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(323) 652-9451| At first blush, an internship can seem like a win-win for everybody. Students gain valuable experience and industry contacts while business organizations are afforded an opportunity share knowledge, enhance their visibility and even develop a long-term applicant pipeline.
Unfortunately, unless strict requirements are met, unpaid internships can violate state and federal laws, exposing unwary employers to substantial liability risks, including for unpaid wages, unpaid overtime, rest and meal breaks, unreimbursed expenses and waiting time penalties. The following are the federal and state standards for when an employer can legitimately use unpaid interns. As with all employment laws, California employers must comply with both federal and state-specific law. The federal law derives from the Department of Labor (DOL)’s unpaid internship rules, which require the employer to ensure that: 1. The intern knows that the position is unpaid. 2. The training is similar to training received at an educational institution. 3. The internship is tied and integrated to the student’s educational program or degree. 4. The intern only works during periods that do not conflict with academic commitments or the academic calendar. 5. The internship only lasts for a period of time in which it imparts beneficial learning upon the intern. 6. The intern’s work does not replace existing employees’ work while providing significant educational benefits. 7. The intern understands that this internship does not provide entitlement to a job. In addition to the DOL test, California courts tend to apply the following criteria in evaluating when an unpaid internship is lawful: 1. Whether the internship is part of an educational curriculum which requires the participation of a school or a similar institution. 2. Interns cannot receive employee benefits, such as medical insurance and workers’ compensation. 3. The training must be general enough so that the intern can work for any similar business, rather than just for a specific company. 4. The screening process for the internship cannot be the same process used for regular employees. 5. Advertisements for the internship must clearly indicate that the internship position is educational and not for paid work. Employers considering unpaid interns are encouraged to contact us to ensure their program complies with the law and will not expose them to liability. |
| While the California statewide minimum wage remains $15.50, several municipalities will raise the applicable minimum wage effective July 1, 2023. These include:
· City of Los Angeles, increasing to $16.78 (from $16.04) · County of Los Angeles, increasing to $16.90 (from $15.96) · Malibu & Santa Monica, increasing to $16.90 (from $15.96) · Pasadena, increasing to $16.93 (from $16.11) · West Hollywood, increasing to $19.08 (from $17/$17.50, depending on size) · San Francisco, increasing to $18.07 (from $16.99) This list is not exhaustive. Additionally, the minimum wage for hotel workers will increase in Santa Monica ($19.73). Employers with remote workers should ensure that anyone performing remote work in an affected municipality must adhere to the municipality’s minimum wage. Some local ordinances contain specific notice requirements. This includes posters in a conspicuous place at the worksite and may be required in multiple languages. Notices may be emailed to remote workers (we recommend a method to confirm receipt). Employers with questions about the applicable minimum wage or the notice requirements should contact us. |
There are a slew of bills pending before the California Legislature that, if passed, will impact California employers. Two such bills are Senate Bill (SB) 731 and 616.
SB 731 – Remote Work as an Accommodation. SB 731 would authorize an employee with a qualifying disability to initiate a renewed request for reasonable accommodation to perform their work remotely if certain requirements are met, including that the employee performed their essential job functions remotely for at least 6 of the 24 months preceding the renewed request.
SB 616 – Dramatically Increased Paid Sick Leave. If passed, SB 616 would amend California’s statewide paid sick leave requirements to change accrual methods and increase the total amount of sick leave an employee may accrue annually from 24 hours (3 days) to 56 hours (7 days), with a maximum accrual of 112 hours (14 days). Importantly, this would alter the statewide Paid Sick Leave requirement; several cities and counties, including Los Angeles and San Francisco, already exceed the statewide minimum.
Learn MoreSince 2015, the California Legislature has attempted to hinder employers’ attempt to resolve disputes with employees though mandatory arbitration. Assembly Bill (AB) 51, effective January 1, 2020, prohibited employers from making mandatory arbitration a condition of employment. However, several industry groups, including the California Chamber of Commerce, sued to prevent enforcement of AB 51 immediately when it became effective.
Three years of circuitous litigation followed, culminating in the decision by the federal Ninth Circuit Court of Appeals, in Chamber of Commerce v. Bonta, affirming a district court injunction striking down California Assembly Bill (AB) 51 as preempted by the Federal Arbitration Act (FAA). As a result, for now at least, California employers may continue to implement mandatory employment arbitration agreements for employee claims for unpaid wages, discrimination, and other causes of action under the Labor Code and the Fair Employment and Housing Act (FEHA).
Learn MoreThe City of Los Angeles Office of Wage Standards has increased the minimum wage effective July 1, 2023. Based upon the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPA-W) for Los Angeles, the minimum wage for the City of Los Angeles will increase by $0.74 for a new minimum wage rate of $16.78 per hour.
The City of Los Angeles’ minimum wage ordinance applies to employees who perform at least two hours of work in any week within the geographic boundaries of Los Angeles. The Office of Wage Standards has also published the required posting on their website: https://wagesla.lacity.org/
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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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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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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.
Learn MoreChanges 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.
Learn MoreBusiness 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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