Many CalPERS agencies hire CalPERS retirees for limited post-retirement work to help with overflow or special projects.  Often times, these retirees are the agency’s former employees who are familiar with the agency and the work to be performed.  CalPERS can review these arrangements and determine that the retiree was engaging in unlawful post-retirement work either during the retiree’s appointment or years after the retiree’s post-retirement work ended.  If CalPERS determines that there is a violation, then CalPERS will send a letter to both the agency and the retiree of its determination and require that the retiree give back all the pension payments collected during the period of post-retirement work for up to three years of retroactive payments.  We have seen seemingly minor violations result in demands for repayment for hundreds of thousands of dollars!

But Can’t We Employ Retired Annuitants?

Yes, CalPERS agencies can employ CalPERS retired annuitants.  However, the general rule is that a CalPERS retiree needs to be reinstated back into CalPERS membership, i.e., “unretire,” unless they qualify for an exception.  We typically see post-retirement work violations in this context when agencies do not strictly comply with the exception requirements.  For example, a retiree may be paid an hourly rate higher than what was allowed under a publicly available pay schedule for an employee performing similar duties, received benefits in addition to an hourly rate, or performed work that suggests the retiree is filling a vacant position.  For a more detailed on these exceptions, please see our previous blog post here.

But What if the Retiree is an Independent Contractor?

There is nothing that prohibits a CalPERS agency from obtaining the services of an independent contractor who also happens to be a CalPERS retiree.  However, simply labeling someone as an “independent contractor” will not be sufficient to make it so.  CalPERS will look at various factors, such as where the person works physically, whether the person wears a uniform, whether the person has an agency email, etc.  The most important factor, however, is whether the agency controls the manner and means of how the individual performs the services.  In cases where a retiree is misclassified as an “independent contractor,” CalPERS may find a violation of post-retirement work.  For more details on whether an “independent contractor” may be misclassified, please see our previous blog post here. 

What Are the Consequences?

If CalPERS finds a violation of post-retirement work, there are major consequences, for both the retiree and the agency.  CalPERS will retroactively reinstate the retiree back into CalPERS membership as of the effective date of when he or she began the unlawful post-retirement work, with a three-year limit.  Employers will then be liable for employer contributions and possibly employee contributions for any of the wages paid for the unlawful post-retirement work.  In addition, CalPERS can assess administrative penalties against the employer for its efforts to resolve the issue (e.g., accounting or payroll consultants).

For retirees, on the other hand, CalPERS will demand that the retiree pay back up to three years of retirement benefit payments, or the length of the unlawful post-retirement work, whichever is shorter.  So, for example, if a retiree has been engaged in unlawful post-retirement work for three years, CalPERS will demand that the retiree pay back all three years of pension payments.  In addition, CalPERS can assess employee contributions on the unlawful post-retirement work earnings and administrative penalties.  CalPERS can also reduce future pension payments from the retiree in order to recover these “overpayments.”

What Should We do if CalPERS Notifies Us of a Post-Retirement Work Violation?

We recommend you contact legal counsel and get advice on how to respond to CalPERS.  The employer has a right to appeal CalPERS’ determination before an Administrative Law Judge (ALJ) with the California Office of Administrative Hearings (OAH).

LCW has a team of experts throughout California who have successfully represented employers against CalPERS before OAH on these matters.  Each case is different, so each must be analyzed on its own facts to determine the best course of action.

If you would like to learn more about this topic, please view our webinars on-demand:

Life After Retirement – Hiring Retired Annuitants and Avoiding Violations 

How to Hire CalPERS Retirees the Right Way

If you are a supervisory employee for a public agency or private school in California, or a member of your employer’s human resources department, you have most likely sat through a 2-hour supervisory training regarding preventing harassment in the workplace.  You may know this training as “AB 1825  Training.”  If you are a non-supervisory employee, don’t feel left out!  Due to recent changes in California law, if you have not already done so, your employer will be requiring you to sit through a 1-hour harassment prevention training by January 1, 2020 (*friendly reminder to all agencies and schools who have not scheduled this training yet*).

Harassment prevention trainings cover a lot of information, including legal standards for harassment under the California Fair Employment and Housing Act (“FEHA”) and its implementing regulations and what types of conduct may constitute harassment.  Additionally, the FEHA now requires that harassment trainings also include instruction on the prevention of “abusive conduct,” what may colloquially be called bullying.  While “abusive conduct” is not illegal, engaging in such conduct will likely violate employer codes of conduct and subject a perpetrator to discipline, up to and including termination.  Harassment, and abusive conduct, include visual conduct, such as the use or display of derogatory or lewd posters, pictures, drawings, and cartoons, and making lewd gestures, as well as verbal conduct, such as epithets, derogatory comments, slurs, jokes, or lewd propositions.  Whether such visual or verbal conduct constitutes unlawful harassment depends on if the conduct was perpetrated because of someone’s membership in a protected classification, including race, religious creed, color, national origin, ancestry, physical disability, mental disability, medical condition, genetic information, marital status, sex, gender, gender identity, gender expression, age, sexual orientation, or military and veteran status, or association with someone who is a member of one of these protected classes; if the conduct is unrelated to a person’s protected status, it will not satisfy the legal definition of harassment, but may constitute abusive conduct.

This may all sound familiar to you.  Employers have been investigating and litigating claims of harassment for decades.  Most supervisors have been sitting through harassment prevention trainings for the last 15 years.  But while the overarching legal definition of harassment may not have substantially changed, the types of behavior that may constitute harassment has greatly expanded.  In the age of social media – where people (and not just Millennials and Gen-Z’ers) are choosing to more regularly communicate through emoticons (e.g., :) or ;) ), emojis (e.g.,  😊), memes, and Instagram and Facebook postings and messages – the types of behavior that may expose an employee and employer to allegations of harassment and bullying are expansive.  Images or videos that may constitute evidence of visual harassment may now include emoticons, memes, “snaps” and other images or videos created or posted through social media applications.  Verbal harassment may no longer be as simple making inappropriate jokes or lewd comments in front of or directed to colleagues.  What about “tagging” someone in an inappropriate Instagram or Twitter post?

As social media and image-based communication becomes a regular part of our lexicon and daily interactions, it is important to understand how these types of visual and verbal communications have the potential to implicate claims of harassment and abusive conduct.  Here are some tips for employers, as well as individual employees, for preventing certain types of conduct from being used to establish claims of visual or verbal harassment or abusive conduct:

  • Avoid using emoticons, such as “winky” faces ;), or emojis in communications with colleagues. Given different contexts in which a fellow employee can receive these images, sending a ;) to a colleague may be misconstrued as having a sexual undertone, even though this is not the message the sender intended to convey.  If you are attempting to convey appreciation or another emotion through these means of communication, use your words instead.
  • Consider not “friending” colleagues, and in particular subordinates, on social media, including Instagram, Facebook, Twitter and Snapchat. While the use of a personal social media account off-duty will generally not give rise to actionable claims for workplace harassment, standing alone, the types of statements you make in private could lead to uncomfortable situations with colleagues in the workplace, and may also be used as evidence in support of other allegedly harassing conduct in the workplace.  If you chose not to heed this advice, think twice about who your social media audience includes before posting or sharing personal or private information on social media.  (As a caveat, at the same time, labor relations laws can protect employees’ communications with others on social media concerning their wages, hours, and conditions of employment.)
  • If you are a supervisor, consider making it a personal policy not to accept “friend requests” from subordinates.
  • If you are friends with colleagues on social media, be careful about what posts you “tag” your colleagues. For example, a meme that you consider funny may be considered offensive to others.  Just because you consider a colleague to be your friend does not mean they have the same sense of humor as you.
  • If you work for an educational institution, considering making it your personal policy not to accept “friend requests” from students or otherwise engage with current students via social media.
  • Do not use social media accounts to communicate about work-related matters. For example, many agencies do not provide certain classes of employees with agency email accounts.  This may include front-line utility and recreation & parks employees, as well as volunteers.  Just because your agency does not provide these individuals with email accounts does not mean that those individuals’ supervisors should communicate about work related matters using non-employer approved methods of communication.  Employers should ensure that there are established lines of communications between supervisors and those employees or volunteers without email accounts.  For public sector employees, it is also important to remember that written communications about agency-related matters made through personal email accounts, social media accounts, or phones can be subject to California Public Records Act requests.

As an LCW attorney who conducts harassment prevention trainings for public agency and private school clients, I regularly get looks of concern when I tell training participants that what they perceive as their innocent use of winky faces in an email communication, or a gesture of friendship by “friending” a colleague on social media, comes with the risk exposing them to claims of harassment.  While such behavior may end up being innocuous, those trainings, and this post, should serve as important reminders that the use of social media or other modern means of communication is a new legal frontier with which we are all learning to deal.  The growing use of technology both in and tangential to the workplace comes with the additional responsibility to check your behavior and that of your colleagues to ensure that the means by which they choose to communicate is objectively and subjectively respectful, unbiased, and inclusive.

Once again, the annual look at outlandish employment cases that should make you all think, “It could be worse.”

No Pot of Gold at the End of This Rainbow

The former aide of a state senator (amazingly not California) submitted a complaint to the state’s division of human rights, complaining that the state senator directed him to dress up as a leprechaun for a St. Patrick’s Day parade. According to the former aide, his “basic human rights” were violated and a leprechaun outfit was “not befitting” a grown man.” What is not quite clear here is what protected status might apply in this case: (1) colorful cereal box cartoon leprechaun or (2) terrible acting in the Leprechaun movie (1993). Although leprechauns are known to enjoy a good practical joke, the aide was not amused when he was later terminated from his position for reasons unrelated to leprechaun shenanigans. The takeaway here is for employers to avoid asking employees to dress up as a mythical creature whose principal occupation is mending shoes. It is not befitting.

There’s Some “Dead Wood” Here, And It Ain’t the Acclaimed HBO Series

The obvious and primary definition of dead wood is a branch or part of a tree that is dead. The secondary definition is “people or things that are no longer useful or productive.” A university settled the age discrimination claims brought by two employees after a new supervisor referred to them as dead wood and change-adverse, and commented that dealing with them was like “herding hippos.” The “dead wood” employees were passed over for promotions and essentially forced out of their positions. They received sizeable settlements and an injunction against the university designed to prevent future age discrimination in the workplace.

Firehouse Pranks Alive and Well

In an effort to “lighten the mood and help guys have some fun,” a firefighter thought it would be a good idea to place snap fireworks in the firehouse toilet. Well, as you can imagine, that prank did not go over well when another firefighter’s scrotum was burned by the exploding snap firework. Needless to say, he was not happy with the results of the prank gone awry. He sued the department for his injuries. What happened next, you ask? The court said it could not provide relief because the incident was covered by workers’ compensation. The offending firefighter said the department allowed a “high degree of pranking among on-duty firefighters” and the judge said he did not commit an “intentional wrong.”

Flatulence from Down Under

An engineer in Australia sued his employer alleging his supervisor bullied him by repeatedly farting in his direction. The court, however, dismissed the case noting that flatulence is not bullying. Enough said.

Many workplaces and schools engage in Halloween celebrations, and with good reason.  LCW is no exception:

However, Halloween parties can be scary for risk managers, as they carry the potential to put a few skeletons in an employer’s closet.  Here are some tricks to keep your Halloween party from raising the specter of liability:

  • Employees Should Know They are Free to “Ghost”.  Participation in any Halloween festivities should be entirely optional.  Employees may not feel comfortable celebrating Halloween; for some employees, it may be prohibited by their religious beliefs.  Nobody should be required to take part, and an employer should not tolerate teasing or ostracism of an employee who opts out.  It’s only fun if everyone’s having fun.
  • When Choosing Costumes, Don’t Let the Zombies Eat Your Brain.  Dracula, Frankenstein, Mickey Mouse, Elsa and/or Anna, a cowboy, an M & M, a puppy, any of the three PJ Masks. . . there are nearly unlimited options for inoffensive Halloween costumes.  And yet, every year, some ghouls make the news by wearing costumes that would give any employer nightmares.  Human Resources professionals can reduce this risk by providing common-sense guidance as to what is an appropriate costume for a Halloween celebration at the office:
    • An attempt to “wear” or parody another culture, religion, race, or identity is not a costume; it’s an exhibit in someone else’s lawsuit for harassment or discrimination.  It should go without saying that blackface or brownface is unacceptable.  The same is true of traditional cultural dress.  A good costume does not make one’s colleagues feel caricatured, mocked, or belittled for their protected characteristics.  On the other hand, an employee should not be prohibited from wearing expressions of his or her own identity.  Context matters.
    • At some point, Halloween shifted from being an opportunity for kids to get free candy to an opportunity for adults to free themselves of their inhibitions.  Inhibitions can be a good thing at work.  A Halloween costume should not expose any part of an employee’s body that ordinary work clothes would not.  If a costume is described by the seller as “sexy” or some euphemism therefor, it is probably better saved for a non-work outing.  Bottom line: the provisions of the employer’s dress code related to appropriate attire still apply.
  • No Creepy Behavior.   Despite HR’s best efforts, some employees may wear provocative costumes to the office.  This does not give other employees license to make comments or engage in conduct that would otherwise violate the employer’s harassment or other conduct policies.  If the behavior is beyond the pale, Halloween does not provide a get-out-of-Hades-free card.
  • Stay Safe Out There. If your employees work with equipment that may impact their health or safety, extra care should be taken to ensure that costumes do not imperil employees.  Some Halloween revelers like to accessorize costumes with fake weapons; realistic-looking toys could cause legitimate fear; these should not be allowed.

If an employer utilizes these few simple tricks, the office Halloween party should be a treat, and the only stomachache a risk manager should suffer is from raiding the candy bowl.

This Special Bulletin was written by Ariana Hernandes and Eileen O’Hare-Anderson.

On October 11, 2019, Governor Newsom signed AB 61. This bill expands existing law to allow an employer, co-worker, and employee or teacher of a secondary or postsecondary school to file a petition requesting a court to issue an ex parte gun violence restraining order. This type of restraining order prevents the subject of the petition from having in the subject’s custody, control, or possession a firearm or ammunition.

Existing law only authorizes immediate family members, roommates, or law enforcement to petition the court for an ex parte gun violence restraining order. AB 61 amends and adds Sections 18150, 18150, and 18190 of the Penal Code and will become effective September 1, 2020.

AB 61 expands the types of individuals that can file a gun violence restraining order, but some are subject to certain conditions:

  • An immediate family member of the subject of the petition;
  • An employer of the subject of the petition;
  • A coworker of the subject of the petition, if the coworker has had substantial and regular interactions with the subject for at least one year and has obtained approval of the employer;
  • An employee or teacher of a secondary or postsecondary school that the subject has attended in the last six months, if the employee or teacher has obtained approval from a school administrator or school administration staff member with a supervisorial role; and
  • A law enforcement officer.

AB 61 passed in conjunction with AB 12, a bill that Governor Newsom also signed on October 11, 2019. AB 61 and AB 12 together extend the length of a gun violence restraining order from one year to between one to five years.

The Impact of AB 61 on Public Entities

Public agencies should be aware of their ability as employers to file such petitions against employees who show signs of a significant danger of harm by firearm.  Public agencies may also approve a request from an employee who seeks to file a petition for a gun violence restraining order against one of his or her coworkers.

The Impact of AB 61 on Public Schools

Secondary and postsecondary schools should be aware of an employee’s or faculty member’s ability to file such petitions against students that have attended a school or community college in the six months preceding the petition. Secondary and postsecondary schools may file such petitions against employees who show signs of a significant danger of harm by firearm.  Secondary and postsecondary schools may also approve a request from an employee who seeks to file a petition for a gun violence restraining order against one of his or her coworkers.

Just prior to the October 13, 2019 deadline to sign/veto bills from this year’s Legislative Session, Governor Gavin Newson signed several labor and employment law bills into law that will bring about significant changes for California public employers beginning next year.  Below are summaries on three of these new bills that will go into effect on January 1, 2020.

Assembly Bill (“AB”) 9 – Increase of FEHA Statute of Limitations from One to Three Years.

The California Fair Employment and Housing Act (“FEHA”) prohibits discrimination, harassment, and retaliation in employment based on protected classifications such as race, national origin, sex, sexual orientation, religion, age over 40, disability, and medical condition, among other protected categories.  Currently, a covered individual (applicant, employee, or former employee) who alleges a violation under the FEHA has one year from the date of such unlawful practice to file a verified complaint with the Department of Fair Employment and Housing (“DFEH”) or the claim would generally be time-barred.

AB 9 will now increase the statute of limitations for bringing such an administrative charge so a covered individual will now have up to three years from the date of such unlawful practice to file a verified complaint with the DFEH.  This new statute of limitations will go into effect on January 1, 2020.  While AB 9 does clarify that its application will not revive any lapsed claims under the older one year statute of limitations, this also seems to imply that any potential claims that did not lapse by December 31, 2019 would now get the benefit of the new three year statute of limitations from the date of such unlawful practice.

This bill will require public employers to be prepared to defend against FEHA claims involving actions that took place up to three years ago and may involve former employees who an employer has not interacted with for some time.  This is also compounded by the fact that this increase in the statute of limitations only applies to the filing of a discrimination, harassment, or retaliation claim with the DFEH, who has initial administrative jurisdiction over the complaint and generally has up to one year from the date the complaint was filed to make an administrative determination.  If the DFEH does not take any action and issues a right to sue notice, the covered individual then has up to one year to file a lawsuit in Superior Court.  In the worst-case scenario, it could be up to five years from the date of the alleged FEHA unlawful practice before a lawsuit is filed in Superior Court for an employer to defend against.  Once the lawsuit is filed in court, litigating the case to jury trial and any subsequent appeals could take several more years.

This will also cause a greater disparity between the ability to file discrimination, harassment, and retaliation claims under California’s FEHA and its federal law counterparts under Title VII, where such complaints must be filed within 300 days of the alleged unlawful practice with the federal Equal Employment Opportunity Commission (“EEOC”).  While the EEOC and DFEH generally cross-file with the other agency any timely discrimination, harassment, and retaliation complaints that apply under both state and federal law, the DFEH will now only be able to process any such complaints under state law that are filed over 300 days and up to three years from the date of the alleged unlawful practice.

In short, employers now will have to defend against older claims of discrimination, harassment, and retaliation from applicants, employees, and former employees under AB 9.  However, this is a good reminder for employers to prepare good written records in a contemporaneous manner of any claims of discrimination, harassment, and retaliation, and to properly maintain such records so they can be referenced and relied upon to defend against any FEHA claims.

Assembly Bill (“AB”) 51 – Employment Discrimination Enforcement.

AB 51 adds a new Section 432.6 to the Labor Code, which provides the following under subsection (a):

A person shall not, as a condition of employment, continued employment, or the receipt of any employment-related benefit, require any applicant for employment or any employee to waive any right, forum, or procedure for a violation of any provision of the California Fair Employment and Housing Act (Part 2.8 (commencing with Section 12900) of Division 3 of Title 2 of the Government Code) or this code, including the right to file and pursue a civil action or a complaint with, or otherwise notify, any state agency, other public prosecutor, law enforcement agency, or any court or other governmental entity of any alleged violation.

The general impact of the bill’s language will be to prohibit employers from requiring any applicant or employee to submit claims under the California Labor Code or the Fair Employment Housing Act (“FEHA”) to a mandatory arbitration agreement as a condition of employment.  The bill also clarifies that any employment arbitration agreement which requires an employee to affirmatively opt-out of the agreement in order to preserve their rights would be deemed a “condition of employment”.

AB 51 also prohibits an employer from threatening, retaliating, discriminating against, or terminating employees or applicants because they refused to waive any such right, forum, or procedure.  An employer found to be in violation of Section 432.6 may be subject to an unlawful employment practice under FEHA.  A court may award an impacted applicant/employee injunctive relief and any other remedies available, in addition to reasonable attorney’s fees.

There are limited exceptions to this new law for public employers.  The most relevant being that this new law does not apply to post dispute settlement agreements or negotiated severance agreements.  In addition, existing mandatory employment arbitration agreements in effect prior to January 1, 2020 are not impacted.  Rather, these new restrictions will apply only to contracts for employment entered into, modified, or extended on or after January 1, 2020.

While this new law also indicates that it is not intended to invalidate a written arbitration agreement that is otherwise enforceable under the Federal Arbitration Act, it is not entirely clear what that means for mandatory arbitration agreements that would otherwise include waivers of the rights, forums, and procedures of Labor Code and FEHA claims.  As a result, it is unclear whether AB 51 will be preempted by the Federal Arbitration Act.  We anticipate there will be litigation regarding whether AB 51 is preempted by the Federal Arbitration Act.   Governor Brown vetoed similar legislation last year and cited that the legislation violated federal law.

In the meantime, we recommend that any public employers who currently use mandatory arbitration agreements as a condition of employment prepare to comply with AB 51 on January 1, 2020.  In order to comply with this law, employers will have a choice of either halting the practice of requiring employees and applicants to enter into arbitration agreements as a condition of employment altogether, or to modify these arbitration agreements to make clear that FEHA and Labor Code claims are not subject to mandatory arbitration.   For employers who select the second option, we recommend working closely with legal counsel to have your arbitration agreements modified to comply with AB 51.

Senate Bill (“SB”) 142 – Employee Lactation Accommodations.

Currently, California employers are required to allow an employee to use their break time to express breast milk, and to provide a private location other than a bathroom for such lactation accommodation.  Under SB 142, an employer must now provide a private lactation room other than a bathroom that must be in “close proximity to the employee’s workspace” with the following features:

  • Is shielded from view and free from intrusion while the employee expresses milk;
  • Contain a surface to place a breast pump and personal items;
  • Contain a place to sit;
  • Have access to electricity or alternative devices (such as extension cords or charging stations) needed to operate an electric or battery-powered breast pump.

An employer may comply with this new law by designating a lactation location that is temporary due to operational, financial or space limitations so long as such space still meets the above-referenced requirements.

Separately, employers must also provide access to a sink with running water and a refrigerator or other cooling device suitable for storing milk in close proximity to the employee’s workspace.  While this requirement to provide a sink and a refrigerator does not necessarily require that they be provided in the lactation room, it is unclear if providing these in a bathroom will satisfy this requirement.

If an employer uses a multipurpose room as a lactation room, such use shall take precedence over other uses but only for the time it is in use for lactation purposes.  An employer in a multitenant building or multiemployer worksite may comply with this new law by providing a space shared among multiple employees within the building or worksite if the employer cannot provide a lactation location within the employer’s own workspace.  Employers or general contractors that coordinate a multiemployer worksite shall either provide lactation accommodations or provide a safe and secure location for a subcontractor employer to provide lactation accommodation on the worksite, within two business days, upon written request of any subcontractor employer with an employee that requests accommodation.

The only potential exemption to these new requirements is for employers with fewer than fifty (50) employees who can demonstrate that this requirement would impose an undue hardship by causing the employer significant difficulty or expense when considered in relation to the size, financial resources, nature, or structure of the employer’s business.  An employer who can establish such undue hardship shall make reasonable efforts to provide the employee with the use of a room or other location, other than a toilet stall, in close proximity to the employee’s work area, for the employee to express milk in private.

An employer who fails to provide break time or adequate lactation accommodations may be fined one hundred dollars ($100) for each day an employee is denied reasonable break time or adequate space to express milk.

In addition, SB 142 requires that California employers develop and implement a policy regarding lactation accommodation requirements that include the following:

  • A statement about an employee’s right to request lactation accommodation;
  • The process by which the employee makes the request;
  • An employer’s obligation to respond to the request; and
  • A statement about an employee’s right to file a complaint with the Labor Commissioner for any violation of the law.

Employers are required to include the policy in an employee handbook or set of policies that are made available to employees, and distribute the policy to new employees at the time of hire and when an employee makes an inquiry about or requests parental leave.  If an employer cannot provide break time or a location that complies with their policy, the employer must provide a written response to the employee.

Because this law goes into effect here shortly on January 1, 2020, employers should conduct an audit at each of their worksites to determine what potential on-site locations can be used for a lactation accommodation, and to begin making contingency plans to address any existing inabilities to provide such accommodations at a worksite.  In addition, agencies need to begin working on drafting a lactation accommodation policy to provide employees in accordance with this new law.

Most people are familiar with the regular 5-day, 40-hour workweek. Did you know there are alternatives to this “standard” schedule, including the popular 9/80 schedule?  Although this schedule can provide increased work-life balance and flexibility for your employees, it has some serious pitfalls that can be costly for your agency.  Read more about these common pitfalls when using 9/80 schedules and how to avoid them in the original blog post here.

 

Note: this blog article was authored by Partner Liz Arce in 2013 and continues to be one of our most popular articles.  This post was reviewed in October 2019 and is up-to-date. 

I’ve had two life-changing blind dates in my life.  The first was in 1996 when I agreed to go out with a former classmate of a co-worker.   That leap of faith resulted in me walking down the aisle a year later and has led to annual celebrations of not just our wedding date but also that first, blind, date.  Maybe because that date worked out so well, I was very receptive to facilitating a blind date for someone else.

The year was 1998 and I had joined Liebert Cassidy as its Marketing Director.  The firm had a statewide practice but was a little better known in Southern California.  With eyes to the future, the firm was open to partnership opportunities.  Like a good blind date, though, we didn’t want to be set up with just anybody.  We were looking for a firm that could go the distance with us.  A firm that shared our client service philosophy and our commitment to quality.  A firm, in short, with whom we could share our professional lives.

Enter Whitmore, Johnson and Bolanos, who also had a statewide practice, but was a little better known in Northern California.  On paper, things looked good.  But, relationships aren’t built on paper.  We decided that a group date was in order.  A date that might help us figure out if we were compatible throughout the organization and help us determine if we had the right temperament for the long haul.

The Public Sector Employment Law Conference was born.  Yes, our first conference was kind of a blind date for the two firms.  We planned our “date” together and ensured that every presentation had a presenter from each firm.  We talked about what we wanted our respective clients to gain from attending and what we hoped to learn from, and about, each other. Our first conference took place in June 1999 in San Francisco with approximately 150 attendees.  We learned a lot about each other and decided to continue the relationship.  Shortly after our second conference, in June of 2000, we merged to become Liebert Cassidy Whitmore.

The firm is still going strong.  The conference has become an integral part of who we are.  It remains an opportunity to reconnect with public agency management from across the state and in a way, renew our commitment to providing innovative presentations on topics that impact our clients as well as provide insights on trends in the area.  It has grown to include a pre-conference (this year it is our Labor Relations Academy’s Costing Labor Contracts session); a public safety track and a human resources boot camp track.  Along the way, we’ve added MCLE, POST and HRCI credit.

Last year more than 550 people participated in the conference. For some, it was a leap of faith.  They had heard about the conference and thought they would check it out.

As my first [LCW] conference I truly had a great time here and learned so much. I cannot wait to bring everything I am learning here back to my agency!

It was my first conference and overall it was excellent. I met new people, made connections and learned a lot.

For others, it was like coming home.  Attending the conference has become a part of who they are and what they do as professionals.

I come every year.  Such awesome information and classes.  I love them.  So grateful for you all sharing you expertise. 

Thank you so much for all you do and for putting on such great training! I look forward to this conference every year because I know I will come away with such great information.

Whether you are “coming home” or taking that “first leap of faith,” know that you will be welcomed with open arms by all of us at LCW.  I look forward to seeing everyone – old friends and new – at the 2020 LCW Conference in January!

 

To learn more about the 2020 Public Sector Employment Law Conference, please visit our website here. The conference will take place in San Francisco at the Hyatt Regency from January 22-24.

 

This article was authored by Brian P. Walter and Lars T. Reed.

Today, September 24, 2019, the U.S. Department of Labor (“DOL”) announced a final rule modifying the weekly salary and annual compensation threshold levels for white collar exemptions to FLSA overtime requirements. The final rule will become effective on January 1, 2020.  It is critical for public education employers to become familiar with the new regulations, among other reasons because misclassification of employees as being exempt from FLSA overtime requirements is a costly mistake.  In addition to the new DOL regulations, public educational institutions in California must also continue to comply with the exemption requirements set forth in the Education Code.

Overview of the FLSA Salary Basis Test and Highly Compensated Employee Rules

Certain employees can be exempt from the FLSA’s overtime requirements.  The most common overtime exemptions under the FLSA are the so-called “white collar” overtime exemptions (executive, administrative, professional).  To qualify for an executive, administrative, or professional exemption, an employee must receive a minimum salary and be paid on a salary basis (“salary basis test”) and perform the appropriate duties (“duties test”).

The current weekly salary threshold of $455/week (equivalent to $23,660 per year for a full-year employee) has been in effect since 2004.  At that time, the FLSA regulations were also amended to add a new “highly compensated employee” overtime exemption for employees that make at least $100,000 annually and who can meet a less-stringent version of the duties test.

The DOL is also officially rescinding regulations it issued in 2016. Those regulations would have raised the salary thresholds even further, to $913/week for the standard threshold and $134,004 annually for “highly compensated” employees, and would have subjected both thresholds to an automatic increase every three years. However, the 2016 regulations were enjoined by a federal District Court in Texas and never went into effect.

Under the FLSA, full-time faculty, part-time faculty, and teaching assistants are exempt from overtime requirements as teachers because the definition of teaching is quite broad and there is no salary basis test for the teacher exemption. (29 C.F.R. sec. 541.303, Teachers)

The FLSA also contains a separate salary test for academic employees (other than teachers) whose primary duties are administrative functions relating to academic instruction or training (as opposed to general business operations of the school).  Common examples of those positions at schools are a Dean, a Director of Student Success and Equity, and a Director of Admissions and Records.  The FLSA salary requirement is the standard weekly threshold or the minimum entrance salary for full-time teachers at the school, whichever is lower.

What Are The New Key Provisions?

The newly published FLSA regulations that become effective January 1, 2020, make the following changes:

  1. The weekly salary threshold level is raised from $455 per week ($23,660 per year) to $684 per week ($35,568 per year);
  2. The total compensation needed to exempt highly compensated employees is increased from $100,000 annually to $107,432 annually;
  3. Employers are now able to use nondiscretionary bonuses and incentive payments made at least annually to satisfy up to 10 percent of the new standard salary level.
  4. The rule also revises the special salary thresholds applicable to workers in U.S. territories and the motion picture industry.

Unlike the rescinded 2016 regulations, the new final rule does not include a provision for automatic updates to the salary threshold; however, the DOL has stated it intends to propose further updates to the salary thresholds at least every four years.

The new FLSA regulations do not make any changes to the FLSA duties tests, which in general also must be satisfied for an employee to qualify for the FLSA overtime exemptions.

Below is a comparison of the current and new FLSA Salary Basis Test:

  2004 FLSA regulation NEW 2019 FLSA regulation
(effective Jan. 1, 2020, available
here)
Minimum Weekly Salary for Executive, Administrative and Professional Employees At least $455 per week
(or $23,660 annually)
At least $684 per week
(or $35,568  annually)
Minimum Weekly Salary for Administrative Employees Performing Functions Related to Academic Instruction or Training               At least $455 per week ($23,660 annually), or salary equal to the entrance salary for teachers at the school At least $684 per week ($23,660 annually), or salary equal to the entrance salary for teachers at the school
Minimum Annual Compensation for Highly Compensated Employees At least $100,000 annually At least $107,432 annually
Inclusion of Nondiscretionary bonuses and incentive payments Bonuses and incentives (including commissions) count only toward the total annual compensation requirement for highly compensated employees. Bonuses and incentives that are made at least annually can now go towards 10 percent of the standard weekly salary threshold of $684/week;   the employer may make a “catch-up” payment within one pay period after the end of the year.

 Other Pending Rulemaking

In addition to the new final rule regarding the salary thresholds, the DOL has issued proposed regulations and is currently considering new rules to clarify the rules surrounding the FLSA “regular rate of pay”. These regulations are currently under consideration and open to public comment. LCW is keeping a close eye on the DOL’s rulemaking process and will publish further updates when the DOL announces its final rules.

Next Steps for Public Education Employers to Prepare For the New Regulations

Given that the new salary basis test threshold of $684 per week and highly compensated employee threshold of $107,432 annually will go into effect on January 1, 2020, public education employers should audit exempt job positions to determine which job positions are affected by these new salary basis test regulations. As noted above, full-time faculty, part-time faculty, and teaching assistants engaged in a teaching capacity should not be affected by these changes to the FLSA salary basis test, as they are exempt from the FLSA salary basis test under the FLSA’s teacher exemption.

For those exempt academic employees whose primary duties are administrative functions relating to academic instruction or training, the new FLSA salary requirement is the lower of:

  • $684/week, or
  • The minimum entrance salary for full-time teachers at the educational institution.

To determine if these employees may be exempt, an educational institution should first examine its entrance salary for full-time teachers.  If that salary is less than $684/week, then the minimum salary for academic employees will be that entrance salary amount.  If that salary is greater than $684 per week, then the minimum salary for administrative academic employees will be $684 per week.

Overtime exempt employees other than teachers or those in administrative functions relating to academic instruction or training – such as exempt, classified employees – will be subject to the new salary basis test of $684 per week or the highly compensated employees exemption of $107,432 annually, depending on what duties test the employee qualifies for.

If any exempt job positions are below or close to being below these new salary levels, employers should evaluate one of the two following options:

  1. Increase the salary for the exempt job position to meet or exceed the new salary levels to maintain the overtime exemption; or
  2. Convert the affected exempt job position to nonexempt status that would qualify for overtime.

If an impacted job position is to remain exempt, the employer should look to increase the salary levels to a level at or higher than the new salary levels.  Keep in mind that the effective date for these new salary levels – January 1, 2020 – is a Wednesday.  Therefore, to the extent that the relevant 7-day FLSA workweek for an affected exempt employee begins prior to that (e.g., Sunday), the employer should look to implement the increased salary level at the beginning of that workweek.

If an impacted job position will be converted to nonexempt status, the employer should carefully examine the impacts of this decision and look to take the following steps:

  • Provide advance notice to the affected employee about the reclassification;
  • Provide training on timekeeping and overtime policies and procedures to the affected employee and their supervisors to ensure compliance with any new overtime obligations; and
  • Implement any necessary changes to the payroll system regarding the new nonexempt classification and determine what additional compensation received by the employee needs to be incorporated into the FLSA regular rate of pay for overtime calculations.

A newly nonexempt employee must accurately report work hours and comply with the agency’s overtime policies and procedures.  This is critical because the FLSA imposes an affirmative obligation on employers to keep accurate time records, and requires prompt payment of wages, including overtime.  Late payment of overtime and improper calculations of overtime pay are also common and costly mistakes for employers.  Without accurate time and payroll records, the employer may face liability for liquidated damages (twice the amount of compensation due) in the event that an FLSA lawsuit is filed alleging overtime claims or liability for back wages. Note that although California public schools and colleges have Eleventh Amendment immunity from FLSA lawsuits by private persons, they can still be subject to damages in a lawsuit brought on an employee’s behalf by the DOL.

For California public education employers, we expect that few, if any, changes will be necessary as a result of the increased weekly threshold because the threshold is still lower than the salary of virtually all public employees who will qualify under the duties test for exemption.  However, we suspect that some educational institutions will have employees who will qualify for the “highly compensated employee” exemption that would not have qualified under the $134,004 threshold proposed by the 2016 regulations.  Under the “highly compensated” exemption announced today, an employee making over $107,432 does not need to meet the normal duties test, but needs only to have a primary duty of performing office or non-manual work, and customarily and regularly performs at least one of the exempt duties or responsibilities of an exempt executive, administrative, or professional employee. Public educational institutions should look closely at positions that exceed the new “highly compensated” threshold to see if those positions can be classified as exempt.

To the extent that affected job positions involve represented employees, any actions taken to change wages, hours, and working conditions may also trigger an agency’s obligation to meet and confer with the pertinent employee organization over the decision or effects and impacts of such decision. Employers are urged to consult with their legal counsel or labor relations professionals regarding the impact of any meet and confer obligations.

Even if a public education institution does not have any exempt employees affected by these new salary basis test regulations, it may still be prudent to assess whether current exempt positions perform the appropriate duties to satisfy the executive, administrative, or professional exemptions, and the corresponding duties test for exemptions under the Education Code.  An audit of exempt positions is also beneficial because an employer may be liable for unpaid compensation and liquidated damages going back up to three years for a willful violation of the FLSA in misclassifying an employee as overtime exempt.  (29 U.S.C. sec. 255.)

LCW’s wage and hour attorneys routinely conduct FLSA audits and provide wage and hour advice and counsel to our public education clients. We are available to advise agencies on the impact of these new FLSA salary basis test regulations.  If you have any questions about this issue, please contact our Los Angeles, San Francisco, Fresno, San Diego, or Sacramento office.