California Employment Law Report

California Employment Law Report

The latest litigation trends, court decisions, & issues on California Employment Law

Five video excerpts from my recent presentation

Welcome to Friday’s Five!  Here are five video excepts from a presentation I conducted in September 2016 to a group of restaurateurs:

  • exempt employee overview
  • the DOL’s increase in the salary basis test and what it means for employers
  • California’s minimum wage – state and local considerations

 

Please let me know if you have any questions or suggestions for topics you would like to see discussed.  Have a great weekend.

Ninth Circuit invalidates arbitration agreement with class action waiver – five points California employers should understand

Recently, the NStanley Moskinth Circuit Court of Appeals issued an opinion in Morris v. Ernst & Young holding that class action waiver in an arbitration agreement were unenforceable because the class action waiver was contrary to the rights provided to employees under the National Labor Relations Act.  The ruling is contrary to the holdings in the Second, Fifth, and Eight Circuits that concluded that the NLRA does not invalidate collective action waivers in arbitration agreements, creating a split in the circuits.  Given this split in the circuits, the case may potentially be reviewed by the United States Supreme Court.  For now, however, what should California employers take away from the case?  This Friday’s Five answers five issues California employers should understand about this changing area of the law:

1. What is an arbitration agreement?

Employers can agree that they and any employees who enter into an arbitration agreement will resolve their differences before a private arbitrator instead of civil court. There are many different arbitration companies to choose from, but the American Arbitration Association and JAMS are two of the larger ones that are routinely appointed in arbitration agreements.

2.  Why would an employer want to implement an arbitration agreement?

There are a number of reasons. The arbitration process can proceed more quickly than civil litigation, saving a lot of time and attorney’s fees in the process.  For example, often times the discovery process moves more quickly, and if there are any disputes, the parties can raise them with the arbitrator telephonically, instead of the lengthy motion process required to resolve disputes in civil court. The arbitration process is also confidential, so if there are private issues that must be litigated, these issues are not filed in the public records of the courts. The parties also have a say in deciding which arbitrator to use in deciding the case, whereas in civil court the parties are simply assigned a judge without any input into the decision. This is very helpful in employment cases, which often times involve more complex issues, and it is beneficial to the parties to select an arbitrator that has experience in resolving employment cases.

While there are many benefits of arbitration agreements, they do not come without a few drawbacks. The primary drawback is that in California, the employer must pay all of the arbitrator’s fees in employment cases. Arbitration fees can easily be tens of thousands of dollars – a cost that employers do not need to pay in civil cases. However, if the company values the confidentiality and speed of process provided in arbitration, this extra cost may well be worth it.

3.  Are class action waivers enforceable in arbitration agreements?

That is the key issue raised in the Morris v. Ernst & Young case.  Many courts have been upholding arbitration agreements that contain class action waivers, including the California Supreme Court in Iskanian v. CLS Transportation Los Angeles, LLC.  That case held that class action waivers are enforceable, following the standards set forth by the U.S. Supreme Court in AT&T Mobility v. Concepcion.

However, the Ninth Circuit’s ruling in the Morris case creates some uncertainty about whether arbitration agreements that contain class action waivers can be enforced.  The arbitration agreements in the Morris case were mandatory, and they contained a “concerted action waiver” clause preventing employees from bringing a class action.  Plaintiffs claimed that the “separate proceedings” clause contravenes the National Labor Relations Act (“NLRA”), 29 U.S.C. §§ 151 et. seq.  The Ninth Circuit held:

This case turns on a well-established principle: employees have the right to pursue work-related legal claims together. 29 U.S.C. § 157; Eastex, Inc. v. NLRB, 437 U.S. 556, 566 (1978). Concerted activity—the right of employees to act together—is the essential, substantive right established by the NLRA. 29 U.S.C. § 157. Ernst & Young interfered with that right by requiring its employees to resolve all of their legal claims in “separate proceedings.” Accordingly, the concerted action waiver violates the NLRA and cannot be enforced.

As mentioned above, this holding is contrary to the holdings in the Second, Fifth, and Eight Circuits that have concluded that the NLRA does not invalidate collective action waivers in arbitration agreements.  For California employers, the Morris holding creates a strange current state of the law where arbitration agreements with class action waivers may be enforceable in state courts under the Iskanian ruling, but may not enforceable in federal court under the Morris v. Ernst & Young ruling.

4.  Should every employer implement arbitration agreements with its employees?

No. The decision to implement an arbitration agreement should be reviewed with an employment lawyer to discuss the positives as well as the negatives of arbitration agreements.

5.  Are arbitration agreements enforceable in California?

Generally speaking, if the agreement is drafted and implemented properly, it is enforceable.  The holding in Morris v. Ernst & Young does not change the enforceability of arbitration agreements, but rather focuses on the issue of whether a class action waiver contained in an arbitration agreement is enforceable.  In addition, arbitration agreements are routinely struck down by courts if they are not properly drafted. For example, a California court held in Ajamian v. CantorCO2e, that an arbitration agreement was not enforceable because it required the employee to waive statutory damages and remedies.  In addition, the agreement in that case only allowed the employer to recover its attorney’s fees if successful, not the employee.  This flaws in the arbitration agreement were fatal to the enforceability of the agreement.  Therefore, as a good lawyer always says, it is critical that employers considering implementing arbitration agreements review the pros and cons of the decision, and receive assistance in drafting the arbitration agreement.

Five free resources of mine you are not using

I bet your lawyer has never uttered those words to you (unless, of course, I am your lawyer).  For today’s Friday’s Five, I wanted to remind readers about five free resources I offer.  That’s right – they are absolutely free.  Happy Friday.Employers Survival Guide

1.  Download the termination checklist

I’m a big proponent of checklists.  Even if you have performed hundreds of employee terminations, there are so many issues that employers must get right every time, I recommend that each employer develop their own termination checklist.  Download my draft checklist as a start to drafting your own checklist for your company here.

2. Subscribe to my webinar and seminar newsletter

I’m routinely conducting webinars and seminars to California employers regarding best practices and employment law updates.  I often times waive the costs or reduce the costs for clients, friends of the firm, and readers of my blog.  You can subscribe here.

3. Subscribe to my Youtube channel – The Employment Law Report

Rather learn by watching videos?  Subscribe to my Youtube channel, The Employment Law Report.  Some popular videos are my overview of California’s paid sick leave law.  More videos to come soon.  View and subscribe to the channel here.

4. Subscribe to my blog

Receive at least weekly updates about California employment law and best practices for employers.  Reading this, right?  Might as well receive an email by subscribing here when I post a new article so you don’t miss any posts.  That is right, as always, this is absolutely free, so why not?  Subscribe to the blog by entering your email address above the big yellow button to the right.

5. Download my e-book on the top ten best HR practices

The Top Ten Best Human Resources Practices for California Employers e-book – need I say more?  Download it here.

Now you do not have any reason to not to utilize these free resources.  And don’t forget, you can find me on Facebook too.  Have a great Labor Day weekend.

 

San Diego’s changing minimum wage and paid sick leave law – five updates to know

The City of San Diego passed the Earned Sick Leave and Minimum Wage Ordinance which took effect on July 11, Coronado Bridge2016.  Now, less and two months later, the City has approved an “Implementing Ordinance” clarifying the law’s regulations.  The Implementing Ordinance takes effect on September 2, 2016.  This Friday’s Five provides five issues that have been updated by the City of San Diego’s Implementing Ordinance:

1. The “Implementing Ordinance” is effective September 2, 2016.

The original ordinance became effective on July 11, 2016.  However, there was a lot of confusing issues that left employers concerned about how to comply with the law, and many issues that were simply not addressed by the original ordinance.  In an attempt to clarify the issues, the City passed the Implementing Ordinance clarifying some issues.  The Implementing Ordinance is effective as of September 2, 2016.

2. Employers are required to provide a written notice to employees about its paid sick leave policy by October 1, 2016.

The Implementing Ordinance requires that every employer must also provide each employee at the time of hire, or by October 1, 2016, whichever is later, written notice of the employer’s legal name and any fictitious business names, address, and telephone number and the employer’s requirements under the law.  The notice must also include information on how the employer satisfies the requirements of the law, including the employer’s method of earned sick leave accrual.  The notice must be provided to employees in English and in each employee’s primary language, if it is a language if it is spoken by at least five percent of the employees at the employer’s workplace.  Employers may provide this notice through an accessible electronic communication in lieu of a paper notice.  The City published a form notice to comply with these requirements, which can be downloaded here.

3. Under the Implementing Ordinance, employers may set a cap on the total amount of accrual at 80 hours.

Under the Implementing Ordinance, employers may cap an employee’s total accrual of earned sick leave at 80 hours.  The language under the original ordinance did not permit employers to cap the amount of accrued sick leave.  The law does not automatically set the cap for employers, but merely states that employers are allowed to set the cap.  Therefore, employers with employees that are covered by the City’s law should develop a written policy that sets this cap if desired.

4. The implementing ordinance allows employers to front load no less than 40 hours of sick leave at the beginning of each benefit year.

An employer may satisfy the accrual and carry-over provisions of the law if no less than 40 hours of earned sick leave are awarded to an employee at the beginning of each benefit year.  This front-loading of the 40 hours must be provided to all employees regardless of their status as full-time, part-time, or temporary workers.

5. Employers may set minimum increment for use, but not more than two hour increments.

Employees may determine how much earned sick leave they need to use, provided that employers may set a reasonable minimum increment for the use of earned sick leave not to exceed two hours.

California Supreme Court agrees to review Starbucks’ de minimis defense

Coffee cup

Douglas Troester filed suit alleging that Starbucks violated the California Labor Code by failing to pay him for short periods of time he spent closing the store.  He alleged that Starbucks failed to pay him for time spent walking out of the store after activating the security alarm, for the time he spent turning the lock on the store’s front door, and for the time he spent occasionally reopening the door so that a co-worker could retrieve a coat.  Based on these allegations, Plaintiff filed a class action under the California Labor Code for failure to pay minimum and overtime wages, failure to provide accurate written wage statements, and failure to timely pay all final wages.

Starbucks filed a motion for summary judgment asking the court to dismiss Plaintiff’s case based upon the de minimis doctrine.  The trial court agreed with Starbucks and dismissed the case, but now the California Supreme Court has agreed to review the ruling based on Plaintiff’s argument that the de minimis doctrine is not applicable to California law.  The Supreme Court’s decision could have major ramifications for California employers.  For today’s Friday’s Five, here are five issues about the de minimis doctrine employers should understand:

1. The de minimis doctrine: What is it?

In granting Starbucks motion for summary judgment, the trial court explained:

Under this doctrine, alleged working time need not be paid if it is trivially small: “[A] few seconds or minutes of work beyond the scheduled working hours … may be disregarded.” Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680, 692, 66 S.Ct. 1187, 90 L.Ed. 1515 (1946), superseded by statute on other grounds as stated in IBP, Inc. v. Alvarez, 546 U.S. 21, 25–26, 126 S.Ct. 514, 163 L.Ed.2d 288 (2005).

2. What factors do courts look to in determining whether time is de minimis?

The factors courts look to in determining whether time is de minimis include (1) the practical administrative difficulty of recording the additional time; (2) the aggregate amount of compensable time; and (3) the regularity of the additional work.  The trial court noted that numerous courts have concluded that daily periods of about 10 minutes are de minimis.

3. What does “administrative difficulty” mean when applying the de minimis doctrine?

The trial court held that the “administrative difficulty of recording the additional time” also supported Starbucks’ de minimis defense.  The court explained that “this factor weighs in favor of the defense when the employer’s timekeeping system cannot be practically configured to capture the alleged off-the-clock work.”  The court cited cases holding that time employees spent submitting to bag checks upon leaving store was de minimis, rejecting plaintiff’s argument that employer should endeavor to record that time by “repositioning the time clock close by the exit door”), and case that held time spent waiting for computer to boot up in order to log into time clock software was de minimis, and that the employer was not required to capture this time by installing a time clock at front door.

The trial court in Starbucks concluded:

The brief moments that Plaintiff spent in and around the store after clocking out are an inevitable and incidental part of closing up any store at the end of business hours. There will always be some unaccounted-for seconds spent on setting an alarm, physically leaving the store, locking the door, and walking out at the end of a closing shift. But not every second can be or need be recorded and compensated. Through the de minimis defense, the law recognizes that “[s]plit-second absurdities are not justified by the actualities of working conditions.” Anderson, 328 U.S. at 692.

4. Generally, how much time can be considered de minimis?

The Plaintiff testified that his time spent conducting closing activities after he clocked out generally amounted to less than four minutes, and was almost always less than 10 minutes.  The court therefore held that the time Plaintiff complain he was not paid for was de minimis.

The trial court in Starbucks noted that in applying these standards, “numerous courts have held that daily periods of approximately 10 minutes are de minimis.”  The court cited cases holding the following:

  • Court concluding that five minutes daily spent passing through security clearance on way to lunch break was de minimis (Busk v. Integrity Staffing Solutions, Inc., 713 F.3d 525, 532–33 (9th Cir.2013)
  • Court rejecting a plaintiff’s claim for unpaid wages because the six minutes that it took each day to log in to a computer program was de minimis and would be “arduous” to monitor and record) Gillings v. Time Warner Cable LLC, 2012 WL 1656937, at * 1, 4 (C.D.Cal. Mar.26, 2012)
  • Court holding that the plaintiff was not entitled to compensation for time spent waiting for security checks at the end of closing shifts because the “several minutes” that the plaintiff had to wait to be let out of the building was de minimis) Alvarado v. Costco Wholesale Corp., 2008 WL 2477393, at *3–4 (N.D.Cal. June 18, 2008)
  • “Here, it is undisputed that donning and doffing protective gear … takes less than 10 minutes…. Therefore, time spent donning and doffing safety gear is de minimis and non-compensable as a matter of law.”) Abbe v. City of San Diego, 2007 WL 4146696, at *7 (S.D.Cal. Nov.9, 2007)

5. The California Supreme Court will review if Starbucks’ de minimis defense is applicable under California law.

Plaintiff has filed an appeal, and the California Supreme Court has agreed to review the lower court’s application of the de minimis doctrine in the case.  Plaintiff argues that the trial court’s reliance on the de minimis doctrine was inappropriate because that doctrine is based on federal law and does not apply to California wage claims.  However, courts have routinely applied the de minimis doctrine to California wage claims.  In Corbin v. Time Warner-Advance/Newhouse, the Ninth Circuit applied the de minimis doctrine and upheld a dismissal of employees’ wage case alleging that the company’s timekeeping system failed to pay them for all time worked because it rounded to the nearest quarter of the hour.  Similarly, the California Court of Appeal Fourth Appellate District in See’s Candy Shops, Inc. v. Superior Court applied a federal standard permitting employers to round employee’s time entries to the nearest 5 minutes, one-tenth, or quarter of an hour as long as that the result over a period of time results in a failure to pay the employees for all of their work.  While the court in See’s Candy Shops did not specifically apply the de minimis doctrine, the court applied a similar federal legal doctrine to California law.  The California Supreme Court’s decision in the Starbucks case could provide clarification on whether the de minimis doctrine (and potentially other federal wage and hour doctrines) have any place in interpreting California law.

Five reminders about sexual harassment training for supervisors under California law

I’ve been conducting many harassment prevention trainings for clients during the last few weeks.  Employers in California with 50 or more workers must provide at least two hours of sexual harassment prevention training to all supervisors.  The regulations regarding the training is becoming more and more detailed.  Therefore I thought it would be good to provide five reminders about sexual harassment training and required anti-harassment polices:

1. Prevention training must cover certain topics.

California law is very specific on the topics that must be covered during harassment prevention training.  Employers need to ensure that their training meets the legal requirements.  For more information about the topics required can be read here.

2. Harassment prevention training must take place at least every two years.

Employers with 50 or more employees must provide at least two hours of classroom or other effective interactive training and education regarding sexual harassment to all supervisory employees who are employed as of July 1, 2005, and to all new supervisory employees within six months of assuming a supervisory position.  From, all covered employers must provide sexual harassment training and education to each supervisory employee once every two years.  In 2015, California requires that a portion of the training also address “abusive conduct.”

3. Employers need to develop an anti-harassment policy that includes a complaint procedure.

All employers should have an anti-harassment policy of their own developed and distributed to all employees.  Employers are required to develop a harassment, discrimination, and retaliation prevention policy that meets the following requirements:

(1) Is in writing;

(2) Lists all current protected categories covered under the Act;

(3) Indicates that the law prohibits coworkers and third parties, as well as supervisors and managers, with whom the employee comes into contact from engaging in conduct prohibited by the Act;

(4) Creates a complaint process to ensure that complaints receive:

(A) An employer’s designation of confidentiality, to the extent possible;

(B) A timely response;

(C) Impartial and timely investigations by qualified personnel;

(D) Documentation and tracking for reasonable progress;

(E) Appropriate options for remedial actions and resolutions; and

(F) Timely closures.

(5) Provides a complaint mechanism that does not require an employee to complain directly to his or her immediate supervisor, including, but not limited to, the following:

(A) Direct communication, either orally or in writing, with a designated company representative, such as a human resources manager, EEO officer, or other supervisor; and/or

(B) A complaint hotline; and/or

(C) Access to an ombudsperson; and/or

(D) Identification of the Department and the U.S. Equal Employment Opportunity Commission (EEOC) as additional avenues for employees to lodge complaints.

(6) Instructs supervisors to report any complaints of misconduct to a designated company representative, such as a human resources manager, so the company can try to resolve the claim internally. Employers with 50 or more employees are required to include this as a topic in mandated sexual harassment prevention training, pursuant to section 11024 of these regulations.

(7) Indicates that when an employer receives allegations of misconduct, it will conduct a fair, timely, and thorough investigation that provides all parties appropriate due process and reaches reasonable conclusions based on the evidence collected.

(8) States that confidentiality will be kept by the employer to the extent possible, but not indicate that the investigation will be completely confidential.

(9) Indicates that if at the end of the investigation misconduct is found, appropriate remedial measures shall be taken.

(10) Makes clear that employees shall not be exposed to retaliation as a result of lodging a complaint or participating in any workplace investigation.

In addition, employers are required to distribute the pamphlet, Sexual Harassment Is Forbidden by Law (DFEH-185), to all employees.  Employers should also routinely discuss the sexual harassment policy with employees at meetings and remind them of the complaint procedures and document these additional steps.  This additional training will show that the company is serious about preventing harassment and took affirmative steps to protect its employees.

4. Trainers conducting the harassment prevention training must meet certain requirements.

A trainer shall be one or more of the following:

  1. “Attorneys” admitted for two or more years to the bar of any state in the United States and whose practice includes employment law under the Fair Employment and Housing Act and/or Title VII of the federal Civil Rights Act of 1964, or
  2. “Human resource professionals” or “harassment prevention consultants” working as employees or independent contractors with a minimum of two or more years of practical experience in one or more of the following: a. designing or conducting discrimination, retaliation and sexual harassment prevention training; b. responding to sexual harassment complaints or other discrimination complaints; c. conducting investigations of sexual harassment complaints; or d. advising employers or employees regarding discrimination, retaliation and sexual harassment prevention, or
  3. “Professors or instructors” in law schools, colleges or universities who have a post-graduate degree or California teaching credential and either 20 instruction hours or two or more years of experience in a law school, college or university teaching about employment law under the Fair Employment and Housing Act and/or Title VII of the federal Civil Rights Act of 1964.

Individuals who do not meet the qualifications of a trainer as an attorney, human resource professional, harassment prevention consultant, professor or instructor because they lack the requisite years of experience may team teach with a trainer, in accordance with 1. through 3. above, in classroom or webinar trainings provided that the trainer supervises these individuals and the trainer is available throughout the training to answer questions from training attendees.

5. Training received from other employers may carry over to new employers.

A supervisor who has received training in compliance with the law during the prior two years either from a current, a prior, an alternate or a joint employer need only be given, be required to read and to acknowledge receipt of, the employer’s anti-harassment policy within six months of assuming the supervisor’s new supervisory position or within six months of the employer’s eligibility. That supervisor shall otherwise be put on a two year tracking schedule based on the supervisor’s last training.  Employers need to be careful however, since the burden of establishing that the prior training was legally compliant rests with the current employer.

Seminar: Top employment law issues facing California restaurants

I wanted to share an opportunity for readers to attend my seminar conducted by the Restaurant Advisory Group on September 13, 2016.  The topics I’ll cover include the top five pitfalls facing California employers and how to comply with the new minimum wage increases taking effect at the local levels throughout Southern California.  The cost is waived for any of my readers of the blog (plus my clients/contacts) to attend the event.  Click here to register.

Robert Sea, a 30 year restaurant veteran as an owner/operator and who is currently with the Press Telegram will also be speaking about new digital marketing trends for restaurants.

While the event is focused on restaurants, any California employer will learn a lot from the presentations and are welcome to join.

Date: September 13, 2016gla-logo-o_swurh3_16053
8:45 a.m. to 11:00 a.m.

Location: Gladstone’s – Long Beach
330 S. Pine Ave.
Long Beach, CA 90802

Cost: Free for any of my contacts and restaurant owners – click here to register.

Light pastries will be served.

Hope you can join us at the event!

Five misunderstandings about disciplining employees

Employees

Working with employers are various sizes, backgrounds, sophistication, and industries, I’ve seen a lot of confusion and simple misunderstandings about what constitutes employee discipline and how to properly document employee performance issues or discipline.  This Friday’s Five addresses five common misunderstandings I’ve seen recently about employee discipline and documentation:

1. If it was not a formal write-up put in the employee’s file, then the action does not constitute disciplinary action.

There is no legal definition of what constitutes a write-up, nor is there a definition of what is required to be in an employee’s personnel file.  Therefore, recollections about verbal warnings, e-mails, letters, even notes on napkins can be evidence to support an employer’s position that an employee was terminated because of performance issues.  The key item employers need to remember is if the employee challenges the reason for the termination that there is support for the termination decision, either through testimony and/or documentation.  The documentation can come in any form and does not have to be a formal write-up that is maintained in the employee’s personnel file.  However, this is not to say that employers can do away with formal employee reviews and write-ups, these are very good practices to maintain.

2. Verbal warnings do not have to be documented.

If there is no record of verbal warnings it is very difficult to prove at a later date that the employee had been counseled about the issue.  Managers should always document a verbal warning in some manner, such as in a manager’s log or even e-mailing themselves the specifics about the verbal warning.  By preparing an e-mail and sending it to themselves, it creates a great time-stamped record that is excellent evidence should there ever be any litigation concerning a termination.

3. Employees have to sign disciplinary documents.

Some employers do not think a write-up for an employee is valid unless the employee signs the write-up, but this is not true.  While it is a good policy to have some system that proves the employee was presented with the write-up, it is not required that the employee sign the document.  Many times the employee will refuse to sign such documents because they do not agree with them.  To alleviate this, some employers provide a line on the document that states the employee does not necessarily agree with the write-up, but is signing the document only to acknowledge receipt.  Another method to avoid the argument that the employee never received the written warning is to email the employee.  This creates a great record of when the warning was prepared and sent to the employee.

4. Employers have to follow a progressive disciplinary policy and cannot fire employees on their first offense.

While employers may choose to implement a progressive discipline policy that starts discipline with a verbal warning and progresses to a second or third written warning prior to termination.  However, if using a progressive disciplinary system, employers should be careful to preserve the employee’s at-will status and reserve the right to not follow the progressive disciplinary system at is sole discretion.  As long as the employee is at-will, they can be terminated at any time, even after their first small infraction of a company policy.  For more information about at-will employment, click here for my previous article.

5. Disciplinary documentation should be as broad as possible.

While write-up and counseling should address the overall issue that the employee needs to improve, employers need to avoid general statements without providing specific examples.  For example, instead of writing an employee up for having a poor attitude, the employer should provide a specific performance issue.  The employer should document the time, date and facts of the incident.  Write ups should also list the conduct that is expected of the employee in the future.

.