This article was reviewed in July 2021 and is up-to-date.

 

Often times, an employee may know that discipline or a poor performance evaluation is imminent. Occasionally, such an employee will engage in a preemptive strike—“You can’t discipline me or give me a poor performance evaluation now since I have submitted a complaint.” While this may not necessarily be the norm, it is also not unheard of, causing employers to go from being confident in their decision to being uncertain and worried about the possibility of costly litigation.

Many believe retaliation claims are the easiest for employees to allege and prove. Therefore, it is not surprising that retaliation claims accounted for 56 percent of the charges submitted to the Equal Employment Opportunity Commission (EEOC) in 2020. Similarly, the California Department of Fair Employment and Housing received a total of 15,898 retaliation complaints, with and without requests for an immediate right to sue, in 2020, which was the highest percentage of claims at 20 percent. An additional reason retaliation claims are much more prolific than other protected status claims is that retaliation can be asserted based upon any protected activity (e.g., whistleblower, using federal or State family leave, complaining on behalf of another person, safety, wage and hour complaints, etc.) It is not necessary to be a member of the protected class in question to assert a retaliation claim (an example would be a man complaining about alleged discrimination against women). The employee only needs some type of protected activity.

Retaliation claims are also often the most problematic for employers to defend. For example, even an employee’s “good faith belief” that he has engaged in protected activity could meet the requirements for a retaliation claim. In a 2016 case, Castro-Ramirez v. Dependable Highway Express, Inc., an employee complained about his hours being changed because it impacted his ability to take his son to dialysis. Although the employer’s refusal to accommodate the employee’s schedule may not necessarily have been unlawful, the employee had a good faith belief that the employer’s refusal was unlawful, and that was all he needed to establish that he engaged in “protected activity” for a retaliation claim. The court even went so far as to say that the employee did not have to use the words “accommodation” or “unlawful” to prove his good faith belief that the employer’s actions were unlawful.

If an employee is able to show that he engaged in protected activity, was subject to an adverse employment action (which in some circumstances can include a poor performance evaluation if it is likely impair the employee’s prospects for advancement or promotion), and there is a connection between the activity and the action, the employer then has the burden of proving that the adverse employment action was not the result of the employee’s protected activity. This is where it gets complicated. The employer must show legitimate, lawful reasons for the action taken, and on-going and consistent documentation is the employer’s most important ally in defending against retaliation claims. If the employer has a clear, written record of the reasons why an employee may be disciplined or receive a poor performance review prior to the employee making a complaint, the employer is in a much better position to defend the adverse action. Another important element is to ensure that the employer’s policies, rules, contracts or practices are applied consistently and evenly. The California Department of Fair Employment and Housing regulations require retaliation as a component in training provided to employees.

Should an employee make that preemptive strike and submit a complaint or grievance in advance of the employer taking an adverse action, the employer need not be intimidated but should consider all the relevant factors before making a decision—how good is the documentation to support the decision, when did the conduct giving rise to the discipline occur, and what factors could potentially support the employee’s retaliation claim. And when in doubt consult legal counsel.

On June 15, 2021, the State of California took a step towards returning to some normalcy when it officially reopened for business after over a year of restrictions and closures due to the COVID-19 pandemic. In doing so, the state announced it would be easing, for vaccinated individuals, some of the restrictions set in place regarding capacity limits, social distancing, and mask wearing.

One of the significant changes in the restrictions is that fully vaccinated individuals can resume everyday activities mask-free in nearly all settings, except in certain settings such as public transit; healthcare and long-term care facilities; indoors in K-12 schools, childcare and other youth settings; correctional facilities and detention centers; and homeless shelters, emergency shelters, and cooling centers.

On the other hand, unvaccinated individuals will still be required to use masks in all indoor public settings and businesses.  This includes indoor malls, movie theaters, and state and local government offices.

What Does the Revised Mask Mandate Mean for California Employers?

Effective June 17, 2021, the state’s new guidelines for mask wearing provide employers with the option of allowing fully vaccinated employees to stop wearing masks while on the job.  This does not mean that an employer can no longer require employees (including those who are vaccinated) to wear a mask while indoors at the workplace, and any employee can certainly continue wearing a mask if they choose.

California employers who choose to allow fully vaccinated employees to work indoors without masks will need to document which employees in their workplace received their vaccination. Employers can track an employee’s vaccination status in different ways.  For example, employers can request that employees provide proof of vaccination – either through a copy of their vaccination card or a health care document showing their vaccination status.  Alternatively, employees can self-attest to their vaccination status, and employers must maintain a record of each employee who self-attests.  Employers must take care to ensure that this documentation or any records regarding an employee’s vaccination status remain confidential.

Additionally, all employees – regardless of vaccination status – may still be required to wear masks indoors if their workplaces see a surge in COVID-19 cases.

Exemptions to Mask Requirements Remain in Place

California employers should also remember that the exemptions to the mask wearing requirements remain in place, and apply to unvaccinated workers.  The exemptions to the mask wearing requirements apply to individuals who: are under two years old; have a medical condition, mental health condition, or disability that prevents them from wearing a mask; are hearing impaired, or are communicating with a person who is hearing impaired, where the ability to see the mouth is essential for communication; and for whom wearing a mask would create a risk to the person related to their work, as determined by local, state, or federal regulators or workplace safety guidelines.

Employers can also consult legal counsel when questions arise on issues such as how to appropriately gather information regarding an employee’s vaccination status.

The problems facing public agencies, many of which are struggling just to keep their heads above water, may get much worse in the near future.  The California Legislature is currently debating Senate Bill (SB) 278 (Leyva), which if passed would create new and in some cases retroactive financial burdens and uncertainties for local public agencies already struggling to fund their pension obligations. Specifically, SB 278 would shift the responsibility for paying disallowed compensation reported to the California Public Employees’ Retirement System (CalPERS) directly to local public agencies.

For context, the Public Employees Retirement Law (PERL) provides a defined benefit retirement plan for public agency employees administered by CalPERS.  The Public Employees’ Pension Reform Act of 2013 (PEPRA) made changes to the categories of compensation that can be included in an employee’s retirement benefit calculation.  Compensation items used for retirement benefit calculations are often specified in collective bargaining agreements and are the product of negotiated agreement.  However, the statutes, regulations, and administrative guidance concerning which items are reportable are complex and can be confusing, which sometimes leads to reporting errors.

Under current law, if CalPERS determines that a disallowed item of compensation was included when determining a retiree’s retirement benefit allowance, the retiree has to pay CalPERS back the amount of overpayment, and future retirement allowance payments are reduced prospectively based on what the retiree would have received if the improper item of compensation had not been included.  CalPERS generally may collect amounts that were overpaid within the last three years.  In a nutshell, the individual must pay back and stop receiving that which they were never entitled to in the first place.

If passed, SB 278 would require local agencies to pay CalPERS the full cost of any overpayments made to the retiree based on the disallowed compensation and provide an annuity or lump sum payment to make the retiree whole for any reductions in future benefit payments.  The statute would apply to any determinations made on or after January 1, 2017, if the appeal rights of the retiree have not been exhausted.  Importantly, it appears a CalPERS determination made on or after January 1, 2017, could potentially apply to decades of misreported compensation before then, and in many cases would impact an entire bargaining group covered by a particular labor agreement.  This may very well incentivize CalPERS to start aggressively auditing local agencies, because any unfunded liabilities for inadvertently misreported compensation would be shifted directly to the employer.  The potential retroactive liability for public employers could be significant – and impossible to predict.  While SB 278 has a provision for CalPERS to review labor agreements prospectively and provide guidance, CalPERS would not be bound by its guidance.  The statute also fails to address past reported compensation that may result in significant retroactive liability.

For current employees, SB 278 does not make significant changes, as it allows improper contributions to act as a credit towards a public agency’s future contributions, and any contributions paid by the employee(s) on the disallowed compensation are returned.

Whether SB 278 becomes law is a decision that will likely fall on Governor Newsom’s shoulders.  A similar proposal – SB 1124 (Leyva) – was passed by the Legislature in 2018, but it was vetoed by Governor Brown.  In his veto message, Governor Brown said he was concerned the bill could be “abused to circumvent limitations in the law intended to protect the government—and ultimately taxpayers—from pension spiking.  Indeed, in the case of an error, this bill would effectively perpetuate that error for the rest of the member’s life, at substantial taxpayer expense.”  Governor Brown encouraged the Legislature to develop policies that would prevent such errors from occurring in the first place, including having CalPERS review proposals for pensionable compensation in memorandums of understanding before the memorandum is finalized.  If the error occurred after that process, penalties might then be warranted.  The current version of SB 278 fails to seriously address Governor Brown’s guidance.  Another similar bill, SB 266 (Leyva), was withdrawn and held at the desk after it passed the Legislature in 2020.

SB 278 suffers from the same problems as its predecessors.  It will lead to whole new category of litigation, does not address concerns with retroactivity and would require public agencies and taxpayers to shoulder the responsibility for reporting mistakes that may cause further crowding out of government services.

Regardless of whether SB 278 becomes law, public agencies should review each item of compensation reported to CalPERS to ensure that the item is reportable under applicable statutes, regulations, and administrative guidance.

 

 

We are excited to announce a new video series designed especially to serve our public safety clients. Our short Public Safety Video Briefings will tackle cutting-edge issues and core principles relevant to public safety employers. We hope you find these videos useful and thought-provoking.

 

This article was reviewed in June 2021 and is up-to-date.

 

Prevention of liability starts with auditing your agency’s personnel rules.  Indeed, in an employment-related lawsuit, the applicable personnel rule is often “Exhibit A.”  Each year, public agencies face changes to employment laws and regulations, best management practices, and internal changes to procedures.  Thus, the outcome of a lawsuit may just depend on whether the agency has audited and updated their personnel rules to reflect these changes.

A personnel rules audit is often a detailed, methodical and lengthy process.  As with most challenging projects, a personnel rules audit requires ample preparation and thoughtful strategy.  Here are some key questions to consider in preparation for a personnel rules audit.

When was the last time your agency conducted a personnel rules audit?

If your agency’s personnel rules hail from the typewriter age, it’s probably been too long since the last personnel rules audit.  Laws change, best management practices change, and internal procedures change.  Accordingly, your agency’s personnel rules will also need to change.  During this past year, many agencies quickly adopted remote work protocols and practices in an effort to efficiently adapt to the challenges surrounding the COVID-19 pandemic. As remote work practices continue into the future, it is important to have a corresponding formal remote work policy to ensure that key expectations and requirements are met.

Do your agency’s personnel rules cover the essentials?

Sure, policies on leaves and discipline are often easy to find in most agency personnel rules.  But there are many other essential policies that are often left out of personnel rules.  Some employees work two or more jobs in addition to their agency employment.  But do the agency’s personnel rules have an outside employment policy?  Employees are issued IPhones, laptops, email addresses, or vehicles.  But does the agency have an equipment use policy that regulates use?  And even more specifically, does the agency equipment policy even reference email?  Most public sector employees in California have due process rights to their employment.  But do the agency’s personnel rules provide clear definitions of categories of employees such as “for-cause employee” and “at-will employee?”  Finally, with disability discrimination claims on the rise, it’s no wonder that agencies are including a comprehensive interactive process policy in their personnel rules so that managers and human resources professionals have guidance on navigating the oftentimes choppy waters of the interactive process.

Do your agency’s personnel rules “make sense?”

Personnel rules should be well organized and easy to read.  Because personnel rules are often lengthy documents, a table of contents is a must.  Headings and subheadings are also essential so that the reader has a roadmap and policies may be more easily referenced.  Personnel rules typically cover numerous categories of policies.  The breakdown of these categories should be based on similarity in personnel topics.  For example, leave provisions should be grouped together.  So if the policy on overtime is tucked away and hidden somewhere in the grievance procedure, it’s definitely time to take a closer look at how your agency’s personnel rules are organized.

Do you know the “why” behind your personnel rules?

In order to effectively audit your agency’s personnel rules, it is essential to know the context behind the policies.  Do you know why a policy in the personnel rules requires what it requires?  Oftentimes, personnel rules are carried over into revised versions through the years.  But little is known as to why.  Is it because the law requires it?  Best management practice?  Neither?  For example, although state and federal law requires an employer to grant an employee leave for jury service, the law does not require that agencies pay overtime-eligible employees for time spent on jury service.  Nevertheless, agencies often pay overtime-eligible employees for time spent on jury service as an additional benefit pursuant to policy in order to treat exempt and overtime-eligible employees equally.

An audit of your agency’s personnel rules can seem like a daunting endeavor.  But regularly auditing your agency’s personnel rules is critical, and can mean the difference between liability and prevention of liability.

This article was reviewed in May 2021 and is up-to-date.

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. These pitfalls, which can also apply to a 3/12 work schedule, and how to avoid them are described below.

Pitfall #1 – Not Designating the Workweek Properly.  Although employers are required to designate a workweek for each non-exempt employee, they often fail to do so.  The problem this creates with respect to a 9/80 schedule is that the employee will end up working 36 hours in the first workweek and 44 hours in the second workweek because the employer uses an FLSA workweek which ends on a Saturday or Sunday night at midnight.  Thus, the employer will likely incur 4 hours of overtime liability in the second workweek.  This problem can be avoided by designating an employee’s workweek to begin four hours after the start time of the employee’s eight hour day, and designating the employee’s day off on the same day of the week in the following week.  The Department of Labor regulations implementing the FLSA specifically permit an employer to designate FLSA workweeks for individual employees.  29 CFR section 778.105.  Thus, if you have employees with different start times on their alternating work day, their FLSA workweek can be different – four hours after the start time of their shift.

Pitfall #2 – Allowing Employees to Change or Switch Their Regular Day Off.  Employers should be cautious of employee requests to change their regular day off because moving it will likely cause the employer to incur four hours of overtime liability.  For example, if an employee who is off-duty every other Friday is scheduled to work this Friday, he/she might ask to take this Friday off and work the following Friday (the day he is ordinarily scheduled to be off duty).  Because each 40 hour workweek is examined on its own, this scenario will result in more hours being worked in one of the two workweeks in the two week pay period.  The best way to avoid this problem is to prohibit employees from changing or switching their regular day off.

Pitfall #3 – Allowing Employees to Come In and Leave Early.  In addition to coming in and leaving early, employees who are permitted to come in and leave late on the alternating work day could also trigger overtime.  Because the workweek in a 9/80 schedule begins four hours into their eight hour shift on the day of the week which constitutes their alternating work day, permitting an employee to work more or less hours before the four hour cutoff will cause overtime to accrue.  For example, if an employee whose workweek starts at noon (because his regular Friday hours are from 8:00 a.m. to 5:00 p.m.) came to work at 6:30 a.m. on Friday and worked until 3:30 p.m., the employee would be owed 1.5 hours of overtime because the hours worked between 6:30 a.m. and noon would be in the first workweek of the two week pay period.  Like the solution to Pitfall #2, employers can avoid overtime liability under this scenario by not allowing employees to adjust the start and end times of their shifts.

Pitfall #4 – Failing to Monitor When Lunch Is Taken.  Failure to monitor lunches on the alternating day worked (e.g., Friday) could also inadvertently trigger an overtime obligation.  For example, if an employee is scheduled to work between 8:00 a.m. and 5:00 p.m. on the alternating Friday and has an unpaid one hour lunch, the employee should work the first four hours (until noon), then take lunch, and return to work the last four hours (until 5:00 p.m.).  However, if the employee decided to take lunch at 11:00 a.m., this would result in the employee working the last five hours after 12:00 p.m. thereby triggering one hour of overtime liability in the second workweek of the two week pay period.  Thus, employers should emphasize to employees the importance of taking lunch after the first four hours of the alternating work day and periodically audit employee lunch breaks to make sure they are being taken at the appropriate time.

Public employers are encouraged to scrutinize their use of the 9/80 work schedule to see if any of the common mistakes are being made.  This may require employers to separately examine each department, division or unit as there may be variations in each group’s practices.

As public agencies head into the end of the 2020-2021 fiscal year and prepare for the 2021-2022 fiscal year, it is the perfect time of year for agencies that contract with the California Public Employees’ Retirement System (“CalPERS”) to refresh their knowledge about upcoming deadlines and requirements.  Below are the key CalPERS deadlines and requirements agencies should know.

End of Year Payroll Reporting Deadlines

Public agencies must ensure that they meet CalPERS’ closing deadlines for accounts and records for the fiscal year ending June 30, 2021.  Reporting on time allows CalPERS to timely process the payroll earned period and adjustment reports and enables CalPERS to provide the proper service, contributions, and interest to member accounts.  All payroll reports for the last complete earning period ending in June 2021 must be created and posted in myCalPERS by the original due date or before 5:00 p.m. on July 29, 2021, whichever due date is earlier.  Inaccurate reporting may lead to inaccurate member information.  (See CalPERS Circular Letter: 200-024-21.)

July 30, 2021 Reporting Deadline for Out-of-Class Assignments 

CalPERS agencies must report the number of hours worked by employees in “out-of-class appointments” to CalPERS no later than July 30, 2021.  Government Code section 20480 expressly defines “out-of-class appointment” as “an appointment of an employee to an upgraded position or higher classification by the employer or governing board or body in a vacant position for a limited duration.”  A “vacant position” is defined as “a position that is vacant during recruitment for a permanent appointment.”  The definition of “vacant position” excludes a “position that is temporarily available due to another employee’s leave of absence.”  The compensation for the appointment must also be stated in a collective bargaining agreement or a publicly available pay schedule.

CalPERS requires agencies to certify “out-of-class appointments” for each member through myCalPERS no later than 30 days following the end of each fiscal year.  The information requested by CalPERS includes: the member’s name, permanent position title and “out of class” position title; beginning and end date of the out-of-class appointment; pay rates of both the permanent and out-of-class positions; and special compensation and total earnings.

Failure to report the information may result in penalties under Section 20480 and notification to CalPERS Office of Audit Services to initiate an audit of the employer’s records.

Please see CalPERS Out-of-Class Reporting Frequently Asked Questions for more information about reporting out-of-class assignments.

CalPERS’ Suspension of Work Hour Limitation for Retired Annuitants Performing Services to Ensure Adequate Staffing During the COVID-19 Emergency Remains in Effect 

In response to Governor Gavin Newsom’s March 2020 Executive Order N-25-20 at the beginning of the COVID-19 pandemic, CalPERS issued Circular Letter 200-015-20.  The letter explains that any hours worked by a retired annuitant to “ensure adequate staffing during the state of emergency will not count toward the 960-hour per fiscal year limit.”  In addition, the 180-day wait period between retirement and returning to post-retirement employment is suspended.  Most other retired annuitant restrictions, including the limitations on permissible compensation and the prohibition of any benefits in addition to the hourly rate, remain in effect.  However, the exception only applies to the extent that the retired annuitants are working to “ensure adequate staffing during the state of emergency.”  The exception does not automatically cover all retired annuitant appointments and a case-by-case assessment is necessary.

The suspension of the retired annuitant work hour limitation and wait period exceptions remains in effect until the state of emergency has been lifted.  Agencies should be aware that they must continue to notify the director of the California Department of Human Resources of any individual employed pursuant to these waivers by emailing CAStateofEmergency@calhr.ca.gov.

Track Hours Worked for Out-of-Class Appointments, Retired Annuitants, and Part-Time/Temporary Employees

Looking ahead to the next fiscal year, agencies should ensure that they have a system in place to track hours worked for certain groups of employees.  Accurate and timely tracking of hours will cut down on potential liability if an employee inadvertently meets or exceeds their work hours limitation.  Agencies should track work hours for out-of-class appointments, which are limited to 960 hours per fiscal year.  Agencies should also track the work hours for retired annuitants, which is limited to 960 hours per fiscal year if the retired annuitant is not hired to ensure adequate staffing during the COVID-19 state of emergency (otherwise CalPERS has suspended the work hour limitation as described above).  Agencies should record the hours worked by part-time/temporary employees, including those hired on a seasonal, intermittent, on-call, limited-term, or irregular basis who must be monitored for enrollment in CalPERS membership.  These employees will generally be eligible for CalPERS membership after 1,000 hours of paid service (including paid leaves) or 125 days (if paid on a daily or per diem basis) in a fiscal year.

2022 Minimum Employer Contribution for PEMHCA (CalPERS Medical)

For employers that provide benefits under the Public Employees’ Medical and Hospital Care Act (“PEMHCA” or “CalPERS medical”) CalPERS recently announced that the new 2022 minimum employer contribution for members is $149.  (See CalPERS Circular Letter: 600-026-21.)  This is a 4.1% increase from the 2021 minimum employer contribution ($143).  Although the increase does not go into effect until January 1, 2022, public agencies should be aware of this increase and take it into account for budgeting purposes as they prepare for the new fiscal year.  Beginning January 1, 2022, CalPERS will automatically update billing to reflect the new $149 amount for contracting agencies that have designated the PEMHCA minimum as their monthly employer health contribution.

The National Football League just completed its annual draft, in which the 32 NFL teams select collegiate players from around the country to compete for a spot on their rosters.  Prior to the draft, the teams spend time scouting, evaluating, and assessing these players.  Soon, the newly drafted players will have a chance to practice with the team and demonstrate whether they have the skills and talent actually to make the team.  Unfortunately for some, they may eventually be cut.

While it is probably not as high-profile or large in scale, public employers also go through a hiring process, in which they conduct interviews and background checks.  If an individual is lucky enough to be hired at a public agency, then they may also have to go through a probationary period in order to avoid being “cut from the team.”  Generally, a probationary period is the initial period of time after the employee begins employment.  There is no required period of time, but we typically see them as little as six months and as long as 18 months.

For public employers, probationary employees are usually classified as “at-will,” which means that they could be released from probation without cause.  However, even though an agency does not need a reason, the agency should be prepared to defend its decision.  The decision to release any employee clearly should never be discriminatory or retaliatory, or for any other unlawful reason.  The decision should still be based on legitimate business reasons, such as poor performance, operational needs, or economic concerns.

Regular Evaluations During the Probationary Period

A useful tool for public employers are regular evaluations within the probationary period.  For example, if your agency has a 12-month probationary period, your agency may want to have probationary evaluations every three months.  Regular evaluations allow the employer to provide feedback and describe areas for improvement so that probationary employees know where they stand throughout the probationary period.  This will help both the employer and the probationary employee work together to understand what is expected of the employee and provide any support, if necessary, to the employee.   Having regular evaluations also creates a record of any poor performance if the agency decides to release the employee.  An early negative evaluation may even justify the release of an employee earlier on in the probationary period.

Extending the Probationary Period

Agencies may have rules or policies to extend a probationary period.  Typically, employers will extend a period for the time that an employee is on a leave of absence.  Also, some agencies may have the discretion to extend the period.  If your agency finds itself regularly extending probationary periods, then you may want to consider alternatives.  First, perhaps your agency may want to consider a longer probationary period to give yourself sufficient time to evaluate the employee’s performance.  Second, perhaps your agency may want to train your supervisors to make the difficult decision to release an employee from probation.  If the reason for the extension is to give probationary employees more time to “prove” themselves, then the agency may want to discuss why the employee was unable to do so in the initial probationary period.

Consequences of Allowing a Poorly Performing Employee to Pass Probation

Typically, if a public employee passes probation, then they may have due process rights to continued employment, which will not only affect the public employer’s ability to separate the employee but also to discipline them.  So, if a public agency allows employee who has poor performance during the probationary period to pass probation and the poor performance continues, then the agency will potentially have to spend significant time and resources to address these performance issues.  This highlights the importance of taking the probationary period seriously and evaluating employees as best as you can.

* * *

If your agency is faced with the decision of releasing a probationary employee, it can be helpful to seek legal advice.

We are excited to announce a new video series designed especially to serve our public safety clients. Our short Public Safety Video Briefings will tackle cutting-edge issues and core principles relevant to public safety employers. We hope you find these videos useful and thought-provoking.