San Francisco Employers Must Limit Criminal History Inquiries

San Francisco has joined several other cities in enacting “ban the box” legislation to restrict the ability of private employers to inquire about and consider criminal history information for employment purposes.  San Francisco’s recently enacted Fair Chance Ordinance takes effect August 13, 2014.  The Ordinance applies to private employers located or doing business in the City and County of San Francisco with 20 or more employees (including owners and regardless of where the employees work).  The Ordinance’s protections apply to applicants or employees whose place of employment is entirely or substantially located in San Francisco.

The Ordinance prohibits covered employers from making any inquiry regarding criminal history until after an initial job interview.  The Ordinance specifically prohibits “check the box” type questions regarding criminal history on employment applications.  In addition to prohibiting direct inquiry of an applicant or employee, the Ordinance also specifies that employers may not indirectly inquire about criminal history through the use of a background check or other means until after an initial interview.  Furthermore, prior to conducting any criminal history inquiry, the employer must provide the applicant or employee with a written notice of their rights under the Ordinance.  This notice, along with a required workplace poster, will be prepared and published by San Francisco’s Office of Labor Standards Enforcement (OLSE).

In addition to restricting the timing of any criminal history inquiry, the Ordinance also restricts the scope of any such inquiry as well as an employer’s permissible response to learning that an applicant or employee indeed has a criminal background.  The Ordinance completely prohibits employers from inquiring about or considering (1) arrests that did not result in a conviction (unless an investigation or charges are currently pending); (2) completion of a diversion program; (3) sealed or juvenile offenses; (4) offenses that are more than seven years old from the date of sentencing; and (5) offenses that are not felonies or misdemeanors (such as infractions).  Even if an employer learns of criminal history information, the employer is limited in its ability to consider that information as a bar to employment.  The Ordinance requires that the employer conduct an individualized assessment of the nature of the offense as it relates to the specific job position at issue.  The offense may only be considered if it has a “direct and specific negative bearing on that person’s ability to perform the duties or responsibilities necessarily related to the employment position.”  In this regard, the employer must consider whether the position “offers the opportunity for the same or a similar offense to occur” and whether “circumstances leading to the conduct for which the person was convicted . . . will recur.”  The employer must also consider the amount of time that has elapsed since the conviction and consider any mitigating factors and rehabilitation efforts specific to the individual applicant or employee.

If an employer decides to take adverse action based on criminal history information (e.g. refusal to hire or promote), the employer must first notify the applicant or employee of the intended decision in writing (and provide a copy of the background check or criminal conviction report) and allow the applicant or employee seven days to respond with any evidence of inaccuracy in the information or to describe any mitigating factors or rehabilitation.  After receiving such a response, the employer must wait a reasonable time to evaluate the information and reconsider the intended action before making a final decision.  If the employer decides to proceed with the adverse action, it must notify the employee of that decision and that it was based on the criminal history information.

The Ordinance requires covered employers to retain records (including application forms and other related records) for three years.  Covered employers are also affirmatively required to state on all job solicitations or advertisements that the employer will consider for employment qualified applicants with criminal histories in a manner consistent with the Ordinance.

The OLSE may investigate compliance and violations of the Ordinance and may award appropriate relief to an applicant or employee, as well as impose penalties against an employer.  The OLSE may also file a civil action against an employer for a violation of the ordinance.

Employers are reminded that they have separate obligations to comply with the Fair Credit Reporting Act as well as California’s Investigative Consumer Reporting Agencies Act.  Both of these acts regulate the process of conducting background checks for employment purposes and overlap in some ways with the requirements of the San Francisco Ordinance.  Additionally, employers are reminded that the EEOC recently published its own guidance on the use of criminal background checks for employment purposes and has stepped up its enforcement efforts in this area.  Employers are urged to review their criminal background check practices for compliance, and San Francisco employers must additionally ensure more specific compliance with the new San Francisco Ordinance.  The text of the Ordinance is available here.  

Obama to Seek to Narrow Federal Overtime Exemptions

News media are widely reporting that President Obama intends this week to direct the Department of Labor to materially revise the Fair Labor Standards Act (FLSA) regulations pertaining to overtime exemptions so that fewer employees will qualify for an exemption from overtime.  Obama's move relies on his executive authority to revise the rules that carry out the FLSA.  Obama is relying on this executive authority to carry out his pro-worker agenda, as a means of sidestepping the need to pass actual legislation that likely would be blocked by Republicans in Congress.

While the details of the intended revisions have not yet been announced, it is reported that Obama will be urging at least two significant changes:  (1) an increase in the amount of minimum compensation that must be paid to an employee in order for the employee to qualify for exempt status (the minimum currently is $455 per week under the FLSA, and Obama is expected to direct that the minimum be substantially increased, with some urging that it be doubled); and (2) replacing the FLSA "primary duty" test with a more quantitative test that requires an employee to spend a certain percentage of his or her time (likely at least 50%) on exempt duties in order to qualify for exempt status.  These changes would substantially decrease the number of employees who qualify for overtime exemption under the FLSA, and would also likely substantially increase the number of wage and hour lawsuits (already soaring) filed against employers to challenge exempt status and seek unpaid overtime compensation.  Business groups are expected to vigorously oppose the intended overhaul of the regulations.

So what does this mean for California employers?  Probably not much.  California employers are already subject to more narrow overtime exemption laws under California law.  To qualify for exemption in California, an employee (among other things) must be paid a guaranteed salary of at least $640 per week (rising to $800 per week in 2016) and must spend more than 50% of his or her weekly work time on exempt duties.  Thus, the changes being contemplated by the White House are already in effect in California, and the Obama administration appears to be looking to California's laws as guidance in revising the FLSA's overtime exemptions.  This is not good news for employers.

Proposed Amendments to CFRA Regulations Published

On February 21, 2014, California's Department of Fair Employment and Housing Council (FEHC) published proposed amendments to the California Family Rights Act (CFRA) regulations.  These regulations are intended to clarify some aspects of the existing regulations and also to adopt many of the recent amendments to the federal FMLA regulations to make the two acts more consistent.  The proposed amended regulations touch on almost every aspect of the CFRA process, addressing, among other things, length of service/eligibility issues, the certification process and timeframes for responding to employee requests for CFRA leave, computation of amount of leave entitlements, key employee issues, clarification of reinstatement rights, maintenance of health and other benefits during leave, retroactive desingation of leave, and the interplay between CFRA leave and California pregnancy disability leave. The proposed regulations make clear that same-sex spouses are covered under CFRA and make clear that the FMLA regulations apply to CFRA leave "to the extent not inconsistent" with the CFRA regulations.  Importantly, there remain some areas where CFRA administration will continue to differ from FMLA administration.  Among other things, pregnancy disability is not covered under CFRA and, therefore, a California employee who is otherwise eligible for leave under CFRA/FMLA will be eligible for up to four months of leave for pregnancy disability AND up to twelve weeks of additional leave for baby-bonding under CFRA.  The proposed regulations make clear that a California employer is required to maintain the employee's group health benefits for this whole time period (and not just up to 12 weeks).  Some other notable differences between CFRA and FMLA are that the medical certification and scope of permissible medical inquiry are narrower under California law than under FMLA, and the circumstances under which an employer can seek re-certification are narrower under California law.  The proposed regulations provide a sample medical certification that California employers can use.  (In this author's opinion, the proposed certification is insufficient as it relates to intermittent leave needs).

Employers covered by CFRA should carefully review the proposed regulations and consider whether to submit comments and/or proposed revisions.  The full text of the proposed amended regulations is available here.  There is a public comment period through June 2, 2014.  Comments can be submitted via email to FEHCouncil@dfeh.ca.gov.  There will also be two public hearings on the proposed amended regulations:  10:00 a.m. on April 7, 2014 at UC Irvine School of Law, and 10:00 a.m. on June 2, 2014 at the California Public Utilities Commission Main Auditorium in San Francisco.  For more information, see the DFEH website here.

IRS Announces New Mileage Reimbursement Rate

Yesterday the IRS announced the 2014 optional standard mileage reimbursement rates.  Beginning January 1, 2014, they decrease one-half cent from the current rates in effect, and are as follows:

  • 56 cents per mile for business miles driven;
  • 23.5 cents per mile driven for medical or moving purposes; and
  • 14 cents per mile driven in service of charitable organizations (same as current rate in effect).

Employers using the standard IRS rates for mileage reimbursement purposes should adjust their expense reimbursement policies accordingly.

SF Family Friendly Workplace Poster Available

San Francisco employers are reminded that the city's new Family Friendly Workplace Ordinance (FFWO) takes effect January 1, 2014 and requires employers to consider employee requests for flexible or predictable work arrangements to assist with caregiving responsibilities.  Our prior post on this new ordinance is here.  This new local ordinance requires San Francisco employers with twenty or more employees to post a poster setting forth the provisions of the ordinance.  That poster has just been made available.  Employers can access the poster here.  For more information on the FFWO, click here.

San Francisco Adopts Family Friendly Workplace Ordinance, Increasing Cost of Employing Workers in the City by the Bay

Last week, San Francisco’s Board of Supervisors unanimously adopted the Family Friendly Workplace Ordinance, giving employees the right to request flexible work schedules or other accommodations to help the employee with childcare obligations and other similar household obligations.  The ordinance of course provides legal remedies to an employee whose rights under the ordinance are violated.  San Francisco Mayor Ed Lee has stated that he will sign the ordinance into law, but has not yet done so.  If signed into law as expected, the ordinance will take effect January 1, 2014.  Thus, employers with employees in San Francisco should familiarize themselves with the newly passed ordinance.

The ordinance applies to employers who regularly employ 20 or more employees, including part-time employees, within the City of San Francisco.  The ordinance grants employees with 6 or more months of service and who work at least 8 hours per week the right to request a flexible work arrangement to accommodate the employee’s caregiving responsibilities for (1) a child; (2) a parent age 65 or older; or (3) a spouse, domestic partner, parent, child, sibling, grandparent or grandchild with a serious health condition.  An eligible employee may make up to two requests for accommodation per year, but may make additional requests following the birth or adoption of a child and/or an increase in the employee’s caregiving responsibilities for a family member with a serious health condition.  An employee may request accommodation in the form of an alternative work schedule, telecommuting, job sharing, part-time work, or any other type of flexible work arrangement.  An employee’s request must be made in writing, and must detail the accommodation requested and how that accommodation relates to the employee’s caregiving responsibilities.  The request must also state the proposed commencement and duration for the requested accommodation.

An employer who receives a written request must respond both verbally and in writing.  The employer must meet with the employee about the request within 21 days of receiving the request.  The employer thereafter must respond to the request in writing within 21 days, explaining whether the employer will grant or deny the request.  An employer who denies the request must explain, in writing, “bona fide business reasons” for the denial, such as identifiable cost of granting the request (lost productivity, rehiring or retraining costs), negative effect on ability to meet customer demands, inability to meet work demands or transfer work among employees, etc.

If an employee’s request is denied, the employee then has 30 days to seek reconsideration, which requires the employer to again meet with the employee within 21 days and respond in writing thereafter within 21 days.

The new ordinance states that it shall be unlawful for a San Francisco employer to interfere with, restrain, deny the exercise of any rights granted by the ordinance.  It also makes it unlawful to discharge, threaten to discharge, demote, or otherwise take adverse employment action against an employee for exercising rights under the ordinance.  The ordinance grants enforcement authority to San Francisco’s Office of Labor Standards Enforcement, which can investigate alleged violations and take administrative and legal action to enforce the ordinance and remedy certain violations.  The ordinance does not provide for a private right of action.

Employers will be required to post mandatory posters (not yet published) concerning the new ordinance and will also be required to maintain records of employee requests for 3 years.

The text of the ordinance is available here.

New California Law Expands Missed Meal and Rest Period Premium Pay to Missed “Recovery” Periods

Last week, California’s Governor signed into law SB 435, which provides for one hour of premium pay for missed “recovery periods.”  This new law amends Labor Code section 226.7, which California employers know as the law providing premium pay for missed meal and rest periods.  (Basically, it’s a penalty of one hour of pay for a missed break, but California courts call it a “wage” instead of a “penalty” so that the statute of limitations on the claim is three times as long).  The statute has led to myriad class action lawsuits in California alleging missed meal and rest breaks and seeking premium pay under section 226.7 on behalf of proposed classes of employees.  Well, with the new amendment to section 226.7, this will undoubtedly lead to a whole new category of class action lawsuits seeking premium pay—now for allegedly missed “recovery” periods.  So what is a “recovery period?”  A recovery period is a cool down period of at least 5 minutes on an “as needed” basis that must be afforded to employees who work outside.  Thus, this new law does not affect all California employers, but only those with outside employees, such as construction industry employers, agricultural employers, and the like.  Employers are encouraged to review Cal-OSHA/Department of Industrial Relations guidance on heat illness and injury prevention.  For some information in this area, click here and here.

The text of the new law is available here.

Impact on Employers of California’s New Law Authorizing Driver Privileges for Illegal Immigrants

Governor Jerry Brown signed AB 60 into law on October 3, 3013.  The law allows individuals without immigration status to obtain driver privileges (DP) and to obtain a DP identification from DMV.  The law goes into effect on January 1, 2015 in order to give DMV sufficient time to publish regulations and procedures and to staff up to meet the expected demand.

CDF reminds employers that the DP identification will not satisfy I-9 requirements.  While a state issued driver license is an acceptable List B document, a DP card will not be.  By definition, anybody who applies for the DP identification is most likely not work authorized.

It is the opinion of this author that Congress will eventually grant employment authorization documents (EAD’s) sometime during the next two years to this same population segment – however it remains to be seen when.  Until then, employers are reminded to remain vigilant regarding accepting proper I-9 documentation for new hires and reverifications.

For more information on the new DP, click here.

For information on other immigration matters, please contact Attorney Greg Berk, Chair of the CDF Immigration Practice Group.

California Governor Approves Minimum Wage Hike, Domestic Worker Bill of Rights, and Expansion of Paid Family Leave Benefits

This week, California's Governor signed into law legislation (1) increasing the state minimum wage, (2) providing overtime compensation for many household employees, and (3) expanding the scope of California's paid family leave insurance program.   With respect to minimum wage (which is currently $8/hour in California), AB 10 increases the minimum wage to $9/hour effective July 1, 2014, and further increases it to $10/hour effective January 1, 2016.  Currently, the only state with a higher minimum wage than California's upcoming $9/hour is Washington, where the minimum wage is $9.19/hour.

The Governor also signed into law AB 241, which adds section 1450 to the California Labor Code and is known as the Domestic Worker Bill of Rights.  Under this new law, individuals who work in many household occupations are now required to be paid overtime compensation at a rate of one and one-half times their regular rate for all hours worked in excess of 9 hours per day or 45 hours per week.  The law excludes "casual babysitters" whose work is intermittent or irregular as well as babysitters who are under age 18, and further excludes individuals who work in residential care facilities.  The law would apply to nannies, housekeepers, and individuals who provide care for the elderly and/or disabled within a private household.  This new law takes effect January 1, 2014.

Finally, the Governor signed into law SB 770, which expands the scope of California's family temporary disability insurance program.  Under the current program, employees who take time off to care for a seriously ill child, spouse, parent or domestic partner, or for baby bonding, are entitled to partial wage replacement benefits through this state insurance program administered by the EDD.  Under the new law, these benefits are expanded to also be provided to employees who take time off to care for a seriously ill grandparent, grandchild, sibling or parent-in-law.  This new law takes effect July 1, 2014.  To be clear, this new law is not a leave statute and does not require California employers to provide leaves of absence to employees for any of these circumstances, much less to provide employees pay for such leaves.  An employer's leave obligations are governed by the employer's policies and the employer's coverage under other applicable laws such as the FMLA and CFRA.

We will continue to keep you updated on any additional legislative developments.

Prevailing Employer In Wage Case Can Only Recover Attorneys’ Fees If Claim Was Brought In Bad Faith

Employers may recall recent publicity in California over the extent to which an employer may recover its attorneys’ fees after prevailing in a wage and hour action.  This is because Labor Code section 218.5 on its face provides that the prevailing party in any action brought for nonpayment of wages “shall be awarded” its reasonable costs and attorneys’ fees.  Thus, Labor Code section 218.5’s fee-shifting provision on its face applies equally to a prevailing employee and employer.  Based on this language, in Kirby v. Immoos, a trial court awarded attorneys’ fees to an employer who prevailed in a wage case alleging, among other things, meal and rest break violations.  A California court of appeal thereafter affirmed the employer’s fee award.  However, the California Supreme Court ultimately reversed this outcome and held that Labor Code section 218.5 does not apply to meal and rest break claims, reasoning that these claims are not claims alleging “non-payment of wages.”  The Court’s ruling left open the possibility that a prevailing employer could recover attorneys’ fees in certain other types of wage-related actions.

To avoid this result, the California Legislature introduced a bill, SB 462, to amend Labor Code section 218.5 to provide that a prevailing employer may only recover attorneys’ fees if a trial court finds that the employee brought the wage action in bad faith.  The legislature recently passed this bill and yesterday California’s Governor signed it into law.  With this amendment, it will be even more difficult and rare for a prevailing employer to recover attorneys’ fees in wage and hour actions in California.

Editor
Cal Labor Law

Robin E. Largent is a Partner in CDF’s Sacramento office and may be reached at 916.361.0991 or rlargent@cdflaborlaw.com BIO »

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