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.

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 Fair Labor Standards Act (FLSA) overtime requirements. The final rule will become effective on January 1, 2020.  It is critical for 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.

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.

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 At least $455 per week
(or $23,660 annually)
At least $684 per week
(or $35,568  annually)

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 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 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 employers should audit all exempt job positions to determine which job positions are affected by these new salary basis test regulations.  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 new 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.

For California 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 many public agencies 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 perform at least one of the exempt duties or responsibilities of an exempt executive, administrative, or professional employee. Public employers should look closely at positions that exceed the new “highly compensated” threshold to see if those positions can be classified as exempt. We suspect there will be positions whose annual salary exceeds $107,432, and who are currently classified as non-exempt, who will qualify for the “highly compensated” exemption announced today.

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 where a public employer does not have any exempt employees affected by these new salary basis test regulations, it may also be prudent to assess whether current exempt positions perform the appropriate duties to satisfy the executive, administrative, or professional exemptions.  For example, an agency can assess whether an “Analyst” position performs work directly related to the operations of the department and actually exercises discretion and independent judgment with respect to matters of significance in order to meet the duties test for the administrative exemption. (29 C.F.R. sec. 541.200(a)(2-3).)  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 agency clients and 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.

January 1, 2020 may bring a number of significant changes to California law for public employers.  Following the end of the Legislative Session on September 13, 2019, a number of proposed laws were passed by the Assembly and Senate and now await final approval by Governor Gavin Newson.  He has until October 13, 2019 to sign or veto these remaining bills.  The following are some of the ones we have been monitoring closely that can impact public agencies.

Assembly Bill (AB) 9 Limitations period for Fair Employment and Housing Act Claims

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 others.  Currently, an employee aggrieved by an alleged unlawful practice 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 would extend this time period to file such a complaint with the DFEH from one to three years for complaints alleging employment discrimination, as specified.  The law would provide that the complaint’s operative date is when the intake form was filed with the DFEH.  The new law would not revive lapsed claims, however.  A similar version of this bill was vetoed last year by Governor Jerry Brown – AB 1870.

AB 749 Settlement Agreements and Prohibitions on Re-Hire

This new law would prohibit an employer who settles an employment dispute from including in the settlement agreement a provision that prohibits, prevents, or otherwise restricts a settling party that is an “aggrieved person” from working for the employer against which the aggrieved person has filed a claim.  (For private entities, the agreement could not impose such a restriction as to any parent company, subsidiary, division, affiliate, or contractor of the employer.)  An “aggrieved person” is defined as “a person who has filed a claim against the person’s employer in court, before an administrative agency, in an alternative dispute resolution forum, or through the employer’s internal complaint process.”  There is an exception if the employer has made a good faith determination that the person engaged in sexual harassment or sexual assault.  The law would also clarify that an employer does not have to continue to employ or rehire a person if a legitimate nondiscriminatory or non-retaliatory reason exists for terminating or refusing to rehire.  The law will provide that an agreement term that violates this prohibition, in an agreement entered into on or after January 1, 2020, is void as a matter of law and is against public policy.

AB 171 and AB 1478 – Protections for Victims of Domestic Violence, Sexual Assault, Sexual Harassment, and Stalking

Labor Code section 230 currently prohibits an employer from discriminating or retaliating against an employee who takes time off to obtain specified relief as a result of being a victim of domestic violence, sexual assault, or stalking.  It also prohibits discrimination or retaliation against employees because of their status as a victim of domestic violence, sexual assault, or stalking.  AB 171 would expand the law in two ways.  First, it would expand the definition of “employer” to include any person employing another under any appointment or contract of hire and also expressly to include the state, political subdivisions of the state, and municipalities.  Second, the bill would include victims of sexual harassment (and not just those of domestic violence, sexual assault, or stalking) within the category of protected persons.  “Sexual harassment” would have the same meaning as in the California FEHA.

AB 171 would add a procedural protection as well.  Commencing July 1, 2020, the new law would establish a rebuttable presumption of unlawful retaliation based on the employee’s status as a victim of domestic violence, sexual assault, sexual harassment, or stalking if an employer takes particular employment actions within 90 days following either the date the victim provides notice to the employer or the employer has actual knowledge of the status.  The employer could rebut the presumption by evidence it had a nonretaliatory business reason for the adverse action at issue.

Another pending law, AB 1478, would allow persons to file private civil lawsuits for relief for violation of these provisions under Labor Code section 230.  This would be an alternative to the person filing a complaint with the relevant state agency, the Division of Labor Standards Enforcement (“Labor Commissioner”).

Senate Bill (“SB”) 142 Employee lactation accommodations

This new law would require an employer to provide a lactation room or location that includes particular features, and that allows access to a sink and refrigerator in close proximity to the employee’s workspace, as specified.  It would treat denial of reasonable break time or adequate space to express milk as failure to provide a rest period in accordance with state law (so that corresponding penalties apply).  The law would prohibit discrimination or retaliation against employees for exercising rights under the law.  The law would require employers to have policies regarding lactation accommodation and make them available to employees.  A similar version of this bill was vetoed last year by Governor Jerry Brown – SB 937.

Our firm’s legislative update materials will continue to provide information on the status of these bills.  It is always prudent to consult legal counsel about compliance with new laws in the context of labor and employment.

 

Yesterday, on September 18, 2019, Governor Gavin Newsom signed Assembly Bill No. 5 (AB 5) into law.  AB 5 codifies the “ABC” test for determining independent contractor status that the California Supreme Court adopted in its 2018 decision in Dynamex Operations West, Inc. v. Superior Court (2018) 4 Cal.5th 903.  AB 5 adds section 2750.3 to the Labor Code and will become effective on January 1, 2020.

Here is what your agency needs to know about AB 5:

Background on Dynamex

On April 30, 2018, the California Supreme Court issued a decision in Dynamex.  In Dynamex, delivery drivers alleged that the Dynamex company misclassified them as independent contractors.  The Court established a new test, often referred to as the “ABC” test, for determining whether an individual works as an independent contractor or employee.  The Court rejected the longstanding and more flexible multifactor standard established in S.G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341.  Under the Borello test, the primary consideration for determining whether an individual is an independent contractor or employee is whether the hiring entity had the right to control the manner and means of the work.  The test also evaluates nine additional factors including the type of occupation, the length of time for which the services were to be performed, and the method of payment.  Under the ABC test in Dynamex, however, the presumption is that the individual is an employee unless the hiring entity demonstrates that all three of the following conditions have been satisfied in order for the individual to qualify as an independent contractor:

  1. The individual is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract terms and in fact;
  2. The individual performs work that is outside the usual course of the hiring entity’s business; and
  3. The individual is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity.

Soon after the Court issued the Dynamex decision, LCW published a Special Bulletin on Dynamex titled: California Supreme Court Adopts New “ABC Test” for Classification of Independent Contracts: Potential Risk and Impact on Public Agencies.

AB 5 Codifies and Expands the California Supreme Court’s Decision in Dynamex

AB 5 creates Labor Code section 2750.3, which codifies the ABC test adopted in Dynamex as listed above, and expands its application beyond Industrial Welfare Commission (IWC) wage orders to the Labor Code and Unemployment Insurance Code.  Importantly, there is no express exemption in AB 5 for public agencies.

Labor Code section 2750.3 also carves out a number of exemptions for occupations that remain subject to the old, multifactor Borello test. These exemptions include, insurance agents; medical professionals such as physicians, dentists, podiatrists, psychologists, and veterinarians; licensed professionals such as attorneys, architects, engineers, private investigators, and accountants; financial advisers; direct sales salespersons; commercial fisherman; some contracts for professional services for marketing, human resources administrators, travel agents, graphic designers, grant writers, fine artists, freelance writers, photographers and photojournalists, and cosmetologists; licensed real estate agents; “business service providers”; construction contractors; construction trucking services; referral service providers; and motor club third party agents.

Additionally, AB 5 applies this new Labor Code section 2750.3 to Labor Code section 3351, which relates to employment status for workers’ compensation coverage.  This portion of the law is effective July 1, 2020.

Finally, AB 5 amends Unemployment Insurance Code section 621 to incorporate Dynamex’s ABC test.  This amendment does not reference the exemptions for occupations in Labor Code section 2750.3 that remain subject to the old, multifactor Borello test.  Thus, those independent contractors who fall into one of the exemptions in Labor Code section 2750.3 may not be exempt from the provisions of the Unemployment Insurance Code unless the conditions of the ABC test are satisfied.

The Impact of AB 5 on Public Agencies

Because IWC wage orders have limited application on public agencies, the Dynamex decision similarly has limited application on public agencies.  However, AB 5 and Labor Code section 2750.3 now extend the ABC test in Dynamex to the Labor Code and Unemployment Insurance Code.  This means that if an individual is an employee of the agency under the ABC test, then corresponding Labor Code provisions applicable to agency employees would now apply to the individual, including workers’ compensation coverage and paid sick leave benefits.  Additionally, if an individual is an employee of the agency under the ABC test, he or she is also now entitled to unemployment benefits under the Unemployment Insurance Code.

Importantly, Labor Code section 2750.3 does not constitute a change of the law, but rather declares the state of the existing law prior to its adoption.  Accordingly, public agencies should evaluate all independent contractor arrangements under the ABC test and Labor Code section 2750.3, and reclassify independent contractors as employees where necessary.  LCW is available to assist your agency in conducting such a review.  LCW has planned a webinar to address the implications of AB 5 on public agencies (click here to learn more) and will continue to provide updates on any new developments.

In the past twelve months, Governors Jerry Brown and Gavin Newson have signed two bills into law affecting harassment training requirements for all employers in California with five or more employees.  Below is a brief summary of these new laws as well as resources for employers to ensure compliance with harassment training requirements.

In October 2018, Governor Jerry Brown signed a number of bills into law intended to further protect employees from workplace harassment and discrimination under the Fair Employment and Housing Act (FEHA).  The significant impact of these laws, which were part of a wave of “Me Too” legislation that went into effect on January 1, 2019, are summarized in full in LCW’s October 2018 Special Bulletin titled “New Legislation Will Impact Litigation of FEHA Claims, Employer-Employee Agreements, and Necessitate Additional Employer Training.

One of these bills, Senate Bill 1343 (SB 1343), required employers with five or more employees to provide two hours of sexual harassment trainings to supervisory employeesand at least one hour of sexual harassment training to nonsupervisory employees by January 1, 2020.  This bill also mandated, beginning January 1, 2020, that covered employers provide sexual harassment trainings to all seasonal employees, temporary employees, and any employee hired to work for less than six months within 30 calendar days or within 100 hours worked, whichever comes first.

On August 30, 2019, Governor Gavin Newsom signed into law clean-up legislation related to SB 1343.   As urgency legislation, Senate Bill 778 (SB 778) went into effect immediately on August 30, 2019.  SB 778 amends Government Code section 12950.1 to state that harassment prevention training to both supervisory and nonsupervisory employees is now not required until calendar year 2020, as opposed to the previous SB 1343 requirement that all applicable harassment training be conducted in the 2019 calendar year.  Therefore, employers who provided harassment training in calendar year 2018 can now wait until 2020 to schedule a refresher training. An employer who provides compliant harassment prevention training during 2019 is now not required to provide refresher training for another two years—which would be in calendar year 2021.  LCW’s August 30, 2019 Special Bulletin titled “SB 778 Clean Up Legislation Signed into Law Pushes Out Effective Date for Implementation of New SB 1343 Harassment Training Requirements to Calendar Year 2020 – What This Means for Employers” summarizes SB 778 and its effects in full.

We have put together a “Harassment Prevention Training FAQ” to assist with SB 1343 and SB 778 compliance.  LCW offers both supervisory and nonsupervisory harassment trainings that are compliant with both laws. Please visit our Harassment Prevent Training Services homepage here.

Below are our most viewed articles covering pressing issues and important matters. In case you missed them, read our top five blog posts here!

To Be or Not to Be an Adverse Employment Action – What is Paid Administrative Leave (by Peter Brown, Stephanie Lower, and Brett A. Overby)
This principle used to be clear – paid administrative leave was outside the scope of adverse employment action. This was based on court holdings that an employee suffers no substantial or material change in terms and conditions of employment while on paid administrative leave. For years, courts held that an employee who is put on paid administrative leave cannot prove he or she suffered an adverse employment action to give rise to a viable discrimination or retaliation claim. However, what once was clear, is no more.

Common Pitfalls in Using 9/80 Schedules and How To Avoid Them (by Elizabeth Arce)
Many public employers utilize 9/80 work schedules for non-exempt employees. A 9/80 work schedule is essentially a two-workweek schedule of eight 9-hour days, one 8-hour day, and one day off. However, once the 9/80 work schedule is implemented, there are a number of mistakes unsuspecting employers often make which can inadvertently trigger overtime liability.

DFEH Provides Guidance on Impact of New SB 1343 Harassment Training Requirements: Some Questions Answered, Many Still Remain – Including Possibility that ALL Supervisory and Nonsupervisory Employees Need to Be Trained or Retrained Again in 2019 (by Gage Dungy and Lars T. Reed)
As part of the 2018 Legislative Session, Governor Jerry Brown signed into law Senate Bill 1343, which expands existing harassment training requirements to lower the private sector employer threshold down to 5 or more employees and to mandate one hour of harassment training for nonsupervisory employees of qualified employers, which includes all public agencies.

Governor Signs SB 1421 and AB 748, Dramatically Increasing Public Access to Peace Officer Personnel Records (by Paul D. Knothe)
On September 30, 2018, Governor Edmund G. Brown, Jr. signed two significant pieces of legislation, Senate Bill 1421 and Assembly Bill 748, that will require major changes in how law enforcement agencies respond to requests for peace officer personnel records.

Tattoos. Piercings. The Workplace. Like it or Not, the Millennials are the Future Workforce (by Stefanie Vaudreuil)
According to the Pew Research Center, forty percent of Millennials have at least one tattoo and usually more than one. Tattoos are no longer taboo. With forty percent of the current and upcoming workforce having one or more tattoos, it is becoming increasingly difficult for employers to take a wholesale anti-tattoo position. Since the Baby Boomers and Gen Xers are still greatly responsible for hiring and promoting employees, they have no choice but to adapt and change their perceptions of tattoos in the workplace.

It’s no secret that it can be a challenge for employees to balance work and family obligations.  One measure taken by the California legislature to increase work/life balance is the establishment of school activity leave under section 230.8 of the California Labor Code.  Below are answers to employers’ most frequently asked questions regarding this lesser-known type of leave.

Are all employers required to provide employees with school activity leave?

No, only employers that employ 25 or more employees at the same location.

Which employees are entitled to school activity leave?

Any employee who is a parent, guardian, step-parent, foster parent, grandparent, or person who stands in loco parentis to one or more children who are enrolled in: (1) kindergarten through grade 12; or (2) a licensed child care facility.

How much leave are employees entitled to take?

Up to 40 hours per school year, but not more than 8 hours in any calendar month.

What school activities are covered?

Eligible employees may take leave to:

  • Participate in activities of their child’s school or licensed child care facility;
  • Find, enroll, or re-enroll a child in a school or with a licensed child care provider; or
  • Pick up a child due to a child care provider or school emergency.

What constitutes an emergency for purposes of taking this type of leave?

A request from the school or the child care provider that the child be picked up, including due to behavior or discipline problems, unexpected closure, or a natural disaster.

Are employers required to pay employees who take school activity leave?

No, the leave is unpaid unless the employee uses vacation, personal leave, compensatory time off, or other applicable leave.

Does an employee have to provide notice or other documentation?

Yes, employees must provide reasonable advance notice of any planned absence.  Employers may also require employees to provide documentation from the school or licensed child care facility as verification that the employee participated in school or child care facility activities on a specific date or time.

What if both parents work for the agency?

If both parents work for the same employer, only one parent is allowed to take this leave at any given time. The parent who requests the leave first is given priority.  Employers may allow both parents to take leave, but they are not required to do so.

If your agency’s personnel policies do not address school activity leave for employees, back to school season is a perfect time to revisit whether the agency should adopt such a policy.

Following up on our December 6, 2018 Special Bulletin “DFEH Provides Guidance on Impact of New SB 1343 Harassment Training Requirements: Some Questions Answered, Many Still Remain – Including Possibility that ALL Supervisory and Nonsupervisory Employees Need to Be Trained or Retrained Again in 2019” regarding the impact of SB 1343’s new legal requirements expanding harassment prevention training to include nonsupervisory employees and also require all employees to be trained in calendar year 2019, there were a number of issues and concerns related to the implementation of this new law.  Governor Newsom has now signed into law clean-up legislation SB 778 on August 30, 2019 to address these issues.  SB 778 will now delay the implementation of the new harassment training requirements and any refresher training until calendar year 2020.  As urgency legislation, SB 778 went into effect immediately upon Governor Newsom’s approval of the law on August 30, 2019.

The changes made by SB 778 to Government Code section 12950.1 are available here:

http://leginfo.legislature.ca.gov/faces/billCompareClient.xhtml?bill_id=201920200SB778

SB 778 makes the following modifications to harassment training requirements that were added on January 1, 2019 as a result of last year’s SB 1343:

Implementation of Harassment Prevention Training Not Required Now Until Calendar Year 2020

The requirement to provide harassment prevention training to both supervisory and nonsupervisory employees is now not required until calendar year 2020, as opposed to the previous SB 1343 requirement that all applicable harassment training be conducted this year.  This new change in the law will allow employers more time to provide any required training to those employees not already trained – especially nonsupervisory employees who are now required to receive at least one hour of harassment training every two years.

This change will also provide the Department of Fair Employment and Housing (DFEH) more time to prepare and make available online harassment training for employers to use to comply with these requirements as mandated by SB 1343.  As noted in our earlier Special Bulletin, the DFEH announced in November 2018 in a “Sexual Harassment and Abusive Conduct Prevention Training Information for Employers” that it would not have such online training available until “late 2019”, which would have made it difficult for employers to use to satisfy the training requirements in time of the original deadline of the end of this year.

This new law should also give the DFEH more time to update their regulations on harassment prevention training to better define what is required for the new one-hour nonsupervisory harassment training.  Currently, such DFEH regulations only reference the previous AB 1825 two-hour supervisory employee harassment training requirements that are not entirely applicable to nonsupervisory employees.

Any Compliant Harassment Prevention Training Conducted in 2019 Would Not Require Refresher Training Again Until Calendar Year 2021.

By extending out the timeline to provide harassment training to calendar year 2020, SB 778 addressed concerns raised by employers who already provided compliant harassment training for both supervisory and nonsupervisory employees in calendar year 2018 and would have had to re-train such employees a year earlier this year under SB 1343.  With the new timeline for implementing this training now calendar year 2020, any previous 2018 harassment training would be on track for the standard two-year follow-up training in calendar year 2020.

Even for those employers who already provided SB 1343-compliant training to supervisory and nonsupervisory employees this year in 2019, the new law addresses this scenario by indicating that refresher training is not required again for another two years – which would be in calendar year 2021.

Conclusion – Now that SB 778 is Law, Here’s What Employers Should Do Now:

The Obligation to Implement the New One Hour of Harassment Prevention Training for Nonsupervisory Employees Can Be Delayed Until Next Year (2020)

The main impact of SB 778 is that employers now have more flexibility in implementing the new requirement to provide at least one hour of harassment prevention training to nonsupervisory employees that was established by last year’s SB 1343.  Instead of providing this new training this year, employers now have until the end of calendar year 2020 to provide this training to nonsupervisory employees.

Employers Who Provided Harassment Prevention Training in Calendar Year 2018 Can Now Wait Until Next Year (2020) to Schedule Refresher Training

SB 778 will hopefully be welcome news to employers who were confronted with the awkward result from SB 1343 requiring follow-up refresher training this year when already provided last year in 2018.  Now that SB 778 is effective immediately as urgency legislation, employers who provided compliant harassment training to supervisory or nonsupervisory employees in 2018 do not have to schedule refresher trainings earlier that the standard two-year track for refresher trainings – which would result in such trainings being scheduled next year (2020).

Employers Who Are Already on a Two-Year Track to Provide Supervisory Employee Harassment Refresher Training in Calendar Year 2019 Should Still Proceed With Such Training This Year.

For employers whose two-year track for providing refresher training instead applied to this year (calendar year 2019), LCW continues to recommend that you follow the guidelines set forth originally by AB 1825 and provide such training this year.  To the extent such employers want to also now include nonsupervisory employees as part of this compliant training, they are free to do so this year and would not have to do refresher training until two years later in calendar year 2021.

Continue Providing Initial Harassment Prevention Training to New Supervisory Employees Within Six Months of Hire.

Finally, it is important to continue following the existing requirement that supervisory employees receive this training within 6 months of hire under the original AB 1825 training requirements.  Therefore, regardless of whether an employer provided harassment prevention training to employees in 2018, any new supervisory employees would still need to receive this training within 6 months of their hire date if that timeline falls in calendar year 2019.

LCW offers both supervisory and nonsupervisory harassment trainings that are complaint with SB 1343 and SB 778.  Leaders in client training, LCW has training options available to meet these requirements including Train The Trainer sessions, live in-person sessions and online interactive sessions.  For more information on our training programs, contact our Training Department at 310-981-2000 or AskLCW@lcwlegal.com.

If you have any questions about this Special Bulletin, please contact attorneys in our Los Angeles, San Francisco, Fresno, Sacramento, or San Diego offices for further guidance. LCW offers both supervisory and nonsupervisory harassment trainings that are compliant with SB 1343 and SB 778. Please visit our Harassment Prevent Training Services homepage here.