New Labor Code § 925 Limits Contractual Choice of Law in Employment Contracts

Starting on January 1, 2017, Labor Code section 925 is in effect.  The statute limits the enforcement of contracts that would require California employees to litigate their disputes with an employer in a venue outside California, or under a different set of laws.    

The new law applies to employment contracts "entered into, modified, or extended on or after January 1, 2017."  And the law only applies to "an employee who primarily resides and works in California."  As to such covered disputes, however, any contract provision designating a non-California forum or choice-of-law, will "voidable" at the election of the employee.  

Employers and employees should also be aware, however, that such provisions may also be unenforceable on the separate ground that enforcement would require an employee to waive a California legal right that is explicitly made "non-waivable," such as minimum wage,overtime, or non-discrimination laws. 

In any event, the full text of Labor Section 925 is as follows:

§ 925. Prohibition against requirement that employee residing and working in California adjudicate claim outside of California or be deprived of substantive protection of California law as condition of employment; violations and remedies; exception
(a) An employer shall not require an employee who primarily resides and works in California, as a condition of employment, to agree to a provision that would do either of the following:
(1) Require the employee to adjudicate outside of California a claim arising in California.
(2) Deprive the employee of the substantive protection of California law with respect to a controversy arising in California.
(b) Any provision of a contract that violates subdivision (a) is voidable by the employee, and if a provision is rendered void at the request of the employee, the matter shall be adjudicated in California and California law shall govern the dispute.
(c) In addition to injunctive relief and any other remedies available, a court may award an employee who is enforcing his or her rights under this section reasonable attorney's fees.
(d) For purposes of this section, adjudication includes litigation and arbitration.
(e) This section shall not apply to a contract with an employee who is in fact individually represented by legal counsel in negotiating the terms of an agreement to designate either the venue or forum in which a controversy arising from the employment contract may be adjudicated or the choice of law to be applied.
(f) This section shall apply to a contract entered into, modified, or extended on or after January 1, 2017.

New Rule: California Appellate Opinions are Now Citable Pending Supreme Court Review

When the United States Supreme Court takes up a case the published Circuit Court opinion from which it arose remains on the books as binding authority unless, and until, it is reversed.

By contrast, under the traditional rule in California a previously published appellate decision was effectively de-published for good once the California Supreme Court elected to take the matter under review.  

Beginning on July 1, 2016, however, California Rules of Court, Rule 8.115 has been modified so that published appellate decisions will now remain citable after review is granted.  

While such opinions are under review, they will remain citable only as persuasive, but not binding authority.  Once the California Supreme Court has completed its review and issued its own opinion, the appellate decision will become binding again as to any point on which it was not overruled or rejected.

Finally, at any time after granting review the California Supreme Court can issue an order directing that some or all points of the appellate decision are binding, while others are not.

It will be especially interesting to see how this last part of the rule is implemented in practice.  It is conceivable that the Supreme Court will use this new authority as a convenient means to partially depublish and thus, in effect, selectively rewrite  lower appellate decisions.  



Consumer Financial Protection Bureau Issues Proposed Rule to Prohibit Class Action Waivers in Arbitration Agreements

 The federal Consumer Financial Protection Bureau (CFPB) has issued a proposed regulation, 12 C.F.R. part 1040, that would ban the enforcement of class action waivers in most consumer financial contracts.

The new regulation does not apply to employment contracts.  Moreover, the new regulation will only apply prospectively to arbitration agreements formed more than 180 days after the regulation becomes effective.  However, it will inevitably stir up some interesting legal and political issues surrounding the enforcement of class action waivers.  

The new rule amounts to a regulatory reversal of the landmark 2011 U.S. Supreme Court decision in AT&T v. Concepcion, which held that the Federal Arbitration Act ("FAA"), requires states to enforce class action waivers even if they would be illegal under state law.  Indeed, the new regulation would prohibit states from enforcing class action waivers even if they would be legal under state law.

The elephant in the room, however, is whether the CFPB actually has the authority to do any of this.  Section 128(b) of the Dodd-Frank Act purportedly gives the CFPB authority to prohibit arbitration agreements containing class action waivers.  However, the FAA already contains a statutory mandate that private arbitration agreements are to be deemed “valid, irrevocable, and enforceable," and are to be enforced "according to their terms."  

Denying enforcement of class action waiver provisions is arguably a partial repeal of the FAA, at least as it was interpreted in AT&T v. Concepcion.   It is therefore dubious that Congress can constitutionally delegate this legislative function to an administrative agency.   





New York Times Article: Arbitration Everywhere, Stacking the Deck of Justice -- Is Mainstream Media Finally Recognizing Class Action Waivers as a Political Issue?

As every lawyer practicing in the field has known since at least 2011, the U.S. Supreme Court's approval of mandatory class action waivers in AT&T v. Concepcion has reshaped the entire field of consumer and employment law.  

The odd thing is that this momentous legal development has flown entirely under the radar of the media.  I am sure it's hard for journalist to make the technicalities of Federal Arbitration Act preemption seem "sexy."  But that's still a pretty lame excuse for totally ignoring one of the most important legal story of the decade.  

It was therefore surprising and interesting to see that the nation's "paper of record" is finally on the class-waiver beat.  In an October 31, 2015 New York Times feature article:  Beware the Fine Print: Arbitration Everywhere, Stacking the Deck of Justice, the authors correctly identify the importance of the issue:

By banning class actions, companies have essentially disabled consumer challenges to practices like predatory lending, wage theft and discrimination, court records show.

“This is among the most profound shifts in our legal history,” William G. Young, a federal judge in Boston who was appointed by President Ronald Reagan, said in an interview. “Ominously, business has a good chance of opting out of the legal system altogether and misbehaving without reproach.”

However, the authors also go a little overboard in blaming the Supreme Court's rulings on a shady cabal of corporate conspirators. 

More than a decade in the making, the move to block class actions was engineered by a Wall Street-led coalition of credit card companies and retailers, according to interviews with coalition members and court records. Strategizing from law offices on Park Avenue and in Washington, members of the group came up with a plan to insulate themselves from the costly lawsuits.

(But like I said, it must be hard to make arbitration "sexy" without a secret conspiracy of evil-doers).

To the extent the class action ban is bad law or bad policy the only people really responsible are the five Supreme Court Justices who created the rule.  Indeed, one interesting revelation is that when Chief Justice Roberts was a private attorney working for Discover Bank, he argued for overturning the California Supreme Court decision that held such class action bans to be unenforceable.  As Chief Justice he was able to implement his own arguments by providing the fifth vote in AT&T v. Conception, which struck down the same California "Discover Bank" rule that he had advocated against as a lawyer.  

When the court ruled 5-4 in favor of AT&T, it largely skipped over Mr. Pincus’s central argument [of states' rights].

“Requiring the availability of classwide arbitration,” Justice Scalia wrote for the majority, “interferes with fundamental attributes of arbitration.” The main purpose of the Federal Arbitration Act, he wrote, “is to ensure the enforcement of arbitration agreements according to their terms.”

It was essentially the same argument Mr. Roberts had made as a lawyer in the Discover case.

 Perhaps the Times' article will start a long-overdue trend of more media attention and political discourse on the subject of class action waivers.  Or, more likely, the issue will hing on the next appointment to the Court which may result in a new 5-vote coalition to re-examine the rule.   

Side Note:  I couldn't help looking up the NYT subscriber agreement to see if it has a class action waiver clause. It doesn't.   But the WSJ has one.  








Mandatory Paid Sick Leave Required Under Healthy Workplaces, Healthy Families Act of 2014

Under the newly signed Healthy Workplaces, Healthy Families Act of 2014, California employers will be required to provide paid sick leave to all employees.  The statute includes a quite detailed scheme with which employers will need to begin complying on July 1, 2015.

Duty to Provide Paid Leave

  • Eligible employees must work 30 days or more during the year, and may begin using accrued sick time after 90 days of employment
  • Paid sick leave accrues at the rate of one hour per every 30 hours worked for hourly-non-exempt employees.  Salaried-exempt employees will generally accrue paid sick time based on an assumed 40-hour workweek.  
  • Employers however may limit the amount of accrued sick leave to 3 days/24 hours per year (or the amount accrued by an employee working 720 or more hours).
  • Accrued but unused sick time carries over from year-to-year, but may be capped at 6 days.
  • Accrued but unused sick time need not be paid out at termination of employment, but must be reinstated if the employee is rehired within 12 months.

Using Paid Sick Leave

  • "An employee may determine how much paid sick leave he or she needs to use"
  • However, the employer may require the leave be used in minimum increments of up to two hours
  • The employee should shall provide "reasonable advance notice" if the need for the leave is forseeable.

Taking Sick Leave as a Protected Status

  •  An employer can take no adverse action against an imployee including "deny[ing] an employee the right to use accrued sick days" for the protected conduct of, inter alia, "using accrued sick days," "attempting to exercise the right to use accrued sick days," or for reporting or opposing alleged violations of the sick leave law.
  • Any adverse employment action within 30 days of reporting or opposing an alleged violation creates "a rebutable presumption of unlawful retaliation.   

Duty to Record and Report Accrued Paid Leave

  • The amount of available paid sick leave or PTO must be included on employee pay statements.
  •  The right to paid sick leave must be included in the employer's Labor Rights' poster and the disclosures of employment terms to new employees required by Labor Code section 2810.5.

Enforcement and Remedies

  • "The Labor Commissioner shall enforce this article." (However, a private enforcement action would also presumably be authorized under PAGA as well).
  • Remedies include reinstatement, back pay, and payment of withheld sick days
  • A penalty under which the dollar amount of withheld sick days shall be the greater of treble damages or $250 per day up to an aggregate amount of $4,000  


Is Your Company A "Large Employer" Subject to "Obamacare" -- Understanding the 50 full-time Equivalent Threshold

It has been well-publicized that, beginning in January 2013, employers with more than 50 full-time employees will be required to comply with "Obamacare" by either providing insurance benefits for their employees or paying a penalty.   There has been much speculation for example that the American economy will begin to resemble France, in which an inordinate number of employers stop hiring at exactly 49 employees to avoid the regulations that kick in at 50 employees. 

But if any employer wishes to follow this "49'er" strategy it needs to understand that Obamacare's definition of a "large employer" subject to coverage is actually based on a special definition of "full-time equivalent" employees.  In essence, the new law aggregates all part-time hours worked and treats 120 monthly part-time hours worked by any number of individuals as equivalent to one full-time employee.  For example, as explained by a report of the Congressional Research Service 

"Full-time employees” are those working 30 or more hours per week.  The number of full-time employees excludes those full-time seasonal employees who work for less than 120 days during the year.  [However] The hours worked by part-time employees (i.e., those working less than 30 hours per week) are included in the calculation of a large employer, on a monthly basis, by taking their total number of monthly hours worked divided by 120.

Employers may also be tempted to avoid application of the statute by obtaining services from independent contractors rather than employees.  In California, however, employer must be very careful to avoid the penalties and liabilities that can result from misclassifying employees as independent contractors.

Another Bad Law from Sacramento - AB 887 and "Gender Expression" Discrimination

Each year California enacts some very bad employment-related laws.  By “bad” I don’t mean that they are necessarily bad policy.  What I mean is that they are so poorly drafted that the policy itself is unintelligible.

One of this year’s “bad” laws is AB 887, which prohibits discrimination based on “a person’s gender-related appearance and behavior whether or not stereotypically associated with the person’s assigned sex at birth.”

What can it possibly mean for one’s appearance or behavior to be “gender related?”  Webster’s defines “gender” as “the behavioral, cultural, or psychological traits typically associated with one sex.”  So the dictionary definition suggests that acting in a manner typically associated with one’s sex is now protected.  Thus, acting like an aggressive macho jerk would be protected if you are a man, or dressing in frilly pink ribbons and batting your eyelashes would be protected if you are a woman.

But then the statute doubles back on itself by providing that “gender-related” also means anything that is “not stereotypically associated” with the person’s sex. Thus “gender-related” is defined as anything associated with a person’s biological sex or anything that is not associated with the person’s biological sex. The statute thus prohibits discrimination based on everything that is either “x,” or “not x.”  It is literally meaningless as drafted.

I know nothing about the Legislative history of this bill.  Perhaps it was intended to prevent discrimination against transsexuals or transvestites.  But if that was the purpose why didn't the Legislature just say so.   

Card Check is Officially Dead, But Has Been Replaced By Bill For Faster Union Elections

As recently as February, President Obama was telling union supporters in emphatic terms that "we will pass the Employee Free Choice Act [a/k/a "card check"]."  According to the New York Times, however, the Democratic majority in the Senate has finally abandoned any attempt to replace secret ballots in union elections with a non-secret "card check" procedure.  Instead, they will supposedly push for speedier elections.

The abandonment of card check was another example of the power of moderate Democrats to constrain their party’s more liberal legislative efforts. Though the Democrats have a 60-40 vote advantage in the Senate, and President Obama supports the measure, several moderate Democrats opposed the card-check provision as undemocratic.

In its place, several Senate and labor officials said, the revised bill would require shorter unionization campaigns and faster elections.

While disappointed with the failure of card check, union leaders argued this would still be an important victory because it would give companies less time to press workers to vote against unionizing.

Having an election on just five or ten days notice will undoubtedly strain the resources of the NLRB -- which must administer and oversee the elections.  And, in any event, the real delays come from post election legal challenges filed by both sides to the campaigning and balloting. 

"Speeding up" elections as consolation for the loss of labor's cherished card check proposal has all the hallmarks of a face-saving way to begin the process of ditching this political hot potato entirely.  Wait and see -- committee members will next demur that their plates are too full with health care and financial issues.  In no time, union election reform will be off the agenda entirely, at least until the next Presidential election cycle.

A Bad Idea Whose Time Has Come? -- Government Mandated Paid Sick Leave Under The Healthy Families Act

Federal legislation to require paid sick leave is currently working its way through Congress.  As currently drafted House and Senate versions of the Healthy Families Act would require seven paid sick days per year for most worker.    

Passage is by no means certain but a number of thorny enforcement issues will clearly arise if the bill becomes law.  For example, how sick do you really have to be to take a day off?  How is this to be verified? What if the employer is skeptical about the need for the day off?

Everyone who has ever tried to leave a sick-sounding message for their boss saying that they can't make it in to work knows that using sick days is an art and not a science.  Employees tend to get sick on Mondays and Fridays, and tend to take periodic "mental health days" when they can enjoy them rather than waiting for a serious injury to strike.  Employers who currently offer paid sick leave know this and are generally willing to accept the cost in order to provide this sort of quasi-vacation time as a fringe benefit. 

Foisting the same requirement on other, more cost-conscious employers will spawn an infinite number of petty disputes over the use of sick days.  These disputes will, in turn, spawn a whole new crop of federal litigation.   

In the long run, employers would presumably adapt to the requirement by treating it as one-weeks' paid vacation with no questions asked and will pay for the benefit by reducing employee base compensation accordingly.  Imposing European-style vacation benefits may arguably be good policy.  But it would certainly be easier to do so directly instead of creating a dispute-generating sick leave law.

The Perfect Storm

Employers in California and across the nation are facing some of the most difficult times in almost 80 years on the employment and labor front. In addition to the bad economy, employers are struggling with the new regulations already put into place by the Obama administration, such as the newly enacted Ledbetter Fair Pay Act. Employers are also concerned about the looming regulations the administration said it supports, primarily the Employee Free Choice Act. Oh, and we cannot forget, the new Secretary of Labor, Hilda Solis, has vowed to ramp up the Department of Labor’s field audits on employers with the help of 150 new investigators it will be hiring under the American Recovery and Reinvestment Act.

What should employers do?

First, it is not a bad time to conduct an audit of pay practices to ensure compliance with the existing regulations. If an employer is going through layoffs, there is a very good likelihood that its pay practices will be under close scrutiny. Second, employers need to understand what their obligations will be if the Employee Free Choice Act is actually enacted. With the decrease of union membership over the last few years, employers need to review what their obligations are when dealing with unionizing efforts.

Obama Tells AFL-CIO He Will Pass The Employee "Free Choice" Act

Although candidate Obama supported the Employee “Free Choice” Act during the campaign, he had yet to declare whether he would support that bill as president and – if so – when he would press for its passage in Congress. President Obama removed all doubt regarding his position this week as he informed AFL-CIO leaders that “we will pass the Employee Free Choice Act” and supporters are expected to introduce that act in the Senate within the next few weeks. As we previously posted, the “Free Choice” Act would make it easier to form unions as employees could simply sign cards signaling their support for union formation rather than actually conduct an election through secret-ballot elections. For more information on President Obama’s decision to push the Employee Free Choice Act this year, click here

Labor Secretary In Trouble?

The Washington Post reported today that the nomination of President Obama’s Labor Secretary, Hilda Solis, may be in trouble. Apparently, Solis’ nomination was to be considered at a Senate hearing today, however, the hearing was canceled once a report surfaced that Solis’ husband recently paid $6,400 to settle tax liens against his business. (The Post reports that some of those liens had been outstanding for as long as 16 years.)

Solis nomination was already delayed by “questions over her role on the board of the pro-labor organization American Rights at Work.” That organization received at least $411,000 for “political activities” from various union organizations in 2007 not counting the approximately $700,000 ARAW also received in generic contributions from unions that year. Several Senators questioned Solis on her role with ARAW as it appears that she was the treasurer of that organization from 2004 to 2007 and some of those funds were likely spent for lobbying Congress during her tenure.

Stay tuned . . .

Obama's First Law Sends A Clear Message To Employers

President Obama signed the Ledbetter bill into law today. The bill overturned the Supreme Court’s ruling in Ledbetter v. Goodyear Tire & Rubber, which held that employees must file a discrimination claim within six months after being discriminated against. Ledbetter argued that the Supreme Court should apply a type of continuing violations doctrine to her situation. Under such a theory, Ledbetter argued that the first discriminatory act (receiving a lower than deserved raise because of her gender) continued with each additional pay raise because pay raises are cumulative over time. Therefore, she alleged that even though she had no evidence that her pay raises during the applicable 180 day time period to file a suit were discriminatory, the original discrimination continued into this time period. The Supreme Court rejected this argument, but now the new law allows employees to file a lawsuit 180 days after receiving their final paycheck, even if the discrimination took place decades earlier.

The new law removes any time limits on pay discrimination claims. A discrimination case can now be brought long after evidence has gone stale or witnesses have died, which was the case with Ms. Ledbetter's former boss. There is no doubt that this will result in more litigation against employers. 

What is the effective date that this law applies?  May 28, 2007.  And yes, that is not a typo - the law is retroactive.  This is the date of the Supreme Court's decision in the case. 

What Does Obama Have Next For Employers?

The Paycheck Fairness Act. This bill, which Obama co-sponsored while in the Senate, provides for stronger remedies under the already existing Equal Pay Act. This Act was coupled with the Ledbetter bill, but Democrats were worried that the two bills together would raise too much of an opposition to their passage. Therefore, the PFA was severed from the Ledbetter bill, and will definitely be placed on the President’s desk in the next couple of months, if not sooner.

The PFA would create a new, more difficult legal standard for employers to meet in showing that their pay structures were not discriminatory. Under the new standard, employers would have to show that wage disparities are job-related, not sex-based, and could only use a defense if they prove that business necessity demands the unequal pay. Under the current Equal Pay Act, employers need only show that the difference in wages results from “any factor other than sex” and the employer does not have to show a business necessity for the difference in pay.

As James Sherk of the Heritage Foundation points out:

Under the PSA, the government will inject itself into areas of business over which it has no experience. For instance: Does experience constitute a "bona fide factor other than sex"? A woman earning less than a man with more experience could argue that her employer should be required to send her to training and then pay them identical wages. She would have a strong case to argue that experience was not a "bona fide" factor because an alternative employment practice would eliminate the disparity.

The paycheck fairness legislation would also require the use comparable worth in creating "voluntary" wage guidelines for industries, and makes class action lawsuits on these grounds easier to bring. The Wall Street Journal notes:

Voluntary or not, these guidelines would become the basis for more litigation against companies that didn't follow them. Meanwhile, the bill strips companies of certain defenses against claims of sex-based pay discrimination. It also makes it easier to bring class actions, and it allows plaintiffs to claim unlimited punitive damages even in cases of unintentional discrimination.


Richard Posner Offers Economic Analysis of Employee Free Choice Act

The impending passage of the "Employee Free Choice Act" has received a great deal of publicity in recent months.  The Act would essentially eliminate secret balloting in union representation elections and allow government arbitrators to impose contract terms when negotiations reach an impasse. 

The conventional wisdom is that the Act will make it far easier for unions to obtain recognition and press for higher wage rights.  Passage is considered a virtual lock because Obama and the new Democratic majority are under irresistible pressure to "payback" unions for their massive support in the '08 election.

To the extent that any political argument could slow the "Free Choice Act" juggernaut it may be that the beginning of a potential economic depression is simply not the right time.  In this regard, Richard Posner, who is both an economist and a sitting Seventh Circuit Justice, draws an interesting historical analogy to the New Deal/Great Depression era in his recent post on The Becker-Posner Blog.  

We especially do not need an uptick in adversarial unionism during what increasingly appears to be a depression. The fact that Democrats in Congress should be pressing for a revival of the union movement at this time indicates a lack of understanding of the economics of depressions. A depression involves a severe reduction in output, resulting in a reduction in inputs, including labor inputs: hence increased unemployment. Adversarial unions increase unemployment, by obtaining wage increases that reduce employers' output by increasing labor costs. A similarly incoherent New Deal program of fighting depression combined sensible measures like going off the gold standard, expanding the money supply, and increasing employment by public-works programs with output-restricting programs like the National Industrial Recovery Act, which encouraged the formation of producer cartels, the Agricultural Adjustment Act, which curtailed agricultural output in order to raise farmers' incomes--and the National Labor Relations Act (the Wagner Act), which encouraged the formation of workers' cartels: adversarial unions such as the United Auto Workers. Some economists believe that such measures prolonged the depression. They certainly did not shorten it.

Incidentally, for those interested in a high-level policy discussion concerning the economic impact of law and legislation The Posner-Becker Blog is first-rate.

Congress Vastly Expands Time to File Discrimination Lawsuits

Since its inception, Title VII has created remedies for any "adverse employment actions" that are  motivated by race, sex or other prohibited reasons.  A string of Supreme Court cases from at least the early 1970's had always held that the statute of limitations for discrimination claims should begin to run from the date of a discriminatory decision was made, regardless of how long the effects of the discrimination might last. 

For example, if a California employee believed that she was denied a promotion because of her sex, she had to file a complaint within 300 days of the promotion denial to challenge the decision.  But no more.  

Under the newly enacted Lilly Ledbetter  Fair Pay Act of 2009, such an employee may file a complaint based on every subsequent paycheck that is allegedly lower due to the prior discrimination.       

For purposes of this section, an unlawful employment practice occurs, with respect to discrimination in compensation in violation of this title, when a discriminatory compensation decision or other practice is adopted, when an individual becomes subject to a discriminatory compensation decision or other practice, or when an individual is affected by application of a discriminatory compensation decision or other practice, including each time wages, benefits, or other compensation is paid, resulting in whole or in part from such a decision or other practice.

The interesting thing about the Act is its inherently retroactive nature.  For example, if an employee was denied a promotion in 1965 her statute of limitations expired approximately 43 years ago.  But if she has been earning less money ever since as a result of that decision, it now appears that a new cause of action has been created for her to sue to based on the lingering present affects of this long-ago discrimination.

The Act amends the statute of limitations rules for Title VII, The Age Discrimination in Employment Act (ADEA), as well as the Americans with Disabilities Act ("ADA").  It is also a safe bet that the California Legislature will soon amend the FEHA to add corresponding language.       

Change We Can Believe In??

Now that the Democratic Party controls Congress and the Presidency, significant changes appear to be coming in the Labor and Employment field. As stated in “The Corner,” (a blog maintained by the National Review), Democrats are expected to introduce several pieces of employment-related legislation in the next few months, including the Civil Rights Act of 2008. As Peter Kirsanow of the National Review writes, that Act would:

(1) Eliminate existing damage caps on lawsuits brought under Title VII and the ADA. Currently, the damage caps are $50,000 for an employer with 15 to 100 employees; $100,000 for an employer with 101 to 200 employees; $200,000 for an employer with 201 to 500 employees; and $500,000 for an employer with 500 employees or more;

(2) Add compensatory and punitive damages to the FLSA (wage and hour) so that an employee can recover those damages in addition to back pay (which can be doubled if a willful violation is found);

(3) Amend the FAA to prohibit clauses requiring arbitration of federal constitutional or statutory claims, unless an employee knowingly and voluntarily consents to this clause after a dispute has arisen or as part of a collective bargaining agreement;

(4) Make it easier for employees to recover expenses (like expert witness fees) even if they aren’t the prevailing party in a lawsuit in all respects;

(5) Give the National Labor Relations Board authority to award backpay to illegal immigrant employees;

(6) Provide individuals with private rights of action to sue federally-funded programs for disparate impact discrimination under Title VI, Title IX, the Rehabilitation Act of 1973, and the Americans with Disabilities Act (thereby undoing the Supreme Court’s decision in Alexander v. Sandoval);

(7) Condition states’ receipts of federal funds on their waiver of sovereign immunity against individual claims for monetary damages under the ADEA, the FLSA, and the Uniformed Services Employment and Reemployment Rights Act. This would reverse U.S. Supreme Court decisions that have barred these lawsuits against state governments; and

(8) Overturn the Supreme Court’s decision in Buckhannon Board & Care Home v. W. Va. Department of Health and Services, that limited the ability of civil rights attorneys to receive attorney’s fees under 42 U.S.C. § 1988.

All of this is in addition, of course, to the Lilly Ledbetter Paycheck Fairness Act and the proposed abolishment of the secret ballots in Union balloting. Stay tuned as this appears to be just the beginning of the significant employment-related changes that the Obama Administration plans to implement in the coming years.

Some Background On New Labor Secretary - Hilda Solis

Hilda Solis has been tapped to be Barack Obama's Secretary of labor.  As reports:

Solis, 51, is a four-term member of Congress with an extensive record on environmental issues. Her legislative accomplishments include spearheading a bill to provide workers with training for “green-collar” employment. Such initiatives are a hallmark of Obama’s plan to address the country’s energy needs and create new jobs.

Obama has promised to press an ambitious labor agenda to strengthen unions, protect jobs and bolster the middle class. The president-elect is set to announce the Solis appointment tomorrow in Chicago, said the officials, who spoke on condition of anonymity. Solis, who grew up in a union household in Los Angeles County, is a favorite of labor groups, including the Service Employees International Union.

Solis has been a blogger for The Huffington Post.  For some insight into Solis' views, it is worth perusing a collection of her posts for The Huffington Post

She also sets out here labor ties in this speech:


New DOL Regs expand FMLA Leave Rights to Include Military Families

The Department of Labor's Wage and Hour Division has just published a Final Rule under the Family and Medical Leave Act. The final rule becomes effective on January 16, 2009, and updates the FMLA regulations to implement new military family leave entitlements enacted under the National Defense Authorization Act for FY 2008

That new law expands the FMLA in two ways for military families. Under the first expansion, spouses, children, parents or nearest blood relatives can take up to 26 weeks of leave under the FMLA to care for a service member who is injured or becomes ill while on active duty. The illness or injury must be severe enough that the service member is unable to perform his or her duties.

Under the second expansion, employees are allowed to take up to 12 weeks of leave when a spouse, child or parent is on active duty in the armed forces or is called up for active duty. Leave is allowed for any “qualifying exigency.”


IRS Offers Whistleblower Informant Awards

As if employers don't have enough to worry about . . . the IRS is now offering money to individuals who tip them off about suspected non-payment of taxes.   According to the IRS website, they are "looking for solid information, not an 'educated guess' or unsupported speculation."  However, if the information is on-point and leads to the recovery of substantial penalties, the snitch (er . . . whistleblower) could be in line for a substantial recovery.  As the IRS website explains: 

The law provides for two types of awards. If the taxes, penalties, interest and other amounts in dispute exceed $2 million, and a few other qualifications are met, the IRS will pay 15 percent to 30 percent of the amount collected. If the case deals with an individual, his or her annual gross income must be more than $200,000. If the whistleblower disagrees with the outcome of the claim, he or she can appeal to the Tax Court. These rules are found at Internal Revenue Code IRC Section 7623(b) - Whistleblower Rules.

The IRS also has an award program for other whistleblowers - generally those who do not meet the dollar thresholds of $2 million in dispute or cases involving individual taxpayers with gross income of less that $200,000. The awards through this program are less, with a maximum award of 15 percent up to $10 million. In addition, the awards are discretionary and the informant cannot dispute the outcome of the claim in Tax Court. The rules for these cases are found at Internal Revenue Code IRC Section 7623(a) - Informant Claims Program, and some of the rules are different from those that apply to cases involving more than $2 million.

If you decide to submit information and seek an award for doing so, use IRS Form 211. The same form is used for both award programs.


Employment Related Bills Signed (and Vetoed) by Governor

It is a bit anticlimactic, but the Governor vetoed many more employment related bills than he approved recently. The following is a list of employment and litigation related bills that were signed by the Governor:

AB 2075 Wages: execution of release of claim or right.
Modifies Labor Code section 205.6 to make it a misdemeanor for an employer to require an employee to sign a release that the employee has been paid for all hours worked, when the employer knows the hours listed are not correct. The law takes effect on January 1, 2009. We previously posted about this bill here.

AB 2619 Civil actions and proceedings.
This bill corrects an erroneous cross-reference in the regulations governing discovery in civil actions.

AB 2193 Civil discovery: out-of-state proceedings.
The bill establishes the Interstate and International Depositions and Discovery Act that sets forth discovery rules for obtaining discovery in California during out-of-state litigation. The law takes effect on January 1, 2010.

SB 1173 Unemployment insurance: employers: motion picture industry.
This bill extends the time period within which a motion picture payroll services company that quits business must notify the motion picture production companies and allied motion picture services of its intent to quit business to 45 days (from 30 days previously).  It also allows a motion picture payroll services company that has elected to be treated as an employer to apply to the director to extend an existing voluntary plan for the payment of disability benefits to motion picture production workers of the company's affiliated entities.

AB 10 Employment: overtime compensation.  Existing law exempts a professional employee in the computer software field from overtime compensation requirements if the employee is primarily engaged in work that is intellectual or creative, the employee's hourly rate of pay is not less than $36, and the employee meets other
requirements.  This bill modifies Labor Code section 515.5 and provides that the exemption applies to an employee who is paid on an hourly basis at an hourly rate of not less than $36 and, if an employee is paid on a salaried basis, the employee earns an annual salary of not less than $75,000 for full-time employment, which is paid at least once a month and in a monthly amount of not less than $6,250. The bill makes related changes, and takes effect immediately as an urgency statute.

Also interesting are the bills that were passed by the legislature, but vetoed by the Governor. There is a good chance that these vetoed bills, or something very similar, will make their way to the Governor’s desk again.  Here is a list of employment related bills that were vetoed:

AB 419 Workers' compensation: public employees: leaves of absence.
Expanded the group of public employees entitled to a paid leave of absence at full salary for up to one year.

AB 1107 Unemployment compensation benefits: drought-related unemployment.
Expanded the group of employees affected by the June 2008 “drought” that would be considered “unemployed” in order to receive unemployment insurance.

AB 1656 Personal information: security breaches.
Imposed stricter requirements on any “agency, person, or business that maintains computerized data that includes personal information” for any breach of security of the personal data.

AB 2369 Apprenticeship programs: prevailing wage enforcement.
Proposed to change the enforcement of the prevailing wage laws for certain public works projects.

AB 2386 Employment: Agricultural labor.
The bill would have required the Agricultural Labor Relations Board to include information related to the status of the Agricultural Employee Relief Fund in its yearly report to the Legislature and the Governor. Also would have provided two methods by which agricultural employees could select a representative for collective bargaining purposes, and would have authorized the board to impose a civil penalty of up to $20,000 for each violation if the board finds that an employer has engaged in specified unfair labor practices.

AB 2918 Employment: usage of consumer credit reports.
The proposed bill would have prohibited the user of a consumer credit report from obtaining a consumer credit report for employment purposes unless the information was: (1) substantially job related, or (2) required by law to be disclosed to or obtained by the user of the report.

AB 3062 Employment: termination: garnishment of wages.
This bill would have prohibited an employer from terminating an employee because garnishment of the employee's wages has been threatened or the employee's wages have been subjected to garnishment.

AB 3063 Employment: criminal history.
Proposed bill would have prohibited an employer from asking an applicant for employment to disclose, or using in an employment-related decision, information concerning a criminal conviction when the record of which has been judicially ordered sealed, expunged, or statutorily eradicated. The bill also proposed to protect information concerning a misdemeanor conviction which probation has been successfully completed or otherwise discharged, and the case has been judicially dismissed.

SB 1113 Attorney's fee and costs.
The Legislative Counsel’s Digest for SB 1113 explains the proposed purpose as:
Existing law authorizes a court, upon motion, to award attorney's fees to a successful party against one or more opposing parties in any action that has resulted in the enforcement of an important right affecting the public interest, if certain conditions are met. This bill would authorize the court to award attorney's fees and costs, including expert witness fees, pursuant to this provision.

SB 1661 Unemployment compensation: family leave: good cause.
Proposed an increased the pool of potential recipients of payments from the Unemployment Fund.

AB 926 Civil discovery.
Proposed to amend the Civil Discovery Act to place more regulations on the production of electronically stored data, such as how parties are to produce such data in litigation, and when sanctions would be appropriate if a party no longer possessed such data.

AB 1666 Meal and rest periods: stage assistants.
The bill would have extended the protections afforded to employees covered by the IWC Wage Order to stage assistants who are employed by a city, county, or special district, to the extent not in conflict with the provisions of a memorandum of understanding reached between an employer and a recognized employee organization.

Oh, one last bill was vetoed by the Governor:  AB 1519 Human remains: commercial display. Only in California…. 

To view all of the bills vetoed and signed by the Governor, visit his website here

New California Law Further Restricts Employee Release Agreements

Governor Schwarzenegger recently signed a bill amending Labor Code Section 206.5, which restricts the enforceability of agreements purporting to release wage claims. 

Labor Code section 206.5 currently provides that an employee cannot be required to sign an agreement releasing the employer from liability for wages "unless payment of such wages has been made."  The new bill, AB 2075, amends the statute to clarify that the prohibitions on the "execution of a release” also extend to any requirement that the employee "execute a statement of hours he or she worked during a pay period which the employer knows to be false.”

In response to wage and hour class actions a growing number of employers have implemented policies requiring employees to sign periodic statements certifying that their wage statements are accurate.  The new statute, which takes effect January 1, 2009, appears to be aimed at preventing employers from arguing that such certifications are binding on the employee.    


ADA Amendments Act (ADAA) Signed Into Law -- Federal Disability Protections Broadened

It didn't get much press this last week -- what with the economy collapsing in the midst of a presidential election -- but on Thursday President Bush signed the ADA Amendments Act (ADAA) into law.  The legislation will take effect on January 1, 2009 and will significantly broaden the federal definition of the "disabilities" that require accommodation under the ADA.

The new legislation preserves the traditional verbal formula that a covered disability is one which "substantially limits one or more major life activities."  However, Congress has now expressly changed the meaning of these words to expand the number of employees who will be covered by the ADA.  For example:

  • The term "disability" shall henceforth be interpreted broadly in favor of finding coverage under the Act.
  • A covered disability now includes any condition that "materially restricts" (rather than "substantially limits") a major life activity.  There is no telling what this new term is intended to means except that it is intended to be broader than the prior definition. 
  • An employees is now covered under the ADA whether or not he has a covered disability, so long as the employer "perceives" that he has an "impairment" that has an expected duration of more than six months.  
  • The employee's condition shall now be judged in its unmitigated state -- i.e., without regard to the effects of any corrective measures such as medications that would control the symptoms.

The main purpose of the legislation is to overturn a number of pro-employer Supreme Court decisions, including Sutton v. United Airlines, Inc., 527 U.S. 471 (1999), and Toyota Motor Manufacturing, Kentucky, Inc. v. Williams, 534 U.S. 184 (2002).  

Interestingly, the effect of these amendments will be to essentially conform the ADA to the already broadened disability protections of the California Fair Employment and Housing Act (FEHA). 

California Human Resources Networking Group - LinkedIn

I recently founded the California Human Resources Networking Group in LinkedIn. I’ve found that LinkedIn is becoming more and more popular with human resource professionals as well as legal professionals, so I created the group in order to promote HR related discussions specific to California.

To join, visit the California Human Resources Networking Group page in LinkedIn, or drop me an email and I will approve your request. There are no particular qualifications required to join - only a need for a better understanding of California's employment laws.

The group is devoted to discussing questions about human resource and other employment law issues that arise in California.

If you know of anyone else that would find the group beneficial, please send them to the group.

To get things started, I will be conducting a free webinar for the group in early October on how to use the Internet to conduct background checks on applicants and/or employees without creating liability for your company. More information to come.

Outdated IRS Rules on Employee Cell Phone Usage Likely To Change

A recent LA Times Article reports that the current IRS rule for expensing employer-provided cell phones is likely to be changing soon. The current rule permits employers to treat employee cell phone reimbursement as a deductible business expense only if the employee has kept a detailed log of every call and the reason for the call.

A bi-partisan bill to dispense with this log-keeping requirement (which is almost universally ignored in practice anyway), is co-sponsored by Reps. Sam Johnson (R-Texas) and Earl Pomeroy (D-N.D.), and has already passed the House.

The cellphone tax law was set "in 1989 when cellphones were huge and when it cost a lot of money to make a phone call," Johnson said. "Nowadays they're a dime a dozen and the cost is way down. If you don't log all your telephone calls, you're going to have some IRS weenie after you. That's why we're trying to get the law changed -- because it just doesn't make any sense anymore."

A change appears likely. When pressed by Johnson at a hearing this year, Treasury Secretary Henry M. Paulson said that updating the rules sounded "like the right idea to me." And the IRS' Advisory Committee on Tax Exempt and Government Entities, calling the rules "burdensome for any employer," recommended last month that the agency loosen reporting requirements for employers and that Congress change the law.

According to the Times article, "Nationwide, about 5.5 million people have cellphone service paid for directly by their employers -- and they are a group that makes up 2.4% of all wireless subscribers." Given the wireless industry's interest in preserving and growing this market, we are willing to bet that the the new legislation is a lock in the coming year.

Schwarzenegger and Sacramento Republicans Look at Reforming Meal Period Rules

The California Legislature has once again missed its budget deadline. This is more of an annual tradition than news. But this year the deficit is particularly large and the resulting budget fight will therefore be especially brutal. For example, state Republicans want to put everything on the table, including non-budget items such as a reform of meal break rules. According to the LA Times, “GOP lawmakers hope to use their leverage over the state budget, which cannot pass without some of their votes, to roll back landmark policies implemented by Democrats,” such as “rules dictating when employers must provide lunch breaks for workers.”

But don’t bet the ranch on this particular reform. Democrats have a prohibitive lock on the Legislature and meal breaks have become a high-profile issue backed by unions, consumer attorneys and other key constituent groups.

Legislative Update: Senate Passes Genetic Information Nondiscrimination Act

The United States Senate voted 95-0 to pass the Genetic Information Nondiscrimination Act yesterday. That bill, which President Bush is expected to sign, would bar insurers from asking or using genetic information to make a decision about coverage or to set premiums. Under the bill, insurers would be prohibited from raising premiums for a group because one or more members have genes that would predispose them to an illness. That provision is important for small employers that offer health coverage because a sudden increase in rates can lead to the cancelation of coverage altogether.

Equally significant for employers is the fact that the bill prohibits employers, unions and employment agencies from requesting or using genetic information for hiring, promotions, assignments or firing. According to Sharon Terry, president of the Genetic Alliance, “genetics will be protected just like race, religion and gender.” Senator Snow (R-Maine) agreed stating that “we are on the threshold of a new era, because for the first time we act to prevent discrimination before it takes hold. We are taking a stand that, as we look to the future, genetic discrimination will not be allowed to flourish, to take root.” For more information on this bill click here.

"Unequal Pay" Bill Blocked In U.S. Senate

The Senate recently failed to break a Republican-led filibuster currently blocking the Fair Pay Restoration Act. The Fair Pay Act would make it easier for people to sue over pay discrimination and is in response to the 2007 Supreme Court ruling that limited such cases. In that case, the Supreme Court ruled that unequal pay claims must be filed within 180 days of the first discriminatory paycheck instead of when the employee discovers the discrepancy. The deadline is specified in Equal Opportunity Commission guidelines and it "protects employers from the burden of defending claims arising from employment decisions long past" Justice Samuel Alito wrote for the majority in the 5-4 decision.

The bill currently under consideration would have "reset the clock" with every paycheck. In support of this provision, advocates argue that each paycheck is a discriminatory act while opponents contend that the provision was unworkable. For example, the bill -- as currently drafted -- would arguably allow retirees drawing pensions to sue their old companies over allegations of discrimination that occurred several years ago.

Opponents further assert that allowing employees to assert claims going that far back will lead to evidentiary problems because evidence supporting decade-old claims will likely be difficult to obtain.

Although the bill is stalled now, supporters promise to continue their efforts even though President Bush is likely to veto the bill should it pass both the House and Senate. For more information on why the supporters of the Fair Pay Act believe it is necessary, click here. Click here for additional reasons opponents believe the bill is unnecessary.

Bill Requiring Paid Sick Days For Employees Takes One Step Closer To Becoming Law

The Assembly Labor and Employment Committee passed the Healthy Families, Healthy Workplaces Act today by a vote of 6-2.

The bill, introduced by Assemblywoman Fiona Ma (D-San Francisco) in February, AB 2716, would allow workers to earn paid sick days that can be used to recover from illness, care for a sick family member, or recover from domestic violence or sexual assault.

The next step for the bill is the Assembly Judiciary Committee on Tuesday, April 15.  If passed by the legislature and signed into law, California would be the first state in the nation to require employers to provide paid sick days.  Click here for a prior post discussing the implications of AB 2716 on California employers

California Legislature Proposes Paid Sick Leave Law To Cover Every Employee In California

Assemblywoman Fiona Ma (D-San Francisco) introduced bill AB 2716 last week.  If passed, would provide paid sick leave to any employee who works for seven or more days each year - the only such law in the United States.  Employees would accrue sick time at the rate of one hour for every 30 hours worked.  Sick time would carry over from year to year. 

There are no exemptions for small businesses, which are defined in the bill as an employer who employs 10 or fewer employees during 20 or more calendar workweeks in the current or preceding calendar year.  So this means if you have one employee - a housekeeper for example - you would need to provide sick leave. 

The bill proposes that an employee would be entitled to use accrued sick time beginning on the 90th calendar day of employment.   Also, medium-to-large employers could limit annual paid sick days to nine days and small employers to five days. 

The sick leave would be available for use to care for a sick family member or to recover from domestic violence or sexual assault. Employers violating the law could face fines of up to $250 per incident.

What is the penalty for violations?  The bill proposes:
 [T]he payment of an additional sum as liquidated damages in the amount of fifty dollars ($50) to each employee or person whose rights under this article were violated for each day or portion thereof that the violation occurred or continued, plus, if the employer has unlawfully withheld paid sick leave to an employee, the dollar amount of paid sick leave withheld from the employee multiplied by three; or two hundred fifty dollars ($250), whichever amount is greater; and reinstatement in employment or injunctive relief; and further shall be awarded reasonable attorney's fees and costs.
So let's assume you employ 100 people.  For whatever reason there is a mistake and for 30 days it goes unnoticed and your company does not provide accrue sick leave as required under the bill.  This means you are on the hook for $150,000 ($50 x 100 employees x 30 days) and if you are deemed to have "unlawfully withheld" paid sick leave you owe another minimum $25,000 ($250 x 100 employees) for a grand total of $175,000.  Don't forget you would also be required to pay the plaintiff's attorney's fees and costs for bringing the lawsuit too. 

I am often asked, "What is the biggest area of liability facing California employers?"  The answer has easily been meal and rest and related wage and hour class actions.  However, if this bill becomes law, plaintiff's lawyers will have their next lawsuit of choice. 

2008 California Law Update and Supreme Court Cases To Watch

Below is a brief summary of some of the more relevant employment laws taking effect in 2008 and a summary of the Supreme Court cases that will have great ramifications for employers in 2008.

Minimum Wage Increase

As written about previously here, the California minimum wage will be increased to $8 per hour starting January 1, 2008. Employers will also have to re-examine the pay rates for their exempt employees. One of the items California law requires for an employee to qualify as exempt (which means they are not entitled to overtime) the employee must earn at least two times minimum wage, base on a forty hour workweek. Therefore, the increase in the minimum wage means that the minimum salary for exempt employees will increase from to $31,200 in 2007 to $33,280 as of January 1, 2008.

In addition, employers should also review their pay rates for commissioned inside sales employees. For an employee to qualify as a commissioned inside sales employees who are exempt from overtime under Wage Order Nos. 4 and 7, the employee must earn at least 1.5 times the minimum wage for all hours of work to maintain the exemption. The employee must meet other requirements to qualify for this exemption, but the salary level is a bright-line rule that must be met in order for the exemption to apply.

IRS Mileage Rate Increase and Expense Reimbursement
The IRS announced the standard business mileage rate for 2008 is 50.5 cents per mile. California's DLSE has maintained that employers are required to reimburse employees for business miles driven at the IRS mileage rate in order to comply with California Labor Code section 2802. However, this year, the California Supreme Court ruled in Gattuso v. Harte-Hanks (as discussed here) that the reimbursement rate does not have to be the IRS mileage rate but can be negotiated by parties as long as it fully reimburses the employee. The Gattuso Court stated:
We agree that, as with other terms and conditions of employment, a mileage rate for automobile expense reimbursement may be a subject of negotiation and agreement between employer and employee. Under section 2804, however, any agreement made by the employee is null and void insofar as it waives the employee’s rights to full expense reimbursement under section 2802.

California Computer Professionals Hourly Rate Decreased
California Labor Code section 515.5 provides that computer programmers who perform specific computer-related duties are exempt from the overtime requirements in Labor Code section 510. In addition to meeting a duties test, computer professionals must earn a statutorily specified minimum pay rate to be considered exempt. The Division of Labor Statistics and Research revised the hourly rate downward for 2008 to $36.00 per hour or $74,880.00 per year.

Employee Social Security Numbers
California Labor Code section 226(a) was amended to provide greater security against identify theft. Beginning January 1, 2008, employers may ONLY list the employee’s last four digits of an employee’s Social Security Number (or alternatively use the employee’s identification number) on the wage statements provided to employees.

Unpaid Leave for Military Spouses
Governor Schwarzenegger signed California Assembly Bill (AB) 392 into law. The bill creates a new leave of absence right for spouses of military personnel while those personnel are on a leave of absence from deployment.
Specifically, the military spouse law provides that:
  • Employers with 25 or more employees in the United States to allow eligible employees to take up to 10-days off from work, on an unpaid basis, when his/her spouse is on leave from deployment during a period of military conflict;
  • Eligible employees are defined as employees who work at least an average of 20 hours per week and whose spouse is a member of the United States Armed Forces, National Guard, or Army Reserve on active duty in an area of military conflict;
  • Employees must provide notice to the employer within 2 business days of receiving official notice that his/her spouse will be on a leave from deployment.
It is important to note that it does not appear there are any circumstances under which an employer would be permitted to deny an employee's leave request. Accordingly, employers should be extremely careful in dealing with requests for leave under this new law.

Hands Free Devices Required For Cell Phones While Driving
Bill SB 1613 makes it illegal as of  July 1, 2008, to drive a motor vehicle while using a wireless telephone, unless that telephone is designed and configured to allow hands-free listening and talking operation, and is used in that manner while driving. This offense would be punishable by a base fine of $20 for a first offense and $50 for each subsequent offense.

Supreme Court Cases to Watch in 2008:

This case presents the following issues: (1) Does a worker's assignment to the worker's union of a cause of action for meal and rest period violations carry with it the worker's right to sue in a representative capacity under the Labor Code Private Attorneys General Act of 2004 (Lab. Code, sec. 2698 et seq.) or the Unfair Competition Law (Bus. & Prof. Code, sec. 17200 et seq.)? (2) Does Business and Professions Code section 17203, as amended by Proposition 64, which provides that representative claims may be brought only if the injured claimant "complies with Section 382 of the Code of Civil Procedure," require that private representative claims meet the procedural requirements applicable to class action lawsuits?

This case presents the following issues: (1) Is a non-competition agreement between an employer and an employee that prohibits the employee from performing services for former clients invalid under Business and Professions Code section 16600, unless it falls within the statutory or judicially-created trade secrets exceptions to the statute? (2) Does a contract provision releasing "any and all" claims the employee might have against the employer encompass non-waivable statutory protections, such as the employee indemnity protection of Labor Code section 2802?

Case Status: review granted/brief due Issues: Petition for review after the Court of Appeal granted and denied petitions for peremptory writ of mandate. This case presents the following issue: Do claims adjusters employed by insurance companies fall within the administrative exemption (Cal. Code Regs, tit. 8, section 11040) to the requirement that employees are entitled to overtime compensation?

Case Status: submitted/opinion due Issues: Petition for review after the Court of Appeal reversed a judgment notwithstanding the verdict and an order granting a new trial in a civil action.
The court limited review to the following issue: May an individual be held personally liable for retaliation under the California Fair Employment and Housing Act (Gov. Code section 12900 et seq.)?

San Francisco's Health Care Mandate Given Green Light By Appellate Court

The Golden Gate Restaurant Association (GGRA) challenged certain provisions of the newly enacted San Francisco Health Care Security Ordinance, contending that they are preempted by the federal Employee Retirement Income Security Act of 1974 (“ERISA”). Part of the Ordinance was scheduled to go into effect on January 1, 2008. On December 26, 2007, the district court handed the GGRA a win by granting summary judgment in favor for the GGRA and placed a hold on the implementation and enforcement of the disputed provisions of the Ordinance.

However, Defendant City and County of San Francisco and Intervernor labor unions quickly appealed the judgment of the district court. They asked the appellate court to stay the judgment of the district court, thereby allowing the Ordinance to go into effect pending a final decision on the merits of the appeal. On January 9, 2008, in handing San Francisco’s businesses a serious blow, the appellate court agreed with the City and the labor unions and granted a stay of the district court’s judgment, therefore allowing the Ordinance to go into effect. The appellate court’s decision can be read here.

The court stated, “It is clear that otherwise avoidable human suffering, illness, and possibly death will result if a stay is denied.” In making this ruling, the court had to address whether the Golden Gate Restaurant Association would likely prevail on the merits of their case, and found that the city’s arguments in favor of implementing the Ordinate have a “strong likelihood of success on the merits.”

In conclusion, the court stated:
There may be better ways to provide health care than to require private employers to foot the bill. But our task is a narrow one, and it is beyond our province to evaluate the wisdom of the Ordinance now before us. We are asked only whether we should stay the judgment of the district court pending resolution of the appeal on the merits. We conclude that the City and Intervenors have a probability, even a strong likelihood, of success in their argument that the Ordinance is not preempted by ERISA. We further conclude that the balance of hardships tips sharply in favor of the City and the Intervenors. Finally, we conclude that the public interest will be served by a stay. We therefore order that the district court’s judgment be stayed pending resolution of the appeal.
Therefore, employers in San Francisco should ensure that they are taking steps to comply with the new law.   Employers should visit the website established by the City to learn about the requirements of the Ordinance: Healthy San Francisco

Also, the text of the Ordinance can be read here.

English-Only Amendment Blocked By US House

The House of Representatives recently passed a $516 billion omnibus spending measure that addresses a number of issues, including the funding of various Cabinet departments and the funding of U.S. troops in Afghanistan. In passing the omnibus bill – which President Bush is expected to eventually sign – Democratic lawmakers were successful in blocking an amendment that would have barred the government from suing employers who try to enforce English only workplace rules.

Republican lawmakers proposed the amendment, in response to the EEOC’s recent decision to sue the Salvation Army for firing two Hispanic after they did not learn English within one-year. The EEOC’s suit claims that the terminated employees suffered “emotional pain, humiliation, and embarrassment” as a result of the Salvation Army’s English only policy.

In addition, a provision that would have barred the Labor Department from enforcing new financial reporting requirements on various unions was also jettisoned from the bill. Union members are currently required to fill out a two page form certifying their personal financial dealings with any company represented by their union. Under the new rules being promulgated by the Bush Administration, employees would be required to submit expanded information on their finances. Unions claim the new rules are invasive, while the Labor Department says they will “enhance union integrity” by strengthening conflict-of-interest reporting. Click here for a summary of omnibus bill.

Stay tuned for new developments as the spending bill works its way through the Senate and eventually to President Bush’s desk.

IRS Mileage Rate Set For 2008

The IRS announced the standard business mileage rate for 2008 is 50.5 cents per mile.  The IRS posted the following on its website yesterday:
The Internal Revenue Service today issued the 2008 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

Beginning Jan. 1, 2008, the standard mileage rates for the use of a car (including vans, pickups or panel trucks) will be:

* 50.5 cents per mile for business miles driven;
* 19 cents per mile driven for medical or moving purposes; and
* 14 cents per mile driven in service of charitable organizations.

The new rate for business miles compares to a rate of 48.5 cents per mile for 2007. The new rate for medical and moving purposes compares to 20 cents in 2007. The rate for miles driven in service of charitable organizations has remained the same.
California's DLSE has maintained that employers are required to reimburse employees for business miles driven at the IRS mileage rate in order to comply with California Labor Code section 2802.  However, this year, the California Supreme Court ruled in Gattuso v. Harte-Hanks (as discussed here) that the reimbursement rate does not have the be the IRS mileage rate but can be negotiated by parties as long as it fully reimburses the employee. The Court stated:
We agree that, as with other terms and conditions of employment, a mileage rate for automobile expense reimbursement may be a subject of negotiation and agreement between employer and employee. Under section 2804, however, any agreement made by the employee is null and void insofar as it waives the employee’s rights to full expense reimbursement under section 2802.
UPDATE:  On June 23, 2008, the IRS announced that the mileage rate would increase effective July 1, 2008 to 58.5 cents a mile for all business miles driven.  Click here to read updated post. 

No "No-Match" Letters For The Rest Of The Year

The Department of Homeland Security (DHS) announced last Friday that it will not be issuing "no-match" letters for the remainder of the year.  The reasons for staying the process of sending out the letters is due to the recent court decision blocking new regulations proposed by the DHS.  The proposed regulations would have required employers to terminate employees who could not resolve a Social Security number mismatch within 90 days. 

We previously posted about the proposed regulations here

UPDATE: House Passes Employment Non-Discrimination Act

The House of Representatives passed the Employment Non-Discrimination Act (ENDA) yesterday by a vote of 235 to 184. As stated in a previous post here, ENDA would ban employment discrimination based on an individual's sexual orientation although the version of the Bill passed by the House, H.R. 3685, does not include protections for transgendered individuals. The lead sponsor of ENDA, Representative Barney Frank (D-Mass), had originally introduced a Bill containing language explicitly including protections for transgendered individuals, however, later abandoned it due to bi-partisan opposition.

Below is the speech Rep. Frank gave in support of ENDA from the House floor yesterday:

Senator Edward Kennedy (D-Mass) announced he is planning to introduce ENDA in the Senate in the near future. Senator Kennedy has not indicated whether his version of ENDA will include the gender-identity provisions that causes so much controversy in the House.

Regardless of which version is introduced in the Senate, ENDA will almost certainly not become law as President Bush has indicated that he will veto either version of ENDA.

Even in the unlikely event that ENDA would become law, it would have little impact on California employers as discrimination based on an employee's sexual orientation is already prohibited. Click here for a DFEH publication briefly describing an employer's obligations under California law.

California Enacts Military Spouse Leave Law (Effective Immediately)

Governor Schwarzenegger recently signed California Assembly Bill (AB) 392 into law. That bill creates a new leave of absence right for spouses of military personnel while those personnel are on a leave of absence from deployment.

Specifically, the military spouse law provides that:
  • Employers with 25 or more employees in the United States to allow eligible employees to take up to 10-days off from work, on an unpaid basis, when his/her spouse is on leave from deployment during a period of military conflict;
  • Eligible employees are defined as employees who work at least an average of 20 hours per week and whose spouse is a member of the United States Armed Forces, National Guard, or Army Reserve on active duty in an area of military conflict;
  • Employees must provide notice to the employer within 2 business days of receiving official notice that his/her spouse will be on a leave from deployment.
It is important to note that it does not appear there are any circumstances under which an employer would be permitted to deny an employee's leave request. Accordingly, employers should be extremely careful in dealing with requests for leave under this new law.

Three Family Leave Bills Vetoed By Governor

California employers should breath a sigh of relief as Governor Schwarzenegger vetoed three bills that provided for expanded leave rights under California law. 

Two of the bills vetoed by the Governor - AB537 and SB727 - proposed to expanded both the unpaid and paid leave programs to include care for a sibling, mother- or father-in-law, grandparent or grandchild.

The third bill vetoed, SB836 (previously discussed here), would have prohibited employment discrimination on the basis of family responsibilities such as caring for a sick relative.

Schwarzenegger said the bills would have increased confusion about leave requirements, confusion that already results in many lawsuits:
California has the strongest employment leave and workplace protection laws in the country...While these laws have been enacted with the best of intentions, they have also caused much confusion.... Instead of expanding the confusing network of laws that presently exist, employers and employees should be working together to eliminate confusion and create a system of workplace laws that ... offers both employers and employees flexibility to meet their respective needs.

Battle Over "Employment Non-Discrimination Act" Heating Up In Congress

In April 2007, the "Employment Non-Discrimination Act" ("ENDA") was introduced in the House of Representatives. The ENDA will, among other things:
  • extend federal employment discrimination protections currently provided based on race, religion, sex, national origin, age, and disability to sexual orientation and gender identity. (These terms are defined in the bill to include gay men, lesbians, bi-sexuals, and transgender persons);
  • prohibit public and private employers, employment agencies and labor unions from using an individual's sexual orientation or gender identity as the basis for employment decisions (i.e., hiring, firing, promotion, or compensation); and
  • would apply to Congress and the federal government, as well as to employees of state and local governments.
Although the ENDA does apply to businesses with 15 or fewer employees, it does not apply retroactively. In addition, it does not apply to uniformed members of the armed forces nor does it allow for quotas based on sexual orientation or gender identity.

Click here to read more on the ENDA from the proponents point of view, and here for the position of various groups opposing the bill.

Apparently, Congressional Democrats are "strongly considering" dropping anti-discrimination protections for transgendered persons from the bill due to stronger than expected opposition to that provision. Congressional observers claim that even if ENDA passes the House, it likely faces a filibuster in the Senate and it is unclear whether supporters have the required 60-votes to pass the bill.

While this bill is making a lot of news on the national level, it does not appear that California employers will be greatly effected if the bill is passed, as sexual orientation is already a protected category under California law.  See California Government Code § 12940 (defining sexual orientation as “heterosexuality, homosexuality, and bisexuality”). 

Bill Making "Familial Status" Protected Category Passed by CA Legislature and Given to Governor

SB 836, introduced by Senator Kuehl, would add “familial status” to the list of protected categories in the employment context. It has passed the California legislature, and now awaits the Governor’s signature or veto. 

The bill states:

In connection with unlawful employment practices, the meaning of "familial status" includes being an individual who is or who will be caring for or supporting a family member.
   For purposes of this section:
(A) "Caring for or supporting" means any of the following:
   (i) Providing supervision or transportation.
   (ii) Providing psychological or emotional comfort and support.
   (iii) Addressing medical, educational, nutritional, hygienic, or safety needs.
   (iv) Attending to an illness, injury, or mental or physical disability.
(B) "Family member" means any of the following:
   (i) A child as defined in Section 3302 of the Unemployment Insurance Code.
   (ii) A parent as defined in Section 3302 of the Unemployment Insurance Code.
   (iii) A spouse, which means the partner to a lawful marriage.
   (iv) A domestic partner as defined in Section 297 of the Family Code.
   (v) A parent-in-law which means the parent of a spouse or domestic partner.
   (vi) A sibling as defined in paragraph (c) of Section 362.1 of the Welfare and Institutions Code.
   (vii) A grandparent.
   (viii) A grandchild.

Surprisingly, there has not been much attention paid to this bill, which is the first of its type in the country. We have previously posted about AB 836 here and here.  I am sure the Governor would be interested in employers' perspectives about this bill.  He can be reached via email through his website here. 

Bills In California State Legislature Expanding Employee Leave Rights

Assemblymember Sandré Swanson posted an article recently on the California Progress Report discussing a few new bills currently being considered by the state legislature.  These bills should be of particular importance to California employers, as Assemblymember Swanson notes:

My bill, AB 537, will directly impact the ability of family members to care for their loved ones. This bill will add seriously ill "grandparents," "grandchildren," "parents-in-law," "siblings," and “domestic partners” to the list of family members that an employee can take job-protected, unpaid leave to care for under the California Family Rights Act (CFRA). It will also ensure that employees can take leave to care for their seriously ill independent, adult children.
He also mentions related bills making their way through the California legislature:
I am also pleased to be supporting two of Senator Sheila Kuehl’s (D – Santa Monica) bills.

The first bill, SB 727, expands paid family leave to cover the same family ties as my bill, AB 537. SB 836 expands the Fair Employment and Housing Act (FEHA) to prohibit discrimination against employees who care for their families by adding “familial status” to the list of prohibited bases for employment discrimination. SB 836 will especially protect mothers from being discriminated against at work. For example, research shows that mothers are often paid less and are less likely to be hired than non-mothers with the same qualifications. The bill also protects fathers and male employees who are often penalized at work when they seek to take an active role in caring for their children or other family members. In addition, SB 836 recognizes the diverse families and family care giving arrangements of California’s workforce. Studies show that families of color are most likely to be caring for elder relatives.
You may contact Assemblymember Swanson via email by clicking here and Senator Sheila Kuehl via email by clicking here

House Democrats Consider Passing Bill to Overturn Ledbetter v. Goodyear Tire

House Democrats are seriously considering legislation to overturn the recent Supreme Court decision in Ledbetter v. Goodyear Tire & RubberForbes reports:
House Majority Leader Steny Hoyer, D-Md., and House Education and Labor Chairman George Miller, D-Calif., said House Democrats would pass legislation to ensure what happened to Ledbetter wouldn't happen to anyone else.
"A key provision of the legislation will make it clear that discrimination occurs not just when the decision to discriminate is made, but also when someone becomes subject to that discriminatory decision, and when they are affected by that discriminatory decision, including each time they are issued a discriminatory paycheck," Miller said.
We will continually update the progress of such a bill once/if it is introduced.

CA State Senate Approves Bill Giving "Familial Status" Protection From Discrimination

Yesterday, the California state Senate passed a bill that would make it illegal for employers to deny promotions or raises to employees who miss time from work due to obligations with children, sick spouses, and aging parents. The bill (SB 836 sponsored by Sen. Sheila Kuehl (D-Santa Monica)) passed by a 25-14 vote along party lines and will now go onto the Assembly. If the bill passes the Assembly and is signed into law, it would be the first law of its type in the nation to make “familial status” a protected category under the law.

DOL On-Line Self Assessment For Restaurateurs Employing Minors

The U. S. Department of Labor’s Wage and Hour Division website provides a self assessment tool for restaurants that employ minors. The assessment covers common violations of the Fair Labor Standards Act (FLSA ). Restaurant owners should note that this assessment does not cover California state law items. The assessment covers items that the DOL found in the past to be some of the most common problems encountered in restaurants, and therefore, are likely issues a DOL investigator will look for in a restaurant.

Here is a list of a few of the items covered in the assessment:

Do any workers under 18 years of age do the following:
1. Operate or clean power-driven meat slicers or other meat processing machines?

2. Operate or clean any power-driven dough mixer or other bakery machines?

3. Operate, load, or unload scrap papers baler or paper box compactors?

4. Drive a motor-vehicle on the job?

Do any workers under 16 years of age do the following:
5. Cook?

6. Bake?

7. Clean cooking equipment or handle hot oil or grease?

8. Load or unload goods from a truck or conveyor?

9. Work inside a freezer or meat cooler?

10. Operate power-driven bread slicers or bagel slicers?

11. Operate any power-driven equipment?

12. Work from ladders?

13. Work during school hours?

14. Work before 7:00 a.m. on any day?

15. Work past 7:00 p.m. between Labor Day and June 1?

16. Work past 9:00 p.m. between June 1 and Labor Day?

17. Work more than 3 hours on a school day, including Fridays?

18. Work more than 8 hours on any day?

19. Work more than 18 hours in any week when school was in session?

20. Work more than 40 hours in any week when school was not in session?

21. Do you employ any workers who are less than 14 years of age?

22. Do you fail to maintain in your records a date of birth for every employee under 19 years of age?

Click here to take the entire assessment. At the end of the assessment, there is a rules summary that explains an employer’s responsibility under the FLSA for the issues on the assessment.

AB 510 Proposed Bill to Relax Complicated Restrictions For Employers to Implement Alternative Work-Week Schedules

Assemblyman John J. Benoit proposed new legislation (AB 510) on March 15, 2007 to give more flexibility to California hourly employees to alter their workweek schedules. Under current California law, employers must pay non-exempt employees time-and-one-half for work beyond eight hours in one day and the first eight hours worked on the seventh consecutive day worked in a single workweek. Double-time is owed for all time worked over 12 hours in a single day, and all hours beyond eight hours worked on the seventh consecutive day in a single workweek. Currently, the law is very inflexible to allow employees and employers to agree to a different working arrangement.

Alternative workweek schedules are permitted under California law, but the process is so cumbersome, and the potential liability is large if done improperly, many employers do not offer their employees this option. For example, in order to establish an alternative workweek under the current law employers need to propose the alternative workweek schedule to employees, hold at least one meeting about the new schedule, hold a secret ballot election, file the election results with the Division of Labor Statistics and Research, and retain documentation of the entire process. Also, once the alternative workweek is established for a "work unit" every employee, with every few exceptions, in the "work unit" must work the alternative workweek schedule. If this detailed process is done improperly, it could invalidate the alternative workweek, exposing the employer to liability of three to four years of back overtime for the employees working the alternative workweek.

AB 510 is a proposed solution to allow more flexibility for employers and employees to develop an alternative workweek schedule to accommodate each individual's work and personal scheduling needs. The bill would allow an individual employee to adopt a schedule that provides for 10-hour workdays in a four-day workweek. If the employer agrees to the proposed four-day workweek schedule, the employee will be paid at straight time rates. Any work performed beyond the 10 hours per day or beyond the four days would remain subject to current California overtime requirements.