The California Court of Appeals decision in Lewis v. Simplified Labor Staffing Solutions, Inc. is a good example of the enforceability of arbitration agreements that contain class and Private Attorneys General Act waivers.  As explained below, there are still arguments being addressed by California courts regarding whether arbitration agreements with Private Attorneys General Act (PAGA) waivers are enforceable.  Employers are well advised to review their use of arbitration agreements as we enter 2023.  Here are five items California employers should understand about the Lewis decision and the continuing changing PAGA landscape into 2023:

1. Background on California’s Private Attorneys General Act (“PAGA”).

PAGA was enacted to authorize aggrieved employees to file lawsuits against employers on behalf of themselves, other employees, and the State of California for Labor Code violations.  PAGA allows aggrieved employees to act as a “Private Attorney 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.

California’s PAGA was designed by the California Legislature offer financial incentives to private individuals to enforce state labor laws to recover certain civil penalties. As set forth below, the issue regarding whether employers can implement arbitration agreements with PAGA representative waivers is an issue that was addressed by the U.S. Supreme Court in June 2022 and will be addressed again by the California Supreme Court in 2023.

2. Background in Lewis v. Simplified Labor Staffing Solutions.

Lewis was hired by Simplified Labor Staffing Solutions, Inc. (“Simplified”) a multi-state temporary staffing services company in September 2019. On or about her hire date, Lewis signed an arbitration agreement that requires arbitration of all claims that arise out of employment relationship with Simplified.

In 2020, Lewis commenced a lawsuit against Simplified and brought her claims pursuant to Private Attorney General Act (“PAGA”), alleging a number of Labor Code violations, including failures to pay wages, provide meal and rest periods, maintain accurate payroll records, and reimburse business expenses. Simplified moved to compel arbitration in which the trial court denied, on the grounds that pre-dispute agreements to arbitrate PAGA claims are not enforceable. Subsequently, Simplified appealed the trial court’s decision which was reversed by the Court of Appeal.

3. The trial court’s ruling in Lewis was overturned based on Viking River.

In Lewis v. Simplified, the trial court initially refused to grant Simplified’s motion to compel arbitration based on the notion that the absence of state consent renders a pre-dispute arbitration agreement unenforceable. This decision was based on the California Supreme Court’s holding in Iskanian v. CLS Transportation Los Angeles, LLC. The trial court reasoned that because the State of California is the real plaintiff in interest in a PAGA action, it is the consent of the State, and not of the named employee plaintiff, that is required to compel arbitration. While the appeal was pending, the U.S. Supreme Court issued its decision in Viking River Cruises, Inc. v. Moriana, prompting the Court of Appeal to reverse the order denying Simplified’s motion to compel arbitration.

As the appellate court in Lewis explained:

This status requires enforcement of an employee’s predispute agreement to arbitrate PAGA claims. Congress’s “`preeminent concern . . . in passing [the FAA] was to enforce private agreements into which parties had entered.'” (Perry v. Thomas (1987) 482 U.S. 483, 490.) As a result, such agreements must be “`rigorously enforced.'” (Ibid.) Where, as here, an employee agrees to arbitrate future disputes with her employer and she later brings such a dispute as a PAGA action, courts must hold her to her choice of forum for the resolution of her dispute.

More information about the Viking River decision can be read here.

4. California Supreme Court to decide key PAGA case in 2023.

In Viking River, the U.S. Supreme Court held that the FAA preempts California’s prohibition on the employer’s ability to implement arbitration agreements with PAGA waivers.  However, Justice Sotomayor’s concurring opinion in Viking made it clear that this is not likely the last decision regarding PAGA waivers.  Justice Sotomayor stated that “[o]f course, if this Court’s understanding of state law is wrong, California courts, in an appropriate case, will have the last word.  Alternatively, if this Court’s understanding is right, the California Legislature is free to modify the scope of statutory standing under PAGA within state and federal constitutional limits.”

The California Supreme Court was quick to act based on the Viking decision, and in August 2022, granted review of Adolph v. Uber Technologies, Inc., and will decide the following issue:

Whether an aggrieved employee who has been compelled to arbitrate claims under the Private Attorneys General Act (PAGA) that are “premised on Labor Code violations actually sustained by” the aggrieved employee (Viking River Cruises, Inc. v. Moriana (2022) 596 U.S. __, __ [142 S.Ct. 1906, 1916] (Viking River Cruises); see Lab. Code, §§ 2698, 2699, subd. (a)) maintains statutory standing to pursue  PAGA claims arising out of events involving other employees” (Viking River Cruises, at p. __ [142 S.Ct. at p. 1916]) in court or in any other forum the parties agree is suitable.

It is likely that the California Supreme Court will issue a decision in Adolph in 2023.  Therefore, employers will need to continue to monitor this case for developments.

5. Issues regarding the implementation and storage of arbitration agreements going forward.

While arbitration agreements can be enforceable, California employers must be aware that arbitration agreements are routinely struck down by courts if they are not properly drafted and the parameters of whether employees can waive their ability to bring representative PAGA actions will likely be addressed once again in the Adolph case.

Challenging the enforceability of arbitration agreements in California courts will likely increase give the U.S. Supreme Court’s holding in Viking. As such, it is imperative for California employers to at least consider the following when implementing arbitration agreements:

  1. Avoid placing arbitration agreements into employee handbooks.
  2. Set forth arbitration agreements in standalone documents with signature lines for the employee and the employer.
  3. Ensure that the employee and a representative from the employer sign the document.
  4. Electronic signatures are acceptable, but employers must review how the electronic signature is recorded and ensure this could be documented in a manner that will be upheld in court when enforcing the arbitration agreement.
  5. If the arbitration agreement is voluntary, implement a system to track who has signed and not signed the agreement.
  6. Implement a system to securely store signed arbitration agreements. This can be a manual or electronic system, but it needs to be audited routinely to ensure that the agreements are store in a usable format, are backed up, and the appropriate people have access to these saved documents.

On November 22, 2022, the City of Los Angeles passed the Los Angeles Fair Work Week Ordinance (“LAFWW”) proposing to regulate retail businesses with employees working in the City.  The LAFWW states that there are over 140,000 workers in the retail sector in the “Los Angeles economy.”  The ordinance sets out that “unpredictability of work schedules endemic in the retail industry creates many socioeconomic burdens on worker of large retail establishments.”  The ordinance is waiting for the Mayor’s approval, and if approved, would take effect in April 2023.  While there have been similar proposed bills on the state level, none of them have passed.  Here are five key questions that employers must understand about the proposed ordinance:

1. Which employers does the LAFWW apply to?

The LAFWW applies to employers who:

  • Has 300 or more employees globally
  • Is identified as a ritual business or establishment in the North American Industry Classification System (NAICS) within the retail trade categories and subcategories 44 through 45; and
  • Directly, indirectly, or through an agent, exercises control over the wages, hours, or working conditions of any employee.

2. Which employees are covered under the LAFWW?

The LAFWW applies to employees who work at least two hours of work within the City of Los Angeles during a work week.

3. What are the predictable work schedule requirements under the LAFWW?

Retail sector employers are required to provide employees with written notice of the work schedule at least 14 calendar days before the start of the work period.  If the employer changes the schedule within the 14 calendar days, the employee has a right to decline any hours that were not included in the initial work schedule.

Predictability Pay

If the employee voluntarily consents to work the changed hours, the consent must be in writing.  In addition, the employer must pay the employee one additional hour of pay for each change to a schedule date, time or location that does not result in a loss of time to the employee or provides more than 15 minutes of additional work time to the employee.  If the change in the schedule reduces the employee’s work time by at least 15 minutes, then the employer must pay the employee one-half of the time the employee does not work as set forth in the initial schedule.

This “predictability pay” is not required under the following exceptions:

  • the employee makes the schedule change request;
  • if an employee accepts a schedule change initiated by the employer due to an absence of another employee or unanticipated customer need (but the employer must communicate that acceptance of the hours is voluntary and the employee has a right to decline);
  • if the employee accepted the hours posted by the employer before hiring another employee to perform the work;
  • if the employee’s hours are reduced as a result of the employee’s violation of law or the employer’s lawful policies and procedures;
  • if the employer’s operations are compromised pursuant to law or force majeure; or
  • if the extra hours worked require the payment of overtime premium.

4. Does the ordinance regulate other areas?

Yes.  In addition to predicable schedules, the LAFWW requires many other items, such as:

  • Good faith estimates provided to employees upon hire or upon 10 days of an employee’s request of the employee’s work schedule. If the employer deviates from this good faith estimate, the employer must have a documented, legitimate business reason that was unknown at the time the estimate was provided to the employee.
  • Employees have the right to request preference for certain hours, times, or locations of work.
  • Additional work hours must be offered to current employees before hiring new employees.
  • Employers may not require employees to find coverage for their shift if unable to work for reasons protected by law
  • Employers may not schedule an employee to work a shift that starts less than 10 hours from the employee’s last shift without the employee’s written consent. Employers still must pay a premium of time and a half for each shift that is not separated by at least 10 hours.
  • Employers have record keeping obligations as well as notice and posting of employee rights under the ordinance.

5. What are the penalties for noncompliance?

The City of Los Angeles can recover penalties up to $500 per violation per employee.  There is also a private right of action that permits employees to file claims for violation of the ordinance.

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.