The following topics were covered:
- Wage and Hour Updates
- Government Wage and Hour Audits
- Employment Classification: Independent Contractors / Exempt Employees
- Leaves of Absence
- Disciplinary Action and Termination of Employment
- Trade Secrets and Confidential Information
The presentation slides are available below:
We will be providing various seminars throughout 2017 on a variety of employment and labor law topics. If you would like to receive legal updates and invitations to participate in our upcoming employment and labor law update seminars, please Join our mailing list. For inquiries, e-mail firstname.lastname@example.org or contact us at 916-442-3552.
Seminar Hosted by Palmer Kazanjian Wohl Hodson LLP
Date: Wednesday April 5, 2017
Time: Presentation: 8:30AM to 10:30AM; Registration and Networking: 8:00AM-8:30AM
Location: PWA Insurance Services LLC – Main Conference Room
2377 Gold Meadow Way
Rancho Cordova, CA 95670
Palmer Kazanjian will be providing its second Employment and Labor Law Updates for 2017 seminar in partnership with PWA Insurance Services LLC. The session will be presented by Treaver Hodson, partner at Palmer Kazanjian Wohl Hodson LLP.
The following topics will be covered:
- Wage and Hour Updates
- Government Wage and Labor Audits
- Employment Classification: Independent Contractors/ Exempt Employees
- Leaves of Absence
- Disciplinary Action and Termination of Employment
- Trade Secrets and Confidential Information
Thank you for attending our Employment and Labor Law Updates For 2017 seminar, which was held on March 1, 2017, in partnership with the Cicotte Law Firm and Eureka Insurance Solutions. We hope the presentation was informative and useful in providing you with the latest in employment and labor law compliance.
A copy of the presentation slides is available below:
Part I: ACA Outlook 2017
Part II: Benefits Update 2017
Part III: Employment and Labor Law Updates 2017
We will be providing various seminars throughout 2017 on a variety of employment and labor law topics. If you would like to receive legal updates and invitations to participate in our upcoming employment and labor law update seminars, please Join our mailing list. For inquiries, e-mail email@example.com or contact us at 916-442-3552.
March Legal Series Session 1: Protecting Trade Secrets
Date: Wed., March 7, 2017
Time: 8:30AM to 10:30AM
Location: Sacramento, California
Palmer Kazanjian will be providing its Protecting Trade Secrets seminar in partnership with Sacramento Area Human Resource Association (SAHRA). The session will be presented by Treaver Hodson, partner at Palmer Kazanjian Wohl Hodson LLP, and Lexee Asterlin, associate at Palmer Kazanjian Wohl Hodson LLP.
The presentation will begin with an overview of trade secret laws, including a detailed discussion of the California Uniform Trade Secrets Act, highlights of federal Defend Trade Secrets Act and applicable California Business and Professions Code torts. The second portion will cover recommended workplace practices for California employers and the use of agreements to protect trade secrets and deter trade secret misappropriation. We will conclude with a discussion of remedies available to an employer and an assessment of the balance between an employer’s need to monitor employees and an employee’s rights under the National Labor Relations Act.
Seminar Hosted by Palmer Kazanjian Wohl Hodson LLP
Date: Wednesday March 1, 2017
Time: 8:30AM to 10:30AM
Location: Our Office: 2277 Fair Oaks Blvd. Ste. 455, Sacramento, CA 95825
Palmer Kazanjian will be providing its Employment and Labor Law Updates for 2017 seminar in partnership with the Cicotte Law Firm and Eureka Insurance Solutions. The session will be presented by Treaver Hodson, partner at Palmer Kazanjian Wohl Hodson LLP, George Cicotte, founder of The Cicotte Law Firm PLLC and Ned Schaut, president of Eureka Insurance Solutions.
- Employment and Labor Law Updates for 2017
- ACA Under the Trump Administration
- Benefits Law Update for 2017
Please register by February 20th, 2017 to attend. Register Here
With the end of 2016 also came the end of yet another legislative term, providing a multitude of new laws, which took effect January 1, 2017 (unless otherwise specified). This article provides a survey of the new laws by category, including health and safety, public works, discrimination, leaves, contingent workforce, wage and hour, and employment contracts, and how these new laws may affect employers in the New Year and beyond. We recommend all employers review the new laws and make any necessary changes to bring their businesses into compliance.
Health and Safety:
A.B. 7: Smoking in the Workplace
Effective January 1, 2017, A.B.-7 expanded the workplace smoking prohibition to include owner-operated businesses where the owner-operator is the only worker and has no employees, independent contractors, or volunteers. This bill also expanded the definition of “enclosed space” where smoking is prohibited and eliminated exemptions for hotel or motel lobbies; meeting and banquet rooms in a hotel or motel; warehouse facilities; gaming clubs; bars and taverns; employee break rooms; and businesses with five or fewer employees. Employers who allow smoking in the workplace should assure that they were not relying on any of the eliminated exemptions in allowing smoking in the workplace. If any of the now eliminated exemptions were relied upon, employers must change their policies accordingly.
S.B. 1167: Heat Regulations for Indoor Workers
This bill requires the division of Occupational Safety and Health to propose a heat illness and injury prevention standard applicable to indoor workers to the Occupational Safety and Health Standards Board. This standard is to be reviewed and adopted by January 1, 2019. This bill has very little impact on employers until the new standard is adopted. However, employers should watch for any proposed rules so policies may be brought into compliance, prior to the regulations taking effect.
A.B. 2687: Driving Under the Influence with a Passenger for Hire in Vehicle.
Effective January 1, 2018, this bill makes it unlawful for a person to drive a motor vehicle with a blood alcohol content of 0.04 or higher when a passenger for hire is in the vehicle or to cause injury to a passenger for hire while driving a motor vehicle with the specified blood alcohol content. A “passenger for hire” is defined as someone for whom consideration is contributed or expected as a condition of carriage in the vehicle, meaning someone who pays or is expected to pay money for a ride. This bill would most significantly affect drivers of ride services such as Uber and Lyft. Additionally any employer who employs these drivers should be aware of the potential vicarious liability for an offense. Employers in this industry may wish to audit their drug and alcohol policy and assure that their employees are aware of this change.
S.B. 954: Per Diem Wages for Employers Subject to Collective Bargaining Agreements
This bill qualifies which employer payments and benefits may be included as per diem wages for the purposes of an employer’s obligation to pay prevailing wages on public works projects where an employer is obligated to make certain payments pursuant to a collective bargaining agreement (CBA). If an employer is obligated under a CBA, he or she may include industry advancement and any administrative fees relating to a CBA in per diem wages. The purpose of this bill is to prevent employers from passing these costs to employees without the input or consent of the employees or their labor representatives. This means employers who are not subject to a CBA may not credit industry advancement payments towards the prevailing wage rate.
A.B. 1926: Prevailing Wages for Apprentices’ Pre-Employment Activities
This bill expanded the requirement that apprentices who perform work on a public works project be paid the prevailing wage rate. Under the new law, apprentices must also be paid prevailing wages for any pre-employment activities required by the contractor. Pre-employment activity includes filling out an application; testing, training, or examination; or other pre-employment process that is a condition of employment. Additionally the apprentice shall be paid for the travel time to and from the required activity. Starting January 1, 2017, employers who wish to use apprentices for public works projects should make sure to pay them the appropriate wage for these pre-employment activities.
A.B. 326: Timing of the Return of Wage and Penalty Assessments Held by Labor Commissioner
This bill shortens the amount of time the Department of Industrial Relations has to release any civil wage and penalty assessments held by the Labor Commissioner for violation of the laws regulating public works contracts, during a review or appeal of the penalty. The Department must release the money to the person or entity entitled to it within 30 days of either: (1) the conclusion of all administrative and judicial review; or (2) the department’s receipt of written notice from the Labor Commissioner of a settlement or other final disposition of an assessment. Employers should be aware that starting January 1, 2017, upon a successful judgment by the Labor Commissioner, they no longer have to wait 60 days for their bond to be returned.
A.B. 1676: Wage Discrimination Based on Gender
Effective January 1, 2017, this bill amended the equal pay act so that prior salary, by itself, is not enough to justify a disparity in compensation under the bona fide factor exception, which allows for a disparity based on any bona fide factor other than sex, such as education, training, or experience. This means that pay differentials based on prior salary, even if applied neutrally, will not be tolerated where it leads to a wage gap among similarly situated men and women. Employers using prior salary as a basis for current salary may want to consider removing that factor from consideration or, at the very least, implement an auditing system to ensure that it does not result in a discrepancy in current salary among genders.
S.B. 1063: Wage Differential Based on Race or Ethnicity
Effective January 1, 2017, this bill extends the protection against unequal pay on the basis of gender to also prohibit discrimination on the basis of race or ethnicity. Employers should note this extension would also include protection against a wage differential on the basis of prior salary, as discussed in the previous bill.
A.B. 1843: Background Checks for Employment Applications
Effective January 1, 2017, an employer is prohibited from asking an applicant for employment to disclose information concerning or related to an arrest, detention, procession, diversion, supervision, adjudication, or court disposition that occurred while the person was subject to juvenile court. An employer may not utilize any such information as a factor in determining any condition of employment. This means employers may need to edit their employment applications to exclude any of the prohibited subject matter.
A.B. 488: Harassment/Discrimination of Employees Employed Under Special License
Effective January 1, 2017, this bill expands the definition of employee pursuant to FEHA, to include individuals employed under a special license in a nonprofit sheltered workshop, day program, or rehabilitation facility. This allows employees to bring an action under the Fair Employment and Housing Act (FEHA) for prohibited harassment or discrimination.
This bill provides a defense to employers where the challenged action was permitted by statute or regulation and was necessary to serve employees with disabilities under a special license. The bill also protects employers who hire or employ a qualified individual at a wage less than the minimum wage, in conformity with a special license. This means that, aside from the narrow exceptions outlined above, it is unlawful for employers to discriminate against employees working under a special license.
A.B. 2844: Discrimination Prevention in Public Contracts
This bill applies to any person who submits a bid or proposal, proposes to enter into a contract, or renew a contract with a state agency in the amount of $100,000. Any person who falls within this definition is required to certify either at the time the bid or proposal is submitted or at the time that the contract is renewed, that they are in compliance with both the Unruh Civil Rights Act and the California Fair Employment and Housing Act. Employers who contract with state agencies should review their policies to ensure compliance with these two laws so that they can continue to submit bids in 2017.
S.B. 269: Construction Violations That Deny Full and Equal Access to Disabled Persons
A violation of the Construction-Related Accessibility Standards Compliance Act may cause a denial of full and equal access to a disabled plaintiff where he or she experienced difficulty, discomfort, or embarrassment because of the violation. Effective May 10, 2016, this bill created a rebuttable presumption that certain technical violations do not cause a plaintiff to experience difficulty, discomfort, or embarrassment, if specified conditions are met. On January 1, 2017, this bill also exempts a defendant from liability for minimum statutory damages if they resolve any violations identified within 120 days from receipt of a certified access specialist (CASp) report. This means that in the event of a violation businesses may significantly reduce their damages by expediently fixing violations.
S.B. 1001: Unfair Practices Regarding Employment Authorization Documents
Effective January 1, 2017, this bill prohibits an employer from requesting more or different employment authorization documents than are required under federal law, refusing to honor documents tendered, refusing to honor documents or work authorization based upon the specific status or the term of status accompanying the authorization, or reinvestigating or re-verifying an incumbent employee’s authorization to work. Employers should audit their employment verification procedures to ensure none of their practices fall within the expanded prohibited categories because a violation of provisions could result in civil penalties of up to $10,000 dollars per violation.
A.B. 908: Paid Family Leave
Effective January 1, 2018, this bill revises the formula for determining benefits available for unemployment compensation disability law and for the family temporary disability insurance program to provide an increase in the wage replacement rate to specified percentages. This bill also eliminates the seven (7) day waiting period before an employee begins to receive benefits. This benefit is paid for through the Unemployment Compensation Disability Fund, and therefore has little impact on employers. However, we encourage employers to be knowledgeable regarding leave laws to comply with notice requirements and provide employees with accurate information regarding protected leaves.
A.B. 2337: Leave for Victims of Domestic Violence, Sexual Assault, or Stalking
This bill requires employers (with 25 or more employees) to notify employees of their right to leave if they are a victim of domestic violence, sexual assault, or stalking. Employers must also notify employees that they will not be subject to any adverse employment action against them for taking leave for this purpose, as well as complaint procedures should employee be subject to any unlawful discrimination or retaliation for taking protected leave. Employers are to notify new employees of these rights in writing, upon hire, and any current employee upon request. The bill requires the Labor Commissioner to develop a form employers may elect to use to comply with the notice requirement and to post it on the Labor Commissioner’s Website by July 1, 2017. Employers are not required to comply with the notice of rights requirement until the commissioner posts the form, however employers should not wait for the form to begin updating their notice policy. We recommend employers update their employment handbooks to comply with this requirement, as well as other laws that took effect in 2016.
A.B. 1066: Overtime Exemptions for Agricultural Workers
This bill removed an exemption in current law, which prevents the payment of overtime compensation to agricultural employees after eight hours of work in a day or 40 in a week. Prior to this bill, agricultural employees were entitled to overtime pay after ten hours of work in a day or more than six days in a workweek. This bill provides that beginning January 1, 2019 (January 1, 2022 for employers with fewer than 25 employees), agricultural employees are entitled to overtime pay for more than 9 ½ hours in any one workday or more than 55 hours in any one workweek. The changes to the overtime requirements will be completely phased in by January 1, 2022, or January 1, 2025 for employers with 25 employees or less. Please note, however, that all other provisions of existing law, such as meal and rest period protections, shall apply to agricultural workers beginning January 1, 2017. Because of the complicated phasing in of this law, agricultural employers may want to seek legal counsel to ensure that they are in compliance to avoid costly penalties and potential back pay for unpaid overtime.
A.B. 1311: Weekly Pay Requirement for Temporary Service Employees
This bill extended the weekly pay requirement for temporary service employees to security guards that are employed by a temporary services provider. Please note that this was an urgency bill, which means that it took effect immediately upon being enacted on July 22, 2016. Employers who have not already updated their payment policies for these security guard employees should do so immediately because a violation of this law carries criminal penalties punishable up to a misdemeanor.
A.B. 2763: Use of Private Vehicles in Transportation Network Companies
Existing law authorizes the California Public Utilities Commission (CPUC) to regulate Transportation Network Companies (TNCs). A TNC is an organization that provides prearranged transportation services for compensation using an online-enabled application or platform to connect passengers with drivers using a personal vehicle (e.g., Lyft and Uber). Effective January 1, 2017, this bill defined the term personal vehicle and clarified that personal vehicles may be driven by TNC drivers and must comply with the CPUC regulations.
S.B. 1015: Domestic Worker Bill of Rights
The Domestic Worker Bill of Rights (DWBR) regulates the working hours of domestic work employees who are personal attendants and provides an overtime compensation rate for those employees. Under prior law the DWBR was set to be repealed as of January 1, 2017. This bill nullified the repeal date and extended the DWBR indefinitely. This means there is no longer an end date for overtime compensation due to domestic work employees under California law. However, due to a recent amendment to the FLSA, this change has little impact on employers because overtime is now required under federal law. For more information regarding the amendment to the FLSA and the DWBR please see our article, Final Rule Impacts Domestic and Household Workers.
Wage and Hour
A.B. 2535: Itemized Wages Statements for Salaried Employees
Currently, an employee exempt from overtime under IWC wage order is exempt from the “total hours worked” requirement on an itemized wage statement. This bill expands the total hours worked exemption to employees exempt from the minimum wage requirement. The purpose of this bill was to close any gaps in the law exposing employers to liability for omitting the total hours worked from a wage statement of an employee paid on a salary basis. This means that employers may omit this section of an itemized wage statement for employees paid on a salary basis.
A.B. 2899: Bond Requirement to Appeal of Labor Commissioner Ruling
Effective January 1, 2017, this bill requires that, prior to filing an appeal of a decision by the Labor Commissioner, relating to a violation of wage laws, employers must post a bond which covers the unpaid wages and damages owed to employees.
S.B. 3: Sick Leave for In-Home Care Workers
Effective July 1, 2018, this bill amends the definition of “employee” under the Healthy Families Act of 2014 and extends sick leave to in-home care workers. This means that all in-home care workers need to be receiving at least three (3) days or 24 hours of sick leave per year. For more information regarding the sick leave law, please see our article, Assembly Bill 304 – Urgency Amendment to the Paid Sick Leave Law.
S.B. 1234: California Secure Choice Retirement Savings Program
This bill would require eligible employers who do not offer specified retirement plans or accounts to have a payroll deposit retirement savings arrangement allowing employees to participate in the California Secure Choice Retirement Savings Program. The effective date for compliance is on a rolling basis, based on the number of eligible employees that the employer has. This bill only affects employers, with at least five employees, who do not have their own retirement savings arrangement. If you are an eligible employer and you do not have a retirement savings plan, we recommend consulting counsel to aid with compliance because of the complexity of the program’s requirements.
S.B. 1241: Forum Selection and Choice of Law Clause
This bill applies to contracts entered into, modified, or extended on or after January 1, 2017. This bill prohibits an employer from requiring an employee who primarily resides and works in California, as a condition of employment, to either: (1) agree to adjudicate a claim outside of California when that claim arose in California; or (2) deprive the employee of the substantive protection of California law with respect to a controversy arising in California. Employers should carefully review their agreements before requiring an employee to sign. Any provision in violation is voidable by the employee, and any adjudication will automatically occur in California, pursuant to California law. This means violation renders choice of law and forum selection moot as the bill defaults forum and choice of law to California. Lastly, while there are no penalties assessed for a violation, an employer may be liable for attorney’s fees, which could add up quickly if the employer recycles a deficient agreement.
Recent California court decisions provide additional guidance regarding the propriety of offered meal and rest periods in California. In general, employers are required to authorize and provide meal and rest periods to non-exempt employees. Under the applicable California Industrial Welfare Commission (IWC) Wage Orders, employers must provide a paid rest period of at least ten minutes for every four hours of work and a 30-minute, off-duty meal period prior to the end of the fifth hour of a work shift. A rest period is not required if an employee’s total daily working time is less than three and one-half hours. An employee whose work period does not exceed six hours in a day may waive the required meal period by mutual consent of the employee and employer.
Where the employee works longer than ten hours in a day, the employer must provide a second off-duty, 30-minute meal period. However, this second meal period may be waived by mutual consent of the parties when the employee works less than twelve hours in a day and has not waived the first meal period. When the employer fails to provide an employee with a meal period or rest break, a “premium” of one additional hour of pay at the employee’s regular rate must be paid for each day missed.
On-Duty Meal Periods
A limited exception to the above meal period rules allows an employee to remain “on-duty” during the required period. An employee may sign an on-duty meal period agreement if the nature of the work prevents an employee from being relieved of all duty. The on-duty meal period agreement must be a written agreement allowing for an on-the-job paid meal period as between the employer and employee. Such on-duty meal periods must be paid at the employee’s regular rate of pay.
The Division of Labor Standards Enforcement (DLSE) has set forth the following three prongs in assessing whether an on-duty meal period is permissible: 
- The nature of the work must prevent the employee from being relieved of all duty during the meal period;
- The employee and employer must have previously entered into a signed agreement authorizing an on-duty meal period; and
- The signed agreement must expressly state that the employee may, in writing, revoke the agreement at any time.
Often misconstrued as a meal period waiver, an on-duty meal period agreement is more aptly described as an agreement to take a paid on-duty meal break in place of an unpaid, off-duty meal break. To illustrate, it is permissible for an employee working an eleven-hour shift to take an on-duty meal break and waive the second meal break, assuming all requirements of the exception and waiver are met. Importantly, an employer not subject to the on-duty meal break exception, either because the nature of business work falls outside of the exception or because an employee has declined to enter into such an agreement, must compensate an employee for any missed meal periods and associated premium pay.
In consideration of the wide array of industry practices, the DLSE applies a “multi-factor objective test” to determine whether the nature of the work justifies an on-duty meal period:
- The availability of other employees to provide relief to an employee during a meal period;
- The potential consequences to the employee if an employee is relieved of all duty;
- The ability of the employer to anticipate and mitigate these consequences; and
- Whether the work product or process will be destroyed or damaged by relieving the employee of all duty.
Recently, in Driscoll v. Granite Rock Company, the California Court of Appeal clarified an employer’s duty with respect to meal periods. Factually, Granite Rock Company was engaged in the manufacture and transportation of concrete, and plaintiffs were “mixer-drivers” whose duties were to assist in the loading of concrete into mixer trucks and delivery of freshly-mixed concrete to customers. The plaintiffs alleged the employer had (1) failed to provide them with proper off-duty meal periods; (2) failed to pay the meal period “premium” for an additional hour of pay for each day missed; (3) “forced, expected, or trained [the employees] involuntarily to sign [on-duty meal period agreements] or miss off-duty meal periods against their will;” and (4) fostered on-duty meal period agreements that were invalid as written.
At trial, evidence was introduced showing that a certain number of employees entered into an on-duty meal period agreement which provided that the employee understood his or her right to revoke the agreement at any time “by providing at least one (1) working day’s advance” notice to the employer. The trial court found the one-day revocation notice provision failed to satisfy the requirements of the applicable Wage Order by allowing the employee to revoke the on-duty meal period agreement at any time. As such, the on-duty meal period agreement was invalid as a matter of law.
With respect to the claim of defendant’s failure to provide proper off-duty meal periods, the Court reiterated that an employer’s only duty is to provide for timely, off-duty meal periods; the employer is not obligated to police meal breaks to ensure they are taken. Moreover, the Court highlighted that “what will suffice [for an employer’s obligations to provide timely meal breaks] may vary from industry to industry.” The Court found defendant had provided a legally compliant Employee Handbook, which advised employees of their right timely meal periods. Defendant had properly posted the applicable Wage Orders advising employees of such rights. Further evidence was presented at trial in which employees acknowledged that they received, reviewed, and were aware of their rights under the policy. Some employees testified that they refused to take off-duty periods in favor of continuing work. No evidence was presented showing that defendant ever denied any employee’s request for a timely meal period.
As for the claims of defendant’s failure to pay appropriate meal period premiums, the Employee Handbook advised that special pay, equivalent to that of a meal period premium, would be paid to employees who refused or revoked the on-duty meal period agreement and who missed a timely off-duty meal period. In fact, three employees had revoked their on-duty meal period agreement and received the premium pay. Moreover, all employees who had entered the on-duty meal period agreement were paid consistent with policy. Therefore, the Court found no violations.
The Court acknowledged that defendant’s meal period policies were “particularly appropriate” in the context of the ready-mix concrete industry because employees were charged with managing rolling drums of freshly batched concrete at any time throughout their work day. As such, the employee’s lunch period depended upon the state of concrete in his or her truck. Because of this, the nature of concrete mixing and delivering made scheduling off-duty meal periods in advance nearly impossible. The Court reiterated that an employer was not required to affirmatively schedule meal periods, but rather, to only make them available as appropriate.
Lastly, the Court found plaintiffs had failed to prove they were forced to sign the on-duty meal period agreements involuntarily; rather, plaintiffs were given the opportunity either sign the on-duty meal period agreement or refuse to sign and be paid the meal premium equivalent.
Legality of On-Call Rest Periods
The California Supreme Court recently assessed whether employers are required to provide off-duty rest periods and whether employers may require employees to remain “on-call” during rest periods in Augustus v. ABM Securities Services, Inc. In that case, the plaintiffs were employed as security guards and alleged their employer failed to provide proper rest periods. The plaintiffs were required and instructed to “remain vigilant and responsible to calls when needs arose,” including during rest periods.
Labor Code section 226.7 prohibits an employer from requiring an employee to work during a meal or rest period. As noted previously, the applicable Wage Order provisions governing meal periods require that employees be relieved of all duties during a meal period. However, no such requirement is expressly found in the provision relating to rest breaks. Based on this, the Court of Appeal inferred that the off-duty requirement was not intended for rest periods.
The California Supreme Court reversed the decision, holding instead that employers are required to “… relieve their employees of all duties and relinquish any control over how employees spend their break time.” The Court pointed to the absence of any language in the applicable Wage Order expressly authorizing on-duty rest periods in support of its determination.
The Court went on to address whether the obligation to relieve an employee of all duties is met when an employee is required to remain on-call. In a clear departure from the fact-specific approach taken in prior cases to assess whether on-call time constitutes working time, the majority concluded that on-call rest periods were strictly impermissible. The Court reasoned that allowing courts to address whether an on-call obligation unreasonably interferes with an employee’s opportunity to take an uninterrupted rest break would result in “less clarity and considerably greater administrative complexities.”
Impact Upon Employers
An on-duty meal period agreement is generally valid where: (1) it is justified by the nature of work; (2) it is compensated; (3) it is a written agreement between the employer and employee; (4) it is revocable at any time by the employee; (5) the employee is apprised his or her statutory right to off-duty meal breaks; and (6) the employee has voluntarily entered into the agreement. Employers are advised to carefully assess whether the nature of an employee’s job duties warrants application of the on-duty meal period agreement.
With respect to rest periods, the California Supreme Court has ruled that employers must relieve an employee of all duties for the duration of rest breaks, including the duty to remain on-call. Notably, for situations in which it is “especially burdensome” for an employer to relieve an employee of all duties during rest periods, the Court has set forth the option to either: (1) provide an employee with another rest period to replace the interrupted rest period or (2) provide premium pay for each workday that a rest period is not provided.
The rules concerning meal and break periods will continue to evolve as case law develops. Employers should stay abreast of the latest developments, as failure to provide meal and rest breaks in accordance with California law can result in costly premiums, penalties and other potential damages under the California Labor Code and California Business and Professions Code. The first step in avoiding such liability is to ensure that all employment policies and handbooks are compliant with applicable wage and hour laws and to develop and effectively implement regular self-audit procedures.
 Cal. Lab. Code § 512(a).
 Cal. Lab. Code § 226.7(c).
 IWC Wage Order No. 1-2001, subd. 11(C).
 Bono Enterprises, Inc. v. Bradshaw (1995) 32 Cal.App.4th 968.
 Dept. Industrial Relations, DLSE Opn. Letter No. 2002.09.04 (2002).
 Lab. Code § 226.7(c); Murphy v. Kenneth Cole Productions, Inc. (2007) 40 Cal. 4th 1094.
 Driscoll v. Granite Rock Co., No. H037662, 2016 WL 6994923 (Cal. Ct. App. Nov. 30, 2016), as modified (Dec. 22, 2016).
 Driscoll v. Granite Rock Co., No. H037662, 2016 WL 6994923 at *2.
 Augustus v. ABM Security Services, Inc., (Cal., Dec. 22, 2016, No. S224853) 2016 WL 7407328, at *8.
On May 9, 2016, the Equal Employment Opportunity Commission (“EEOC”) issued a resource document in an effort to address continued EEOC “charges indicating that some employers may be unaware of Commission positions about leave under the Americans with Disabilities Act (“ADA”).” (EEOC, Employer-Provided Leave and the Americans with Disabilities Act, May 9, 2016, available at https://www.eeoc.gov/eeoc/publications/ada-leave.cfm.) The EEOC enforces Title I of the ADA, which became law in 1990, and prohibits discrimination against individuals with disabilities in employment, housing, public accommodations, health services education and access to public services. The resource document clarifies existing law regarding an employer’s obligation to offer reasonable accommodation and engage in the good faith interactive process with an employee who has a disability.
Leave of Absence as Reasonable Accommodation
The ADA requires, generally, that covered employers (employers with 15 or more employees) provide reasonable accommodations to applicants and employees with disabilities. A reasonable accommodation is, “any change in the work environment or in the way things are customarily done that enables an individual with a disability to enjoy equal employment opportunities.” (29 Code Fed. Regs. § 1630.2.) That can include an employer’s provision of leave when needed for a disability, regardless of whether employer policy would otherwise so permit.
Many employers offer paid and unpaid leave as a benefit of employment. Some employers have general paid time off policies, under which employees may take leave for any reason they desire. Other employers maintain discrete policies providing a certain number of leave days designated as annual leave, sick leave, or “personal days.” If an employer receives a request for leave because of an employee’s disability and the leave falls within the employer’s established paid time off policies, it must treat the employee requesting the leave in the same manner as an employee who requests leave for reasons unrelated to disability. For instance, if a company’s leave policy does not require documentation, it cannot discriminatorily request documentation of employees who wish to use the leave for disability-related reasons. Similarly, an employer who permits employees to use paid annual leave for any purpose and without explanation, cannot require an employee seeking to use paid annual leave for disability-related purposes to use sick leave instead.
Moreover, employers may be required to make modifications to existing leave policies to enable employees with disabilities to work. This is the case even if the employer does not offer leave; the employee is not eligible for leave; or the employee has exhausted all available leave. Indeed, even those employers who have nondiscriminatory leave policies that establish the maximum amount of leave an employer will provide to any employee may be required to grant leave beyond this amount as a reasonable accommodation to employees who require it because of a disability, unless the employer can show that it doing so will cause an undue hardship. The EEOC resource document makes unequivocally clear: “[t]he purpose of the ADA’s reasonable accommodation obligation is to require employers to change the way things are customarily done to enable employees with disabilities to work. Leave as a reasonable accommodation is consistent with this purpose when it enables an employee to return to work following the period of leave.”
Employers are also required to consider job reinstatement or reassignment as reasonable accommodation. Reinstatement refers to the placement of an employee back in his or her work position following an extended period of illness or disability. If an employer determines that holding open a disabled employee’s job while that employee is on leave will cause undue hardship, the employer may instead reinstate the employee in a different position for which he is qualified. In some cases, the requested reasonable accommodation will be reassignment to a new job that better suits the employee in light of the employee’s disability.
It is in violation of ADA for an employer to institute a “100% Healed Policy” in which the employer requires an employee with a disability to return to work without any medical restrictions. An employer may not claim that an employee with medical restrictions poses safety a risk unless he or she can show a “direct threat” of “substantial risk of substantial harm to self or others.” In assessing whether a medical restriction poses a direct threat, employers should look to whether the restriction affects the employee’s “essential and marginal functions.”
Despite the above, an employer must only grant a reasonable accommodation, including in the form of paid or unpaid leave, to an employee with a disability to the extent that it does not create an undue hardship for the employer. If an employer determines that providing the requested accommodation would impose an undue hardship on its operations and finances, it is not required to grant the leave. The following factors are generally considered in assessing whether providing leave would result in undue hardship to the employer:
(1) The amount and/or length of leave required
(2) The frequency of the leave during the work week
(3) Whether there is any flexibility with respect to the days on which leave is taken
(4) Whether the need for intermittent leave on specific dates is predictable or unpredictable
(5) The impact of the employee’s absence on coworkers and on whether specific job duties are being performed in an appropriate and timely manner
(6) The impact on the employer’s operations and its ability to serve customers and clients appropriately and in a timely manner
While indefinite leave generally constitutes an undue hardship, the EEOC notes that undue hardship is not necessarily imposed in a situation where an employee taking time off due to disability provides the employer with approximate return dates that are subject to modification in light of changing circumstances. Employers should evaluate such situations on a case-by-case basis. The employer may consider leave that has already been taken in assessing the impact of a requested accommodation leave. For instance, where an employee has used up the amount of leave permitted by the Family Medical Leave Act, Worker’s Compensation and the company’s leave policy, the impact of any additional time off will be assessed by looking at the total amount of time taken off. Bear in mind that employers are not, under any circumstances, required to provide paid leave beyond what it provides as part of its paid leave policy.
Employers should carefully document any analysis undertaken in consideration of whether providing leave would result in undue hardship. Moreover, employers who use “form letters” to inform employees of remaining leave balance or to instruct employees to return to work by a certain date or face termination should make clear that leave as an accommodation for disability may be permitted, provided that it does not produce an undue hardship.
Communication: The Interactive Process
The “interactive process” is a procedure designed to enable the employer to assess the feasibility of providing leave as a reasonable accommodation without causing undue hardship. Employers may use this process to request additional information to confirm that a condition experienced by an employee qualifies as a disability under ADA. Most of the focus will on (1) the specific reason the specific reason the employee needs leave; (2) whether the leave will be a block of time or intermittent; and (3) when the need for leave will end. During this preliminary phase, an employer may obtain information regarding the need for leave from the employee’s health care provider, provided there is employee consent. The interactive process may continue throughout the leave, up until employee’s return to work if the granted leave does not have a fixed return date or if the leave is extended. The employer may not request periodic updates where the return date is fixed. Importantly, employers who use third-party administrators or human resource department personnel to handle leave requests must ensure that a procedure is in place to ensure compliance with the interactive process.
Earlier this year, the Department of Labor’s Wage and Hour Division (“WHD”) issued Administrator’s Interpretation No. 2016-1, an interpretive memorandum (“memorandum”) providing clarification to employers on whether a joint employment relationship exists when two or more businesses share the same worker. The memorandum provides the WHD’s opinion of when employers may be considered joint employers under the Fair Labor Standards Act (“FLSA”) and the Migrant and Seasonal Agricultural Work Protection Act (“MSPA”), thereby creating joint and several liability between joint employers for compliance violations. The WHD’s memorandum is particularly important because in the event of joint employment, an employee’s hours worked for each of the joint employers during the workweek are aggregated and considered as a single employment relationship for purposes of calculating overtime premiums and related hours of work. Not surprisingly, this interpretive memorandum comes in response to employers’ increasingly widespread practice of sharing employees and the use of third party management companies, independent contractors, staffing agencies and labor providers.
The WHD addresses two potential forms of joint employment which it refers to as “horizontal” and “vertical” joint employment. If one or both of these forms of joint employment exist, the joint employers will be jointly and severally liable for violations under both the FLSA and the MSPA.
Horizontal Joint Employment
The WHD provides that horizontal joint employment may exist “where the employee has employment relationships with two or more employers and the employers are sufficiently associated or related with respect to the employee such that they jointly employ the employee.” The primary focus of horizontal joint employment is on the relationship between the employers. This type of joint employment may be present, for example, where two separate restaurants, which share economic ties, have the same managers controlling both restaurants, share staff, and have common management. The WHD provides several factors which may be relevant in assessing whether a horizontal joint employer relationship exists, such as:
- who owns the potential joint employers (i.e., does one employer own part or all of the other or do they have any common owners)
- do the potential joint employers have any overlapping officers, directors, executives, or managers;
- do the potential joint employers share control over operations (e.g., hiring, firing, payroll, advertising, overhead costs);
- are the potential joint employers’ operations inter-mingled (for example, is there one administrative operation for both employers, or does the same person schedule and pay the employees regardless of which employer they work for);
- does one potential joint employer supervise the work of the other;
- do the potential joint employers share supervisory authority for the employee;
- do the potential joint employers treat the employees as a pool of employees available to both of them;
- do the potential joint employers share clients or customers; and
- are there any agreements between the potential joint employers.
Vertical Joint Employment
Distinguished from horizontal joint Employment, the WHD provides that vertical joint employment may be found when an employee is economically dependent on an employer who, via an arrangement with an intermediary employer, is benefitting from the work. This form of vertical joint employment typically exists when a potential joint employer has contracted for workers that are directly employed by an intermediary employer (usually a staffing agency, subcontractor, labor provider, or other intermediary employer), and those workers are economically dependent on the potential employer. The WHD points out that the threshold question in a joint employment case is whether the intermediary employer (who may be an individual or company responsible for providing labor) is actually, as a matter of economic reality, an employee of the potential joint employer. See Rutherford Food Corp. v. McComb, 331 U.S. 722, 729-30 (1947). (Depending on the industry, the “intermediary employer” could be, for example, a staffing agency, farm labor contractor, or any individual or company that is dependent on the grower as a matter of economic reality). If an intermediary employer is actually determined to be an employee of the potential joint employer, all employees of the intermediary employer will also be considered employees of the potential joint employer and no vertical joint employment analysis need even occur. Therefore, the existence of a vertical joint employment relationship focuses on the employee’s relationship with the employers.
The MSPA provides some specific factors of “economic realities” to consider when determining whether an economic dependency exists between a worker and a potential joint employer who is benefiting from the employee’s work, thus creating a vertical joint employment relationship. While these factors are specific to the MSPA, they are helpful when performing a similar analysis under the FLSA as the FLSA uses the same “economic realities” standard. These factors include:
- does the potential joint employer direct, control, or supervise the work performed by the employee;
- does the potential joint employer control employment conditions;
- is there is permanent, full-time, or long-term relationship by the employee with the potential joint employer;
- is the nature of employee’s work for the potential joint employer repetitive and rote;
- is employee’s work an integral part of the potential joint employer’s business;
- is the work by the employee performed on premises owned or controlled by the potential joint employer; and
- does the potential joint employer perform administrative functions for the employee that are commonly performed by employers.
What This Means for Employers
While the WHD’s memorandum serves merely as guidance and does not carry the force of law, it is indicative of the WHD’s sweeping efforts to find joint employment relationships in FLSA and MSPA cases. Additionally, courts, administrative agencies, and government enforcement officer will often rely on such interpretations of the law when making decisions. Moreover, this broad view of the joint employment relationship is indicative of an expansive and growing effort on the part of many state and federal governmental agencies to define the employment relationship broadly and reduce the alternatives the modern workforce has developed and embraced. Similar expansive interpretations have been aimed at the independent contractor relationships and the franchisor/franchisee relationship. As such, employers should be proactive in determining if they are in a potential joint employment relationship and, if so, take steps to structure their current practices to avoid or reduce potential liability. At a minimum employers who have entered these types of relationships need to recognize the risks associated with the joint relationship and take appropriate precautions through contractual arrangements, including the proper use of indemnification, access, due diligence, insurance, and termination provisions.
If you have additional questions about joint employment or any other employment or labor related matters, we encourage you to reach out to one of our attorneys. For additional employment and labor updates, you can also visit our website at www.pkwhlaw.com.
To Our Clients and Business Associates:
Over the years, as we have represented employers and management in labor and employment related legal matters, we have discovered a few practices that help keep employers from costly disputes and litigation. With this in mind, we share a few practices that may assist you in maintaining compliance with current labor and employment laws.
Although at certain times modifications may be more frequent, we generally recommend employers update employment handbooks and written policies at least every two years, conduct regular labor audits, and consider obtaining appropriate Employment Practices Liability Insurance (“EPLI”) to guard against unanticipated liability. In addition to reviewing employment policies and labor audits, our firm offers, at no charge, regular training seminars and monthly articles on current labor and employment laws and trends. If you haven’t already, we recommend you sign up to receive these articles and notice of our seminars. More information is available at our website: www.pkwhlaw.com. Also, please find us on Facebook and LinkedIn where regular updates and access are available.
Last year, the National Labor Relations Board issued a Report Concerning Employer Rules. The report attempted to provide guidance on whether employee handbook policies were considered lawful or unlawful. The report prompted many employers to revise their employment policies and practices. Employers should consider reviewing applicable policies and rules to ensure compliance with these guidelines and other current legal amendments and trends, such as the recently adopted regulations from the California Department of Fair Employment and Housing, which have necessitated changes to prohibited harassment policies and the statutory sick leave requirements that took effect in 2015, which significantly changed how many employers structure their sick leave and other paid time-off policies.
In many instances, clearly defined employment policies and handbooks have been instrumental in protecting employers. For example, the California Supreme Court in Guz v. Bechtel National, Inc. advised that employers who want to ensure their at-will employment relationship with their employees should include correct at-will language in all written communications, including employee handbooks. The court stated, “[W]ritten employer communications to employees are the best evidence of the company’s intentions about at-will or for-cause terminations.” Guz v. Bechtel Nat. Inc. (2000) 24 Cal.4th 317.
In another case, a federal court found that the language in the employer’s handbook, coupled with the employee’s signed acknowledgement that she read and understood the provision in the handbook, was “strong evidence” that the parties did not intend to enter into any agreement to the contrary. Bianco v. H.F. Ahmanson & Co. (C.D. Cal. 1995) 897 F.Supp. 433, 440. See also Eisenberg v. Alameda Newspapers, Inc. (1999) 74 Cal.App.4th 1359, 1388, (holding that the employer’s written personnel policies and employee’s acknowledgement provided overwhelming evidence in support of the presumption that employment was at-will). In a recent landmark case, the Supreme Court of California denied class action certification for off-the-clock work, in part, based on the employer’s formal written handbook policy disavowing such work consistent with the law. Brinker Restaurant Corp. v. Superior Court (2012) 53 Cal.4th 1004, 1017.
So, handbooks should be updated regularly to reflect major changes in the law or in the workforce. Also, from time to time, employers determine that some policies are not effective and wish to consider options that may be more suitable for a productive workforce. We regularly review and revise employment policies and practices and are able to provide meaningful insights as you consider and develop strong employment procedures.
We recommend employers be proactive about ensuring compliance in their employment practices. It is a good practice to periodically audit employment practices. Because employment law continues to evolve, regular labor audits can keep you up to date and help you modify aspects of your employment practices to comply with applicable laws. Additionally, employers should be aware that many state and federal governmental agencies have the right to conduct audits at any time (with little notice), so it is prudent to regularly conduct self-audits with an eye toward compliance and maintenance of sound practice.
To be proactive, we recommend employers consider performing labor audits which may include review of the following:
- Recruitment and Hiring Policies and Practices
- Performance Evaluations; Promotions and Transfers Policies and Practices
- Discipline and Termination Policies and Practices
- Recordkeeping/Personnel Files/Job Descriptions
- Existence and Components of Safety and Training Programs
- Employee Handbook /Written Policy Review
- Communication of Policies and Practices
- Wage and Hour Compliance
- Leaves of Absence Policies and Practices
- Individual Contracts
- Independent Contractor
Employment Practice Liability Insurance (EPLI)
We have seen a growing trend in the use of EPLI. EPLI protects an insured against major litigation costs and the liabilities associated with claims of wrongful termination, harassment, discrimination, and retaliation. Additionally, some EPLI policies include limited coverage for other claims such as leaves of absence and wage and hour issues. Although EPLI continues to develop, some of our clients have secured favorable results when properly insured. So, as a firm, we encourage clients to consider obtaining appropriate EPLI coverage.
In making this recommendation, we also note that EPLI has some restrictions. For example, some clients were unaware, and quite surprised to find, that their EPLI coverage restricted their right to select their own legal counsel. For these particular clients, provisions in their EPLI policies gave the insurance company full authority to select the client’s legal representative, even when that legal counsel (hand-picked by the insurance company) may not have had the client’s best interests or preferences at heart. We believe selection of your legal representation should be your choice, not the insurance company’s.
So, if you decide to obtain EPLI coverage, or if you are renewing your existing EPLI policy, consider asking your broker about choosing your own lawyer. At your request, many EPLI insurance companies will include a “choice of counsel” provision that expressly permits you to choose your own legal counsel – so long as the lawyer is experienced and qualified in employment law. We have seen that retaining this right to choose your own legal counsel can be critical to resolving a matter consistent with your objectives and values.
These are just a few practical solutions we believe can help you avoid employment law disputes and legal actions. If you have any questions, you are welcome to contact us directly. Contact information is available at our website: www.pkwhlaw.com. We would be happy to discuss any or all of these topics with you in greater detail. We look forward to our continued relationship. We truly appreciate and value your confidence in our firm.
Very truly yours,
Palmer Kazanjian Wohl Hodson
Human Resource Law From Start to Finish Seminar
Session Hosted by: National Business Institute ™ | Date: Wednesday, November 18, 2015
Location: Courtyard Sacramento Midtown
4422 Y Street
Sacramento, CA 95817
Larry Kazanjian has been invited to be a guest speaker at the National Business Institute’s upcoming Human Resource Law From Start to Finish Seminar November 18, 2015.
This program will get you up to speed on human recourse compliance so you can return to work confident in your abilities. Know the fundamentals of human resources: from hiring to firing and everything in-between.
Seminar details and pricing information can be found on the NBI website.
Attorneys of Palmer Kazanjian regularly counsel employers on compliance with laws and prevention of litigation. Moreover, the firm is committed to ensuring its clients stay abreast of changes in the law, and to that end, publish complimentary articles distributed via e-mail and available on our web site.
Our attorneys regularly provide training seminars for managers, HR professionals and/or the workforces at the companies’ places of business. These are tailored to each organization’s needs. Representative seminars include:
- Avoiding Claims of Harassment — Interactive Manager Training
- Avoiding Claims of Harassment — Interactive Employee Training
- Handling Medical Issues in the Workplace: Manager Training
- Everything Employers Need to Know About Employment Law in
- Time Off in California: State and Federal Laws on Employee
Leave, Vacations and Holidays
- Disability Discrimination: What Employers Need to Know to Avoid
- AB2222 Roundtable – A Discussion on Dealing with Expanded
Disability Discrimination Law
- Employment Law Update: Equal Employment Opportunity Law
- Arbitration of Employment Disputes: Benefits and Limitations
- Special Employment Law Update for HR Professionals
- Avoiding Liability for Unlawful Employment Practices
(Harassment, Wrongful Termination, Wage & Hour Issues)
- AB60: The 8-Hour Restoration & Workplace Flexibility Act
- EPLI Coverage and Employment Torts
- Integration of Benefits/Integration of Rights; the Injured/Disabled
- Employment Related Records in California
- The Employment Law Audit: Creating a Shield Against
- The Nature of a Retaliation Action
- Independent Contractor or Employer
- Employment Discrimination & Sexual Harassment — Beyond the
- Wrongful Termination Law for Managers
- Violence in the Workplace: Why Management Needs to Have a