(323) 652-9451(805) 845-1752
(323) 652-9451Counseling clients to avoid exposure for disability discrimination can be a prickly business. Consider the following scenario.
Your client operates a small manufacturing concern. Every worker at the widget factory, from the owner to the janitor, takes lunch together at noon, every day. It has been that way every day since your client’s father opened the doors 45 years ago. This is because the factory operates as an assembly line, and it requires everyone’s simultaneous involvement.
One day, an employee, “Sam,” shares that he saw his doctor for vision problems and learned he has Type 2 Diabetes. Your client mutters some sympathetic words (not entirely sure about Diabetes or its different types), and the worker goes on to say that, owing to his Diabetes, he must eat more frequently. He wonders if, perhaps, he could break for lunch at 11 o’clock rather than noon.
Your client knows this is an absurd proposition, given the assembly line. Nonetheless, he says he’ll consider the request and they wander back to the factory floor. A week passes. Two. Sam continues to join everyone for lunch at noon. He does not raise the need to eat early again. However, his diabetic symptoms remind him daily that he needs to break and eat earlier. He gets shaky and light-headed. Not only is he physically uncomfortable, he is growing resentful. Each day that passes is a day closer to when he quits (or is “constructively terminated”) because he needs to eat earlier and your client has forgotten his request.
This describes an actionable case of “disability discrimination” or, at the very least a case of “failure to engage in the interactive process” (yes, that is a separate cause of action). What happens next is anyone’s guess, but it probably doesn’t end well for your client. If he had asked your advice, would you have known what to say? If not, read on.
Duties in this area are triggered when your client learns an employee has a “disability.” California’s Fair Employment and Housing Act (FEHA) defines disability to include a physical or mental disability, or medical condition. While “medical condition” encompasses a limited list of conditions, “physical disability” is read expansively, to include any condition that “limits a major life activity.”
While “mild” conditions, such as a common cold, non-migraine headaches and nonchronic gastrointestinal disorders do not meet the standard, the case law makes clear that FEHA has no durational requirement and even a passing condition may qualify. Employers tempted to define disability too narrowly must know that it has even been found to include uncorrected severe myopia (nearsightedness) and monocular vision.
Back to the widget factory. Sam was diagnosed with Type 2 Diabetes. A disability? Some would argue his condition affects the digestive, hemic and endocrine systems and, because eating is a “major life activity,” Type 2 Diabetes limits a major life activity and thus qualifies as a disability.
Assuming Sam has a disability, this knowledge triggered a duty by your client to “engage in the interactive process” in order to reasonably accommodate Sam if he could perform the essential function of his job with an accommodation.
What does the interactive process look like? It is a “discussion about an applicant’s or employee’s disability — the applicant or employee, health care provider and employer each share information about the nature of the disability and the limitations that may affect his or her ability to perform the essential job duties.”
The best practices for the interactive process include the following:
• Review the accommodation request;
• Obtain written medical release(s) or permission from the employee to obtain records and communicate with providers;
• Request the employee provide documentation from the his/her/their health care or rehabilitation professional regarding the nature of the impairment, its severity, the duration, the activities limited by the impairment(s) and the extent to which the impairment(s) limits the employee’s ability to perform the job’s essential duties/functions.
At the widget factory your client didn’t do any of this. This failure to engage in the process by itself supports an action and damages under FEHA.
Imagine if your client had engaged in the interactive process with Sam. They would have explored whether it was possible to “accommodate” Sam’s disability. The California Government Code and regulations provide guidance on reasonable accommodation. These include:
• Making facilities readily accessible to and usable by disabled individuals (e.g., providing accessible break rooms, restrooms or reserved parking places, etc.);
• Job restructuring;
• Offering modified work schedules;
• Reassigning to a vacant position;
• Acquiring or modifying equipment or devices;
• Adjusting or modifying examinations, training materials or policies;
• Providing qualified readers or interpreters;
• Allowing assistive animals on the worksite;
• Altering when and/or how an essential function is performed;
• Modifying supervisory methods;
• Providing additional training;
• Permitting an employee to work from home; and
• Providing paid or unpaid leave for treatment and recovery.
But, there are limits to this duty. FEHA does not obligate an employer to choose the best accommodation or the specific accommodation an employee or applicant seeks. They are not required to accommodate a worker’s medical marijuana use. Moreover, they are not required to provide an accommodation that causes the business to suffer “undue hardship,” defined as an action requiring “significant difficulty or expense” when considered in light of at least the following factors:
• Nature and cost of the accommodation weighed against tax credits, deductions or outside funding; and
• Nature, size and resources of business and accommodation’s impact on other employees.
At the widget factory, Sam’s desired accommodation was to break an hour earlier for lunch so that he would not feel shaky from a drop in blood sugar. On its face, this was not unreasonable, particularly given that a “shaky,” “light-headed” factory worker can endanger himself or others. Unfortunately, your client did not give this much thought. He clearly did not engage with Sam to explore potential (alternative) accommodations.
To be clear, it may be that your client cannot accommodate Sam. His proposal to allow him an early break might have proven unreasonable, given how the assembly line operates. If all possible accommodations would cause your client undue prejudice (applying the factors above), then it is unfortunate but Sam will need to find other work. Included in this equation is the principle that employers need not create a new position to accommodate a disabled applicant or employee. Thus, your client need not create a job for Sam in Accounting, where he can break early to eat without disrupting the assembly line. But the interactive process must be thorough and well-documented before this conclusion is reached without exposing your client to possible liability.
This law is nuanced. Unless your client has an experienced human resource professional, it might be a good idea to involve employment counsel, at least at the outset. The concepts and obligations may be unfamiliar, and the stakes are high. At least you can now rest easy knowing that you have some basic understanding of the risks in this area, and you can help your clients avoid disability discrimination liability. (This article originally appeared in the April, 2021 issue of the Santa Barbara Lawyer.)
Learn MoreCertain California cities and counties are increasing the minimum hourly wage for nonexempt employees effective July 1st! Please see the list below to determine if your business or California-situated employees are affected. Many regulations differentiate between businesses with 25 or fewer employees and those with 26 or more employees.
Location 25 or fewer employees 26 or more employees
California statewide
(no change) $11.00 $12.00
Los Angeles city $13.25 $14.25
Los Angeles county $13.25 $14.25
Malibu city $13.25 $14.25
Pasadena city $13.25 $14.25
San Diego (no change) $12.00 $12.00
San Francisco $15.59 $15.59
Santa Monica $13.25 $14.25
Palo Alto $15.00 $15.00
What Employers Should Do
Employers often find it difficult to justify, practically or emotionally, paying severance to an employee being terminated for cause. After all, employers ask, why compensate and reward a worker who broke the rules? It may be easier when the separation is a layoff, yet even under these circumstances, the company’s financial condition may constrain its ability to offer money to a separating employee, getting nothing but goodwill in return.
This Employment Law Bulletin briefly discusses severance and its primary justification: obtaining a release of any future employment law-based claims. We explain why best practices dictate employers set emotions aside in order to secure the protection provided by a release in exchange for a severance payment. We also discuss important issues related to the drafting and implementation of an enforceable severance agreement.
Why Offer Severance
There are sundry reasons an employer may want to offer severance to a separating employee: to reward a worker for years of loyalty; to cushion the blow of an unexpected layoff; to maintain goodwill in the community; or to preserve standing as a competitive, quality employer in the industry.
These are all sound reasons. They explain why employers might consider offering severance in many instances. But the single best reason why employers should offer severance to every terminated employee (i.e., one who is not leaving by her own volition) is the protection that a severance payment, combined with a well-drafted severance agreement, provides against a future claim or lawsuit.
Let’s begin by defining “severance.” In order to support a binding agreement in which the employee waives any claims, the severance must be compensation to which the employee wasn’t already entitled by virtue of her employment. Many employers we work with are surprised to learn that severance does not need to equal several months’ or even several weeks’ pay. This can be a particularly helpful point when considering offering severance to an employee terminated for lying or theft. The investment can be minimal. The peace purchased for merely a few hundred dollars (or less!) is always well worth the investment.
What Severance Buys You
Provided the agreement is properly drafted, signed and otherwise enforceable, the severance payment purchases a promise by the separating employee that she will not bring any claim or lawsuit, in a court or with a government agency, arising out of the employment relationship. Our typical California severance agreement expressly protects against seventeen (17) separate common law causes of action, as well as claims that could potentially be brought under eighteen (18) separate state and federal statutory schemes and regulations.
In fact, the only employment-related claim that cannot be expressly released by way of a severance agreement is one for unpaid wages, which can include reimbursement of expenses, overtime and waiting time penalties. Perhaps most importantly, most reasonably competent lawyers will abandon a claim, regardless of its apparent merits, where a potential client has signed an enforceable severance agreement with the former employer. In this way, for an investment of as little as a few hundred dollars, an employer can avoid incurring attorney’s fees and costs fighting a spurious claim.
The Elements of an Enforceable Severance Agreement
We cannot overstate the importance of having a knowledgeable employment law attorney draft your severance agreement. A severance agreement is a contract. In addition to pitfalls common to every type of contract, there are crucial drafting considerations unique to a severance agreement. This is particularly true if the separating employee is over 40-years-old. An agreement waiving any claims under the Older Workers’ Benefit Protection Act (“OWBPA”) must meet eight (8) statutory requirements, including providing the separating worker a 21-45 day period within which to consider the Agreement before signing it. Even then, the employee has seven (7) days to revoke the agreement. If the employer pays the severance before the expiration of the 7-day period, and the employee revokes the agreement, she may keep the payment and the employer is without recourse to recoup the funds!
In addition to an explicit waiver of any claims that could be brought under federal, state, common law, county, city or local ordinances, a severance agreement can and should provide other protections. Among these, we recommend clauses requiring confidentiality of the severance and prohibiting future disparagement of the employer and its management. It is generally a good idea also to include a clause in which the employee agrees not to apply for employment at any future time; this protects against future claims of discrimination in hiring.
The employee should never be pressured to sign the severance agreement, or to sign it “right away,” as this can provide a duress defense which may undermine the effectiveness of the agreement. It is also a good idea to include a severability clause so that, if an issue arises, a court can later “sever” out any portions of the agreement that are unlawful, rather than rendering the entire agreement unenforceable. A merger clause is also advisable, to prevent a terminated employee from claiming additional terms that are not included on the agreement itself.
Conclusion
California employers should always consider offering a severance when terminating an employee, provided the employee signs a well-drafted severance agreement waiving any claims arising out of the employment relationship. The severance payment need not be sizeable. However, it is crucial that the agreement be drafted properly. Employers with lingering questions should not hesitate to contact their experienced employment law counsel.
Employers may be already aware of the significant movement afoot to eliminate the consideration of an applicant’s criminal history, both from job applications and the interview, until a conditional offer of employment has been made. Variously termed “Ban the Box” or “fair chance” laws, the goal is to “ensure a fairer decision-making process” because, it is believed, anything that makes it harder for ex-offenders to find a job makes it more likely they will re-offend.
In California, the state of the law in this area is very much in flux. The purpose of this Bulletin is to discuss the current state of the law, including a new set of regulations issued in January, and provide a preview of pending legislation that is reasonably likely to be signed into law.
The Current Law
Under the current California laws and regulations, it is unlawful for an employer to consider the following from an applicant’s background record when hiring:
Before an employer can refuse to hire based on an applicant’s criminal history, it must provide the applicant notice of the disqualifying conviction and an opportunity to show that it is factually inaccurate. If shown to be inaccurate, the conviction cannot be relied upon.
There are exceptions to these prohibitions for certain classes of employers, including health care facilities, that are required by law to screen prospective employees or prohibit hiring of individuals with criminal records.
Additionally, the cities of San Francisco and Los Angeles have enacted their own “Ban the Box”-type ordinances with more stringent requirements/limitations than those described above.
Pending Legislation
Assembly Bill 1008, introduced on February 16, 2017, proposes to add a section to California’s Fair Employment and Housing Act (FEHA), which would create new statewide restrictions on employers’ ability to make pre-hire decisions based on an applicant’s criminal history.
Under the proposed new law, employers:
If the employer decides, following this individualized assessment, to deny employment it must provide written notice that:
The applicant may then offer information that challenges the accuracy of the conviction or provide mitigation/rehabilitation evidence. In its current form, the bill requires the employer to consider any mitigation/rehabilitation evidence the applicant offers.
If the applicant does not respond to the first written notice, or upon receipt of the applicant’s response the employer still decides against hiring the applicant, it must provide a second written notice that:
What Should Employers Do?
California employers should ensure that their hiring practices fully comply with existing California laws, which must include consideration whether they are also governed by the separate ordinances for the cities of San Francisco and Los Angeles. Additionally, employers should monitor the progress and outcome of Assembly Bill 1008, and appropriately adjust their practices if it passes. Employers with lingering questions should not hesitate to contact their experienced employment law counsel.
Governor Brown has signed a number of new laws affecting California employers. This post briefly discusses a few of them.
Increased Statewide Minimum Wage
Senate Bill (SB) 3 provides for six stepped annual statewide increases in the minimum wage, currently $10 an hour, for employers with 26 or more employees. The minimum wage will increase, beginning on January 1, 2017, as follows:
Employers with 25 or fewer employers have an extra year to comply with each new wage rate. Bear in mind that individual municipalities may set minimum wage rates that exceed this schedule.
Employers Cannot Choose Venue or Law in Employment Contracts
Some employers have historically included choice of venue or law clauses in employment contracts. Such clauses dictate where an employee can bring a civil lawsuit or what state (or federal) law would apply in deciding disputes. New California Labor Code Section 925 prohibits employers from including contract provisions as a condition of employment that require application of another state’s law or dictate that suits must be filed in another state court. This law will apply to employment contracts signed, modified or extended on or after January 1, 2017.
Notification of Certain Leave Rights
Assembly Bill (AB) 2337, effective January 1, 2017, will require employers to inform each worker of his or her employment leave rights as a possible victim of domestic violence, sexual assault, or stalking, by providing that information in writing to newly hired employees. Existing employees are entitled to such information upon request.
Restriction on Use of Applicant’s Juvenile Records in Employment Decisions
AB 1843, also effective January 1, 2017, will prohibit employers from inquiring about and considering information concerning “an arrest, detention, process, diversion, supervision, adjudication, or court disposition” that occurred while an applicant or employee was under the jurisdiction of the juvenile court.
Legislative Approval of California Secure Choice Retirement Savings Program
Under SB 1234, employers with five or more employees that do not already offer an employer-sponsored retirement plan will be required either to offer an employer-sponsored retirement plan or to automatically enroll their employees in Secure Choice by creating a payroll contribution to the employee’s personal California Secure Choice Retirement Savings account. The legislation was intended to saddle employers with only minimal administrative burdens. They will be required to: (1) enable employees to make an automatic contribution from their paycheck into their Secure Choice Account; (2) transmit the payroll contribution to a third-party administrator to be determined by the Board; and (3) potentially provide state-developed informational materials about the program to employees.
Extension of Equal Pay Protections to Race and Ethnicity
Readers of this Bulletin will recall that, last year, the California Equal Pay Act was amended to require employers to pay the same wage as between a male and female employees who perform substantially similar work. On September 30, 2016, Governor Brown signed the Wage and Equality Act of 2016, SB 1063. Effective January 1, 2017, this will extend the protections provided by the Equal Pay Act to employees of different races or ethnicities. Thus, employees who perform substantially similar work must be paid equally, regardless of differences in gender, race or ethnicity.
As with the Equal Pay Act, pay differential between workers of different races or ethnicities may be allowed if it is based on a reasonably applied factor such as a seniority system, merit system, system that measures earning by quantity or quality of production, or some bona fide factor other than race or ethnicity.
Conclusion
Employers with questions concerning any of these new or amended California employment laws should not hesitate to contact their experienced employment law counsel.
The U.S. Department of Labor has issued regulations requiring employers to post two revised workplace posters. The regulations took effect August 1, 2016.
The first new poster, “Employee Rights Under The Fair Labor Standards Act” poster, contains new information about the rights of nursing mothers under the FLSA to take reasonable breaks to express milk for a period of one year following birth of their child. It also instructs them that their employer must provide a workplace location shielded from view and free from intrusion. The location may not be a bathroom.
The new FLSA poster also contains a new section about independent contractor misclassification, as well as information in the “tip credit” section that instructs employers of tipped employees who meet certain conditions that they may claim a partial wage credit based on tips received. The poster, available in 10 different languages, is available at: https://www.dol.gov/whd/regs/compliance/posters/flsa.htm.
The second revised poster is the “Employee Rights—Employee Polygraph Protection Act” poster. The only substantive change to this poster was the removal of a reference to the amount of possible penalties. The new poster also contains new contact information for the DOL. This poster, available in English and Spanish, is available at: https://www.dol.gov/whd/regs/compliance/posters/eppa.htm.
Finally, for employers with 50 or more employees, the Department of Labor previously released an updated Family and Medical Leave Act (FMLA) poster in April, 2016. Unlike the FLSA and Employee Polygraph Protection Act posters, the updated FMLA poster contains substantial revisions. This revised poster, available in English and Spanish, is available at: https://www.dol.gov/whd/regs/compliance/posters/fmla.htm.
Conclusion
Employers with questions concerning workplace posters mandatory under federal and state laws should not hesitate to contact their experienced employment law counsel. We can assist.
California Assembly Bill 2535, signed on July 22, 2016 by Governor Brown, amends California Labor Code Section 226. Prior to this amendment, employers were required to track and record hours worked for exempt outside sales persons and executives who are not paid solely by salary. This meant that such tracking was required, even where an employee was not compensated for hours worked, but received commissions, bonuses or stock options.
AB 2535 amends Labor Code Section 226 to eliminate this anomaly. Employers are no longer required to record hours for employees exempt from payment of minimum wage and overtime. Specifically, the law adds section (j) to Section 226, which, effective January 1, 2017, will provide:
“(j) An itemized wage statement furnished by an employer pursuant to subdivision (a) shall not be required to show total hours worked by the employee if any of the following apply:
(1) The employee’s compensation is solely based on salary and the employee is exempt from payment of overtime under subdivision (a) of Section 515 or any applicable order of the Industrial Welfare Commission.
(2) The employee is exempt from the payment of minimum wage and overtime under any of the following:
(A) The exemption for persons employed in an executive, administrative, or professional capacity provided in any applicable order of the Industrial Welfare Commission.
(B) The exemption for outside salespersons provided in any applicable order of the Industrial Welfare Commission.
(C) The overtime exemption for computer software professionals paid on a salaried basis provided in Section 515.5.
(D) The exemption for individuals who are the parent, spouse, child, or legally adopted child of the employer provided in any applicable order of the Industrial Welfare Commission.
(E) The exemption for participants, director, and staff of a live-in alternative to incarceration rehabilitation program with special focus on substance abusers provided in Section 8002 of the Penal Code.
(F) The exemption for any crew member employed on a commercial passenger fishing boat licensed pursuant to Article 5 (commencing with Section 7920) of Chapter 1 of Part 3 of Division 6 of the Fish and Game Code provided in any applicable order of the Industrial Welfare Commission.
(G) The exemption for any individual participating in a national service program provided in any applicable order of the Industrial Welfare Commission.”
Employers with any questions about wage statement requirements are encouraged to contact their experienced employment law counsel. We’re here to help.
The cities of Los Angeles and San Diego approved ordinances that will increase the minimum wage and mandatory Paid Sick Leave starting this month.
Los Angeles
Los Angeles Mayor Eric Garcetti signed an ordinance that increases the minimum wage of employees who work in the City of Los Angeles for at least two hours in a particular week. Employers with 26 or more employees will pay $10.50 per hour effective July 1, 2016. Employers with fewer than 26 employees will continue to pay the state minimum wage of $10.00 until July 1, 2017, when their applicable minimum wage will climb to $10.50.
Los Angeles employers must also provide Paid Sick Leave up to 48 hours per year, which can be provided in a “front load” method, or an accrual method, accruing 1 hour of PSL for every 30 hours worked. This is twice the annual PSL required under California state law. Additionally, Los Angeles employers must allow employees to carry over accrued, but unused, sick leave up to a limit of 72 hours. Unlike the statewide PSL law, the Los Angeles ordinance expressly allows employers to require reasonable documentation of an absence from work for which PSL will be used.
There are stiff fines for noncompliance, including a $500 fine for failing to post the required notice.
San Diego
On June 7th, voters in San Diego voted to increase the city’s minimum wage to $10.50 immediately upon certification of the election results by the San Diego City Clerk, which could occur anytime. The minimum wage will increase to $11.50 per hour effective January 1, 2017. Further increases, keyed to San Diego’s Consumer Price Index, will occur beginning Jan. 1, 2019.
The ordinance also requires employers to provide employees with one hour of Paid Sick Leave for every 30 hours worked within the city limits. While employers may limit an employee’s use of PSL to 40 hours per year, they may not cap sick leave accrual.
As with Los Angeles, there are stiff penalties for noncompliance. Employers who fail to comply may face a civil penalty of up to $1,000. Failure to comply with the notice requirement face a penalty of $100 per employee, up to $2,000.
What you should do: Employers with any employees in the cities of Los Angeles or San Diego should immediately ensure their pay practices, sick leave practices and posted notices comply with the new ordinances. Your employment law counsel can help.
Most employees are entitled to receive overtime premium pay when they work beyond a certain number of hours in a day or week. Under both state and federal law, certain employees, because of their job duties and compensation, can be considered “exempt” from overtime. The most common exemptions are the so-called “White Collar” exemptions, for executive, administrative and professional employees.
On May 18, 2016, the US Department of Labor published its Final Rule updating the Fair Labor Standards Act (FLSA) to increase the minimum compensation required for an employee to be properly classified under one of the White Collar exemptions. The Final Rule increases the minimum salary level from its present $455 per week ($23,660 annualized) to $913 per week ($47,476 annualized). Employers can count nondiscretionary bonuses and commissions toward up to 10% of this annual minimum.
Importantly, all of the other stringent “duties” requirements for an employee to be considered exempt remain unchanged. Finally, the Rule, which becomes effective December 1, 2016, provides for automatic increases in the salary levels every three years (beginning January 1, 2020).
What you should do: This is an excellent time to evaluate whether exempt employees are properly classified. This means, not only determining whether they will meet the increased salary requirements, but equally important is evaluating whether their job duties meet the specifications set forth under the FLSA (and California Wage Orders). We encourage you to involve your employment law counsel in this important analysis.
In Castro-Ramirez v. Dependable Highway Express, the California Court of Appeal for 2nd Appellate District, which includes the Los Angeles Superior Courts, held for the first time that an employer has a duty to reasonably accommodate an applicant or employee who is related or associated with a disabled person who needs the applicant/employee’s assistance.
The facts underlying the case are interesting. Luis Castro-Ramirez was a driver for Dependable Highway Express (DHE). His son required dialysis. Before accepting DHE’s job offer, Castro- Ramirez explained that he would need to leave work early enough to go home and operate his son’s dialysis machine. Although DHE initially accommodated this request, scheduling early routes, a new supervisor refused and warned Castro-Ramirez that if he did not take a later route he would be fired. Castro-Ramirez refused and was fired.
The trial court ruled in favor of DHE, reasoning that Castro-Ramirez could not show that the termination was motivated by his association with his disabled son. The Court of Appeal reversed, holding that California’s Fair Employment and Housing Act (FEHA) creates a duty on the part of employers to accommodate employees who are associated with a disabled person.
At this juncture, Castro-Ramirez is only binding in the 2nd Appellate District. It is likely DHE will seek review of the decision by the California Supreme Court, which could result in a reversal. However, until such review, if it occurs, other appellate courts throughout California could find the court’s reasoning persuasive and follow it.
What Employers Should Do Given This Ruling
Disability discrimination, including claims of failure to reasonably accommodate a known or perceived disability, is a particularly thorny area for California employers. Castro-Ramirez further complicates matters. Employers must take care whenever a request is made for accommodation of a disability or medical condition. When in doubt, it is wise to seek the advice of employment law counsel.
Effective April 1, 2016, significant amendments to the California Fair Employment and Housing Act (FEHA) will take effect. These impact every employer, including out of state employers, with at least 5 workers in California. Here are the critical highlights of these amendments.
Mandatory Written Anti-Discrimination/Harassment Policy
Of greatest import, the amendments require every covered employer to have a written policy that:
In order to ensure that employees receive the written policy, employers may publish the policy through various means. These include: providing a copy to existing employees and during the hiring process, posting it in the workplace, and obtaining a written acknowledgement. Translation of the policy is required into every language that is spoken by at least 10% of the workforce.
Definitions
The amendments also contain definitions that are important in the context of gender discrimination.
Recordkeeping Requirement
Employers with 50+ employees are required to provide sexual harassment prevention training to supervisors at least every 2 years. The amendments require employers to retain materials related to this training, including sign-in sheets and course materials, for at least 2 years.
What Employers Should Do
Covered employers (5+ employees) should immediately review their policies to ensure they are in compliance with the amended regulations before April 1st. If you have any doubt whether your business is in compliance, we recommend you contact your qualified employment law counsel.
Each new year brings challenges for employers and their Human Resources management, as a slew of new laws take effect, creating new traps for the unwary. 2016 is no exception. Here is a list of four new laws (or amendments) that can impact virtually every California employer.
The New Minimum Wage is $10.00
At first, this doesn’t seem like real news, as almost everyone has known the California minimum wage has been climbing since 2014. The information important to many employers, however, is the role the enhanced minimum wage plays in classification of salaried exempt vs. non-exempt employees.
Remember that an exempt employee in California must be paid a salary that is no less than two times the state minimum wage for full-time employment. Accordingly, as the state minimum wage increases from $9.00 to $10.00 per hour, the minimum annual salary for an exempt employee increases from $37,440 to $41,600. What you should do: Review compensation for all salaried exempt employees to ensure it equates to at least $41,600 annually.
Changes to Piece-Rate Compensation Requirements
Are some or all of your employees paid according to a piece-rate method? A business school definition of piece-rate compensation is: A wage determination system in which the employee is paid for each unit of production at a fixed rate. It is common in the automotive repair and garment industries, among others.
Assembly Bill 1513 added section 226.2 to the California Labor Code. It requires employers to pay piece-rate employees a separate hourly wage for “nonproductive” time, as well as “rest and recovery” periods. These hours and pay must be separately itemized on employees’ paystubs.
An additional challenge created by the new law relates to determination of the correct rate of pay. For “rest and recovery” breaks, employees must be paid the greater of (1) the minimum wage, or (2) the employee’s average hourly wage for all time worked (exclusive of break time) during the work week. For “nonproductive” time, the employee must receive at least minimum wage. What you should do: If you have employees paid on a piece-rate basis, make sure you understand and comply with the above. If not, contact your employment lawyer to get in compliance.
California Fair Pay Act
Senate Bill 358, amends California Labor Code Section 1197.5, which prohibits an employer from paying employees of one sex less than employees of the opposite sex for “substantially similar work.” Prior to the amendment, an employee seeking to prove unequal pay had to demonstrate that he or she was not being paid at the same rate as someone of the opposite sex at the same establishment for “equal work.” As amended, an employee need only show he or she is not being paid at the same rate for “substantially similar work” as measured by a composite of skill, effort and responsibility performed under similar working conditions.
Additionally, the amended law makes it unlawful for employers to prohibit employees from disclosing their wages to others, discussing their wages or inquiring about the wages of another employee. It also creates a new private cause of action whereby an employee may bring suit in court seeking reinstatement and reimbursement for discrimination or retaliation. What you should do: Audit your compensation structure to ensure both genders are paid equally for substantially similar work. Where changes are required, you may only increase the underpaid employee. Involve your employment lawyer if you need clarification or help.
Requesting Reasonable Accommodations is a Protected Activity
Assembly Bill 987 amends the California Fair Employment and Housing Act (FEHA) to expand the protections for employees who request a reasonable accommodation for disabilities or religious beliefs, regardless whether the request is granted. This means that, once an employee has requested a reasonable accommodation for a disability or religious belief, the employer may not take an adverse employment action (i.e., discipline, reduction in hours or pay, termination) in retaliation for the accommodation request. What you should do: Be sensitive to an employee’s request for accommodation, even if s/he does not use the term “reasonable accommodation.” If an employee tells you (or you perceive) s/he is disabled or has a particular religious belief/preference that requires accommodation, take the situation seriously. It may be a good idea to consult with your employment counsel.
Conclusion
Employers should remain mindful of these changes as we embark upon a satisfying and, hopefully, productive new year!
