California Public Agency Labor & Employment Blog

California Public Agency Labor & Employment Blog

Useful information for navigating legal challenges

Screening Applicants With Domestic Violence Criminal History

Posted in Employment

Employment-Application.pngThe National Football League’s handling of several recent high-profile domestic violence incidents involving players Ray Rice, Greg Hardy and Jonathan Dwyer has raised the national consciousness regarding how employers handle domestic violence issues. Domestic violence has been, and continues to be, a prevalent problem that creates many challenging issues for employers.  A recent Centers for Disease Control and Prevention study found that domestic violence victims lose a total of nearly 8.0 million days of paid work which is the equivalent of more than 32,000 full-time jobs as a result of the violence.  Employers have to consider issues including workplace security, whether discipline is appropriate for off-duty conduct, and handling accommodations for the victims of domestic violence.

Because of the many challenges that employers face, the natural inclination may be systematically to screen out all job applicants who have any criminal history of engaging in domestic violence, so that the agency can protect against the pernicious effects of domestic violence on the workplace.  However, employers should be extremely cautious in screening for particular types of criminal history, including when it involves domestic violence. Employers must comply with all applicable federal and state laws regarding the collection and consideration of criminal history records.

California “Ban the Box” Law

Since July 1, 2014, California state and local agencies are prohibited from making any inquiry about conviction history on the initial employment application.  This does not mean that the employer cannot inquire about convictions at all.  Rather, criminal background inquiries can only be made after the employer has established that the applicant meets the minimum qualifications of the position. This does not apply to those positions in which the agency is required by law to conduct a criminal history background check (e.g., peace officers) or to positions within a criminal justice agency.

Once minimum qualifications have been established, the employer can ask about criminal convictions. In California, with the exception of peace officers, the agency still cannot ask about arrests not resulting in convictions.

Title VII of the Civil Rights Act of 1964

Title VII prohibits employment discrimination based on race, color, national origin, and other protected classifications. The Equal Employment Opportunity Commission (EEOC) interprets and enforces Title VII. According to the latest EEOC Guidance on the use of criminal records information, blanket criminal record exclusions may have a disparate impact on African-American and Hispanic applicants. While a policy that automatically screens out applicants with a domestic violence criminal history does not on the face of it discriminate against any protected classification, employers must avoid creating a disparate impact on any protected group.  If an applicant can establish that the policy has a disparate impact, then the employer must show the policy is job related for the position in question and consistent with business necessity.

To establish that a criminal conduct exclusion that has a disparate impact is job related and consistent with business necessity, the employer needs to show that the risks inherent in the duties of a particular position are enhanced by the applicant’s previous criminal conduct.  In the case of a domestic violence conviction, the employer would need to show that this specific offense demonstrates unfitness for the job the applicant  seeks.  Consider, for example, whether a domestic violence conviction makes an applicant for a data entry position unfit to perform the duties of that job.  Ostensibly, an applicant with a domestic violence conviction could satisfactorily perform a data entry job as well as an applicant without such a conviction.  Thus, the criminal conduct does not necessarily demonstrate unfitness for the position and an automatic exclusion from this position based on the criminal conviction is not likely to be found sufficiently job related and consistent with business necessity.

The EEOC Guidelines describe three factors that the employer should consider when assessing criminal records:

  1. The nature and gravity of the offense or conduct (evaluating the harm caused, the elements of the crime, and whether the crime was a felony or misdemeanor);
  2. The time that has passed since the offense or conduct and/or completion of the sentence; and
  3. The nature of the job held or sought (including essential functions, specific duties and environment).

The EEOC Guidelines state that employers will “consistently meet the ‘job related and consistent with business necessity’ defense” if the employer develops a targeted screen considering at least the three factors listed above, and then provides an opportunity for an individualized assessment for applicants excluded by the screen.

An individualized assessment means the employer:

  1. informs the applicant that he or she may be excluded based on his or her criminal record;
  2. offers the applicant an opportunity to explain why the exclusion should not apply  (for example, an applicant may be able to show the record has misidentified him, or contains other inaccuracies); and
  3. considers whether the applicant should continue to be excluded.

If the applicant refuses to provide any additional information about his or her background, the employer may make its employment decision without the information.

In sum, while a policy that automatically excludes applicants with a domestic violence criminal history may seem like a good idea, employers should refrain from having blanket screening policies that are not narrowly tailored for the specific job, because those policies may well run afoul of Title VII.  As the EEOC guidance provides, the best practice is to have a targeted screen based on the three assessment factors listed above and to provide an individualized assessment.

Is Bankruptcy the Way Out of Pension Obligations?

Posted in Pension, Retirement

Retirement-Sign.jpg

This blog post was authored by Paul D. Knothe

We are all aware of the ongoing discussion over the rising cost of public pension benefits and whether they are sustainable in the long run. However, one unanswered question was lurking in the background: Is Chapter 9 bankruptcy a way for struggling municipalities to shed these pension liabilities?  We now have a glimpse at what at least one bankruptcy judge would rule if faced with that situation:  those pension obligations can likely be impaired in a bankruptcy proceeding.

Published reports indicate that on October 1, 2014, Bankruptcy Judge Christopher Klein stated from the bench that he believed that, contrary to arguments made by CalPERS, the City of Stockton can impair its pension obligations to its employees and retirees as part of a Chapter 9 plan by terminating its contract with CalPERS.

To be clear, Judge Klein’s statements of October 1 do not constitute a finding that the City must or will impair its pension obligations.  The question before Judge Klein is whether to accept or reject the City’s proposed plan, which does not call for any reduction in its pension obligations.  Another City creditor opposed the plan, arguing that the City’s debt to it should not be reduced while pensioners face no reduction to their benefits.

California courts have regularly stated that pension benefits are vested and therefore have certain protections (although retiree medical benefits seem to be less protected).  But what does “vested” mean?  A vested benefit is based on contract principles.  The courts have stated that the promise made by a public employer to provide a pension benefit in the future is akin to the offer portion of a contract and, the employee accepts that offer by performing work.  Thus, according to the courts, a contract is formed and, given the prohibition on passing legislation impairing a contract, the public agency may not impair that contract.

In a bankruptcy, however, contracts are regularly modified, many times against the creditor’s will.  Those other creditors think that their contract is just as valid as any other contract, including pension obligations to public agency employees and retirees.  In fact, that was the assertion of one of Stockton’s creditors.  It argued it should not take a large loss while employees’ and retirees’ pension benefits go unscathed.  If the creditor is successful in blocking the plan and a future approved plan does require that the City terminate its contract with CalPERS, the results could be significant.   The City asserted numerous negative consequences of compelled termination of its CalPERS contract.  As an example, two of them are:

  • Accrued pension benefits would be cut to some degree.  CalPERS’ Deputy Chief Actuary and the City’s hired expert, as cited in the City’s brief, estimated this reduction at 60%.   A Termination Liability would be imposed on the City, and because it does not have the funds to pay that liability, benefits to employees must be reduced pro rata based on the amount of the Termination Payment that is not funded.
  • The City would not be allowed to rejoin CalPERS for at least three years.

These issues are far from settled.  We will continue to keep you updated with any new developments.

Governor Brown Vetoes Legislative Bill Which Would Have Allowed Factfinding for All Negotiable Subjects Rather than Only MOUs, And Impasse Mediation If Requested By One Party

Posted in Brown Act

Breaking-News.jpgThis blog post was authored by Connie C. Almond and  Shardé C. Thomas

On September 30, 2014, Governor Brown vetoed AB 2126 – a bill which included significant changes to the Meyers-Milias-Brown Act (“MMBA”). As discussed in our prior blog post, this closely watched bill included four amendments to the MMBA’s factfinding and mediation provisions. Together, they would have allowed for more robust and potentially longer impasse procedures. We will discuss each in turn.

The Scope of Issues Subject to Factfinding – Complete MOU or Any Mandatory Subject of Bargaining?

If after meeting and conferring in good faith, a public employer subject to the MMBA cannot reach agreement with the union or association and impasse is declared, the MMBA currently requires the parties to participate in factfinding if the union or association requests it. The law does not currently specify whether a union or association could request factfinding over any negotiable subject or only when the parties have reached impasse over a full memorandum of understanding (“MOU”). The Public Employment Relations Board (“PERB”) has held that factfinding applies to any mandatory subject of bargaining. But two separate trial courts – County of Riverside v. PERB and San Diego Housing Commission v. PERB – have recently held that MMBA factfinding applies only to contract negotiations and not other discrete mandatory subjects of bargaining, such as effects bargaining related to a layoff decision. Both of these cases are currently awaiting appellate review.

AB 2126’s most significant provision would have “clarified” that a union or association can request factfinding in the event of impasse over any mandatory subject of bargaining. In his veto message, Governor Brown explained that the “measure is premature because a key issue it raises is currently pending before two separate courts of appeal.” The Governor further explained that he intends to “get the benefit of the courts’ reasoning before” taking any action on such a bill. As a final note, the Governor expressed that he feels the negotiations process under the MMBA is “extraordinarily robust and extensive.” What that may mean for future legislation remains to be seen.

Impasse Mediation

Currently, when parties reach impasse in negotiations, mediation is only required if mandated by local rules or if the parties mutually agree to mediation.

AB 2126 would have required mediation as a mandatory impasse procedure if either party requested it. This change would have resulted in potentially more time-consuming impasse procedures.

Union’s Ability To Waive Factfinding

AB 2126 also would have provided employee organizations with the ability to voluntarily waive factfinding. Currently, employee organizations are prohibited from agreeing to waive their right to factfinding. Consequently, public agencies must wait at least 30 days after the declaration of impasse before taking action on the last, best, and final offer even if an employee organization previously indicated it would not seek factfinding.

Factors Considered By A Factfinding Panel

The MMBA provides eight statutory criteria for a factfinding panel to “consider, weigh, and be guided by.” AB 2126 proposed to clarify the existing law to provide that a factfinding panel only has to consider the factors which it finds to be relevant, and not necessarily all eight factors. While this bill may have provided some clarification, in practice, factfinding panels generally give the more relevant factors more weight than the other factors anyway. Consequently, this portion of the bill would have had minimal impact.

WHAT DOES THIS MEAN FOR YOUR AGENCY?

Q: In light of this veto, can an MMBA public employer reject a union or association’s request for factfinding over a negotiable subject other than an MOU, such as a drug and alcohol policy?

A: Not necessarily, there is still some risk. The Governor’s veto does not provide any clarity regarding the scope of the MMBA’s factfinding provision. And the statute remains vulnerable to different interpretations. Your agency should evaluate the potential risks of refusing a request to participate in factfinding over a discrete mandatory subject of bargaining. And we will of course keep you updated on the outcome of the appellate court cases analyzing this issue.

Q: Can a union or association request mediation over a mandatory subject of bargaining other than a full MOU?

A: Yes, but generally the agency will have to agree to participate. Like the factfinding provisions in the MOU, the scope of the MMBA mediation provision is also somewhat unclear. Agencies should review their local employer-employee relations resolutions (“EERR”) to determine what impasse procedures are required locally and whether they apply to all bargaining or just contract negotiations. Under the MMBA, however, mediation must be mutually agreed upon, so California law does not allow for a union or association to unilaterally insist on mediation over any mandatory subject of bargaining, including a full MOU.
Note:
If you have questions about this issue, please contact our Los Angeles, San Francisco, Fresno, or San Diego office.

To receive these Special Bulletins on the day they are released, please send your email address to info@lcwlegal.com.

Tips from the Table: Avoiding an Unfair Practice Charge with PERB

Posted in Labor Relations, Negotiations

We are proud to continue our video series – Tips from the Table. In these monthly videos, members of LCW’s Labor Relations and Negotiations Services practice group will provide various tips that can be implemented at your bargaining tables. We hope that you will find these clips informative and helpful in your negotiations.

Your Employee Did What?? – HR Lessons Learned From Real Cases

Posted in Employment

Gavel-and-Flag.jpgYou really can’t make this stuff up.  These are some examples of actual employment cases and lessons that can be learned from them.

The $180,000 Bag of Chips

A diabetic employee was fired because she ate a $1.39 bag of chips before paying for it. She then filed a disability discrimination complaint with the EEOC, claiming she had eaten the chips because her blood sugar was low and she was not able to pay for the chips first. The employer settled the claim for $180,000.

Lesson learned: Employers certainly are entitled to have policies regarding theft and should enforce them. However, common sense should prevail and policies should not always be applied as if the circumstances are always “black and white.” Even in situations such as these where an employee is accused of violating policy, an employer should not disregard whether an employee’s disability was the cause of the violation.

Men Harassing Men

A car dealership paid $2 million dollars to settle a same-sex harassment claim brought on behalf of 50 male employees. The harassment included sexual comments, frequent solicitations for oral sex, and regular touching, grabbing and biting of male workers on their buttocks and genitals. Management promoted and encouraged the harassment.

Lesson learned: Same-sex harassment is abhorrent.  Employers should be mindful that same-sex harassment violates the law just as other types of harassment. If it is not already part of employee sexual harassment training, employers should include it. Training and monitoring of employees is far less expensive than a $2 million dollar settlement.

Worst Co-Worker Ever

A medical assistant hired through a staffing company had minor disagreements with a co-worker.  The medical assistant then put carbolic acid in the co-worker’s water bottle. The employer avoided liability because the court found poisoning a co-worker is not conduct that is considered to be within the course and scope of employment. However, this did not mean the co-worker was not free from personal liability.

Lesson learned: Poisoning a co-worker is never a good idea. Luckily, this kind of conduct was found to be outside the course and scope of employment, but the employer, nonetheless, was required to defend itself in a lawsuit. Employers who become aware of co-worker disputes should take action to correct and monitor the situation.

Not By The Hair Of His Chinny Chin Chin

A parts storeroom supervisor sued her employer after her manager sexually harassed her. The first incident occurred when the manager put his arms around her and kissed the side of her face. She told him the conduct was not welcome. The second time, the manager tried to put his arms around her and she pushed him away. He then changed his demeanor towards her and was “biased and angry.” He also told her not to bother reporting the conduct. The employee reported to her manager’s direct supervisor, but nothing was done. The next incident occurred when the manager called the employee into his office, shut and locked the door, and told her to come over and remove an ingrown facial hair from his chin. (Yes, this happened!) He put tweezers in her hand and said, “you know I can terminate you.” When she tried to leave, he put his arms around her and kissed her on the side of her face and forehead. The employee was subsequently terminated for performance problems. The court allowed the lawsuit to continue because a reasonable jury could find a causal relationship between her refusal to accept the harassment and her termination.

Lesson learned: This litigation could have been avoided if management had taken the employee’s complaints seriously and acted upon them. Here, the employee complained and nothing was done to remedy the situation. In fact, she was harassed even after complaining. Also, when terminating an employee following a complaint of unlawful conduct, the employer should have significant and legitimate reasons for the termination, as the employer inevitably will be required to defend its decision.

Cultural Learnings Of America For Make Benefit of Glorious Nation of Kazakhstan

A Jordanian-born employee was nicknamed “Borat” by his co-workers. For those of you who don’t know, Borat was a fictional Kazakh journalist with a thick accent who was in a film of the same name and portrayed as naïve, ignorant, chauvinistic, and anti-Semitic. The employee’s co-workers routinely referred to him as Borat and told other employees to do the same. There were other comments made to him, such as “We let you in this country, and we gave you a Green Card. The least you can do is speak English.” Although he did not complain to supervisors, he repeatedly asked his co-workers to stop calling him Borat because he found it to be offensive. His supervisor over heard him complain to his co-workers about the name-calling but did nothing.

Eventually, the employee’s performance reviews declined and he was facing a potential performance improvement plan. Before the employer had a chance to implement a PIP, the employee took a leave of absence to attend his family’s estate in Jordan. When he returned, he was told his job had been filled. He then sued his employer for hostile work environment, termination based on national origin, and retaliation for making internal complaints. The court concluded a reasonable jury could find he was harassed because he is Arab, and that the employer could be liable for failing to take corrective action. The employer attempted to argue it should not be held responsible because the employee did not directly complain; however, the harassing conduct occurred in open areas where management likely was aware of it.  His supervisor overheard the complaints and took no action.

Lesson learned: Supervisors have a duty to take action even if the employee does not directly complain about unlawful conduct. In this case, the employee’s supervisor had heard the complaints and was likely aware of the harassment because it was frequent and in the open. Management should be trained to recognize harassment and take appropriate action.

Harassment And Our Neighbor To The North

Harassment and retaliation happens—even in Canada. A winery employee complained to her employer that a supervisor was referring to a subordinate as “boobie girl.” The supervisor claimed she only meant it as a joke. The complaining employee, who was not the subject of the harassment, was told that she should start looking for another job after she made the complaint. She was then terminated. The employer argued the actions did not rise to the level of sexual harassment, so the complaint could not be protected. The court disagreed, finding that the employee was rightfully offended by the comments (even though they were not directed at her). The court did not find the employer’s reasons for termination to be legitimate as there was no evidence of any performance problems. The employee was awarded damages for the unlawful termination.

Lesson learned: Employers should use caution when dismissing an employee’s complaint of harassment. While some people may not find comments offensive, and allegedly the recipient of the comments did not, they still could be considered unlawful and harassing.

Part-Time Employee Traps For CalPERS Employers

Posted in Retirement

This blog post was authored by Steven M. BerlinerRetirement-Sign.jpg

Given all the recent public employee pension reform changes to absorb, it is not surprising that part-time employees of CalPERS contracting agencies have received little attention.  After all, part-time employees are excluded from CalPERS membership, right?  While that might be the general rule, the exceptions practically swallow the rule.  Your agency needs to be aware of the exceptions to avoid very expensive and time-consuming problems.

Government Code section 20305 sets out the various thresholds that must be reached before a part-time employee must be enrolled as a member in CalPERS.  The general rule is that permanent employees who work in a position requiring less than half time (i.e., average less than 20 hours per week) are not eligible for membership (unless your agency amends its CalPERS contract to enroll part-time employees).  Easy enough.  However, another basic rule is that once an employee is a CalPERS member, he or she remains a CalPERS member, even if they switch employers and/or their status changes from full-time to less than half time.  As a result, it is essential that any applicant for part-time employment be asked if they are a CalPERS member.  If they are, and they are hired, they must be enrolled as a CalPERS member from the first day of employment.

Another trap is the 1,000 hour per fiscal year rule.  Once a part-time employee exceeds that limit, he or she must be enrolled as a member.  Combining this rule with the first one, that “once a member, always a member,” a part-time employee that exceeds 1,000 hours in one fiscal year and never exceeds that threshold again, must nonetheless continue to be enrolled.

Failure to enroll an eligible employee timely can result in a $500 penalty.  In addition to paying employer contributions on the part-time employee’s salary, the employer may also be required to pay the employee contribution.  Since there is no statute of limitations on when an employee (or CalPERS) can pursue retroactive enrollment, it is not uncommon for requests for membership to be made by former employees years after they stopped working for the agency.  Dealing with that problem can be an administrative nightmare, since the employer likely no longer has records of the employees’ salaries.  This is especially true when temporary agency workers or independent contractors are determined to be agency employees. In those cases, merely determining the correct salary to report to CalPERS as compensation can be a challenge.

Government Code section 20305 has several other thresholds for enrolling employees.  Not all can be addressed in one blog post.  However, your agency needs to be aware of the rules and comply.  Since there is no statute of limitations, the problem never really goes away.

Court of Appeal Decision Indicates MOU Language Providing for On-Duty Meal Periods for Commercial Drivers May Protect Against Penalties for Interrupted Lunch

Posted in Wage and Hour

hourglass-small-copy.jpgThis blog post was authored by Paul Knothe.

A recent decision of the California Court of Appeal clarifies that agencies that employ commercial drivers, such as bus drivers, paratransit bus drivers and sanitation truck drivers can protect themselves from meal time penalties by providing for meal periods in their collective bargaining agreements – even if these are “on duty” meal periods.

California Labor Code section 512 mandates completely work-free meal periods of at least 30 minutes every five hours but this does not apply to the vast majority of public agency employees.   However, pursuant to IWC Wage Order No. 9, this requirement does apply to commercial drivers employed by public agencies.  The penalties for violation of this requirement are harsh – one hour’s pay for each meal period missed or encroached on by work.

Subdivision (e) of section 512 provides that the mandate does not apply to certain types of employees, including commercial drivers, if (1) the employee is covered by a valid collective bargaining agreement and (2) that agreement expressly provides for:

  • The wages, hours of work, and working conditions of employees
  • Meal periods for those employees
  • Final and binding arbitration of disputes concerning application of its meal period provisions
  • Premium wage rates for all overtime hours worked
  • A regular hourly rate of pay of not less than 30% more than the state minimum wage.

Araquistain v. Pacific Gas & Electric Company, recently decided by the California Court of Appeal is the first reported decision to address what language is sufficient in a labor contract to meet the requirements of the subdivision (e) exception.

In Araquistain, the contract covering the plaintiffs, who were one of the types of employees referenced in subdivision (e), provided that employees “shall be permitted to eat their meals during work hours.”

The plaintiffs argued that this language did not expressly provide for “meal periods,” as opposed to simply “meals.”   Relying on the California Supreme Court’s Brinker Restaurant decision, the plaintiffs argued that a meal period under section 512(e)(2) must be a period of time “with a beginning and an end” during which an employee is relieved of all duty.   The PG & E collective bargaining agreement provided only that employees were entitled to eat during work hours, and the plaintiffs testified that they ate while working.

The Court rejected the employees’ argument.  It held that, while the term “meal period” as used in section 512(a), which mandates a meal period every five hours, does mean that an employee must be relieved of all duty, it has a different meaning in section 512(e).  As used in section 512(e), which creates the exception, the term “meal period” does not require that the employee be relieved of all duty.  The Court noted that  “subdivision (e)(2) provides an exception to the ordinary rule that an employer must provide meal periods of a specified time after a specified amount of work; that is, it provides that where a collective bargaining agreement meets certain requirements, subdivision (a) ‘do[es] not apply.’  It would make no sense to conclude that subdivision (a)’s requirements apply to an employee who is explicitly exempted from them.”

The Court also pointed to the legislative history of the exception, signed into law in 2010, and concluded that the legislation was intended to increase meal period flexibility in certain industries, and to address to some degree the problem that employers were forced to monitor employee meal periods to ensure that the employees were not doing work.

Therefore, the Court found the language that employees “shall be permitted to eat their meals during work hours” does expressly provide for meal periods.    Agencies that employ commercial drivers should check their MOUs to determine if they qualify for the Section 512(e) exception.

California’s New Paid Sick Leave Law Provides Employees With Paid Sick Days Effective July 1, 2015

Posted in Employment, Legislation

Special BulletinThis blog post was authored by Gage Dungy and Stephanie J. Lowe

On September 10, 2014, Governor Brown signed Assembly Bill 1522 (“AB 1522”), codified as Labor Code sections 245 through 249, enacting the Healthy Workplaces, Healthy Families Act of 2014 (“Paid Sick Leave law”).  Effective July 1, 2015, this new Paid Sick Leave law entitles an employee to the accrual of up to three paid sick days in a 12-month period for the diagnosis, care, or treatment of an existing health condition or preventative care for an employee or an employee’s family members.  It also provides paid sick days for an employee for certain purposes related to being a victim of domestic violence, sexual assault, or stalking.  In preparation for the effective changes on July 1, 2015, all California employers should review their current sick leave policies and practices to ensure compliance with the Paid Sick Leave law.  Below is a summary of the Paid Sick Leave law and how it can apply to your agency.

Overview of the Paid Sick Leave Law

Prior to AB 1522, there was no law in California mandating sick leave (paid or otherwise) for employees.  The Legislature’s intent in enacting the Paid Sick Leave law is to ensure that employees can address their own health needs and the health needs of their families and to decrease public and private health care costs by enabling employees to seek early and routine medical care and to address violence, sexual assault, or assault.  

The Paid Sick Leave law requires nearly all employers to provide at least three sick days to each employee per year.  All employers, with at least one employee, are subject to the Paid Sick Leave law, including state and municipal employers.  There is no minimum number of employees needed in a workplace for the Paid Sick Leave law to apply.

The Paid Sick Leave law only exempts the following employees:

  1. Employees covered by a valid collective bargaining agreement if the agreement expressly provides paid sick days or paid leave for sick days, final and binding arbitration of disputes about paid sick days, premium wage rates for all overtime, and a regular hourly rate of pay of not less than 30 percent more than the state minimum wage rate;
  2. Employees in the construction industry covered by a valid collective bargaining agreement;
  3. Providers of in-home support services; and
  4. Employees of an air carrier flight deck or cabin crew members. 

Under the Paid Sick Leave law, an employee is entitled to paid sick days if he or she works in California for 30 or more days within a year from when employment commences.  As a result, the Paid Sick Leave law applies to most any employee – including temporary, extra help, part-time, and seasonal employees who work 30 or more days within a year from when employment commences.  The Paid Sick Leave law does not provide any other eligibility requirements.

Employees accrue paid sick leave at the rate of at least one (1) hour per every 30 hours worked – beginning on the first date of employment or July 1, 2015, whichever is later – up to twenty-four (24) hours [three (3) days] per 12-month employment year.  For employees exempt from overtime requirements, their workweek is considered 40 hours for purposes of the Paid Sick Leave law.  Employees are entitled to request and use accrued paid sick days beginning on the 90th day of employment.  However, an employer may lend paid sick days to an employee in advance of accrual at the employer’s discretion.  The rate of pay shall be the employee’s hourly wage. If the employee in the 90 days of employment before taking accrued sick leave had different hourly pay rates, was paid by commission or piece rate, or was a nonexempt salaried employee, then the rate of pay shall be calculated by dividing the employee’s total wages, not including overtime premium pay, by the employee’s total hours worked in the full pay periods of the prior 90 days of employment.  An employer shall provide payment for covered sick leave taken by an employee no later than the payday for the next regular payroll period after the sick leave was taken.

The Paid Sick Leave law also requires employers to allow employees to carry over paid sick days to the following year of employment, up to an accrual cap of six (6) days/forty-eight (48) hours of sick leave.  Although sick leave can be carried over year to year within the cap limit, an employer can limit the number of sick leave days used to three (3) days in any one year.

Under the Paid Sick Leave law, an employee may determine how much paid sick leave needs to be used, provided that an employer may set a reasonable minimum increment, not to exceed two hours, for the use of such covered sick leave.  If the need for paid sick leave is foreseeable, the employee shall provide reasonable advance notification. If the need for paid sick leave is unforeseeable, the employee shall provide notice of the need for the leave as soon as practicable.

Employer Obligations Under the Paid Sick Leave Law

To comply with the Paid Sick Leave law, an employer must satisfy the following obligations:

  1. An employer must comply with the sick day accrual, carry over, and use requirements of the Paid Sick Leave law (as outlined above);
  2. An employer shall not deny an employee the right to use accrued sick days, discharge, threaten to discharge, demote, suspend, or discriminate against an employee for using accrued sick days;
  3. At the time of hiring, an employer shall provide each employee with written notice of his or her rights under the Paid Sick Leave law;
  4. An employer shall provide written notice of the amount of paid sick days available on an employee’s itemized wage statement or on a separate writing provided on the designated pay date with the employee’s payment of wages;
  5. An employer shall display a poster in a conspicuous place informing employees of their rights under the Paid Sick Leave law.  Employers can obtain a poster containing all of the required information from the Labor Commissioner; and
  6. An employer shall keep records documenting the hours worked, paid sick days accrued, and paid sick days used by an employee for at least three years.

Employers Who Already Have Sick Leave Policies

Many public agencies and private employers currently have sick leave policies in place, whether negotiated in a collective bargaining agreement (CBA) or memorandum of understanding (MOU); or provided by rule/policy.  Employers who already have a paid sick leave policy or paid time off (PTO) policy in place are not required to provide additional sick days if their current policies satisfy the accrual, carry over, and use requirements of the Paid Sick Leave law and they provide no fewer than three paid sick days (24 hours) each year.  The Paid Sick Leave law sets the minimum accrual rate, and therefore, does not prohibit an employer from adopting an accrual rate more generous than one hour per every 30 hours worked.  In addition, if an employer’s current policy does not allow for sick leave to carry over year to year, it must amend its policy to comply with the minimum carry over requirement up to an accrual cap of six (6) days/forty-eight (48) hours of sick leave. 

Intersection of Paid Sick Leave Law with Other Current Laws

The Paid Sick Leave law will intersect with other laws that are currently on the books, including the following:

Labor Code Section 226 – Itemized Wage Statements

Private sector employers are currently required under Labor Code section 226 to provide an itemized wage statement of gross/net wages earned, hours worked, hourly/piece rates, deductions made, dates of pay period, employee name, and employer name and address.  Public sector employers are exempt from Labor Code section 226.  New Labor Code section 246(h) of the Paid Sick Leave law requires that all employers now provide in writing the amount of paid sick leave available (or PTO leave in lieu of sick) either on the itemized wage statement used in compliance with Section 226 or in a separate writing provided on the designated pay date with the employee’s payment of wages.

Labor Code Sections 230 and 230.1 – Prohibition of Discrimination Against Victims of Domestic Violence, Sexual Assault, and Stalking for Taking Leave

Labor Code sections 230 and 230.1 prohibit an employer from discharging, discriminating, or retaliating against an employee who is a victim of domestic violence, sexual assault, or stalking for taking time off of work to obtain or attempt to obtain relief.  The Paid Sick Leave law expands on this by providing employees with the ability to use covered paid sick days for taking time off from work to obtain or attempt to obtain any relief, including, but not limited to, a temporary restraining order, restraining order, or other injunctive relief, to help ensure the health, safety, or welfare of the themselves or their child(ren) because they are victims of domestic violence, sexual assault, or stalking.  The Paid Sick Leave law also provides for an employee who is a victim of domestic violence, sexual assault, or stalking to use covered paid sick leave to attend to any of the following:

  1. To seek medical attention for injuries caused by domestic violence, sexual assault, or stalking.
  2. To obtain services from a domestic violence shelter, program, or rape crisis center as a result of domestic violence, sexual assault, or stalking.
  3. To obtain psychological counseling related to an experience of domestic violence, sexual assault, or stalking.
  4. To participate in safety planning and take other actions to increase safety from future domestic violence, sexual assault, or stalking, including temporary or permanent relocation. 

The Paid Sick Leave law would also prohibit discharge, discrimination, or retaliation against a victim of domestic violence, sexual assault or stalking for using covered sick leave days for these purposes noted above.

Labor Code Section 233 – Sick Leave to Care for a Child, Parent, Spouse, or Domestic Partner

Labor Code section 233 applies to employers who, at their discretion, adopted paid or unpaid sick leave policies.  Section 233 requires employers who provide sick leave to permit an employee to use up to one-half of his or her annual allotment of sick leave to attend to the illness of a child, parent, spouse, or domestic partner. For example, an employee who accrues one sick day per month (12 sick days per year), can use six sick days (half of the annual accrual) to care for a family member. 

The Paid Sick Leave law is broader than Section 233 by also permitting covered sick leave to be taken to care for a parent-in law, grandparent, grandchild, or a sibling, in addition to child, parent, spouse or registered domestic partner as currently required under the terms of Section 233.  This will result in the potential overlap of protected sick leave reasons both under the Paid Sick Leave law and Labor Code section 233.  As a result, employers will need to carefully review their sick leave policies and practices to ensure that they are properly providing sick leave and its protections in accordance with both laws. 

Practical Tips to Comply with AB 1522

Even though the Paid Sick Leave law does not go into effect until July 1, 2015, public and private employers should become familiar with the requirements of this new law now.  They should be ready to meet all of the employer obligations and to post the required notices by July 1, 2015.  If employers have no current sick leave policy in place, they should start drafting a policy to ensure compliance with the Paid Sick Leave law.  For employers who have already adopted a sick leave policy, they should start reviewing their sick leave policies and practices to ensure compliance with the Paid Sick Leave law.  If sick leave policies are adopted through a negotiated CBA or MOU, employers may need to review such policies to determine what amendments need to be made and may be obligated to meet and confer with the applicable bargaining unit to modify such policies.  However, employers will still have to meet the minimum requirements of the Paid Sick Leave law regardless of whether new CBA/MOU provisions can be negotiated prior to the July 1, 2015 effective date.

Employers need to be aware that part-time, extra help, temporary, and seasonal employees may now be entitled to paid sick leaves.  Employers should be prepared to start documenting accrual of paid sick leave for all employees who work at least 30 days from the beginning of employment or July 1, 2015, whichever date is later. Employers should also prepare to enforce the request procedures and employee notice requirements of paid sick days.  Foreseeable sick leave requires advance notification, while unforeseeable sick leave requires notice as soon as practicable.  This will allow employers to differentiate between paid sick leave for permissible purposes and excessive and unexcused absenteeism.  On a similar note, employers may need to examine excessive absenteeism policies and make any adjustments in light of protected sick leave usage under the Paid Sick Leave law. 

Conclusion

The Paid Sick Leave law brings forth major changes in sick leave for all California employers.  Employers therefore will need to ensure that current sick leave policies and procedures are properly updated to ensure that their workplace is prepared to comply with these changes on July 1, 2015.

If you have any questions about this issue, please contact our Los Angeles, San Francisco, Fresno, or San Diego office.

9th Circuit Says Control Is Key In Determining Independent Contractor Status

Posted in Employment

truckMany public agencies supplement their workforce with independent contractors.  Since independent contractors who perform services are not employees, agencies do not have to pay them according to the requirements of the Fair Labor Standards Act (FLSA). If the contractor does not meet the qualifications for “independent contractor” status, the worker must be treated as an employee for FLSA purposes. Often, employers mistakenly believe that they have properly designated an individual as a contractor because they have a services contract that says the worker is an independent contractor.  However, job titles and contract terms do not determine whether a worker is truly a contractor.

The 9th Circuit Court of Appeals, which covers California, recently held that the most important factor in determining whether a worker is an employee or independent contractor is control.   In Ruiz v. Affinity Logistics Corp., truck drivers of the company sued for unpaid wages and other benefits under the FLSA and California law.  The drivers argued that Affinity wrongfully classified them as independent contractors, and that instead they should have been classified as employees.  In order to determine whether the truck drivers were employees or independent contractors, the Court of Appeals considered a number of factors and held that the most important factor is whether the employer maintains the right to control the work being performed by the worker.  The more control the employer has over the worker’s manner and means of work, the more likely it is that the worker is an employee as opposed to an independent contractor.

The Court of Appeals in Ruiz held that the truck drivers were misclassified as independent contractors because the company exercised significant control over their work.  The company decided the days the drivers worked and retained discretion to deny requests for days off.  It set the drivers’ rates and did not permit them to negotiate it.  In addition, the company set the drivers’ routes and told them not to deviate from them, required them to report to the company’s warehouse and attend meetings, and required them to wear uniforms and follow the company’s grooming and dress code.  The company also supervised the drivers while they were loading their trucks and required them to call their supervisors every two or three steps.

The Court also concluded that the secondary factors in the applicable test for determining whether an employer-employee relationship exists also weighed in favor of finding that the drivers were employees.  These factors include:

  1. whether the worker is engaged in a distinct occupation or business;
  2. the kind of occupation and whether the work is done by a specialist without supervision or under the principal’s direction;
  3. the skill required in the occupation;
  4. whether the principal provides the tools and place of work;
  5. the length of time for which services are performed;
  6. the method of payment, whether by time or by job;
  7. whether the work is part of the principal’s regular business; and
  8. whether the parties believe they are creating an employer-employee relationship.

The factors examined by the 9th Circuit to determine independent contractor status are similar to the “totality of circumstances” test adopted by the U.S. Department of Labor (DOL) when evaluating contractor status for purposes of the FLSA.  Although the DOL has indicated no single factor is regarded as controlling, the factors considered under the test include:

  1. the nature and degree of control by the employer; 
  2. the extent to which the worker’s services are an integral part of the employer’s business;
  3. the permanency of the relationship;
  4. the amount of the worker’s investment in facilities and equipment;
  5. the worker’s opportunities for profit and loss; and
  6. the level of skill required in performing the job and the amount of initiative, judgment, or foresight in open market competition with others required for the success of the claimed independent contractor.  

Despite the multiple factors a court will examine, the answer to the question of whether a worker is a bona fide independent contractor will often turn on one factor: control.  If your agency is currently using independent contractors, consider seeking legal advice regarding whether the classification is proper.  In addition to having substantial FLSA consequences, improperly classifying workers as contractors can result in liability under other laws such as the Public Employees’ Retirement Law, the Affordable Care Act, workers’ compensation laws and anti-discrimination and harassment laws.