It might surprise many California public employers that there is no law that requires them to provide meal and rest breaks to most of their employees.  Similarly, there is no law that requires California public employers to pay overtime to most of their employees for working over eight hours in a day or pay “double time” for working over 12 hours in a day.

What about the FLSA?  Nope.  With respect to overtime, the FLSA requires that an employee work over 40 hours in a seven-day work week before being paid overtime.  The federal law is silent on daily overtime.  Similarly, the FLSA does not mandate meal periods or daily overtime.

What about California law?  Well, this is where it gets a bit interesting.  For example, a California public employer or employee may have looked up Labor Code section 510, which states:

Eight hours of labor constitutes a day’s work.  Any work in excess of eight hours in one workday and any work in excess of 40 hours in any one workweek and the first eight hours worked on the seventh day of work in any one workweek shall be compensated at the rate of no less than one and one-half times the regular rate of pay for an employee.  Any work in excess of 12 hours in one day shall be compensated at the rate of no less than twice the regular rate of pay for an employee.  In addition, any work in excess of eight hours on any seventh day of a workweek shall be compensated at the rate of no less than twice the regular rate of pay of an employee.

Upon reading this, one might be convinced that California public employers are required to pay daily overtime and/or double overtime.

In 2009, however, the California Court of Appeal held in Johnson v. Arvin-Edison Water Storage District, that “unless the Labor Code provisions are specifically made applicable to public employers, they only apply to employers in the private sector.”   Section 510 does not specifically reference public employers, and under the plain language of Johnson’s holding, it should not apply to them.

Still not convinced?  Well, let’s look at the California Industrial Welfare Commission Wage Orders.  For example, IWC Wage Order 4, which applies to employees in professional, technical, clerical, mechanical, and similar occupations, states, in Section 1, paragraph (B):

Except as provided in Sections 1, 2, 4, 10, and 20, the provisions of this order shall not apply to any employees directly employed by the State or any political subdivision thereof, including any city, county, or special district.

Notably missing from this are Sections 3, 11, and 12.  Section 3 requires daily overtime.  Section 11 requires meal periods.  Section 12 requires rest periods.  This Wage Order, and others like it, expressly exempt California public employers from state overtime provisions and meal and rest break requirements.

But before we finish, we have to note the exceptions.

Some agricultural and irrigation public employees may be covered by state IWC Wage Order 14, which regulates agricultural and irrigation employees.  Commercial drivers for public entities are covered by portions of state IWC Wage Order 9, which regulates the transportation industry.  In addition, Wage Order 15 generally applies to public entities that employ in-home services support workers.

Why do California public employers still provide meal breaks and daily overtime?

More likely than not, this is because public agencies do provide for meal periods and rest breaks in some agency rule or policy or in a collective bargaining agreement.  This is where you will also likely find daily overtime provisions.  This is important to know so that California public employers can properly enforce these requirements, either under the law or by contract.

Plaintiff Cari McCormick worked as an appraiser for Lake County.  In 2010, she started to experience physical pain throughout her body and felt constantly fatigued.  McCormick’s symptoms worsened when she was in her office environment but felt much better if she was at home or outside.  McCormick was eventually told by her supervisors that she “was a liability” and “should stay home.”  McCormick took leave under the Family Medical Leave Act and continued to ask for accommodations such as permission to telecommute.  However, her supervisors declined to let her work anywhere other than in the courthouse.  In May 2013, Lake County terminated McCormick’s employment because she had exhausted her medical leave.

McCormick applied for disability retirement to CalPERS.  In the application, she stated that her disability was “[respiratory] and systemic health problems as a result of exposures in indoor environment” at the courthouse.  She also explained that she could work in another building but that her employer would not allow her to work outside of the courthouse.  CalPERS denied the application in December 2014.  McCormick appealed the decision.  At the administrative hearing on the appeal, McCormick’s doctor indicated that he had initially opined that McCormick was “temporarily partially disabled.”  He explained at the hearing that he had assumed in forming his initial assessment that she would be able to find a different location in which to work.  While his diagnosis remained unchanged, McCormick’s doctor testified that McCormick was permanently disabled to the extent that she was unable to work at that courthouse due to her symptoms.  CalPERS presented testimony from another one of McCormick’s doctors who opined that “if the environment can be amended or… accommodations [could be provided] to help her, then she would not be disabled.”

Accordingly, based on the medical testimony, the administrative law judge (ALJ) issued a proposed decision denying McCormick’s appeal and finding that she was not permanently disabled or substantially incapacitated from performing her usual job duties at the time she submitted her disability retirement application.  The ALJ rejected McCormick’s argument that because the County would not accommodate her to work at a location outside the courthouse, she was substantially incapacitated from performing her usual job duties.  The Board of Supervisors adopted the ALJ’s proposed decision and McCormick filed a petition for writ of administrative mandate.

The Court of Appeal did not dispute that McCormick was physically capable of performing her usual job duties if she worked in an environment that did not trigger her systems.  However, the Court acknowledged that “Section 21156 is concerned with members’ ability to perform their duties for their actual employers, not their ability to perform their duties in the abstract.  Thus, the relevant question is whether McCormick was incapacitated from performing the duties of an Appraiser III for Lake County, not whether she was incapacitated from performing them elsewhere.”  Thus, whether McCormick was able to perform the duties of an appraiser somewhere other than the Lakeport courthouse did not foreclose a finding that under Section 21156 that she was unable to perform her usual job duties.  Moreover, Lake County denied McCormick’s request for accommodation, which included a request to work in a different location or environment. Therefore, the Court found that CalPERS may not deny disability retirement under Section 21156 when, due to a medical condition, applicants can no longer perform their duties at the only location where their employer will allow them to work.

Based on the holding of this case, employers should explore, during an interactive process meeting, whether the employee can perform their essential job duties at a different work location as a reasonable accommodation.  If the employer denies such an accommodation, then the employee may be found to be substantially incapacitated from performance of their usual job duties and entitled to a disability retirement.

On October 8, 2019, the U.S. Supreme Court heard oral arguments in three cases: Altitude Express, Enc. v. Zarda (out of New York), Bostock v. Clayton County, Georgia (out of Georgia), and R.G. and G. R. Harris Funeral Homes v. EEOC (out of Michigan).  All three cases involve plaintiffs arguing that Title VII of the Civil Rights Act, which prohibits employment discrimination “because of . . . . sex,” includes protection against discrimination because of sexual orientation or gender identity.  Zarda and Bostock both involve men who were fired from their jobs after coming out as gay.  Harris involves a transgender woman who was fired after she informed her employer of her identification as female, when she was previously living as a man.

Zarda and Bostock, the two cases involving male employees that were fired after coming out as gay, were heard before the Supreme Court together.  The U.S. Court of Appeals for the Second Circuit in Zarda ruled that discrimination based on sexual orientation is protected by Title VII.  The U.S. Court of Appeals for the Eleventh Circuit in Bostock, on the other hand, had ruled that Title VII does not cover discrimination based on sexual orientation.

The transgender woman in Harris was allegedly fired after she announced in 2013 her intention to live as a woman and have sex-reassignment surgery to reflect her female identity.  Her employer testified that he fired her because she was “no longer going to represent himself as a man” which he believed would go against “God’s commands.”  The U.S. Court of Appeals for the Sixth Circuit reversed the district court’s ruling that Title VII does not apply to transgender employees.  The employer thereafter appealed to the U.S. Supreme Court.

At oral argument, in Zarda and Bostock, the plaintiffs argued that sexual orientation discrimination is on the basis of “sex” for purposes of Title VII protection because when an “employer fires a male employee for dating men but does not fire female employees who date men, he violates Title VII.”  The employer argued that “sex” and “sexual orientation” are separate and different characteristics, and that “sexual orientation by itself does not constitute discrimination because of sex under Title VII.”  The Trump Administration presented its views at oral argument as amicus curiae (third party or friend of the court) on behalf of the employer.  The Justices’ questioning in Zarda and Bostock focused on the role of Congress and what it understood “sex” to mean when enacting Title VII, as well as the effect on bathroom usage and sex-specific dress codes.

The Plaintiff in Harris argued that a transgender female employee was fired for contravening sex-specific expectations and stereotypes about how men and women should behave, and that the term “sex” as used in Title VII should be narrowly read to mean “sex assigned at birth.”  Taking a similar position to that of the employers in Zarda and Bostock, the employer argued that sex and transgender status are independent concepts,  and also advanced the notion that “sex-based differentiation is not the same as sex discrimination.”  In the Harris oral argument, the Trump Administration also argued as amicus curiae on behalf of the employer and pointed out that Justice Gorsuch commented that Harris was a “close textual case.”  The questioning from the Justices again revolved a lot around the implications of sex-specific bathroom usage and sex-specific dress codes.

The rulings in all three cases will likely be handed down in Summer 2020 at the latest.

In comparison to federal law, California law already provides significant protections for both the sexual orientation and gender identity or expression of LGBTQ+ employees.  The Fair Employment and Housing Act (FEHA) prohibits discrimination and harassment on the basis of sexual orientation, gender, gender identity, and gender expression.  Gender expression under FEHA is defined as a “person’s gender-related appearance and behavior whether or not stereotypically associated with the person’s assigned sex at birth.”  FEHA accordingly protects both transgender and non-binary employees, as well as persons undergoing gender transition, from discrimination and retaliation.

The Supreme Court’s decisions in these three cases will likely not have a significant impact on California’s standing protections of LGBTQ+ employees.  Since 2012, California’s anti-discrimination laws expressly include a person’s sexual orientation, gender identity, and gender expression.   If the Supreme Court decides in these cases that Title VII’s prohibition on discrimination on the basis of “sex” does not include sexual orientation and/or gender identity, it will not affect protections provided by California’s FEHA or the interpretations of such protections.  Should the Court affirmatively decide that “sex” includes sexual orientation and/or gender identity, this will expand employees’ rights to sue in federal court.

As a refresher on FEHA’s protections for gender discrimination, remember that in California, it is an unlawful employment practice to do any of the following because of an employee’s sex, sexual orientation, gender identity, or gender expression:

  • Fail or refuse to hire
  • Discharge from employment
  • Discriminate in compensation, terms, conditions, or privileges of employment

Employers in California must allow employees to dress consistently with the employee’s gender identity and protect them from harassment and discrimination on that basis.  The Department of Fair Employment and Housing (DFEH) also advises employers that all employees have a right to a safe and appropriate restroom and locker room facility that corresponds to their gender identity, regardless of their assigned sex at birth.  For more information on DFEH guidance on transgender rights in the workplace, visit here.

The beginning of the New Year (and a new plan year for many public agencies) is a good time to review key provisions of the Comprehensive Omnibus Budget Reconciliation Act (“COBRA”), including what notice requirements COBRA imposes on public agencies.

This year, make a resolution to ensure that your public agency fully complies with COBRA by following the guidance in this post. Educate your Human Resources staff about the law to equip them with the knowledge to respond quickly, confidently and accurately to questions that your public agency employees may have about their obligations and rights under COBRA.

What is COBRA and Who is Eligible?

COBRA is a federal law that provides for the continuation of group health plan benefits to “covered employees” (i.e., employees who elect group health plan coverage) and “qualified beneficiaries” (i.e., the spouses and dependents of covered employees) under certain circumstances when the health coverage would otherwise be lost. Generally, COBRA permits continued coverage under the group health plan for eighteen (18) months, but under certain circumstances, the coverage period may be extended.

General Notice Requirements for Agencies that Serve as Plan Administrators

Many public agencies also serve as administrators for their group health care plans. In such circumstances, COBRA requires that the public agency provide a written general notice of COBRA rights to each covered employee and spouse within ninety (90) days of the commencement of their coverage. These public agencies must also send this notice to any new dependents who join the plan after the covered employee’s enrollment in COBRA.

The general notice must include the following information: (1) a summary plan description; (2) a list of individuals who can become qualified beneficiaries under the plan; and (3) an explanation of the qualified beneficiaries’ obligations when a qualifying event under COBRA occurs. The Department of Labor has a COBRA Model General Notice that public agencies may use to meet this general notice obligation.

These public agencies may provide a single general notice to a covered employee and his or her spouse if they reside at the same address. However, agencies should note that delivery of the notice to an employee at work does not constitute delivery to the spouse, so they will need to provide a separate notice to the spouse.

Procedure for Employees to Notify the Plan Administrator of a “Qualifying Event”

In addition to general notice requirements, a public agency that serves as a plan administrator must also establish in the summary plan description a procedure by which covered employees and qualified beneficiaries can provide notice to the plan administrator in the event they experience a “qualifying event.” These public agencies may require employees and beneficiaries to use a standard form. However, the form must be readily available and provided without cost.

What are “Qualifying Events”?

“Qualifying events” are events that would otherwise cause a covered employee or qualified beneficiaries to lose health coverage. The following events constitute “qualifying events” for covered employees if they would cause the employee to lose coverage under the group health plan:

  • Termination for any reason other than gross misconduct; and
  • Reduction in hours worked.

In addition to those events described above, which also constitute “qualifying events” for qualified beneficiaries, the following events constitute “qualifying events” for the qualified beneficiaries separate from the covered employee:

  • Covered employee becomes entitled to Medicare;
  • Divorce or legal separation of the spouse from the covered employee; and
  • Death of the covered employee.

The occurrence of one of these “qualifying events” triggers an obligation for the covered employee or qualified beneficiary to notify the public agency.

Unless the group health plan provides a more liberal policy, covered employees and qualified beneficiaries must provide notice to the public agency of the occurrence of a “qualifying event” within sixty (60) days.

Election Notice after a “Qualifying Event”?

If the agency does not serve as the plan administrator, the agency must notify the plan administrator of the occurrence of a “qualifying event” within thirty (30) days after it receives notice. The plan administrator will then notify the beneficiaries of their respective rights under the Act to elect to continue coverage under the group health plan.

For a public agency that also serves as a plan administrator, COBRA requires that the public agency notify beneficiaries of their election rights. Such an agency must provide election notice to the covered employee and/or qualified beneficiary within fourteen (14) days of receiving notice that a “qualifying event” has occurred.

For each of the common “qualifying events”, identified above, we now indicate the proper recipients of election notices:

  • Termination for any reason other than gross misconduct requires notice to the former employee and qualified beneficiaries;
  • Reduction in hours worked requires notice to the employee and qualified beneficiaries;
  • Covered employee becomes entitled to Medicare requires notice to the employee and qualified beneficiaries;
  • Divorce or legal separation of the spouse from the covered employee requires notice to the employee’s former spouse and qualified beneficiaries; and
  • Death of the covered employee requires notice to the deceased employee’s spouse and surviving and qualified beneficiaries.

The provision of election notice to a covered employee and/or qualified beneficiary discharges the agency’s COBRA notice requirements. Thereafter, the agency and its staff may continue to work with the employee, his/her spouse and dependents to decide whether to continue to receive coverage under the group health plan under COBRA.

How many times have you set a New Year’s resolution and a month or two into the New Year said to yourself, “oh well, maybe next year”?  We all too often set personal and professional goals each year, only to give up or put them on the back-burner once we get behind in reaching those goals.  The same can be said of workplace practices.  If you’re an employer in California, each New Year is accompanied by new laws impacting the workplace, most of which take effect each January 1.  But, when agencies begin each year worried about whether they are complying with new laws, they all too often stop prioritizing projects that address systemic issues facing the agency.  It is these systemic issues that are likely to have a more immediate and drastic impact on an agency if the agency is caught out of compliance.

As your agency begins to feel the impacts of policy changes arising from California’s newest laws, here are some reminders and recommendations about what can be done in 2020 to address systemic issues, as well as other policies your agency should consider implementing to make your agency an effective and welcoming environment:

Audits, Audits and More Audits

  • Independent Contractor Audits: Does your agency rely heavily on the use of independent contractors?  Are you a CalPERS agency and utilize the services of contractors who are CalPERS retirees?  Not only does California law place severe restrictions on who can be considered an independent contractor under the Labor and Government Codes, but the Public Employees’ Retirement Law (PERL) places other significant restrictions on CalPERS retirees providing services to agencies once they retire.  If these laws are not applied properly, not only could your agency be on the hook for substantial back-pay of employee benefits to those individuals it misclassified as independent  contractors, but CalPERS retirees may be personally liable for certain overpayments of pension benefits that they received from CalPERS while contracting with the agency. 
  • Policy and Regulation Audits: When was the last time your agency updated its employee handbook? Administrative procedures?  Personnel rules? For example, while your agency’s practices already recognize that the Fair Employment and Housing Act (FEHA) protects employees from discrimination and harassment because of 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, do its written policies accurately reflect the scope of these protections provided under the FEHA?  Do they indicate that volunteers, interns and contractors are also protected from harassment based on these protected classifications? Do they explain that discrimination based on race includes discrimination because of traits historically associated with race, including, but not limited to, hair texture and styles, pursuant to amendments made to the FEHA in 2019, which go into effect on January 1, 2020?  Or, does your agency have a written disability accommodation policy?  The New Year is a good time to work with your legal counsel to audit your handbooks and administrative procedures/regulations to ensure they accurately reflect actual practices and the current state of the law.
  • FLSA Audits: On December 12, 2019, the U.S. Department of Labor (DOL) announced a Final Rule clarifying and amending federal regulations concerning regular rate of pay under the federal Fair Labor Standards Act (FLSA).  The amended regulations take effect on January 15, 2020, and address whether certain employee benefits are included in the regular rate of pay for overtime.  If you have not yet examined your agency’s practices in regard to these clarifications and amendments, you should immediately do so.  When working with your legal counsel to audit current practices, we also recommend an audit of other wage and hour practices.     

Recruitment, Retention and Succession Planning: As your agency begins to think about succession planning, are you realizing that your agency is having trouble recruiting highly qualified workers? Maybe your agency is located in a geographic area that is being hit by high rents and limited housing options?  Or maybe your agency is located in a more geographically isolated area of the State?  Consider adopting and implementing a remote work/telecommuting policy to draw talent to your agency.  Research shows that Millennials and Gen Zers, in particular, are drawn to workplaces that provide more flexibility in scheduling, resulting in better job satisfaction and higher retention rates.

Reconciling the Rise of Social Media in the Workplace, Free Speech and Expression, Employee Privacy, and Electronic Use Policies: As agencies begin to regularly utilize social media to communicate with constituents, invite public comment, recruit new hires, and announce new agency initiatives, the more at risk they become of violating individual’s privacy and free speech and expression rights.  For example, Labor Code section 980 prohibits employers from requesting or requiring an employee or applicant to disclose their personal social media account information, accessing their social media in front of the employer, or sharing personal social media.  Additionally, under the U.S. Supreme Court cases Connick v. Meyers, Pickering v. Board of Education and Garcetti v. Ceballos, public employers are limited in their ability to discipline of employees for their speech.  Finally, agencies or elected officials that create or utilize websites or social media platforms for public discussion or comment are thought to be limited by the First Amendment in what restrictions they can place such forums.  As technology and the world of social media evolve, so too do the courts’ interpretations of how far public agencies can go in terms of both employee oversight and regulation of speech.  Agencies should review their electronic use policies and practices to ensure that they are compliant with ever these evolving areas of the law.

As you come out of that food coma on January 1 or breathe a sigh of relief after having said goodbye to your relatives visiting from out of town, think not only about your personal and professional goals for the new year, but ways that you can help contribute to the success and health of your agency.

Wishing everyone a happy, healthy, successful, and meaningful New Year!

‘Twas the day before Christmas, and all through the workplace,
A few diligent employees were working apace,
Others had taken vacation to spend time with St. Nick,
While still others were absent having called in sick.

Some surely were, for it was cold and flu season!
But the Manager wondered if some had another reason.
The very next day was a paid holiday,
And some planned to travel to far, far away.

Some of them grumbled “we should have the day off,”
And some had displayed an unconvincing cough.
Although she hated to be such a Grinch,
Their absence had left their colleagues in quite a pinch.
How could she identify the dishonest faction,
And if so, could she take remedial action?

She could act out rashly, but what would be wiser,
Would be to contact her trusted legal adviser.

They could help her to notice some typical clues
To identify where there is sick leave abuse
One sleuthing method that is true and is tried,
Is to check if the employee had a vacation request denied.

Another way to find the clue that you seek,
Is to consider whether it is a holiday or other short week.
The Manager noticed this suspicious timing,
And your exhausted blogger cannot believe he is still rhyming.

The employee’s public social media posting
May tell whether he is sick, or just ghosting.
As the Manager grew increasingly suspicious,
Her trusted adviser reminded her, “be judicious.”

It is hard to prove sick leave lies and misdirections
And California employees have robust sick leave protections.
While sick leave abuse can be cause for discipline,
Remember the “Kin Care” law is not just for kin!

And while an empty office is a cause of frustration,
So too is a DLSE charge for retaliation.
Although you may think your “sick” worker is trimming his tree,
Even asking for a doctor’s note is not risk-free.

And before you assume the employee is just stuffing her stocking,
Please consider whether she is a victim of domestic violence, sexual assault, or stalking.
Because not only is that the right thing to do,
Those are valid reasons for sick leave under AB 1522.

Be patient, look for patterns or habits.
Was he also “sick” Monday after the Easter Rabbit?
Discipline is fraught, and if you choose to do the deed,
Cautiously is how you should want to proceed.
The Manager sought advice, and could proceed without fight,
And at last, your blogger says Happy Holidays to all, and to all, a good night!

Residency requirements for public employees is a long-standing concept that has been experiencing a resurgence. In the 1970s, numerous legal challenges were brought against municipalities that required employees to reside in the city or county where they were employed. In 1972, the California Supreme Court found the City of Torrance residency requirement was unconstitutional. In that case, the city ordinance required all employees, including current, to become city residents within six months of the ordinance being enacted. The Supreme Court found the city did not present a compelling government interest that could outweigh the constitutional right to travel beyond the boundaries of the city for residential purposes.

Since the 1970s, public agencies have been honing the craft of writing an enforceable ordinance. In particular, many agencies have focused on public safety. By expanding the residency requirements from within city limits to something distance-based, agencies have created more palatable and reasonable restrictions for police and fire employees. The compelling nature of the need for speedy responses in emergency situations generally has been accepted by the courts.

Some agencies have more strict requirements than others do, and several noteworthy challenges have been in the news. Recently, in Oregon, a police officer is facing possible termination because he lives in another state, which violates the residency requirement ordinance. The police officer and his union argued that the requirement is unconstitutional and not exemplary of the country’s “value of freedom.” The city has not yet made a decision whether to terminate the police officer, but the officer and the union vow legal challenges if he is released based on the residency requirement.

In Iowa, a fire chief recently requested that the city stop forcing firefighters to live within 10 miles of city hall. According to the chief, the restriction is impeding the recruitment of qualified applicants, and he asked that the distance be expanded to 60 miles. The city council noted the purpose of the restriction was to ensure a quick emergency response if needed. The council argued the purpose of the requirement also was to show citizens that critical personnel are part of the community and has not modified the10 mile requirement.

This year, the Arizona legislature presented a bill that would make it unlawful for agencies to enact residency limitations for police and fire personnel, except in cases where the community has less than 5,000 residents. According to the state senator who introduced the bill, firefighters and police in areas such as Sedona and Flagstaff were having difficulty finding affordable housing within the residency restricted areas.

A firefighter in Illinois was terminated from his employment because he did not live within the prescribed boundaries. He rented a house in the city but did not live in it. He argued that the house was his mailing address and that this was sufficient to meet the residency requirements. The board of fire and police commissioners disagreed and upheld the termination. Unsatisfied with that decision, the firefighter sued, and ultimately appealed to the state Court of Appeal. The appellate court said the residency ordinance was not satisfied simply by the firefighter’s renting a house in which the firefighter did not live.

While the need to have readily available emergency personnel may be considered reasonable, enforcing the requirements can be a challenge. Recruitment for many agencies has been an ongoing problem. Rejecting qualified applicants and dismissing employees simply based on the residency requirement may be problematic for agencies that are experiencing recruitment difficulties. Reasonable restrictions, particularly in areas where housing is expensive, may serve agencies better in the long term. If your agency has residency restrictions, it may be a good time to review and evaluate them to ensure they are fair and effective.

On December 12, 2019, the Department of Labor (DOL) announced a Final Rule that clarifies and amends federal regulations concerning the regular rate of pay under the federal Fair Labor Standards Act (FLSA).  Many of the affected regulations date back more than 60 years, long before the FLSA was made applicable to the public sector.   The effective date of the modified regulations is January 15, 2020.   They were published in the Federal Register today, December 16, 2019.

All public agencies should evaluate how they pay overtime and develop a strategy to not only ensure compliance with the new regulations, but also how best to take advantage of the regulations to save on overtime costs.  This can, and likely will, include meeting and conferring with employee associations and labor unions whose employees will be impacted by changes in the calculation of overtime. 

The Final Rule specifically addresses whether certain employee perks and benefits must be included in the FLSA regular rate of pay for overtime.  Among the most relevant items for public agencies are the DOL’s clarifications that holiday-in-lieu pay and sick leave buy backs may be excluded from the regular rate.

Holiday in lieu pay is common in the public sector for public safety employees who are scheduled to work without regard to holidays because the service is provided 24 hours a day, seven days a week.  Employees receive pay for holidays in lieu of taking the holidays off as their shift may or may not fall on one of the holidays provided by the agency.  Prior to the issuance of the Final Rule, case law and other DOL interpretations of whether this pay must be included in employees’ regular rate of pay were mixed and thus, the issue has not been settled.  The new regulations clarify that when an employee works instead of taking a holiday off, and receives holiday pay in addition to normal pay for the work performed, the additional holiday pay may be excluded from the regular rate.  This is the case whether the payment is issued immediately or at some later time (e.g., upon cashing out accrued holiday hours), as well as if employees are paid a flat percentage each pay period as pay in lieu of holiday pay.

Sick leave buy backs are also common in the public sector for all employees, not just for public safety employees.  Employees may be given the opportunity to cash out a certain amount of sick leave per year that may or may not be tied to sick leave usage.  The Final Rule provides that sick leave buy backs are treated the same as vacation buy backs and other occasional payments for unused leave.  Specifically, the Final Rule excludes the payments for sick leave buy backs from the regular rate of pay.  Two federal Circuit Courts of Appeals have held that sick leave buy backs must be included in the regular rate.    The rationale of those decisions was that allowing employees to cash out sick leave was akin to an attendance bonus, i.e., an incentive not to use sick leave. The Final Rule tracks Balestrieri v. Menlo Park Fire Protection District (a 2015 Ninth Circuit Court of Appeals decision won by Liebert Cassidy Whitmore), which held that buy back payments for annual leave (a combination of sick leave and vacation) were excludable from the regular rate.

The Final Rule makes an important distinction between sick leave buy backs and attendance bonuses, which involve an employee receiving an incentive payment that does not affect his or her leave balance or is tied to factors unrelated to the illness period, such as a perfect attendance record.  Per the Final Rule, non-discretionary attendance bonuses are still included in the regular rate of pay.  However, it is now clear that if, due to sick leave usage or for any other reason, an employer allows an employee to cash out sick leave, the payment for the cash out may be excluded from the regular rate of pay.

The Final Rule further clarifies that the following items are among those that may be excluded from the regular rate of pay (subject to certain conditions):

  • The cost of off-site parking, wellness programs, onsite specialist treatment, gym access and fitness classes, employee discounts on retail goods and services, tuition programs, and adoption assistance;
  • Employer contributions to Health Savings Accounts;
  • State or locally mandated payments or penalties (such as call-back pay, show-up pay, and similar payments) that attach when, before or after reporting to work as scheduled, the employee is not provided with the expected amount of work (provided that such payments or penalties are infrequent or sporadic);
  • Reimbursement for business-related expenses including a cell phone plan, organization membership dues, credentialing exam fees, and travel, even if not incurred “solely” for the employer’s benefit;
  • Sign-on bonuses (unless subject to a claw-back provision (i.e., a provision allowing the bonus to be taken back by the employer if certain conditions occur) under a collective bargaining agreement, or city ordinance or policy);
  • Office coffee or snacks provided to employees as gifts; and
  • Employer contributions to benefit plans for accident, unemployment, legal services, or other events that could cause future financial hardship or expense.

The Final Rule addresses two issues related to cafeteria plans.  First, the Final Rule follows the Ninth Circuit’s ruling in Flores v. City of San Gabriel that cash payments in lieu of health benefits must be included in the regular rate of pay.  Additionally, the Final Rule includes discussion of the standard that employer contributions for premiums and other benefits under a cafeteria plan are excludable from the regular rate as long as cash payments to employees in lieu of benefits are “incidental.”  The DOL’s comments to the Final Rule expressly reference twenty percent (20%) as the threshold for when the amount of cash paid in lieu of benefits is incidental.

While the Final Rule may prompt employers to make adjustments to their regular rate calculations, we recommend first consulting with trusted legal counsel to assess FLSA compliance.  The Final Rule, like the FLSA in general, presents various complexities that must be navigated carefully, such as attaching conditions to various exclusions from the regular rate.  Employers should also consider their meet and confer obligations in advance of implementing any changes to overtime compensation.

Liebert Cassidy Whitmore can provide your agency with legal counsel to help ensure compliance with the Final Rule and modified regulations.  This can include working with your Finance staff on payroll issues, Human Resources staff on meet and confer obligations or on other strategies that may be implicated at your agency by these changes.  We will be conducting trainings throughout the state in early 2020 that will go into detail about the Final Rule and new regulations.  Look for upcoming announcements about the training, and register early because you won’t want to miss this critical information.

This may be hard to believe, but in three weeks, we will be living in the year 2020.  I find this fact particularly surprising, as I often refer to events of the mid-90’s as incidents that occurred “a few years ago.”

Whether we acknowledge it or not, though, time marches on.  Annually in California, employers in the public and private sector must ready themselves for a new wave of laws that will take effect just after the ball drops to ring in the new year.  Is your agency ready?

This article recaps a handful of significant laws that will take effect in 2020.  Unless otherwise noted, these will take effect on January 1, 2020.  Yes, that’s still just three weeks away.

Laws to Watch for in 2020 (and Beyond)

  • A + B + C = Independent Contractor

Looking Ahead in 2020

AB 5 codifies the elements to establish that someone performing work is an independent contractor, rather than an employee.  While the law states it is confirming existing law, rather than creating new law, employers need to ensure their practices comply with AB 5’s rules.  The legislation amends the California Labor Code and Unemployment Insurance Code to confirm the impacts of 2018’s California Supreme Court case Dynamex Operations West, Inc. v. Superior Court.   For an in-depth analysis of AB 5, visit here.  Here are the key points for California employers:

  • AB 5 confirms that the following standard test applies to establish that an individual is an independent contractor and not an employee:
    • (A) The hiring entity does not control how the individual performs the work; AND
    • (B) The individual’s work is outside the usual course of the hiring entity’s business; AND
    • (C) The individual customarily works in an independently established trade, occupation, or business performing the same work performed for the hiring entity.
  • Like all laws, AB 5 includes notable exceptions. First, the applicability for public agencies is relatively limited.  Some, but not all, provisions of the Labor Code apply to public agencies (such as paid sick leave and the ability to use part of annual accrued sick leave to care for certain family).  Second, AB 5 exempts several categories of professions, referral services, and vendors from the ABC test –if they meet a series of criteria.  Finally, if the ABC test does not apply to a particular situation, the more flexible, multi-factor test established by the California Supreme Court in 1989’s Borello case will determine whether an individual is an independent contractor or an employee.   

How Can We Prepare?

Consider having legal counsel review policies, procedures, and contracts to confirm that: (1) The agency is applying the appropriate test for independent contractors; and (2) The agency is applying that test correctly.   Contact legal counsel if any questions arise – it’s important to address potential classification issues as quickly and effectively as possible.

  • Expanded Requirements for Lactation Accommodations

Looking Ahead in 2020

SB 142 amends the Labor Code to expand protections for employees to express breast milk at work.  Employers have already been required to provide a private location – other than a bathroom – for an employee to express breast milk during their break time.  Click here for a detailed review of SB 142.  SB 142 expands most employers’ obligations as follows:

  • The employer must provide a private lactation room in “close proximity” to the employee’s workspace, which is shielded from view and free from intrusion from others while the employee expresses milk.
  • The lactation room must have a place for the employee to sit, and have access to electricity or alternative devices (such as extension cords or charging stations)
  • The employer must provide a sink with running water and a refrigerator or other cooling device for storing milk in close proximity to the employee’s workspace.
  • The employer must develop, implement, and make available a policy regarding employees’ lactation accommodations.

How Can We Prepare?

Review your agency’s policies and practices regarding lactation accommodations for employees.  Does the current lactation accommodation meet SB 142’s requirements?  If not, it is time to develop a strategy to implement the required changes.  If the agency does not already have a policy, now is the time to act to develop and implement one.  If a policy exists, does it meet SB 142’s requirements?  Consider consulting legal counsel for assistance to assess your agency’s compliance and develop a strategy to implement any required changes.  As with any potential changes to workplace conditions, the agency should be mindful of potential labor relations implications.

  • Expanded Protections Against Discrimination Based on Traits Historically Associated with Race

Looking Ahead in 2020

SB 188 amends the Fair Employment and Housing Act and Education Code to expand protections against discrimination based on race to include “traits historically associated with race, including, but not limited to, hair texture and protective hairstyles.”  Click here for more details about SB 188.   “Protective hairstyles” include, but are not limited to, braids, locks, and twists.  SB 188 is designed to address the concern that workplace dress codes and grooming policies that prohibit natural hair (including afros, braids, twists, and locks) “are more likely to deter Black applicants and burden or punish Black employees than any other group.”  Accordingly, SB 188 prohibits discrimination based on traits that are historically associated with race.

How Can We Prepare?

Review your practices and policies related to hiring, harassment and discrimination prevention, dress codes, and grooming standards.  Does your policy (or practice) prohibit or limit individuals from choosing afros, braids, locks, or twists?  If so, it’s time to update the policy and change the practice.  Do your supervisors understand the new law, and the fact that they should not write someone up for a dress code violation based on hair texture of protective hairstyles?  If not, it’s the perfect time to train them on the new laws, and on the compliance procedures your agency is putting into place for the new year.

… Which brings us to another important reminder for 2020:

  • Harassment Prevention Training for Non-Supervisors

Looking Ahead in 2020

SB 778 clarifies that employers are required to provide at least 1 hour of training on harassment, discrimination, and retaliation for non-supervisors by the end of 2020.  Employers have long been required to provide 2 hours of harassment prevention training for supervisory employees – within six months of the person taking on the lead or supervisory role, and every two years thereafter.  In 2019, legislation required employers to extend training to non-supervisory employees, every two years.  SB 778 (which took effect in August 2019 as emergency legislation) clarified that employers have the 2020 calendar year to meet the training requirement.  If your agency was ahead of the curve and trained non-supervisors in 2019, they will be due for updates in 2021.

How Can we Prepare?

Employers can meet the training requirement in many ways: Trainings conducted by outside experts; trainings conducted by internal agency experts; or online tools.  The Department of Fair Employment and Housing will have online resources available for employers.  Additionally, LCW offers flexible options to meet employers’ needs and interests.  Visit to find the right training option for your agency.

  • Where Can I Learn More?

Kick off the New Year with a great learning and professional development opportunity! Consider sending your agency’s human resources professionals, managers, and attorneys to LCW’s 2020 Public Sector Employment Law Annual Conference, January 22-24, 2020, in San Francisco.

For more information about our training services, publications, consortiums, and other services we offer, please visit

We wish you a happy and healthy holiday season, and look forward to an exciting future in 2020 and beyond!

An important part of the litigation practice is appellate law.  One side can win in the trial court – by a motion to dismiss, on summary judgment, or after a jury trial – only to have the result overturned on appeal.  The court of appeal can send the parties back for an entirely new trial, or in some circumstance, it can decide that the party who lost at trial should actually win the case altogether.  Also, the court of appeal can publish its decision, meaning that the decision will serve as binding law for future cases raising the same issues.  Thus, a published appellate decision can have far-reaching effects for the industry or administrative area involved.  In addition, published appellate decisions often draw media attention, thus further raising the stakes.

In appeals, a party’s written briefing can serve as its sole opportunity to present arguments to the court and influence the court’s decision.  The parties present the appeal to a panel of three justices.  These three individuals decide the matter based only on the paper record from the trial court to determine if the court committed any errors that had a sufficient likelihood of affecting the result.  They do not hear any witness testimony, and they do not accept any additional evidence.  The court of appeal does often hold an oral argument, which is a hearing where the attorneys can argue the appeal in person.  But the hearings tend to be relatively short and are often taken up with the attorneys responding to questions from the justices (and responding to the questions may or may not serves as means for the attorneys to convey their key arguments).

This all shows the importance of effective appellate briefs.  Below are six tips lawyers follow for preparing briefs on appeal.

  1. Be accurate: The appellate brief’s citations to the trial court record, and to applicable legal authorities must be exact.  Accuracy is a requirement for all legal briefs in any court, but for appeals, the stakes can be higher.  If the brief contains an accidental mis-statement, the other side can easily make accusations that the party that presented the brief has tried to mislead the court, create confusion, or lacks credibility.  The appellate court may agree with these contentions and respond accordingly.  Even if it does not, a lawyer’s need to respond to such contentions puts his or her side on the defensive.
  2. Be complete: It is important to make all available arguments that have a sufficient chance of success on appeal.  If the party’s first brief does not make a particular legal argument, the appellate court can consider it waived.  It will be difficult to make the argument for the first time at oral argument before the court of appeal, in subsequent briefing, or to a higher court like the California Supreme Court.
  3. Be clear and guide the court through the decision making sought: This applies both to sentence and paragraph structure and the overall organization of the brief.  Briefs should set forth, in a logical and clear way, the legal structure the court must assess, and how the facts presented in the record fit into that structure.  Briefs will be organized under separate point headings (different items in the table of contents) so as to make it absolutely clear which elements of law apply to which items of evidence.  What about addressing the other side’s arguments?  The brief can group the arguments at the end of the analysis section to which they relate and then restate and refute them in sequence, with typically one argument per paragraph.  This systematic approach constitutes the same approach the court takes preparing its decision, and can provide the court with an analysis it can more or less adopt if it sees fit.
  4.  Apply case themes:  In preparing a brief, attorneys often find that a particular fact, legal principle, or perspective will actually refute many of the other side’s arguments.  The attorneys will develop this into a case theme, something carefully crafted to be repeated in various ways throughout the briefing to keep it at the forefront of the justices’ perceptions.  Often, for consistency, it makes sense for the appeal brief  to include the same case themes as in the trial court.  On appeal, however, lawyers usually add themes that have a more technical dimension, meant to draw on the justices’ interest in accurately applying and developing the law rather than relying on themes based on more general concerns intended to persuade a jury.  Either way, a case theme on appeal can demonstrate to the court of appeal that it can resolve the whole matter by relying on one or two core principles or by making a few key rulings.
  5. Temper your invective: Lawyers sometimes fill their briefs with harsh, accusatory language against the other side or the other side’s lawyers.  They may label arguments made by their opposing counsel “ridiculous,” “bad faith,” “ignorant,” or the like.  But this type of invective is well-known to irritate courts, and even terms like “frivolous” or “bad faith” are thought to have the same effect if they sound perfunctory, and made without any effort actually to single out for the court arguments or conduct by the other side that are particularly outrageous.  Indeed, some appellate attorneys – in appropriate cases – choose to have their briefing not say anything particularly negative about the other side.  Instead, the briefing will simply explain cogently why, under applicable law and the evidence in the record, the other side cannot win the case.  This makes the brief appear more objective and appellate justices may find it easier to rule in favor of the side that takes a more measured tone.
  6. Tell the client’s story: Often both sides experienced the trial court litigation as an emotional saga that took a heavy toll.  It may turn out that the appeal, however, involves only a few more technical issues (e.g., jurisdiction, sufficiency of the evidence on monetary damages, evidentiary rulings on expert witnesses, etc.).  In such cases, the parties may well expect their lawyers nevertheless to write briefs that contain the whole narrative, an emphatic description of why the other side’s conduct was wrongful, and a impassioned explanation of why their side behaved properly and deserves vindication.  It does not help for briefs to include substantial matter irrelevant to issues on appeal.  At the same time, it is common for a brief to offer the court of appeal a context for the decision the court will make.  It is best to find a way to present this context in the appellate briefing, and tell the client’s story succinctly in the process.  This may mean that the brief will include notifications to the court that parts of the discussion serve as this kind of background.  Such matter can have some emotional impact, draw on a sense of fairness, and influence the court.

We will continue to prepare updates on appellate law, and on litigation in general.