Labor & Employment

California Employer Domestic Violence Notice Requirement

Written by Erica Parks

Last November, Assembly Bill No. 2337 (“AB 2337”) was signed into law amending Section 230.1 of the California Labor Code by requiring employers to provide written notice to all employees, including new employees upon hire, of their rights thereunder. Specifically, Section 230.1 prohibits employers from discriminating or retaliating against an employee who is a victim of domestic violence, sexual assault, or stalking for taking time off from work to seek medical attention for resulting injuries, receive counseling, participate in safety planning, or obtain services from a domestic violence shelter, program, or rape crisis center.

AB 2337 postponed the notice requirement until such time as the Labor Commissioner developed and posted on the Department of Industrial Relations’ (“DIT”) website a model notice. The Labor Commissioner has now issued its model notice. Accordingly, employers must immediately comply with the posting requirement either by adopting the Labor Commissioner’s model notice or developing their own notice, in which case such notice must be “substantially similar” to the model notice. The Labor Commissioner’s model notice is available on the DIR’s website here.

Please contact MSK if your business decides to develop its own notice and would like to ensure that it complies with the new law.

Salary Inquiries Off Limits in San Francisco

Written by Erica Parks

Last month, San Francisco Mayor Ed Lee signed the “Parity in Pay” Ordinance, making San Francisco the latest in a growing number of cities and states that have enacted legislation prohibiting employers from asking job applicants about their salary histories. The ordinance, the full text of which is available here, takes effect July 1, 2018 (penalties for violations will be available starting July 1, 2019). Under the new law, employers will be prohibited from:

  • Asking about an applicant’s current or prior salary;
  • Considering or relying on an applicant’s salary history in determining whether to make a job offer or what salary to offer;
  • Refusing to hire or otherwise retaliating against an applicant for refusing to disclose their salary history; and
  • Releasing the salary history of a current or former employee  without written authorization unless such information is required to be disclosed by law, publicly available, or subject to a collective bargaining agreement.

However, employers may discuss an applicant’s salary expectations and any benefits they would have to forfeit in order to take the new job (e.g., unvested equity or deferred bonus compensation). Further, when an applicant voluntarily discloses salary history without prompting by the employer, the employer may consider such information. Of course, pursuant to California Labor Code 1197.5, such history by itself cannot be used to justify paying such applicant less than an employee of a different sex, race, or ethnicity for doing substantially similar work under similar working conditions. Click here to view our previous alert. (more…)

California Court of Appeal Upholds Clearly Defined Waiting Period Before Vacation Begins to Accrue

By Steven Schneider and Hilary Feybush

Building on earlier vacation policy decisions, a California Court of Appeal recently held in Minnick v. Automotive Creations, Inc.  that employers may impose a clearly expressed waiting period before an employee can begin to accrue vacation time.  This means that  employers do not have to provide vacation pay vesting on day one of employment.  While an employer cannot contract around the rule against forfeiture of wages, an employer does not do so by unambiguously providing that employees do not begin to earn vacation pay until a certain period of employment has occurred.  However, once vacation pay under an employer’s policy starts to be vested and earned, it cannot be taken away.

In the Minnick case, the employer’s policy clearly expressed that no vacation time was earned during an employee’s first year of employment.  The plaintiff was a former employee who had only been employed for six months.  He accordingly was not paid any unused vacation in his final paycheck because he had not worked a full year.  His lawyer argued that the employer’s policy violated California law because it required employees who worked less than one year to forfeit vested vacation pay. (more…)

NYC Updates “Ban the Box” Law

NYC Updates “Ban the Box” Law to Detail Per Se Violations and Procedures Employers Must Follow to Conduct Employment-Related Criminal Background Checks

By Greg Hessinger and Melvin Felton II

On August 5, 2017, important updates to New York City’s Fair Chance Act went into effect.  The Fair Chance Act (FCA), which regulates criminal background checks on employees and license holders, is the City’s version of a growing trend of so-called municipal “Ban the Box” laws designed to prohibit employers and agencies from denying jobs and licenses to would-be employees because of a criminal conviction(s), especially when the conviction is not directly related to the persons’ ability to perform the job.

The Fair Chance Act itself took effect on October 27, 2015 (see MSK’s prior alert here).  Since then, the New York Commission on Human Rights (Commission), the agency charged with enforcing the FCA, has published revisions that further clarify the law, provide guidelines for per se violations, and detail the analysis and process for legally withdrawing conditional offers of employment based on the results of a criminal background check.  It is those revisions that took effect on August 5, 2017.  (Click here for a copy of the rule).  (more…)

DFEH Issues New Workplace Harassment Guidance

By Anthony Amendola and Justine Lazarus

Since April 1, 2016, California employers subject to the Fair Employment and Housing Act (“FEHA”) have been required to comply with a number of amendments to the FEHA regulations that were adopted by the California Fair Employment and Housing Council (“FEHC”).  FEHA imposes an affirmative duty on employers to “take all reasonable steps to prevent discrimination and harassment from occurring.”  To effectuate that duty, the amended FEHA regulations expressly require employers to develop a written harassment, discrimination and retaliation prevention policy. More detailed information regarding the 2016 FEHC may be found here.

To aid employers in complying with their obligations under the FEHA and the 2016 FEHC amendments, the California Department of Fair Employment and Housing (“DFEH”) recently released a “Workplace Harassment Guide for California Employers,” which provides recommended practices for preventing and addressing workplace harassment.  The publication is intended to help employers develop effective anti-harassment programs, investigate reports of harassment, and understand what remedial measures they might pursue.  In short, the Guide discusses the following:

  • What is included in an effective anti-harassment program;
  • The basic steps required to conduct a fair investigation;
  • Confidentiality of investigations;
  • Timing of investigations;
  • Recommended practices for conducting workplace investigations, including impartiality, investigator qualifications and training, type of questioning, making credibility determinations, burden of proof, legal conclusions, and documentation;
  • Special issues, such as what to do if the target of harassment asks an employer not to do anything, investigating anonymous complaints, and retaliation; and
  • Implementing effective remedial measures.

The Workplace Harassment Guide for California Employers is available here. (more…)

And On The Seventh Day…

By Anthony Amendola and Justine Lazarus

In Mendoza v. Nordstrom, Inc., the California Supreme Court answered some unsettled questions regarding the state’s day of rest statutes.  In short, these provisions of the California Labor Code provide that employees are entitled to at least one day’s rest out of seven.  Specifically, section 551 of the Labor Code states that “[e]very person employed in any occupation of labor is entitled to one day’s rest therefrom in seven.”  Section 552 states that “[n]o employer of labor shall cause his employees to work more than six days in seven.”  Section 556 provides an exception to sections 551 and 552, stating that they “shall not apply to any employer or employee when the total hours of employment do not exceed 30 hours in any week or six hours in any one day thereof.”

At the behest of the federal Ninth Circuit Court of Appeals, the Supreme Court considered three questions, each of which is discussed below.

(1) “Is the day of rest required by sections 551 and 552 calculated by the workweek, or does it apply on a rolling basis to any seven-consecutive-day period?”

Considering the text and history of sections 551 and 552, the Industrial Welfare Commission’s (“IWC”) wage orders, and the statutory scheme of the day of rest provisions, the Supreme Court concluded that employees are entitled to one day of rest each work week (as defined by the employer) rather than one day in seven on a rolling basis.  Thus, the Court acknowledged that an employee could be required to work up to twelve consecutive days without violating sections 551 and 552.  For example, if an employer defines a workweek as Sunday through Saturday, then an employee could be given a day of rest on the Sunday of Week 1, could be required to work 12 consecutive days, and then could be given off the Saturday of Week 2.

(2) “Does the section 556 exemption for workers employed six hours or less per day apply so long as an employee works six hours or less on at least one day of the applicable week, or does it apply only when an employee works no more than six hours on each and every day of the week?”

With respect to this question, the Court held that the exemption set forth in Section 556 applies only to those employees who never exceed six hours of work on any day of the workweek.  If on any one day an employee works more than six hours, a day of rest must be provided during that workweek. (more…)

NYC Says Salary Inquiries are DOA

May 10,2017

By Erica Parks

In August 2016, we alerted you that the New York City Council was considering an initiative that would prohibit employers from seeking an applicant’s salary history, and from using salary history to determine pay under most circumstances. Recently, the Council approved the legislation, which was signed into law by Mayor de Blasio last week.

The new law, which can be read in full here, amends the New York City Human Rights Law by making it an “unlawful discriminatory practice” to inquire about or seek an applicant’s salary history, including by searching publicly available records. Employers also will be prohibited from using salary history to determine pay “at any stage in the employment process” unless the applicant “unprompted, willingly disclosed such salary history” or disclosure is otherwise authorized under federal, state, or local law. Salary history is broadly defined and includes current and prior wages, benefits, and “other compensation.” The new law does not, however, prohibit employers from discussing with applicants  their expectations with respect to salary, benefits, and other compensation, including equity, nor does it prohibit employers from asking about “objective measures” of their performance history, such as “revenue, sales, or other production reports.”

Employers who violate the new law can face civil penalties of up to $250,500, back pay, compensatory damages, and attorneys’ fees.

As we previously alerted you last August and October, similar legislation has been passed in several other states, including California and Massachusetts, which may indicate a growing trend towards restricting employers from seeking or relying on an applicant’s wage history.

Ask MSK

Q: What Does This Mean For New York and Multi-State Employers?

A: Employers in the City of  New York must take steps to ensure that their hiring practices conform to the new law. Moreover, multi-state employers should review any centralized recruiting systems or multi-state employment applications and hiring materials for any request for salary history and consider revising to exclude New York City-based positions and, given the growing trend of prohibiting salary history inquiries, even omitting such requests nation-wide.

 

 

Where’s The Rest Of My Pay?

Commission-Only Employees Must Be Paid Separately for Rest Periods

April 18, 2017

By Brian M. Ragen

In Vaquero v. Stoneledge Furniture LLC, a California Court of Appeal recently held that inside sales employees who are paid on a 100% commission basis must be separately compensated for their rest periods.

Though inside sales persons are exempt from overtime (provided they earn at least 1.5-times minimum wage and earn more than half of their compensation from commissions), they are not exempt from California’s meal and rest period requirements.  Thus, the Court’s logic was as follows:  Inside sales employees must receive at least one paid rest period of 10 minutes for every four hours worked.  If 100% of an employee’s pay is attributable to commissions, then he or she is not being compensated for rest periods—i.e., an employee cannot earn a commission while “resting,” so an employee paid only commissions must not be receiving pay for rest periods.

Notably, the Court’s reasoning applies even where an employee receives a minimum amount each pay period, if that minimum amount is treated as a “draw” or an “advance against commissions.”  (For example, in order to preserve the overtime exemption, it is common to ensure that inside salespersons receive at least 1.5-times minimum wage every pay period, but later to treat those payments as advances against earned commissions.)  Indeed, in Vaquero, the sales employees were paid on a 100% commission basis, but if they failed to earn at least $12.01 per hour in any given pay period, they received “Minimum Pay” of $12.01 per hour as a “draw” against future commissions. (At the time, this amount exceeded 1.5 times the then-applicable $8 per hour minimum wage.)  The commission agreement explained, “The amount of the draw will be deducted from future [commissions], but an employee will always receive at least $12.01 per hour for every hour worked.”  With respect to meal periods, the Court disapproved of this arrangement, finding that an employee who was paid 100% commissions could not possibly be receiving pay for rest periods, noting, “[T]he purpose of a rest period is to rest, not to work.”

In reaching its conclusion, the Court relied heavily on a line of cases involving piece-rate workers (i.e., employees who are paid a fixed rate for each task they complete, such as sewing a garment, or changing the oil on a vehicle).  In that context, it is clear that employees who receive only their piece rate are not being compensated for rest periods, because no work towards completing a “piece” can be accomplished during rest periods.  Despite their differences, the Vaquero Court found that commission pay systems and piece-rate systems were essentially identical in their treatment of rest breaks:  “The commission agreement used by Stoneledge . . . is analytically indistinguishable from a piece-rate system in that neither allows employees to earn wages during rest periods.”

Ask MSK:

Does Vaquero mean that we need to revise our commission plan?

If your sales employees are paid 100% commission—even if they receive a minimum “draw” or “advance against commissions” each pay period—it is virtually certain that you will need to revise your commission plan.  If your inside sales employees receive a base salary plus commissions, it would be wise to ensure that the base salary is sufficient to cover all rest periods, and to state expressly in your commission plan that the base salary is intended to include rest period pay.

If we pay rest periods separately, what hourly rate should we use?

This remains unclear after Vaquero.  Arguably, nothing prevents employers from paying rest periods at 1.5 times minimum wage—regardless of how much the sales employee earns in commissions during the pay period.  But when similar cases arose in the piece-rate context (requiring employers to pay piece-rate employees separately for their rest periods), the California Legislature quickly introduced Labor Code section 226.2, which requires employers to pay piece-rate employees for rest periods at their “regular rate,” i.e., their total compensation for the pay period divided by their hours worked for the pay period.  The Division of Labor Standards Enforcement may apply a similar rule with respect to commissioned employees or the Legislature could pass similar legislation in the commission context in light of Vaquero.

I thought sales persons were exempt from most wage and hour rules. What gives?

Outside sales persons are exempt from overtime and meal and rest period requirements.  To qualify for this exemption, the employee must spend more than half of his or her time outside of the office engaged in sales activities.

 

What’s In Your Arbitration Agreement?

California High Court Finds Another Exception to Enforcing Arbitration Agreements As Written

April 13, 2017

By Suzanne Steinke and Mazen Khatib

Many employers enter into pre-dispute arbitration agreements with their employees so that any future claims or disputes between the employer and the employee get resolved through binding arbitration, rather than a court of law. The United States Supreme Court has traditionally favored the enforcement of such arbitration agreements as written. This has included approving agreements that contain a waiver of the right to bring a class action in any forum, meaning that an employer and an employee must resolve all disputes in arbitration and on an individual, not class-wide, basis. This class action waiver is significant for employers because an employee is stopped from bringing any claim in court or arbitration to benefit and on behalf of any employees other than herself.

California courts have been reluctant to fully embrace pre-dispute arbitration agreements, even though they are generally required to follow U.S. Supreme Court pronouncements in this area. Although California’s highest court has finally accepted that class action waivers in arbitration agreements are enforceable, with its recent decision in McGill v. Citibank, it once again shows its willingness to find exceptions to avoid fully enforcing these agreements as written. (more…)

Data Breaches: An Employer’s Duty to Protect Employees’ Personal Information

By Aaron Wais

An appellate court in Pennsylvania recently dismissed an employee class action against their employer over a data breach, holding that the employer did not have a duty to protect its employees’ personal information (e.g., names, birth dates, social security numbers, bank information, etc.).  While this was a significant victory for employers, non-Pennsylvania employers should temper their enthusiasm because courts in other states, including California, have made clear that employers do have a legal duty to protect their employees’ personal information. These courts have also made clear that the liability for a data breach differs when an employer has legally compliant, written policies for safeguarding private information and responding to data breaches in a timely manner.

(more…)