and bisexuals that are similar to the federal protections already in place for older workers, minorities and disabled workers under the federal ADEA, Title VII and Americans With Disabilities Act.  For those interested in the politics of this event, 35 Republicans joined 200 Democrats voting for the bill, while 25 Democrats voted against the bill.  The overall vote was 235-84. 

While this is big news in today's newspapers, it probably will have little impact in California for two reasons:

1.         Although this bill will also likely pass through the Senate, most expect President Bush to veto the measure and there are not sufficient votes to override such a veto; and,

2.         Even if it became law, California's Fair Employment and Housing Act already offers virtually all the same protections as this bill and is actually much broader, offering similar protections to any individual discriminated against based on being transgender or based in any way on their gender identity (see 2004 amendments - AB 196). 

Thus, while the path of this bill may have some interesting political ramifications and could influence how gay voters cast their ballots in 2008, for California employers it will have little practical workplace impact no matter whether it is enacted, defeated, or vetoed.

Governor Schwarzenegger has vetoed a number of employment-related bills, many of which would have imposed additional financial burdens on California employers.  Among the most significant are Assembly Bill 8 (which, among other things, would have require affected employers to either make certain minimum health care expenditures or contribute to a statewide pool for health care coverage benefits); Assembly Bill 504 (which would have forced employers convicted of fraud, misrepresentation or misconduct related to a lock-out to make restitution to affected employees for lost wages and benefits); and Senate Bill 622 (which would have penalized employers for the "willful misclassification" of independent contractors).

Please contact us directly to discuss any questions relating to the effect the Governor's actions may have on your workplace.

 

 

Recent legislation signed by Governor Schwarzenegger creates new rights for the spouses of deployed soldiers.  Specifically, Assembly Bill 392 requires employers of 25 or more employees to grant up to 10 days of unpaid leave to qualified employees (meaning those who work an average of 20 or more hours per week for the employer and who are married to members of the U.S. armed forces deployed during a period of military conflict to an area designated as a combat theater or zone, or members of the National Guard or reserves deployed during a period of military conflict).  Employees are eligible to take this time off only during "qualified leave periods," defined as periods during which the soldier-spouses are on leave from deployment.  Employers may not retaliate against employees for requesting or taking the leave provided by this new statute, which goes into effect immediately.

Please contact us directly to discuss any questions relating to the effect this new law may have on your workplace.

Governor Schwarzenegger is currently reviewing AB 537, a bill that would substantially expand the class of employees eligible to take leave under the California Family Rights Act (“CFRA”). 

CFRA requires employers with 50 or more employees to provide covered employees with up to 12 weeks of protected unpaid leave during any 12-month period 1) to bond with a child born to, adopted by, or placed for foster care with the employee, 2) to attend to the employee's own serious health condition, or 3) to care for the employee’s parent, spouse or child who has a serious health condition.  At the conclusion of such a leave of absence, CFRA requires that an employer provide the employee a guarantee of employment in the same or comparable position. 

If enacted, AB 537 would expand CFRA in two significant ways.  First, CFRA would no longer be limited to employees caring for children under the age of 18 or adult children who are dependents.  Under the new law, caring for an adult child with a serious health condition would constitute a valid reason for requesting CFRA leave.  Second, the list of family members on whose behalf an employee may use CFRA leave would also be expanded.  Specifically, under the new legislation, employees would be entitled to also take leave to care for a grandparent, sibling, grandchild, parent-in-law or domestic partner with a serious health condition. 

These amendments to CFRA have the potential to significantly increase costs for California employers by expanding the class of employees eligible to take protected leave.  Governor Schwarzenegger has until October 14th to decide whether to sign AB 537; however, there are both strong supporters and opponents of the bill, so it is uncertain at this time whether the Governor will sign the legislation into law.  In the interim, please contact us directly to discuss any specific concerns regarding the impact of AB 537 on your business.

Posted by Nancy G. Berner

United States District Court Judge Charles R. Breyer has extended a temporary restraining order that prevents the Department of Homeland Security from implementing a rule requiring employers to fire employees after they receive notices from the Social Security Administration ("SSA") of discrepancies between the employees’ names and social security numbers (so-called “no match” letters).  According to the rule, if an employer cannot resolve such a mismatch within 90 days, it is required to fire the employee or risk prosecution for employing illegal immigrants. 

The rule – originally scheduled to go into effect on September 14, 2007 – was challenged by a coalition of immigration and labor groups (including the American Civil Liberties Union, the AFL-CIO and the United States Chamber of Commerce), which claimed that the SSA's records are filled with errors that could lead to numerous legal workers, including American citizens, being unfairly fired.  The coalition initially obtained a temporary restraining order on August 31^st; after concluding that there was no immediate harm to the government, but a “potentially enormous burden on the employer,” Judge Breyer extended that restraining order for 10 additional days.  A final ruling will be issued within 10 days to determine whether or not the previously enacted rules will be implemented.

Please contact us directly to discuss any questions relating to the effect this ruling may have on your workplace.

Posted by Nancy G. Berner

The California Assembly adjourned the 2007 session without voting on Assembly Bill 1711, a bill that proposes sweeping changes to the Labor Code provisions regulating meal and rest break requirements imposed on California employers.  The Labor Code amendments were proposed by Assembly Member Lloyd Levine on the last day members were permitted to make amendments, and we anticipate that Assembly Member Levine’s proposal will be debated and considered when the Legislature reconvenes in January.  Given the controversial issues addressed in this Assembly Bill, it is likely that other proposals will also be considered in the next legislative session.

Posted by Nancy G. Berner

Last week, California Assembly Member Lloyd Levine proposed broad changes to sections of the California Labor Code regulating, among other rules, the meal and rest break requirements imposed on the state’s employers as part of AB 1711.  The bill’s most important provisions are summarized below. 

Meal Break Timing and On Duty Meal Periods

The proposed legislation requires that the meal period shall be completed before the end of the sixth hour of work.  The current interpretation is that the meal period must be commenced before the end of the fifth hour, so this bill would provide greater flexibility in the scheduling of meal breaks if enacted.

The bill also contains significant modifications to Labor Code section 512(b), regulating provision of an on-duty meal period.  Current regulation leaves employers to guess when an on-duty meal period is permitted, and prudent employers generally guess “very rarely” based on prior opinion letters issued by the Division of Labor Standards Enforcement interpreting the on-duty meal break provisions. 

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For years, the Social Security Administration (“SSA”) has been sending “No-Match Letters” to employers who had a significant number of employees whose social security numbers (“SSN”) did not match their personal information.  The SSA, however, provided unclear guidance for responding to the letters, and little consequence appeared to befall those employers who ignored them. 

Last year, the U.S. Immigration Customs Enforcement, a legacy of the disbanded INS, changed all that.  It announced the use of no-match letters to target employers in high-profile immigration raids, including the April 2006 raid of IFCO Systems that led to the arrests of thousands of undocumented workers and numerous current and former IFCO Executives.  In June 2006, the Department of Homeland Security followed-up the IFCO raids with proposed regulations regarding responding to no-match letters.  The final version of those regulations was announced on August 10, 2007 and published on August 15th.  In sum, employers who do not comply with the regulations will be considered to have “constructive notice” of the status of those unauthorized workers who were subjects of no-match letters and whose employment eligibility the employer failed to re-verify.  Click here to review the regulations in their entirety.

In addition to announcing the final regulations, the Department of Homeland Security also announced that it would increase civil penalties by approximately 25% and expand criminal investigations of those employers who knowingly hire unauthorized workers.  Employers therefore now face the potential of significant civil penalties and criminal sanctions for ignoring no-match letters. 

What should employers do?  Following is a brief summary of the steps employers should take after receiving a no-match letter:

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San Francisco's Office of Labor Standards Enforcement recently finalized its regulations relating to implementation of the City's Health Care Security Ordinance ("HCSO").  As previously discussed, the HCSO requires covered employers to make health care expenditures for their covered employees.  In 2008, covered employees include any person who has been employed for at least 90 days and who performs at least 10 hours of work per week within the geographic boundaries of the City and County of San Francisco; effective 1/1/09, the hourly requirement is reduced from 10 to 8 hours per week.  Affected employers may purchase health insurance coverage for their covered employees, make payments to the City for the benefit of their covered employees, or make the required health care expenditure in a variety of other manners.

Significantly, employers should note that recent amendments to the HCSO changed the operative date of the employer spending requirement (previously set for July 2007) to January 1, 2008 for employers with 50 or more employees, and to April 1, 2008 for employers with 20 – 49 employees.

For specific questions regarding employer obligations relating to the implementation of the HCSO, please contact us directly.

Earlier today the Senate essentially thwarted the passage of the Employee Free Choice Act of 2007 (the "Act") with a final vote of 51 – 48 against moving the Act to the Senate floor for debate (60 votes were needed to ensure that the Act could overcome a threatened filibuster by Republican senators).

As discussed in a previous entry on this blog, the Act – which was largely opposed by business organizations and employers – had three major components: The first would have outlawed secret ballot elections by employees who were deciding whether or not to be represented by a labor union, instead allowing unions to obtain signed authorization cards from employees through which they could simply agree to labor representation.  The Act would also have instituted new mediation and arbitration processes for first-contract disputes.  Additionally, the Act would have increased penalties against employers for various labor law violations, requiring payment of three times the amount of wages lost by employees and imposing civil fines of up to $20,000 per violation.

For specific questions regarding the implications of the Senate's vote, please contact us directly.

The Employee Free Choice Act of 2007 (the "Act") is currently wielding its way through the Senate after having passed the House of Representatives.  The Act's stated purpose is to "amend the National Labor Relations Act to establish an efficient system to enable employees to form, join, or assist labor organizations and to provide for mandatory injunctions for unfair labor practices during organizing efforts, and for other purposes."  As is evident from this preamble, because of the subject areas touched on the Act will potentially affect the overwhelming majority of American employees who are not currently members of a union.

Specifically, the Act has three main components.  The first would outlaw secret ballot elections by employees who are deciding whether or not to be represented by a labor union, instead allowing unions to obtain signed authorization cards from employees through which they could simply agree to labor representation.  The Act would also institute new mediation and arbitration processes for first-contract disputes.  Additionally, the Act would increase penalties against employers for various labor law violations, requiring payment of three times the amount of wages lost by employees and imposing civil fines of up to $20,000 per violation.

For specific questions regarding the Act's applicability to your workplace, please contact us directly.

 

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Posted by Jennifer Barrera

Ensuring health and safety in the workplace is California’s Occupational Safety and Health Administration’s primary goal (Cal-OSHA). In order to achieve this goal, Cal-OSHA has certain powers including the ability to conduct random inspections, issue citations, and assess penalties against an employer it finds has jeopardized the health and safety of the workplace. To avoid any citations or penalties, California employers must comply with all safety regulations, including the following key safety requirements:

1.Maintain a written Injury and Illness Prevention Program (“IIPP”) and make sure the IIPP is distributed to all employees or displayed in a location for employees to easily view/access. If there are hazardous chemicals in the workplace, then the IIPP must contain a written hazard communication program as well, unless the employer already has a separate written hazard communication program.

The IIPP cannot be general. Rather, it must address the specific safety issues in the particular workplace, and contain a discussion regarding at least the following elements: responsibility, compliance, communication, hazard assessment, accident/exposure investigation, hazard correction, training and instruction, and recordkeeping. A common safety hazard for all restaurants that should be addressed in an IIPP is the threat of violence, such as a robbery, and an emergency action plan in case of an emergency. For more information regarding how to develop an IIPP, including a written hazard communication program, refer to Cal-OSHA’s publications that are located at http://www.dir.ca.gov/dosh/PubOrder.asp.

2.Inspect the workplace and identify all potential hazards employees may face while on the job. Use color codes, posters, labels, or other signs to warn employees of any potential hazards. Make sure to notify and train all employees regarding these potential hazards and document such training.

3.Establish or update standard safety operating procedures in the workplace so that employees can follow those procedures to maintain health and safety. Make sure employees are following these operating procedures, including always using the appropriate tools and properly operating equipment.

4.Immediately remove or correct any hazardous condition in the workplace that may result in a serious injury to an employee. Cal-OSHA assesses penalties against an employer based, in part, upon the severity of the safety violation, such as an employer’s failure to abate a known hazardous condition.

5.Immediately notify (within 8 hours) the nearest Cal-OSHA office of any serious injury or fatality that occurs on the job. A serious injury is considered an injury that requires the employee to be hospitalized for more than 24 hours other than for medical observation, or an injury in which part of the body is lost or permanently disfigured. To find the nearest Cal-OSHA office, refer to Cal-OSHA’s website at http://www.dir.ca.gov/dosh/DistrictOffices.htm.

6.If you have 11 or more employees at anytime during the calendar year, maintain accurate records of any work-related injuries or illness, including Cal-OSHA Form 300, Log of Work-Related Injuries and Illnesses, and Form 300A, a Summary of the Work-Related Injuries and Illnesses for the year. Employers must post the Summary for employees to review. Employees can also request to view the Log of Work-Related Injuries and Illnesses.

The above safety requirements only address a portion of the regulations employers are required to follow in order to maintain a safe and healthful workplace. If you have any questions or concerns about any health or safety issue in the workplace, Cal-OSHA provides employers with free consultation services and will even assist the employer in identifying hazards in the workplace. For more information regarding such assistance, you can access Cal-OSHA’s website at http://www.dir.ca.gov/dosh/consultation.html.

Posted by Nancy Berner

On Thursday, February 8, the Rules Committee of the San Francisco Board of Supervisors is scheduled to hear the proposed modification to the Paid Sick Leave Ordinance that would delay payment of required paid sick leave until June 6, 2007, and prevent awards of penalties until the same date. The Chair of the Committee intends to entertain a motion to send the proposed modification to the Board of Supervisors as a Committee Report for consideration on February 13, 2007. It appears likely that the proposed transition period will be adopted.

Again, employers are reminded that this proposal does not allow any transition period for the requirement to record hours worked and the number of paid sick leave hours accrued. The record keeping aspect of the Ordinance, detailed in earlier articles, has been in effect since February 5. In short, the primary impact of the proposed "transition period" is to push back the date when an employee can use the paid time off, and to provide employers with a bit of "breathing room" by suspending penalties during the transition. The employer's responsibility to keep the records, however, is unchanged.

On January 31, Los Angeles City Council unanimously rescinded the ordinance that would have applied the city’s living wage ordinance to a select few hotels located on Century Boulevard near LAX under terms of a compromise with city business leaders. However, many questions still exist as to the final terms of the compromise, which includes the drafting of a new ordinance in attempts to assuage some of the local businesses’ primary concerns with the rescinded ordinance. However, business leaders are just realizing that the terms agreed to under a new ordinance do nothing to protect businesses against the concerns they had under the rescinded ordinance.

First, the new ordinance increases the workers’ pay at the dozen or so hotels targeted by the original ordinance to $9.50 an hour upon the passage of the ordinance, and on July 1, 2007, this amount increases to $10.64. Click here for an article in the Los Angeles Business Journal.

Second, the compromise proposes a system for determining whether the living wage could expand in the future based upon the economic effects of such an expansion. The economic effects would be determined by two economists, one selected by the chamber of commerce, and the other selected by the Los Angeles County of Federation of Labor. The primary concern for Los Angeles businesses was that the original rational for extending the living wage ordinance to the hotels on Century Boulevard could be used to extend the living wage to all employers operating in Los Angeles. It appears that the compromise does nothing, or very little, to actually prevent this slippery slope.

Los Angeles business leaders still need to be vigilant as there will be many more battles in this ongoing effort to increase the minimum wage of workers in Los Angeles under the guise of a living wage.

Posted by Nancy Berner

On January 30, 2007, a member of San Francisco's Board of Supervisors introduced legislation to allow a transition period in the implementation of the Paid Sick Leave Ordinance. Specifically, Supervisor Elsbernd introduced the following modification to the Paid Sick Leave Ordinance:

Ordinance adding Section 12W.17 to the Administrative Code to establish 120-day Transition Period (from February 5 through June 5, 2007) to implement Paid Sick Leave Ordinance, by providing that (1) an employer may delay payment of required paid sick leave until June 6, 2007, and (2) administrative penalties, compensatory costs to the City, liquidated damages, and attorneys' fees may not be awarded for a failure to pay required sick leave during the Transition Period.

This new modification has been assigned to the Rules Committee. While waiting to see if the modification is accepted by the Rules Committee, employers should be sure to comply with the record keeping requirements of the Paid Sick Leave Ordinance. If this proposal is accepted, employers will have the option of delaying provision of the accrued time off until June 6, 2007, but must record the time accrued during the transition period.

Posted by Nancy Berner

On Tuesday, January 30, the Office of Administrative Law ("OAL") informed the Fair Employment Housing Commission ("FEHC") that it would not approve the regulations submitted by FEHC on December 14, 2006 regarding the requirements of AB 1825, the existing law that requires California employers with 50 or more employees to provide sexual harassment training to all supervisory employees every two years. The OAL disapproved the regulations as lacking sufficient clarity and because of procedural mistakes made by FEHC in propounding the regulations. Under the California Administrative Procedures Act (Gov. Code 11349.4) the agency has 120 days to correct the errors and resubmit the regulations to OAL for further review.

From a practical point of view, this is unlikely to have a significant impact on clients. The proposed regulations contain a form of grandfather clause saying, in effect, that any business that has made a good-faith effort to comply with the statute as of the effective date of the regulation (whenever that turns out to be) will be deemed to be in compliance with the regulation. Clients who are familiar with the requirements of regulation, and can document their efforts at compliance will have little to worry about.

On January 31, 2007, the Office of Labor Standards Enforcement (OLSE) posted a list of frequently asked questions about San Francisco’s Paid Sick Leave Ordinance which takes effect on Monday, February 5, 2007.

The OLSE’s frequently asked questions information attempts to provide guidance to the many questions employers have about the ordinance, but still does not resolve the uncertainty about many other issues. Nevertheless, the FAQ’s illustrate the increased burden employers face in attempting to comply with the law and should be read by any employer conducting business in San Francisco.

Here are some excepts from the OLSE’s web-site:

Q: If an employer is based outside of San Francisco but has employees who perform work in the city, do the employees accrue paid sick leave for hours worked in San Francisco?
A: Yes. All employees who perform work in San Francisco, including on a part-time or temporary basis, accrue paid sick leave for those hours worked in the city, regardless of where their employer is located.

Q: Do employees accrue paid sick leave for hours worked outside of the city?
A: No. Under the Ordinance, employees accrue paid sick leave only for those hours worked within San Francisco.

Q: Does the Ordinance cover undocumented employees?
A: Yes. All employees who work in San Francisco – whether or not they are legally authorized to work in the United States – are covered by the law. OLSE will process an employee’s claim without regard to his or her immigration status. Employees filing a claim with OLSE will not be questioned about their immigration status.

Q: Can an employer require employees to use paid sick leave while on family medical leave under state or federal law?
A: This question involves the interpretation of the Family Medical Leave Act (FMLA) and the California Family Rights Act (CFRA). OLSE has no jurisdiction over enforcement of either the FMLA or the CFRA. OLSE recommends that employers and employees consult with the Federal Department of Labor (www.dol.gov) regarding FMLA issues and with the California Department of Fair Employment and Housing regarding CFRA issues (www.dfeh.ca.gov). In addition, employers and employees may wish to review administrative regulations implementing the FMLA (29 Code of Federal Regulations, Section 825.207) and CFRA (California Administrative Code, Title 2, Section 7297.5)

The OLSE’s answers to the frequently asked questions can be viewed here in their entirety.

Posted by Nancy Berner

What It Is And What Employers Need To Do

On February 5, 2007, San Francisco will become the first city in the country to require that employers offer paid sick leave to their employees. As with so many 'firsts,' this mandate leaves many questions unanswered while companies scramble to understand both what the new law requires, and how they can meet those requirements.

What Does The Paid Sick Leave Ordinance Say?
In brief, the Ordinance requires employers with employees who work in San Francisco, either full-time, part-time or on a temporary basis, to provide them with paid sick time, accrued at a rate of one hour of sick time for every thirty hours worked. Note that a covered employee is one who works in San Francisco, regardless of the location of the employer. For example, a San Diego based company with a branch office in San Francisco will be required to meet the requirements of the Ordinance for its San Francisco-based employees. Accrual begins on February 5 for those employees who began work for their current employer on or before that date. For those hired after February 5, accrual begins 90 days after the start of employment. Accrual is 'capped' at 72 hours for large businesses (those with 10 or more employees) and at 40 hours for small businesses (those with fewer than 10 employees).

Paid sick leave does not expire annually and the cap is absolute rather than annual. So an employee who ends the year with 72 paid sick leave hours begins the next year with the same number, and does not accrue additional hours beyond the 72 already accumulated. Employers are not required to pay employees for unused time. Once the employee has accrued time, the time can be applied to cover illness of either the employee, a family member (broadly defined to include grandparents, grandchildren and domestic partners), or a "designated person" selected by employees who are unmarried and are not part of a registered domestic partnership.

The Ordinance requires employers to post a notice of the Ordinance, and to record the amount of sick time accumulated and used by each employee and retain the records for four years. The required poster is available from the OLSE here.  The Ordinance may be enforced by the City of San Francisco, or by a civil lawsuit brought by an aggrieved employee.

Additional detailed information covering the requirements of the Ordinance is available here and here. 

What Does The Paid Sick Leave Ordinance Fail To Say?
As currently described by the Office of Labor Standards Enforcement (or "OLSE"), the Ordinance leaves unanswered a number of questions critical to employers. As an initial matter, even the apparently straightforward definition of an employee as a person working within San Francisco does not address concerns relating to employees who are only temporarily located in San Francisco, such as seasonal workers and delivery or repair people. The Ordinance simply states that while an employee is working in San Francisco, that employee is accumulating paid sick leave. Nor does the Ordinance advise employers whose workforce varies above and below the 10 person cutoff used to calculate the amount of sick time accrued. For example, a small retailer may have six employees for most of the year, but might increase to 11 to cover the busy holiday shopping season.

Currently, the OLSE maintains that the Ordinance applies to both non-exempt, hourly employees, and exempt, salaried employees. How employers will track the amount of sick time accrued by exempt employees whose hours are not tracked is not addressed by either the Ordinance or the OLSE. In addition, although the Ordinance allows employers to take "reasonable measures" to document propose use of paid sick time, "reasonable" is left undefined.

What Can Employers Do To Comply With The Paid Sick Leave Ordinance?
First, it is important to remember that it is still early days for the Paid Sick Leave Ordinance, so there are few guidelines and fewer precedents available to guide employers. For example, the OLSE is still drafting and providing sample forms, such as the form needed to identify the Ordinance's "designated person." Employers and those who advise them are left in the unenviable position of taking aim at a moving target.

That having been said, there are ways for employers to protect themselves. As an initial step, a careful review of current paid time off policies is critical to determine if modification of current policies is needed, and if so, what modifications. Although not widely applicable, the requirements of the Ordinance can be explicitly waived by a collective bargaining agreement. Perhaps the best protection lies in providing a sick leave policy that is as generous as the policy provided by the Ordinance. One simple solution would be to provide a Paid Time Off Bank in which employees accumulate time off (at no less than the rate required by the Ordinance) that can be used for any purpose, including medical care of the employee, the employee's family members, and any person the employee needs to take to the doctor during hours when he or she would normally be working. The downside for employers is that time accumulated pursuant to a Paid Time Off policy becomes a vested right of the employee, and upon termination, the employee must be paid for unused time, unlike unused sick time, which is not owed or payable upon termination of employment.

In Conclusion
In addition to the steps listed above, employers must remain vigilant and aware of developments as the Ordinance is implemented as law, particularly given the number of questions that remain in spite of the approaching compliance deadline. Additional information will be posted on this blog as soon as it becomes available.

UPDATE:  The OLSE published a sample "Designated Person" form.  The document can be downloaded here (a Word document).

Posted by Vanessa Whang

As previously posted here, the California Fair Employment and Housing Commission has been busy finalizing its proposed regulations to help California employers implement the new California sexual harassment supervisory training law, Government Code Section 12950.1 (AB 1825).

On November 14, 2006, the Commission adopted its final proposed regulations and submitted the regulations to the Office of Administrative Law ("OAL") for review on December 14, 2006. If approved by the OAL, it is expected for the regulations to become effective sometime in February 2007.

The final proposed regulations, which are available for review at www.fehc.ca.gov, specify, among other things, that:

1. independent contractors and temporary workers must be counted as part of the workforce;
2. new supervisory employees who were trained in prior employment do not necessarily need to be immediately re-trained, but the burden is on the new employer to establish that the prior training complied with the requirements of AB 1825;
3. employers can use either an individual tracking method for ensuring that each supervisor is re-trained every two years, or employers may use a “training year” method, whereby some or all supervisors are trained every other calendar year by group; and
4. the term "supervisor" adopt the broad definition in Government Code Section 12926(r) to include "any individuals having the authority, in the interest of the employer to hire, transfer, suspend, lay off, recall, promote, discharge assign, reward, or discipline other employees, or the responsibility to direct them, or to adjust their grievances, or effectively to recommend that action, if, in connection with the foregoing, the exercise of that authority is not of a merely routine or clerical nature, but requires the use of independent judgment."

The final regulations also provide details regarding the required qualifications of the trainers and the content and manner of training (in person, on-line, etc.).

Please check back on this blog on or after February 14, 2007 to find out the status on the proposed regulations.

Carlton DiSante & Freudenberger LLP offers training conducted by its attorneys that fully complies with the requirements of California Government Code Section 12950.1 (AB 1825) and is actively monitoring the proposed regulations discussed above to ensure compliance. For more information about CDF’s training classes, click here.

Maryland law requiring corporations with 10,000 or more workers to spend 8 percent of their payrolls on health insurance, or pay the difference into a state fund was found to be preempted by Employee Retirement Income Security Act (ERISA). By a 2-to-1 ruling, the United States Court of Appeals for the Fourth Circuit in Baltimore found that the Maryland law was preempted by ERISA, a 32 year old federal labor law. ERISA was developed to allow large companies to uniformly administer health benefits across the country, rather than becoming entangled in state-by-state requirements.  Here is the opinion.

We have commented previously that it is likely California’s attempts to impose employer funded health insurance will encounter similar challenges.

Posted by Mark Spring

The United States Department of Labor is now inviting interested parties having knowledge of or experience with the FMLA to submit information. The Department welcomes any pertinent information that will provide a basis for ascertaining the effectiveness of the current regulations and the Department’s administration of the Famly Leave Act. They are seeking to understand the problems and issues that employers and employees are facing with FMLA. Supposedly, the DOL is going to be considering these comments for additional regulations and comments.

The employer's voice needs to be heard. If you have positive or negative comments or experiences with FMLA, we enourage you to participate in this process. The DOL will be taking comments through February 2, 2007.

Click here for information on how to submit comments and here to access the Federal Register Notice Page.

The U.S. House of Representatives passed a bill today to increase the federal minimum wage to $7.25 an hour in three steps over 26 months. Under the bill the minimum wage would increase to $5.85 an hour 60 days after signed into law by the president, to $6.55 and then to $7.25 over two years. It appears that the bill will have a hard time passing the U.S. Senate unless the minimum wage increase is coupled with tax breaks or other types of relief for small businesses. Click here for a Business Week article on the bill.

The bill, as it stands now, would not affect California employers' minimum wage obligations -- who are required to pay $7.50 per hour as of January 1, 2007, and this amount increases to $8 per hour effective January 1, 2008.

In a unprecedented step last November, the Los Angeles City Counsel passed an ordinance that requires private hotels located on Century Boulevard near LAX to comply with the city’s living wage ordinance (which requires employers pay $10.64 per hour in wages and benefits). Prior to this ordinance, only employers who have contracts to do business with the city had to comply with the city’s living wage requirements. The city argues that it has the power to require these private hotel employers to pay higher wages due to the benefits that the hotels receive due to their proximity to LAX, which is owned by the city.

The ordinance consists of three measures. The first measure extends the city’s living wage requirements of $9.35 per hour for hotel employees who have health benefits or $10.64 per hour if the employees do not have health benefits. The second measure requires new purchasers of the hotels to retain existing employees for at least 90 days after taking control of the hotel. The third measure requires hotels to pass all service charges for banquets and special events on to servers and other line employees.

Los Angeles business leaders have gathered over 100,000 signatures to challenge the ordinance, placing it in a holding pattern for now. If the signatures are verified, the City Counsel will then have to decide whether to repeal the ordinance or to place a referendum on the ballot in the citywide elections in May 2007.

This ordinance poses a threat to businesses not only along the Century Boulevard Corridor, but to all businesses in the state of California. If the ordinance succeeds, it is very likely that cities throughout the state will similarly attempt to regulate private employers. This is simply a backdoor approach by the labor unions and other forces supporting this ordinance to attempt to increase the minimum wage even further, and to overturn the outcome of the voter’s rejection of a referendum in 2004 that would have required businesses to provide health care coverage to their employees. We will continue to monitor the status of the ordinance and publish updates as more information becomes available.

Posted by Jeremy Naftel

The holiday season is almost here and many employers are planning holiday parties for their employees. Such parties are often important to espirit de corps and have become part of the “corporate culture.” Unfortunately, holiday parties have become associated in the minds of some with excessive use of alcohol. Employees, including managers and supervisors, fail to drink responsibly and become a hazard to themselves and others. In such cases, they may also become a source of liability for their employers.

Under California law, a “host” generally is not responsible for the injuries caused by a guest’s consumption of alcoholic beverages. However, this general immunity may not shield employers from liability for injuries caused by employees who consume alcohol at company functions. In several cases, California courts have allowed non-employee third parties to sue employers for the injuries and damages caused by employees, where their conduct was a “foreseeable risk” of the employee’s consumption of alcohol occurring after ordinary working hours, but within the “scope of employment.” In this context, a risk is “foreseeable” if the employee’s conduct is not so unusual that it would be unfair to include the loss within the employer’s cost of doing business. Attending a company function and consuming alcoholic beverages is considered “within the scope of employment” if (1) the activity is endorsed by the express or implied permission of the employer, and (2) there is some conceivable benefit to the employer or the activity is a customary aspect of the employment relationship. Thus, in addition to their social responsibilities as good citizens, employers who serve alcohol at company functions may have legal responsibilities to assure the safety of others.

In light of this potential for disaster, the safest course is to prohibit the consumption of alcohol at company functions. For those employers for whom an outright prohibition is unattractive, the following safeguards should reduce, but will not eliminate, legal exposure:

1. Make attendance voluntary and hold the function at a facility off company property.
2. Use a cash bar and give written instructions that servers should not serve more than a specified number of drinks to any individual.
3. Serve alcohol only at specific times during the evening (e.g., before dinner), and serve food throughout the evening.
4. Arrange for transportation home, e.g., taxi vouchers and designated drivers.
5. Remind managers and supervisors of their obligation to set an example and to prevent others from becoming intoxicated or driving a vehicle while intoxicated.

Have a happy and safe holiday season and a prosperous new year.

The recent National Labor Relations Board (NLRB) ruling in Oakwood Healthcare, Inc. [click here for opinion] provides a much needed clarification of the standards to determine which employees qualify as “supervisors” under the National Labor Relations Act. By a 3-2 vote, the Board held that the permanent charge nurses employed by the Employer, Oakwood Heritage Hospital, an acute care hospital, exercised supervisory authority in assigning employees within the meaning of Section 2(11) of the National Labor Relations Act.

The definition of supervisor under the Act is critical because employees who qualify as supervisors under the National Labor Relations Act are excluded from bargaining units and may be prohibited from supporting unionization. Employers across the country are pleased with the outcome because the ruling provides a rational and clear standard for determining which employees are supervisors. However, unions are already expressing concerns that the Board’s decision is too narrow and excludes too many employees from the union’s control.

Supervisors Under the National Labor Relations Act
Section 2(11) of the Act defines supervisors as “any individual having the authority, in the interest of the employer, to hire, transfer, suspend, lay off , recall, promote, discharge, assign, reward, or discipline other employees, or responsibly direct them, or to adjust their grievances, or effectively to recommend such action, if in connection with the foregoing the exercise of such authority is not of a merely routine or clerical nature, but requires the use of independent judgment.” In Oakwood, the Board clarified the terms “assign,” “responsibly to direct,” and “independent judgment.”

Assign
The Board defined “assign” as the act of “designating an employee to a place (such as a location, department, or wing), appointing an individual to a time (such as a shift or overtime period), or giving significant overall duties, i.e. tasks, to an employee.” Further, to “assign” for purposes of the Act, “refers to the . . . designation of significant overall duties to an employee, not to the . . . ad hoc instruction that the employee perform a discrete task.”
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SB 1745, authored by Shelia Kuehl, passed both the Assembly and Senate on September 7, 2006. As it left the Senate, the bill declared that it was the intent of the Legislature to develop legislation that protects victims of domestic violence, sexual assault, and stalking from housing and employment discrimination.

This bill provides that it is against public policy of the state to discriminate against a person in employment because he/she is a victim of domestic violence, sexual assault, or stalking as defined in the bill. Specifically, SB 1745 prohibits any person from discharging, refusing to hire or harass any individual, or otherwise discriminate or retaliate against any individual “because the individual is a victim of domestic violence, sexual assault or stalking.” Supporters of the bill state that “the ability to gain and keep a job is vital to the independence and recovery of victims” of domestic violence, while opponents of the bill claimed it would add new employer liability over issues over which an employer has no control. No word on whether the Governor will sign the bill.

Yesterday, September 12, 2006, Governor Schwarzenegger signed the bill that raises California's minimum wage, currently $6.75 per hour, to $7.50 per hour on January 1, 2007. On January 1, 2008, California’s minimum wage will increase to $8 per hour.

The increase will also affect some of California's exempt executive, administrative and professional employees who must meet minimum salary requirements (in addition to a duties test) that are tied to the state minimum wage. Exempt employees must earn a monthly salary equivalent to no less than two times the state minimum wage for full-time employment. With the current minimum wage of $6.75 per hour, exempt employees must earn a monthly salary of at least $2,340 ($2,340 = $28,080 ÷ 12), which is an annual salary of at least $28,080 per year ($28,080 = 2 x $6.75 x 40 hours x 52 weeks). On January 1, 2007, the minimum salary requirement to qualify as an exempt employee will increase to $2,600 per month, or $31,200 per year. On January 1, 2008, the amount exempt employees must earn will increase to $2,773.33 per month, or $33,280 per year.

Today, the Fair Employment & Housing Commission posted on its website the revised sexual harassment training and education regulations that it adopted in its August 29, 2006 meeting.

On August 29, 2006, the Commission adopted modified proposed regulations on Harassment Training and Education, interpreting Government Code section 12950.1 [A.B. 1825], which requires harassment training for supervisors of employers with 50 or more employees. The August 29, 2006, regulations modify earlier June 20, 2006 regulations, which this blog commented about here. The August revisions can be viewed at the Commission’s website here.

The August revisions clarify the issues about who is qualified to design and teach the sexual harassment training, the frequency of training required for supervisors, and whether the sexual harassment training requirement applies to supervisors outside of California. The major revision made in the August proposed regulations clarify that supervisors who are located outside of California and supervise employees within California are not covered by the regulations. Therefore, supervisors located outside of California are not subject to the sexual harassment training requirements under the proposed regulations.

The other clarification made in June 2006 regarding which employees are counted within a company in order to determine whether a company has 50 employees remained unchanged.  The proposed regulations state that for the purposes of counting the 50 employees, employees both inside and outside California should be counted.

Additionally, the language added in June that harassment training for an employee does not create an inference that that employee is a supervisor also remained in the proposed regulations. Furthermore, at the August 29th meeting, the Commission added language that a contractor who attends sexual harassment training will also not be inferred to be an “employee or a supervisor” for the employer providing the training. The Commission previously stated that it “does not want to discourage employers from offering two hours of harassment training to a variety of non-supervisory employees for fear that these employees might be construed to be supervisors on the sole basis that they had received harassment training.”

On October 2, 2006, the Commission will decide whether to adopt the August 29, 2006, modified regulations or make further changes to its proposed regulations.  Anyone interested may submit their comments about the proposed regulations by 5 p.m. on September 15, 2006.  Comments can be submitted to:

Ann M. Noel
Executive and Legal Affairs Secretary
Fair Employment and Housing Commission
455 Golden Gate Avenue, Suite 10600
San Francisco, CA 94102
email: regs@fehc.ca.gov

Carlton DiSante & Freudenberger LLP offers training conducted by its attorneys that fully complies with the requirements of California Government Code Section 12950.1 (AB 1825) and is actively monitoring the proposed regulations discussed above to ensure compliance. For more information about CDF’s training classes, click here.

As chronicled on this blog (here, here, and here), Governor Schwarzenegger and the state legislature have been in an embroiled dispute over increasing California’s minimum wage for over one year. The major area of disagreement between the Governor and the legislature was whether the state’s minimum wage would be indexed for inflation so that the minimum wage would automatically increase each year. Last year the Governor vetoed a bill requiring this automatic increase each year.

It appears that there has been an agreement reached. Initial reports are that the agreement between the state legislature and the Governor calls for an increase the state’s minimum wage by $1.25 over the next year and a half to $8 per hour. The agreement specifies that the minimum wage will increase by 75 cents per hour next January, increase again by 50 cents per hour the following January, and there will be no automatic increases each year due to inflation. Currently, the California minimum wage is $6.75 per hour.

Posted by Kendra D. Miller

The DLSE has endorsed the position taken by the California Court of Appeal last year in Conley v. Pacific Gas and Electric Co., 131 Cal. App. 4th 260 (Cal. App. 1st Dist., 2005) that employers may deduct partial-day absences from exempt employees’ accrued vacation/PTO banks for absences of 4 hours or more without jeopardizing their exempt status. The DLSE amended its Enforcement Policies and Interpretations Manual to reflect the Conley decision. See DLSE Enforcement Policies and Interpretations Manual § 51.6.15.4. This is a clear position reversal from that stated in a 2002 opinion letter which suggested that such deductions might jeopardize exemptions under the “salary basis” test and expose employers to significant risks of having to pay overtime to exempt workers.

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The American Civil Liberties Union of San Diego and Imperial Counties and the California Rural Legal Assistance Inc. of Oceanside have filed a lawsuit claiming that a city of Vista ordinance regulating the hiring of day laborers on city streets is unconstitutional because it restrains free speech and is discriminatory. The two groups represent an employer who has hired day laborers in Vista as well as and two Vista day laborers.

The groups are seeking a temporary restraining order to prevent a city of Vista law, unanimously approved by the City Counsel on June 27, from going into effect on July 28. The law requires anyone who hires off-site day laborers to register with the city, display a certificate in a car window, and present workers with written terms of employment. Violations would be misdemeanors punishable by no more than six months imprisonment or $1,000.

This is very similar to the city of Redondo Beach law preventing people from soliciting work on public property and hiring someone on public property (click here for prior post). The law was in the city's municipal code since the 1980's, but was not enforced until recently. When the city's arrest of day laborer's in violation of the ordinance was challenged in federal court recently, the law was held to violate worker's first amendment rights to solicit work on city streets.

Plaintiff Dark was a heavy-equipment operator for the Road Department of Curry County, Oregon. Dark suffers from epilepsy. His seizures are usually preceded by a nervous jerk, called an "aura." Dark experienced an aura, went to work despite the aura, and suffered a seizure while driving a County truck. The County terminated Dark after receiving a doctor's report recommending that he not work around moving machinery. Dark then sued for wrongful termination under the Americans with Disabilities Act.

The district court granted summary judgment in favor of the County, finding no genuine issue of material fact that the County terminated Dark for misconduct (acting recklessly by driving the truck despite constructive knowledge of an imminent seizure). The Ninth Circuit reversed, holding that Dark had raised genuine issues of material fact about the reasons for his termination, about whether he was qualified for his position despite his disability, and about whether he posed a direct threat to the safety of others. The decision relied in part on a holding that conduct resulting from a disability (e.g. driving despite knowing of the possibility of an imminent seizure) is generally deemed to be part of the disability, rather than a separate basis for termination. Given that Judge O'Scannlain (typically one of the more conservative members of the Ninth Circuit) ruled in favor of the employee in a published opinion, the case could signal a trend toward greater sympathy for employees on ADA claims. Dark v. Curry County, No. 04-36087 (9th Cir. July 6, 2006)

A woman who worked as a hair model at a L'Oreal show earned $500 for her day of work, but did not receive the money until two months after the show. She sued on behalf of herself and other models for failure to pay wages immediately upon discharge in violation of Labor Code § 201, and sought $15,000 in penalties under Labor Code § 203. The trial court granted L'Oreal's motion for summary judgment and the court of appeal denied Plaintiff's petition for writ of mandate. The California Supreme Court reversed and remanded, holding that the definition of "discharge" under the statute is not limited to termination, and may also apply when an employer releases an employee after completion of a specific job assignment or time duration. Between this and the Yanowitz decision, not a good year for L'Oreal, from a Supreme Court litigation standpoint. Smith v. Superior Court (L'Oreal USA, Inc.), 2006 DJDAR 8988 (July 10, 2006)

The Fair Employment and Housing Commission recently released its proposed modifications to California Government Code section 12950.1 (AB 1825), which requires two hours of harassment training for supervisors of employers with 50 or more employees.

The proposed regulation clarifies two main issues that were unclear in AB 1825. First, the proposed regulations state that for the purposes of counting the 50 employees, employees both inside and outside California should be counted. Second, the proposed regulations require sexual harassment training for supervisors who are located outside of California, but supervise employees within California.

It is also important to note that the proposed regulation adds language that harassment training for an employee does not create an inference that that employee is a supervisor. The Commission stated that it "does not want to discourage employers from offering two hours of harassment training to a variety of non-supervisory employees for fear that these employees might be construed to be supervisors on the sole basis that they had received harassment training."

The Commission is seeking written comments on these modifications, which can be submitted until July 21, 2006. The next Commission meeting is set for August 29, 2006, in Riverside, California. At this meeting the Commission will decide whether to adopt these proposed regulations, modify the regulations, or make further changes. For more information regarding the proposed regulation, the California Fair Employment and Housing Commission's web site can be found here.

InhouseBlog, has published a guest article by Cal Labor Law's own Brian Van Vleck and Anthony Zaller entitled, "Top Ten Items Out-Of-State Employers Need To Know About California's Unique Labor Laws." Click here to read the article.

InhouseBlog is written by Geoffrey G. Gussis, Esq. who has been in-house counsel and is now back in private practice at Riker, Danzig, Scherer, Hyland & Perretti LLP. InhouseBlog is an excellent resource for in-house attorneys and provides information on a wide range of issues.

The U.S. Supreme Court's June 22 decision in Burlington Northern & Santa Fe Railway Co. v. White has substantially expanded the scope of employer action that may be deemed illegal "retaliation" under Title VII. In particular, the Court held that (1) The threshold injury necessary to support a Title VII retaliation lawsuit is significantly lower than the injury necessary to support a discrimination lawsuit; and (2) An employer may be liable for retaliation causing harm to an employee that is not even "workplace-related or employment-related."

It is not immediately clear how much impact the decision may have on most California retaliation lawsuits, which are overwhelmingly filed in state court under state law. Nevertheless, California employers would be well advised to understand the important anti-retaliation issues raised in the Burlington.

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On June 9, 2006, the Department of Homeland Security (DHS) proposed two Federal regulations to help businesses comply with verifying employees' work eligibility. The first proposal would allow employers to digitize their employees' I-9 forms. The second proposal suggests guidelines that, if followed by the employer, would provide a safe harbor for employers when a discrepancy in the employee's Social Security number or immigration status are discovered.

No match letters are sent to employers typically when the employee's Social Security number does not match the worker's name on tax or employment eligibility documents, such as the I-9 form. The DHS or the Social Security Administration can send no match letters to employers. The DHS letter informs the employer that the immigration status or the employment authorization documentation presented by the employee is not consistent with its records. The Social Security Administration sends a letter informing the employer that the employee's Social Security number submitted for employment does not match the agency's records.

The DHS proposed regulations set forth a set a rules that if the employer follows in good faith, then the DHS would not find that employers violated any of their legal obligations.

The proposed regulations have a 60-day public comment period, but the I-9 regulation will become effective on an interim basis until it is published.

Topic: First Amendment Protections for Government Employees. Plaintiff, a supervising deputy district attorney, advised his supervisors to dismiss a case based on misrepresentations in a police affidavit that was used to obtain a search warrant. At the hearing on a defense motion to challenge the warrant, Plaintiff recounted his review of the affidavit. He was later transferred to a new position and denied a promotion. Plaintiff claimed that these employment actions were in retaliation for exercising his First Amendment rights. The Supreme Court held that when public employees make statements pursuant to their official duties, they are not speaking as citizens for First Amendment purposes, and the constitution does not insulate their communications from employer discipline. Thus, had Ceballos leaked his information to the press, his speech would likely have been protected. However, because his "complaint" was contained in a work-related memorandum, his actions were not protected by the First Amendment.

Singh v. Superior Court (UHS of Delaware, Inc.), No. B187797 (2nd Dist. June 12, 2006). Topic: Payment of overtime for healthcare employees working alternative workweek schedules. Plaintiff Singh, a registered nurse, signed an agreement in accordance with an alternative workweek schedule that had previously been adopted by the hospital's employees. The agreement stated that he would be paid the regular rate of pay for work performed within the 3/12 schedule (three twelve-hour shifts per week), time-and-a-half pay for all work performed beyond forty hours in the workweek and double time pay for work in excess of twelve hours in a workday. Singh argued that under the Industrial Welfare Commission Wage Order No. 5 (Cal. Code Regs., tit. 8, § 1150, subd. 3(B)(1)), he was entitled to time-and-a-half pay for all hours worked beyond the regularly scheduled alternative workweek, including hours 37 to 40. The hospital argued that under section 3(B)(8), Singh was only entitled to overtime pay after 40 hours of work had been performed in a week. The Court found in favor of the hospital, holding that Wage Order No. 5 provides that health care employees working a 3/12 alternative workweek schedule are only entitled to overtime pay for work in excess of forty hours per week or twelve hours in a workday.

Carter v. California Dept. of Veterans Affairs, No. S12796 (June 8, 2006). Topic: retroactivity of FEHA amendments. Plaintiff, a nurse, brought suit alleging that she had been sexually harassed by a patient in 1996. The California Supreme Court found that the 2003 amendment to FEHA, which expressly imposed liability on employers for sexual harassment by non-employees, applies to claims preceding the amendment.

Williams v. Genentech, Inc., No. A110611 (1st Dist., May 9, 2006). Topic: Continuing Violation Doctrine; Duty to Accommodate. Plaintiff, a receptionist, went out on medical leave for work-related stress in October 2000. On January 31, 2001, after having received multiple requests for extension of Plaintiff's leave, Genentech filled Plaintiff's position. Genentech informed Plaintiff that when she was cleared to return to work, she would have sixty days to apply for a new position. On July 9, 2002, more than a year after she had been informed that her position had been filled, Plaintiff filed a DFEH charge in which she alleged race and disability discrimination. The Court held that there was a triable issue of fact as to whether or not the continuing violation doctrine applied to extend the statute of limitations where she was not actually terminated until July 16, 2001. Further, although Plaintiff did not include a "failure to accommodate" claim on her DFEH complaint, the Court held that the trial court erred in barring the cause of action under the exhaustion of administrative remedies doctrine where she had included "disability discrimination" in her original charge. However, because Plaintiff had presented a doctor's note stating that she was "totally incapacitated" and unable to work at the time Genentech filled her position, she failed to establish that she was a qualified individual with a disability. Further, the undisputed evidence established that Genentech did not did not fail to accommodate Plaintiff or to engage in the interactive process where there were no available jobs at the time Plaintiff was cleared to return to work.

Green v. State
Whether California law requires an employee to prove he or she is qualified to perform the job in question as part of the employee's prima facie case.

Smith v. Superior Court of Los Angeles (L'Oreal USA, Inc)
Whether an employee who is hired for an agreed-upon period of time such as a one day project has been "discharged" within the meaning of Labor Code section 201 and is thus entitled to waiting time penalties.

Dore v. Arnold Worldwide, Inc.
Is extrinsic evidence as to the parties' interpretation of the contract admissible where an employment contract states "your employment with [the employer] is at will" and "this simply means that [the employer] has the right to terminate your employment at any time"? The 2nd District's found in favor of the plaintiff, finding it was reasonable for Plaintiff to assume that he could only be terminated for cause where the contractual language did not reference "cause" or contain an integration clause and he was placed on a 90-day probationary period, which he completed.

Under state and federal law, employers have an affirmative duty to provide "reasonable accommodation" for "disabled" workers. This obligation includes a requirement to engage in a good faith "interactive process," in which the parties discuss the employee's limitations and explore possible accommodations.

The recent California appellate decision of Gelfo v. Lockheed Martin Corp., addressed a common dilemma for employers -- what to do when an employee claims he is "100% healthy" but the written medical restrictions contained in his file tell a different story.

In Gelfo, the plaintiff had suffered a back injury and obtained workers compensation benefits based on medical reports stating that he was "permanently disabled" and restricted from "prolonged sitting or standing." Within a month of settling his workers compensation claim for a lump sum cash payment, however, the employee requested rehire on the ground that he was now totally recovered.

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The immigration debate and our nation's struggle with our complex and difficult border enforcement and labor supply needs are gripping headlines with massive immigration reform bills in the House and the Senate, huge protest rallies by immigrant groups, and aggressive worksite raids by the Department of Homeland Security ("DHS"). Garnering much less attention, but maybe more far-reaching is the United States Supreme Court's forthcoming decision on whether to allow class action lawsuits under the RICO Act against businesses accused of hiring unauthorized immigrants. This article reviews the most important developments and recommends some cost-effective solutions.

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Posted by Alison L. Tsao

On April 20, 2006, DHS Secretary Michael Chertoff announced a nationwide enforcement program directed at enforcement of laws which prohibit employment of unauthorized foreign workers. This announcement comes against the backdrop of raids conducted on April 19, 2006, against IFCO Systems, Inc., a German-owned palleting firm, at locations in New York, Pennsylvania, North Carolina, Ohio, Texas, Indiana, Arizona, Virginia and Massachusetts. The raids were carried out pursuant to criminal enforcement measures accusing the company and its executives of criminal conspiracy with the objective of harboring and transporting undocumented workers. Government officials reported that the case against IFCO began when DHS learned of the company's failure to resolve ongoing notices from the Social Security Administration of large numbers of non-matching social security account numbers in their quarterly payroll tax reports. Many employers have received such reports in recent years. The new "get tough" policy comes in the midst of congressional debate over immigration reform and whether the U.S. should grant legal status to millions of undocumented foreign nationals currently living here.

Posted by Alison L. Tsao

1. Whether waiver of participation in a class action in a pre-employment arbitration agreement is enforceable in California. Gentry v. Superior Court (Circuit City Stores), previously published at 135 Cal.App.4th 944 (2006) (class action for overtime wages filed by retail store managers who claim they were misclassified under the managerial/executive exemption), rev. granted April 26, 2006; Jones v. Citigroup, Inc. previously published at 135 Cal.App.4th 1491 (2006) (class action brought by credit card holders alleging violation of unfair competition law), rev. granted April 26, 2006.

2. Whether (1) Proposition 64 that limits standing to bring an action under the Unfair Competition Law to "any person who has suffered injury in fact and has lost money or property as a result of such unfair competition" (Bus. & Prof. Code, § 17204, as amended) apply to actions pending when the provisions of the proposition became effective on November 3, 2004? and (2) If the standing limitations of Proposition 64 apply to actions under the Unfair Competition Law that were pending on November 3, 2004, may a plaintiff amend his or her complaint to substitute in or add a party that satisfies the standing requirements of Business and Professions Code section 17204, as amended, and does such an amended complaint relate back to the initial complaint for statute of limitations purposes? Young America Corp. v. Superior Court, 2006 WL 217967, rev. granted May 10, 2006, briefing deferred pending decision in Californians for Disability Rights v. Mervyn's, previously published 126 Cal.App.4th 386 (2005), rev. granted April 27, 2005, and Branick v. Downey Savings & Loan Assn., previously published at 126 Cal.App.4th 828 (2005), rev. granted April 27, 2005.

Posted by Alison L. Tsao

Topic: employee's personal use of company property.
An employer may be held liable for an employee's use of a company vehicle for personal use. The Court determined that the company's policy and protocol regarding use of company cars implied permission to the employee to use the company car for personal errands. For example, the employee handbook lacked specificity regarding "personal use" of company property. The company also lacked specific protocol when using company vehicles such as failure to have a verification system subsequent to use of company vehicles, such as review of gas, oil, or mileage usage, all of which were indicators that the company's business practice amounted to indifference as to how the vehicles were actually used. Employers should carefully review their employee handbooks to ensure that it expressly prohibits personal use of company property. Employers should also implement consistent protocols to document and monitor use of company property to avoid liability for employees' personal use of company property. Taylor v. Roseville Toyota, Inc., 42 Cal.Rptr.3d 68, 06 C.D.O.S. 3362 (April 4, 2006).

Topic: employment agreements with foreign choice of law and forum selection provisions.
The Court held that an employment agreement containing a New York choice of law provision and New York forum selection provision is enforceable as between a New York employer and California employee. The Court held that the public policy of California in enforcing its anti-discrimination statutes under FEHA and convenience of the party/witnesses in adjudicating the case in California do not invalidate the parties' enforceable agreement where the selected forum affords an adequate remedy to the employee. Out-of-state employers who employ individuals in California may use foreign choice-of-law and forum selection provisions in their employment contracts, so long as the forum selected offers the employee adequate remedies otherwise available to him or her under California law. Olinick v. BMG Entertainment, 42 Cal.Rptr.3d 268, 06 C.D.O.S. 3497 (April 27, 2006).

Topic: discovery of putative class members' names, addresses, and telephone numbers.
This case involves a putative class action lawsuit alleging wage and hour violations, including missed meal and rest breaks and unpaid overtime. The Court ruled that the discovery requested was relevant and did not violate the attorney-client privilege or attorney-work product doctrine. Nevertheless, the Court held that defendant employer's special interrogatories seeking the names, addresses and telephone numbers of all putative class members who contacted plaintiffs' counsel violated the putative class members' privacy rights. Most or all of the class members who contacted plaintiffs' counsel did so in response to a neutral letter sent to a sample of class members, administered by a neutral third party. The Court reasoned that the class members' right to privacy outweighed the employer's need to learn the identities of class members who contacted plaintiffs' counsel, because the employer already knew who the universe of class members were, and presumably knew how it compensated its own employees and administered its meal and rest break policies. The Court evidently found plaintiffs' counsel's declaration persuasive where he states that putative class members were reluctant to reveal their identities unless it remained confidential, and were fearful of retaliation by their employer. Defense counsel should therefore proceed with caution when seeking the identities of putative class members who contacted plaintiffs' counsel, unless there is a compelling reason seeking the disclosure that outweighs the class members' privacy interests. Tien v. Superior Court (Tenet Healthcare Corp.), 06 C.D.O.S. 4006 (May 15, 2006).

Posted by Alison L. Tsao

A.On May 15, 2006, Governor Schwarzenegger signed SB 144 into law (revised food and safety code). SB 144 was sponsored by the California Restaurant Association and a broad coalition of interested parties that overhauled California's entire food and safety code in an effort to improve food safety for consumers and eliminate bureaucratic red tape for businesses. SB 144 will enact the updated California Retail Food Code (California Code) and repeal the existing California Uniform Retail Food Facilities Law (CURFFL). SB 144 consolidates food safety regulations and makes them more user friendly, provides better uniformity and consistency, updates and uses the best available science to ensure Californians are safe, and provides businesses with greater flexibility.

B.Currently pending: AB 2095 (sexual harassment prevention training for managers). This bill would limit the provisions regarding mandatory sexual harassment prevention training to employers having 50 or more employees in California and would limit the training requirement to supervisory employees within California. Please see our firm blog for more details about this pending bill.

C.Currently pending: AB 2186 (misclassification of employees as independent contractors). Existing law prescribes comprehensive requirements relating to minimum wages, overtime compensation, and standards for working conditions for the protection of employees applicable to an employment relationship. This bill would state the intent of the Legislature to prohibit deliberate misclassification of employees as independent contractors to avoid the application of such laws and to penalize intentional misclassification. Employers should assess whether they are controlling the manner and means of the work performed by their contractors' employees, a key factor in determining whether an employment relationship exists. Employers also should take a careful look at their contracts with independent contractors to ensure that (1) their contractors must comply with all laws, including wage-and-hour laws, and must insure that their subcontractors also comply with all applicable laws, and (2) they have strong indemnification language in the event they are sued for violations of the law by their contractors or subcontractors.

D.Currently pending: AB 2217 and SB 1254 (expansion of alternative workweek arrangements). Two bills have been introduced in the California legislature that would allow employees greater flexibility in scheduling their workweek. These bills would allow individual workers to request and their employers to mutually agree to a compressed workweek that comprises of four 10-hour days. Any work performed beyond the compressed work schedule would remain subject to current state overtime rules. Please see our firm blog for more details about this pending bill.

E.Currently pending: AB 2371 (employment arbitration agreements). Existing law provides that written agreements to submit controversies to arbitration are valid and enforceable. This bill would invalidate arbitration agreements between employers and employees that relate to employment practices covered by the Fair Employment and Housing Act (FEHA) that are required as a condition of hiring. It would further establish that on and after January 1, 2008, any waiver of rights or procedures under the FEHA must be knowing, voluntary, and not made as a condition of hiring. The bill also provides that an employer has the burden to prove that a waiver or arbitration agreement was knowing, voluntary, and not a condition of employment or continued employment. If passed, this bill would undermine an employer's ability to enter pre-dispute arbitration agreements with employees regarding any rights covered by FEHA.

F.Currently pending: SB 300 (family and medical leave). This bill would increase the circumstances under which an employee is entitled to protected leave pursuant to the Family Rights Act by (1) eliminating the age and dependency elements from the definition of "child," thereby permitting an employee to take protected leave to care for his or her independent adult child suffering from a serious health condition, and (2) permitting an employee to take leave to care for a seriously ill grandparent, sibling, or domestic partner, as defined.

G.Currently pending: SB 1414 (large employer healthcare mandate). Following the lead of Maryland, California State Senator Carole Migden, D-San Francisco, has introduced a bill that would require businesses with 10,000 or more employees to spend at least 8 percent of total wages on health benefits. It has been reported that this bill would affect approximately 69 employers in California, and is being drafted with Wal-Mart in mind. Maryland passed a similar law in January, and at least 30 other states are planning to introduce similar legislation. Senator Migden argues that many employers who do not provide health benefits to their employees are placing the burden on the government to fill this need. The Retail Industry Leaders Association has filed suit to challenge the Maryland law, arguing the law violates the commerce clause, the equal-protection clause of the U.S. Constitution, and the Employee Retirement Income Security Act (ERISA). As you may recall, in 2004 California voters narrowly rejected Proposition 72, which would have required employers with 20 or more employees to provide health benefits to employees or to pay a fee to the medical insurance board that would provide insurance to individuals. There is no doubt that employers in California will have to carefully watch this issue and communicate with their elected representatives the impact that such a requirement would have on their businesses. Although this bill is targeted at the large employers, passage of this type of legislation would pave the way for mandatory employee health benefits for all employers.

Posted by Brandy Thompson Cody

Ash v. Tyson Foods, Inc., 126 S.Ct. 1195 (Feb. 21, 2006), holding that racial animus may be evidenced by the use of the term "boy" regardless of whether the speaker uses a racial modifier. Plaintiff, an African-American, was denied a promotion and sued for racial discrimination under Title VII. Plaintiff was awarded compensatory and punitive damages by a jury. However, upon defendant's Rule 50(b) motion, the trial court ordered a new trial. The Eleventh Circuit affirmed the granting of a new trial. On appeal to the U.S. Supreme Court, the Court indicated that the Eleventh Circuit's affirmation of a new trial may be correct, it erred in holding that the use of the word "boy" alone was not evidence of discrimination unless it was modified with a racial classification like "black" or "white." The Court stated that the word "boy" standing alone is not always benign. The Court advised that the speaker's meaning depends on various factors including context, inflection, tone, local custom and historical usage. The case was remanded for proceedings consistent with the Court's clarification.

Comer v. Micor, Inc., et al. 436 F.3d 1098 (9th Cir. Feb. 1, 2006), holding that a non-signatory to arbitration agreement entered into by an ERISA plan is not required to arbitrate his claims. Smith Barney and Micor trustees entered into an agreement to manage the company's investments. The agreement contained an arbitration clause providing that "all claims or controversies" between Smith Barney and the trustees "concerning or arising from" any trustees accounts managed by Smith Barney must be submitted to binding arbitration. Comer, a participant in the plan, sued Smith Barney for breach of fiduciary duties. The court held that because Comer had not signed the agreement nor had he "knowingly exploited" the agreement containing the arbitration clause he was not equitably estopped from avoiding the arbitration provision.

Gober v. Ralphs Grocery Co., 137 Cal.App.4th 204 (Mar. 1, 2006), holding that a ratio of 6 to 1 punitive to compensatory damages is constitutional maximum that can be awarded in sexual harassment case. Plaintiffs alleged sexual harassment by store manager with a long history of prior complaints from employees and customers about his behavior. Ralph's held liable for punitive damages based on advanced knowledge of supervisor's unfitness in conscious disregard of employees' right to be free from sexual harassment. In addition to varying amounts of compensatory damages, the jury awarded $5 million in punitive damages to each of the 6 plaintiffs (ranging from a ratio of 25-1 to 100-1). The Court of Appeal reduced the punitive damage award to a 6-1 ration for each Plaintiff as the constitutional maximum under the facts of this case. The court looked to (1) the degree of reprehensibility of the defendant's misconduct; (2) the disparity between the actual or potential harm to plaintiff and punitive damages award; and (3) the difference between the punitive damages awarded by the jury and the civil penalties authorized in comparable cases. Thus, the court looked at what Ralph's knew or should have known and what it did or failed to do with regard to the harasser's prior misconduct in order to determine maximum ratio of punitive damages as 6-1.

Harman v. City and County of San Francisco, 136 Cal.App.4th 1279 (Feb. 22, 2006), holding that Civ. Code §§ 51.7 and 52.1 are not part of the Unruh Civil Rights Act and may be asserted as a separate cause of action in the employment context. Plaintiff may bring claims under Civ. Code §§ 51.7 and 52.1 for threats and intimidation in the workplace. Plaintiff alleged he was subject to retaliation, violence, threats and intimidation in the workplace because of his race. In addition to claims for wrongful termination in violation of public policy and retaliation, he asserted claims for violation of Civil Code section 51.7 and 52.1. Defendant demurred on the grounds that those sections are part of the Unruh Act and that under Rojo v. Kliger, the Unruh Act does not apply to employment cases. The court held that §§ 51.7 and 52.1 are not part of the Unruh Act and that Rojo does not bar employment cases from being premised on these statutes.

Hulteen v. AT&T Corp, 441 F.3d 653 (9th Cir., Mar. 8, 2006), holding that the Pregnancy Discrimination Act (PDA) which amended Title VII effective in 1979 does not apply to female employees and retirees of telecommunications company who allege discrimination in reduction of their retirement benefits because they were granted less service credit for their pre-1979 leaves than employees on temporary disability leaves, since nothing in the text of the PDA indicates clear congressional intent that statute was intended to be applied retroactively.

Posted by Alison L. Tsao

Topic: grooming standards based on gender.
The Ninth Circuit, in an en banc decision, affirmed a prior decision that found appearance standards, including makeup requirements, do not impose an unequal burden on women, and do not amount to sexual stereotyping or harassment under Title VII. Employers should, however, ensure that their grooming standards are reasonable. If different grooming standards apply to men versus women, the employer must demonstrate a legitimate business reason for doing so. Jespersen v. Harrah's Operating Co., --F.3d --, 2006 WL 962538 (April 14, 2006).

U.S. District Judge Consuelo Marshall ruled a Redondo Beach City ordinance that made it illegal for day laborers to solicit work on city streets violated the First Amendment right to free speech. Click here for an article relating to the ordinance and here for an article pertaining to the recent ruling. The judge also said that the ordinance was drafted so broadly that it could prevent children from setting up lemon aid stands on the street and possibly stop girl scouts from selling cookies.

The Redondo Beach ordinance was drafted using language in a similar ordinance adopted in Phoenix, Arizona. The Phoenix ordinance was upheld by the Ninth Circuit Court of Appeals in 1986. California is part of the Ninth Circuit, but Judge Marshall found that there were differences between the two laws. The Redondo Beach City Attorney said that the City is considering an appeal of the ruling.

Posted by Brandy Thompson Cody

STAY TUNED: The California Supreme Court is currently reviewing cases involving the following issues:

Murphy v. Kenneth Cole. The issue the Supreme Court will review is whether the one hour premium pay for violation of meal or rest period rules is a penalty or a wage. The California Labor Commissioner and two Courts of Appeal have issued rulings defining the one hour premium as a penalty, not a wage. Another Court of Appeal (in San Diego) recently issued a contrary ruling, defining the premium pay as a wage. This issue is important because if the premium pay is a penalty, a one-year statute of limitations applies, and terminated employees suing for the penalty are not entitled to waiting time penalties. In contrast, if the premium pay is a wage, the statute of limitations can be up to four years, and former employees would be entitled to waiting time penalties if they succeed in their claim. Click here to read prior posts on this topic.

In Gattuso v. Harte-Hanks Shoppers, the Court of Appeal ruled that it is permissible for an employer to rely on increased compensation, instead of a mileage reimbursement procedure, to satisfy its obligations under Labor Code section 2802 to reimburse an employee for expenses related to the use of the employee's personal vehicle for work. This case is important because there is a dearth of case law interpreting an employer's obligations under Labor Code section 2802, which has recently become a focus of wage and hour litigation. Click here to read a prior post on this case.

Does California law preclude an employer from terminating an employee for away-from-work use of marijuana for medicinal purposes pursuant to the Compassionate Use Act? (Ross v. Ragingwire Telecommunications, Inc.)

Does an employer accused of disability discrimination in violation of the Fair Employment and Housing Act bear the burden of establishing that the plaintiff is incapable of performing his essential job functions with reasonable accommodations? (Green v. State of California)

Does an employee's ability to perform the same job functions for a different employer preclude her right to medical leave for employer-specific stress-related reasons under the California Family Rights Act? (Lonicki v. Sutter Health Center)

Does an employee bonus plan based on a profit figure that is reduced by a store's expenses, including the cost of workers' compensation insurance and cash and inventory losses, violate California law? (Prachasaisoradej v. Ralphs Grocery Company)

Two bills have been introduced in the California legislature that would allow employees greater flexibility in scheduling their workweek. The California Chamber of Commerce sponsored two bills, AB 2217 (Villines; R-Clovis) and SB 1254 (Ackerman; R-Tustin), that will allow individual workers to request and their employers to mutually agree to a four-day compressed workweek.

The Chamber states that:

Both AB 2217 and SB 1254 would allow employees to work four 10-hour days a week if the employee desires the schedule and the employer agrees to the compressed schedule.

If the employer agrees to the proposed four-day workweek schedule, the four-day workweek will be paid at straight-time rates. Any work performed beyond the compressed work schedule would remain subject to current state overtime rules.

Working a compressed four-day workweek provides for up to 50 extra days off from work each year for the average full-time employee. That will be time for the employee to spend with family, attend children's school activities, take care of dependent elders, go to medical appointments, go back to school or attend to other private matters that usually cannot be accomplished on a weekend.

Current Law Inflexible
Under current law, individual employees do not have the right to seek and arrange flexible schedules with their employers.

California overtime law requires premium pay for an hourly employee who works more than eight hours in a single day or more than 40 hours in a single workweek. Due to the state's strict overtime premium pay requirements, an employer who agrees to permit a four-day compressed workweek schedule would incur additional costs because the employee must be paid at time-and-a-half wage rates for the last two hours of each 10-hour workday.

The current alternate work schedule adoption process is largely unused and does not provide flexibility for individual workers and employers. About 11,000 of the state's 800,000-plus employers are trying to operate under the restrictive alternate workweek rules.

The current (and very detailed) Industrial Welfare Commission wage orders permit employers to institute alternative work schedules only if a supermajority of affected employees agree to the arrangement in writing and by secret ballot.

Employers must hold discussion meetings at least 14 days before secret ballot voting. Two-thirds of the company's employees must agree to the change. Any deviation from the rigidly controlled process voids the election and subjects the employer to potential lawsuits that can seek up to three years of back overtime pay for affected workers, along with huge penalties and fines.

Moreover, variances in schedules or the use of more than one schedule is prohibited without repeating the voting process. This effectively eliminates most employers and employees from choosing schedule options such as flextime, part-time, job sharing, telecommuting and compressed workweeks.

Employers who are offering a compressed work schedule without going through the election process are operating in violation of the law.

Click here to read the Chamber's full article.

The Chamber is also looking for employers or employees who would like to testify in support of the two bills. For those who are interested can contact Jessica Smith, Chamber grassroots coordinator, at (916) 444-6670 or e-mail jessica.smith@calchamber.com.

Today, California legislators are debating three different bills to raise the minimum wage in California. California's minimum wage at $6.75 per hour is currently the seventh highest in the country.

One bill (SB 1167) written by State Senator Abel Maldonado, R-Santa Maria, proposes to increase the minimum wage to $7.25 on July 1, 2006 and again to $7.75 on July 1, 2007. (Click here to see SB 1167 history and status) This bill does not include a provision that would automatically increase the minimum wage each year according to inflation. The Governor vetoed a minimum wage increase last year because the minimum wage increase was automatically indexed to increase with inflation subsequent years. The Governor argued that automatically increasing the minimum wage each year would not provide lawmakers the ability to take current economic factors into account before the minimum wage automatically increased.

Another bill, written by State Senator Gil Cedillo, D-Los Angeles, proposes to increase the minimum wage to $7.25 sixty days after the bill is signed into law. The minimum wage would increase again on July 1, 2007 to $7.75, and contains a provision that would increase the minimum wage annually based on inflation. (Click here to see SB 1162 history and analysis)

The third bill, proposed by Assembly Member Sally Lieber, D-Santa Clara, raises the minimum wage to $7.25 on July 1, 2007, increases it again to $7.75 on July 1, 2008, and is indexed to the Consumer Price Index for increases each year. (Click here to see AB 1835 history and analysis)

UPDATE: The bill backed by the Govenor, (SB 1167) written by State Senator Abel Maldonado, R-Santa Maria, was stalled in the Senate Labor Committee without a vote.

Following the lead of Maryland, California state Sen. Carole Migden, D-San Francisco is preparing to introduce a bill that would require businesses with 10,000 or more employees to spend at least 8 percent of total wages on health benefits. It has been reported that this bill would affect approximately 69 employers in California, and is being drafted with Wal-Mart in mind.

Maryland passed a similar law in January, and at least 30 other states are planning to introduce similar legislation. Sen. Migden argues that many employers who do not provide health benefits to their employees are placing the burden on the government to fill this need. The Retail Industry Leaders Association has filed suit to challenge the Maryland law, arguing the law violates the commerce clause, the equal-protection clause of the U.S. Constitution, and the Employee Retirement Income Security Act (ERISA).

As you may recall, in 2004 California voters narrowly rejected Proposition 72, which would have required employers with 20 or more employees to provide health benefits to employees or to pay a fee to the medical insurance board that would provide insurance to individuals.

There is no doubt that employers in California will have to carefully watch this issue and communicate with their elected representatives the impact that such a requirement would have on their businesses.

The Fair Employment and Housing Commission ("FEHC") is currently reviewing the recently passed law requiring California employers with 50 or more employees to provide two hours of sexual harassment training for supervisors. [Click here for related article] The FEHC's web site lists the upcoming dates of its review of the law:

On December 16, 2005, the Commission issued for public comment proposed regulations on Harassment Training and Education, interpreting Government Code section 12950.1 [A.B. 1825], which requires harassment training for supervisors of employers with 50 or more employees. The Commission held two hearings to take public comments about its regulations on February 1 and 10, 2006. The public comment period ended February 10, 2006.
The Commission will consider revised regulations at its next Commission meeting, April 25, 2006, in Fresno, California. Once the Commission has adopted revised regulations, the Commission will post the revised regulations on this website and will take public comments about its revised regulations for a 15 day period.
Details about the April 25, 2006, Commission meeting, including its specific location and an agenda will be posted on this website as soon as it is available.

The new requirement has many uncertainties that have left California employers with more questions than answers. The California Chamber of Commerce submitted comments regarding what changes/clarifications need to be made to the proposed regulations in order to help California employers understand and comply with the law. The Chamber sought clarification regarding the definition of employees and supervisors covered by the training requirement, among other items. Click here to view the Chamber's comments. The issues raised by the Chamber are likely to be the areas of litigation if they are not resolved during this review period.

Unlike the two prior years, the 2005 Legislative session resulted in very little activity that directly affected California employers. Although there were a number of laws from prior years going into effect in 2006, Governor Schwarzenegger vetoed virtually all of the employment-related laws that were pushed forward by California's less-than-employer-friendly Legislature. The following is a brief summary of some of the laws either that are going into effect in 2006 from prior years, or that have now been signed into law, and with which employers in California need to be familiar.

1. DIRECT DEPOSIT OF PAYCHECK UPON TERMINATION OF EMPLOYMENT (AB 1093): Labor Code section 213 used to provide that employee direct deposit authorizations would terminate upon separation of employment for any reason, which prevented employers from directly depositing an employee's final paycheck, including accrued but unpaid vacation pay. This new law, AB 1093, amends Labor Code section 213 to permit direct deposits of all final paychecks, as long as the employer submits the final paycheck within the appropriate statutory time (i.e., immediately for involuntary terminations or resignations with more than 72 hours' notice, or within 72 hours for an employee who immediately resigns).

2. NEW OVERTIME RULES FOR COMPUTER SOFTWARE EMPLOYEES (also AB 1093): Federal law requires that all exempt employees be paid on a salary basis. California law has a similar requirement; however, high-level computer professionals (who may not qualify as executive or administrative employees) are allowed to be paid on an hourly basis and still be exempt, provided that the hourly wage exceeds $47.81 per hour. AB 1093 closes this gap between California and federal laws by amending Labor Code Section 515.5, and allowing computer professionals who are paid either on an hourly basis or on an equivalent annualized salary to be exempt as "computer professionals" as opposed to "executive or administrative employees."

3. EMPLOYEE SOCIAL SECURITY NUMBERS ON PAY STUBS (SB 899 - 2004 session): California has taken various steps to prevent identity theft by restricting use of social security numbers. In a law effective January 1, 2005, employers have until January 1, 2008, to remove employee social security numbers from the itemized portion of an employee's pay stub. Employers have the option of either including just the last four digits of the employee's social security number or an existing employee identification number. Employers may implement the change before January 1, 2008.

4. MORE RULES FOR EMPLOYEE IDENTIFICATION NUMBERS (SB 101): Labor Code section 226 currently prohibits the use of the full social security number on paychecks (no more than the last four digits of the SSN may be included). SB 101 amends section 226 by expanding the types of identification numbers that can be used on paychecks and changes the location of the numbers so that they are on the itemized pay stub in lieu of the paycheck itself.

5. EXPANSION TO THE UNRUH CIVIL RIGHTS ACT (AB 1400): The Unruh Civil Rights Act generally prohibits business establishments from discriminating on the basis of sex, race, color, religion, ancestry, national origin, disability, or medical condition. It also provides civil remedies for violations of its provisions. This bill would further prohibit that discrimination on the basis of familial status, marital status, or sexual orientation, and would define related terms. This bill would integrate those definitions into other related provisions, and would provide that the identification of particular bases of discrimination in those provisions are illustrative rather than restrictive.

6. LIMITATIONS ON COMPENSATION FOR UNEMPLOYMENT (AB 1577): Existing unemployment insurance law provides that an employee cannot receive unemployment benefits if the employee left the employer's employ voluntarily and without good cause, or under one of the specified circumstances. This bill revises the specified circumstances under which an employee cannot receive unemployment benefits to include a situation in which an employee was denied employment or was terminated by an unspecified licensee or facility that was required by law to deny or terminate employment of that employee based on written notification from the department that the employee had a prior criminal conviction or was determined unsuitable for employment.

7. NO MEAL PERIODS REQUIRED FOR CERTAIN EMPLOYEES (AB 1734): Existing law requires employers to provide meal periods to employees during work periods of specified duration. This bill exempts from the meal period requirement certain employees in the motion picture and broadcasting industries who are covered by a valid collective bargaining agreement that contains specified terms.

8. DLSE NOT AUTHORIZED TO PROMULGATE REGULATION RE MEAL AND REST PERIODS (ACR 43): This bill declares that the Division of Labor Standards Enforcement does not have the authority to promulgate a specified regulation relating to meal and rest periods. Instead, said authority rests with the Legislature or the Industrial Welfare Commission, and the regulation specified by the DLSE is inconsistent with existing law.

Carlton DiSante & Freudenberger LLP has prepared an executive summary of a comprehensive list of new laws and developments in new cases employers should be aware of in 2006. To receive a free copy of the executive summary, request a copy via e-mail.

On January 27, 2006, the Second Appellate District issued a holding that the payments required under Labor Code section 226.7 are penalties and, therefore, a one year statute of limitations governs the payments, as opposed to a three year statute of limitations if the payments are considered wages. This holding is one of many recent (and conflicting) holdings on this issue as illustrated below.

Cases Holding 226.7 Payments are Penalties (and therefore a one year statute of limitations applies):
1. Mills v. Superior Court (Jan. 27, 2006) ___ Cal.4th __, 2006 [PDF] [WRD]
2. Murphy v. Kenneth Cole Productions, Inc. (2005) 134 Cal.App.4th 728
3. Caliber Bodyworks, Inc. v. Superior Court (2005) 134 Cal.App.4th 35, 381, fn. 16
4. Hartwig v. Orchard Commercial, Inc., Case No. 12-569901RB (This case only binding on any hearing before a Deputy Labor Commissioner or Hearing Officer.) [Click here to read further analysis on Hartwig]

Cases Holding 226.7 Payment are Not Penalties (and therefore a three year statue of limitations applies):
1. National Steel and Shipbuilding Company v. Superior Court (Jan. 20, 2006) __ Cal.4th __, 2006 WL 147520 (with Justice Irion dissenting)
2. Tomlinson v. Indymac Bank, F.S.B. (C.D. Cal. 2005) 359 F.Supp.2d 891 (This case is a federal case and therefore is not binding on California state courts. Indeed, Mills v. Superior Court, above, explicitly rejected Tomlinson's reasoning.)

California law currently requires employers to pay a penalty, measured in the amount of one hour's wages, to any employee who is denied a mandatory meal or rest break. The confusing language of the statute itself (codified at Labor Code Section 226.7) is no doubt partly responsible for the tidal waive of class action lawsuits that followed in the wake of its enactment in 2001. Indeed, the difficulty faced by employers in attempting to interpret and apply its ambiguous requirements was recently on display when two separate appellate courts reached diametrically opposite conclusions on the same question: i.e. is the payment required under the act really a "wage" or a "penalty?"

This seemingly semantic dispute has important real-world consequences. If the payment is a "penalty" then a one-year statute of limitations would apply. On the other hand, if the payment is a "wage," then the three-year statute of limitations would apply.

In December 2005, the First Appellate District held in Murphy v. Kenneth Cole Productions, Inc. that the payment is necessarily a penalty because it "is not compensation for labor performed, but is an arbitrary amount imposed on the employer in addition to the salary already paid during the time the employee was not eating or not resting. It is not overtime pay for an allowed work period, but a penalty for violating the law that prohibits work during those times."

Within barely a month, however, the Fourth Appellate District reached the opposite result, in National Steel and Shipbuilding Company v. Godinez that the payment must be characterized as a "wage" because it believed the objective of the statute was "to pay employees for additional work performed during mandated meal or rest periods and deter employers from requiring employees to work through these periods."

Moreover, on January 13, the Division of Labor Standards Enforcement (DLSE) withdrew its proposed interpretive regulations, which have been winding their way through the public comment process for nearly a year. [See related article]. Ironically, the DLSE claimed in a press release that the regs were withdrawn because the Murphy v. Kenneth Cole decision had rendered further clarification unnecessary. As astute observers have noted, however, the Division may not be keen to stake out a position on a question that has become a high-profile political struggle between pro-business interests and plaintiffs lawyers.

Thus, notwithstanding this recent flurry of judicial and administrative activity, the meaning of the meal and rest period statute is still in legal limbo. The California Supreme Court will ultimately need to provide any definitive interpretation and is expected to grant review of one (or, more likely, both) of the conflicting appellate cases. The Supreme Court is currently averaging one to three years from the grant of review to the issuance of a final opinion.

On January 13, 2006, the Department of Industrial Relations ("DIR") announced it would withdraw the proposed revisions to meal period regulations that had been pending for more than a year. The revisions would have given employees the option to decide whether or not to take a thirty-minute meal break and would have clarified the issue of the statute of limitations for penalties assessed to employers for violations of the meal break regulations. The DIR has indicated it will issue new proposed regulations at a later date.

Summary and History of Proposed Regulations

In December 2004, Governor Schwarzenegger announced new meal break regulations that would have required employers to inform all hourly employees either in writing or verbally of their right to take a thirty-minute meal break and to afford employees the opportunity to take a meal period. Under the current regulations, employers are required not only to make the meal period available to employees, but also to make sure all employees actually take a thirty-minute break. Accordingly, employers currently can be penalized when employees do not take their meal breaks, even if the employee voluntarily chooses not to take one.

The proposed regulations further specified that recovery by employees for missed meal periods should be classified as a penalty rather than back wages. If classified as a penalty, aggrieved employees would be able to recover for missed meal periods going back one year. If classified as a wage, employees would be able to seek three years of back wages for missed meal periods. In a recent press release, John Rea, the acting director of the DIR noted that this issue has already been reviewed by the First District Court of Appeal (which found that the payment is a penalty and not a wage) and that "the need for a regulation clarifying that the 'payment' is a penalty and not a wage is significantly reduced at this time."

The proposed regulations met with strong opposition from labor unions and other employee rights groups, who argued that employers would bully employees into not taking their meal breaks. The DIR indicated that it received hundreds of opinions of the proposed rules and wanted additional time to consider the comments before acting.

Conclusion

Although the DIR has indicated it will revisit the meal period regulations at a later date, it is likely that any proposed regulations will not go into effect until 2007 at the earliest. Accordingly, employers should continue to ensure that all hourly employees take their legally-mandated meal periods.

Governor Arnold Schwarzenegger vetoed a bill (AB 48) that would have raised California's minimum wage from $6.75 to $7.75 over the next two years. The bill also tied all future increases in minimum wage to an inflation index, which was the primary reason the Governor vetoed the bill. Schwarzenegger said the legislature should carefully review the ramifications of increasing the minimum wage each time it is raised instead of putting all increases on "autopilot."

The Governor also use this opportunity to express his desire to provide employers some relief from the other employment laws in California, saying California has "the most inflexible workplace scheduling rules in the country" and "Byzantine labor law defining employer classifications." (Click here to see the Governor's proposed meal and rest break regulations)

Question: What new laws are going into effect that will impact my business in 2005?

1. Sexual Harassment Training for Supervisors - AB 1825
All employers with 50 or more employees must provide comprehensive sexual harassment training to all supervisory employees. This training must be completed by January 1, 2006 for all current supervisory employees. Any employees promoted into supervisory positions or hired into supervisory positions after January 1, 2006, must complete the training within six months of taking the supervisory position. The training must then be given to all supervisory employees every two years.

In order to be compliant the training must:
(a) be at least two hours in length;
(b) be interactive (this is not defined and therefore we advise employers to utilize classroom training as opposed to resorting only to video training, which may not be considered interactive);
(c) be conducted by individuals with knowledge and experience with sexual harassment law;
(d) include practical examples of sexual harassment aimed at instructing attendees in the prevention of sexual harassment; and
(e) include information and practical guidance regarding federal and state laws concerning sexual harassment, including what type of conduct is prohibited, how to prevent and correct sexual harassment if it occurs, and what remedies are available to victims of sexual harassment.

2. SB 2 Defeated/Repealed - Proposition 72
Because Proposition 72 was narrowly defeated by the voters, SB 2 (mandatory healthcare) will not go into effect in 2006 and the Legislature will have to find another method to reform healthcare then on the backs of California employers.

3. Bounty Hunter Laws Weakened - SB 1809 and Proposition 64
By enacting Proposition 64, California voters limited the ability of unscrupulous plaintiff lawyers to bring shakedown lawsuits against California businesses. Under Proposition 64, private sector plaintiffs suing under section 17200 of the California Business and Professions Code, now must (1) prove that they suffered actual harm to have standing to sue, and (2) must meet all the requirements of class action litigation before bringing a representative action on behalf of the general public.

By enacting SB 1809 in conjunction with the state budget, the California Legislature has limited the effectiveness of the previously enacted Bounty Hunter legislation enacted under Governor Davis. The Bounty Hunter Law allowed individuals to sue for penalties for any violation of the California Labor Code. Pursuant to the reform legislation the following changes are now in effect:
a. No lawsuit may be brought for posting, notice or other similar trivial requirements set forth in the Labor Code, with some very limited exceptions;
b. Employees must first provide notice to employers before filing a lawsuit;
c. Employees must first give the state the opportunity to investigate the alleged violation before filing a lawsuit;
d. Penalties are no longer mandatory and the courts have the discretion to reduce penalties; and
e. Courts must approve all settlements for lawsuits under this provision.

4. Posting Social Security Numbers on Employee Payroll Documents - SB 1618
Under this legislation, California employers have until January 1, 2008, to remove employee social security numbers from the itemized portion of an employee's pay stub. Employers have the option of either including just the last four digits of the employee's social security number or another employee identification number.

5. COBRA Modifications - DOL Regulations
Pursuant to recent DOL regulations, COBRA notice requirements have now changed. Employers should contact their attorneys and/or health insurance brokers/providers to ensure that they comply with the new notices and notice provisions. In addition, in California COBRA and Cal COBRA eligible employees are now eligible for 36 months of COBRA coverage.

6. Same-sex Domestic Partner Health Coverage - AB 205
Employers that provide dependent coverage health insurance must offer such coverage to same-sex domestic partners registered with the state. This applies to any health insurance policy that is issued or renewed after January 1, 2005. Employers can require proof of registration as a condition of providing coverage.

7. San Francisco Minimum Wage
Effective January 1, 2005, the minimum wage for all employers with 10 or more employees working in the City and County of San Francisco increases to $8.62 an hour ($7.75 for non-profits).