Mid-Year Employment Law Update
Several laws that were signed last year took effect on July 1, including the minimum wage increase. Here’s a mid-year employment law update.
Employers should take note of the laws below and revise existing business practices accordingly.
For CalChamber members, HRCalifornia was updated on July 1 to reflect these new laws.
Employers should also be aware of significant decisions from the United States Supreme Court and the California Supreme Court in important employment law cases.
Minimum Wage
On July 1, 2014, California’s minimum wage increased to $9 per hour from the existing minimum wage of $8 per hour. This was the first increase to the state minimum wage since January 1, 2008. The minimum wage will increase a second time to $10 per hour on January 1, 2016.
Employers should examine all pay practices that might be affected by the minimum wage increase. The minimum wage increase affects several employer practices, including:
• Overtime rates of pay;
• Exempt/nonexempt classification: The minimum salary requirement for administrative, professional and executive exemptions increases to $3,120 per month;
• Meal and lodging credits;
• Piece-rate pay: Employers must ensure that piece-rate employees receive the minimum wage for each hour worked;
• Draws against future commissions, which must be equal to at least the minimum wage and overtime due to the employee for each pay period (unless the employee is exempt);
• Tools and equipment: Only employees whose wages are at least two times the minimum wage can be required to provide and maintain hand tools and equipment customarily required by the trade or craft in which they work; and
• The subminimum wage rate.
Notice Requirements
Employers need to comply with all notice requirements that are affected by the minimum wage increase.
• Post California’s official Minimum Wage Order (MW-2014) in a conspicuous location frequented by employees. The Department of Industrial Relations (DIR) updated the official notice, which now includes both the July increase and the second increase for January 1, 2016.
• Post the correct industry Wage Order(s) for your business. The DIR recently revised all 17 industry Wage Orders. The DIR amended sections 4(A) and 10(C) in orders No. 1 through No. 15, and sections 4(A) and 9(C) in order No. 16. Employers must post a copy of the industry Wage Order(s) that applies to their business in a place where employees can read it easily. Use the correct industry Wage Order(s), which now bear a revision date of “07/2014.”
• Provide each employee with written, itemized wage statements at the time wages are paid. The wage statements must reflect all applicable hourly rates in effect during the pay period, and reflect any increase due to the new minimum wage (Labor Code Section 226).
Paid Family Leave Benefits
Effective July 1, SB 770 expands Paid Family Leave (PFL) wage-replacement benefits for employees to include benefits for time taken off to care for a seriously ill grandparent, grandchild, sibling or parent-in-law.
PFL does not create the right to a leave of absence, but provides California workers with some financial compensation/wage replacement during a qualifying absence.
Background Checks
Effective July 1, AB 218 prohibits a state or local agency from asking an applicant to disclose information regarding a criminal conviction until after the agency determines the applicant meets minimum employment qualifications. There are specified exceptions, such as when a criminal history background check is otherwise required by law for the position.
At the local level, San Francisco’s Fair Chance Ordinance takes effect August 13, 2014. This ordinance limits the use of criminal history information by San Francisco employers and also requires employers to post a new notice.
Workers’ Compensation Predesignation of Physician
Workers’ compensation regulations concerning predesignation of personal physicians took effect July 1.
According to the DIR, the final regulations change the criteria that an employee must meet to predesignate a personal physician or medical group for work-related injuries or illnesses to conform to SB 863 (which was passed in 2012).
DIR also revised the forms used for predesignating a personal physician or a personal chiropractor and the time of hire pamphlet.
Work Sharing Plans
The California Employment Development Department (EDD) uses a special work sharing program to help companies avoid mass layoffs by sharing the available work among employees.
Requirements for certain work sharing plans were changed as a result of AB 1392, which took effect on July 1, 2014. Work sharing plans effective on or after July 6, 2014, must meet the additional requirements. Work sharing plans effective on or prior to July 5, 2014, will continue under the law as it existed prior to the legislation that took effect on July 1, 2014.
The EDD’s director still must approve plans. For more information about the work sharing program, visit EDD’s work sharing webpage.
CalChamber Alert Mobile App – Updates on Proposed Laws/Regulations
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Supreme Court Activity at Federal and State Levels
In the last couple of months, a flurry of activity from the United States and California Supreme Courts in labor and employment cases resulted in significant opinions. Below, we summarize some of the more important opinions issued so far this year.
United States Supreme Court Cases
National Labor Relations Board v. Noel Canning: NLRB Appointments Rejected
• The U.S. Supreme Court unanimously concluded that President Obama’s “recess” appointments to the National Labor Relations Board (NLRB) were invalid. The case is important for employers because it calls into question the validity of several key NLRB decisions issued during the time that it did not have a validly composed board (from January 4, 2012, to August 3, 2013). The decisions applied to employers in both union and non-union settings and involved issues relating to workplace investigations, confidentiality provisions, discipline of employees for social media usage and employer handbook policies, among other topics.
Sandifer v. U.S. Steel Corp.: Time Spent Changing Clothes Not Compensable
• The U.S. Supreme Court ruled that unionized steelworkers were not entitled to compensation for time spent putting on and taking off certain flame-retardant safety gear required for their job. The case is limited in scope to union workplaces with collective bargaining agreements that govern whether time spent changing clothes at the beginning or end of a workday will be compensated.
Harris v. Quinn: Union Fees Knocked Down in Limited Decision
• The U.S. Supreme Court ruled that compulsory union dues violated a group of workers’ First Amendment free speech rights. The Court’s ruling is limited because the Court in this case did not consider the Illinois state homecare workers to be “full-fledged public employees.” Instead, the Court distinguished them as “partial-public employees.” The Court declined to overturn a nearly 40-year-old Supreme Court decision which held that unions can collect dues from public-sector employees without violating the First Amendment so long as the dues are used for collective bargaining and other activities germane to the union’s duties as a collective bargaining representative.
Lawson v. FMR LLC: Court Extends Federal Whistleblower Protections
• The U.S. Supreme Court ruled that the whistleblower protections of the Sarbanes-Oxley Act (SOX) extend to employees of private-sector companies that contract and subcontract with public-sector companies.
California Supreme Court Cases
Salas v. Sierra Chemical Co.: Protections for Unauthorized Workers Using False IDs
• The California Supreme Court allowed an unauthorized worker who had been using a false Social Security number to proceed with his disability discrimination and retaliation lawsuit. The employer sought to have the case dismissed using the doctrine of “unclean hands” – an argument that the employee’s wrongdoing should bar his/her lawsuit. The employer also argued that federal immigration law pre-empted Salas’ lawsuit.
• The state Supreme Court allowed the lawsuit to proceed because state law provides job protections “regardless of immigration status.” The court allowed back pay damages up until the employer discovered the employee was unauthorized to work.
Paratransit v. Unemployment Insurance Appeals Board: Refusal to Sign Disciplinary Document No Bar to UI Claim
• The California Supreme Court ruled that an employee’s refusal to sign a disciplinary notice was not misconduct but was, “at most, a good faith error in judgment” that did not disqualify him from receiving unemployment insurance (UI) benefits. The employee was asked to sign a disciplinary notice confirming receipt, but not admitting any wrongdoing – a requirement that was imposed by the governing collective bargaining agreement. The employee repeatedly refused to sign the disciplinary notice and was terminated for insubordination.
• Under the Unemployment Insurance Code, an individual is ineligible for UI benefits if he/she was discharged for misconduct, but the state Supreme Court ruled that this employee was not precluded from receiving UI benefits.
Duran v. U.S. Bank National Association: Employer Friendly Ruling on Class-Action Lawsuits
• In an exempt/non-exempt misclassification lawsuit, the California Supreme Court ruled that a class-action trial must allow the employer the opportunity to present affirmative defenses, even when the defenses touch upon individual issues. The court also criticized the use of sampling statistics to extrapolate class-wide liability from a small sample if those statistics prevent an employer from showing that some class members are, in fact, exempt.
Iskanian v. CLS Transportation: Class-Action Waivers in Arbitration Agreements
• The California Supreme Court issued a mixed decision relating to class-action waivers in employment arbitration agreements. Although the court found that class-action waivers in arbitration agreements can be enforceable, the court also found that PAGA (Private Attorneys General Act) representative-action waivers are not enforceable and are against public policy.
Ayala v. Antelope Valley Newspapers, Inc.:Independent Contractor Lawsuit – Ability to Certify Class Action
• This case involved a class-action lawsuit brought by a group of newspaper carriers who claimed they were misclassified as independent contractors. The state Supreme Court, agreeing with long-standing precedent, held that whether a common law employer/employee relationship exists depends primarily on the degree of a company’s right to control how the end result is achieved. If the company retains the right to control the manner and means of accomplishing the end result, an employment relationship may be found.
• In determining whether to certify a class in an independent contractor case, the question, according to the court, is not whether the hirer actually exercised the right to control, but whether the hirer had uniform legal authority to exercise control. The case holding is narrow and fact-specific.
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If you have any questions about these new laws, give Bressler & Company at 559.924.1225.
This article was taken from the Lemoore Chamber of Commerce e-mail newsletter dated 7/17/2014.
