California Public Agency Labor & Employment Blog

California Public Agency Labor & Employment Blog

Useful information for navigating legal challenges

The Legislature Introduces Clean-Up Bill SB 778 to Fix SB 1343 Harassment Training Requirements – What This Means for Your Agency

Posted in Harassment, Special Bulletin

This Special Bulletin was authored by Gage C. Dungy.

NOTE:  This update incorporates further amendments to SB 778 and serves to remind clients that these are only proposed fixes to the existing SB 1343 harassment prevention training requirements that are not yet law.  SB 778 is subject to change again before becoming law.  If SB 778 becomes law, we will notify you immediately. In the meantime, employers must comply with the training requirements and deadlines imposed by SB 1343, which took effect January 1.  We have taken the unusual step of updating you about the status of pending legislation because we are aware that many clients are currently assessing whether and when to re-train their employees.

On December 6, 2018, LCW published a Special Bulletin titled, “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”.  That bulletin informed clients that the DFEH published still valid guidance regarding SB 1343, including a mandate that all nonsupervisory employees to undergo harassment training in calendar year 2019, even if they received the training in 2018.  The Legislature is now considering SB 778, clean-up legislation introduced on February 26, 2019, to address employer concerns about some of the onerous requirements of SB 1343, as interpreted by the DFEH.  The proposed bill language is available at:  http://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201920200SB778

If SB 778 Passes in Its Current Form, Compliant Harassment Prevention Training Provided After January 1, 2018 Will Suffice Until Calendar Year 2021.

The DFEH published  a notice in November 2018, titled “Sexual Harassment and Abusive Conduct Prevention Training Information for Employers”, that said all covered employees would be required to undergo harassment prevention training by the end of calendar year 2019.  The DFEH premised this mandate on the following language in Government Code section 12950.1(a):

An employer who has provided this training and education to an employee after January 1, 2019, is not required to provide training and education by the January 1, 2020, deadline.

Unfortunately, this awkward statutory language, and the interpretation given to it by the DFEH, requires any employer who already provided otherwise compliant harassment prevention training in 2018 to re-train the same employees again in 2019.

SB 778, in its present form, would replace the above-referenced sentence in Government Code section 12950.1(a) with the following sentence:

An employer who has provided this training and education to an employee after January 1, 2018, is not required to provide refresher training and education until after December 31, 2020.

There is Strong Indication that SB 778 Will Become Law

SB 778 is a “committee bill” in the State Senate, meaning all of the members of the Senate Labor, Public Employment and Retirement Committee, including legislators from both parties, approved of the bill.  At this point, there is no indication of any opposition to the bill and all signs point to it passing.

SB 778 does not include an “urgency” clause that would allow it to take immediate effect upon signature of the Governor.  As presently worded, the legislation would not take effect until January 1, 2020.  There is some support in the Legislature for an urgency clause to be added, but urgency legislation requires 2/3 approval of both the Senate and Assembly.  Nevertheless, the fact that SB 778 is a committee bill with bi-partisan support leaves open the possibility that could happen.

While SB 778 is Not Yet Law, Here’s What Agencies Should Do Now:

Employers Who Provided Harassment Prevention Training in Calendar Year 2018 May Consider Waiting to Reschedule Training This Year

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.  While not yet law, the fact that SB 778 has bipartisan support is a good indicator that it will become law.  Therefore, employers who provided otherwise compliant harassment prevention training in 2018 may wish to consider delaying refresher training until SB 778’s fate is determined in the Legislature.  LCW will publish updates on SB 778 on its blog as information becomes available.

Assuming that SB 778 becomes law, employers should consider scheduling future training for supervisory and non-supervisory employees on the same two-year track to ensure that employees are receiving consistent training to the extent possible.

Employers Who Either 1) Are On a Two-Year Track to Provide Supervisory Employees Harassment Prevention Refresher Training in Calendar Year 2019, or 2) Did Not Provide Non-Supervisory Employees With Compliant Harassment Prevention Training in 2018 Still Need to Still Provide Such Training in 2019.

Employers who did not provide otherwise compliant harassment prevention training in 2018 still need to provide the training this year.  SB 778 would not provide any relief for such employers.

Provide Harassment Prevention Training to New Hires Within Six Months.

Importantly, employers must provide new employees with harassment prevention training within six (6) months of hire.  Therefore, regardless of whether your agency provided harassment prevention training to employees in 2018, any new supervisory or non-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, which has offered effective harassment prevention training for decades, offers SB 1343 training.  For more information on our training programs, contact our Training Coordinator Anna Sanzone-Ortiz at asanzone@lcwlegal.com or (310) 981-2051 or Director of Marketing and Training Cynthia Weldon at cweldon@lcwlegal.com or (310) 981-2000.

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.

Is Minimum Wage a Matter of Statewide Concern? The Second Appellate District Says Yes, Applying the State Minimum Wage to Charter Cities (and Counties).

Posted in Special Bulletin, Wage and Hour

This post was authored by Lisa S. Charbonneau.

On February 25, 2019, the California Second Appellate District Court of Appeal issued a decision in the case Marquez, et al. v. City of Long Beach, holding that the state minimum wage applies to charter cities because minimum wages are a matter of statewide concern.  The holding should be construed to apply to all counties (charter and general law) as well.

What does this mean for charter cities and counties (charter and general law)?  The practical effect of Marquez is that charter cities and all counties must ensure that their non-exempt employees are paid no less than the state minimum wage for all hours worked.  An agency that pays any non-exempt employee less than the state minimum wage should take immediate steps to increase those wages right away.  We recommend consulting with legal counsel on how to take those steps.

Currently, the state minimum wage is $12.00 per hour for any employer with more than twenty-five employees and $11.00 per hour for employers with 25 employees or less.  The state minimum wage is statutorily set to increase yearly until it reaches $15.00 for all employees in 2023 (2022 for employers with more than 25 employees).  Click here for a chart on the state minimum wage phase-in.

Note that Marquez decision does not affect general law cities, which are subject to the state minimum wage.

Background

Beyond the impact on day-to-day wage rates, the Marquez decision is notable for its discussion of why the state minimum wage applies to charter cities and counties.  A bit of background will be helpful here.  Under the California Constitution at Article XI, Sections 4 and 5, charter cities and counties (charter and general law) have exclusive authority to regulate and determine their own municipal affairs.  These provisions have given rise to what is known as the home rule or municipal affairs doctrine.  Under the doctrine, charter cities and counties (charter and general law) have plenary power over their own municipal affairs exclusive of state interference.  In contrast, the state legislature has the power to regulate matters of statewide concern.  Click here to read more about the home rule doctrine.

Over the years, courts have been asked to determine what is a municipal affair, what is a matter of statewide concern, and in what cases may the state legislate municipal affairs.  In the context of employee compensation, courts have ruled, for example, that the state’s workers’ compensation law is a matter of statewide concern, as is the statewide rights of public employees to join a union, thus the constitution permits those laws to apply to charter cities and counties despite conflicting local laws.  In contrast, courts have found that setting the wages of charter city employees, capping those wages, and outsourcing the determination of such wages to a third party were all municipal affairs not subject to state interference.  (Marquez, *18.)

In the Marquez case, the court was tasked with evaluating whether the state’s minimum wage law is a matter of statewide concern applicable to charter cities (like workers’ compensation or the right to join a union) or unconstitutionally interfered with purely municipal affairs of those entities.

The State Minimum Wage Is a Matter of Statewide Concern

In applying the state minimum wage law to charter cities (and all counties), the Marquez court analyzed the purpose of the law itself, holding that the law and its legislative history evidences the Legislature’s intent to broadly apply the state minimum wage to all employees throughout the state in every industry – private and public.  Moreover, the state minimum wage law protects Californians by keeping California “families above the poverty line.”  (Marquez, *28.)  That is, like workers’ compensation law, the statewide minimum wage serves the “fundamental purpose of protecting health and welfare of workers,” which is a matter of statewide concern.  (Id.)  The court also noted the state is more likely to provide state-funded public assistance to employees receiving wages below the statutory minimum.  (Marquez, *25.)   For all these reasons, the court concluded that the state minimum wage law is a matter of public concern and may be applied to charter cities (and all counties).

The Marquez court was careful to distinguish minimum wage laws from prevailing wage laws, which have been struck down by the California Supreme Court as unconstitutional numerous times, most recently in State Building & Construction Trades Council v. City of Vista.  According to the Marquez court, the Supreme Court struck down prevailing wage laws because they effectively set wages and salaries at the prevailing rate, which has a greater impact on local control than minimum wage laws, which only set “as a floor the lowest permissible hourly rate of compensation.”  (Marquez, *29.)

Charter Cities and Counties Retain Authority to Provide Wages Above the Minimum

Importantly, the Marquez court wrote, “the minimum wage law does not deprive the City completely of its authority to determine wages.  The law sets a floor based on the Legislature’s judgment as to the minimum income necessary for a living wage in this state.  The City retains authority to provide wages for its employees above that minimum as it sees fit.”  (Marquez, *32.)  Thus, charter cities and counties should not rely on Marquez to follow wage and hour laws that are not the state minimum wage.  Agencies are cautioned to consult legal counsel to evaluate whether California wage and hour laws apply.

What Should You Do Right Now?

You should ensure that if you are a charter city or a county (general or charter) that all of your employees (including part-time and unrepresented employees) are paid at least the current state minimum wage.

It is not known whether the City will appeal the decision to the California Supreme Court.  Regardless, LCW is following this case and will provide updates on any new developments.

U.S. Supreme Court Unanimously Rules Civil Asset Forfeitures are Subject to Eighth Amendment

Posted in Constitutional Rights

This post was authored by Paul Knothe.

On February 20, 2019, the U.S. Supreme Court decided Timbs v. Indiana, holding for the first time that the Eighth Amendment to the U.S. Constitution’s prohibition of excessive fines applies to civil forfeiture by state law enforcement agencies.  It did not, however, decide how large a forfeiture constitutes an unconstitutionally “excessive” fine.

The term “civil asset forfeiture” refers to the practice of law enforcement agencies seizing property, such as cars, weapons, or cash from crime suspects when there is probable cause to believe the assets are being used for criminal activity.   Under certain circumstances, agencies have been able to retain the value of those assets, and for some agencies, civil asset forfeiture has become a significant source of funding.  In recent years, this practice has garnered increased public attention and controversy, centered largely on the fact that the standard for seizing property does not require a criminal conviction.

In the Timbs case, plaintiff Tyrone Timbs was arrested for selling heroin, and the police seized his Land Rover, which he had recently purchased for approximately $42,000 with the proceeds of his father’s life insurance policy.  Timbs subsequently pleaded guilty and was sentenced to one year of home detention and five years of probation, including a court-supervised addiction treatment program.

Following Timbs’ guilty plea, the trial court denied the State of Indiana’s action for forfeiture of the Land Rover.  The court found that the vehicle had been used to facilitate Timbs’ crime.  However, it noted that the maximum monetary fine available under state law for Timbs’ conviction was $10,000, and that seizing the vehicle, worth more than four times that amount, was grossly disproportionate and therefore violated the Excessive Fines clause of the Eighth Amendment of the federal constitution.  The Eighth Amendment provides: “Excessive bail shall not be required, nor excessive fines imposed, nor cruel and unusual punishments inflicted.”  The Court of Appeals of Indiana affirmed this ruling.

The Indiana Supreme Court, however, reversed the ruling, holding that the Excessive Fines clause applies only to the federal government, and not to the states.  When the U.S. Constitution was originally drafted, the Bill of Rights only applied to the federal government.  Following the Civil War, the Due Process clause of the Fourteenth Amendment extended application of most of the Bill of Rights to the states.  The Supreme Court had not yet answered whether this included the Excessive Fines clause.

The U.S. Supreme Court unanimously held that the excessive fines clause does apply to the states.  Justice Ruth Bader Ginsburg authored the main opinion of the Court, expressly stating that the Excessive Fines Clause is incorporated by the Due Process Clause of the Fourteenth Amendment.  Justices Gorsuch and Thomas each wrote separately, arguing that the Excessive Fines Clause should instead be incorporated through the Privileges or Immunities Clause of the Fourteenth Amendment.

Although the Supreme Court held that the Excessive Fines clause does apply to the states, it did not decide whether the seizure of the Land Rover constituted an excessive fine.  Instead, it remanded that question to the Indiana Supreme Court.   Under existing law, a forfeiture constitutes an unconstitutional fine if it is “grossly disproportionate” to the offense, determined by reference to four factors: (1) the nature and extent of the crime, (2) whether the violations was related to other illegal activities, (3) the other penalties that may be imposed for the violation, and (4) the extent of the harm caused.   (See People v. Estes (2013) 218 Cal.App.4th Supp. 14, 21; U.S. v. Bajakajian (1998) 524 U.S. 321, 337-40.)

The Timbs decision does not dramatically change the landscape for California agencies, because the California Constitution also prohibits excessive fines.  However, given the public attention being paid to this topic, we expect further development of the law on the question of what constitutes an excessive fine in the asset forfeiture context.

EEOC Removes Final Rules that Permitted Employers to Offer Incentives to Encourage the Disclosure of Health Information in Connection with an Employer Wellness Program

Posted in Disability

This post was authored by Carla McCormack.

In December 2018, the Equal Employment Opportunity Commission (“EEOC”) removed Final Rules that permitted employers to offer incentives to encourage the disclosure of health information in connection with an employer wellness program.  This change is effective January 1, 2019.

An employer wellness program, generally offered through an employer-provided health plan, is intended to help employees improve their health and also to reduce healthcare costs for the employer.  These programs sometimes seek to use medical questionnaires or health risk assessments (“HRA”) to determine a person’s health risk factors, such as body weight, cholesterol, blood glucose, and blood pressure levels.  They implicate several legal provisions in their request for information.

One such provision, the Americans with Disabilities Act (“ADA”), prohibits employment discrimination because of disability.  The other provision, the Genetic Information Nondiscrimination Act, prohibits employment discrimination because of genetic information.  These laws generally prohibit an employer from obtaining and using information about employees’ health conditions or the health conditions of the employees’ family members.

However, these laws allow employers to ask health-related questions and conduct medical examinations if the employer is providing health or genetic services as part of a “voluntary” wellness program.  In May of 2016, the EEOC issued Final Rules expressing its position on when participating in an employer wellness program is “voluntary” under the ADA and GINA.

The EEOC’s Final Rules permitted an employer to offer incentives (up to 30 percent of the total cost of self-only coverage) to encourage employees to answer disability-related questions or undergo medical examinations as part of the wellness program.  They also permitted an employer to offer inducements (up to 30 percent of the total cost of self-only coverage) to encourage an employee’s spouse to provide information on the spouse’s current health status by completing a HRA as part of the wellness program.

Shortly thereafter, in October 2016, the American Association of Retired Persons (“AARP”) filed suit against the EEOC.  It alleged that the incentive portion of the Final Rules violate the ADA and GINA and were not voluntary.  The 30% incentive “pressured” employees to “divulge” “confidential health information” about themselves and “confidential genetic information” about their spouses as part of an employee wellness program.  The incentive acted as a “penalty” if the employees choose to keep their medical information private and not participate in the program.

After some initial filings, in August 2017, the court denied the EEOC’s motion to dismiss and granted the AARP’s motion for summary judgment.  The court found that the EEOC failed to provide a “reasoned explanation” for the 30 % incentive in the ADA and GINA rules.  Because the court believed that vacating the incentive rules would be disruptive in the middle of the plan year, it decided not to vacate the rules “for the present.”  Instead, it remanded the rules to the EEOC for reconsideration.

In December 2017, the AARP requested that the court alter or amend its decision not to vacate the incentive rules. One reason for the request was the representation of the EEOC that it intended to issue its new final rule in October 2019 that would be applicable “at the earliest” in 2021.  The court granted AARP’s motion and vacated the incentive rules.  The court also stayed when the ruling would take effect until January 1, 2019 to avoid the potential for disruption.

In December of 2018, and shortly before the court’s order would take effect, the EEOC removed the two Final Rules challenged by the AARP.  The EEOC also has represented its intent to issue proposed rules addressing the concerns of the court in June of 2019.  This leaves a gap of almost six months without guidance from the EEOC on this issue.

We will keep you apprised of the proposed new rules when the EEOC issues them.  In the meantime, employers should be aware that there are risks to offering incentives to encourage the disclosure of health information in connection with an employer wellness program.  Such incentives potentially affect the voluntary nature of the program.  Employers should contact legal counsel to discuss these risks and on what to do in the interim.

 

 

The text of the original rules can be found at:

The text of the EEOC’s removal of the challenged rules can be found at:

A copy of the AARP complaint, and the court decisions referenced in this blog, can be found at:

The text of the EEOC’s anticipated June 2019 date to issue the new proposed rules can be found at:

Democracy in Action

Posted in Democracy

Photo Credit: Saadia Mahdi

This post was authored by Melanie L. Chaney.

As a proud American citizen, I want to instill a healthy respect for American government and democracy in my child.  I have a son who has an interest in American government that belies his seven years on this earth.

You may have read in the Washington Post about the 17 African-American women who were all elected to the judiciary in Harris County, Texas this last November bringing the total number of African-American women judges in the County to 19.

Earlier this month, my son Carson and I had the opportunity to attend the swearing in ceremony of one of the newest Harris County judges, the Hon. Dedra Davis, who happens to be a dear friend of mine for the last 30 years. I brought Carson to the ceremony because I wanted him to see democracy in action first hand and witness what can be accomplished when one chooses to be an active participant in democracy and works hard towards a goal, even when the chances of success seem bleak.  It might sound cliché, but I want him to know that as he grows up, he does not have to wait on the world to change.  Rather, he can choose to be the change that he might want to see in his world and his government.

Carson was asked to lead the Pledge of Allegiance for the ceremony and he rose to the occasion.  He proudly led the Harris County bench, numerous elected officials and many other notable Harris County citizens in the Pledge of Allegiance without fear or hesitation.

It was a proud moment for me as a friend, as a parent and as a participant in democracy that I wanted to share!

Tips from the Table: Constructive Receipt

Posted in Labor Relations, Tips from the Table

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

 

Will the Supreme Court Prohibit Employers From Considering Salary History in Setting Pay?

Posted in Wage and Hour

This post was authored by Megan Lewis.

The United States Supreme Court may be gearing up to decide whether, under the Equal Pay Act, employers can consider an employee’s previous salary history when setting the employee’s rate of pay.  In doing so, the Court could clarify an area of the Equal Pay Act that has been interpreted differently by the various Circuit Courts of Appeal.

Under the federal Equal Pay Act, if an employer is paying an employee less than an employee of the opposite sex for work requiring the same skill, effort, and responsibility, which is performed under similar working conditions, the employer must be able to demonstrate that the disparity is based on one of the following:

  • seniority system;
  • a merit system;
  • a system which measures earnings by quantity or quality of production; or
  • a differential based on any other factor other than sex.

The first three exceptions are fairly straightforward, but the fourth (which is also known as the “catchall” exception) has often been the subject of litigation.

In April 2018, the Ninth Circuit ruled in Rizo v. Yovino that salary history is not a “factor other than sex” for purposes of the Equal Pay Act, meaning that employers cannot rely on an applicant’s prior salary history to justify paying one employee differently than another employee of the opposite sex for similar work.  The Ninth Circuit held that the only “factor[s] other than sex” that employers can use to justify a wage disparity are “legitimate, job-related factors such as a prospective employee’s experience, educational background, ability, or prior job performance.”

Jim Yovino, the Fresno County Superintendent of Schools, filed a petition for writ of certiorari asking the U.S. Supreme Court to review the Ninth Circuit’s decision because the Circuit Courts of Appeal do not agree on whether prior salary is a “factor other than sex.”  The Eleventh Circuit, like the Ninth Circuit, has held that the “factor other than sex” exception to the Equal Pay Act is limited to “job-related factors.”  The Seventh Circuit, on the other hand, has reached the exact opposite conclusion and held that employers can consider prior salary in setting pay.  The Second Circuit lands somewhere in the middle, holding that the “factor other than sex” exception applies to “business-related reasons,” which is likely less restrictive than the approach taken by the Ninth and Eleventh Circuits.

The Court is likely to decide the fate of Yovino’s petition in the coming weeks, possibly as soon as later this month.

If the Supreme Court ultimately affirms the Ninth Circuit’s decision in Rizo, the Ninth’s Circuit’s standard (under which only “job-related factors” can be a “factor other than sex”) could become the nationwide standard.  However, even if the Court were to overturn Rizo, state and local legislation regarding the right of employers to consider salary history in setting pay would remain in effect.  For instance, California employers would still be required to comply with the provisions of AB 168, which restricts the ability of employers to gather applicants’ salary history information or consider such information when determining whether to offer employment to an applicant and/or what salary to offer.  The same is true for employers in other states (Massachusetts, Delaware, and Oregon) and cities (New York, San Francisco, Boston, and Philadelphia) that have passed similar legislation.

We are watching this case closely, and we will provide updates as soon as they become available.

Service Animal Vs. Emotional Support Animal At Work – Is There A Difference Any More?

Posted in Disability

This post was authored by Jennifer Rosner.

In the employment context, the statutory schemes that require reasonable accommodation for disabilities are the California Fair Employment and Housing Act (FEHA) and the Americans With Disabilities Act (ADA).  The ADA defines a “service animal” as any dog (or in some cases, miniature horses) that are trained to do work or perform tasks for the benefit of an individual with a disability, including a physical, sensory, psychiatric or other mental disability.  Animals that satisfy this definition are considered service animals under the ADA regardless of whether they have been licensed or certified by a governmental entity.

The FEHA regulations provide that an “assistive animal” is one that is “necessary as a reasonable accommodation for an individual with a disability.”  Included in the definition of “assistive animal” is a “service dog or other animal” that is “individually trained to the requirements of a person with a disability.”  In 2016, the FEHA regulations were amended to add “support animal” to the definition of “assistive animal.”  A “support animal” is defined as one “that provides emotional, cognitive, or other similar support to a person with a disability, including, but not limited to, traumatic brain injuries or mental disabilities, such as major depression.”  Accordingly, the distinction between “service animal” and “support animal” in California has become immaterial.  Also, California law does not only apply to dogs or miniature horses but can include any animal that meets the above definitions.  In Pennsylvania, a disabled man registered an emotional support alligator, which he said helps him to deal with his depression.  (Like California, Pennsylvania does not limit support animals to a specific animal.)

In addition, the FEHA regulations do not require that an assistive animal is trained by a professional trainer.  The regulations do allow an employer to request (1) a letter from the employee’s healthcare provider stating that the employee has a disability and explaining why the employee requires the presence of the animal in the workplace (e.g., why the animal is necessary as an accommodation to allow the employee to perform the essential functions of the job); and (2) confirmation that the animal is free from offensive odors, does not engage in behavior that endangers the health or safety of the individual with a disability, and is trained to provide assistance for the employee’s disability.  The second component can be provided by the disabled employee.

The employer may challenge whether the assistive animal meets the above standards during the first two weeks that the animal is in the workplace based on objective evidence of offensive or disruptive behavior.  An employer may also require annual recertification from the employee of the continued need for the animal.

An employer may deny an employee’s request to bring an assistive animal to the workplace if the accommodation would not be reasonable.  Accordingly, employers should engage in the interactive process with the disabled employee to discuss whether the request for an assistive animal is reasonable.  The accommodations analysis should address three issues:

  1. Reasonableness: Is the requested accommodation reasonable?
  2. Effectiveness: Is the request effective? Will this requested accommodation effectively allow the employee to perform the essential functions of his or her job?
  3. Undue Hardship: Does the request pose an undue hardship? With regards to assistive animals, this analysis requires that employers weigh issues such as whether the animal will be disruptive to the workplace.

Employers should document efforts to engage in the interactive process with the employee regarding a request for an assistive animal in the workplace.  Moreover, to minimize risk and liability, employers should be vigilant in monitoring an assistive animal’s behavior and interaction with other employees and individuals who may be at the workplace.

Now is The Time to Consider an FLSA Audit!

Posted in Wage and Hour

This blog post was authored by Jennifer Palagi.

A number of developments – the 2016 decision in Flores v. City of San Gabriel on the intersection of wage and hour law and employer health plans and the U.S. Department of Labor’s (“DOL”) increased scrutiny of employers’ FLSA practices as of several years ago – continue together to provide a resounding “wake-up call” to employers.  It is important to assure FLSA compliance this year.

An FLSA audit is an opportunity to examine an agency’s policies and practices to identify any possible FLSA violations.  FLSA audits may examine every applicable wage and hour issue, or may look at one or two pressing concerns.  Audits typically involve reviewing various documents, such as payroll records, memoranda of understanding, and agency rules, as well as interviewing agency employees who are familiar with relevant practices.

Payroll Audits

Under the FLSA, all compensation that is “remuneration for employment” must be included in the regular rate unless it falls within one of several narrowly construed statutory exceptions.  The regular rate is not to be confused with the base hourly rate or salary and must include all requisite special pays in the overtime calculation.   In Flores v. City of San Gabriel, the Ninth Circuit held that cash payments to police officers made in lieu of health benefits must be included in the regular rate for overtime purposes under the FLSA (and that under some circumstances, health plan payments made on behalf of employees must also be included).

A payroll audit can assess whether an agency includes all special pays required by the FLSA in determining a non-exempt employee’s regular rate of pay and whether the agency is calculating the FLSA regular rate of pay correctly.

Employee Classification Audits

Misclassifying employees as exempt or non-exempt is a common FLSA error.  Unless exempt, employees must generally be paid at the rate of 1.5 times their “regular rate” of pay for all hours worked more than 40 in a week.  The most common exemptions, or “white collar” exemptions, apply to executive, administrative, professional, outside sales, and certain computer-related employees.  The burden is on the employer to show that an employee is properly classified as exempt.

The audit may be based only the determining whether salary levels are met for exemptions (i.e., just to confirm that relevant employees make enough for FLSA exemptions to apply to them).  Alternatively, it could involve a comprehensive review of the duties employees are actually performing and the percentage of time spent performing those duties to determine if employees qualify under FLSA exemptions.

Hours Worked Audits

The DOL continues to increase its rate of audits and general scrutiny of employers’ FLSA compliance.  One area of focus is whether non-exempt employees are getting compensated for all “hours worked.”  Under the FLSA, overtime compensation must be paid for all hours worked over a maximum amount in a work period (usually 40 hours in a seven day FLSA work week).  Hours worked under the FLSA is broadly defined to include all hours employees are “suffered or permitted to work” for their employer, including time they are necessarily required to be on duty on the employer’s premises or time worked even if the employer did not request the employee to perform that work.  Thus, the issue is often ripe for challenge by employees.

An “hours worked” audit can identify whether an agency’s calculation of hours worked is correct when an employee, for example, travels for work or attends a training.  The audit can also examine whether employees work off-the-clock hours and can identify whether these hours are compensable under the FLSA.

Finally, the FLSA provides employers a defense to liquidated damages (double damages) if the employer can show that in good faith it tried to follow the FLSA and was reasonable in believing that it was in fact in compliance.  Thus, agencies should regularly audit FLSA compliance to help support a good faith defense.

Now is the time for agencies to take a close look at their policies and practices and ensure they are in strict compliance with the FLSA.   An essential preventive tool for agencies is an FLSA audit.  It is only through a comprehensive analysis into an agencies’ compensation, classification and time-keeping practices, and an examination of whether those particular practices comply with FLSA requirements that an agency can properly navigate the FLSA and its regulations and reduce the risk of FLSA lawsuits.

It’s Not FMLA Unless I Say So!

Posted in FMLA, Wage and Hour

This blog post was authored by Jennifer Rosner.

In a 2014 decision of the U.S. Court of Appeals, the Ninth Circuit Court in California held that an employee can affirmatively decline to use leave under the Family Medical Leave Act (“FMLA”).  However, buyer beware!  If an employee affirmatively declines to use FMLA to which he/she would otherwise be entitled, the employer may be shielded from a lawsuit if it takes an adverse employment action against the employee based on that leave.

The FMLA provides job protection to an eligible employee who takes leave (up to 12 workweeks per year) to care for the employee’s spouse, child or parent with a serious health condition.  However, in Escriba v. Foster Poultry Farms, an employee declined to use FMLA when she took an extended leave of absence to care for her ill father.  When the employee was terminated for failing to comply with the company’s absence policy, she filed a lawsuit claiming that her termination was an unlawful interference with her FMLA rights.  The Court held that the termination was lawful because the employee had expressly declined to have her time off count as FMLA leave and therefore, was not entitled to job protection.

Maria Escriba worked at a Foster Farms processing plant for 18 years.  On November 19, 2007, she met with her immediate supervisor to request two weeks vacation leave to care for her ailing father in Guatemala.  Her supervisor asked if she needed more time in Guatemala to care for her father, and Escriba responded that she did not.  The supervisor told her that if she later decided to request more than two weeks leave, she would need to visit Human Resources.  Escriba then went to the Foster Farms facility superintendent and told him she was going to Guatemala because her dad was very ill.  She told him she was using two weeks of vacation time and asked her for an additional two weeks as a “favor.”  The superintendent told Escriba to send a note or documentation to Human Resources for the extra time.  He did not instruct Escriba regarding her rights and obligations under FMLA and did not take any steps to designate her time off as FMLA.  Escriba never requested any additional time from Human Resources.

Escriba then traveled to Guatemala to care for her father.  While there, she decided that returning to work after two weeks would not be practical but she failed to make contact with her employer to extend her leave.  Sixteen days after she was supposed to return to work, Escriba called her union representative who informed her that she was going to be terminated under Foster Farm’s “three day no-show, no-call rule.”  Under this policy, an employee is automatically terminated if absent for three work days without notifying the company or without seeking a leave of absence.  Escriba then sued Foster Farms, claiming that the company interfered with her right to take FMLA leave.

To establish a case of FMLA interference, an employee must establish that 1) he/she was eligible for FMLA protection; 2) the employer was covered by the FMLA; 3) the employee was entitled to leave under the FMLA; 4) the employee provided sufficient notice of intent to take leave; and 5) the employer denied the employee FMLA benefits to which he/she was entitled.  Here, the Court found that Escriba elected not to take FMLA leave after telling her supervisor that she only wanted vacation time and that she did not need additional time off.  She also knew that her supervisor only handled requests for vacation whereas Human Resources had handled her past fifteen requests for FMLA leave.  Moreover, Escriba had intended to take vacation time and not family leave.  Accordingly, Escriba did not express intent to take leave under the FMLA.

Thus, this case demonstrates that an employee cannot have it both ways – the employee cannot decline to use FMLA (even if the leave qualifies for FMLA) and then try to hide behind FMLA protections after the fact.  Accordingly, once an employee declines to use FMLA, the employee assumes the risk of the decision.  Thus, as in this case, if an employee declines FMLA leave, and goes on an unauthorized leave of absence, the employee can be lawfully terminated (consistent with agency policies).  Because the FMLA does not require that an employee expressly ask for “FMLA leave” to fall under its protections, we recommend that the employer should inquire of the employee if it is necessary to determine whether FMLA is being sought by the employee and obtain the necessary details of the leave to be taken.