Best Practices For California Employers

I just updated my Facebook settings to prohibit the software company from conducting facial recognition scans on my photos today due to a notification from Facebook that its software would be analyzing my likeness to automatically recognize me in photos posted on Facebook.  This was a coincidence because today I spoke at the American Bar Association’s National Symposium on Technology in Labor and Employment Law on the topic of biometrics in the workplace today.  As I’ve written about previously, Facebook has been sued for violating Illinois’ Biometric Information Privacy Act (BIPA) for the analysis it performs on individual’s images that are uploaded to Facebook, and indeed other companies are dealing with legal issues arising from Illinois BIPA.  This Friday’s Five consists of my five ruminations about biometrics use in the workplace.

1.     Technology is developing faster than society’s perceptions of privacy and the law’s ability to keep up. 

 Technology is quickly developing rapidly on biometric gathering and analysis of the information.  As reported today, cameras will likely have the ability to gather data to understand how an individual is feeling and thinking.  We are not at the point of a Star Trek type of body scanner to determine in an individual is sick or injured, but it is not inconceivable that this will be possible in the near future. Current technology allows the collection of a lot of biometric information that most of the public probably does not know is possible, such as thermo-images, identification by your “ear print,” heartbeats and possibly EEGs. It raises the key question: is your ear print, heartbeat, heat signature, or EEG signals private information?

2.     Only 3 states have legislation regarding the collection and analysis of biometric information of individuals. 

A bit surprising to me, all but three states allow for the collection and analysis by employers or consumer companies of biometric information without any type of disclosures or notice to individuals. Illinois, Texas and Washington state have statues that require some type of notice and voluntary consent before biometric information is collected by a private company.  There is no restriction regarding law enforcement collection of biometric data.

On one hand it is not, it is publicly shared and information that can be acquired through very unobtrusive means.  There does not have to be any contact (except for the EEG monitoring – which requires probes placed on the scalp) with the individual to obtain this information.  Indeed, this information can often be derived through taking a picture, with nothing more complicated than the camera found on most mobile phones.

On the other hand, the technology being developed can gather more intimate information about people beyond their identity.  Thermo-images, EEG scans, and carbon dioxide monitors can gather a lot more information than previously imaginable about an individual’s health and mood.  As this technology continues to develop, it will be able to derive even more detailed information about people’s health, propensities to become sick, such as likelihood of having cancer, or maybe even be able to detect cancer.

3.     Biometric information is useful in the employment context. 

Employer has already been using biometric information to track employees and for security issues, such as permitting access to certain areas based on fingerprint or retinal scans.  Employees are able to share passwords very easily to get around password safeguards, but it is harder (but not impossible) for them to share fingerprints or “earprints” (yes, you can be identified by your earprint, which are more reliable than fingerprints).

In the future, employers may be interested in tracking blood pressure, heartbeats, and the general anxiety level of employees for workers’ safety, workers comp claims, and productivity.  To the extent the employee asserts some accident or incident occurred on a certain day, it would be useful to have this biometric information for the same time period.  While it would be useful, does it violate an employee’s right to privacy?  While employees do have a reduced privacy rights a work as long as the employer provide notice to the employee that they may be monitored, California courts have also been clear in holding that employees do not forfeit all privacy rights while at work.

4.     If employers collect biometric information, is it simply creating a database that can be used by other third parties?

My libertarian tendencies cause an uneasy feeling in my stomach when realizing the current capabilities with biometric information.  This is partly while I opted out of Facebook’s facial recognition setting mentioned above.  I believe that many people have a concern that while an individual may consent that a company or an employer may collect and analyze their biometric information, it is unknown about what may happen to this information in the future.  This information is an asset that could be acquired by other companies in the future through company purchases or mergers.  This would result in the individual’s biometric information being available to third-parties that the individual never anticipated would have access to the information.  There are currently no legal safeguards restricting who has access to biometric information, expect the couple of states that have passed legislation on this issue.

5.     Once biometric data is hacked, it may be hard to identify people. 

Again, I recognize that employers and companies have legitimate uses for biometric information.  However, the type of information that is contained in biometric information under current technology and the information that will be able to be gathered by future technology is critical to an individual’s identity.  What if the data is hacked and used by a third party to steal an individual’s identity?  How will one be able to prove that they are who they claim to be if their finger print data base has been changed by a hacker?  These are issues that will have to be resolved as this technology and area of the law are developing.

I’m conducting a poll of the readers to see if they believe biometric information is private or not.  Please vote and share your comments here, and I will report back the data.

As I wrote about recently, on March 23, 2018, the Consolidated Appropriations Act, 2018 signed by President Trump changed federal law on the issue of tip pools and allows employers to share tips with back of the house employees.  In connection with the new law, the Department of Labor issued a memorandum this week further explaining the law.  Of importance to California employers, the DOL’s memo sets forth that:

In the meantime, given these developments, employers who pay the full FLSA minimum wage are no longer prohibited from allowing employees who are not customarily and regularly tipped—such as cooks and dishwashers—to participate in tip pools. The Act prohibits managers and supervisors from participating in tip pools, however, as the Act equates such participation with the employer’s keeping the tips.

The full Field Assistance Bulletin NO. 2018-3 can be read here.

My prior article setting forth common issues for California employers in regards to tip pools can be read here.

In addition, I recently posted a video explaining some tip pooling issues facing California employers:

Clients come to my firm often frustrated by California employment laws and their complexity, the raising costs of doing business in California (such as the higher minimum wage), and the legal system in general.  I have to agree that California poses one of the most difficult business environments businesses have to operate within, but I come back to thinking that many of the issues the clients voice frustration with can be managed if they are given the tools to do so.  This Friday’s Five lists five things every employment attorney should tell their California clients:

1. Litigation is expensive (and no, I’m not just talking about legal fees).

Two lessons here:  1) Don’t approach litigation with the attitude that you are fighting for principle (unless you have unlimited resources), and 2) focusing on human resources/policy development/legal compliance before litigation (see #5 below) can help prevent litigation and save resources.  For most businesses, litigation should be avoided, but to the extent it cannot be avoided, companies should usually view the transaction not as a personal vendetta, but as a business transaction.  Executives should weigh the costs of litigation versus the benefits just as they do in any other business decisions to determine whether to litigate the case or make an attempt at settlement.  But don’t approach this decision based on any attorney’s advice that litigation can be completed fast and inexpensively.  As there are defense costs, but as just or possibly costlier is the time and effort that the company and its managers and employees will have to spend defending the litigation instead of running the business.  This is often a hidden cost that must be taken into consideration.

2. Treating people with respect will likely result in less litigation.

I understand, it seems like California employment law is always adding new requirements on employers that are difficult to comply with.  However, with a small amount of time and attention, most of the issues that present the largest amounts of potential liability for employers can easily be managed.  But for the few occasions when it is legally unclear about what action the company should take, or if legal counsel cannot be reached in time for a decision where the law is not clear, employers that treat the employee with respect will usually avoid litigation.  I believe that, for the most part, employees understand that employers/managers/supervisors must make difficult decisions.  When the employee is treated with respect during a difficult employment decision, even though they might not like the decision, they will probably understand why it was made, and most likely will not hold a grudge against the company.

3. When in doubt, document.

As a litigator, the worse feeling I have is when the employer provides me with an employee personnel file for a problem employee, but the personnel file contains less than a few pages.  Employers’ primary defenses to many employment lawsuits will be won or lost on the documentation created and maintained by the employer.  The employee that believes they were wrongfully terminated will face a much tougher case if there were a dozen documented performance write-ups in their file setting for the date and examples of what the employee did or failed to do.  For additional information, see my prior post, Five best document storage and retention practices for California employers.

4. Train front line managers and supervisors.

A company’s managers and supervisors are the eyes and ears of the company.  They must be well trained about what issues can create legal liability for the company, as well as be trained in new developments in the law (for example, so they are not asking about criminal histories during the interview process since the beginning of 2018) and are trained about how to be managers (and treat people with respect).  This training for managers/supervisors is the difference between a good and a great company.

5. A small investment in human resources will provide a return.

As I wrote about last week, human resource departments need to have a more critical role in organizations and should be viewed on the same level as marketing and finance departments.  Giving HR managers budgets to proactively update policies, handbooks, and training sessions for managers will provide a positive return to the company.  Now it may not be an immediate net gain on the financials, but if one lawsuit is avoided because of the proactive measures put into place, this will be money well spent (see item #1).

In a huge development in the last couple of weeks, a change in federal law now permits California employers to include back of the house employees in tip pools.  This week’s post is an update and a general discussion about issues facing restaurants, hotels, and other industries where tipping and gratuities are left for employees.  This simple concept is surprisingly complex for employers.  Here are five issues employers should understand about tips 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. In the seminal 1990 case on tip-pooling, 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.” However, owners, managers, or supervisors of the business cannot share in the tip pool.  Employers need to be careful to exclude any employees who direct the work of other employees from tip pools, as lead shift supervisors, floor managers, and others who do not have the authority to hire or fire may still be considered a supervisor for tip pooling purposes.

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 bartender
  • 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) When do tip tips left on credit cards have to be paid, and can a deduction made for processing the credit card transaction?

If a patron leaves a tip on their credit card, the employer may not deduct any credit card processing fees from the tip left for the employee. Moreover, tips left using a credit card must be paid to employees no later than the next regular payday following the date the credit card payment was authorized. See Labor Code § 351.

4) Can California employers have back of the house employees share in a tip pool?

On March 23, 2018, the Consolidated Appropriations Act, 2018 signed by President Trump changed federal law on this issue and allows employers to share tips with back of the house employees.  Therefore, as of March 24, 2018, California employers may include back of the house employees in any tip pooling arrangements.  Prior to President Trump’s approval on the new law, this was not the case, as a Court in Oregon Restaurant and Lodging Association v. Perez, the Ninth Circuit Court of Appeals, which covers California, held in February 2016 that the Department of Labor’s regulations about who can participate in tip pools applies to states like California which do not permit tip credits.  The DOL had issued regulations that under the FLSA a tip pool is only valid if it includes employees who “customarily and regularly” receive tips, such as waiters, waitresses, bellhops, counter personnel who service customers, bussers and service bartenders.  According to the DOL past rule, a valid tip pool “may not include employees who do not customarily and regularly receive[] tips, such as dishwashers, cooks, chefs, and janitors.”  The Plaintiffs in Oregon Restaurant filed a petition for review to the United State Supreme Court.  Given the new law that took effect, the Supreme Court’s review of the case is not necessary.

While some states provide the employer with a “tip credit”, California law does not allow this. However, with the recent passage of the increase in California’s minimum wage, there is more discussion of examining whether a tip credit should be considered in California. However, current law does not allow employers to “credit” an employee’s tips towards the minimum wage requirement for each hour worked.

A service charge added to a customer’s bill is not a tip or gratuity and remains the property of the employer.  Therefore, the employer may distribute the service charge to its employees, including back of the house employees as it wishes.  However, if a service charge is distributed to employees, it is considered wages and effects the employee’s regular rate of pay for overtime purposes as discussed below.

5) Do tips change an employee’s 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.

However, if an employer implements mandatory service charges and shares these service charges with employees, the service charges must be considered wages for overtime and tax purposes.  Therefore, the employee’s regular rate of pay for overtime purposes will be higher when mandatory service charges are distributed to the employees.  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.

**Additional issue: Pay attention to other requirements under local ordinances regulating service charges.

For example, Santa Monica’s minimum wage ordinance requires employers to “distribute all Service Charges in their entirety to the Employee(s) who performed services for the customers from whom the Service Charges are collected.”  Santa Monica Municipal Code § 4.62.040.  “Service Charge” is defined as “any separately-designated amount charged and collected by an Employer from customers, that is for service by Employees, or is described in such a way that customers might reasonably believe that the amount is for those services or is otherwise to be paid or payable directly to Employees…under the term ‘service charge,’ ‘table charge,’ porterage charge,’ ‘automatic gratuity charge,’ ‘healthcare surcharge,’ ‘benefits surcharge,’ or similar language.”  Santa Monica Municipal Code § 4.62.010(g).

I recently read an article from the Harvard Business Review published in 1981, Managing Human Resources, by William Skinner.  The article raised great points about the lack of respect human resource departments receive in companies at the time.  The article is as timely as when it was published nearly 40 years ago.   Skinner’s article really hit a nerve for me in that companies manage, measure results, and set long terms goals for their functional departments, but these same type of management tools are not often used in human resources.  The article also illustrates that the issues existing nearly 40 years ago, are still persistent today.  Here are the five key lessons for me from the article illustrating why human resources is such a difficult field to manage:

1. Obtaining employee commitment to a company is difficult

Aligning the long term goals of a company with the often short term goals of employees is difficult at best.  Companies are working on 5 or 10 year plans, while employees are focused on the next year’s wages, job titles and potentially moving to another company for a better position.  As Skinner points out, “it’s rosy idealism to think that every employee is going to turn on and perform with 100% devotion to a company and its objectives.  Short-term economic interests are in clear conflict….Further, political factors such as Nader’s Raiders and the anti-big-business wing of the Democratic party exploit employees’ distrust of business, the corporation, and managers, whom employees often see as being out for themselves and siding with their corporate basses against the employee.”

So what is HR’s role to help with employee commitment?  Executives in the company need to understand that HR’s role is a long-term function, and provide HR with the time to develop and execute goals over a 5 year period (or even longer as Skinner recommends).

2. As companies grow, they lose their competitive advantage

Larger the company, the larger the risks are in trying new approaches to HR or employment practices.  Skinner points out that larger companies are inherently more conservative about innovation: “Decisions become more sensitive, have longer shadows, and, understandably, executives may become more cautions and may procrastinate or pass the buck when they can.”  Small start-up companies have been utilizing their size and ability to adapt quickly has a competitive advantage in the technology industry for years now based on the same assumption – big companies are less likely to innovate because they are the established player.  As the incumbent, the management team takes a defensive posture, not an innovative one.

3. Hiring is hard

Skinner sets outs that hiring is difficult: “Subtle differences in job and personal skills and in attitudes toward work and employers have made selecting an outstanding set of employees even more difficult.”  Skinner cites “mass education” as an issue that makes selecting employees even harder.  More of the population has a college degree, but this does not necessarily a good indication of how well the employee will do.  This is especially truer today.

The hiring aspect of HR’s function needs to be more than getting new employees through a new hire orientation and providing them a parking card.  HR needs to be involved in the hiring process to develop a process to ensure the best employees are hired, as opposed to simply filling empty seats.  I strongly believe that having A employees will lead to brining in other A employees.  Permitting B employees to pervade a company will result in only being able to hire C employees.  Hiring is hard, but the selection of employees determines the success of the company.

4. Managing people is hard

The issues facing HR are different than those facing other departments in a company, such as finance or marketing.  HR must manage morale, a HR manager’s decision are based in conflict, and each interaction with employees varies based on personalities.  On top of this, there is also  the ever changing legal landscape and legal obligations the employer faces, which often times the employees do not want to follow (for example getting tipped employees to clock out for an unpaid 30-mintue meal break when they are waiting to collect tips from a large party).   HR managers that can navigate these issues, and do it while maintaining a positive employee morale are a very rare breed, but necessary to a successful company.

5. There is a natural gravity towards alienation

Skinner points out that there are many forces that if left unchecked, are driving employees to become alienated from the company.  Therefore, HR must ensure that managers in the company are trained well on how to communicate with employees, able to listen to employee complaints, and when it is appropriate to involve HR in critical issues.  Managers within the company are the tool to stop alienation, but they must have the tools and know-how to accomplish this.  The process of having employees committed to the company, and trust the company, is a long-term process that can easily be destroyed by a single lawsuit or complaint.  I also view employee alienation with a direct correlation with increase in employment lawsuits.  Employees who are treated with respect, even when are confronted with their inadequacies for what the company needs, may not be happy with the decision, but they will be more likely to respect the decision.

When he opened his first restaurant at 27 years old (Union Square Cafe) and it took another 10 years after that for Danny Meyer to open his second restaurant, Gramercy Tavern.  But then four years later there were two, and the rate he started opening restaurants quickly grew, becoming one of the world’s most successful restaurateurs.  This Fridays Five summarizes five of the key issues about running a successful restaurant/business/career to take away from his interview on the AskGaryVee Show.  Restaurateur?  Perfect, these lessons are on point for you.  Not a restaurateur?  That’s fine too, the business lessons discussed by Danny and Gary are universal truths applicable to all industries.

1. Key lesson: Leave your camp sight cleaner than how you found it. 

Danny’s primary lesion was one that he learned when he was 10 years old at camp:  Leave the world a little better than you found it.

2. Four types of competitive personalities.

A successful leader/entrepreneur/person must understand who they are and their personality type.  Key to this understanding is the type of competitor you are.  Danny believes there are four competitive types of personalities:

  • A-competitive – i.e., not competitive at all
  • The person who competes primarily motivated to crush others
  • The person who compete because they hate to lose
  • The person motivated to compete to out-do their personal best

While there is no “right” personality, it is key that individuals understand what drives them, and their motivation.  Another takeaway related to competitive personalities: Leaders have to surround themselves with people who want to be champions.

3. Some of the most successful businesses are born out of accidents.

Danny admits that Shake Shack and Daily Provisions were born out of accidents.  It is important to stay flexible and be able to deviate from a plan to see new opportunities based on the facts/surroundings/people/resources that you are dealt.

4. Create permission to be held to a higher standard.

Invite criticism.  If you won a lot last year, you just need to win more this year.  The minute you start believing in your own success you are destined to fail.

5. Best ways to leverage social media.

People are confused and often link having a strong social media presence to having a successful brand or business.  This is not the case.  If your service and food sucks, social media presence simply speeds up the process of failing.  Social media followers does not equate to being a good restaurant.  After you get people into the funnel, what is important is what happens next.

The traditional PR companies are going to be out of business in 10 years.  Danny use to spend 80% of his marketing budget on public relations five years ago.  Today, 80% is spent on social media and marketing.  Some other key points about social media Danny and Gary discussed:

  • Owners should not be hung up on who is posting to social media.
  • If a company is bullish on social media, then they need to spend money on it.
  • It is all story telling. The form is just changing, it used to be Michelin, Zagat, and then Google.  Now it is social media.  Whatever is the technology of the time is what companies need to use for promotion.
  • The way not to be at the mercy of a third-party is to be a good communicator through the medium that is relevant to the end consumer. Two executions: produce the best product or be the best communicator in the current moment.  The holy grail is to do both.
  • The opportunity for restaurants has never been greater since the communications landscape is changing.
  • Not all of us are natural users of the various social media platforms. Use the social media platforms that you are comfortable with.  However, there is one cavate: companies need to be able to change with the times and don’t be romantic about the first platform you started using if it is clear that your customers are moving to a different platform.
  • Instagram is key for restaurants today.
  • Restaurants are not widget factories. They are about food and love.  Tell a story.

Danny concluded the interview with the question of the day: Restaurants are able to create a social atmosphere, but how can restaurants combine what people want: quick, less expensive, where they want it, with the hug that they are used to giving in their own places?

Yes, this week’s post was a bit off-topic for an employment law blog, but I represent a lot of restaurateurs so I found this interview very fascinating.  Hope you enjoyed this deviation from the law.

If an employee is injured and is unable to work overtime (i.e., over 8 hours in a day or 40 hours in a week), can an employer terminate the employee?  Potentially.  Employers may terminate employees who are unable to work overtime if this is an essential duty of the position.  This Friday’s Five reviews when being able to work overtime can be an essential duty of a position:

1. Disability discrimination under California and Federal law

The California Fair Employment and Housing Act (“FEHA”) makes it an “unlawful employment practice” “[f]or an employer, because of … physical disability … of any person … to discharge the person from … employment.” (Gov. Code § 12940, subd. (a)).

Similarly, the Federal ADA prohibits employers from discriminating against any “qualified individual on the basis of disability.” 42 U.S.C. § 12112.  In evaluating discrimination claims under both the ADA and FEHA, courts apply the McDonnell Douglas three-part burden-shifting framework. Raytheon Co. v. Hernandez, 540 U.S. 44, 49 (2003) (citing McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973)); Guz v. Bechtel Nat’l, Inc., 8 P.3d 1089, 1113 (Cal.2000). Under the McDonnell Douglas test, the plaintiff must first establish a prima facie case of disability discrimination.  If established, then the burden shifts to the employer to demonstrate a “legitimate, nondiscriminatory reason” for the challenged action.  Finally, the burden shifts back to the plaintiff to prove that the employer’s asserted reason is pretextual.

2. Unable to perform “essential duties” with a reasonable accommodation

There are certain exceptions to an employer’s liability for disability discrimination. For example, an employer may discharge an employee with a physical disability or medical condition where the employee, because of that physical disability or medical condition, “is unable to perform his or her essential duties even with reasonable accommodations, or cannot perform those duties in a manner that would not endanger his or her health or safety or the health or safety of others even with reasonable accommodations.” (Gov. Code § 12940, subds. (a)(1), (a)(2).)

So the question often turns then on what is an essential duty?  The identification of essential job functions is a “ ‘highly fact-specific inquiry.’ ” (Lui v. City and County of San Francisco (2012) 211 Cal.App.4th 962, 971.)

Evidence of whether a particular job duty is essential includes the following:

  1. The employer’s judgment as to which functions are essential;
  2. Written job descriptions prepared before advertising or interviewing applicants for the job;
  3. The amount of time spent on the job performing the function;
  4. The consequences of not requiring the incumbent to perform the function;
  5. The terms of a collective bargaining agreement;
  6. The work experience of past incumbents in the job; and/or
  7. The current work experience of incumbents in similar jobs.

29 C.F.R. § 1630.2(n)(3); see also Cal. Gov’t Code 12926(f)(2).  In making this determination, a jury will likely look at the job advertisement and the job description for the position at issue.  The jury would also likely review past job performance to see if the employee or others in similar job position routinely were required to work overtime.  In addition, if the employee works in the position and as an accommodation initially the employer attempts to accommodate the work restriction of no overtime, did the employee perform well?  Were there any complaints from customers?  Was all work completed?

3. Overtime can be an essential function of a job

Many courts have held that an employer’s requirement that the employee must be able to work overtime can be an essential function of a job.  Therefore, if the employee is unable to work overtime, the employee cannot assert a disability discrimination claim.  For example, in Rincon v. Am. Fed’n of State, Cnty, & Mun. Employees (N.D. Cal. Aug. 13, 2013) 2013 WL 4389460 the court granted summary judgment where the plaintiff was unable to work extended hours, which was an essential function of her union organizer job.  Also, in Davis v. Florida Power & Light Co. (11th Cir. 2000) 205 F.3d 1301, 1305–1306 the court found that where mandatory overtime work was an essential function of plaintiff employee’s position, summary judgment was properly granted for the employer, an electrical company, on the employee’s disability discrimination claim (“overtime is the tool that gets that work done”).   In Tjernagel v. Gates Corp. (8th Cir. 2008) 533 F.3d 666, 673, summary judgment was properly granted in favor of the employer where plaintiff was unable to perform essential function of overtime, which was an explicit requirement according to job description.

4. Employers must engage in the interactive process

In determining whether an employee’s disability can or cannot be accommodated, the employer is required to engage the employee in the good faith interactive process.  The Department of Fair Employment and Housing sets forth that this includes the following:

  • Employers must evaluate job applicants regardless of their actual or perceived disabilities. They can’t ask about the nature or severity of disabilities nor can they require an applicant to take medical or psychological exams that aren’t routinely given to other prospective hires.
  • Employers may ask an applicant about his/her ability to perform job-related functions and respond to a request for a reasonable accommodation.
  • Employers may (but do not have to) ask for medical certification of an employee’s or applicant’s need for reasonable accommodation.
  • If there is a question of what accommodation is possible or whether it will allow an employee or applicant to do the job, employers are required to engage in a timely, good faith interactive process with the person who needs support to do a job or his or her representative. This process can clarify what job functions are essential, what accommodations are possible, and whether accommodating an employee with disability will be an “undue hardship” to the business operation.

5. Job descriptions are essential

The analysis above should make it clear to employers that written and accurate job descriptions are essential.  Job descriptions should be carefully drafted and updated on a regular basis so that they can be utilized in establishing the essential duties of a job in disability litigation.

California employers need to review their hiring processes, interview questions, and on boarding practices to comply with California’s new laws regarding what types of questions can be asked and background checks. This video contains few portions of a presentation I conducted for a group of California employers covering new hiring laws facing California employers in 2018, including:

  • AB 168 (Labor Code section 432.3) effective January 1, 2018 bans employers from asking about prior salary history.
  • Criminal history prohibitions, and
  • the need to update applications and hiring forms to remove questions seeking this type of information

I just posted a new video on my YouTube channel about the issues facing employers with the state and local minimum wage increases in 2018 (embedded below).  At the end of the first quarter in 2018, it is a good time to review compliance with the state and local minimum wage laws, and to start to prepare for the local minimum wage increased on July 1, 2018.  For example, Los Angeles city and county minimum wage rates will increase to $13.25 per hour from the current $12.00 per hour for employers with 26 or more employees on July 1.  In addition to my regular blog posts, I’ll be featuring more videos on my channel as well, so please subscribe to both.

Employers need to understand their rights and obligations when they receive notice of a complaint through the Labor Commissioner.  The process can seem daunting, but with a little preparation it can be managed effectively.  This  Friday’s Five post sets out a brief explanation of the five steps that most Labor Commissioner proceedings follow:

Step one: Notice of claim

Employers usually become aware of a complaint to the Labor Commissioner when they receive a Notice of Claim and Conference from the Labor Commissioner’s office.  Employers are not required to file any paperwork in response to the notice of conference, but the employer or an employer’s representative is required to appear at the conference at the date and time indicated on the notice.  The conference is not the actual hearing on the matter, rather the conference is structured as a non-binding settlement conference during which the Labor Commissioner discusses the various allegations, the employer’s response, and will attempt to mediate a resolution between the parties.  Here is typical notice of claim that is sent to employers in most cases:

https://www.scribd.com/document/372844865/Sample-Notice-of-Claim-and-Conference-California-Labor-Commissioner

The Labor Commissioner can only hear disputes for “any action to recover wages, penalties, and other demands for compensation.”  Labor Code section 98(a).  Therefore, the Labor Commissioner cannot adjudicate any other types of employment claims, such as harassment or discrimination.  Likewise, if the employer has a counter claim against the employee, it cannot be heard by the Labor Commissioner, but must be filed in court.

Neither the employee and the employer are required to have an attorney during any stage of the Labor Commissioner process.  Whether or not an employer decides to have legal representation during the process depends on how comfortable the employer is with handling these issues and how well they understand the law in order to articulate the appropriate defenses available to them.

Step two: Preparing for the settlement conference

It is important for employers to review the paperwork provided from the Labor Commissioner’s office to ensure that they gather and bring the required paperwork to the settlement conference.

Usually the Labor Commissioner requires the following background information from the employer:

  1. Completion of the DLSE’s Report of Workers’ Compensation Insurance
  2. City business license
  3. Articles of information filed with the Secretary of State
  4. Any documentation that may be applicable to the employee’s claims: payroll records, time sheets, handbook and applicable policies, correspondence with the employee, etc.…

The employer should also review the employee’s allegations in the notice of claim and prepare an outline of defenses and facts that support their position.

Step three: Settlement conference

Although it is not mandatory, most Labor Commissioner offices will often set the matter for a settlement conference.  Employers often misunderstand the purpose of the initial settlement conference.  The settlement conference is not the hearing on the matter in which the Labor Commissioner takes sworn testimony and makes a decision.  While this step is not the actual hearing that will determine who should prevail, employers should prepare evidence and documents that will be persuasive during the settlement conference to establish defenses to the employee’s claims.  It is also good to listen to the employee’s facts and learn what they are claiming, what evidence they may have, and who may be witnesses.  It is important to learn this information in the event that the case does not settle and is set for a formal hearing.

Employers should also understand the arguments in support of their defenses so that those can be articulated to the employee and Labor Commissioner.  The more persuasive the employer’s case is, the more likely that the case can be resolved for a nominal amount during the settlement conference.

Employers should be prepared to negotiate during the settlement conference and be prepared with a range of how much they would be willing to settle the case. An experienced employment law attorney can help address the strengths and weaknesses of the claims and can help advise on the appropriate settlement offer, if any, that could be made.

Step four: Hearing

If the case does not settle at the settlement conference, or if there was never a settlement conference set, the Labor Commissioner will set the matter for a hearing pursuant to Labor Code section 98(a).  The hearings are often referred to as “Berman” hearings after the name of the legislator who sponsored the bill creating this procedure.  The basic idea behind Berman hearings is to provide a relatively fast way to resolve wage disputes.  However, with the state budget constraints, the hearings are usually set for about one year from the date that the settlement conference takes place.

The hearing takes place in the Labor Commissioner’s office, and is usually in a conference room.  The Labor Commissioner will tape record the hearing, and all witnesses’ testimony is provided under oath, just like it would be if they were testifying in court.  The Labor Commissioner can issue subpoenas compelling the attendance of parties at the hearing, as well as compelling parties to produce documents at the hearing.

Generally, employers need to be prepared but flexible for how the hearing will proceed.  The Labor Commissioner conducting the hearing has a lot of flexibility on how the parties are to present witnesses and conduct cross-examinations.  The rules of evidence are not controlling in the proceeding, but the Labor Commissioner generally has discretion to control the evidence presented during the hearing.  The Labor Commissioner can, and usually will, ask questions of their own to get a better understanding of certain issues.

After the hearing, the Labor Commissioner will issue a written order that must be served on all parties.  Unless this order is appealed, it is a binding judgment against the parties, and a certified copy of the order is filed with the superior court and judgment is entered.

For some additional tips about preparing for and attending a Labor Commissioner hearing, see my prior post here.

Step five: Potential appeal

Both the employee and the employer have the right to appeal the Labor Commissioner’s order within 10 days after it is served.  The order must be a written order, and will normally be served on the employer through the mail.  If the employer appeals the order, the appeal moves the case to the appropriate superior court.  The appeal is a de novo appeal, meaning that the case starts from the beginning in superior court and the Labor Commissioner’s order is given no weight.  Employers wishing to appeal the Labor Commissioner’s order must also post a bond in the full amount that was awarded in the order.  Given the short 10-day deadline to file an appeal, employer wishing to appeal Labor Commissioner orders must seek counsel immediately once they receive the order from the Labor Commissioner.