Recent Developments for California Employers: Racial Hairstyles, Uniforms, and Regular Rate
In case you missed them, there have been some recent developments impacting EEO policies and practices and wage and hour practices. This post summarizes some notable developments.
California Enacts Explicit Protection From Discrimination For Racial Hairstyles
The California Legislature recently passed a bill (SB 188) to amend California’s Fair Employment and Housing Act (FEHA) to make it clear that the Act’s prohibition against race discrimination includes discrimination against a person because of the person’s hair texture or “protective” hairstyle that is historically associated with race. “Protective hairstyles” includes braids, locks, and twists. California’s Governor signed SB 188 into law earlier this month. The new law takes effect January 1, 2020.
California law, like federal law, has long prohibited race discrimination in employment, and courts have interpreted this ban on race discrimination as prohibiting discrimination against a person based on natural hairstyles such as an afro. However, at least one federal court has held that the federal anti-discrimination law (Title VII) does not protect other hairstyles, such as dreadlocks (reasoning that a person chooses this hairstyle, rather than the hairstyle being a natural trait). SB 188 was introduced and enacted in response to these court decisions, to make clear that California’s FEHA protects blacks against race discrimination based on additional hairstyles, including braids, locks, and twists.
In terms of impact on California employers, this means that an employer generally should not have a dress code policy that prohibits racially-associated hairstyles such as afros, braids, locks, or twists. Taking adverse action against an applicant or employee based on a racial hairstyle could subject an employer to liability for race discrimination under FEHA. Managers and human resources personnel should be trained accordingly. If there are unique concerns presented by the workplace environment, they should be addressed on an individual basis.
Slip-Resistant Shoes Are Not Reimbursable Business Expenses
A California court recently considered whether an employer must reimburse employees for the cost of slip-resistant shoes they were required to wear to work. In Townley v BJ’s Restaurants, Inc., the court held that the answer is no. In that case, the employer, which operates a number of restaurants in California, required its hourly restaurant employees, for safety reasons, to wear black, slip-resistant, close-toed shoes in the workplace. BJ’s did not require a specific brand, style, or design of shoe, and employees were free to wear their shoes outside of work. BJ’s did not pay for the cost of these shoes and did not reimburse employees for the expense of purchasing them. Because this is California, BJ’s of course got sued by a former server seeking penalties under PAGA on behalf of all aggrieved employees of BJ’s in California. The server alleged that the shoes were a required uniform item that BJ’s was required to provide (or reimburse employees’ expense for purchasing them).
Rejecting the employee’s claim and holding that BJ’s was not required to pay for the cost of slip-resistant shoes, the court, relying on guidance from the Division of Labor Standards Enforcement and the Ninth Circuit in a similar case, held that this was not a reimbursable business expense because the slip-resistant shoes were non-distinct and generally usable by employees in any restaurant occupation. As such, they could not be considered a “uniform” that BJ’s was required to provide or reimburse.
Federal Department of Labor Issues Proposed Updated Regulations on Regular Rate
Lawsuits against employers alleging that they did not pay employees the correct overtime rate are increasingly common, in significant part due to a lack of clear rules in this area. In an effort to provide more clarity, the federal DOL has introduced a proposed rule to update the federal regulations under the FLSA regarding types of compensation that may be excluded from the regular rate calculation. In particular, the DOL’s proposed amendments clarify that the following may be excluded from the regular rate:
- that the cost of providing wellness programs, onsite specialist treatment, gym access and fitness classes, and employee discounts on retail goods and services may be excluded from an employee’s regular rate of pay;
- that payments for unused paid leave, including paid sick leave, may be excluded from an employee’s regular rate of pay;
- that reimbursed expenses need not be incurred “solely” for the employer’s benefit for the reimbursements to be excludable from an employee’s regular rate;
- that reimbursed travel expenses that do not exceed the maximum travel reimbursement permitted under the Federal Travel Regulation System and meets other regulatory requirements may be excluded from an employee’s regular rate of pay;
- that employers do not need a prior formal contract or agreement with the employee(s) to exclude certain overtime premiums described in sections 7(e)(5) and (6) of the FLSA; and
- that pay for time that would not otherwise qualify as “hours worked,” including bona fide meal periods, may be excluded from an employee’s regular rate unless an agreement or established practice indicates that the parties have treated the time as hours worked.
In addition to the foregoing, the proposed regulations clarify that call-back pay (and similar payments) need not be only occasional and sporadic to be excluded from the regular rate. Furthermore, the proposed regulations attempt to provide clarification on when a bonus may be excluded from the regular rate. It will remain the law that non-discretionary bonuses must be included in the regular rate, whereas discretionary bonuses may be excluded. The general rule is that if a bonus is promised in advance to an employee for longevity, meeting certain goals, or similar conditions, then the bonus is non-discretionary and must be included in the regular rate. Conversely, if both the fact that a bonus will be paid, and the amount of the bonus, are determined in the employer’s sole discretion at or near the end of period for which the bonus will be paid, then it is a discretionary bonus that need not be included in the regular rate. Despite this definition, it is not always clear which category a bonus falls under. As such, the proposed regulations add examples of bonuses that are non-discretionary and may be excluded from the regular rate. These include employee-of-the-month bonuses, bonuses to employees who made unique or extraordinary efforts which are not awarded according to pre-established criteria, severance bonuses, bonuses for overcoming stressful or difficult challenges, and other similar bonuses for which the fact and amount of payment is in the sole discretion of the employer until at or near the end of the period for which it is paid.
For more information on the proposed regulations, see here and here. These regulations are not yet final and may be revised by the DOL prior to issuing a final rule. In the meantime, California employers are reminded that California wage and hour law is not always consistent with the FLSA. In significant part, California follows the FLSA regulations concerning the regular rate. However, there are some differences, and it remains to be seen whether California will agree or disagree with any changes to the federal regulations on this subject.