On Saturday, November 6, 2021, the United States Court of Appeals for the Fifth Circuit blocked the implementation of the OSHA Emergency Temporary Standard (ETS) that would require employers with 100 or more employee to implement a mandatory COVID-19 or weekly testing employees.  Our prior post here set forth what California employers need to know about the OSHA ETS.

The Court’s order stated, “Because the petitions give cause to believe there are grave statutory and constitutional issues with the Mandate, the Mandate is hereby STAYED pending further action by this court.”

OSHA cannot enforce the ETS until this stay is lifted, plus there are numerous other legal challenges to the ETS in other courts.  While this may give employers some additional time to comply with the ETS, how much time, if any at all, is unknown at this point.  In addition, California employers must also closely monitor the steps Cal/OSHA will take in response to the federal OSHA ETS.  Cal/OSHA could modify its ETS to comport with the federal requirements, which California employers would need to comply with.  Employers should consider continuing developing their polices and procedures to comply with the ETS in order to be prepared either way these legal challenges play out on the federal level, with a close watch on any actions taken by Cal/OSHA.

[Update: On November 6, 2021, the United States Court of Appeals for the Fifth Circuit blocked the implementation of the OSHA Emergency Temporary Standard (ETS) that would require employers with 100 or more employee to implement a mandatory COVID-19 or weekly testing employees.  Our update on the court’s ruling is here.]

On November 4, 2021, the Occupational Safety and Health Administration (OSHA) issued the Emergency Temporary Standard (ETS) that implements the Biden Administration’s COVID-19 vaccine mandate for large employers: employers with 100 or more employees.  The OSHA ETS will be published in the Federal Register and becomes effective, November 5, 2021.  Employer obligations begin on December 5, 2021.  Below is a brief overview of the OSHA ETS and what this could mean for California employers.

1. OSHA ETS vaccine mandate.

The OSHA ETS required covered employers (employers with 100 or more employees) to ensure all employees have been vaccinated by January 4, 2022.  Employees who have not received all necessary shots to be vaccinated must be tested on at least a weekly basis.  Should an employee test positive, they will need to be removed from the workplace.  All unvaccinated employees are required to wear face masks in the workplace.

2. Employers are required to pay for time for employees to obtain vaccine.

Starting December 5, 2021, employers are required under the ETS to provide “reasonable time” to each employee during work hours for each of their primary vaccination doses.  OSHA’s FAQs state that a “reasonable time” includes up to four hours of paid time, at the employee’s regular rate of pay, for the purposes of vaccination.  OSHA also explains that employers do not need to pay the employee if they obtain the vaccination outside of work hours.

The four hours of paid time that employers must provide for time off to receive the vaccination cannot be offset by any other leave that the employee has accrued, such as sick leave or vacation leave.

3. Employers are required to pay for time off to recover from vaccine side effects.

If an employee experiences side effects after receiving the vaccination, the employer must pay employees for time off work.  Generally, OSHA presumes employers who provide for up to two days of paid sick leave per primary vaccination dose for side effects, the employer would be in compliance with the requirement to provide a “reasonable cap” on paid time off.  When setting the “reasonable cap,” the employer does not need to account for the possibility of the vaccination resulting in a prolonged illness in the vaccinated employee (e.g., a severe allergic reaction). The reasonable time and paid sick leave that employers are required to pay employees to recover from side effects is in addition to four hours of paid time to receive each primary vaccination dose also required by the standard

For purposes of time off due to side effects of receiving the vaccine, employers can require employee to use accrued paid sick leave.  To the extent employees do not have any accrued paid sick leave, employers cannot require employees to run a negative balance of accrued sick leave for these purposes.  This requirement to pay employees does not apply retroactively for leave taken prior to December 5, 2021.

The OSHA ETS does not require employers to pay for COVID-19 testing.  However, other laws could require employers to pay for this testing – and California employers must approach this issue with caution.

4. Employers must provide employees certain information about COVID-19 vaccinations.

Covered employers must provide each employee, in a language and at a literacy level the employee understands any policies and procedures the employer establishes to implement the ETS. This includes:

    • any employer policies;
    • the process that will be used to determine employee vaccination status, as required;
    • the time and pay/leave they are entitled to for vaccinations and any side effects experienced following vaccinations;
    • the procedures they need to follow to provide notice of a positive COVID-19 test or diagnosis of COVID-19 by a licensed healthcare provider;
    • and the procedures to be used for requesting records.

Employers must provide additional information to unvaccinated employees, including information about the employer’s policies and procedures for COVID-19 testing and face coverings.

In addition, OSHA states that the information provided to employees must address:

  • COVID-19 vaccine efficacy, safety, and the benefits of being vaccinated (by providing the document, “Key Things to Know About COVID-19 Vaccines,” available at https://www.cdc.gov/coronavirus/2019-ncov/vaccines/keythingstoknow.html);
  • the requirements of 29 CFR 1904.35(b)(1)(iv), which prohibits the employer from discharging or in any manner discriminating against an employee for reporting work-related injuries or illness, and Section 11(c) of the OSH Act, which prohibits the employer from discriminating against an employee for exercising rights under, or as a result of actions that are required by, the ETS. Section 11(c) also protects the employee from retaliation for filing an occupational safety or health complaint, reporting a work-related injuries or illness, or otherwise exercising any rights afforded by the OSH Act (fact sheet available in English and Spanish); and
  • the prohibitions of 18 U.S.C. § 1001 and of Section 17(g) of the OSH Act, which provide for criminal penalties associated with knowingly supplying false statements or documentation (fact sheet available in English and Spanish).

5. Does the federal OSHA ETS preempt Cal-OSHA ETS and local county and city vaccine mandates?

OSHA and the White House have been clear that the federal OSHA ETS preempts any state and local laws on the issue.  During a call with reporters on November 3, 2021, a senior administration official stated:

The OSH Act provides that OSHA standards preempt any state occupational safety or health standard “relating to [the same] occupational safety or health issue” as the federal standard OSHA.

This ETS preempts the occupational safety and health issues of vaccination, wearing face coverings, and testing for COVID-19.  Thus, the standard preempts states, and political subdivisions of states, from adopting and enforcing workplace requirements relating to these issues, except under the authority of a federally approved state plan.

However, California employers will need to monitor the response from Cal/OSHA regarding what actions it will take because of the federal OSHA ETS.  The current Cal/OSHA ETS does not require employers of any size to mandate vaccines or require testing for employees who are not vaccinated.  Cal/OSHA could decide to adopt the federal OSHA ETS, or it could adopt a modified version that meets the requirements of the federal OSHA ETS with additional restrictions.  Employers need to monitor Cal/OSHA’s response over the next 30 days.  A collection of articles discussing the Cal/OSHA ETS is available here.   However, employers subject to the federal OSHA ETS should begin steps to comply with these requirements while also ensuring compliance with California’s additional requirements.

Moreover, there is a patchwork of various county and city requirements for vaccine mandates for employers across California.  There is an argument that these local requirements applicable to employers are preempted by the federal OSHA ETS.  However, employers are cautioned to seek legal counsel before deciding not to comply with any requirement from the state of California or a local jurisdiction.

Resources for Employers:

OSHA publish FAQs on the new ETS here.

For some suggestions on developing a mandatory vaccination policy, see our prior post here.

Also, my firm will be conducting a webinar on new laws facing California employers in 2022 on Wednesday, November 17, 2021.  We will be discussing the federal OSHA ETS during the webinar.  Registration for the webinar is here.

Labor Code section 226 requires that employers provide to employees semimonthly or at the time of each payment of wages, either as a detachable part of the check, or separately if wages are paid by personal check or cash, accurate itemized statements in writing.  The Labor Code refers to these documents as “itemized statements”, but they are also referred to as pay stubs, wage statements, and itemized wage statements.  Employers need to ensure compliance with the technical aspects of Labor Code section 226, and should audit this information on a regular basis, and should at least consider these five issues:

1. Ensure compliance with Labor Code section 226(a).

Labor Code section 226(a) requires the following information to be listed on employees’ pay stubs:

  1. Gross wages earned;
  2. Total hours worked (not required for salaried exempt employees);
  3. The number of piece-rate units earned and any applicable piece rate if the employee is paid on a piece rate basis;
  4. All deductions (all deductions made on written orders of the employee may be aggregated and shown as one item);
  5. Net wages earned;
  6. The inclusive dates of the period for which the employee is paid;
  7. The name of the employee and the last four digits of his or her social security number or an employee identification number other than a social security number;
  8. The name and address of the legal entity that is the employer, and if the employer is a farm labor contractor, the name and address of the legal entity that secured the services of the employer; and
  9. All applicable hourly rates in effect during the pay period, and the corresponding number of hours worked at each hourly rate by the employee.

2. Small technical errors can still result in substantial liability.

In Savea v. YRC Inc. (2019), the plaintiff alleged defendant YRC Inc. violated Section 226 because the company listed its fictitious business name (“YRC Freight”) on the wage statement.  Ultimately the Court of Appeals held that “[b]ecause YRC Inc. and YRC Freight are the same ‘legal entity,’ YRC did not violate section 226, subdivision (a)(8) by listing YRC Freight as the employer name on its wage statements.”  The court also rejected plaintiff’s argument that the employer did not provide its “address.”  The employer listed its full address on the pay stub, “10990 Roe Avenue, Overland Park, KS 66211.”  Plaintiff argued that the address should have also listed a mail stop code or ZIP+4, so it should have listed, “10990 Roe Ave. MS A515, Overland Park, KS 66211-1213.” (Italics added.)  The court also rejected this argument, and held that the employer provided its full address on the pay stub and was not required to list the mail stop or ZIP+4 number in the address.

Even though the employer prevailed in Savea, it is a good example of how closely the pay stubs will be examined in litigation, and even a minor technical error could create substantial liability.  In addition, in a different case, Clarke v. First Transit, Inc. (2010), the court held that an employer that only provided a logo with the words “First Transit” on the wage statement violated section 226(a)(8) because it “did not accurately reflect the employer name of First Transit Transportation, LLC, as opposed to First Transit, Inc., a separate and distinct entity.”  Therefore, even though the employer prevailed in Savea, companies must be very careful about listing the correct legal entity on the employee wage statements for compliance with section 226.

3. Potential penalties for violations. 

Labor Code section 226(e) provides that an employee “suffering injury as a result of a knowingly and intentional failure by an employer” can result in damages of $50 for the initial pay period and $100 per employee for each subsequent violation, not to exceed $4,000.  In addition, Labor Code section 226.3 provides that employers who violation Labor Code section 226(a), are subject to a civil penalty of $250 per employee per violation for the initial “citation, and $1,000 per employee for each subsequent violation.

4. Wage statements must be maintained for at least three years.

A copy of employee’s wage statements and records of the deductions must be kept on file by the employer for at least three years at the place of employment or at a central location within the State of California.  A “copy” includes a duplicate of the itemized statement provided to an employee or a computer-generated record that accurately shows all of the information required under the Labor Code.

Employers must provide copies of pay stubs to employees upon written or oral request no later than 21 days from the date of the request.  See Labor Code section 226(c).  For more information about responding to records requests by current and former employees, see our prior article here.

5. Don’t rely upon a payroll company to save wage statements.

Employers should not rely upon their payroll company to retain copies of employee wage statements.  First, the obligation falls on the employer do retain these, and many payroll companies do not necessarily save this information.  Second, if the employer changes payroll companies, it may be difficult to access the payroll information from the former payroll company.

Payroll companies are quick to provide employers copies of payroll reports listed the totals paid for all employee for a given time period.  While these reports show the wages and deductions, the payroll reports are not a substitute for a copy of the wage statements.  Employer must ensure that they saved, and have access to the wage statements provided to employees.

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

Misconception #1: If there was no formal write-up put in the employee’s file, then the action does not constitute disciplinary action.

There is no legal definition of what constitutes a write-up.  Likewise, there is no legal requirement of what needs to be placed in an employee’s personnel file.  As such, documentation about verbal warnings, e-mails, letters, even notes on napkins can be evidence to support an employer’s position that an employee was terminated because of performance issues.  The key item employers need to remember is if the employee challenges the reason for the termination, the employer needs to be able to offer support for the termination decision, either through testimony and/or documentation.  The documentation can come in any form and does not have to be a formal write-up that is maintained in the employee’s personnel file.  However, this is not to say that employers can do away with formal employee reviews and write-ups, as these are still good practices to maintain and, if done properly, can show trends of how well the employee has performed over extended time periods.

Misconception #2: Verbal warnings do not have to be documented.

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

Misconception #3:  Employees must sign disciplinary documents.

Some employers believe a write-up or documentation is not valid unless the employee signs the write-up, but this is not true.  While it is a good policy to have some system to prove the employee was presented with the write-up, it is not required that the employee sign the document.  It is common that an employee will refuse to sign such documents because they do not agree with it, but this should not prevent the employer from documenting the discipline.  To alleviate this issue, employers can provide a line on the document that states the employee does not agree with the write-up, but is signing the document only to acknowledge receipt.  If the employee still refuses to sign the document, the manager administering the write-up should simply record on the bottom of the document that it was presented to the employee, the date, and that the employee refused to sign.

Another method to avoid the argument that the employee never received the written warning is to email the employee.  This creates a great record of when the warning was prepared and sent to the employee, which will be hard for the employee to argue was never provided to them.

Misconception #4: Employers cannot fire employees on their first offense.

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

Misconception #5: Disciplinary documentation should be as broad as possible.

While write-ups and performance documentation should address the overall issue that the employee needs to improve, employers need to avoid general statements without providing specific examples.  For example, instead of writing-up an employee for having a “poor attitude,” the employer should provide a specific performance issue, such as the employee’s response to a customer was rude and not professional and set forth what the employee said.

A creative plaintiff’s lawyer can spin broad language as evidence to support their allegation that the reason was based on the employee’s complaint, race, gender or age. A good practice is to use concrete examples in the performance review, such as:

  • You were 25 minutes late today.
  • Your conduct towards your coworker was unacceptable today when you informed Mr. Jones that “it was not your job to help him and he should know how to do these tasks by now.” You are expected to assist others in all aspects of their job, and to the extent they need additional help, you need to provide assistance to ensure that the customer’s needs are met.
  • You did not provide adequate customer service last Tuesday when you ignored the customer’s request for help in retrieving a different size three times.

The employer should also document the time, date and facts of the incident.  Write-ups should also list the conduct that is expected of the employee in the future.  In providing concrete examples of how the employee did not meet expectations, it will be difficult for the employee to dispute the documentation later.

I’ve been working with several clients recently in reviewing various timekeeping and payroll systems and am amazed about the limited capability for some of the software being offered to employers.  With employees’ access to computers, point of sale systems, tablets and other technology, timekeeping should be a seamless function within a company in 2021, but surprisingly software companies often over promise on what they can deliver.  Below are five key functions that timekeeping software need to provide to California employers in 2021:

1. Timekeeping software must maintain records in an “indelible” form.

California Wage Orders require that employers maintain the employees time records “in the English language and in ink or other indelible form.”  “Indelible” means that the time entries cannot be erased, removed, or changed.

The Division of Labor Standards Enforcement (“DLSE”) issued an Opinion Letter on July 20, 1995 stating that “storage of records by electronic means meets the requirements of California law if the records are (1) retrievable in the State of California, and (2) may be printed in an indelible format upon request of either the employee or the Division.”

However, the DLSE issued another Opinion Letter on November 10, 1998 advising employers that the electronic time record data could be maintained outside of the State of California “as long as a hard copy of the records was maintained at a central location within California.”  As these two Opinion Letters contradict each other, employers could also look to the Wage Orders.  The Wage Orders require that time records “shall be kept on file by the employer for at least three years at the place of employment or at a central location within the State of California.”

Therefore, employers should consider maintaining a copy of employee time records, either electronically or on paper, within the State of California.

2. Must record required information – especially information about meal breaks.

California Wage Orders require employers keep “[t]ime records showing when the employee begins and ends each work period. Meal periods, split shift intervals and total daily hours worked shall also be recorded. Meal periods during which operations cease and authorized rest periods need not be recorded.”  IWC Wage Order 5-2001(7)(a)(3).

Additionally, Labor Code section 1174 requires employers to keep time records showing the hours worked daily and the wages paid, number of piece-rate units earned by, and the applicable piece rate paid.

It is essential that timekeeping software record the information required by the Labor Code.

3. Meal break attestations should be recorded electronically.

The California supreme court in Donohue v. AMN Services LLC (2021) explained that if an employer’s records do not show a compliant meal break was taken by the employee, it may be possible for the employer to use electronic attestations at the time an employee does not take a full meal break, a late meal break, or misses a break in order to ensure accurate tracking.

In Donohue, the employer’s timekeeping system provided a drop-down menu that prompted the employee to choose one of three options:

  1. “I was provided an opportunity to take a 30 min break before the end of my 5th hour of work but chose not to”;
  2. “I was provided an opportunity to take a 30 min break before the end of my 5th hour of work but chose to take a shorter/later break”;
  3. “I was not provided an opportunity to take a 30 min break before the end of my 5th hour of work.”

The employee was required to choose an option by the end of the pay period, and if the employee selected item #3, they were paid a premium wage for the missed break. The court recognized that this attestation by the employee would be enough to track meal break violations or to establish that the employee was provided a meal break but voluntarily chose to continue to work.

The use of electronic attestations by employers in California to defend against meal and rest breaks is critical.  Attestations shift the burden of proof back to the plaintiff to establish that they did not have an opportunity to take a meal or rest break, even if the time records show that they did not clock out for a compliant meal break.  The timekeeping software should require employees to complete the attestation before clocking out at the end of their shift.

4. Timekeeping software must record edits to time entries.

Timekeeping software needs to record when an employee’s time entry was changed.  It should record who made the change, when the change was made, why the change was made, and what exactly was changed.  The software should be able to print a report of all of the changes made, and should be sortable by time period, employee, and the manager who made the change.  The software should also be able to generate a report for select employees on a batch basis.  This is necessary in wage and hour litigation when a sampling of employee data is sometimes required to be disclosed to opposing counsel.

Being able to access this information quickly and efficiently is critical to defend against wage claims.  For example, a few years ago we defended a claim where an employee alleged that a manager edited time punches in an electronic timekeeping system to reflect less time.  However, upon review of the time entries, and the edits, the net effect of the manager’s changes resulted in an increase in the time the employee worked because the employee forgot to clock in at the beginning of the shift on a regular basis.

5. Retain back-up copies in a usable format that the employer can access, even if the employer is no longer a client of the software provider.

The statute of limitations for many wage and hour class actions in California is four years under Business and Professions Code section 17200 (this is one year longer than under the Wage Orders mentioned above), and employers should consider keeping wage statements and other wage and hour records for four years.  Just as critically important, this data needs to be saved in a manner that is easily accessible and usable.  Records for thousands of employees maintained on paper printouts held in a storage unit are not easily accessible, and create huge costs when these paper records need to be reviewed and potentially relied upon in litigation.  Digital time records that are stored in a common format, such as a data file that is compatible with Excel, save a huge amount of time and costs when needed in litigation, and can ultimately be an advantage in litigation.

I enjoy working with entrepreneurs; I love their spirit, drive, and persistence, even when the odds are stacked against them.  This is especially true now dealing with the labor shortage, supply chain disruptions, and irate customers.  But what makes entrepreneurs keep working, taking risks, and showing up each day?  Here are five qualities that I believe make a successful entrepreneur/business founder:

1. They don’t do it for the status.

A restaurant client of mine opened a new restaurant a few years ago and invited friends and family to the soft opening.  You would think that this would be a great time for the operator to celebrate his success and meet with the people attending the event, right?  He was one of the first people I saw walking up to the restaurant because he was in the parking lot picking up trash.  I’ve changed this story a bit to protect the identity of my client – but the essence is true – this successful entrepreneur was picking up garbage to ensure customers had a great first experience.

If an entrepreneur is doing it for the status, they will not do the dirty work, put in the long hours, or have the push that is required to have a chance at success.  Entrepreneurs understand they must do everything in their company – even pick up trash during the launch.

2. They can rely upon and follow their own instinct.

There are many different stats on the failure rate of startups – but the often cited percentage is that 90% fail.  Also, only 25% of small businesses will employ more than just the founder.  Entrepreneurs are confident in their own decisions and have the fortitude to be held accountable for their decisions.  It is a difficult lifestyle (often not discussed, but getting more attention recently) that can be very lonely.  In the likely event that the startup fails, the entrepreneur must be comfortable with their contacts, friends and family members who will likely criticize the entrepreneur’s attempt as being foolish.  But if the company succeeds, these same critics will be the first ones who would say that they always knew the entrepreneur “had it in them.”  Entrepreneurs don’t internalize the shame or the accolades, and they continue on following their own instincts.

3. They select great teams and develop a great culture.

Entrepreneurs have a great EQ and cultivate the people around them and on their team.  At first, when the company cannot afford other employees and executives, it is critical that they have friends and family that they can trust to receive honest feedback.  As the company grows, these positions are filled with other executives selected by the entrepreneur.  As Gary Vaynerchuk points out, “The higher you climb and the more the business grows, the stakes become a lot bigger. More and more people are depending on you to make the right decisions for them and the company. The league you’re playing in and the skill set required jumps from pickup ball to NBA very quickly.”  It is critical that the entrepreneur selects the right team, and communicates the culture of the organization.  This stars with just two employees.

4. They are comfortable with uncertainty.

One trait that I believe is essential for an entrepreneur is the ability to be comfortable with uncertainty.  It may even extend beyond uncertainty, to include the ability to be comfortable with risk.  A lot of people who claim they are a start-up founder say they like the risk, but let’s face it, once there is a major setback or the company fails, most people go and get a job.

5. They are realistic, but don’t let the status quo set their reality.

Yes, there are many obstacles facing the entrepreneur, and yes, no one has done this before, but the entrepreneur sees potential opportunities where others have not.  This takes a very refined skill of understanding reality, while also being opportunistic, just enough to see something that others have not seen before.  For Bill Gates and Paul Allen, this was the insight that PCs would become a fixture in every business and house, when the companies that dominated the field, such as IBM, were certain that mainframe computers were the future.  For Jeff Bezos, it was the insight that he could take an on-line book company and evolve it to sell everything to everyone.

Are these qualities in a person’s DNA or are they learned over time?  I believe it is a bit of both – some natural tendencies in combination with hard work that can ultimately lead to a successful business.

[Updated 10/14/21 to reflect that Mayor Garcetti signed the Los Angeles City ordinance.]

Adding yet another layer of confusion into who must receive a COVID-19 vaccine, Los Angeles City Council enacted a vaccine mandate for indoor venutes.  This ordinance is not to be confused with the recent Los Angeles County order issued on September 28, 2021 requiring patrons and employees of certain establishments to be vaccinated.  Here are five issues employers in Los Angeles should understand about the Los Angeles County and City requirements:

Los Angeles City ordinance:

  1. The City Council will vote on the ordinance next week (the week of October 4, 2021).  [Update: On 10/6/21 the City Council passed the ordinance, which which was signed by Mayor Garcetti.]
  2. The ordinance applies to businesses where food or beverages are served, including, but not limited to, restaurants, bars, fast food establishments, coffee shops, tasting rooms, cafeterias, food courts, breweries, wineries, distilleries, banquet halls, and hotel ballrooms. It also applies to gyms, entertainment and recreation venues, and personal care establishments (such as spas).
  3. The ordinance does not apply to employees. The ordinance only requires patrons to provide proof of vaccination to enter an indoor portion of a business covered by the ordinance.  A patron can be exempted from this requirement due to a medical condition if the patron provides a “self-attestation” that the Patron has a medical condition or a sincerely held religious belief that qualifies the Patron for one of these exemptions.  If the patron provides the self-attestation, they can only enter the indoor portion of the establishment if they provide proof of a negative COVID-19 test and photo identification.
  4. The ordinance requires businesses to display an “advisory notice” informing patrons that, beginning on November 4, 2021, they must provide proof of vaccination in order to enter any indoor portion of the business.
  5. Enforcement of the ordinance would begin on November 29, 2021, and businesses face progressive fines reaching $5,000 for the fourth and each subsequent violation. There are still questions about how the City will enforce the ordinance.  Councilman Joe Buscaino raised this issue this week noting that the city is still researching which agency would enforce the ordinance.

Los Angeles County order implemented on September 28, 2021:

  1. Los Angeles County order is effective October 7, 2021.
  2. Bars, breweries, wineries and distilleries:
    1. From October 7 to November 3, these establishments must require patrons who are 12 years or older to provide proof of COVID-19 vaccination status for entry of at least one dose.
    2. Beginning November 4, 2021, they must require all patrons 12 years or older to provide proof of full vaccination in order to have indoor service.
    3. By November 4, 2021, all on-site employees must provide proof of full vaccination. Employees are eligible to exemptions based on medical or sincerely held religious beliefs, but these exempted employees must be tested once a week and wear a surgical mask or higher-level respirator.
    4. Unvaccinated patrons may enter the indoor portion of the establishment for limited time periods for specific reasons, such as using the restroom, picking up an order, or make repairs at the business. However, these individuals must wear a mask.
  3. Nightclubs and lounges:
    1. From October 7 to November 3, these establishments must require patrons and on-site personnel to provide proof that they have received one dose of a COVID-19 vaccination for indoor service. On November 4, all patrons and on-site personnel must provide proof of being fully vaccinated in order to receive indoor service.
    2. Employees are eligible to exemptions based on medical or sincerely held religious beliefs, but these exempted employees must be tested once a week and wear a surgical mask or higher-level respirator.
  4. Restaurants:
    1. The County “strongly recommends” that restaurants reserve indoor seating and service for patrons who are fully vaccinated.
    2. The County’s order provides that restaurants “should” verify the full vaccination status of all patrons who will be seated indoors.
  5. Limited exceptions for unvaccinated individuals to enter indoors at bars, breweries, wineries, distilleries, nightclubs and lounges: Unvaccinated patrons may enter the indoor portion of the establishment for limited time periods for specific reasons, such as using the restroom, picking up an order, or make repairs at the business.  However, these individuals must wear a mask.

Los Angeles County developed an overview for businesses regarding the vaccination or test requirement, which is available here.

Los Angeles County also developed a business toolkit for compliance with the order, which is available here.

On September 22, 2021, Governor Newsom signed AB 701 into law aimed at “warehouse distribution centers” and the use of quotas.  While the law was drafted to curtail alleged practices of Amazon, it will impact many warehouses across California.  Here are five key questions California employers need to understand about the new law:

1. Which employers must comply with AB 701?

The new law applies to employers with 100 or more employees at a single warehouse distribution center or 1,000 or more employees at one or more “warehouse distribution centers” in the state of California.  Warehouse distribution centers are defined as:

an establishment as defined by any of the following North American Industry Classification System (NAICS) Codes, however that establishment is denominated:

(A) 493110 for General Warehousing and Storage.

(B) 423 for Merchant Wholesalers, Durable Goods.

(C) 424 for Merchant Wholesalers, Nondurable Goods.

(D) 454110 for Electronic Shopping and Mail-Order Houses.

The law makes clear that “warehouse distribution center” does not include NAICS Code 493130, Farm Product Warehousing and Storage.

2. What quota disclosures are required to employees?

The law defines “quota” to mean, “a work standard under which an employee is assigned or required to perform at a specified productivity speed, or perform a quantified number of tasks, or to handle or produce a quantified amount of material, within a defined time period and under which the employee may suffer an adverse employment action if they fail to complete the performance standard.”

Employers must provide to each employee upon hire or within 30 days once the law takes effect, a written description of each quota that applies to the employee, and the “quantified number of tasks to be performed or materials to be produced or handled, within the defined timer period, and any potential adverse employment action that could result from failure to meet the quota.”

Current and former employees who believe that meeting a quota caused a violation of their right to take a meal or rest period or required them to violate an occupational health and safety law, the employee may request the following:

  • A written description of each quota applicable to them, and
  • The employee’s own “personal work speed data.”

Current and former employees may make this request orally or in writing, and employers have 21 calendar days from the date of the request to provide the information.

3. Which quotas cannot be enforced by employers under AB 701?

The new law provides that employees shall not be required to meet quotas that prevents the employee from taking compliant meal and rest periods, using bathroom facilities (including reasonable travel time to and from the bathroom), or violating occupational health and safety laws.  Employers may also not take adverse employment actions against employees who do not meet a quota due to taking a compliant meal and rest break or complying with the health and safety laws, or if the quota was not disclosed to the employee as discussed above.

4. What are the penalties for violations?

Employees may bring a lawsuit for injunctive relief to obtain compliance with the requirements, and if they prevail in the action, they are entitled to recover costs and attorney’s fees.  Employers may also be exposed to penalties in representative actions brought under the Private Attorneys General Act (PAGA).  However, the new law does provide that if the employee files a PAGA claim for violations under the new law, employers can cure alleged violations under Labor Code section 2699.3.

5.  When does the law take effect?

AB 701 takes effect January 1, 2022.

California employers have a lot to keep their eye on over the last few weeks. For this week’s Friday’s Five article, here is a list of five key issues California employers should know about and how these issues will likely impact their workplace:

1. New decision approves striking unmanageable PAGA claims.

In Wesson v. Staples The Office Superstore, LLC, the California Court of Appeals held that trial courts have inherent authority to ensure that Private Attorney General Act (PAGA) claims are manageable at trial, and may strike PAGA classes that are not manageable.  Plaintiff’s lawsuit was on behalf of 346 Staples general managers, arguing that the GM’s were misclassified as exempt employees.  Plaintiff contended that the trial court lacked authority to ensure PAGA claims are manageable arguing that there is no requirement of manageability in the PAGA statute.  Defendant argued that plaintiff’s claims would require individualized assessments for each GM to determine if each individual GM was properly classified, and that this would lead to “an unmanageable mess” that “would waste the time and resources of the Court and the parties.”

The holding in Wesson provides defendants an additional defense against the tide of PAGA claims filed against California employers.

2. California COVID-19 supplemental paid sick leave set to expire September 30, 2021.

California’s supplemental paid sick leave that requires employers with more than 25 employees is set to expire on September 30, 2021.  The law requires employers to provide up to 80 hours of paid leave for certain qualifying reasons.  Absent emergency legislation or an executive order by Governor Newsom, this requirement will end on September 30.

Employers need to be aware of local city or county ordinances that still may be in place requiring paid sick leave for employees.

3. Vaccination mandates on the federal, state, and local levels.

On September 9, 2021, Biden announced a move to mandate private employers with more than 100 workers to require vaccinations or to test for COVID-19 on a weekly basis.  More information about Biden’s vaccine mandate can be read in our prior post here.  As of the date of this writing, OSHA has not published any guidelines or requirements for employers.  This requirement is likely to be announced within the coming weeks.  It has been reported that employers will have 50 to 90 days to comply with the requirements once they are announced.

California does not have a general state-wide mandate (but this could also change in the coming weeks – likely through additional rules made through Cal/OSHA’s ETS).  California does have mandates for teachers and school staff, and for certain health care workers who must be vaccinated by September 30, 2021.

In addition, many local counties and cities have passed or are considering vaccination mandates, such as Los Angeles City and Palm Springs (which only applies to patrons).  Los Angeles County will be issuing a new Health Officer Order requiring patrons and employees of indoor bars, wineries, breweries, nightclubs and lounges.  The order will require customers and employees to have at least one dose by October 7, and the second dose by November 4.

4. New case upholding ban of mandatory arbitration agreements in California.

In U.S. Chamber of Commerce v. Bonta, the Ninth Circuit upheld portions of California’s AB 51 that makes it an unlawful practice for employers to require applicants or employees to enter into arbitration agreements as a condition of employment.  More information about the decision is in our prior post here.  In short, employers with voluntary arbitration programs are unaffected, as AB 51 only regulates mandatory agreements. Also, existing mandatory arbitration agreements are not invalidated, but employers with mandatory arbitration programs should consult legal counsel for guidance on this new decision.

5. California Supreme Court reviewing extend of penalties available in meal and rest break cases.

In Naranjo v. Spectrum Security Services, the California Supreme Court is reviewing the extent of penalties that a plaintiff can recover for meal and rest break violations.  At issue in the case is whether a violation of Labor Code section 226.7, which requires payment of premium wages for meal and rest break violations, also triggers penalties under Labor Code section 203 (waiting time penalties) and section 226 (wage statement violations).  The case is fully briefed by the parties.  The Court’s ruling will greatly impact the value of wage and hour cases being litigated in California.  We will report on the decision once it is issued.

In 2019, California enacted AB 51, making it an unlawful employment practice for employers to require applicants or employees, as a condition of employment, to waive any right, forum, or procedure relating to a Labor Code or FEHA claim. The short version of this word salad is that employers couldn’t mandate arbitration agreements. However, a federal district court preliminarily enjoined enforcement of AB 51 two days before the law was scheduled to go into effect.

Wednesday, a three-judge panel of the Ninth Circuit partially vacated that injunction.

At issue is whether AB 51 is preempted by the Federal Arbitration Act, which prohibits states from disfavoring arbitration agreements relative to other contracts. The district court agreed with business groups that AB 51 conflicted with the FAA. AB 51 has several components. One is the prohibition described above. A second component is a ban on discriminating or retaliating against an employee who refuses to sign an arbitration agreement. Additionally, employers who violate these prohibitions are guilty of a misdemeanor and can also be sued by the employee. The district court found that all of the foregoing as preempted by the FAA.

The Ninth Circuit panel split 2-1 in finding that the ban did not conflict with the FAA. The majority reasoned that the ban merely regulates pre-agreement conduct, and that AB 51 does not invalidate any arbitration agreement. Moreover, the FAA’s purpose is not frustrated by AB 51 because the FAA is concerned with enforcing voluntary arbitration agreements, not mandatory ones.  However, the majority found that the criminal penalties and civil liability are preempted (and thus remain enjoined) to the extent they apply to executed arbitration agreements.

This “bifurcated” approach drew sharp criticism from the dissenting justice: “In case the effect of this novel holding is not clear, it means that if the employer offers an arbitration agreement to the prospective employee as a condition of employment, and the prospective employee executes the agreement, the employer may not be held civilly or criminally liable. But if the prospective employee refuses to sign, then the FAA does not preempt civil and criminal liability for the employer under AB 51’s provisions. In other words, the majority holds that if the employer successfully ‘forced’ employees ‘into arbitration against their will,’ … the employer is safe, but if the employer’s efforts fail, the employer is a criminal.”

This decision leaves us with two big questions.

First, what does this mean for the future of AB 51? After all, the district court order was only a preliminary injunction meant to maintain the status quo while the merits of the litigation could be fully resolved. However, the Ninth Circuit’s decision resolved legal questions that will definitely bind the district court and likely bind the Ninth Circuit throughout the rest of the litigation. This means that AB 51 (minus the criminal penalties and civil liability in part) will likely survive unless the entire Ninth Circuit rehears the matter or the Supreme Court agrees to take up the matter. If the Supreme Court does grant certiorari, we will get another chapter in a long-running dispute between the Court and California over arbitration.

Second, what are employers to do now? Those with voluntary arbitration programs are unaffected, as AB 51 only regulates mandatory agreements. Existing mandatory arbitration agreements are not invalidated, either. However, employers with mandatory arbitration programs should consult legal counsel for guidance on this new decision.