The new federal budget signed into law on November 2, 2015, requires the federal Occupational Safety and Health Administration (OSHA) to increase its penalties for the first time since 1990.

What is OSHA and why is this important?

OSHA is a federal agency (part of the Department of Labor) that ensures safe and healthy working conditions for Americans by enforcing standards and providing workplace safety training. OSHA is empowered to enforce its regulations by imposing penalties that most employers feel are already steep.

From 1990 through 2015, OSHA was one of only three federal agencies that were exempt from a law requiring such agencies to raise fines to keep pace with inflation. A section of the 2015 budget bill–the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (no that’s not a typo!)–eliminated this exemption.

The budget bill further requires OSHA to make a one-time “catch-up” increase, which cannot exceed the inflation rate from 1990 through 2015 as measured by the Consumer Price Index (CPI). Based on the recent CPI, the maximum increase is expected to be in the range of 75-80%. Further, given consistent comments by OSHA leadership about the benefits of imposing stiffer regulatory punishments, it is believed that OSHA will implement most, if not all, of the increase.

To illustrate the impact of this increase, an 80% increase in the current schedule of maximum penalties would result in the following fines:

• Other than Serious Violations: $12,600
• Serious Violations: $12,600
• Willful Violations: $126,000
• Repeat Violations: $126,000

Cal/OSHA

California is among several states that have a State Plan: an OSHA-approved job safety and health program that is operated by an individual state instead of federal OSHA. Federal OSHA still provides up to 50 percent of the funding for these programs and the State Plan must be “at least as effective” as federal OSHA.

Cal/OSHA has recently hit employers with staggering penalties. Since June, 2015, Cal/OSHA imposed penalties against a meat byproducts processing company, a door manufacturer, a refinery and two construction firms amounting to $1.6 million.

Who is at risk?

Any employer that does not fully comply with OSHA safety standards is at risk for penalties. Unfortunately, many employers in industries that do not typically focus heavily on safety standards are equally at risk, not only for accidents and injuries, but also for stiff OSHA penalties. For example, retail businesses have been heavily penalized for such violations as blocked exits, fire extinguishers and similar non-obvious safety risks. Often ownership and management of such “white collar” businesses are unsophisticated about safety issues.

What should employers do?

Fortunately, employers have several months to take steps to avoid OSHA penalties. These should include making safety and compliance with applicable OSHA standards a priority. Where there is doubt about the specifics of a safety standard, employers should consult with their employment counsel, who may also recommend or involve safety specialists to ensure full compliance.

On October 6, 2015, California Governor Jerry Brown signed Senate Bill 358, amending California’s Equal Pay Act, which prohibits an employer from paying employees of one sex less than employees of the opposite sex for “substantially similar work.” This Bulletin briefly discusses this amendment and how it could impact California employers.

What is required for an employee to prove unequal pay?

Prior to the new law, 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.”

The new law, effective January 1, 2016, relaxes this standard, making it much easier for an employee to prove unequal pay. Under the new law, 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. It is not necessary that the employees of opposite sexes perform the same or equal work.

What can an employee recover?

Employees have the option of pursuing a claim through the Labor Commissioner or filing a civil lawsuit. An employee who prevails through a claim with the Labor Commissioner may recover pay differential plus an equal amount as liquidated damages. An employee who successfully sues in court may recover pay differential damages, interest, litigation costs and attorneys’ fees.

How can an employer defend a claim or suit?

Even if there is a gender-based wage differential, an employer can escape liability if it can show that the differential is based on:

• A seniority system;
• A merit system;
• A system that measures earnings by quality or quantity of production; or
• Some other bona fide factor other than sex, such as education, training or experience.

These factors were included in the law, as it existed prior to the October 6th amendment. However, the fourth factor has been changed to require an employer to show with competent evidence that any difference in compensation is not sex-based, is related to the position in question and there exists a “business necessity” for the wage differential. A “business necessity” is an overriding legitimate business purpose such that the factor relied upon effectively fulfills the business purpose it is intended to serve.

Additional “Wage Transparency” requirement

As amended, the 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.

Extended record keeping period

The amendment extends the time period for employers to keep records pertaining to employees’ terms and conditions of employment (including wages and job classifications) from two to three years.

What Should Employers Do?

Commentators suggest this amendment may cause a significant uptick in claims and lawsuits alleging unequal pay–this remains to be seen. However, there are unquestionably steps employers should take to protect themselves against an unequal pay claim:

• Review employee compensation to ensure that instances of gender-based pay differential are minimized and/or defensible under the criteria set forth above.
• Ensure that individuals making compensation decisions are familiar with the amended law.
• Review policies, in handbooks and elsewhere, to ensure they do not violate the “wage transparency” requirement.

If you have questions about this amendment, you should consult with experienced employment law counsel.

California’s new Paid Sick Leave Law, the Healthy Workplaces, Healthy Families Act of 2014 (“Act”), took effect January 1, 2015, with leave benefits to accrue starting July 1, 2015. Although the Act was already in effect, the California legislature passed additional amendments, which were signed into law by Governor Jerry Brown on July 13, 2015.

Here are some of the key amendments:

Accrual

In addition to the accrual method in which an employee gains one hour of paid sick leave for every 30 hours worked, employers have the option to use their own accrual method, provided accrual is (1) on a regular basis; and (2) the employee will have 24 hours of accrued sick leave by his or her 120th calendar day of employment.

Employers who already have their own PTO policy

Employers who had a preexisting Paid Time Off (“PTO”) policy as of January 1, 2015, may continue that policy provided: (1) PTO/PSL accrues regularly; (2) employees accrue at least one day/eight hours of PTO/PSL within 3 months of employment each calendar year; and (3) employees accrue at least 3 days/24 hours PTO/PSL within 9 months of employment.

Rate of pay for Paid Sick Leave

For nonexempt employees, pay during PSL can be calculated using one of two methods: (1) the “regular rate of pay” for the workweek in which the employee uses paid sick leave; or (2) by dividing the employee’s total wages, not including overtime premium pay, by the total hours worked in the full pay periods of the prior 90 days of employment.

Other Amendments

• If an employer provides unlimited PSL or PTO, the employer may satisfy its notice obligation by indicating “unlimited” on the employee’s wage statement.
• An employer is not required to reinstate accrued PSL to an employee who returns to the company after less than one year, if the employee was “cashed out” for unused PSL at the time of separation. (Recall there is no obligation to “cash out” accrued, but unused PSL, though there is for PTO.)
• PSL is only available for employees who have worked at least 30 days within the last year for the same California employer.

Again, California employers are encouraged to consult with their employment law counsel to ensure they are in compliance with all aspects of the new Paid Sick Leave law.

On July 15, 2015, the United States Department of Labor (DOL) issued a guidance memorandum (Administrator’s Interpretation No. 2015-1) clarifying whether workers can properly be characterized as Independent Contractors, rather than employees. This Bulletin explains this development and its implications for employers who treat any workers as Independent Contractors.

What is The DOL and Why is This Important?

The DOL is the federal agency charged with enforcing laws and regulations enacted to protect employees. The DOL’s Administrator periodically issues “guidance” memoranda interpreting a law or regulation. While these memoranda are neither law nor legally binding, they are frequently cited and given weight by courts when interpreting law in a particular case. They may also be considered in the legislative process, as federal and state laws are enacted which directly impact employers.

This guidance is also important because it provides clarity and may help employers avoid misclassifying workers as Independent Contractors. Employers who misclassify risk a costly claim or civil lawsuit by the worker claiming she did not receive overtime or rest and meal periods as a result of the misclassification.

The “Economic Realities” Test

Determination whether an employer can properly treat a worker as an Independent Contractor has long required application of the “economic realities” test. This test asks the following questions about a worker classified as an Independent Contractor:

Is the work performed by the individual an “integral part of the employer’s business”?

Does the individual’s “managerial skill” affect his or her opportunity for profit or loss?

How does the worker’s investment compare with that of the company?

Does the work performed require special skill and initiative?

Is the relationship between the worker and the company permanent or indefinite?

What is the nature and degree of the employer’s control?

What Does the DOL Guidance Add?

The DOL guidance memorandum adopts the economic realities test. But the agency makes clear that the test must be applied in the context of the definition, from the federal Fair Labor Standards Act (FLSA), of “employ,” as “suffer or to permit to work.” An individual who is “economically dependent on an employer is suffered or permitted to work by the employer,” and thus cannot be properly classified as an Independent Contractor (emphasis added).

In other words, only a worker who is financially independent of the employer can properly be classified as an Independent Contractor. In one telling sentence, the memorandum says that “Only carpenters, construction workers, electricians, and other workers who operate as independent businesses, as opposed to being economically dependent on their employer, are independent contractors.”

The guidance also clarifies that work away from the employer’s premises does not necessarily support Independent Contractor classification, since that work can still be integral to the employer’s business.

What Should Employers Do?

The issuance of this guidance is an excellent reminder for employers to work with their employment law counsel to evaluate whether they are properly classifying any worker who is treated as an Independent Contractor.

The Division of Occupational Safety and Health (DOSH), better known as CalOSHA, protects workers from health and safety hazards in almost every workplace in California. The amendments to certain CalOSHA regulations, effective May 1, 2015, will impact any business that includes an “outdoor place of employment.” The amendments require action by employers, including (1) revision of written policies covering heat illness prevention; (2) updates to training protocols and materials; and (3) adoption of expanded workplace procedures, practices and protections to better prevent heat illness from occurring.

A key amendment relates to the temperature at which shade must be provided. Previously, the regulation required a shaded area when the temperature reached 85 degrees. The threshold is now 80 degrees.

Certain industries, including agriculture, construction, landscaping, oil and gas extraction, and transportation or delivery of agricultural, construction or other heavy materials, face an even heavier burden when the temperature reaches 95 degrees. These include (1) conducting paid pre-shift safety meetings to go over the company’s high-heat procedures; and (2) implementing effective heat illness monitoring, defined as having a supervisor assigned to observe 20 or fewer employees, a mandatory buddy system, regular communication with each employee, and a designated person at the worksite authorized to call emergency services in the event of a heat illness.

Employers must also provide adequate fresh, pure and suitably cool water, at no cost, located as close as practicable to the areas where employees are working. Employers must encourage employees to take cool-down periods of at least five minutes (10 minutes every 2 hours for agricultural workers at 95 degrees).

Finally, employers must establish a written heat illness prevention plan in English and any other languages that will be understood by employees. This plan must be made available at the worksite.

The California Family Rights Act (CFRA) was established to ensure secure workplace leave rights for the birth of a child, for purposes of bonding, placement of a child in the employee’s family for adoption or foster care, for the serious health condition of the employee’s child, parent or spouse, or for the employee’s own serious health condition.

Importantly, the CFRA applies only to employers who employ 50 or more employees within a 75-mile radius. This is not new. However, the amended regulations clarify how to determine if this threshold is met for employees with no fixed worksite (i.e., work from home, etc.). The regulations now provide that such employees’ worksite is the location (1) to which they are assigned as their home base; (2) from which their work is assigned; or (3) to which they report.

CFRA leave is only available to employees who have been employed for at least 12 months and at least 1,250 hours during the preceding 12 months period. The amended regulations provide that employees who are not eligible for CFRA leave at the start of a leave because they did not meet this requirement, may become eligible for protected CFRA leave during their non-CFRA leave because their continued employment during such leave counts toward the 12 month threshold.

Formerly, employers could require an employee using CFRA leave to obtain a second opinion of the employee’s “serious health condition” if the employer had “reason” to doubt the validity of the first medical certification. This regulation has been amended to allow an employer to require a second opinion only where it has a “good faith, objective reason” to doubt the certification. Employers are also now prohibited from contacting health care providers except to authenticate a medical certification.

As amended, the regulations now provide that an employee who fraudulently uses CFRA leave is not protected for purposes of job restoration (at conclusion of leave) or health benefits.

Finally, the amended regulations require employers to post a notice explaining the CFRA and how to file a complaint with the Department of Fair Employment and Housing (DFEH).

In my last post, I highlighted a recent California Court of Appeal Decision, Nealy v. City of Santa Monica, in which the Court held that an employer is not required, as part of its duty to accommodate an employee’s disability, to eliminate an essential function of the employee’s job. At the time of my post, the case was not published, meaning it could not be cited as authority. In the interim, the case has been ordered published, meaning it is now citable authority. Good news!

The California Court of Appeal, in Nealy v. City of Santa Monica, recently provided insight about the extent of an employer’s obligation to provide reasonable accommodation to a disabled employee. Specifically, the Court addressed whether an employer is required to remove an “essential job function” as a reasonable accommodation.

Factual Background

The employee, Tony Nealy, worked for the City as a “solid waste equipment operator.” He suffered two work-related injuries, leaving him partially disabled. When the agreed medical examiner ultimately approved Nealy’s return to work, he stipulated that Nealy should be precluded from “kneeling, bending, stooping, squatting, walking over uneven terrain, running, and prolonged standing relative to the right knee, as well as climbing and heavy lifting.”

Nealy’s pre-injury job as a “solid waste equipment operator” requires workers be able to operate at least four different types of refuse collection vehicles, as well as refuse and recyclable collection/disposal duties, heavy lifting and equipment maintenance/inspection.

Nealy took the position that, even with his work restrictions, he could still work as a “solid waste equipment operator” if the job duties were altered in his case to limit his responsibility to a single refuse collection vehicle (automated side loader). When the City refused this suggestion, he sued, claiming disability discrimination and other theories.

Essential Function and Reasonable Accommodation

California law imposes on employers the obligation to make “reasonable accommodations” for known disabilities. “Reasonable accommodation” has been defined as “a modification or adjustment to the work environment that enables the employee to perform the essential functions of the job.” (Nadaf-Rahrov v. Neiman Marcus Grp., Inc., 166 Cal.App.4th 952, 974 (2008).)

An “essential function” of a given position has been defined as “the fundamental job duties of the employment position the individual with a disability holds or desires.” (Cal. Gov. Code §12926(f).) The City argued that the ability to operate multiple different refuse collection vehicles was an essential function of the job of “solid waste equipment operator” because (1) employees could be required to “fill-in” for one another, operating different vehicles, in the event of an absence; and (2) a natural disaster may dictate that larger vehicles than the automated side loader would be required to adequately clear debris.

Among the questions presented to the Court was whether the City’s duty to accommodate Nealy’s disability required it to eliminate an essential job function of a “solid waste equipment operator,” so that he would be required only to operate the automated side loader and not perform any of the other duties that fell outside his restrictions. Citing authorities, including Lui v. City and County of San Francisco, 211 Cal.App.4th 962, 985 (2012), and Dark v. Curry County, 451 F3d.1078, 1089 (9th Cir. 2006), the Court said no. Elimination of an essential function is not a reasonable accommodation of an employee’s disability.

Summary

Nealy v. City of Santa Monica is an unpublished opinion, which means it cannot be cited to a court as authority. However, it provides valuable insight into the extent of an employer’s obligation to provide reasonable accommodation to a disabled worker. Specifically, the case suggests reasonable accommodation does not require the elimination of an essential job function.

Employers facing questions of reasonable accommodation of an employee’s known disability would be wise to consult with their employment law counsel, to help reduce the likelihood of a violation of state and/or federal law.

Politicians in several states have been lobbying for years to make “bullying” in the workplace illegal. While Tennessee is the only state with such a law currently on its books, California took a step closer when Governor Brown signed AB 2053, which will require certain employers to provide “abusive conduct” training as a component of already mandatory sexual harassment prevention training for supervisory employees.

The existing requirement, found in Government Code section 12950.1, applies to employers with 50 or more employees and requires supervisory employees receive two hours of sexual harassment prevention training, within six (6) months following their assumption of a supervisory role. Follow up training is required every two years.

Here is what the amendment adds to Section 12950.1:

• Training must now include a component on the “prevention of abusive conduct.” This need not necessarily extend the length of the training beyond two hours.
• “Abusive conduct” is “conduct with malice that a reasonable person would find hostile, offensive, and unrelated to an employer’s legitimate business interests.”
• “Abusive conduct” may include repeated infliction of verbal abuse (e.g., derogatory remarks, insults, and epithets), verbal or physical conduct that a reasonable person would find threatening, intimidating, or humiliating, or the gratuitous sabotage or undermining of a person’s work performance.
• “Abusive conduct” need not be based on any otherwise protected classification, such as race, age, gender, disability or religion.
• A single act does not constitute “abusive conduct” for purposes of the training, unless it is especially severe or egregious.
• The amendment takes effect January 1, 2015.

What Employers Should Do – Employers with 50 or more employees should immediately consult with their regular employment attorneys to update training to comply with the new law.