In recent developments across the United States, a significant shift is underway regarding the value and necessity of college degrees. At the heart of this transformation are legislative and executive efforts aimed at reevaluating the traditional emphasis on bachelor’s degrees for job eligibility. Amidst these governmental actions to potentially limit employer’s ability to require a bachelor’s degree, a new question is also arising: are college degrees becoming obsolete? With industry giants like Google and Apple moving away from stringent degree requirements, and figures like Gary Vaynerchuk challenging the traditional valuation of college education, the debate intensifies. This article delves into these pivotal changes, exploring the evolving landscape of employment qualifications, the role of legislation in shaping hiring practices, and the ongoing discourse on the relevance of college degrees in today’s workplace.

1. Federal “Opportunity to Compete Act” proposed bill.

On the federal level, in October 2023, a bill was introduced by Representatives Raja Krishnamoorthi (D-Ill.) and John James (R-Mich.) to amend the Fair Labor Standards Act (FLSA) to prohibit large employers from utilizing automated systems from automatically discarding applicants without a bachelor’s degree.  The bill is termed the “Opportunity to Compete Act” would prohibit employers from using computerized hiring systems that discard applicant who do not have a bachelor’s degree, but would permit the applicant to substitute years of experience, community college, and training programs in lieu of a four-year degree. 

While not law at this time, the proposed bill illustrates the considerations by legislators regarding potentially regulating this issue. 

2. California Executive Order to remove any degree requirements that are not related to the job duties for State positions.

In California, Governor Newsom signed an Executive Order in August 2023, that directed the California Department of Human Resources to update its policies to ensure that any state position that requires a bachelor’s degree “remains a job-related educational requirement, explicit analysis of whether a bachelor’s degree is necessary for successful performance in the position and, if it is determined necessary, supporting data that demonstrates the necessity.”  The Executive Order only applies to state jobs, the measure is indicative of the consideration being given to the topic by legislators.

3. Are college degrees becoming obsolete anyway?

Is legislation required to address this issue?  There are trends already in the workforce where employers are not requiring college degrees.  For example, large employers such as Google, Bank of America, and Apple are moving away from requiring college degrees. 

Gary Vaynerchuk is vocal on this point, and has been making the case for a few years now that college degrees are becoming obsolete.  Vaynerchuk points out, “You can get better “courses” on the internet and you can take that money and travel the world for 40k as an eighteen year old. Plus, you would really learn…the big argument is, you grow up in college and you meet people. As if that’s the only way one gets life experience and meets people. I think if you’re crafty as shit, there’s a way better way to spend 50,000 dollars a year.”

Vaynerchuk makes a valid point that where someone attend school is becoming less relevant today, “I have no clue where some of my employees went to school. If they all said community college, or they didn’t go at all, or they went to Harvard–it all would have landed the same way.”

4. Companies should be the final arbiter for requirements to work for them. 

I do not agree with any legislation that would attempt to regulate what standards an employer sets for its workforce.  It is too subjective to effectively legislate anyway – I could make the case that a college degree is required for nearly almost any job that requires the use of a computer.  On the other hand, one could argue that nearly everyone coming out of high school understands how to use a computer, or could learn the required skills on YouTube, and this should not be a requirement.  It is just too subjective – and employers should be the final arbiter of what they require from their workforce. 

5. My stance on college: Everyone that has the desire should attend but keep costs as low as possible. 

I believe college degrees are still important to have.  I’ve changed my position on college degrees a lot over the last few years, and can see the argument that a degree is not necessary in today’s economy.  However, I still think that the generation that is making the hiring decisions still value applicants having a college degree.  But the exception to this is, like Vaynerchuk mentions above, where someone received their degree does not matter.  Unless someone has a clear path in mind to attend law school, medical school, or obtain some other advance degree, young students need to obtain a degree with as little to no dept as possible.  The fact that students cannot declare bankruptcy against school debt is insane, and illustrates how serious this debt will be for students for the rest of their lives.  Large amounts of college debt will limit a person’s opportunities and likely force them to remain in jobs they do not like or limit their ability to take a risk and start their own company.  The cost-benefit analysis for attending college that requires loans of more than $20,000 a year is quickly changing.  Many people are realizing that obtaining a bachelor’s degree through a community college with no debt has more advantages than a student with $250,000 of debt from a notable college. 

An issue that constantly plagues the service industry is what to do about tips and the challenges that come with mandated tip pooling and mandatory service charges. We still routinely counsel restaurant clients on the intricacies regarding tips, mandatory tip pools, and service charges. This simple concept, which should be relatively easy, becomes complex under California law.  Here are five issues employers should understand about tips, tip pools, and service charges in California.

1) Who owns a tip?

California law is clear that voluntary tips left for an employee for goods sold or services performed belong to the employee, not the employer. Labor Code section 351 provides, “No Employer or agent shall collect, take or receive any gratuity or a part thereof that is paid, given to, or left for an employee by a patron…. Every gratuity is hereby declared to be the sole property of the employee or employees to whom it was paid, given, or left for.”

2) Is employer-mandated tip pooling legal?

Yes, generally tip pooling is legal in California as long as it is fair and reasonable (and owners/managers/supervisors are not involved in the tip pool as discussed below). In Leighton v. Old Heidelberg, Ltd., the court held that an employer’s practice of tip pooling among employees was not prohibited by section 351 because the employer did not “collect, take, or receive” any part of a gratuity left by a patron, and did not credit tips or deduct tip income from employee wages. The court relied upon the “industry practice” that 15% of the gratuity is tipped out to the busboy and 5% to the bartender, which was “a house rule and is with nearly all Restaurants.”

There must be a reasonable relationship between tip pooling arrangements.  The following examples of mandatory tip pooling percentages have been approved by a court, the DLSE or DOL:

  • A policy in which 80 percent of tips were allocated to waiters, 15 percent to busboys and five percent to bartenders
  • A policy in which cocktail service must give one percent of tips to bartenders
  • The Department of Labor responsible for enforcing Federal law has stated that a policy that requires servers to share 15 percent of their tips with other employees is presumptively reasonable
  • A policy in which a server contributes 15 percent to a tip pool, and other employees in the chain of service receive a portion of these tips based on the amount of hours they worked

The following examples were tip pooling policies disapproved by courts or the DLSE and therefore employers cannot legally establish them:

  • A policy providing 90 percent of tips to hostesses who spend only a small amount of time seating customers
  • A policy requiring food server to share 10 percent of tips with floor managers

3) Who can share in the tip pool?

Employees in the chain of service:

Generally, employees who are in the “chain of service” may partake in a mandatory tip pool. In Etheridge v. Reins International California, Inc., the servers challenged the inclusion of employees, such as kitchen staff, bartenders, and dishwashers, who do not provide direct table service in the mandatory tip pool. The California Court of Appeals confirmed that employees who do not provide direct table service but are in the “chain of service,” such as kitchen staff, bartenders, and dishwashers, are allowed to participate in mandatory tip pools. The Court reasoned that this would encourage all staff in the chain of service to give their best service, regardless of whether the customers personally see them performing the work.

Managers, owners, or supervisors:

Labor Code section 351 prohibits agents from keeping a share or any portion of gratuities left or given to one or more employees by a customer. However, the California Court of Appeal in Chau v. Starbucks Corp. found that a service employee who is also an agent, such as the shift supervisor, can participate in tip pools for tips left in a collective tip box for all service employees. While Chau permitted employers to include supervisors in tip pools, that case addressed a very specific set of facts, and employers must approach the issue of including supervisors in tip pools with caution.

4) Do tips change an employee’s minimum wage or regular rate of pay for overtime calculations?

No. Because tips are voluntarily left by customers to employees, tips do not increase an employee’s regular rate of pay used to calculate overtime rates.

Additionally, California law does not allow employees to “credit” an employee’s tips towards the minimum wage. Therefore, employers should still ensure to pay employees the state (or local) minimum wage.

In addition, Labor Code section 351 requires that employers pay the employee any tips that a patron paid by a credit card no later than the next regular payday.  Also, employers may not deduct any credit card processing fees from the amount of the tip left for the employee on the credit card. 

5) Are mandatory service charges the same as a tip?

No. A tip is voluntarily left by the patron, while a mandatory service charge is a mandatory charge to the patron by the employer.

While a tip is considered the employee’s property, a mandatory service charge is considered the employer’s property. Thus, unlike with tips, an employer may distribute all or part of the service at their discretion. However, this freedom comes with strings: the amounts paid to employees as a mandatory service charge must be considered when calculating the employee’s regular rate to calculate overtime rates. As a reminder, to calculate an employee’s regular rate of pay, the employer must divide all compensation for the week by the total number of hours worked by the employee.

Employers had until February 14, 2024 under the newly enacted AB 1076 to provide written notices to employees who were subject to a noncompetition agreement that these agreements were void (unless an exception applied).  With California passing this and other laws, prohibiting noncompetition agreements, what measures do employers have to protect their confidential information, and prevent employees from using hard earned information and client relationships, for their own benefit after they leave employment? 

The California Labor Code, as well as other aspects of California law, still provide many protections to employers.  While noncompetition agreements are not enforceable under California law, employers still have many resources to protect their information, client lists, and confidential data, and employees still have many obligations towards their employers:

1. Labor Code section 2856: Employees must comply with employer’s directions.

Labor Code section 2856 provides, “An employee shall substantially comply with all the directions of his employer concerning the service on which he is engaged, except where such obedience is impossible or unlawful, or would impose new and unreasonable burdens upon the employee.” 

2. Labor Code sections 2858 and 2859: Employees must exercise a reasonable degree of skill.

Labor Code section 2858 provides, “An employee is bound to exercise a reasonable degree of skill, unless his employer has notice, before employing him, of his want of skill.

Labor Code section 2859:

An employee is always bound to use such skill as he possesses, so far as the same is required, for the service specified.

3. Labor Code sections 2860 and 2863: Employee’s owe a duty of loyalty.

California codified an employee’s duty of loyalty to their employers in Labor Codes section 2860 and 2863.  Labor Code section 2860 provides that, “Everything which an employee acquires by virtue of his employment, except the compensation which is due to him from his employer, belongs to the employer, whether acquired lawfully or unlawfully, or during or after the expiration of the term of his employment.”

In addition, Labor Code section 2863 provides, “An employee who has any business to transact on his own account, similar to that intrusted to him by his employer, shall always give the preference to the business of the employer.”

Under this duty of loyalty, employees may not compete with their employer while still employed, take confidential information and share it with others for their own benefit, or use the employer’s confidential information after leaving employment. 

4. Employers may also assert a conversion claim against employee’s who misappropriate company items.

A claim for conversion may also be available under Civil Code section 1712.  This section provides that anyone obtaining a thing (such as a document, plans, equipment, or customer list) without the consent of the owner, or if consent is later rescinded, must restore the property to the owner. 

5. Other potential claims.

Employers may also utilize many other theories, such as unfair business practices in violation of Business and Professions Code section 17200, intentional interference with prospective economic advantage, intentional misrepresentation and fraudulent concealment, as well as misappropriation of trade secrets under the Uniform Trade Secrets Act. 

So while noncompetition agreements are generally not enforceable under California law, employers are not without recourse to protect their propriety information. 

This week Gina Carano filed a lawsuit against The Walt Disney Company for terminating her as a cast member in the popular ‘The Mandalorian’ series.  Carano played Cara Dune in the series and was terminated for expressing conservative views on social media and is garnering a lot of attention based on the allegations and the fact that Elon Musk is paying for her legal team to bring this lawsuit.  The lawsuit highlights the interplay between California employees’ rights outside of the workplace with an employer’s right to terminate employees for views that differ politically.  California grants employees many rights, especially when they are involved in political activities away from the workplace and during their own time.  However, employers generally have the right to terminate employees under the at-will doctrine for any reason, as long as it is not for an illegal reason.  Carano’s lawsuit highlights how these rights can conflict under California law, and will be an interesting case to follow. 

In the complaint, Carano alleges that, “In announcing Carano’s termination, Lucasfilm made the following public statement: ‘Gina Carano is not currently employed by Lucasfilm and there are no plans for her to be in the future. Nevertheless, her social media posts denigrating people based on their cultural and religious identities are abhorrent and unacceptable.’”  The complaint continues, “Defendants’ statement characterizing Carano’s social media posts as ‘denigrating people based on their cultural and religious identities’ was false. It was also made with knowledge of its falsity, with the purpose of harming Carano, and to distract from Defendants’ illegal termination and treatment of Carano.”

The complaint quotes former CEO Bob Chapek, saying that Carano was fired “because she didn’t align with Company values.’ In doing so, Chapek said those company values are ‘values that are universal: values of respect, values of decency, values of integrity, and values of inclusion.” 

Carano alleges she was terminated from her role in ‘The Mandalorian,’ and that Disney cancelled production of ‘Ranger of the New Republic,’ even though she had previously been told the role was hers. 

Carano’s complaint alleges three causes of action: (1) Wrongful discharge in violation of Labor Code section 1101; (2) wrongful discharge and refusal to hire in violation of Labor Code section 98.6; and sex discrimination in violation of California Government Code section 12940.

The lawsuit raises interesting issues about an employer’s ability to terminate an employee over their expression of political views:

1. Employers cannot prevent an employee from engaging in political activity or affiliations of the employee’s choice.

As alleged in Carano’s complaint, Labor Code Sections 1101 and 1102 prohibit employers from controlling employee’s political activities.  For example, section 1101 prohibits employers from “[c]ontrolling or directing, or tending to control or direct the political activities or affiliations of employees.”  Section 1102 provides that, “No employer shall coerce or influence or attempt to coerce or influence his employees through or by means of threat of discharge or loss of employment to adopt or follow or refrain from adopting or following any particular course or line of political action or political activity.” 

2. Employers may not refuse to hire, or demote, suspend, or discharge an employee for engaging in lawful conduct occurring during nonworking hours away from the employer’s premises.

Carano’s lawsuit also alleges Disney violated Labor Code section 98.6, which makes it illegal for any employer to “discriminate, retaliate, or take any adverse action against any employee .. because the employee… engaged in any conduct delineated in this chapter, including the conduct described in subdivision (k) of Section 96….”  Carano’s complaint alleges that she was terminated and refused to hire because of her social media posts expressing conservative views, and this prevented her from engaging in or participating in politics. 

3. Carano’s sex discrimination claim is based on how Disney has treated male counterparts differently. 

Carano’s complaint also alleges violation of Government Code section 12940 for sex discrimination.  This section prohibits employers from discriminating against any employee based upon their sex, among other protected categories.  Carano’s complaint sets forth a variety of social media posts from fellow actors in ‘The Mandalorian,’ including the star, Pedro Pascal and Mark Hamill, Luke Skywalker himself.  The complaint details posts made by Pascal comparing President Trump to Hitler, comparing the treatment of “those entering the country illegally to the concentration camps of Nazi Germany,” and the following post which was subsequently deleted by Pascal:

The complaint also alleges that Disney rehired the director of the Guardians of the Galaxy, James Gunn, in 2019 after terminating him in 2018 for making obscene social media posts about rape and sexual activity with underage boys.  Carano claims that since Disney took no action against these co-workers due to their social media posts, she is being treated differently based on her sex. 

4. The First Amendment does not apply in this case because Disney is not a governmental agency.

This often raises the issue, don’t employees have a First Amendment right to speak their views and shouldn’t the First Amendment protect this activity?  Case law is clear that the First Amendment does not prohibit “a private corporation or person who seeks to abridge the free expression of others.”  For example, a newspaper publisher can fire an at-will employee “based on dissatisfaction with the content of or views expressed by the reporter’s writing.” Eisenberg v. Alameda Newspapers, Inc. (1999). 

5. California law protects other areas of employee conduct.

While these are not an issue in the Carano lawsuit against Disney, California law provides many protections for employee’s at-work and off-work conduct, including:

  • Employers cannot prohibit employees from discussing or disclosing their wages, or for refusing to agree not to disclose their wages. Labor Code Sections 232(a) and (b).
  • Employers cannot require that an employee refrain from disclosing information about the employer’s working conditions, or require an employee to sign an agreement that restricts the employee from discussing their working conditions. Labor Code Section 232.5.
  • Employers cannot prevent employees from disclosing information to a government or law enforcement agency when the employee believes the information involves a violation of a state or federal statute or regulation, which would include laws enacted for the protection of corporate shareholders, investors, employees, and the general public. Labor Code Section 1102.5.

February is off to a fast start for employers on a state and on the Los Angeles local level.  This Friday’s Five covers updates on California pay data reporting site, and LA City and County minimum wage announcements, deadline for employers to provide notices to employees who have noncompetition agreements, and updates to the required Notice to Employee under Labor Code 2810.5:

1. California’s payroll data reporting site opened for employers to meet the May 8, 2024 reporting deadline.

The California Civil Rights Department (CRD) opened the Pay Data Reporting portal on February 1, 2024 for California employers to submit their 2023 payroll reports.  California employers with 100 or more employees and/or 100 or more workers hired through labor contractors must submit reports annually.  This year the reports are due by May 8, 2024. 

The CRD updated the User Guide, templates, and the FAQs for California employers.  It is critical for employers to start gathering the information as soon as possible in order to meet the May 8th deadline. 

2. Los Angeles City minimum wage will increase to $17.28 per hour on July 1, 2024.

Los Angeles City announced on February 1, 2024, that the City’s minimum wage will increase to $17.28 per hour on July 1, 2024.  More information and the required posters for employers are available on the City’s website here

3. Los Angeles County minimum wage will increase to $17.27 per hour on July 1. 2024.

The County of Los Angeles maintains its own minimum wage, and the county recently announced that as of July 1, 202, its minimum wage will increase to $17.27 per hour. The County’s website with more information and updated workplace posters is available here.

4. February 14, 2024 deadline for employers to give notice regarding noncompetition agreements.

Two new companion laws drastically expanded California’ ban on noncompetition agreements in most employment contracts. These new laws bar employers from entering into or attempting to enforce noncompete agreements and require employers to give written notice to current and former employees revoking any existing noncomplete agreements.  SB 699 expands the prohibition on noncompete agreements in employment contracts to contracts signed out-of-state, voiding noncompliant provisions regardless of where or when the contracts were signed. 

In addition, SB 1076 requires employers to provide individualized written notice to all current employees and all former employees (employed after January 2022) stating that any existing noncompetition clause in an employment agreement or noncompete agreement with the employer is void. Employers who have utilized a noncompetition clause have until February 14, 2024 to provide this required notice to employees. 

5. Agricultural employers will be provided updated Notice to Employee by March 1, 2024.

Labor Code § 2810.5 requires employers to provide a Notice to Employees to all new hires that includes specific information.  Effective January 1, 2024, AB 636 requires employers to include “the existence of a federal or state emergency or disaster declaration applicable to the county or counties where the employee is to be employed, and that was issued within 30 days before the employee’s first day of employment, that may affect their health and safety during their employment.”  The Labor Commissioner published an updated Notice to Employee that incorporated this and the State’s increased paid sick leave requirements in the notice available here.

Starting on March 15, 2024, employers with employees admitted pursuant to the federal H-2A agricultural visa, employers must include specific information in the 2810.5 notice about their rights as agricultural workers.  The Labor Commissioner is required to publish the updated sample notice by March 1, 2024. 

The start of 2024 is the perfect time for companies to conduct a California employment law audit to ensure policies are compliant, managers are properly trained, and the company is maintaining the required records for the necessary length of time.  Here are five topics to review in conducting an audit and a few suggested questions for each topic (feel free to reach out to us as well for a self-audit, we conduct periodic audits for our clients as a preventative measure):

1. Hiring Practices

 2. Records

  • Are employee files maintained confidentially and for at least four years?
  • Are employee time records maintained for at least four years?
  • Are employee schedules maintained for at least four years?
  • Do the managers have set forms for the following:
    • Employee discipline and write-ups
    • Documenting employee tardiness
  • How is the employee documentation provided to Human Resources or the appropriate manager?
  • Who is involved in reviewing disability accommodation requests?
  • How are employee absences documented?

3. Wage and Hour Issues

  • Does the company have its workweeks and paydays established?
  • Are paydays within the applicable time limits after the pay period as required under the law?
  • Are employees provided with compliant itemized wage statements?
  • Are employees provided with a writing setting out their accrued paid sick leave each pay period? Has the amount of accrued paid sick leave reported to employees been updated to comply with California’s increased requirements in 2024?
  • Are employees properly classified as exempt or nonexempt?
  • Are any workers classified as independent contractors, and if so, could they be considered employees under AB 5?
  • Are nonexempt employees properly compensated for all overtime worked?
  • Is off-the-clock work prohibited?
    • Policy in place?
    • Are managers trained how to recognize off-the-clock work and what disciplinary actions to take if finding employees working off-the-clock?
  • Does the company’s time keeping system round employee’s time?
    • If so, is the rounding policy compliant with the law? Employers should note that meal breaks cannot be rounded pursuant to Donohue v. AMN Services, and whether California employers may use time rounding at all is currently being reviewed by the California Supreme Court. Employers are cautioned about using time rounding given these cases.
  • Are meal and rest period policies set out in handbook and employees routinely reminded of policies?
    • Does the company pay “premium pay” for missed meal and rest breaks? If so, how is this documented on the employee pay stub? Does the company have a clear definition of what is considered a missed break and document why the employee missed the break?
    • Do employees record meal breaks?
    • Are managers trained on how to administer breaks and what actions to take if employees miss meal or rest breaks?
    • Are employees provided attestations to document the reason if the employee missed, took a short, or a late meal break? (See Donohue v. AMN Services)
  • If employer provides vacation, is the policy properly documented, tracked, and is unused vacation paid out with the employee’s final paycheck?
  • Are all deductions from the employee’s paycheck legally permitted?
  • Are employees reimbursed for all business expenses, such as uniforms, work equipment, mileage for work, and for expenses incurred for working from home (such as internet, cell phones, etc.)?

 4. End of Employment Issues

  • Are employees leaving the company provided their final wages, including payment for all accrued and unused vacation time?
  • Are final paychecks provided to employees within the required deadlines?
  • Does the employer deduct any items from an employee’s final paycheck?
    • If so, are the deductions legally permitted? (Use caution, very few deductions are permitted under California law.)

5. Anti-harassment, discrimination and retaliation

  • Are supervisors provided with sexual harassment training every two years? (If employer has 50 or more employees, supervisors are legally required to have a two-hour harassment prevention training that complies with California law.)
  • Are there steps in place to provide nonsupervisory employees with 1-hour sexual harassment prevention training and once every 2 years thereafter? (Required for employers with 5 or more employees.)
  • Are supervisors and managers discussing the company’s open-door policy to employees at routine meetings with employees? Is this being documented?

As recently covered on this blog, the surge in Private Attorneys General Act (PAGA) lawsuits and the amounts of damages sought in these cases in California has become a significant cause for concern among the business community. PAGA, initially designed to empower employees to file lawsuits for labor code violations on behalf of themselves and other workers, has seen a dramatic increase in its application. This uptick has not only heightened the legal and financial pressures on companies across various industries but also raised questions about the broader implications for the state’s business environment. The California Supreme Court decided a key issue in Estrada v. Royalty Carpet Mills, Inc., regarding whether a trial court has discretion to limit PAGA cases that are unmanageable.  Here are five key issues California employers need understand about the Estrada decision:

1. Background of PAGA

PAGA became law in 2004 to authorize aggrieved employees to file lawsuits against employers on behalf of themselves, other employees, and on behalf of the State of California for Labor Code violations.  PAGA allows aggrieved employees to act as a “Private Attorneys General” to seek remedies against their employer not only for the violations committed against them, but also to recover any violations committed by their employer against other employees.  The statute was intended “to punish and deter employer practices that violate the rights of numerous employees under the Labor Code.” Iskanian v. CLS Transportation Los Angeles, LLC (2014).   The plaintiff’s ability to bring claims on behalf of other employees is referred to as “non-individual claims.” PAGA is “simply a procedural statute allowing an aggrieved employee to recover civil penalties … that otherwise would be sought by state labor law enforcement agencies.” Amalgamated Transit Union, Local 1756, AFL-CIO v. Superior Court (2009).  As the California Supreme Court explained in Estrada v. Royalty Carpet Mills, a PAGA plaintiff “represents a single principal, the [Labor and Workforce Development Agency] LWDA, that has a multitude of claims.”  Therefore, nonparty employees and the California government are bound by PAGA judgments, nonparty employees are not bound as to “remedies other than civil penalties.”

Civil penalties recovered under PAGA are split: 75% of the penalties go to the state, and 25% go to the aggrieved employees.

2. Supreme Court issue being reviewed in Estrada v. Royalty Carpet Mills, Inc.

The issue in Estrada was: Do trial courts have inherent authority to ensure that claims under the Private Attorneys General Act (Lab. Code, § 2698 et seq.) will be manageable at trial, and to strike or narrow such claims if they cannot be managed?

The California Supreme Court’s answer: No.  The California Supreme Court explained, “striking a PAGA claim on manageability grounds alone, as the trial court did in this case, is inconsistent with a plaintiff’s statutory right to bring such a [PAGA] claim and is beyond a trial court’s inherent authority.”  This decision resolved a split in authority between two cases: Wesson v. Staples of the Offices Superstore, LLC and Estrada v. Royalty Carpet Mills, Inc.

3. Distinction between class actions and PAGA suits.

The California Supreme Court explained in Estrada that a PAGA suit, while it is brought on behalf of all aggrieved employees, is procedurally different than a class action.  A class-action plaintiff can “raise a multitude of claims because he or she represents a multitude of absent individuals; a PAGA plaintiff, by contrast, represents a single principal, the [Labor and Workforce Development Agency] LWDA, that has a multitude of claims.”  Therefore, the due process rights of third parties are “not paramount.” 

Moreover, under federal law and California law, “manageability” is a factor used to determine whether a class action can be certified.  For example, the California Supreme Court in Duran v. U.S. Bank National Assn. (2014), held: “In certifying a class action, the court must also conclude that litigation of individual issues, including those arising from affirmative defenses, can be managed fairly and efficiently.  ‘[W]hether in a given case affirmative defenses should lead a court to approve or reject certification will hinge on the manageability of any individual issues.’ In wage and hour cases where a party seeks class certification based on allegations that the employer consistently imposed a uniform policy or de facto practice on class members, the party must still demonstrate that the illegal effects of this conduct can be proven efficiently and manageably within a class setting.”  However, the California Legislature did not write any type of manageability requirement into the “detailed statutory requirements for maintaining a PAGA claim.” 

4. Even though trial courts lack power to dismiss PAGA claims because of manageability, they have other tools to manage PAGA cases. 

The Court in Estrada explained that even though trial courts do not have the inherent authority to strike PAGA claims on manageability grounds alone, there are tools trial courts have to manage PAGA cases, such as:

  1. Discretion in setting what penalties, if any, to award to plaintiff;
  2. May limit witness testimony and other forms of evidence when determining the number of violations that occurred and the amount of penalties;
  3. May limit the scope of the PAGA claim; and
  4. May issue substantive rulings, including but not limited to, demurrers, motion for summary judgment or judgment notwithstanding the verdict in cases in which a plaintiff is unable to meet their burden of proof or pleads the claim in an overbroad or unspecific manner.

5. 2024 Ballot Initiative to reform PAGA

On another front, PAGA faces a battle for survival directly from the voters of California. The California Fair Pay and Employer Accountability Act aims to replace PAGA. This initiative has garnered enough signatures to secure a spot on the November 2024 ballot. If approved, it would allow employees to receive 100% of the penalties collected, a significant increase from the current 25% allocation. Additionally, it proposes to prohibit the awarding of attorneys’ fees in such cases and to double the penalties for employers who knowingly violate the law. More details about the initiative are available on the Californians for Fair Pay and Accountability website.

Under existing law, the California Health and Safety Code requires all food handlers to obtain a food handler card that meets certain training and testing requirements.  Effective January 1, 2024, SB 476 requires employers pay for the costs associated with the training and testing, in addition to paying the employee for the time associated with the training and testing.  Here are five key issues California employers must understand about the existing obligations as well as the new requirements under SB 476 for food handlers for 2024 and onward:

1. Employers must pay for the costs and wages for time to obtain a food handler card.

SB 476 requires that as of January 1, 2024, employers must pay for the costs of the food handler card course, as well as pay the employee for the time spent in in the training and time required to take the examination.  The employee must also be relieved of all other work during the time of the training and examination. 

2. Employers cannot condition employment upon having a food handlers card.

In addition, under SB 476, employers may not condition employment for an applicant or an employee on having an existing food handler card.  This requirement left a few open questions for employers, such as: Can employers give preference to employees who already have a card when hiring?  What if an employee has taken the food handler test multiple times but cannot achieve a passing score, can the employer decide not to continue employment with this employee?  Hopefully there will be some clarity provided on these issues by the Legislature. 

Employers are urged to update hiring materials, job ads, and train managers who are in charge of hiring employees to ensure compliance with this requirement that employment cannot be conditioned upon already possessing a food handler card. 

3. Food handler card timing requirements. 

SB 476 does not change the general timing requirement of when a food handler must obtain the card and the time period for which it is valid for.  As a reminder, food handler is required to obtain a food handler card within 30 days after the date of hire, and must maintain the food handler card throughout their employment.  Generally, food handler cards are valid for three years from date of issuance, and carry over to the employee’s new employer if they change employment during this time period. 

4. Food handler testing requirements.

SB 476 does not change the requirements for the training and examination required to obtain a food handler card.  As a reminder, the test must cover specific information set forth in Section 113947.2, and be designed to be completed within approximately two and a half hours.  The examination must consist of at least 40 questions, and in order to pass, the food handler must earn at least a 70% on the examination. 

The training may be offered through an in-person class and examination, or throught a computer or internet based course.  If offered in a computer or internet based course, there needs to be sufficient security to prevent fraud, but this does not require a proctor to be present during a computer or internet based course. 

The requirement to obtain a food handler’s card does not apply to a food handler who is employed by any of the following:

(1) Certified farmer’s markets.

(2) Commissaries.

(3) Grocery stores, except for separately owned food facilities to which this section otherwise applies that are located in the grocery store.

(4) Licensed health care facilities.

(5) Mobile support units.

(6) Public and private school cafeterias.

(7) Restricted food service facilities.

(8) Retail stores in which a majority of sales are from a pharmacy, as defined in Section 4037 of the Business and Professions Code, and venues with snack bar service in which the majority of sales are from admission tickets, but excluding any area in which restaurant-style sit-down service is provided.

(9) A food facility that provides in-house food safety training to all employees involved in the preparation, storage, or service of food if certain conditions are met.

(10) A food facility that is subject to a collective bargaining agreement with its food handlers.

(11) Any city, county, city and county, state, or regional facility used for the confinement of adults or minors, including, but not limited to, a county jail, juvenile hall, camp, ranch, or residential facility.

(12) An elderly nutrition program, administered by the California Department of Aging, pursuant to the Older Americans Act of 1965.

5. Employer’s documentation obligations.

The new law does not change the documentation the employers must maintain about the food handler cards for their employees.  As a reminder, the regulations require each food facility that employs a food handler to maintain records documenting that each food handler employed possesses a valid food handler card, and shall provide those records to the local enforcement officer upon request.

As we embark on the year 2024, California’s employment law landscape is poised to continue to present an unfriendly environment for employers. This article proffers some predictions for California employment law in 2024, examining potential legislation and emerging legal trends. Here are a few likely scenarios the Golden State might have in store for employers in the upcoming year.

1. Continued increase in PAGA litigation.

I’m not going out on a limb in predicting that PAGA litigation over meal and rest breaks will continue to rise in 2024.  However, I will predict that PAGA claims will start expanding more into other wage and hour allegations, including for claims of expense reimbursement and claims for paid sick leave under California’s Healthy Workplaces, Healthy Families Act of 2014 – especially with the increase of paid sick leave under the Act in 2024.  In March 2023, a California court of appeals held that plaintiffs could bring PAGA claims for alleged violations of California’s paid sick leave requirements in the Healthy Workplaces, Healthy Families Act of 2014.  In Wood v. Kaiser Foundation Hospitals, the court held, “Given the perceived necessity for mandating minimum paid sick leave, coupled with its documented understanding that traditional government institutions would be unable to adequately assure compliance, it seems inconceivable that the Legislature intended to prohibit PAGA actions to enforce the Act.”  As employers continue to place defenses against the traditional meal and rest break claims, it is likely that plaintiffs will be turning to other provisions in the Labor Code, such as the Healthy Workplaces, Healthy Families Act, for alternative PAGA claims. 

2. Industry focused regulations will become more prevalent.

On September 28, 2023, Governor Newsom signed AB 1228 into law, which repealed the FAST Act and implemented new regulations of the fast-food industry in California and will be raising the minimum wage for the fast-food industry to $20 per hour on April 1, 2024.  AB 1228 applies to national fast food chains, which are defined as “limited-service restaurants consisting of more than 60 establishments nationally that share a common brand, or that are characterized by standardized options for decor, marketing, packaging, products, and services, and which are primarily engaged in providing food and beverages for immediate consumption on or off premises where patrons generally order or select items and pay before consuming, with limited or no table service. Just as AB 1228 targets the fast-food industry, I predict that California will continue to see legislation that targets specific industries: because the law does not apply to every employer across the state, the opposition to such legislation is much less.  And, of course, once the law is passed and has gained traction in one industry, it is easier for the legislature to expand the law to other industries. 

3. Local jurisdictions will continue their employment regulations, including increased paid sick leave and minimum wages.

As has been occurring over the last few years, local cities and counties will continue to pass employment laws or increase their local requirements for minimum wage and paid sick leave.  As the UC Berkeley Labor Center reports, before 2012 only five local jurisdictions had minimum wage laws, but now there are 59 cities and counties that do.  I predict that local jurisdictions will start expanding their employment regulations and not only regulate minimum wage and paid sick leave, but many other aspects of the employment relationship. 

4. Increase in criminal actions brought in connection with Labor Code violations.

On September 6, 2023, District Attorney Gascon announced the creation of a new “Labor Justice Unit” (LJU) that will focus on pursuing criminal charges for employment violations.  Gascon said in the press release that the LJU “will bolster our existing fight to end wage theft and labor exploitation by providing a dedicated team of seasoned prosecutors and investigators whose focus will be the enforcement of these laws.”  The State Labor Commissioner, Lilia Garcia-Brower, joined Gascon in the announcement, and stated, “California needs more criminal prosecutions of wage theft to protect workers and honest employers from unfair competition. My office will continue to work closely with the LADA office to hold perpetrators accountable.”

5. Time rounding polices will likely be not permissible.

The California Supreme Court is currently reviewing the issue of whether California employers are permitted to use neutral time-rounding practices to calculate employees’ work time for payroll purposes.  The case is Camp v. Home Depot, and we expect a decision within the next 30 to 60 days.  I’m predicting that the Supreme Court will rule that employers cannot use time rounding any longer in California.  In 2021, the California Supreme Court held in Donohue v. AMN Services LLC, that employers may not use time rounding policies in context of meal periods.  I expect this line of reasoning will be broadened to apply for all timekeeping purposes. 

Happy New Year!  2023 has been another challenging year for California employers.  Some of the critical issues for employers included returning employees to the office after COVID-19, the California Supreme Court’s ruling that employers could not enforce PAGA waivers in arbitration agreements, the continuing onslaught of PAGA litigation, and the new employment laws passed for 2024.

This Friday’s Five focuses on the enormous amount of work put forth by our team at Zaller Law Group (ZLG) during 2023 in helping California employers deal with and stay informed with California legal developments:

1. 54 Blog Posts

The California Employment Law Report was a primary resource ZLG uses to provide updates about California employment law during the year.  Our blog will continue to be one of the first places new legal issues that employers need to know about are posted.  If you are not already a subscriber, you can subscribe to the blog here:

2. Over 20 webinars conducted

We hosted a number of webinars through our Firm, as well as in partnership with various organizations.  These webinars were a great source of information for California employers to stay informed about California’s quickly developing issues.

3. 71 YouTube Videos

There were over 68,000 views of the Firm’s video content on our YouTube channel.  Our number of subscribers to the channel continues to rise each year.  Currently there are over 2,300 subscribers. Feel free to check out our channel here: Employment Law Report – YouTube.

4. Most viewed LinkedIn Post: Discussion of Los Angeles Times article I was quoted in regarding litigation facing restaurants over service charges and tips.

The Los Angeles Times article discussed the ins and outs of tips and service fees under California law. If you’ve ever been puzzled by these rules as a consumer or a business, the article is a great read.  My LinkedIn post discussing the article was the most viewed post during 2023 – understandably as it is a critical issue facing California’s hospitality industry. 

5. 10 employees of Zaller Law Group.

The work described above is a testament to the dedication of the attorneys and staff at Zaller Law Group on how hard the team works to reach these accomplishments in 2023 – especially considering that this work is in addition to the normal litigation obligations the team provides in defending employers in court.

Wishing everyone the best for 2024, and we look forward to assisting California employers in successfully navigating California employment laws in the New Year!