Click here to subscribe to the blog.  In addition, subscribers to the blog are invited to attend seminars and seminars I periodically host throughout the year.

ebook: “The Ten Best Human Resources Practices For California Employers” (please email me for a free copy).

TERMINATION CHECKLIST CONSIDERATIONS

This termination checklist provides an outline of termination considerations employers should consider:

  • documenting reasons for termination
  • final pay and accounting issues
  • company property and passwords
  • severance agreement considerations
  • final notices required under the law

BEST PRACTICES WHEN CONDUCTING EMPLOYEE DISCIPLINE AND TERMINATIONS

This white paper discusses some of misconceptions and myths about employee discipline, when severance pay and severance agreements should be used, and other end-of-employment considerations employers should consider.

Video: California’s Ban on asking about job applicant’s salary effective January 1, 2018

 

Subscribe to the California Employment Law Report YouTube Channel here.

 

Plaintiff Ketryn Cornell began working part-time for the Berkeley Tennis Club as a lifeguard and pool manager in 1997, while attending college at UC Berkeley. She was employed as a night manager and continued to work at the Club after graduating from college in 2001.  In 2011, she took on additional duties and began working as a night manager, day manager, and tennis court washer. She received positive reviews, merit bonuses, and raises throughout this period.

The Club employed a new general manager in 2012.  The new manager implemented a uniform policy.  While mandating the staff to wear uniform shirts, the largest sized ordered by the club did not fit Cornell.  Cornell was obese, at five feet, five inches tall, she weighed over 350 pounds.  Cornell explained to the general manager that she needed a bigger size, and he reported that he would work on providing an appropriate uniform.  However, it is unclear if he attempted to find shirt Cornell could fit.  Taking upon herself, Cornell ordered shirts from a specialty shop at her own expense and had them embroidered with the Club logo.

Cornell filed a lawsuit in May 2014, asserting causes of action for various Labor Code violations and the eight causes of action that were at issue on the appeal, which included disability discrimination/failure to accommodate under the Fair Employment and Housing Act (FEHA), wrongful discharge in violation of public policy based on the disability discrimination, disability harassment under the FEHA, and retaliation under the FEHA.  This Friday’s Five reviews five takeaways for California employers arising from this disability discrimination decision:

1. Obesity can qualify as a physical disability under the Fair Employment and Housing Act.

Under FEHA, it is unlawful to discriminate against an employee on the basis of “physical disability.” (Gov. Code, § 12940, subd. (a).)  In addition to making it illegal to discriminate on the basis of disability, the FEHA makes it unlawful “to fail to make reasonable accommodation for the known physical . . . disability of an . . . employee.” (§ 12940, subd. (m)(1).)  Finally, the FEHA prohibits an employer from harassing an employee “because of . . . physical disability.” (§ 12940, subd. (j)(1).)

The Club moved for summary adjudication of the discrimination/failure to accommodate claim and the harassment claim on the basis that Cornell’s obesity is not a physical disability under FEHA. The Club also argued that even if Cornell has a condition protected by the FEHA, she did not require an accommodation and was not terminated for a discriminatory reason, and the Club’s actions were not severe or pervasive enough to constitute harassment.

Cornell argued that her obesity qualified as an actual physical disability because it is a “physiological disease, disorder, condition, cosmetic disfigurement, or anatomical loss that does both of the following: [¶] (A) Affects one or more of the following body systems: neurological, immunological, musculoskeletal, special sense organs, respiratory, including speech organs, cardiovascular, reproductive, digestive, genitourinary, hemic and lymphatic, skin, and endocrine. [¶] (B) Limits a major life activity.” (Government Code § 12926, subd. (m)(1).)

In Cassista v. Community Foods, Inc. (1993) 5 Cal.4th 1050 (Cassista), the California Supreme Court held “that weight may qualify as a protected `handicap’ or `disability’ within the meaning of the FEHA if medical evidence demonstrates that it results from a physiological condition affecting one or more of the basic bodily systems and limits a major life activity.” (Id. at p. 1052.) Interpreting the same statutory language as currently found in section 12926, subdivision (m)(1)(A), and relying on federal antidiscrimination law for guidance, the Court concluded that “an individual who asserts a violation of the FEHA on the basis of his or her weight must adduce evidence of a physiological, systemic basis for the condition.” (Cassista, at pp. 1063-1065.)

The court set forth the definition of “physiological”:

Rather, the pertinent question is whether a genetic cause qualifies as a “physiological cause.” “Physiological” means “relating to the functioning of living organisms.” (Oxford English Dict. Online (3d ed. Mar. 2006) [as of Dec. 21, 2017 [physiological].) This term encompasses genetics, and the Club does not argue otherwise. We therefore reject the implication that Cornell cannot establish her claim by proving that her obesity has a genetic cause.

The Court found that Cornell’s testimony that other doctors hand determined that her obesity was caused by genetics, and the fact that those doctors were not deposed, was enough evidence for Cornell to overcome the employer’s motion for summary judgment and proceed to trial on this claim.

2. Even if others were involved in decision to terminate, plaintiff can still maintain a discrimination cause of action if person alleged to have discriminated against plaintiff was involved in the termination decision.

The employer in this case argued that the general manager who was alleged to have discriminated against Cornell was not the only person involved in the decision to terminate her, but that other supervisors were involved, and therefore the decision could not have been discriminatory.  The court rejected this argument in holding:

“[S]howing that a significant participant in an employment decision exhibited discriminatory animus is enough to raise an inference that the employment decision itself was discriminatory, even absent evidence that others in the process harbored such animus.” (DeJung v. Superior Court (2008) 169 Cal.App.4th 533, 551.) There is evidence that [General Manager] Headley made several comments suggesting he held a discriminatory animus toward Cornell. Although the extent to which he participated with Gurganus and Miller in the decision to fire Cornell is unclear, there is plenty of evidence that he participated in some way….

3. While sporadic comments are not enough to create a hostile work environment, courts may look to the context of all of the actions taken against the employee in determining if a hostile work environment existed.

The Club argued that even if Cornell is otherwise entitled to protection under the FEHA, summary adjudication of her disability harassment claim was proper because she was not subject to sufficiently severe or pervasive harassment. The appellate court disagreed:

Here, Cornell was able to present enough evidence to at least continue to trial with her harassment cause of action because of the statements made by the General Manager in regards to obtaining a uniform shirt that fit Cornell, the General Manager’s comments about Cornell having weight-loss surgery, and his comments to kitchen staff not to give Cornell extra food because “she doesn’t need it.”  The Court recognized that these types of comments on four occasions do not create a hostile work environment, “Four comments over several months does not establish a pattern of routine harassment creating a hostile work environment, particularly given that the comments were not extreme.”  (“Actionable harassment consists of more than “annoying or `merely offensive’ comments in the workplace,” and it cannot be “occasional, isolated, sporadic, or trivial; rather, the employee must show a concerted pattern of harassment of a repeated, routine, or a generalized nature.” (Lyle v. Warner Brothers Television Productions (2006) 38 Cal.4th 264, 283.)”)

However, the Court found that the employer’s conduct must be viewed in context of the General Manager’s other actions, “including his ordering of shirts that were significantly too small for her and reporting to the Personnel Committee that she was resisting the uniform policy by not wearing appropriate shirts, as well paying her less than another employee and denying her extra hours and internal job openings.”  This evidence was enough to prevent the employer from dismissing Cornell’s harassment claims prior to trial.

4. Requests for reasonable accommodations are protected activities under the law.

In 2015 the Legislature amended section 12940 to add subdivision (m)(2), which now makes it unlawful for an employer to “retaliate or otherwise discriminate against a person for requesting accommodation under this subdivision, regardless of whether the request was granted.” (Stats. 2015, ch. 122, § 2.)

5. Primary takeaway for employers: treat all employees with respect.

While certain conduct that is rude, unfair, and unethical may not raise to the level of being unlawful discrimination, harassment or retaliation under the law, this type of conduct will inevitably lead to higher litigation costs and employee turnover.  I’ve written about how most companies cannot afford to have managers like Steve Jobs, and this case is another example.  While the employer had arguments that the manager’s actions in this case were not illegal under the law, even if the employer prevails at trial in this case, the costs associated with the litigation are substantial.  Unprofessional comments by co-workers, managers and supervisors in the workplace should be stopped by employers, as while sometimes they may not be illegal, it drives litigation from employees who felt that they were not treated fairly.

The appellate court’s decision, Cornell v. Berkeley Tennis Club, can be found here.

California’s Immigrant Worker Protection Act became effective January 1, 2018.  The law, set forth in AB 450, requires, among other items, employers to verify that immigration officials have a judicial warrant or subpoena prior to entering the workplace and for employers to provide notice to employees if there has been a request to review the employer’s immigration documents, such as Form I-9s.  The new law puts employers in a difficult situation of having to comply with federal immigration law obligations on one hand and state law requirements on the other, with large penalties that could result for violations of either law.  This Fox News report sets out the impending conflict between the Federal government and California:

http://insider.foxnews.com/2018/01/19/ice-director-homan-possible-california-immigration-raids-criticism-dianne-feinstein

Now with the fight on immigration issues between the Federal government and California, employers should start reviewing their obligations if Federal immigration officials audit their workplace.  This Friday’s Five discusses five issues employers need to understand about the obligations created by AB 450.

1. Employers may not voluntary consent to an immigration enforcement agent to enter any nonpublic areas of “a place of labor” without a subpoena or judicial warrant.

The new law provides that employers cannot provide voluntary consent to an immigration enforcement agent to “access, review, or obtain the employer’s employee records without a subpoena or judicial warrant.”  This prohibition does not apply to I-9 Employment Eligibility Verification form and “other documents for which a Notice of Inspection has been provided to the employer.”

2. Employers must give notice to employees of any immigration review of employment records.

Employers are required to post information about any inspections of I-9 Employment Eligibility Verification forms or other employment records conducted by an immigration agency within 72 hours of receiving notice of the inspection.  The notice must be posted in the language the employer normally uses to communicate employment-related information to the employee.  In addition, the notice must include the following information:

(A) The name of the immigration agency conducting the inspections of I-9 Employment Eligibility Verification forms or other employment records.

(B) The date that the employer received notice of the inspection.

(C) The nature of the inspection to the extent known.

(D) A copy of the Notice of Inspection of I-9 Employment Eligibility Verification forms for the inspection to be conducted.

The Labor Commissioner is required to publish a template for employers to use by July 1, 2018.

3. An employer, upon reasonable request, shall provide an “affected employee” a copy of the Notice of Inspection of I-9 Employment Eligibility Verification forms.

An “affected employee” is an employee identified by the immigration agency inspection results to be “an employee who may lack work authorization, or an employee whose work authorization documents have been identified by the immigration agency inspection to have deficiencies.”

The employer is required to provide the affected employee a copy of the written immigration agency notice that provides the results inspection within 72 hours of after receipt of the notice. In addition, the employer shall also provide written notice of the obligations of the employer and the affected employee arising from the results of the records investigation.  The notice needs to relate to the affected employee only and shall be delivered by hand at the workplace if possible and, if hand delivery is not possible, by mail and email, if the email address of the employee is known.

4. Except as otherwise required by federal law, employers cannot reverify the employment eligibility of a current employee at a time or in a manner not required by federal law

Violations of this provision can result in civil penalties up to $10,000.  In addition, penalties for failure to provide the notices required under the new law are $2,000 up to $5,000 for a first violation and $5,000 up to $10,000 for each subsequent violation.  The penalties will be recovered by the Labor Commissioner.

5. Start planning now.

Employers should review their current policies and practices to ensure compliance with Federal immigration requirements, including all I-9 requirements.  In addition, employers should train and designate one executive to ensure that the tight notice requirements set forth in the Immigrant Worker Protection Act are met should the Federal government ask to enter the workplace or seek review of employment records.

AB 450 adds Sections 7285.1, 7285.2, and 7285.3 to the Government Code, and to add Sections 90.2 and 1019.2 to the Labor Code.

Effective January 1, 2018 California employers can no longer ask an applicant for employment to disclose information about criminal convictions.  The new law (added as Section 12952 to the Government Code) applies to employers with 5 or more employees.  Once an offer of employment has been made, employers can conduct criminal history background checks, but only when the conviction history has a “direct and adverse relationship with the specific duties of the job,” and requires certain disclosures to the applicant if employment is denied based on the background check.  This Friday’s Five covers five areas of the new law that California employers should be aware of when hiring employees:

1. Employers may not include on any application for employment “any questions that seeks the disclosure of an applicant’s conviction history.”

2. Employers may not inquire into or consider this conviction history of the applicant, including any inquiry about conviction history on any employment application, until after the employer has made a conditional offer of employment to the applicant.

3. Employers can only research certain areas of an applicant’s background after a conditional offer has been made.

Employers may not “consider, distribute, or disseminate information” relating to any of the following areas when conducting a conviction history background check:

(A) Arrest not followed by conviction, except in some limited circumstances set forth in Labor Code section 432.7.

(B) Referral to or participation in a pretrial or posttrial diversion program.

(C) Convictions that have been sealed, dismissed, expunged, or statutorily eradicated pursuant to law.

4. If an employer intends to deny employment based on the applicant’s conviction history, it must make an “individualized assessment” if the conviction history “has a direct and adverse relationship with the specific duties of the job.

In making his determination, the employer shall consider all of the following:

(i) The nature and gravity of the offense or conduct.

(ii) The time that has passed since the offense or conduct and completion of the sentence.

(iii) The nature of the job held or sought.

The employer is not required to record these results of this individualized assessment in writing. However, employers that are governed by local city and county background checks must be careful to follow those requirements as well.  For example, Los Angeles’ ordinance requires that employers provide this assessment in writing to applicants. 

5. If the employer preliminary disqualifies the applicant based on a conviction history, the employer is required to provide written notice to the applicant.

The notice must contain all of the following items:

(A) Notice of the disqualifying conviction or convictions that are the basis for the preliminary decision to rescind the offer.

(B) A copy of the conviction history report, if any.

(C) An explanation of the applicant’s right to respond to the notice of the employer’s preliminary decision before that decision becomes final and the deadline by which to respond. The explanation shall inform the applicant that the response may include submission of evidence challenging the accuracy of the conviction history report that is the basis for rescinding the offer, evidence of rehabilitation or mitigating circumstances, or both.

The applicant then has five business days to respond to the notice before the employer makes a final decision.  If the employee responds within this time limit, and states that they dispute the accuracy of the conviction history report and is in the process of obtaining evidence to support their position, the applicant will have an extra five business days to respond.  The employer must consider the information provided by the applicant before making a final decision.

If the employer makes a final decision denying the applicant employment solely or in part because of the applicant’s conviction history, the employer is required to provide a second written notice to the applicant containing the following:

(A) The final denial or disqualification. The employer may, but is not required to, justify or explain the employer’s reasoning for making the final denial or disqualification.

(B) Any existing procedure the employer has for the applicant to challenge the decision or request reconsideration.

(C) The right to file a complaint with the Department of Fair Employment and Housing.

In addition to this new law, California employers need to be sure they are in compliance with the Federal Fair Credit Reporting Act (FCRA) and the California Investigative Consumer Reporting Agencies Act (ICRAA) when conducting any background checks.

California’s state minimum wage increased for California’s employers on January 1, 2018.  California’s minimum wage law provides for two different rates based on the size of the employer, and the minimum wage increases are reflected in this chart:

Date Minimum Wage for Employers with 25 Employees or Less Minimum Wage for Employers with 26 Employees or More
January 1, 2017 $10.00/hour $10.50/hour
January 1, 2018 $10.50/hour $11.00/hour
January 1, 2019 $11.00/hour $12.00/hour
January 1, 2020 $12.00/hour $13.00/hour
January 1, 2021 $13.00/hour $14.00/hour
January 1, 2022 $14.00/hour $15.00/hour
January 1, 2023 $15.00/hour

 

Once the rate reaches $15 per hour, it will be adjusted annually based on inflation.  Here are five potential pitfalls California employers need to be careful to avoid with the increase in the state minimum wage.

Pitfall #1: Who is considered an employee?

California’s Department of Industrial Relations website provides the following explanation:

Labor Code section 1182.12 defines “employer” as: “any person who directly or indirectly, or through an agent or any other person, employs or exercises control over the wages, hours, or working conditions of any person [and] includes the state, political subdivisions of the state, and municipalities.”

Any individual performing any kind of compensable work for the employer who is not a bona fide independent contractor would be considered and counted as an employee, including salaried executives, part-time workers, minors, and new hires.

The DIR admits that California’s minimum wage statute does not specify how employers should count employees to determine if they have more or less than 26 employees.  For example, the law does not provide a time period that employers could use to calculate the average number of employees in determining whether or not they meet the 26 employee threshold.  Therefore, employers should be very conservative in making this calculations, and if there is any doubt or the calculation is close, employers should consider paying the higher minimum wage rate rather than risk an audit or costly lawsuit over the difference in rates.

Pitfall #2: The salary level to qualify as an exempt employee increases based on the state minimum wage.

Employers need to review the base salary for all exempt employees to ensure the employees meet the salary required to be exempt.  To be exempt from the requirement of having to pay overtime to the employee, the employee must perform specified duties in a particular manner and be paid “a monthly salary equivalent to no less than two times the state minimum wage for full-time employment.” (Lab. Code, § 515, subd. (a).)  For more information about the salary basis test for exempt employees, see my previous article here.

With the increase in the state minimum wage in 2018, the equivalent of two times the minimum wage of $10.50 per hour for small employers equals $43,680 per year, and two times the minimum of $11.00 per hour for large employers equals $45,760 per year to qualify for the white collar exemptions.

It is important to note that the salary basis test is set according to the California state minimum wage, not the applicable minimum wage that may apply in the various local city and counties in California.

Pitfall #3: Which minimum wage rate applies if the number of employees raises and falls below 26 employees throughout the year? 

The California Department of Industrial Relations provides that: “An employer with 26 or more employees at any time during a pay period should apply the large-employer minimum wage to all employees for that pay period.”  It is important to note that the DIR’s opinion is not binding on a court of law, but it can be instructive of the position the state would take in its own enforcement actions.

Changing the rate of pay for each pay period raises another pitfall about the notice employers are required to provide employees before changing their rate of pay (see pitfall #4 below).

Likewise, employers with exempt employees who are earning at or near the two times salary basis required to qualify as an exempt employee (see pitfall item #3 above), and whose number of employees may increase during the year to 26 or more employees, need to be careful about the salary amounts being paid to employees.  If there is a chance that the employer’s workforce could increase to 26 or more employees, the employer should take a conservative approach and pay the higher salary amounts required for employees to meet applicable exemptions.

Pitfall #4:  Employers are required to update the notice to employees setting forth the employee’s rate of pay. 

California employers are required to provide non-exempt employees with certain information upon hire as required by the Wage Theft Protection Act.  The law became effective in 2012 and is codified at Labor Code section 2810.5.  Many employers use the Labor Commissioner’s template to meet this notice requirement.

However, employers who pre-populate the form will need to revise the forms to ensure that the wage rates comply with the increased minim wage rate in 2018.  Likewise, it is a good practice to review the notices mid-way through the year to ensure compliance with  the various local cities and counties (such as Los Angeles and Santa Monica) that typically increase their minimum wage rates in July each year.

Employers are not required to re-issue the Notice to Employee to existing employees with updated wage information as long as new increased rate is show on the employee’s pay stub with the next payment of wages.  The DIR publishes a great FAQ on the law here that employers should review.

Pitfall #5: Employers still need to comply with local city or county minimum wage requirements if those laws provide a higher minimum wage rate. 

Employers need to review any applicable local city or county laws that may provide for a higher minimum wage than the state minimum wage requirement.  Employers must comply with the highest minimum wage rate applicable to their workforce.  It is also important to review the local minimum wage ordinances as many ordinances differ in how to determine if the employer is small or large, and usually contain their own notice requirements.  A list of the various local minimum wage ordinances across the United States is published by UC Berkley Labor Center.

Happy New Year.  I started the Friday’s Five articles in the summer of 2014, and the interest in the articles has been more than I expected.  I appreciate everyone who has read them and provided comments and feedback. If you have any topics you would like me to address, please let me know. With that said, here is a list of five resolutions for California employers in 2018:

1. Relax – Still need to make sure your employees are taking their meal and rest breaks.

2. Train – All supervisors must be trained to comply with California’s required sexual harassment prevention training for employers with 50 or more employees.

Since 2015 the training must discuss bullying in the workplace to be legally compliant, and as of January 1, 2018, the training also needs to cover harassment based on gender identity, gender expression, and sexual orientation.

3. Read – Update employment handbook policies on a yearly basis.

2018 has a few new laws that should be addressed the employee handbook and new hire packets.

4. Run – Sorry, no play on words with this one, you just need to get outside and run a bit.

5. Organize – and keep employment files, time records and wage information for at least the length of any applicable statute of limitations.

Employers should review their systems to ensure there is a process in place on how to organize and maintain employment information for the required time periods, it is required under the law and can help defend the company should litigation ensue.

A final more bonus resolution:
Learn – more by attending my webinars on California employment laws to stay up to date.

In the next month, I will be hosting a seminar on the new laws facing employers in 2018 and what steps should be taken to comply. The date is still to be determined, but drop me an email if you are interested and I make sure you are notified once we set the date and location.

Wishing you the best in 2018!

AB 168 was approved by Governor Brown on October 12, 2017 which prohibits employers from seeking or taking into consideration an applicant’s prior compensation and benefits when determining whether to hire the applicant, and in setting the applicant’s compensation and benefits.  The new law creates Labor Code section 432.3.  This Friday’s Five covers five issues of the new law that employers must understand:

1. The law applies to all employers, regardless of size, effective January 1, 2018.

2. Employers may not rely on salary history information of an applicant in determining whether to offer employment and in determining the about of compensation to offer.

3. Employers may not seek salary history information, which includes compensation and benefits, about the applicant.

4. Upon a reasonable request, an employer must provide the “pay scale” for the position to an applicant.

5. Nothing in the law prohibits employees from voluntarily disclosing salary history to a prospective employer.

The National Labor Relations Board issued a ruling this week that reverses the Board’s ruling issued under the Obama administration in regards to who can be held a “joint employer.”  The ruling is critical to businesses in the franchisee industry as well as businesses that use contract workers.  This Friday’s Five reviews five keys issues on the NLRB’s ruling in Hy-Brand Industrial Contractors and Brandt Construction Co. and the joint employer test for California employers:

1. The Hy-Brand decision overrules the NLRB’s prior holding in Browning-Ferris

In Browning-Ferris, the Board held that even when two entities have never exercised joint control over essential terms and conditions of employment, and even when any joint control is not “direct and immediate,” the two entities will still be joint employers based on: (1) the mere existence of “reserved” joint control, or (2) based on indirect control, or (3) control that is “limited and routine.”

The NLRB’s ruling in Hy-Brand stated, “We find the Browning-Ferris standard is a distortion of common law as interpreted by the Board and the courts, it is contrary to the Act, it is ill-advised as a matter of policy, and its application would prevent the Board from discharging one of its primary responsibilities under the Act, which is to foster stability in labor-management relations.”

2. Joint-employer relationship can only be established by “direct and immediate” control

In reverting back to its pre-Browing-Ferris test, the NLRB restores the joint-employer test that it set forth in Airborne Express, 338 NLRB at 597 fn. 1.  In Airborne Express the Board explained that, “[t]he essential element in [the joint-employer] analysis is whether a putative joint employer’s control over employment matters is direct and immediate.” A company’s right to approve hires is not enough to establish a joint-employer relationship, but instead, “[i]n assessing whether a joint employer relationship exists, the Board does not rely merely on the existence of such contractual provisions, but rather looks to the actual practice of the parties.”

3. The NLRB’s holding makes it consistent with Federal and some state courts’ test for joint-employer

The NLRB’s decision stated that its reversal of the standard use in finding a joint-employer makes its standard more consistent with Federal and state law court rulings on the issues.  For example, the NLRB cited the following cases: Doe I v. Wal-Mart Stores, Inc., 572 F.3d 677, 683 (9th Cir. 2009) holding that a “finding of the right to control employment requires . . . a comprehensive and immediate level of ‘day-to-day’ authority over employment decisions.”  Gulino v. N.Y. State Educ. Dep’t, 460 F.3d 361, 379 (2d Cir. 2006) (employment relationship must involve a “level of control that is direct, obvious and concrete, not merely indirect or abstract”); SEIU Local 32BJ v. NLRB, 647 F.3d 435, 442–443 (2d Cir. 2011) (“‘An essential element’ of any joint employer determination is ‘sufficient evidence of immediate control over the employees.’”)); Texas World Service Co. v. NLRB, 928 F.2d 1426, 1432 (5th Cir. 1991) (same); Pulitzer Publishing Co. v. NLRB, 618 F.2d 1275, 1280 (8th Cir. 1980) (holding that the Board erred in finding a joint-employer relationship, distinguishing cases “where the companies share direct supervision of the employees involved and control hiring, firing, and disciplining”); see also NLRB v. Denver Building & Construction Trades Council, 341 U.S. 675, 689–690 (1951) (holding that contractor’s supervision over subcontractor’s work “did not eliminate the status of each as an independent contractor or make the employees of one the employees of the other,” emphasizing that “[t]he business relationship between independent contractors is too well established in the law to be overridden without clear language doing so”).

4. California’s joint employer test

“[T]he basis of liability is the defendant’s knowledge of and failure to prevent the work from occurring.”  Martinez v. Combs, 49 Cal.App.4th 35, 70.  Therefore, to be an employer, the entity must have power to prevent the worker from performing work.  If there is no control to prevent the work, the entity cannot be held liable as a joint employer.

California’s Industrial Welfare Commission (IWC) also sets forth law regarding California’s wage and hour requirements.  The IWC definition also includes “any person … who directly or indirectly, or through an agent or any other person, employs or exercises control over the wages, hours, or working conditions of any person.”  The court in Martinez held that a joint employer relationship exists when one entity, which hires and pays workers, places the worker with another entity that supervises the work.  There are many factors that a court can look to in making this determination, and employers need to carefully analyze the facts particular to their situations.

5. Additional joint-employer liability for California employers under Labor Code section 2810.3

Effective January 1, 2015, Labor Code section 2810.3 expanded the liability of “client employers” that obtain workers through temporary agencies or other labor contractors.  The law requires that the client employer who obtains the workers through the agency must share in the liability for any wage and workers compensation issues.  The law also provides that a client employer cannot shift all of the liability for wage and workers’ compensation violations.  However, the law does provide that the client employer can seek indemnity from the labor contractor for violations.  Therefore, it is important for employers who are covered by Labor Code section 2810.3 and who are obtaining workers through a labor contractor to ensure the labor contractor is meeting all wage and workers compensation requirements, and negotiate an indemnity provision in the contact with the labor contractor should any liability arise.

With the fires effecting large portions of Southern California and Los Angeles this week, it is a good time to review some of the obligations employers have in regards to pay and leave issues during times of natural disasters.  The picture above is one I took showing the smoke covering the northern part of Los Angeles on a flight to Napa on Thursday night.  It was just a couple of months ago I wrote about this topic when Napa faced the same situation of wild fires in October.  So for regular readers of the blog, this article will be a refresher course, but I thought it would be important to cover this topic again in today’s Friday Five:

1. Reporting time pay obligations

California law requires an employer to pay “reporting time pay” under the applicable Wage Order.  This requires that when an employee is required to report for work and does report, but is not put to work or is furnished less than half said employee’s usual or scheduled day’s work, the employee shall be paid for half the usual or scheduled day’s work, but in no event for less than two (2) hours nor more than four (4) hours, at the employee’s regular rate of pay, which cannot not be less than the minimum wage.

In addition, if an employee is required to report to work a second time in any one workday and is furnished less than two hours of work on the second reporting, he or she must be paid for two hours at his or her regular rate of pay.

California’s Labor Commissioner provides the following example:

For example, if an employee is scheduled to report to work for an eight-hour shift and only works for one hour, the employer is nonetheless obligated to pay the employee four hours of pay at his or her regular rate of pay (one for the hour worked, and three as reporting time pay). Only the one-hour actually worked, however, counts as actual hours worked.

Employers must remember, when an employee is scheduled to work, the minimum two-hour pay requirement applies only if the employee is furnished work for less than half the scheduled time.

2. Time paid as reporting time pay does not trigger overtime pay

Reporting time pay for hours in excess of the actual hours worked is not counted as hours worked for purposes of determining overtime.

3. Reporting time pay and meetings

There has been significant litigation over reporting time pay that is owed when employees are called in for meetings.  If an employee is called in on a day in which he is not scheduled, the employee is entitled to at least two hours of pay, and potentially up to four hours if the employee normally works 8 hours or more per day. See Price v. Starbucks.

However, if the employer schedules the employee to come into work for two hours or less, and the employee works at least one half of the scheduled shift, the employer is only required to pay for the actual time worked and no reporting time is owed.  See my prior post on Aleman v. AirTouch for a detailed discussion.

4. Exceptions to the reporting time requirements – “Acts of God”

The Wage Orders provide that employers are not required to pay overtime pay during the following circumstances:

  1. When operations cannot begin or continue due to threats to employees or property, or when civil authorities recommend that work not begin or continue; or
  2. When public utilities fail to supply electricity, water, or gas, or there is a failure in the public utilities, or sewer system; or
  3. When the interruption of work is caused by an Act of God or other cause not within the employer’s control, for example, an earthquake.

5. What if the employee voluntarily leaves early?

Employers are not required to pay reporting time pay if the employee voluntarily leaves work early.  For example, if the employee becomes sick or must attend to personal issues outside of work and leaves early, then the employer is not obligated to pay reporting time pay (however, this may trigger paid sick leave or other legal obligations for the employer).

Matt Lauer’s abrupt departure from NBC illustrate important lessons employers should take away from this week’s events in how to investigate and respond to harassment claims.  It is important it note that NBC is not like most employers in that this one of the most newsworthy and public harassment allegation cases in the nation and it must manage public relations at the same time of mitigating its legal liability.  However, there are still lessons employers should pay attention to arising out of this case, leading to this Friday’s Five:

1. Be up-front and as accurate as possible in any initial reports or disclosures to the public

Employers need to be very careful in issuing any public statements about harassment allegations and investigations.  As set forth below, in addition to likely being evidence in litigation, it could create additional defamation liability for all of the parties involved.

If a company does issue a statement, it needs to be well vetted and with knowledge of all of the facts.  For example, NBC’s responses to the Lauer issues raised questions.  First NBC issued a statement from Chairman Andrew Lack read on the Today Show Wednesday morning stating that the woman’s complaint was “the first complaint about his behavior in the over twenty years he’s been at NBC News.”  Later in the same day, NBC released a second statement stating, “We can say unequivocally that, prior to Monday night, current NBC News management was never made aware of any complaints about Mat Lauer’s conduct.”  The fact that NBC issued a qualifying explanation that “current NBC News management” was never informed later in the day, when initially the company said that there was no complaint ever made about Lauer, had raised many questions: did former NBC News management know of complaints?  If so, what, if any, actions did the company take in response to those complaints?

2. Don’t rush to make any disclosures to the public

Even though the company’s intentions may be good in making disclosures as quickly as possible, it can create some issues, such as:

  • Making statements that may not be accurate because all of the facts have not been discovered and all of the witnesses have not been spoken to. Even though it may not be intended, providing changing facts makes it look that the company is attempting to cover up issues.
  • Creating additional legal liability: statements issued publicly will be evidence in any resulting litigation, and could be used against a party in the litigation.

As discussed below, given the liability that could be created, employers should think twice about issuing any statements to third-parties that do not have a need-to-know.

3. Be careful in discussing any aspect of the complaint and investigation to third-parties who do not have a need to know

Employers must also be careful about issuing any statements to other employees in the company or to the public that could result in a defamation charge by the alleged victim or the alleged harasser.  Employers can be liable for defamation for statements made about the employee’s termination, statements made during investigations, or statements about the employee after they left employment.  Generally, to prove defamation, a plaintiff needs to prove “(a) a publication that is (b) false, (c) defamatory, and (d) unprivileged, and that (e) has a natural tendency to injure or that causes special damage.”  Taus v. Loftus (2007).  A plaintiff must show that the statements caused damages such as damage to their reputation, that the statements made it harder to find another job, or emotional distress.  Again, it is critical that employers do not rush to make any statements before all of the facts are known.  A good rule of thumb is to only discuss the allegations, investigation, and ultimate findings about the investigations with the parties involved and individuals who have a need to know.

4. Must conduct “immediate and appropriate corrective action” in the workplace

Employer must act quickly in addressing the potential harassment in the workplace.  How soon the investigation must start depends on the circumstances.  In Van Zant v. KLM Royal Dutch Airlines, 80 F.3d 708, 715 (2d Cir. 1996) the employer’s response was held to be prompt where it began investigation on the day that complaint was made, conducted interviews within two days, and fired the harasser within ten days.  In Steiner v. Showboat Operating Co., 25 F.3d 1459, 1464 (9th Cir. 1994), the court held that an employer’s response to complaints were not immediate when it did not seriously investigate or reprimand the supervisor until after plaintiff filed charge with state FEP agency, even though the harasser was eventually discharged.  In Saxton v. AT&T, 10 F.3d 526, 535 (7th Cir 1993) the court found that the investigation was prompt when it started one day after complaint and a detailed report was completed two weeks later.  In Nash v. Electrospace Systems, Inc. 9 F.3d 401, 404 (5th Cir. 1993) the court held that the investigation was prompt when completed within one week.  The court in Juarez v. Ameritech Mobile Communications, Inc., 957 F.2d 317, 319 (7th Cir. 1992) found the investigation was adequate when completed in four days.

However, employers have no duty to report findings to the public or other third-parties that do not have an interest in the harassment allegations and the subsequent investigation.  High profile harassment claims do carry an additional public relations aspect that must be considered, but employers have not legal duty to report findings to the public.  In fact, doing so may create additional liability as discussed above.

5. Employers may have to take actions internally before conducting the investigation

Based on the allegations and the facts of the case, as a precautionary measure, the employer should analyze if any immediate steps needs to be taken.  The EEOC set forth examples of precautionary steps that may be necessary include: “scheduling changes so as to avoid contact between the parties; transferring the alleged harasser; or placing the alleged harasser on non-disciplinary leave with pay pending the conclusion of the investigation.”  However, the employer needs to ensure that the complainant “should not be involuntarily transferred or otherwise burdened, since such measures could constitute unlawful retaliation.”

The type of precautionary actions that the employer should take depends on the facts they are presented with, as each case will vary.