In this Friday’s Five I discuss:

  • new case decision on vacation pay and policies (Minnick v. Automotive Creations)
  • PAGA decision allowing contact information for other employees (Williams v. Superior Court),
  • new Form I-9 released and employers must start using by September 17, 2017 (download here)
  • new Notice of Rights for Victims of Domestic Violence/sexual assault/stalking required to be provided to California employees effective July 1, 2017 (download here), and
  • new law signed by Governor Brown prohibiting inquiries into litigant’s immigration status.

For good or bad, the use of AI is already prevalent and its potential uses are expanding quickly, including to the workplace.  LinkedIn is currently suing a competitor, hiQ Labs, for use of information “scraped” from the social network’s site and used for AI analysis.  hiQ uses the information gleaned from LinkedIn to predict whether employee are likely to leave their jobs.  While the issue in the lawsuit is whether outside companies have the right to use information made public on social media sites and does not involve any employment work-place privacy issues, the lawsuit has disclosed how AI is currently being used and in the workplace.  AI is quickly being adopted, and its effects will have huge ramifications for employers and employees.  This Friday’s Five discusses five impacts AI will have in the employment context:

1. Predictions of whether employees are likely to leave their jobs.

The analysis being done by hiQ Labs is a prime example of information that would be highly relevant to employers, employer’s competitors, recruiters and others.  As the Wall Street Journal article notes:

Among its services, hiQ monitors and analyzes LinkedIn profile pages to see who is polishing their résumés and liable to be poached, assigning so-called flight-risk scores to individual employees.

LinkedIn’s primary argument in suing hiQ to stops its “scraping” of LinkedIn’s information is that if LinkedIn users understood that their data was being gathered and used in this manner that they would be reluctant to share information and update their profiles.  This illustrates that there is value in the information being shared on LinkedIn when AI can analyze user’s data.  Regardless of which company has access to it, the fact that LinkedIn is suing over who has access to this data establishes how valuable the data is.  Employers are likely to begin using this data to evaluate their workforce in the near future, if it is not already occurring.

2. Set pay and performance standards.

One positive use of AI in the workplace could be as an aid to highlight good performers in a company and remind the managers to provide positive feedback or raises to high performing employees to increase employee retention.  Another potential use is analyzing data to set pay scales commensurate with the market for a particular locale or skill set.

3. Predictions of potential litigation.

Just as AI has been used to predict future mechanical failures of engines or other devices based on data history and monitoring the device, AI will likely be used to highlight employees who may pose a litigation risk.  Just as hiQ sets flight-risk scores, it is conceivable to set litigation-risk scores based on data.  Not commenting on whether this is appropriate (or legal) to do, the reality is that AI can and will be used for this analysis.

4. Help evaluate candidates interviewing for a job.

AI will likely be used in helping companies evaluate candidates for a job.  AI could evaluate education, experience, and other data obtained through the internet to predict an employee’s likely fit with the company as well as skill set.  There are laws already in place about employer’s use of certain public information, such as credit history and criminal backgrounds that must be excluded from such analysis, employers would have to approach this type of analysis cautiously to ensure compliance with existing laws.

5. Will there be a backlash for use of AI in the employment context, and will it be regulated?

Employers are already regulated on how they can use background information about candidates and employees under the Fair Credit Reporting Act (FCRA) and California’s Investigative Consumer Reporting Agencies Act (ICRAA).  Similarly, AI is using background information known about a person and comparing that data to a wide data set to glean likely future outcomes.  There could be a case made that just as the FCRA and ICRRA create obligations to provide notice to employees about the background information that an employer is relying upon to make an employment decision for the employee to correct any mistakes in that information, employees should be able to see the data being relied upon in the AI analysis.  However, given that AI can gather and process a huge amount of data, it might be impossible to review all of the data.  Moreover, the data relied upon by AI about the employee’s background may be very accurate, but the algorithms relied upon by the AI might weight information in a way that does not result in accurate predictions.  Don’t forget, AI predictions are just that – predictions.  Nevertheless, employers are always looking for a small advantage over competitors, and AI may be one additional tool to do this.  However, like many other areas of technology, the legal system is slow to adopt to technical advancements.  AI in the workplace exists and is being used, employers and the legal system needs to start considering its ethical and legal parameters.

In this Friday’s Five I recommend books that I am either reading and have read related to managing employees or a business.  I hope everyone is having a great summer.

 

1. Manager Onboarding: 5 Steps for Setting New Leaders Up for Success

By Sharlyn Lauby

 

2. 101 Tough Conversations to Have with Employees: A Manager’s Guide to Addressing Performance, Conduct, and Discipline Challenges

By Paul Falcone

 

3. 101 Sample Write-Ups for Documenting Employee Performance Problems: A Guide to Progressive Discipline & Termination

By Paul Falcone

 

4. How to Win Friends & Influence People

By:  Dale Carnegie

A classic business book not often thought of as a human resources book.  However, many of the principles set out in this book are great practices for human recourse managers.

 

5. The Thank You Economy

By: Gary Vaynerchuk

Anther book not thought of as a traditional human resources book, but many of the lessons set out by Gary on how to market and build a successful business in today’s economy equally apply to human resources and managing a workforce.  Being authentic and focusing on one-on-one interactions with people will always be a good practice, no matter how technical the workplace becomes.

Photo by Ben White on Unsplash

USCIS released a revised version of Form I-9, Employment Eligibility Verification. The revised I-9 was released on July 17, 2017, and employers can use this revised version or continue using Form I-9 with a revision date of 11/14/16 N through September 17, 2017. On September 18, 2017 employers must use the revised form with a revision date of 07/17/17 N. Employers must continue following existing storage and retention rules for any previously completed Form I-9.

The City of Los Angeles recently assessed Carl’s Jr. Restaurants $1.45 million in fines for violation of the City’s minimum wage law ordinance.  The City sought these penalties against Carl’s Jr. for allegedly failing to pay 37 employees the applicable Los Angeles minimum wage rate of $10.50 per hour from July 1, 2016 to December 31, 2016.  The city also claimed that the company failed to post the required notices required by the ordinance and did not allow investigators access to two locations.  This astronomical fine imposed by the city seems out of proportion for the size of the number of employees affected, but it is a stark reminder for employers about how serious any violations of the local ordinances could be.  Here are five lessons for Southern California employers from this incident:

1. Enforcement of local ordinances is taking place.

The cities that have passed local ordinances are enforcing the laws strenuously.  The City of Los Angeles has especially been active in investigating potential violations.  First hand I have had a number of clients who have been contact by the city seeking information about compliance with the ordinance.  The investigators have appeared at workplaces in person and also contacted the employers over the phone. As discussed in item number five below, it is important for employers to train staff about how to appropriately respond to questions with people entering the workplace asking for information about the employer’s employment practices.

2. Review pay rates to ensure compliance with local ordinances.

Employers need to remember that even if their business is not located in a city or county that does not have a minimum wage or paid sick leave requirement, this does not mean your company can ignore the new laws.  Most of the ordinances require compliance with their local laws if any employee works two hours within the city or county even if the employer is not based within that city or county.  For example:

  • Santa Monica:  Law applies to any employee working a minimum of two hours within Santa Monica in a given week (even if employer is located outside of Santa Monica).
  • City of Los Angeles: Ordinance applies to “[a]n employee … who performs at least two hours of work in a particular week within the City of Los Angeles….”
  • County of Los Angeles: Ordinance applies to “[a]nyone who works at least two hours in a one-week period within the unincorporated areas of Los Angeles County is entitled to the County minimum wage for the hours worked in the unincorporated area of the County.”
  • Pasadena: Applies to employees who perform at least two hours of work in Pasadena.
  • Malibu: “This ordinance applies to employees who perform at least two hours of work in a particular week within the Malibu city limits.”

3. Penalties for non-compliance are substantial.

An employer who violates the City of Los Angeles’ minimum wage requirements is liable to the employee for payment of back wages and an additional penalty of $100 for each day that the violation occurred or continued.  Where retaliation has occurred, the employee is entitled to reinstatement and a trebling of all back wages and penalties.

In addition, employers are subject to administrative fines as set forth below:

Failure to post notice of the Los Angeles Minimum Wage rate

 $500 per day per employee
Failure to allow access to payroll records $500 per day per employee
Failure to maintain payroll records or to retain payroll records for your years $500 per day per employee
Failure to allow access for inspection of books and records or to interview employees $500 per day per employee
Retaliation for exercising rights under the ordinance $1,000 per day per employee
Failure to provide employer’s name, address, and telephone in writing $500 per day per employee
Failure to cooperate with the Division’s investigation $500 per day per employee
Failure to post Notice of Determination to employee $500 per day per employee

4. Ensure all poster and notice requirements are complied with.

The cities and counties that have local minimum wage and paid sick leave ordinances are making the notices relatively easy to obtain from their websites.  For example, here are a few links published by various cities in the Los Angeles area:

Santa Monica notices:  https://cityofsantamonica.app.box.com/s/nuccal4on935m43p0nhmuzgy65f5mbwl

City of Los Angeles notice: http://wagesla.lacity.org/#information

County of Los Angeles notice: http://file.lacounty.gov/dca/cms1_245570.pdf

Pasadena notice:  http://www.cityofpasadena.net/minimumwage/

Malibu: http://www.malibucity.org/minimumwage

5. Implement policy and train staff and managers about how to respond to investigators.

All staff should receive training about how to respond if contacted by anyone who indicates that they are from a government office and are seeking information about the workplace.  It is important for the employer to be able to identify and confirm that the investigators are who they are reporting to be and that they are actually working for the federal, state or local government.  Once their identify has been confirmed, employers need to designate who from the company will gather and communicate the relevant information to the investigators in a timely manner.  The person designated by the employer should have experience in dealing with investigations, an understanding of the company’s policies and the local legal requirements.  Finally, the employer should address whether they need the assistance of legal counsel to assist in the investigation.

American FlagI published this post the last couple of years just before the Fourth.  Thinking back on it again this year I want to publish the same post, and hopefully I’ll be able to keep publishing it for many years to come.  Hope you have some time this weekend for put aside your work for a bit this weekend and enjoy some time with your family.  Happy Fourth!

Five things I’m thankful for this Fourth of July:

1.     For the great risk and sacrifice our Founding Fathers took to establish the country. 

When learning about the Founding Fathers in high school history class I did not have a perspective about the risks the Founders took in establishing the country.  Only now that I have a business, a family, and am relatively successful, can I realize the huge risks that the Founders took.  By all means, they were the establishment, the elite of the American society, if anyone had an interest in preserving the status quo it was them.  It is great that their sacrifices of life (theirs and their family members) and their fortunes, helped build the foundation we benefit from today.

2.     The ability to speak freely and practice or not practice any religion I want.

It is great being able to say what you want to say freely and believe in whatever you want.  It is also great be free to practice or not practice any religion you want.  We live in a very tolerant society, and it is even better when the government is not telling you how to live your life.  It is important to remember that throughout history, this has been the exception for how a government normally behaves.

3.     Our Country’s ability to attract creative people.

People that like creating things and being productive want to practice their trade where the government will basically leave them alone and provide a good environment to protect their gains derived from their hard effort (see item #5 below).  The U.S. provides this environment, and that is why so many people come to the U.S. to create a business or to practice their trade.  It is also important to recognize how lucky we are to be born in the U.S.

4.     My right to practice any profession and unlimited resources to learn the required skills.

No one is dictating what students need to be after they graduate high school or college.  Everyone is free to pursue their interest, and the market decides the value of the effort.  With basically any information freely available on the Internet, anyone can learn almost any skill, and like no other time in human history individuals have an almost free way to sell their services or products over the Internet.  In your mid-40’s and want to make a career change?  Perfect, and you don’t even need to go back to school as the information is freely available on the Internet.  Didn’t finish college and are 20 years old with an idea?  Perfect.  Venture capitalists don’t care about your pedigree, they basically are only interested if you work hard and don’t give up.

5.     Our legal system.

Yes, it sounds trite.  But while I don’t think our legal system is perfect by any means, it is the best system established in the history of mankind.  Everyone living in the U.S. presently is very lucky to have this benefit.  It is a foundation for many of the items I mentioned above.  Because people have a good basis for predicting the outcomes of their actions, such as being able to retain property legally obtained, and knowing if someone breaches a contract there will be repercussions, it creates an environment that attracts hard effort and the best talent from around the world.  This is why the U.S. has been the leader in ideas and new businesses.  However, just because the system is established it does not mean our work is done.  We have to be vigilant not to lose the fairness, reasonableness, and lack of corruption in the legal system.

Happy Fourth of July.  I have to go start the grill.

Los Angeles City begins enforcement on July 1, 2017 of its Fair Chance Initiative for Hiring Ordinance that prohibits employers from seeking criminal background information prior to offering a job to applicants.  The ordinance was effective in January 2017, but to give employers time to become compliant with the new hiring prohibitions, the City delayed enforcement until July 1.  This Friday’s Five discusses five issues Los Angeles City employers need to understand prior to the July 1 deadline:

1. Employers are prohibited from inquiring into a job applicant’s criminal history until a conditional offer of employment has been made.

Employers cannot conduct any “direct or indirect” activity to gather criminal history from or about any applicant using any form of communication, including on application forms, interviews or Criminal History Reports.  This includes searching the internet for information pertaining to the applicant’s criminal history.

2. Review the Fair Chance Initiative for Hiring Ordinance Guideline for Employers

The City published a flow-chart setting out a guideline for employers to follow to comply with the Ordinance [update: the City has since removed this flow-chart from its website – for additional information, see updated links below].

Employers should review the Ordinance, and if they will be conducting background checks make sure to implementing processes to meet the requirements of the Ordinance.

3. Post the notice to applicants and employees and ensure documents are retained for three years.

Employers are required to post a notice informing applicants of the law at each workplace, job site or other location in the City of Los Angeles under the employer’s control and visited by the applicants.

In addition, employers are required to retain applications and related information for three years.

4. Develop a process to comply with ordinance if revoking conditional offer based on criminal history report.

The City published a sample notice to rescind employment offer that employers can utilize to comply with the Ordinance after an employee’s criminal history background check reveals information that may allow the employer to revoke the conditional offer of employment.  The sample letter can be downloaded here.

The City also published an individual assessment and reassessment form for employers to use in conducting the required review of whether the employee’s criminal history is job-related and can be used to revoke the offer of employment.  Employers should review this document, understand the required steps to comply with these requirements, and seek help from qualified employment lawyers if/when this assessment must be done in making a determination of whether to revoke a job.

5. Place disclosures in all job-wanted ads to ensure compliance with ordinance.

The Ordinance requires that employers state “in all solicitations or advertisements seeking Applicants for Employment that the Employer will consider for employment qualified Applicants with Criminal Histories in a manner consistent with the requirements of this article.”

The City has proposed the following sample language to comply with this requirement:

We will consider for employment all qualified Applicants, including those with Criminal Histories, in a manner consistent with the requirements of applicable state and local laws , including the City of Los Angeles’ Fair Chance Initiative for Hiring Ordinance.

It is important to remember that this requirement applies to all online advertisements and solicitations.

Employers should review the City’s website for more information as well as the City’s Frequently Asked Questions.

IMG_4751 (1)Mid-way through 2017 and the California legislature is busy and, as expected, there are a number of employment law bills making their way through the legislature.  This Friday’s Five reviews five bills that could have a major impact upon California employers if passed:

1. AB 168 – Prohibition of asking salary history when hiring employees.

This bill prohibits employers from seeking salary history information from applicants and requires employers to set pay scale for positions and to provide this information to applicants.

2. AB 1008 – Statewide “Ban the Box” (limiting any questions by employers about criminal histories on applications).

Los Angeles and San Francisco have already passed regulations prohibiting employers for asking about criminal histories before a job is offered to employee.  This bill would apply similar requirements on employers state-wide.

3. AB 1565 – Increasing the required salary threshold to $47,472 annually ($3,965/month) for white collar exempt employees.

To qualify as an executive, administrative, or professional employee exemption, employers bear the burden of establishing that the employee is paid a salary the equivalent of two times the state minimum wage and that the employee spends more than 50% of their time on exempt duties.  With the state minimum wage at $10.50 per hour for large employers as of January 1, 2017 the currant salary level that must be paid in order to qualify for the white collar exemptions is $43,680/year.  On January 1, 2018, the state minimum wage increases to $11 per hour for large employers, raising the salary required for exempt employees to $45,760/year.  This bill proposes to increase the salary required to be paid to employees to meet the white collar exemptions since the Department of Labor’s attempt to do this on a federal level stalled at the end of last year.

4. AB 1209 – Internet publication of wages based on gender. This bill would require employers to publish information about “pay gender differentials” on a website open to the public. 

The bill would apply to employers who are required to file a statement of information with the Secretary of State and who have 250 or more employees to collect specified information on gender pay differentials. The bill would require an employer to annually update, publish, and submit the information.

5. SB 63 – Require small businesses to provide parental leave.

Currently, employers with 50 or more employees are required to comply with the California Family Rights Act and provide parental leave of up to 12 weeks to bond with a new child within one year of the birth.  This bill would lower the number of employees for covered businesses to 20 employees in a 75-mile radius.  The bill would also prohibit an employer from refusing to maintain and pay for coverage under a group health plan for an employee who takes this leave.

 

coffee breakCalifornia Labor Code section 226.7 provides that employees are entitled to receive premium wages in the form of one additional hour of pay at the employee’s regular rate of pay for a missed meal or rest break.

An employee who works more than three and one-half hours per day must be permitted to take a paid 10-minute rest period — during which the employee shall not be required “to work” — per every four hours of work or major fraction thereof.  An employee who works at least five hours must also be given a 30-minute unpaid meal break, during which the employee must be “relieved of all duty” if the meal period is not to be counted as time worked.

As the California Supreme Court recognized in Augustus v. ABM Security Services (2016), employers that cannot provide the required meal or rest breaks to employees have various options to comply with the law.  The Court stated:

Several options nonetheless remain available to employers who find it especially burdensome to relieve their employees of all duties during rest periods — including the duty to remain on call. Employers may (a) provide employees with another rest period to replace one that was interrupted, or (b) pay the premium pay set forth in Wage Order 4, subdivision 12(B) and section 226.7. (See Brinker, supra, 53 Cal.4th at p. 1039.)

As recognized by the Supreme Court, employers may consider voluntarily paying premium wages when it is questionable if an employee did not receive a compliant break or if they in fact missed the break.  Here are five issues employers should understand about the option of paying premium pay voluntarily1.

1. Employers potentially only owe two premium pay hours for each day worked.

The court in United Parcel Service, Inc. v. Superior Court (2011) concluded that the employer is liable up to two hours of premium wages – one hour for a missed meal break and one hour for a missed rest break – per day.  Even if the employee missed two rest breaks and one meal break in one day of work, the employee would only be entitled to one hour of premium pay for the missed rest breaks, and one hour of pay for the missed meal break, for a total of two hours of premium pay for that day.

2. Voluntarily making premium payments establishes that employer has effective open door policy.

By paying premium pay to employees who are not able to take breaks or complain that they have not been able to take breaks establishes that the company has an effective complaint procedure employees should utilize when any problems arise.  This presents an effective argument against any claims by employees after-the-fact that they were unable to take their breaks, and assert claims against the employer well after their employment ended.

3. Voluntary payment reduces potential liability.

The premium pay mentioned above is the penalty that is provided to the employee if they miss any of their required breaks.  Therefore, if the employer voluntarily pays the premium when the employee did not receive proper breaks, this will reduce the total potential liability owed to employees if sued.

4. Establishes that employer understands its legal obligations.

In making premium payments to employees who are arguably not able to take meal and or a rest break, establishes to any governmental agency or a plaintiff’s counsel that the company understands it obligations under the law and treats the obligations seriously.

5. If paid, it should be listed separately on employees’ paystubs to record payments.

It goes without saying that if the employer is taking this affirmative step, it needs to record the payments in a manner that makes it clear to the employee that the premium pay is being paid when breaks are missed.  In addition, the employer needs to have a record to establish all premium paid that could possibly be asserted by an employee has been paid out.