In Limon v. Circle K Stores, Inc., the Fifth Appellate District court issued a favorable ruling for California employers regarding the Federal Credit Reporting Act (FCRA) and employer background checks.  The appellate court held that a former employee for Circle K, Ernesto Limon, could not pursue a proposed class action against Circle K for allegations that Circle K violated the FCRA by providing Limon faulty disclosures prior to obtaining a background check for employment.  While the employer won in this case, it is a great reminder for California employers to approach background checks very carefully.  Here are five key points for California employers to understand about the ruling in Limon v. Circle K Stores:

1. The Federal Credit Reporting Act (FCRA) and background checks.

The court explained in this case that the FCRA was enacted by Congress to protect certain interests of job applicants and employees.  The law seeks to “ensure fair and accurate credit reporting” and “protected consumer privacy.”  Moreover, the law provides job applicants with “(1) the knowledge their prospective employer ‘may obtain the applicant’s consumer report for employment purposes’; (2) the knowledge they can withhold their authorization; and (3) ‘an opportunity to warn a prospective employer of errors’ in the consumer report before an adverse hiring decision is made based on incorrect information.”  The FCRA requires the employer to provide certain disclosures to the applicant or employee prior to obtaining a background check, and the information contained in the disclosures used by Circle K were being challenged by plaintiff.

2. Plaintiff alleged employer had a technical violation of the FCRA by including additional information in the background consent form.

Limon brought the proposed class action lawsuit alleging that he “was not presented with all the [FCRA] required information in a clear manner to enable him to understand his rights and give informed consent for Circle K to procure his consumer report.”  The FCRA requires that an employer provide a “clear and conspicuous disclosure” in writing that “consist solely of the disclosure, that a consumer report may be obtained for employment purposes[.]”

Plaintiff alleged that Circle K’s disclosure did not comply with the FCRA because it violated the “standalone” requirement and “clear and conspicuous” requirement of the FCRA.  Specifically, plaintiff alleged that the language bolded below in Circle K’s disclosure violated the FCRA:

“I authorize, without reservation, any person or entity contacted by Circle K … or its agent(s) to furnish the above stated information, and I release any such person or entity from any liability for furnishing such information;

“Copy:  If you are applying for a job in or live in California, Minnesota, or Oklahoma you may request a copy of the report by checking this box.”  (Bold type added.)

Circle K countered plaintiff’s argument in that Limon suffered no injury because: (1) he was willing to submit to the background check; (2) he knew that by checking a box on the employment application that he agreed to Circle K’s obtaining a background check; and (3) he admitted in his deposition that he would have signed an indisputable FCRA compliant disclosure consenting to a background check.  In addition, Plaintiff obtained all of the information required under the FCRA, and any alleged “confusion” suffered by Limon is insufficient to establish an injury because there were no “downstream consequences” that impacted Limon in his employment.  Because plaintiff had no injury, he could not continue with any claims against Circle K.

3. A plaintiff must show an actual injury to pursue a FCRA claim.

The court agreed with Circle K in holding that plaintiff was unable to show he was injured, and therefore, had no claim.   The court disagreed with plaintiff’s argument that a “concrete or particularized injury is never required in order for a plaintiff to have standing to sue in California.”

In addition, the court explained that the statutory language found in the FCRA refers to both “damages” and “penalties” and these terms have a significant meaning.  “Damages” are to compensate for a loss or injury, and “penalties” are to punish the wrongdoer.  As such, plaintiff in this case was seeking damages permitted under section 1681n(a)(1)(A) of the FCRA.  Therefore, plaintiff must show an injury to be eligible for these damages.  Because plaintiff was unable to show that he suffered an injury as a result of the extra language added to the FCRA disclosure, the court found that plaintiff failed to establish any of the following: that he suffered an adverse employment action because of any inaccuracies found in his background check, that Circle K failed to notify him that it would be conducting a background check, that Circle K failed to inform him that he could withhold authorization, or that he did not receive a copy of the background report ordered by Circle K.  Therefore, the court in dismissing Limon’s case explained that “Limon has not alleged a concrete or particularized injury to his privacy interest sufficient to afford him an interest in pursuing his claims vigorously.”

4. Penalties under the FCRA are substantial.

Employers must be aware that any violations of the FCRA carry substantial penalties, especially if the plaintiff is able to bring a case on a class-wide basis.  The FCRA provides that plaintiffs are entitled to their actual damages, but in no event less than $100 and not more than $1,000 for violations, as well as punitive damages, and costs and attorney fees.

5. California employers must also comply with state and local background check requirements.

In addition to the FCRA discussed above, California employers must also comply with California’s versions of the law: the California Investigative Consumer Reporting Agencies Act (ICRAA) and the California Consumer Credit Reporting Agencies Act (CCRAA) (see our prior article here for more information about the ICRAA and CCRAA).  In addition, since January 1, 2018 California employers cannot ask an applicant to disclose information about criminal convictions.  The law added as Section 12952 to the Government Code and applies to employers with 5 or more employees.  Once an offer of employment has been made, employers can conduct criminal history background checks, but only when the conviction history has a “direct and adverse relationship with the specific duties of the job,” and requires certain disclosures to the applicant if employment is denied based on the background check.  In addition, local governments, such as Los Angeles and San Francisco have implemented their own prohibitions on criminal history checks, and employers must also comply with these local requirements. As employers update their employee handbooks, new hire packets, and other policies for 2023, it is an excellent time to review policies and disclosures to ensure compliance when conducting background checks.

Happy Thanksgiving!  I hope you are able to spend some time with family this Thanksgiving.  As we enter the holiday season, it is a good time to review employer’s obligations to accommodate requests for time off for holidays and best pay practices during the holiday season.  This Friday’s Five covers five reminders for employers about holiday leaves and pay:

1. California employers are not required to provide employees time off for holidays.

There is no requirement that California employers provide time off (except for religious accommodations – see below) for holidays. California’s DLSE’s website states the following:

Hours worked on holidays, Saturdays, and Sundays are treated like hours worked on any other day of the week. California law does not require that an employer provide its employees with paid holidays, that it closes its business on any holiday, or that employees be given the day off for any particular holiday.

2. California employers are not required to pay for time off for holidays, nor are they required to pay additional wages if employees work on holidays.

Likewise, there is no requirement that employers pay employees extra pay or “holiday pay” for work performed on holidays. Employers can voluntarily agree to pay employees extra pay for work that is required during holidays, but these terms would be governed by policy set forth by the employer. Therefore, employers are urged to make sure their holiday pay policies are clearly set forth.

California’s legislature has proposed bills that would require certain employers to pay employees double time for work done on Thanksgiving, but none of these bills have become law.  For example, the “Double Pay on the Holiday Act of 2016” proposed to require an employer to pay at least 2 times the regular rate of pay to employees at retail and grocery store establishments on Thanksgiving. None of these attempts by the legislature have been successful (yet) in requiring California employers to pay any extra “holiday pay.”

3. Employers must provide reasonable accommodations for employees who cannot work on certain holidays due to religious observances.

Employers need to be aware of any religious observances of their employees since employers need to provide reasonable accommodations for employees due to religious reasons. The analysis of reasonable accommodation is on case-by-case basis depending on the company’s type of business and the accommodation requested by the employee. If the employer’s operations require employees to work during normally recognized holidays, such as a restaurant, then this should be communicated to employees in the handbook or other policies and set the expectation that an essential function of the job requires work during normal holidays.

4. If an employer pays for time off during holidays, the employer does not have to allow employees to accrue holiday paid time off.

If an employer pays for time off during certain holidays and an employee leaves employment before the holiday arrives, the employer is not required to pay the employee for the day off.  But the employer’s policy regarding holiday pay must clearly set forth that this benefit does not accrue to employees and that they must be employed during the specific holidays to receive the holiday pay.  Often employers will also require employees to work the days leading up to and following the holiday in order be eligible for the holiday pay.

5. If a pay day falls on certain holidays, and the employer is closed, the employer may process payroll on the next business day.

If an employer is closed on holidays listed in the California Government Code, then the employer may pay wages on the next business day.  The DLSE’s website sets forth this requirement, and other considerations, regarding the timing obligations for payroll.  The holidays listed in the Government Code section 6700 are as follows:

  • Every Sunday
  • January 1 — New Year’s Day
  • Third Monday in January — Martin Luther King Jr. Day
  • February 12 — Lincoln’s Birthday
  • Third Monday in February — Washington’s Birthday
  • March 31 — Cesar Chaves Day
  • Last Monday in May — Memorial Day
  • July 4 — Independence Day
  • First Monday in September — Labor Day
  • September 9 — Admission Day
  • Fourth Friday in September — Native American Day
  • Second Monday in October — Columbus Day
  • November 11 — Veterans Day
  • December 25 — Christmas
  • Good Friday from 12 noon to 3 p.m.
  • Other days appointed by the governor for a public fast, thanksgiving or holiday

Wishing all of our readers a great Thanksgiving!

Employee terminations and resignations must be planned for in advance to avoid common pitfalls for California employers.  Last week I wrote about hiring considerations for California employers in 2023, so I thought it would be appropriate to follow that post up with this list of termination considerations.  This Friday’s Five focuses on critical management and legal considerations during the separation process:

1. Documenting the reason for termination

What is the reason for termination? Is there a company policy that was violated? [Note: Is the company policy in writing?  Has it been distributed to the employee?  Is there a signed acknowledgement of the policy in the employee’s file?]  Who was involved in termination decision? Review documentation for termination if “for cause” and ensure this documentation is maintained in personnel file.

2. Final pay and accounting

Employers need to prepare the employee’s final paycheck and ensure that any unused accrued vacation time is also included.

Final wages must be paid within certain time limits, including the following:

  1. An employee who is discharged must be paid all of his or her wages, including accrued vacation, immediately at the time of termination.
  2. An employee who gives at least 72 hours prior notice of quitting, and quits on the day given in the notice, must be paid all earned wages, including accrued vacation, at the time of quitting.
  3. An employee who quits without giving 72 hours prior notice must be paid all wages, including accrued vacation, within 72 hours of quitting.
  4. An employee who quits without giving 72-hours’ notice can request their final wage payment be mailed to them. The date of mailing is considered the date of payment for purposes of the requirement to provide payment within 72 hours of the notice of quitting.
  5. Final wage payments for employees who are terminated (or laid off) must be made at the place of termination. For employees who quit without giving 72 hours’ notice and do not request their final wages be mailed to them, is at the office of the employer within the county in which the work was performed.

Employers should also review if commissions, bonuses, or expense reimbursement owed to employee?  Obtain all expense reimbursement forms form employee.

Employers with multiple locations need to ensure that the final wages are made available.  The place of the final wage payment for employees who are terminated (or laid off) is the place of termination. The place of final wage payment for employees who quit without giving 72 hours prior notice and who do not request that their final wages be mailed to them at a designated address, is at the office of the employer within the county in which the work was performed. Labor Code Section 208.

3. Company property and passwords

Obtain all company property from employee and reset passwords.  Also, has employee returned all company provided uniforms?  Have all company keys been returned?  The company should also develop a list of all passwords employee had access to and ensure the passwords are reset.

4. Final notices

Employers need to ensure that all required notices are provided to the employee.  For example, common notices include:

  • Notice to Employee as to Change in Relationship
  • For your Benefit (Form 2320)
  • COBRA and Cal-COBRA Notices from insurance provider
  • Notify insurance provider
  • Health Insurance Premium (HIPP) Notice

5. Retention of employee files

Employers need to take measures to secure and save employee’s file, wage, and time records.  In this regard, employers need to develop policies for the following issues:

  • What is kept in a personnel file?
  • Where is the personnel file maintained? Is it physical or electronic?  Who has access to personnel files?  If stored electronically, are the safety protocols that prevent deletion?  Are the files backed up?
  • How are time records kept? Physical or electronic?  Who has access to them?  How long are they stored for?
  • Retention of pay records: How long are pay records maintained? How easily can this data be pulled for California’s pay data reporting requirements?  As a reminder, SB 1162 modified these requirements for 2023, and the pay data reports are due by May 10, 2023 for large employers.

Here are five considerations that should be on the top of every employer’s mind in California during the hiring process in 2023:

1. Does the manager posting job ads understand which pay transparency disclosures are required?

Starting January 1, 2023, employers with 15 or more employees are required to include the pay scale for the position in any job posting.  SB 1162 amends Labor Code section 432.3 to add this obligation, among other items.  As a reminder, Labor Code section 432.3, effective since January 1, 2018, prohibits California employers from asking applicants about prior salary history.  Section 432.3 already required employers to provide applicants a pay scale “upon reasonable request.”  It defines “pay scale” as “the salary or hourly wage range that the employer reasonably expects to pay for the position.”

2. Will the applicant commit the “unforgivable sin” and how can an employer find this out?

Gary Vaynerchuk explains that being able to put in long hours is not a skill that he looks for in every employee.  The “unforgivable sin” for Vaynerchuk is if employees cannot get along with co-workers, are disrespectful, selfish, or create conflict.  How can an employer find out if an applicant is not a team player?  Seeing how the applicant treats the receptionist upon arriving for the interview and how they treat the waiter at the lunch meeting can be key indicators.  Calling references provided by the applicant can lead to good information.  Also, asking around with colleagues and your network about people can surprisingly lead to great information about applicants.  For example, it amazes me how many attorneys know of other attorneys in Los Angeles and how important one’s reputation is even in a large legal community like Los Angeles.

3. Does the employer follow-up with references provided by applicant?

It is a good practice to follow-up with the applicant’s references provided.  A Google search of the applicant can provide some great unfiltered information as well.  I can hear attorneys and HR professionals groaning already about potential legal issues with conducting a basic Internet search of an applicant’s background.  Generally speaking, employers are free to Google an applicant, but I’ll address this issue in more detail over the next couple of weeks as well.

4. Does the employer understand obligations when conducting non-criminal background checks?

When conducting a formal background check (i.e., not a Google search, but paying for a background check) on applicants and employees, employers need to take time to review the applicable state and federal laws that apply to background checks.  LinkedIn was sued previously for violation of the federal Fair Credit Reporting Act (FCRA) for certain background reports it generated for users of the site.  In addition, under California law, the Investigative Consumer Reporting Agencies Act and the Consumer Credit Reporting Agencies Act could apply to background checks in the employment context.  These laws are very complex, and employers should enter this area with the knowledge of their obligations before conducting background checks.

5. Does the employer understand state and local criminal history background check prohibitions?

Since January 1, 2018 California employers cannot ask an applicant for employment to disclose information about criminal convictions.  The law (added as Section 12952 to the Government Code) applies to employers with 5 or more employees.  Once an offer of employment has been made, employers can conduct criminal history background checks, but only when the conviction history has a “direct and adverse relationship with the specific duties of the job,” and requires certain disclosures to the applicant if employment is denied based on the background check.  In addition, local governments, such as Los Angeles and San Francisco have implemented their own prohibitions on criminal history checks, and employers must also comply with these local requirements.  Don’t forget about California’s prohibition on inquiring about applicant’s prior salary history as well.

Let’s face it, California employers need to have a great working relationship with an employment lawyer.  Even if the employer has never been sued, an experienced employment lawyer is key in preventing litigation.  Below are five recommendations about what to look for when hiring an employment attorney, and when an attorney should be engaged (hint: sooner than later):

1. Personality fit is key.

Just like any other high-stakes, high-stress relationship, how you get along with your employment attorney is one of the most fundamental aspects to the relationship.  I’m not saying you have to be able to be best friends with your attorney, but do you learn new things from them when you speak?  Also, consider whether you enjoy calling your attorney.  If you dread speaking with your attorney, you will use them less, receive less critical council, and this could cost you a lot of money in the long run.  Your attorney needs to be a trusted advisor that you feel comfortable reaching out to for advice.

Also, the attorney’s personality and how they treat you as a client is a key indicator on how they treat the attorneys on the other side of the deal or in litigation.  Most clients say they want the scorched-earth, brass-knuckles attorney representing them.   However, business deals and even litigation (at its core litigation is a business transaction), usually need to be resolved when reasonable people reach a compromise.  If your litigation attorney is billing by the hour and never seems interested in considering how to resolve the case sooner than later, it should raise some concerns.  Likewise, if your business attorney is not working on a flat fee and has issues with every single negotiation point in a deal, this could be a concern.

2. Ask friends and contacts for referrals.

If you do not know any attorneys, ask your contacts in your industry for a referral.  If you have a trusted attorney that does not practice employment law, ask that attorney for a referral.  As discussed below, the legal industry is becoming very specialized, and attorneys that routinely practice in the area you need assistance with are critical.

3. Engage attorneys with experience in your industry.

Just as important as the attorney’s experience in the practice area, it is equally important to find an attorney with experience in your industry.  If you operate a restaurant, your issues will be much different than the owner of a start-up software company.  Employment laws do not generally change based on which industry your company operates in, but there are some exceptions to this general rule.  Moreover, an attorney that has worked in your industry will be able to bring the experience of previously dealing with the issue, and will be better positioned to understand what to expect two or three steps in the future.

4. Seek lawyers with a focus on that type of law (such as employment law).

For example, I can determine within about five minutes if I’m dealing with opposing counsel who do not routinely litigate employment cases.  Likewise, I would be the first one to admit that I am not the attorney to negotiate your next lease.  Clients save a lot of money when hiring attorneys with experience in the area they need assistance in – many of the routine issues are already understood by the attorney and do not have to be researched.  Generally, a company will typically require the following types of attorneys:

  • Corporate attorney to assist with forming a corporation, raising money from investors, and stock issues.
  • Employment attorney to set up employment policies, such as handbooks, set up and audit pay practices to ensure everyone is properly classified, and to be available for routine advice and counseling issues that will come up from time-to-time.
  • Tax attorney to work with your other attorneys and accountants to advise on tax implications on various transactions and how best to structure the transactions to minimize the tax implications.
  • Intellectual property attorney when dealing with any copyright, trademark, or patent issues.
  • Real estate attorney to review leases or agreements to buy/sell buildings or land.

5. Engage a lawyer before you need them.

Once you realize that an attorney will likely be needed for your business, engage the attorney for some small issues.  Make sure your personalities match, see if the attorney provides good value to your company, and get a general sense of the attorney.  In the employment context, it is also a good time for the attorney to get a sense of the company’s policies, meet people in the human resources department, and potentially review and update the employee handbook.  This general knowledge is helpful when a critical issue arises, and important decisions must be made with your attorney on a very tight timetable.  It is much more comfortable to have the beginnings of a relationship with the attorney established before your company is trusting this advisor with issues that will have significant consequences.

I’ll admit – I missed publishing an article last Friday to the blog.  It has been over six years that I’ve published an article every Friday – known as the Friday’s Five.  I’ve managed to publish an article every Friday, regardless of vacations, COVID-19, press of work, and health issues.  Last week was just too much for me and I had to focus on some other items (don’t worry – all good things, and I remind myself about how fortunate I am to be so busy).  But it made me think about why I write for the blog, and answer some common questions I receive from readers about the California Employment Law Report:

1. The Friday’s Five is my own deadline.

I started a blog for a law firm I worked at when I was a young attorney.  It must have been around 2005.  I remember having to give a presentation to the entire firm explaining what a blog was, how it worked, and answer questions from skeptical partners.  To the firm’s credit, they let me as a young associate run with the idea (and to the firm’s credit, they are still running the blog).

When I started my own firm, it was not a question about whether to have a blog – the choice was obvious and I started this blog, the California Employment Law Report. However, as an attorney managing my own firm, the issue then became finding time to publish and holding myself accountable to consistently publish.  I had lunch about seven years ago with a colleague of mine, Don Fitzgerald, and he recommended to just set a day to publish each week.  This will set an expectation that people will look forward to the article each week.  That’s when I decided to publish an article each Friday, and discuss at least five issues.

2. Why on Friday?

A lot of people have asked why I publish articles on Friday.  Nearly every marketing “expert” I’ve worked with notes that it is not the best day of the week to publish content in terms of search engine optimization and engagement.  That may be true, but Fridays somewhat slow down enough for me to gather my thoughts for an article. It may not be the best time to publish, but it is the time I publish.

3. Great way to stay current with California employment law.

As a reader of the blog, you know that California employment law is a living thing, and you constantly must be monitoring updates, new laws, and changes.  Publishing the blog helps me stay attuned to the issues and updates as an employment lawyer.  Just like pilots must have at least three takeoffs and three landings within the preceding 90 days in order to carry passengers, writing each week helps me maintain my California employment law currency.

4. Expectations.

As I mentioned above, once you commit to publishing each Friday, people expect that you publish, and this helps motivate me to publish each week.  Also, my family knows the expectations, and when I’m working late on a Friday night to publish an article, they understand what I’m up to.

5. Scratches my creative itch.

Writing for the blog is very creative, and it is nice to have an outlet to be able to write about topics I chose to write about once a week.  Also, for me, writing is much easier than recording video or audio.  All I need is my keyboard, and I don’t have to worry about microphones and lighting.

Don’t worry, I expect to continue to write for the blog for the next ten plus years. I continue to enjoy it, and if people are subscribing and continuing to read my updates, I’ll keep publishing.  See you on Friday.

Why should you attend my firm’s webinar, “New Employment Laws Facing California Employers in 2023” taking place next Friday, October 21, 2022? Here are five reasons:

  1. A lot has taken place in 2022. It is worth one hour of your time to begin to learn about the major employment legal developments that California employers must contend with in 2023 and beyond.
  2. The Governor signed a significant number of new employment-related laws in the 2022 legislative year. We will cover the major laws enacted that will impact California employers in 2023.
  3. Gain insights into major employment cases decided in 2022 and cases that will impact employers in 2023.
  4. Gain insights into what modifications must be made to current practices, employment handbooks and policies.  For example, SB 1162 requires with 100 or more employees to provide further pay data information to the state, and that these reports be provided by the second Wednesday of May 2023.  Moreover, the new law also requires employers with 15 or more employees to include the pay scale for a position in any job posting.
  5. The best reason – it is free.  However, there are a limited number of spaces available, and we have already had a high level of registrations. I recommend registering early.

Sorry for the short post this week, but we have been very busy this week helping clients.  Hope to see you in the webinar next Friday (10/21/22). Registration is here.

On September 29, 2022, Governor Newsom signed AB 152 into law, extending California’s Supplemental Paid Sick Leave (“SPSL”) law through December 31, 2022 (the law was previously set to expire on September 30, 2022).  The law requires employers with 26 or more employees to provide up to 80 hours of COVID-19 related paid sick leave.  Here are five key issues California employers should know about the new law and some reminders about obligations under California’s Supplemental Paid Sick Leave:

1. AB 152 extends employers’ obligation to provide SPSL until December 31, 2022.

AB 152 extends SPSL until December 31, 2022 (the prior law was set to expire on September 30, 2022).  The paid sick leave requirement expires on September 30, 2022 (but employees currently using the sick leave can continue its use past the September 30th deadline).

The prior law, and AB 152 applies to employers with more than 25 employees.

2. The new law establishes a grant program to assist qualifying businesses with costs of providing SPSL.

AB 152 establishes a grant program to assist qualified small businesses and nonprofits that have incurred costs in providing SPSL to employees.  The grants are to reimburse employers for SPSL provided between January 1, 2022 and December 31, 2022.  The grants are capped at $50,000 and are available for employers who are:

  • a “C” corporation, “S” corporation, cooperative, limited liability company, partnership, or limited partnership, registered 501(c)(3), 501(c)(6), or 501(c)(19);
  • began operating before June 1, 2021;
  • is currently active and operating;
  • has 26 to 49 employees and will declare under penalty of perjury of this fact;
  • has provided SPSL pursuant to Labor Code section 248.6 and 248.7;
  • provides organizing documents (such as Articles of Incorporation, Certificate of Organization, etc…) and tax returns in 2020 or 2021.

3. Which employees are entitled to paid sick leave?

AB 152 does not change the qualifying reasons for SPSL. As a reminder, employers are required to provide employees COVID-19 supplemental paid sick leave if the employee is unable to work or telework due to the following reasons:

  1. The employee is subject to a quarantine or isolation period related to COVID-19 as defined by an order or guidance of the State Department of Public Health, the federal Centers for Disease Control and Prevention, or a local public health officer who has jurisdiction over the workplace.
  2. The employee has been advised by a health care provider to isolate or quarantine due to COVID-19.
  3. The employee is attending an appointment for themselves or a family member to receive a vaccine or a vaccine booster for protection against COVID-19, subject to certain limitations.
  4. The employee is experiencing symptoms, or caring for a family member experiencing symptoms, related to a COVID-19 vaccine or vaccine booster that prevents the employee from being able to work or telework.
  5. The employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis.
  6. The employee is caring for a family member who is subject to an order or guidance or who has been advised to isolate or quarantine.
  7. The employee is caring for a child whose school or place of case is closed or otherwise unavailable for reasons related to COVID-19 on the premises.
  8. If the employee, or a family member for whom the employee is providing care, tests positive for COVID-19. (Note: employer may condition payment of supplemental paid sick leave for this reason upon the employee providing a positive test for themselves or the family member they are caring for.)

The new law does provide that employers may require employees to submit to a diagnostic test on or after the fifth day after they initially tested positive and require the employee provide documentation of this test.  If the second test was positive, the employer may require the employee to submit to a third diagnostic test within no less than 24 hours.  The employer must pay for these tests.

4. How much paid leave is required?

AB 152 does not change the amount that employees are entitled to receive in SPSL.  The employee is eligible for potentially up to 80 hours of leave available under two different banks:

  • Bank #1: Employees are entitled up to 40 hours of COVID-19 supplemental paid sick leave for full time employees based on reasons 1 through 7 above.
  • Bank #2: Employees are entitled up to 40 hours of paid leave for reason number 8 listed above (if they or a family member test positive).

Employers should have internal tracking measures in place to track the reason for the leave and how much of the leave the employee has taken under each of the two banks of leave available.

Calculating Amount of Leave Available

There is also no change in how employers are to calculate the amount of leave.  The calculation varies for employers based on the amount of work employees perform, such as part-time, variable scheduled employees, and full-time employees.  Employers will need to review the requirements in order to make the appropriate calculations for these different classes of employees.

Calculating Rate of Pay

The law sets forth how employers are to calculate the rate of pay for nonexempt employees, and exempt employees.  Employers need to carefully review these calculations to ensure the proper rate of pay is being used when an employee takes qualifying paid leave.

Caps on Payments

The prior law placed a total cap on SPLS at 80 hours for the period between January 1, 2022 to September 30, 2022.  This cap is still in place, even though employers must continue to provide SPSL until December 31, 2022.  Therefore, if an employee has already used all of their eligible SPSL, the new law does not require employers to provide any additional leave.

Interaction with California’s Healthy Workplaces, Healthy Families Act and Cal/OSHA ETS Exclusion Pay, and Local Ordinances

As a reminder, the supplemental paid sick leave is in addition to the paid sick leave employees are entitled to under California’s Healthy Workplaces, Healthy Families Act set forth in Labor Code 246.  Moreover, employers cannot require employees to first exhaust the supplemental paid sick leave before paying exclusion leave required under the Cal/OSHA Emergency Temporary Standards (ETS).  The California supplemental paid sick leave leaves in place any employer obligation to comply with local paid sick leave requirements, such as those in Los Angeles City and County, Long Beach, and Oakland.

5. New updated posters published by the Labor Commission, and reminder about pay stub requirements.

The Labor Commissioner has updated the posters employers are required to post in the workplace.  The updated posters are available here:

English: https://www.dir.ca.gov/dlse/COVID19resources/2022-COVID-19-SPSL-Poster.pdf

Spanish: https://www.dir.ca.gov/dlse/COVID19resources/Spanish/2022-COVID-19-SPSL-Poster.pdf

The poster is required to be displayed in a place at the worksite where employees can easily read it. If an employer’s covered employees do not frequent a workplace, the employer may satisfy the notice requirement by disseminating notice through electronic means.

The law requires employers to provide a notice to employees the amount of COVID-19 supplemental paid sick leave that the employee has used through the pay period that it was due to be paid.  This can be provided on the employee’s pay stub or on another writing provided to the employee on the designated pay day.  The employer shall list “zero hours used” if a worker has not used any COVID-19 supplemental paid sick leave.  This requirement has been in place since the full pay period following February 19, 2022 and will continue until December 31, 2022.

Other provisions of the law also address firefighters and providers of in-home supportive services employees.

September 30, 2022 marked the last day Governor Newsom had to sign or veto new bills passed by the Legislature to end the 2022 legislative year.  The Governor signed nearly every substantial employment law related bill placed on his desk.  This Friday’s Five (I know – it is more than five bills, but you have to work with me, it is California) recaps the major bills signed by the Governor that California employers will need to learn about in 2023 and going forward.

AB 257: Fast Food Accountability and Standards Recovery Act or FAST Recovery Act

Bill Text – AB-257 Food facilities and employment. (ca.gov)

The Governor previously signed this bill, as we have already covered in a prior article.  The link to our prior article is here: Governor Newsom Signs AB 257 That Establishes Council To Further Regulate Fast Food Restaurants | California Employment Law Report

AB 152: COVID-19 Relief /Supplemental Paid Sick Leave

Bill Text – AB-152 COVID-19 relief: supplemental paid sick leave. (ca.gov)

AB 152 extends the obligation for California employers to provide supplemental paid sick leave until December 31, 2022 (the prior law expired on September 30, 2022).  However, the new law provides some employer friendly modifications to the current obligations for California employers.  For example, AB 152 authorizes the employer to require, if the COVID-19 test is positive, that the employee submit to a second test within no less than 24 hours. The employer must provide both tests at no cost to the employee.  This bill additionally specifies an employer has no obligation to provide additional COVID-19 supplemental paid sick leave if the employee refuses to submit to the COVID-19 tests.  Employers may also require employees to submit to another test on or after the fifth day after the first positive test and provide documentation of those results.  Lastly, AB 152 creates a grant program to assist qualified small businesses and nonprofits up to $50,000 for reimbursement of Supplemental Paid Sick Leave provided to employees from January 1, 2022, to December 31, 2022. There are several criteria to be eligible for this grant, most easily identifiable are that the employer has between 26 – 49 employees and began operating before June 1, 2021.

Reviewing the obligations under the existing California supplemental paid sick leave was covered in our prior article: Five Reminders of Employers Obligations To Comply With California’s Supplemental COVID-19 Paid Sick Leave Law Through September 30, 2022 | California Employment Law Report

AB 676: Franchises

Bill Text – AB-676 Franchises. (ca.gov)

AB 676 makes various changes to the California Franchise Relations Act and the Franchise Investment Law, and creates new requirements and prohibitions for franchise agreements.  The new law clarifies that an offer or sale of a franchise is made in California when the franchise business is intended to be operated in California.  Additionally authorizes the commissioner of the Department of Financial Protection and Innovation (DFPI) to summarily issue a stop order denying the effectiveness of or suspending or revoking effectiveness of any registration if the commissioner finds that the franchise agreement contains a provision that is contrary to law.

This bill also requires a prospective franchisee seeking to buy an existing franchise to provide specified information and documentation to the franchisor. The bill would also require the franchisor to notify the prospective franchisee in writing of any additional information or documentation necessary to complete the application, and requires the franchisor to notify the prospective franchisee of the decision to approve or disapprove the application.  The bill also specifies that provisions of the bill neither prohibit a franchisor from exercising nor require a franchisor to exercise a contractual right of first refusal to purchase an existing franchise.

AB 1041: Employment: leave

Bill Text – AB-1041 Employment: leave. (ca.gov)

Under the existing law, the California Family Rights Act, an employer with 5 or more employees are not allowed to refuse to grant a request from an employee who meets specified requirements to take up to a total of 12 workweeks in any 12-month period for family care and medical leave.

AB 1041 expands the definition of “designated person” under CA Family Right Act. Accordingly, a “designated person” is any individual related by blood or whose association with the employee is the equivalent of a family relationship. The bill would authorize a designated person to be identified at the time the employee requests the leave. It allows an employer to limit an employee to one designated person per 12-month period.

In addition, under the new law, an employee is defined as an individual who works in California for the same employer for 30 or more days within a year to paid sick days, including the use of paid sick days for diagnosis, care, or treatment of an existing health condition of, or preventive care for, an employee or an employee’s family member. Existing law defines “family member” for this purpose to include individuals who share a prescribed relationship with the employee.

AB 1601: Employment Protections: mass layoff, relocation, or termination of employees: call centers

Bill Text – AB-1601 Employment protections: mass layoff, relocation, or termination of employees: call centers

AB 1601 prohibits a call center employer from ordering the relocation of its call center, unless 60 days before the order takes effect, the employer gives written notice to affected employees, the Employment Development Department (EDD), the local workforce investment board, and the chief elected official of each city and county government within which the termination, relocation, or mass layoff would occur.

Under this bill a “Call Center” is defined as a facility or other operation where employees, as their primary function, receive telephone calls or other electronic communication for the purpose of providing customer service or other related functions. Additionally, Relocation of a Call Center includes when the employer intends to move its call center to a foreign country.

If the employer fails to provide notice regarding a relocation of its call center, the employer will be ineligible to be awarded or have renewed state grants or state-guaranteed loans for 5 years. Such employer would also be ineligible to claim a tax credit for 5 taxable years as of the date that the list is published unless an appropriate agency waives the ineligibility.

Lastly, this bill requires EDD to compile and publish semiannually a list of employers that provided notice to relocate a call center as well as provide workforce services to call center employers and their employees who are laid off as a result of a relocation.

AB 1949: Employees: bereavement leave

Bill Text – AB-1949 Employees: bereavement leave. (ca.gov)

AB 1949 grants employees up to five days of bereavement leave under the California Family Rights Act (CFRA). The bill permits employees to take the leave if they have been employed for at least 30 days prior to the leave, and the leave is for the death of a spouse or a child, parent, sibling, grandparent, grandchild, domestic partner, or parent-in-law. The leave is unpaid, but the employee must be permitted to use vacation, personal leave, accrued and available sick leave, or compensatory time off that is otherwise available.  Employers may request documentation from the employee within 30 days which could consist of a death certificate, a published obituary, or written verification of death, burial, or memorial services from a mortuary, funeral home, burial society, crematorium, religious institution, or governmental agency.

AB 2183: Agricultural labor relations: elections

Bill Text – AB-2183 Agricultural labor relations: elections. (ca.gov)

AB 2183 refers to the election by secret ballot process as a polling place election and provides that, as an alternative to a polling place election, a labor organization may be certified as the exclusive bargaining representative of a bargaining unit of agricultural employees through either a labor peace election (also known as a compact) or a non-labor peace election until January 1, 2028.

The bill specifies that every agricultural employer in California shall have the option, on an annual basis, to indicate to the Agricultural Labor Relations Board (ALRB) whether they agree to a labor peace compact. If an agricultural employer does not agree to a labor peace election, then employees may make a choice regarding union representation through a non-labor peace election.

This bill also establishes a schedule for agricultural employers to indicate whether they agree to a “labor peace compact.” A “labor peace compact” is described as an agreement by the employer that includes among other things, an agreement in any written or oral form, at any time during employee hire, rehire, or orientation, or after certain documents regarding organization are filed with the board. The bill would prohibit a labor peace compact from prohibiting an employer from communicating truthful statements to employees regarding workplace policies or benefits, as specified.

Lastly, AB 2183 requires the board to develop an online web-based labor peace election process that will allow employers to indicate their labor peace choice online, and that will allow labor organizations to see whether a specific agricultural employer has agreed to a labor peace election campaign.

AB 2188: Discrimination in employment: use of cannabis

Bill Text – AB-2188 Discrimination in employment: use of cannabis

AB 2188 amends Government Code section 12945 to make it illegal for employers to discriminate against employees who use cannabis off the job and away from the workplace. The bill does not create the right for the employee to be impaired while at work, does not apply to the building and construction trades, and does not preempt state or federal laws requiring employees to be tested.  The new law becomes effective on January 1, 2024.

As a reminder, in 2016, California passed Proposition 64 legalizing marijuana. Proposition 64 expressly provides that employers may prohibit marijuana in the workplace, and will not be required to accommodate an employee’s use of marijuana.  This is also consistent with the California Supreme Court’s holding in Ross v. Ragingwire Telecommunications, Inc.  In that case the court examined the conflict between California’s Compassionate Use Act, (which gives a person who uses marijuana for medical purposes on a physician’s recommendation a defense to certain state criminal charges and permission to possess the drug) and Federal law (which prohibits the drug’s possession, even by medical users).  The court held that the Compassionate Use Act did not intend to address the rights and obligation of employers and employees, and further noted that the possession and use of marijuana could not be a protected activity because it is still illegal under federal law.

SB 1044: Employers: emergency condition

Bill Text – SB-1044 Employers: emergency condition: retaliation. (ca.gov)

SB 1044 prohibits an employer, in the event of an emergency condition, from taking or threatening adverse action against any employee for refusing to report to, or leaving, a workplace within the affected area because the employee has a reasonable belief that the workplace is unsafe. The bill also prohibits an employer from preventing any employee, from accessing the employee’s mobile device or other communications device for seeking emergency assistance, assessing the safety of the situation, or communicating with a person to confirm their safety. It also requires an employee to notify the employer of the emergency condition which may prompt the employee to leave or refuse to report to the workplace.

Under this bill “Emergency Condition” means existence of either 1) conditions of disaster or extreme danger to the safety of persons or property at the workplace caused by natural forces or a criminal act; 2) An order to evacuate a workplace, a worker’s home, or the school of a worker’s child due to natural disaster or a criminal act.

SB 1162: Employment: salaries and wages

Bill Text – SB-1162 Employment: Salaries and Wages. (ca.gov)

SB 1162 requires additional information be reported to the state of California on the employer’s pay data report. For example, the bill requires employers to report the median and mean hourly rates for employees.  It also requires employers who hire an employee through labor contractors to submit a separate report for those employees.

The bill further requires that employers to provide a pay scale to any current employee for their position currently working upon request. In addition, the bill would require employers with 15 or more employees to include the pay scale for a position in any job posting. Existing law requires employers to provide a pay scale to an applicant upon request.

The process of separating an employee from a company must be clearly set out and planned in advance.  We recommend developing a separation checklist so that all of the company’s policies are followed, as well as any applicable laws that pertain to the employer and their industry.  This article provides five issues employers should consider in developing a separation checklist for their company:

1. Documenting reason for termination

Employers should establish a protocol for documenting the reason for termination.  Some considerations for documenting could include the following:

  • Is there a company policy that was violated? Is this policy in writing?  Has it been distributed to the employee, and has the employee signed an acknowledgment of the policy?
  • Who was involved in the termination decision?
  • Review reasons for termination, and have clear guidelines for seeking legal counsel to avoid any potential wrongful termination or discrimination claims.

2. Final paycheck amounts and timing requirements

An employee who is discharged must be paid all of his or her wages, including accrued vacation, immediately at the time of termination.  Ensure that the final paycheck will be available to the employee on a timely basis (see below for timing requirements).  If an employee had direct deposit, an employee must re-authorize direct deposit for a final paycheck, and this should be documented.  In Canales v. Wells Fargo, N.A., (2018) the court held that employers are not required to provide final wage statements (pay stubs) at the same time as the final check, but instead have until the semimonthly deadline set forth in Labor Code section 226(a).

California law requires the employer comply with the following deadlines for providing final paychecks:

  • An employee who is discharged must be paid all of his or her wages, including accrued vacation, immediately at the time of termination. This does not mean that the company cuts the check and mails it to the employee, the check must be provided to the employee at the time of termination.
  • An employee who gives at least 72 hours prior notice of quitting, and quits on the day given in the notice, must be paid all earned wages, including accrued vacation, at the time of quitting.
  • An employee who quits without giving 72 hours prior notice must be paid all wages, including accrued vacation, within 72 hours of quitting.
  • An employee who quits without giving 72-hours notice can request their final wage payment be mailed to them. The date of mailing is considered the date of payment for purposes of the requirement to provide payment within 72 hours of the notice of quitting.

Final wage payments for employees who are terminated (or laid off) must be made at the place of termination. For employees who quit without giving 72 hours notice and do not request their final wages be mailed to them, the location is at the office of the employer within the county in which the work was performed.

3. Compile list of documents to provide to separating employees

California law requires employers to provide certain documents to employees upon their separation from employment.  Here is a list of some of the common forms often required to be provided to employees:

Employers should take time to review their obligations and forms that are required for their particular industry or situation.

4. Establishing protocol for references and disclosing why the employee left the company within the company

Employers often establish that it will only confirm the title and dates of employment for former employees, and, if authorized by the former employee, the former employee’s final pay rate. Employers do this to avoid potential claims for misrepresentation, violation of privacy, and defamation. Also, employers need to be careful about disclosing the reason for an employee departure within the company, as that may violate the former employee’s privacy rights. Employers should remind employees and management not to disclose this information to people in the company that do not have a reason to know, and remind employees about who any requests for references should be directed to within the company.

5. Evaluate whether a severance agreement would be appropriate

Under California law, the obligation to provide severance to a departing employee is not required. However, employers can offer severance to employees for numerous reasons:

  • during a layoff the employer wants to provide something to the employees for their recognized service,
  • the company entered into a contract with an executive to provide severance if certain conditions were met, or
  • the separation is high risk and there is potential litigation between the parties and the employer wishes to obtain a release of claims to prevent future litigation.

If an employer offers severance payment to a departing employee, they should always have the severance agreement reviewed by an employment attorney to ensure that it contains a broad release of claims so that the employee cannot initiate litigation against the company for claims that arose during their employment. My previous article discussed in more detail issues about severance and severance agreements.