As reported previously on this blog, the minimum wage for California’s fast-food operators will increase to $20 per hour on April 1, 2024 under AB 1228.  The new law applies to national fast food chains, which are defined as “limited-service restaurants consisting of more than 60 establishments nationally that share a common brand, or that are characterized by standardized options for decor, marketing, packaging, products, and services, and which are primarily engaged in providing food and beverages for immediate consumption on or off premises where patrons generally order or select items and pay before consuming, with limited or no table service. For purposes of the definitions in this part, “limited-service restaurant” includes, but is not limited to, an establishment with the North American Industry Classification System Code 722513. Bakeries and grocery stores are exempt from this definition and are not included as fast-food restaurants. 

Here are five essential steps fast-food operators who are covered under AB 1225 should review for this April 1 deadline:

1. Update wage rates with payroll company.

    Operators need to communicate with their payroll company to ensure that the $20 per hour minimum wage is updated and reflected on all employees’ pay stubs provided for pay periods after the April 1st deadline. 

    2. Ensure that all overtime rates are calculated at the new rate.

    Likewise, operators need to ensure that all applicable overtime rates are calculated properly for all overtime worked starting April 1. 

    3. Update pay stubs to reflect increased wages.

    All pay stubs issued for pay periods that include work done since April 1, 2024 must include the increased minimum wage rate.  Employers need to work closely with their payroll companies to ensure that work prior to the April 1 deadline, and work completed on and after April 1 are reported correctly on employees’ pay stubs. 

    4. Ensure new employee notices include the updated wage information.

    Covered businesses must also update the notices to employees required under Labor Code section 2810.5 are updated with the new minimum wage for any employees hired on April 1, 2024.

    5. Audit exempt employee classifications and ensure all exempt employees are paid at least $83,200 annually.

    Operators cannot forget to review the status of exempt employees.  Under AB 1228, fast-food industry employers covered under the law must pay exempt employees at least $83,200 on a salary basis (a monthly salary equivalent to no less than two times the minimum wage for full-time employment). Given the higher salary requirement, many employers are re-classifying previously exempt managers as non-exempt. Employers may do this for any at-will employee (as there is no contract requiring employers to continue to pay employees at a given rate), but there needs to be some advanced notice to employees who are being reclassified as non-exempt.

    With the enactment of Senate Bill 553 and the upcoming implementation of California Labor Code section 6401.9 on July 1, 2024, California employers will be required to implement additional measures for workplace safety. This legislation compels most non-health care related businesses to review and develop certain workplace violence measures by mandating the creation, execution, and ongoing maintenance of a Workplace Violence Prevention Plan (WVPP). Below, we outline five critical steps that employers must take to align with these new requirements, emphasizing development, risk assessment, training, and compliance documentation to meet these new requirements by the July 1 deadline:

    1. Determine if your business is a covered employer that must develop a WVPP

    The new requirements under SB 552 apply to all employers, employees, places of employment, and employer-provided housing, except for the following:

    1. Employees teleworking from a location of the employee’s choice, which is not under the control of the employer.
    2. Places of employment where there are less than 10 employees working at the place at any given time and that are not accessible to the public, if the places are in compliance with Section 3203 of Title 8 of the California Code of Regulations.
    3. Health care facilities, service categories, and operations covered by Section 3342 of Title 8 of the California Code of Regulations.
    4. Employers that comply with Section 3342 of Title 8 of the California Code of Regulations in the health care setting.
    5. Facilities operated by the Department of Corrections and Rehabilitation, if the facilities are in compliance with Section 3203 of Title 8 of the California Code of Regulations.
    6. Employers that are law enforcement agencies that are a “department or participating department,” as defined in the California Code of Regulations and meet other requirements.

    The exceptions are vary limited, and most employers in California will need to take steps to comply with SB 553’s requirements by July 1, 2024.

    2. Conduct risk assessments

    For covered employers under AB 553, an essential first step in violence prevention is conducting comprehensive risk assessments to identify potential hazards that could lead to workplace violence. Factors such as working conditions, the nature of the employment, and interactions with the public can all contribute to risk. Employers need to evaluate these factors meticulously to develop targeted prevention strategies.

    3. Develop and implement a WVPP

    Covered employers must craft a detailed WVPP that outlines the responsibilities of all parties involved, incorporates employee and representative involvement, and establishes clear protocols for handling and responding to incidents of workplace violence. This plan should include procedures for emergency responses, effective training programs, and methods for identifying, evaluating, and mitigating violence hazards.

    Cal/OSHA published a model written Workplace Violence Prevention Plan for General Industry (Non-Health Care settings), which is available as a resource guide for employers.  Employers may download the model form as a Word document here. 

    4. Engage in training and communication

    Employers are required to develop and provide effective training for all employees, focusing on recognizing, preventing, and responding to potential violence in the workplace. This training should be part of an ongoing dialogue between employers and employees and needs to be documented.

    5. Maintain and review compliance records

    Compliance with the new legislation includes thorough documentation and record-keeping related to the WVPP. Employers must keep detailed records of all violence prevention efforts, including hazard identification and mitigation, training sessions, incident responses, and investigations. These records are vital for evaluating the effectiveness of the WVPP and for demonstrating compliance with these new regulations.

    For more information about complying with the requirements for employers to develop a WVPP, join my firm for our webinar discussing the new law on Thursday, March 28, 2024 at 10 a.m. PST.  You may register here. 

    In legal disputes, five primary challenges can significantly complicate the defense of an employment lawsuit:

    1. Failure to document routine employment issues.
    In any employment litigation, whether it’s wage and hour claims, leave issues, or harassment claims – the amount of documentation an employer has dramatically increases the odds of prevailing in litigation. I would even go as far as to say there is a relationship in place here (similar to Moore’s law in the computing industry) that the likelihood of avoiding a devastating judgment is proportionate to the amount of documentation the employer has regarding the particular employee or group of employees involved in the litigation.

    What should employers document? Conversations with employees, reviews, days absent and the reason for the absence, performance issues (both good and bad – see below), among other items.  With email and the ability to scan documents or take pictures of documents on a phone, there is almost no excuse not to have everything documented. The only issue preventing employers from documenting issues is not stressing the need to do document, and the press of business.

    2. Not maintaining the proper time records.
    Employers have the burden to record and maintain accurate time records under California law. If the employer knows employees are not properly recording their time, the employer needs to enforce a policy to have employees accurately record their time, even if it requires disciplinary action.  Some examples of inadequate time records by employers:

    • The records that do not record the employee’s actual time working. For example, the employee records their start and stop time and the same time every day even though the employer knows it changes.
    • Not keeping time records long enough. The statute of limitations can reach back four years in wage and hour class actions, and these records will be the primary evidence in most cases.
    • Not recording all required information. For example, employers are required to record employee’s meal periods under the IWC Wage Orders (see section 7 – Records).
    • Not keeping the time records in a manner that is usable. Maintaining records in a form that makes reviewing the records almost impossible is almost equivalent to not maintaining them in the first place. Some thought should be put into how an employer is keeping old time record information and how that data could efficiently be reviewed in the future if needed.

    3. Loss of institutional knowledge.
    It’s crucial that knowledge about the company’s employment policies, including their implementation and modifications, is not held by a single individual. This institutional knowledge should be well-documented and accessible to multiple people within the organization to ensure continuity and compliance.

    4. Inconsistent communication of goals and expectations.
    Regular and accurate performance reviews are fundamental.  They play a crucial role in cases of wrongful termination, discrimination, or retaliation. Accurate documentation of performance reviews and clear communication of expectations are vital.  Addressing performance issues in writing is not only necessary for improvement but critical in defending against claims.

    5. Lack of written policies.
    Operating on unwritten policies can lead to significant risks.  Clear, written policies in an employee handbook or another formal document are essential.  This ensures that policies are applied consistently and protects against claims of arbitrary discipline based on non-existent policies.

    Addressing these five areas can significantly strengthen an employer’s position in employment litigation, emphasizing the importance of thorough documentation, proper record-keeping, shared institutional knowledge, clear communication, and formalized policies.

    Being named as a defendant in a Private Attorneys General Act (PAGA) or class action lawsuit can be overwhelming, especially for a quickly growing company. However, with planning, a company can minimize the impact of the litigation on its existing operations and put forth the best defense.

    A lawyer who has experience in employment law and class actions should be contacted as soon as possible. There are certain deadlines that begin to run when a lawsuit is filed, and any delay could adversely affect the company’s defense. If the company does not know of an employment lawyer, a good start is to reach out to trusted advisors for recommendations, such as the company’s corporate lawyer or accountant. Wage and hour litigation, especially in California, is very unique and it is recommended that the company utilize a lawyer that has experience in this area. Here are five additional items a company can do as part of this planning process when it is first notified of an existing lawsuit:

    1. Review allegations with counsel to see if the safe harbor provision of the PAGA could apply.
    With the advice of counsel, there should be a review of the allegations in the complaint, and if the Plaintiff is seeking damages under PAGA, the PAGA notice sent to the Labor Workforce & Development Agency (“LWDA”). PAGA provides the employer a short window of time (33 days from receiving the PAGA notice) to “cure” any alleged violations. If the employer cures the deficiencies within the time period, the plaintiff cannot recover penalties under PAGA. Whether or not any items can or need to be cured, and the process for utilizing this safe harbor should be reviewed closely with counsel.

    2. Gather time records and personnel files for the Plaintiff, handbooks, and policies that were in effect during the last four years.
    The personnel file for the named Plaintiff will have to be produced early in the case. In addition, the information in the personnel file will (hopefully) document any performance issues or other possible defenses the company has to the Plaintiff’s allegations. Also, if the company has implemented an arbitration agreement, it will be important to determine if the Plaintiff has signed it and whether or not there is an argument that in signing the agreement the Plaintiff cannot bring a class action.

    The litigation will likely revolve around what policies the company had in place, and whether the policies were legally compliant. The company’s counsel will have to review these policies and handbooks. It is also likely that the company will have to produce these early in the litigation as well.

    3. Begin constructing a list of all employees who have worked in similar positions as the Plaintiff during the last four years (which is likely the statute of limitations).
    In California, the statute of limitations for most wage and hour class actions is four years from the date the complaint is filed. Therefore, the employees who have worked in the same or similar positions as the Plaintiff will likely be the group of employees the Plaintiff is seeking to represent in the class action. It is important to know how many of these employees there are. For example, if there are too few this could be a defense to class certification.

    4. Review any applicable insurance policies.
    The company should review all insurance policies it has to see if any of them could potentially cover the litigation. Most employment practices liability insurance (“EPLI”) policies exclude class action lawsuits from coverage, but there may be coverage for defense costs, or there may be something unique about the litigation facing the company that triggers coverage. It is also important to assess whether the lawsuit needs to be tendered to the insurance company.

    5. Develop a plan about how to communicate the existence of the class action with current employees.
    Word usually starts to spread quickly among the employees about the existence of the lawsuit. The company, with advice from counsel, should determine whether it wants to be proactive about communicating with the employees about the lawsuit, as well as what can and cannot be said to employees. At the minimum, a person within the company should be designated to handle any questions about the lawsuit. This will ensure a consistent message is used.

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

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

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

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

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

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

    3. Are college degrees becoming obsolete anyway?

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

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

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

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

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

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

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

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

    1) Who owns a tip?

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

    2) Is employer-mandated tip pooling legal?

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

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

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

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

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

    3) Who can share in the tip pool?

    Employees in the chain of service:

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

    Managers, owners, or supervisors:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

    Labor Code section 2859:

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

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

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

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

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

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

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

    5. Other potential claims.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

    5. California law protects other areas of employee conduct.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

    1. Hiring Practices

     2. Records

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

    3. Wage and Hour Issues

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

     4. End of Employment Issues

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

    5. Anti-harassment, discrimination and retaliation

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