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Assembly Bill (AB) 2188, signed into law on September 18th, will soon protect employees who use cannabis before or after completing their workday.
The new law goes into effect until January 1, 2024, and will make it unlawful for an employer to discriminate against an individual due to the individual’s use of cannabis off the job, or when an employer-required drug test finds non-psychoactive cannabis in the individual’s system.
This means that employers will be prohibited from firing employees or denying applicants job positions if drug test results merely detect cannabis metabolites in hair, blood, urine, or other bodily fluids.
Importantly, employers can still maintain a drug-free workplace, and continue to discipline employees who possess or use cannabis on the clock. Additionally, AB 2188 specifies that the cannabis use protections do not apply to employees in building or construction trades, or for individuals applying to positions that require federal background investigations and clearance.
Fortunately, employers have ample time to prepare for AB 2188. This should include revisions to policies and handbook language. Additionally, if an employer’s current testing methods include non-psychoactive cannabis metabolites, alternative testing methods should be considered. We can assist with these efforts.
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Some employers desire, for various reasons, to ensure that disputes with employees are resolved through private arbitration rather than in court. A recent legal development could signal that employers may once again regain the opportunity to make arbitration agreements a condition of employment.
Some background. When Gov. Newsom signed Assembly Bill (AB) 51 in 2019, it prohibited employers from requiring employees to sign arbitration agreements as a condition of employment. When AB 51 took effect in 2020, the U.S. Chamber of Commerce obtained a preliminary injunction in federal court enjoining (halting) enforcement of AB 51 with respect to arbitration agreements governed by the Federal Arbitration Act (FAA) on the grounds that the FAA preempted laws preventing arbitration. The State of California appealed.
In 2021, in a ruling described by a dissenting Justice as “tortuous,” the federal Ninth Circuit Court of Appeals held that the FAA preempts AB 51 only with respect to its provisions that impose penalties on employers who execute arbitration agreements governed by the FAA.
The U.S. Chamber of Commerce immediately sought rehearing. The Ninth Circuit initially deferred but, on August 22, 2022, ultimately withdrew its prior opinion and granted rehearing.
It is worth noting that Judge William Fletcher, who originally supported the opinion, voted in favor of withdrawing the panel opinion and granting rehearing. Whether this signals that Judge Fletcher has been persuaded that the FAA preempts AB 51 in its entirety remains to be seen, but employers desiring mandatory arbitration may be encouraged.
Changes in the consumer price index (CPI) from July 1, 2021 through June 30, 2022, will require California to raise the statewide minimum wage on January 1, 2023 to $15.50-per-hour. This applies to all employers regardless of size. This change was previously not slated to kick in until 2024. The California minimum wage law requires the rate adjustment to be the lower of 3.5% or the rate of inflation – 7.9% during the relevant period.
Importantly, the minimum wage rate hike will also affect whether certain employees (continue to) qualify to be exempt from overtime and rest and meal break requirements. To qualify as “Exempt,” from such requirements under the Executive, Administrative, and/or Professional exemptions a worker must, in addition meeting the strict “duties” test, meet the “Salary Threshold,” which requires they earn a monthly salary of at least twice the state minimum wage for full-time employment (defined as 40 hours per week).
To qualify for the Commission Sales overtime exemption, commissions must represent more than half of the worker’s compensation and he/she must earn more than 1½ times the minimum wage. Thus, whenever the state minimum wage increases, the Salary Threshold increases.
Additional issues triggered by a change in the statewide minimum wage include:
• For Piece Rate Workers: Employees paid on a piece-rate basis must be paid for rest and recovery periods and non-productive time. This time is paid at a rate that is the greater of the applicable (including local) minimum wage or the worker’s average hourly rate for the workweek.
• Tools & Equipment: Employers generally must provide and maintain tools and equipment. However, if the employee is paid at least twice the minimum wage, an employer may require him/her to provide and maintain necessary hand tools and equipment.
These are complex issues of law requiring detailed understanding and advance preparation to remain in compliance. We encourage you to reach out to The Law Offices of Alex Craigie to assist with planning and implementation.
Business owners and managers are frequently unaware of the risk of individual liability for unpaid wages in California. However, the Court of Appeal, in Elsie Seviour-Iloff v. LaPaille, recently published an opinion with several important holdings relating to wage and hour claims pursued through the Labor Commissioner.
One standout from the opinion serves as a reminder that California Labor Code §558.1 grants discretion to an employee seeking unpaid wages to pursue individual liability against “Any employer or other person acting on behalf of an employer, who violates, or causes to be violated, any provision regulating minimum wages.”
This holding clarifies the issue presented to the Court whether the discretion to hold an employer or other person acting on its behalf individually liability belongs to the employee or the trial court.
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The Ninth Circuit Court of Appeals recently held, in Johnson v. WinCo Foods Holdings, Inc., that WinCo job applicants were not entitled to pay for time required to take a pre-employment drug test, nor was WinCo required to cover the travel expenses associated with undergoing the test. (The employer must shoulder the cost of the testing.)
The Court rejected an argument advanced by the job applicants that, because the tests were administered under the control of WinCo, they must be categorized as employees under California’s “control test” used to determine whether an employment relationship exists.
The Court held the control test did not apply because drug testing was a way to secure employment rather than a responsibility for those already employed.
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The California Employment Development Department (EDD) administers Paid Family Leave (PFL), which provides eligible employees with up to 8 weeks of wage replacement benefits when an employee is off work for certain qualifying reasons.
Recognizing that small businesses with employees using PFL experience increased ancillary costs such as cross-training existing staff and hiring and training new or temporary employees to cover for the employees on leave, the California Employment Training Panel and California Labor and Workforce Development Agency have funded a grant program for small employers.
Small businesses in California with 1 to 100 employees who have at least one employee on PFL on or after June 1, 2022, may be eligible for grant monies, up to $2,000 per employee. A grant recipient must be registered to do business in the State of California, on an active status with the California Secretary of State and have an active California Employer Account Number under which employees are listed for payroll.
Employers interested in applying for the grant can apply through the grant website: Californiapfl.com.
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The California Labor Code (Sec. 2802) requires employers to reimburse employees for necessary expenses incurred in executing their job duties. A reimbursement obligation arises where an employee is required to use her personal vehicle for work purposes, such as driving between work sites (though not for her regular commute to/from work).
The reimbursement requirement can be satisfied in different ways, including actual expense, mileage reimbursement or a stipend method, provided the employer can establish the employee was fully reimbursed.
The most common method is to reimburse based on mileage. The California Labor Commissioner issued an opinion that using the IRS mileage rate as a multiplier establishes adequate reimbursement of work-related auto expenses, in the absence of evidence to the contrary.
In response to the recent drastic increases in fuel prices, the IRS announced on June 9, 2022, that it would increase the business travel rate to 62.5 cents per mile,effective July 1, 2022. This is a special adjustment for the final six months of 2022. Employers tying reimbursement to the IRS rate should consider increasing their reimbursement to 62.5 cents/mile for the near term.
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In a favorable opinion for California employers, the US Supreme Court, in Viking River Cruises v. Moriana, held employees may be compelled to submit individual Private Attorney General Act (PAGA) claims to binding arbitration (thereby waiving their rights to a jury trial).
By way of background, PAGA permits an “aggrieved” employee who allegedly had their Labor Code rights violated, to step into the shoes of the state Labor Commissioner and enforce certain violations of California labor law. PAGA allows for civil penalties against employers on behalf of the state. Further, only an individual employee brings a claim under PAGA, while other allegedly “aggrieved” employees do not participate in the lawsuit. The default PAGA civil penalty is $100 per employee per pay period for an initial violation and $200 per pay period for subsequent violations.
Prior to Viking River Cruises, PAGA claims could not be compelled into arbitration. In those cases in which an employee was bound by an arbitration agreement, the lawsuit would be split, with non-PAGA claims submitted to arbitration first and PAGA claims decided after the arbitration was completed, essentially subjecting the employer to multiple trials and no benefit of arbitration of PAGA claims.
A second important thrust of Viking River Cruises is that, because an employee bound to arbitrate her PAGA claims lacks standing to prosecute claims on behalf of other similarly “aggrieved” employees, the remaining PAGA claims must be dismissed upon submission of the case to arbitration.
It is important to remember that, based on the current status of California’s Assembly Bill (AB) 51, it remains unclear whether an employer can require a new hire to sign an arbitration agreement as a condition of employment. It remains to be seen how the Supreme Court will address this issue. At this time, it is safest to make an agreement to arbitrate employment claims voluntary.
Additionally, it is critical to understand both the costs and benefits of binding arbitration of employment claims in California, as employers are required to shoulder 100% of the arbitration fees, which can be quite substantial. Employers contemplating adopting an arbitration policy or who wish to fully understand the costs vs. benefits of employment arbitration, should contact us for further information.
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Employers with just five (5) W-2 employees must be prepared for the June 30, 2022 deadline to offer a qualified retirement savings plan (including a 401(a), 401(k), 403(a), 403(b), 408(k), 408(p), or 457(b)) to their employees.
One option for employers that do not already have a plan in place is to register with the California state offered Calsavers program (formerly known as Secure Choice). Information about this plan is available here.
If employers fail to offer a plan by the deadline, they may receive a notice of noncompliance and face steep fines. A penalty of $250 per eligible employee if noncompliance extends 90 days or more after the notice. If found to be in non-compliance 180 days or more after the notice, the employer is responsible for an additional penalty of $500 per eligible employee.
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California employers in several cities and counties must be prepared for July 1, 2022 minimum wage increases. While most California localities previously imposed a different minimum wage for employers with more or less than 26 employees, all municipalities listed below, except West Hollywood, will now impose the same minimum wage regardless of size. Here is a quick list of localities where the minimum wage will climb effective July 1st:
California employers must also be mindful of the likelihood that the statewide minimum wage may climb faster than expected due to rising inflation. In 2017, California initiated an annual planned increase of the statewide minimum wage, with all employers, regardless of size, scheduled to reach $15.00 per hour effective January 1, 2023.
However, the minimum wage ordinance included an exception triggering an accelerated increase if the U.S. Consumer Price Index (CPI-W) exceeds 7 percent over a specified period of time. Based on current projections, the CPI-W will have risen by 7.6 percent in the period ending in July. On May 12, 2022, when Governor Gavin Newsom announced his proposal for a state inflation relief package, he also announced that California’s minimum wage is now projected to increase to $15.50 per hour, rather than $15.00 per hour, on January 1, 2023, for all businesses regardless of size. Of course, a business operating in any of the listed municipalities must ensure compliance with the higher local minimum wage.
Employers with exempt employees must remember that certain exempt employees must receive a salary of at least twice the state minimum wage (the “Salary Threshold”), in addition to meeting the general duties and other requirements. Whenever the state minimum wage increases, this impacts the Salary Threshold and may cause exempt employees to suddenly become improperly classified. To be clear, the Salary Threshold is tied to the California state minimum wage, not any city or county minimum wage ordinance.
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