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The Challenge Ahead: Addressing the Risks of Using Virtual Tools in Employment Decision Making
OpenAI’s launch of ChatGPT nearly two years ago kicked off the rapid integration of artificial intelligence into society’s daily activities. Today, established tech giants and upcoming startups alike are seemingly adding some level of AI to every product. This developing landscape provides employers with possibilities of both increased efficiency and increased liability.
While the technology is new, the potential harms are familiar. In a lawsuit developing in the Northern District Court of California, Mobley v. Workday, Inc., a plaintiff is suing the HR-provider Workday alleging that its algorithmic decision-making tools screened employment applications in a discriminatory manner. The litigation has focused on whether the plaintiff could bring such a lawsuit in the first place. In this regard, the court recently reasoned, “Workday’s role in the hiring process is no less significant because it allegedly happens through artificial intelligence rather than a live human being who is sitting in an office going through resumes manually to decide which to reject. Nothing in the language of the federal anti-discrimination statutes or the case law interpreting those statutes distinguishes between delegating functions to an automated agent versus a live human one.” At least for this judge, employers must ensure that their AI tools comply with existing employment laws.
The EEOC’s Guidance on AI and Hiring
Absent new laws specifically addressing AI use, regulators aim to address potential AI risks under existing legal frameworks. The Equal Employment Opportunity Commission (“EEOC”) published guidance earlier this year focusing on actions employers may take to monitor their AI tools. The EEOC has taken the position that employers are responsible under Title VII for their use of AI tools even if another entity designed or administered them. The EEOC also noted that employers may be held responsible for the actions of their agents, such as software vendors.
The EEOC specifically focused on employers’ obligations to prevent “disparate impact” or “adverse impact” absent a business necessity. A disparate impact occurs when a selection procedure has the effect of disproportionately screening out a protected classification. As an example, if an existing workforce has a large number of male supervisors, AI software may inappropriately correlate being male with success and favor males for hire and promotion.
As a rule of thumb, the EEOC uses the “four-fifths rule” to determine disproportionate impact. The selection rate of one group is substantially different from the selection rate of another group if their ratio is less than four-fifths, or 80%. For example, if a selection procedure results in hiring 80 applicants, 30% of whom are Black while 60% are White, the procedure may have a disparate impact on Black applicants. This is because the proportion between the selection rates (30/60 = 1/2) is 50%, which is less than 80%.
Analyzing the potential adverse impact of an AI tool is an easy step since it focuses on the output data of the tool, rather than attempting to determine the technical parameters of an algorithm. However, adverse impact is only one form of discrimination, and the “four-fifths” rule is only a general rule of thumb. Employers should still attempt to form other guardrails over AI use.
Indeed, the EEOC’s recent Title VII guidance supplements a 2022 guidance on potential risks of violating the ADA using AI tools. In that guidance, the EEOC noted areas of concern such as failing to provide a reasonable accommodation to applicants that cannot be fairly rated by automated application procedures or that perhaps reveal a medical restriction.
California’s Proposed Regulations
Late last year, Governor Gavin Newsom signed Executive Order N-12-23. The Executive Order instructed several California agencies to analyze and report on potential risks of AI on governmental functions. It also directed the agencies to establish guidelines ensuring responsible development of AI systems and to prepare the government for AI use.
Significantly, there may be new AI-focused state regulations on the horizon. On May 17, 2024, the Civil Rights Department’s Civil Rights Council (“Council”) noticed its Proposed Regulations to Protect Against Employment Discrimination in Automated Decision-Making Systems. The initial public comment period for the proposed regulations closed on July 18, 2024.
On October 17, 2024, the Council noticed its first modification of the proposed regulations. The comment period for the proposed modifications closes on November 18, 2024. Significantly, the Council is taking the position that an “agent” that utilizes an automated decision-making tool, directly or indirectly, on behalf of an employer to facilitate decision-making traditionally exercised by an employer is also an “employer.” The Council may be relying on the California Supreme Court’s recent holding in Raines v. U.S. Healthworks Medical Group (2023) 15 Cal.5th 268 for this position. Raines concluded that an employer’s business entity agents could be directly liable under the Fair Employment and Housing Act (“FEHA”) when they carry out FEHA-regulated activities on behalf of an employer.
The regulations also broadly define automated decision systems to mean a “computational process that makes a decision or facilitates human decision making.” The Council initially tried to carve out basic tools like calculators or excel spreadsheets, but the amended regulations appear to reverse course if those tools facilitate human decision-making. Thus, employers need to have some level of confidence that any calculation or formula used to make employment-related decisions does not create a disparate impact. The proposed regulations note that proof of anti-bias testing or similar proactive efforts to avoid algorithmic discrimination may be relevant evidence to a claim of employment discrimination. However, it recently deleted a previously articulated business necessity defense—leaving it to the courts to determine the appropriate nature and scope of what that defense will look like (if at all).
The Council maintains that the proposed regulations do not impose any new requirements. Instead, it asserts that they are only clarifying how existing regulations apply to AI tools. Both employers and software vendors are likely to test that assertion in court.
The October 17, 2024 modifications reflect that the Council is receptive to some concerns. Particularly, the original proposals would have defined “medical or psychological examinations” to include “personality-based” questions, which include questions that measure optimism/positive attitudes, personal/emotional stability, extroversion/introversion, and “intensity.” The original proposed regulations did not limit the definition to AI-use, nor clearly limit the scope of “personality-based” questions. Thus, an employer could potentially violate the law by asking any pre-offer interview questions that attempt to determine a candidate’s personality in any way. In the modified draft regulations, the Council more plainly defined medical or psychological examinations to “include a test, question, puzzle, game, or other challenge that leads to the identification of a disability.”
AI at Work
Beyond management’s use of AI tools, employers should also be aware of their employee’s use of AI tools for work. More than likely, at least several of any workplace’s employees have used AI tools. As a result of the increasing AI integration into existing products, employees may have even used AI without realizing it. For example, Google searches result in an “AI Overview” which summarizes several webpages into one result.
In the context of employee use of AI tools, the general risks in using AI apply. One primary concern is accuracy. AI systems may “hallucinate” false information. Even Google’s AI Overview is prone to make mistakes. Employers should instruct employees to not rely on AI summaries, and instead confirm the information by visiting the sources of information.
Also, agencies often interact with sensitive information from members of the public. For example, employees could use AI tools to draft incident reports or personnel documents. Employers should contemplate specifically whether to allow such use, and if so, employees should receive guidance on how to safely use AI without jeopardizing information security.
Further, agencies must be ever mindful of their obligations under the Public Records Act. A member of the public may argue that “communications” between employees and AI tools are public records, which must be disclosed.
Evolving Scene
Unquestionably, the impact of AI on the employment landscape will continue to develop quickly. It is unclear when or if the Council’s regulations will be implemented, or whether the state legislature (which is actively working on AI-related statutes) will beat them to the punch. What is certain, however, is that employers have an opportunity now to take a hard look at the formulas and software being used to assist with their employment decisions, directly or indirectly through a vendor. Employers should actively question whether anti-bias testing or other proactive methods have been implemented and can be cited as a potential defense, as well as the possibility of indemnity provisions in contracts with software or recruitment vendors.
AI will transform our world in the coming years, and its adoption and utilization will become ubiquitous. Employers must be mindful, however, of the risks associated with AI and ensure they are considering the ways it can be a double-edged sword. LCW continues to monitor these issues with specific attention to how AI will affect California’s public employers.
Department of Education Publishes AI Toolkit Amidst Approaching Deadline to Publish Artificial Intelligence Resources, Policies
On October 24, 2024, the U.S Department of Education (“DOE”) released its AI Toolkit for Safe, Ethical, and Equitable AI Integration for school leaders. This toolkit, primarily targeted towards K-12 school leaders, implements recommendations from the DOE’s Artificial Intelligence (“AI”) Future of Teaching and Learning report (published May 2023). It provides guidance for the effective use and integration of AI in teaching and learning, summarizes key federal laws and considerations for ensuring safe, secure, and non-discriminatory AI use, and promotes the principles of transparency and awareness for schools using AI. The toolkit covers ten key topic areas, or “modules”: 1) opportunities and risks; 2) privacy and data security; 3) civil rights; 4) accessibility, and digital equity; 5) understanding evidence of impact; 6) considering the instructional core; 7) planning an AI strategy; 8) establishing a task force to guide and support AI efforts; 9) building AI literacy for educators; and 10) updating AI policies and advocating for responsible use; and developing an organization-wide AI action plan.
The DOE was required to develop this toolkit pursuant to President Biden’s October 30, 2023, Executive Order on the Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence (“Executive Order”). This Executive Order was issued to promote the thoughtful responsible development of AI with appropriate guardrails by developing of federal standards for artificial intelligence (“AI”) use within public institutions and in connection with federal programs. California Department of Education’s previously released a resource entitled “Learning With AI, Learning About AI” https://www.cde.ca.gov/ci/pl/documents/cdeairesourcekit.pdf in September 2023, providing policy suggestions and guidance for the use of AI in the classroom and the safe use of the technology.
Liebert Cassidy Whitmore attorneys are closely monitoring guidance from the DOE and will provide updates to assist our clients with compliance. We are available to assist our clients in developing policies to promote responsible and ethical use of AI.
Artificial Intelligence and the FLSA After Recent DOL Guidance
Though technological innovation is always happening, in the past year there has been an almost inescapable reference to a decades-old science fiction term: AI, or Artificial Intelligence. Seen as a watershed moment of research and development in the past, AI is now a buzzword for content creation, software features, and product design. Whether you are on the internet or watching TV, AI seems to be everywhere. But some employers don’t realize that AI is making its way into the workplace, whether it is wanted or not. This means that regulation of this budding technology is inevitable.
On April 29, 2024, the Department of Labor’s Wage and Hour Division joined the fray to provide its analysis on emerging issues, publishing a Field Assistance Bulletin (“Bulletin”) concerning “Artificial Intelligence and Automated Systems in the Workplace under the Fair Labor Standards Act and Other Federal Labor Standards.” The bulletin discusses how AI can affect the workplace in relation to several federal laws, but dives a bit deeper into how it might interact with the Fair Labor Standards Act (“FLSA”). Specifically how it relates to these two FLSA issues: “Hours Worked” and “Calculating Wages Owed under the FLSA”, and we think both deserve a little more perspective.
Hours Worked and AI’s Impact on Employee Tracking – The DOL Bulletin
The Bulletin provides an overview of how all “hours worked” must be paid under the FLSA, grouping its discussion into AI’s impact on tracking work time, monitoring break time, waiting time, and employee travel. Each discussion point focuses on how AI now makes it easier and more tempting than ever, for employers to track an employee’s work performance.
The FLSA mandates employers pay covered employees at least the federal minimum wage for every hour worked, as well as overtime pay of one and one-half their regular rate of pay for each hour worked in excess of 40 hours in a workweek. See 29 U.S.C. §§ 206-207. In all cases, it is the duty of management to exercise control and ensure that work is not being performed when it does not want work to be performed. See 29 C.F.R. § 785.13. That makes enforcing schedules and tracking employee time essential for compliance and, if the employer knows or has reason to believe that work is being performed, it counts as hours worked. See 29 C.F.R. §§ 785.11, 785.12.
With AI improved employee tracking, it is easier than ever to recognize when employees are working and how much time they are spending on individual tasks. In 2022, Vice published an article exploring Amazon’s detailed warehouse employee tracking system that used employee’s handheld scanners to discern their actions, and which Amazon ultimately used to discipline employees for time spent “off task”. As the Bulletin recognizes, AI and employee monitoring tools are now more widely available and accurate, so that an employer can know precisely when an employee is idle and not performing tasks directly related to their job.
But “hours worked” under the FLSA are not always spent working. Short breaks and waiting time might require payment, even if the employee is not doing any actual work during those periods, depending on the circumstances. See 29 C.F.R. §§ 785.14 (noting that being engaged to wait is compensable time), 785.18 (noting that rest periods of short duration from five to 20 minutes must be counted as hours worked). Though part of the rationale for these rules is that such breaks and waiting time boost productivity and efficiency, the end-result is that measurable productivity and efficiency play no role in the calculation of “hours worked”. So though AI and an increasingly digital world are making it easier to track employees and their work performance down to the minute, employers cannot claw back “idle” time.
So what happens if an employer can definitively prove that an employee was not working at a certain time (using advanced AI tracking) and has a written policy prohibiting idle time while working? From an FLSA perspective, not much. With an increase in wearable smart technology, employers now have more tools that collect real time data that AI could use to classify activities as “work” or “idle” time, regardless of whether employees are working desk jobs or are in the field. Whether an activity is excluded from hours worked under the FLSA is a mixed question of fact and law, meaning that there is no one-size fits all solution and the details matter. But “hours worked” is not changing to reflect that AI might enable more that accurate tracking, so “idle” time remains a performance issue, rather than an FLSA one.
One area of the FLSA that AI may significantly impact is the defense of “de minimis” time. The de minimis time concept arose because sometimes, small periods of time spent on work related tasks could not be accurately recorded for payroll purposes. See 29 C.F.R. § 785.47. De minimis time has impacted cases where employees spent time “donning and doffing” protective gear and equipment, took time uploading data gathered during field work once returning home, and when logging into an employer’s time-keeping program. Under the de minimis doctrine, the employer bears the burden to satisfy a three-part test which considers: (1) the regularity of the additional work, (2) the aggregate amount of compensable time, and (3) the practical administrative difficulty of recording the additional time. But with the capability for increasingly accurate employee tracking and monitoring through AI, we may see the erosion of the de minimis doctrine, as situations involving uncertain and indefinite periods of work time become more rare.
So, while the FLSA may eventually change to reflect improved employee tracking abilities, for now the traditional rules on “hours worked” continue to apply.
Payroll and AI
The Bulletin also discusses how AI might impact the calculation of wages under the FLSA, aka payroll, due to increased automation. With the ability for AI systems to track and assess the amount or type of work an employee is performing in detail, AI systems can also recalculate and adjust pay rates in real time to reflect when an employee is completing certain tasks. For instance, if an employee earns a premium during work time spent in a certain location, or working out of class, an AI system might be able to track and log that without relying on an employee or supervisor to manually tag such an adjustment.
Despite the jump in technology, there are a few reasons to be wary about adopting an AI payroll system without close oversight. AI automation can be extremely useful for employers (and employees) to tackle time-heavy and rote tasks but can also have unintended consequences when complicated variables are at play. For instance, hiring systems using AI have faced backlash for unintentional discrimination. And during the early days of image generative AI systems, AI-generated images regularly displayed stereotypical and offensive things that it had not yet “learned” was incorrect. Unless you designed it, there is a lot unknown about how a given AI system works – it is a “black box” where inputs go in and outputs come out. AI systems may not properly account for variables, or can have a “bias” built in due to its designer’s own misunderstandings. So there are several reasons why an AI system might fail to address an unforeseen problem that requires a more “human” touch.
AI payroll systems, while hopefully not as prone to discrimination-related mistakes, still pose the danger of oversimplifying or failing to account for legal requirements, especially when their designers do not know what to watch out for. One hallmark of the FLSA is that for non-exempt employees, employers must pay employees overtime, at one and one-half times their “regular rate of pay”, for any time worked in a workweek in excess of 40 hours. Beyond the difficulties of tracking time, discussed above, the “regular rate of pay” causes multiple complications in the public sector because of the need to comply with local rules, collective bargaining agreements or memoranda of understanding, the FLSA, and more. And because the “regular rate of pay” includes “all remuneration” with certain exclusions, it is not always easy to determine which payments made to employees need to be included. If a payroll vendor is trying to craft a payroll system from the ground up, there are a lot of legal variables that aren’t readily obvious, and quite a few employers are going to have situations where legal advice is needed to ensure proper calculations.
So an AI payroll system vendor attempting to build their system without fully understanding or accounting for those changing variables may ultimately produce a payroll system that suffers from similar problems that traditionally offered automated payroll systems face. Even in “man-made” automated payroll systems, we regularly see payroll errors happen frequently due to human error, such as when a bonus is coded incorrectly and not counted in the regular rate of pay, when overtime is due for hours worked, and when certain cash in lieu payments are not included in the regular rate of pay. Add onto these issues that the designers of AI payroll systems might not know how to properly address both FLSA and MOU problems at the same time, and you can quickly have unintended underpayments (or overpayments) happening with an AI payroll program that provides a quick fix. And even if an AI payroll system was capable of “learning” what variables or documents to consider, and then seek them out, there is simply no guarantee that the AI payroll system would still be legally accurate without review.
In short, AI is likely to provide additional automation that makes it tempting to quickly adopt, but employers are going to want to double-check the work for accuracy. We heavily recommend, just like we do for all current payroll systems, regular audits and oversight of any payroll system using AI.
Future AI Uses in the FLSA Sphere
AI has the potential to drastically improve the productivity of workers, alter employee monitoring, and quite possibly eliminate the need for certain positions. One possibility is that AI will allow employees to hold multiple jobs, as rote tasks and data analysis become simpler and quicker to perform. If an employee works multiple job classifications for a single employer with different rates of pay, maybe the AI payroll system could automatically detect and accurately pay the employee the correct rate of pay for the time spent on each classification, as well as calculate their regular rate of pay to properly pay overtime.
Another possibility is that AI could become widely incorporated into wearable trackers issued to all employees. We already have law enforcement personnel using body-worn cameras, is it a stretch to have all employees wear some sort of similar tech that allows constant tracking during the workday? There are already hi-tech eyeglasses on the market that allow for video recording without much added bulk, and we would anticipate it will not take long for AI to become incorporated. Will the FLSA need to adapt so that there are more protections for “hours worked”? With more advanced AI technology creeping into everything, we might find out the answers to the above answers sooner rather than later.
The Adoption of Artificial Intelligence Tools and Technology and the Duty to Bargain
The Fourth Industrial Revolution will be an age of automation and analytics powered by Artificial Intelligence (“AI”). It promises futuristic realities with deep-level analytics, next-level automation, and omnipresent algorithmic workplace monitoring.
As AI tools and technology becomes more affordable and widely available, it is likely that public agencies, like other employers, will adopt AI in order to operate in a more efficient and cost-effective manner. As the public agency use of AI increases, it is unavoidable that the technology will impact employee working conditions and the method by which they perform their jobs and potentially, in the longer term, the nature of services provided by public employees and the size of public agencies.
These considerations should both interest and concern management. As public agencies begin to consider how to leverage AI, management must consider how to do so to the benefit the public and how to do so while accounting for and complying with their statutory collective bargaining obligations.
This article addresses situations in which public agencies may use AI and how the adoption and implementation of such tools and technology will affect agencies’ duty to bargain changes related to wages, hours, terms and conditions of employment.
AI WILL CHANGE THE WAY WE WORK – GET USED TO IT!
The role of automation and the use of analytics in the workplace is not new. However, the 2021 release of OpenAI’s ChatGPT ushered in a new era of AI with a more powerful product and new possibilities and use cases. While the AI tools available today are even more powerful than the 2021 version of ChatGPT, the adoption of such technology and its application by public agencies will likely be slowed, but not necessarily stopped, by applicable statutory obligations that require negotiation on certain effects or impacts of management decisions, if not the decisions themselves.
EMPLOYEE CONCERNS ABOUT AI
Despite the barriers to the immediate adoption of AI by public agencies, many public employees are reasonably concerned about the introduction of AI into the workplace.
Public employees, like employees in the private sector, fear that AI will result in mass layoffs and workforce reductions or job replacement, re-categorization, or re-assignment. Public employees are also concerned about less fundamental, but nevertheless significant changes to working conditions precipitated by AI, such as mandatory training on and use of AI and AI-powered surveillance.
As witnessed in recent and high profile labor disputes with longshoreman on the East Coast and earlier strikes in Hollywood with screen actors and writers, use of automation and AI and demands by workers for protections against such technology were key issues in bargaining.
While fears about widespread layoffs and workforce reductions in the public sector are likely overstated at present and not a certainty in the immediate future, one thing that is certain is that change is coming to workplaces, including public agency workplaces. A recent study predicted that, while only nine percent (9%) of jobs presently face a high risk of reduction or replacement due to automation or AI, approximately 60% of jobs involve duties, functions or tasks that could be automated or performed using AI tools or technology.
LEGISLATIVE AND EXECUTIVE RESPONSE TO PUBLIC AGENCY USE OF AI
In California, the Legislative and Executive branches are beginning to grapple with the use of AI in workplaces, including public agency workplaces.
The recently concluded legislative term included a number of AI-related bills, including several that, if enacted, would have affected public agencies and their use of AI. One bill, Senate Bill 1220, proposed to protect public employee jobs by prohibiting public agencies from using AI tools and technologies to automate functions and tasks performed by employees in call centers.
Governor Newsom’s veto message regarding this bill was instructive. In the message, he stated the following:
Technology can and should enhance the experience of the workforce – by making work more efficient and pushing us to attain new heights of achievement and innovation. At the same time, we must consider appropriate guardrails and control the risks posed by this technology.
Governor Newsom then explained that he signed Executive Order N-12-23 to develop responsible AI deployment in the state and that the state would be issuing forthcoming criteria to evaluate the impact of AI on public employees.
As a result of the Governor’s veto, public agencies may continue to deploy AI tools and technology to perform the duties, functions and tasks of public call center workers. However, this is the beginning of the story and not the end and there is likely to be similar, or even more expansive, legislative introduced in the future that is designed to protect public employee jobs and regulate the use of AI by public agencies.
RESPONSE BY MANAGEMENT AND THE DUTY TO MEET AND CONFER
While public agencies have the right and obligation to direct their workforces, this right is not without limitation.
Public agencies have an obligation to meet and confer in good faith with employee organizations regarding changes to wages, hours, and other terms and conditions of employment that affect the employees that they represent.
When it comes to decisions to adopt new AI tools and technology, public agencies must carefully consider whether the decision affects a matter within the scope of representation. Agencies must refrain from making any change to the terms or conditions of represented employees’ employment without notifying the employee organization of the change and negotiating the change. (County of Santa Clara (2022) PERB Decision No. 2820-M.) Agencies that unilaterally make such changes risk the employee organization filing an unfair labor practice and the Public Employment Relations Board (“PERB”) undoing the change, potentially at great expense to the agency.
As AI tools and technology become more widespread and widely available, public agencies that adopt such tools and technology should be mindful of their the duty to meet and confer with employee organizations before implementing any decisions that affect or might affect the terms and conditions of employees’ employment.
CONSIDERATIONS BEFORE DECIDING TO IMPLEMENT AI
Once a public agency makes a decision to implement an AI tool that effects a matter within the scope of representation, the agency must provide the employee organization with notice and an opportunity to meet and confer regarding the changes to matters within the scope of representation. (Gov. Code §§ 3501, 3505.)
Adopting and implementing AI tools will likely require employers to engage in meet and confer on a wide range of subjects, including, but not limited to, where the agency intends to impose new training requirements related to AI (See City of Sacramento (2020) PERB Decision No 2745-M, pp. 17-20) or where the agency intends to use AI to monitor the workplace and worker conduct and productivity. (See Rio Hondo Community College District (2013) PERB Decision No. 2313, pp. 14-16.)
Where the underlying decision is a non-negotiable management right or prerogative, a public agency may seek clarification from the employee organization as to what exactly the employee organization proposes to bargain in order to determine whether the subject identified by the employee organization is negotiable.
In Compton Community College District (1989) PERB Decision No. 720, pp. 14-15, PERB stressed that an employer may implement a nonnegotiable management decision prior to completing effects bargaining in the following circumstances:
- The implementation date is based on an immutable deadline “or an important managerial interest, such that a delay in implementation beyond the date chosen would effectively undermine the employer’s right to make the nonnegotiable decision”;
- The employer provides sufficient notice of the decision and advance notice of the implementation date “to allow for meaningful negotiations prior to implementation; and
- The employer negotiates in good faith prior to implementation and continues to negotiate in good faith after implementation as to those subjects not necessarily resolved by virtue of the implementation.
Public agencies should be prepared to provide notice of decisions involving the adoption and implementation of requirements related to AI or technology that relies on AI and be prepared to engage in meaningful negotiations on such decisions, or the effects or impacts of that decision.
FUTURE CHANGES TO WORK AND WORKFORCES
Looking forward, public agencies should consider more profound changes that AI may have on public agencies, including the services performed by public employees and the size of public agency workforces.
The adoption and use of AI tools and technology may, at some point, cause or result in layoffs, work force reductions and restructurings in public employee job classifications that perform functions and tasks that lend themselves to automation or performance by AI, such as call center workers.
Such significant changes will undoubtedly cause employee organizations to request to negotiate public agency decisions to adopt tools or technologies that have such a disruptive capacity or, at a minimum, the effects or impacts of the decisions to do so.
Moving forward and into this new age, it is more important than ever for public agencies to remember that old rules still apply and they must discharge their statutory obligations as they relate to these new and powerful AI tools and technology.
California’s New Worker Freedom from Employer Intimidation Act
Senate Bill (SB) 399, the “California Worker Freedom from Employer Intimidation Act” (“Act”), will prohibit compelled attendance at employer-mandated meetings to discuss political and religious matters, including the decision to join or support a labor union. The Act adds the new Labor Code section 1137, and is effective January 1, 2025.
Prohibition Against Employer-Mandated Political and Religious Meetings:
The Act strictly prohibits employer-mandated meetings, sometimes referred to as “captive audience meetings,” in relation to a union’s organizing effort, or in which employees are required to attend and listen to the employer’s opinion about religious or political matters, including the decision to join or support a labor organization. A meeting is considered mandatory if an employee is subject to “discharge, discrimination, retaliation, or any other adverse action” because the employee declines to attend the meeting. The prohibition also applies where an employee declines to receive or listen to communications about the employer’s opinion about political or religious matters. Under the Act, “political matters” include matters relating to elections for political office, political parties, legislation, regulation, and the decision to join or support any political party or political or labor organization. “Religious matters” include matters relating to religious affiliation and practice and the decision to join or support any religious organization or association.
No Adverse Action for Failure to Attend:
If an employee is working at the time of the meeting and elects not to attend, they must continue to be paid while the meeting is held.
Employers cannot subject, or threaten to subject, an employee to discharge, discrimination, retaliation, or any other adverse action because the employee declines to attend an employer-sponsored meeting covered by the Act, or declines to listen to any communications regarding the employer’s opinion about religious or political matters.
For purposes of the Act, the definition of employer includes an agent, representative, designee, or person or group of persons acting directly or indirectly on behalf of or in the interest of an employer with the employer’s consent.
Applicability of the New Law and Exemptions:
In addition to applying to most private employers, the Act applies to all California branches of state government, cities, counties, special districts, political subdivisions of the state, and public school districts. However, the Act expressly does not apply to:
- An educational institution requiring a student or instructor to attend lectures on political or religious matters that are part of the regular coursework at the institution; or
- When an employer requires employees to undergo training to comply with the employer’s legal obligations, including obligations under civil rights laws and occupational safety and health laws.
The Act expressly does not prohibit an employer from communicating any of the following:
- Any information that the employer is required by law to communicate, but only to the extent of that legal requirement.
- Any information that is necessary to perform their job duties.
- An institution of higher education from participating in any communications with its employees that are part of coursework, any symposia, or an academic program at that institution.
- A public employer from communicating information related to a policy of the public entity or any law or regulation that the public entity is responsible for administering.
Penalties:
An employer who violates the new Act is subject to a civil penalty of $500. The California Labor Commission is authorized to enforce the Act.
In addition, any employee who has suffered a violation of the bill’s provisions is authorized to bring a civil action, and petition for injunctive relief.
Current Public Employer Restrictions on Political and Religious Activity in the Workplace:
California public employers are already subject to significant restrictions on political and religious activity in the workplace, and therefore the Act does not create significant changes for the public sector. For example:
1. Public officials in cities, counties, state agencies, political subdivisions, and special districts are prohibited from:
- Using their authority to influence the outcome of a person’s position, promotion, or compensation within agency;
- Soliciting political contributions from employees, except when part of solicitation of a significant segment of the public; and
- Participating in political activities of any kind while in uniform.[1]
Furthermore, by establishing rules and regulations, agencies may, and often do, prohibit or restrict officers and employees from engaging in political activity during working hours or on agency premises.[2]
2. Public employers cannot discourage public employees and applicants from:
- Becoming or remaining members of a labor organization,
- Authorizing labor representation, or
- Authorizing dues deduction for a labor organization.[3]
Of note, the Act expressly carves out an exception for a public employer holding a new employee orientation, as defined in Government Code Section 3555.5, or a provider holding an orientation as described in Welfare and Institutions Code Section 12301.24.
3. Before disseminating mass communications to public employees or applicants concerning employees’ rights to join or support a labor organization, or to refrain from joining or supporting a labor organization, public employers are required to meet and confer with the exclusive representative in advance regarding the content of the mass communication. If the public employer and the exclusive representative do not come to agreement on the content of the employer’s mass communication, the public employer must simultaneously distribute with its communication a separate communication of reasonable length submitted by the labor organization.[4]
4. The Establishment Clause of the U.S. Constitution, and provisions of the California Constitution, prohibit local government agencies from promoting or endorsing religion, and therefore a public employer cannot force employees to participate in religious activities, or promote one religion over another.
Potential Legal Challenge:
SB 399 will likely be subject to a legal challenge alleging that the Act violates First Amendment rights under the United States Constitution. In anticipation of such legal challenges, the Act contains a section that automatically severs any provision of the Act held legally invalid.
Next Steps for Employers:
While the Act has little impact on public employers, the new legislation creates an opportunity to review and update applicable policies and train supervisors regarding restrictions on political and religious activity in the workplace, including the new restrictions on mandatory, “captive audience” meetings. Attendance at any meetings that are covered by the Act should be strictly voluntary (and existing law strongly counsels against an agency hosting even non-mandatory employee meetings on religion or partisan politics). Employers are encouraged to reach out to their trusted legal advisors with any questions about SB 399.
For more information about new labor and employment legislation that will affect public agency employers, please join LCW for our Public Agency Legislative Roundup Webinar on October 24, 2024.
[1] Government Code §§ 3201-3209.
[2] Government Code § 3207.
[3] Government Code § 3550.
[4] Government Code § 3553.
Five Things to Know Before Bringing Your Dog (Or Any Pet!) to Work
This post originally appeared in June 2023 and has been reviewed and updated for October 2024.
- Be Purr-Real
Generally, your boss can say no to your pet. However, California requires employers to accommodate employees with assistive animals, such as service dogs (or miniature horses) and emotional support animals. So, it might be tempting to claim that your pet is an assistive animal, even if they are not. DO NOT DO THIS!
Making a false claim that your pet is an assistive animal is disrespectful to people living with disabilities. Instead of boosting morale, misrepresenting your pets could lead to strained relationships with coworkers who may view it as unfair or a breach of trust.
Instead, honestly ask your supervisor if you can bring your pet. You can discuss the potential benefits and positive effects that a pet’s visit can have on the workplace. Be prepared to address any potential concerns such as allergies, safety, or distractions. Assure them that you will take full responsibility for your pet’s behavior and well-being, and propose practical solutions to address any valid concerns.
2. Check the Paw-licies
Check if your workplace has a pet policy. Familiarizing yourself with this policy will help you understand the guidelines and expectations surrounding pets in the workplace. Additionally, it is crucial that you consider local ordinances and regulations that may apply to non-assistive pets in the workplace. Different jurisdictions may have specific requirements or restrictions that you need to be aware of to ensure compliance. These regulations could also depend on the type of work you do. For example, it is likely less of an issue to bring your dog to a Parks and Recreation program than it would be to bring your dog to the kitchen for Meals on Wheels.
3. Make Sure Your Pet is Vetted
We are not talking about going to the vet—though that is also important! Vetting your pet means making sure that your pet is up to the challenge. Pets can experience stress when exposed to unfamiliar surroundings, noises, and interactions. If your pet will be in physical contact with others, make sure that your pet has a friendly disposition, is well trained, and can socialize with humans and other animals.
You need to evaluate your pet’s temperament and personality and make honest assessments. Remember, you promised to be personally responsible for your pet’s behavior. If your pet is not ready for the office life, results could be disastrous. Keep in mind that you can be liable for injuries even if you did not intend to cause any harm. Beyond property damage or injuries, a bad experience at the office will stress your pet and could leave lasting trauma.
4. Bear in Mind, We’re Not All Party Animals
Pets can inspire either adoration or apprehension. In some cases, our pets can inspire both! Some people might want to cuddle with your furry friend but their allergies say otherwise. Be prepared to set up “no pet” zones for people who cannot be around animals.
Fear and dislike of pets are also valid emotions experienced by many. These feelings sometimes stem from past traumas, cultural differences, or personal preferences.
If you have an exotic pet (like spiders or snakes), you are probably already aware that your pet might scare some people. In these circumstances, you may be liable for injuries even if it was the result of your coworker’s fearful reaction to the pet, and not your pet actually doing anything harmful.
Before bringing your pet to work, make sure everyone is on board. This applies to all kinds of pets. Remember that your coworkers did not sign up for this. Make it clear to them that you understand that your pet would be an unexpected addition to the work environment. Recognizing a hesitant coworker’s concerns might even put them on your side.
5. Being Top Dog Comes With Responsibility
Employers—understand that the buck stops with you. An employee or a member of the public can initiate legal action against you for injuries caused by your employee’s pet, even if your employee promised to take full responsibility. This is an inherent, unavoidable risk when allowing pets in the workplace.
Mitigate the risk of unwanted consequences as much as you can. It helps to have a carefully crafted pet policy. This policy should outline expectations from your employees and any restrictions (such as pet free zones). It should also make clear that your employees are responsible for their pet’s actions. Be prepared to resolve disputes and complaints fairly and professionally. When in doubt, ask a lawyer!
The Time to Audit Your Labor Agreements is Now
Do you plan to enter labor negotiations in the spring? If so, fall is the perfect time to audit your labor agreements.
A labor agreement audit is a legal compliance review and internal analysis of contract language. Regular audits of an agency’s labor agreements are important for many reasons:
- Legal Compliance: Labor, leaves, wage and hour, and pension laws change over time. Regular review of your agreements ensures that your agency can address non-compliance issues, which can help an agency avoid litigation and potential fines.
- Clarifying Language: Labor agreements often contain ambiguous and even contradictory provisions. An audit can help identify provisions that may be subject to multiple interpretations so that the parties can negotiate clarifying language and ensure that both parties clearly understand the terms of the agreement. An audit can also help identify areas that are not addressed by the contract, such as what happens when a paid holiday falls on an employee’s regular day off, how much time in advance must employees request vacation, or whether there is a waiting period before temporary upgrade pay applies. Identifying these gaps allows the parties to negotiate clarifying provisions in forthcoming negotiations.
- Benefits Compliance: Benefit law, including the Affordable Care Act and the Public Employees’ Retirement Law, can be complicated and sometimes dense. Non-compliance can lead to fines. For example, for agencies in CalPERS, 2022 legislation shifted financial liability from retirees to their employers for misreporting employee compensation if certain conditions are met. One such condition includes whether a non-pensionable compensation item was included in a Memorandum of Understanding or Collective Bargaining Agreement. CalPERS actively audits agencies, and agencies can preempt a CalPERS audit by proactively addressing non-compliance issues.
- Wage and Hour Issues: Agencies should review their agreements and labor practices for wage and hour compliance. This includes working hours, rest and meal breaks, overtime compensation, and properly defining the work period.
- Labor Relations: Agencies should review language regarding various labor relations matters, such as dues deduction, no strike provisions, union access rights, and union release time to ensure they are addressed in detail in the agreement, and to ensure they are in compliance with statutory requirements as well as changes created by case law. Agencies should review grievance procedure provisions to ensure that time limits, appeal procedures, and grievability are clearly spelled out. Finally, union waivers of the right to meet and confer over a change within scope of bargaining must be clear and unmistakable in order to be enforceable. Agencies should review whether waivers meet legal requirements to avoid future challenges.
Au audit is most effective when an internal examiner, such as an analyst in Human Resources or Finance, partners with an outside legal auditor to review for legal and payroll compliance. Payroll and pension reporting errors in particular may not be apparent from the language of the agreement. Such a partnership can enable internal investigation to ensure that compliance issues are properly addressed within the agreement, within agency practices, and within the payroll system.
For more detailed discussion on conducting MOU and payroll audits for CalPERS and wage and hour compliance, register here to attend LCW’s upcoming webinar on “Addressing FLSA and CalPERS Compliance in a Single MOU/Payroll Audit” presented by Lisa Charbonneau and Michael Youril on October 10th 2024 at 10 am.
A Refresher On Less Common Leaves For Employees
You have probably heard a lot about leaves under the Family and Medical Leave Act (FMLA), California Family Rights Act (CRFA), and other well-established leave laws, but below are some less common types of leave that employers should recognize and cover in their policies.
SCHOOL ACTIVITY
The Family School Partnership Act provides employees the option of taking leave to participate in their children’s education. (Lab. Code, § 230.8.) Under the Act, an employee who is a parent (“parent” includes a parent, guardian, stepparent, foster parent, or grandparent of, or a person who stands in loco parentis to, a child) having custody of a child in kindergarten or grades one through twelve, including a licensed child care facility, can take off up to forty hours a year for the purpose of certain child care or school-related activities. Covered activities include finding, enrolling, or reenrolling a child in a school or with a licensed child care provider; time off for this purpose is limited to eight hours in a calendar month.
Covered activities also include addressing a child care provider or school emergency, including a request that the child be picked up from school/child care, behavioral/discipline problems, closure or unexpected unavailability of the school (excluding planned holidays), or a natural disaster, field trips, open houses, and extracurricular activities. (Lab. Code, § 230.8.)
Employers must also provide an employee who is the permanent guardian of a child in kindergarten through twelfth grade leave to attend a school meeting after the employee’s child has been suspended. (Lab. Code, § 230.7.)
BEREAVEMENT LEAVE
Since Assembly Bill 1949 amended the California Fair Employment and Housing Act (FEHA) on January 1, 2023, eligible employees have the right to take up to five days of bereavement leave upon the death of a covered family member. (Gov. Code, § 12945.7(b).)
AB 1949 applies to all public agencies and all other employers with five or more employees. Employees are eligible for statutory bereavement leave if they have been employed for at least 30 days before the leave commences. Bereavement leave may be taken for the death of a family member, which means a spouse, child, parent, sibling, grandparent, grandchild, domestic partner, or parent-in-law. The bereavement leave must be completed within 3 months of the date of death but need not be taken consecutively. (Gov. Code, § 12945.7(a)-(d).)
This statutory leave works in conjunction with any existing bereavement leave policies an employer may have. Employers that have no bereavement leave policy, or a policy that provides less than five days, must provide no less than five days of leave. (Gov. Code, § 12945.7(a), (e).)
LEAVE FOR VICTIMS OF CRIME AND ABUSE
Under Labor Code section 230 and section 230.1, an employee who is a victim of certain forms of crime or abuse is entitled to take time off from work under certain circumstances. An employee is eligible for leave if they are:
(a) a victim of stalking, domestic violence, or sexual assault (each of which is defined specifically by statute);
(b) a victim of a crime that caused physical injury, or that caused mental injury and a threat of physical injury; or
(c) if the employee’s immediate family member is deceased as the direct result of a crime.
(Lab. Code, § 230(j)(6).)
Eligible employees may take time off to seek relief, such as to seek a temporary restraining order, or other assistance to help safeguard the “health, safety, or welfare” of the employee or his or her child. (Lab. Code, § 230(c).)
An employer with 25 or more employees also must allow eligible employees time off from work for any of the following purposes:
(1) to seek medical attention for injuries caused by crime or abuse;
(2) to obtain services from a domestic violence shelter, program, rape crisis center, or victim services organization as a result of crime or abuse;
(3) to obtain psychological counseling or mental health services related to an experience of crime or abuse; or
(4) to participate in safety planning and take other actions to increase safety from future crime or abuse, including temporary or permanent relocation. (Lab. Code, § 230.1(a).)
Employees must provide reasonable advance notice of their intent to take leave under either of these statutes, unless the advance notice is not feasible. (Lab. Code, § 230(d)(1); Lab. Code, § 230.1(b)(2).)
JURY DUTY AND WITNESS TESIMONY UNDER SUBPOENA
Federal and California laws provide employees with leaves of absence for jury service. The Federal Jury System Improvement Act of 1978 (“the Jury Act”) provides employees with leave for jury service in federal court. Under the Jury Act, employees are entitled to time off for jury duty “in any court of the United States” which includes service on a grand jury and trial jury. (28 U.S.C. § 1875(a).)
Upon completing jury service, the employee must be reinstated to the same position he or she occupied before the leave. Employers are not required to pay employees during jury service under federal law, unless the employer had a policy of paying employees for jury service at the time the employee’s service began. (28 U.S.C. § 1875(c).)
Similarly, employees are protected under California law against discharge, discrimination, or retaliation for taking time off to serve on a jury. An employee serving jury duty is not entitled to pay under California law, but has the right to use vacation, personal leave or compensatory time off pursuant to the employer’s leave policies.
In addition, if an employee of a public agency is subpoenaed to testify as a witness in a case where he or she is not a party or an expert witness, and the case is not brought about because of the employee’s own misconduct, the public employer must give the employee a leave of absence with pay (minus jury or witness fees) for the appearance if the employer has a policy granting this pursuant to Government Code section 1230. (Gov. Code, §§ 1230, 1230.1.)
Wage & Hour: Evaluating Exempt Status
We are excited to introduce our video series – Wage & Hour Issues in the Workplace. In these videos, members of LCW’s Wage & Hour practice group will provide various tips that can be implemented in your workplace. We hope that you will find these clips informative and helpful!