California Enacts New Pay Disclosure Requirements

Another new law that went into effect on January 1, 2023, Senate Bill (SB) 1162 requires (1) employers with 15 or more employees to include a pay scale in job postings; and (2) companies with 100 or more employees must report to the state the pay data of their employees and contractors by race, ethnicity and gender.
For purposes of the job posting requirement, pay scale is defined as the salary or hourly wage range that the employer reasonably expects to pay for the position. It is unclear whether this includes bonuses, commissions, health benefits or paid time off. This requirement includes third-party postings and is meant to address wage disparities at the beginning of employment.
Covered employers must maintain a record for inspection by the Labor Commissioner of each employee’s job title and wage history during their employment period and for three (3) years thereafter. This is a burdensome requirement, imposing an obligation to save records well beyond any current record retention schedule. As a result, employers should plan how to save older records before they are purged and revise any existing retention schedules to comply with SB 1162.
The new Annual Pay Data Report law significantly amends the former Pay Data Report requirements. Private employers with 100 or more employees must file an annual report with the Civil Rights Department (formerly the Department of Fair Employment and Housing (DFEH)) disclosing certain pay data according to race, ethnicity, and gender within several job categories.
Employers should immediately revise their hiring, record retention and reporting practices to conform to these new laws. We can assist.
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California Creates Bereavement Leave Requirement

AB 1949, signed last fall but effective January 1st, creates protected bereavement leave under the California Government Code. AB 1949 makes it unlawful for a covered employer (5+ employees) to refuse to grant an eligible employee the opportunity to take up to five days of bereavement leave upon the death of a family member.

Employees are eligible for bereavement leave once they have been employed for at least 30 days prior to the commencement of leave. A qualifying family member includes a spouse, child, parent, sibling, grandparent, grandchild, domestic partner or parent-in-law as defined in CFRA.

The employee can use bereavement leave under AB 1949 for each qualifying occurrence, meaning each death of a qualifying member. The five days of bereavement leave do not need to be taken consecutively; however, the employee must complete the bereavement leave within three months of the family member’s date of death.

The employer may require that the employee provide documentation of the death of the family member. Employers must maintain the confidentiality of an employee who requests bereavement leave and all related documentation must be maintained as confidential, disclosed only as required by law.

For employers who currently do not offer bereavement leave or offer less than five (5) days leave, we recommend revising their employee handbooks to reflect this policy.

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New California Law Will Protect Workers for Off-Duty Cannabis Use

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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Mandatory Arbitration of Employment Disputes May Be Back on the Table

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.

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Inflation Fuels Minimum Wage Increase Effective Jan. 1, 2023

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.

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Case Serves as Reminder That Employers and “Others Acting on its Behalf” Individually on the Hook for Wage Violations

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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Court Holds Employment Applicants Not Entitled to Wages or Travel Costs For Pre-Employment Drug Test

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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California Agencies Fund Grant for Small Businesses with Employees on Paid Family Leave (PFL)

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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Deadline Looms for Employers with 5+ Employees to Offer A Qualified Retirement Savings Plan

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 Appeals Court Delivers Victory for Employers on “Suitable Seating” Claims

A California appellate court recently affirmed a trial court victory on behalf of Ralphs Grocery Co., in a case alleging the grocer should have provided suitable seating to its cashiers. 
By way of background, most California Industrial Wage (IWC) orders require employers to provide workers “suitable seating” under two circumstances: (1) when the nature of the work reasonably permits the use of seats; and (2) when an employee is not actively engaged in duties that require standing, or during “lulls in operation.”
Former Ralphs employee Jill LaFace sued Ralphs, arguing that cashiers could reasonably perform their cashiering duties while seated and that the company was also obligated to provide seats for cashiers to use during “lulls in operation.” Following a nonjury trial, Los Angeles Superior Court Judge Patricia Nieto held that the nature of LaFace’s work did not permit sitting because “Ralphs cashiers continuously perform work that should or even must be performed while standing.” She also held that Ralphs had no obligation to provide seating for use during “lulls in operation” because the cashiers were expected to remain busy between customers.
LaFace appealed. The appellate court ruled that an employer does not have to provide seating where the employer expects employees to keep busy and not stand, which functionally means there is no “lull” in duties. The court also held that employees bringing suitable seating claims and other claims for penalties under California’s Private Attorneys General Act (PAGA) are not entitled to a jury trial, which may also be seen as a victory for California employers.
For employers of workers where there is some question whether seating may be required, this case highlights the need for an established, clearly comunicated policy. Either employees may be permitted to sit while performing their job or during lulls, in which case suitable seating should be provided, or written policies communicated to workers should make it clear that employees are expected to remain busy, even during lulls in operation.
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Alex Craigie Selected for Inclusion in 2022 Southern California SuperLawyers for Employment Litigation

The Law Offices of Alex Craigie is excited to announce that Alex Craigie has been selected by Thomson Reuters for inclusion in the 2022 Southern California SuperLawyers for Employment Litigation.

Super Lawyers selects attorneys using a multiphase selection process. Peer nominations and evaluations are combined with independent research. Each candidate is evaluated on 12 indicators of peer recognition and professional achievement. Selections are made on an annual, state-by-state basis. The objective is to create a credible, comprehensive and diverse listing of outstanding attorneys that can be used as a resource for attorneys and consumers searching for legal counsel. Only 5% of attorneys in Southern California receive this distinction.

Alex Craigie is a trial lawyer recognized for his innovative, cost-effective and, where necessary, highly aggressive approach to Employment dispute advocacy. After 10 years as a Partner at a leading national law firm, Alex launched his own practice in 2014 with the aim of using the skills and experience he gained representing Fortune 500 companies in high-stakes lawsuits throughout the nation, to represent clients exclusively in Employment Law throughout California.

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San Diego Court Rejects Claim Worker Brought Covid-19 Home

In February, a United States District Court in San Diego dismissed a lawsuit brought by a spouse against her husband’s employer, Kuciemba v. Victory Woodworks, Inc. The suit alleged that the husband contracted Covid-19 while at work due to the employer’s negligence and brought the virus home, where his wife contracted it. The husband brought a separate worker’s compensation claim against Victory Woodworks.

The court initially dismissed the wife’s claim on the basis that worker’s compensation is the exclusive remedy for her claims. Following amendment of the complaint, the court again dismissed the claims, holding that an employer’s duty is only to provide a safe workplace for its employees, and that this duty does not extend to nonemployees, including spouses at home.

While this was certainly a favorable ruling for the employer, the fact it was issued by a federal judge sitting in San Diego may mean the same issue decided by a state court judge sitting elsewhere in the state might reach a different result. Federal judges tend to be more willing to dismiss marginal claims, particularly in San Diego, a conservative jurisdiction.

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