Category Archives: Uncategorized

Source: Wendel Rosen’s Construction Practice Group Receives First Tier Ranking by U.S. News and World Reports

California employers will soon be subject to a new equal pay law that will create a much stricter standard for gender pay equity. Signed into law on October 6, 2015, the new law is considered the most aggressive equal pay law in the nation. Employers will want to begin preparing immediately for its impact – as well as high potential for future laws regarding pay equality based on race, disability, and other protected classes.

What Does the New Law Do?
The new law (SB 358) is actually an amendment to an existing gender pay equity law. There are already state and federal laws that require gender pay equity. The amendment is designed to make it easier to enforce the equal pay rules. The new law prohibits an employer from paying employees of one sex lower than employees of the opposite sex for “substantially similar work, when viewed as a composite of skill, effort, and responsibility, and performed under similar working conditions.”

Before the amendment, an employee had to demonstrate that he or she was not being paid at the same rate as someone of the opposite sex at the same establishment for “equal work.” The “same establishment” has been deleted, and the employee need only show he or she is not being paid at the same rate for “substantially similar work.” In other words, the employees need not be in the same exact job or the same geographic location.

Exceptions Available To Employers
If a wage differential exists between employees of the opposite sex, the law will allow employers to demonstrate the purpose of any difference that is based on:
• a seniority system;
• a merit system;
• a system that measures earnings by quality or quantity of production; or
• some other bona fide factor other than sex such as education, training, or experience.

If an employer tries to justify a pay differential under this law as a “bona fide factor other than sex”, it must show that the factor is not based on or derived from a sex-based differential in compensation, is job-related with respect to the position in question, and is consistent with a business necessity.

“Business necessity” is defined as an overriding legitimate business purpose such that the factor relied upon effectively fulfills the business purpose it is supposed to serve. This exception will not apply if the employee can show that an alternative practice exists that would serve the same business purpose without producing the wage differential.

Remedies and Enforcement
An employee may seek to enforce an unequal pay claim with California’s Labor Commissioner or through a civil lawsuit. An employee who is successful can recover the pay differential plus an additional equal amount as liquidated damages. Employees who file lawsuits can also recover interest, litigation costs, and attorneys’ fees.

An agreement by the employee to work at a lower rate of pay will not bar such a claim or lawsuit.

“Wage Transparency” Required
The new law also bars employers from prohibiting employees from disclosing their own wages to others, discussing their wages, or inquiring about the wages of another employee.

Many employers were already mindful about not limiting employees’ ability to discuss the “terms and conditions of employment,” but this is a good reminder.

The new law does not require that the employer disclose another employee’s wages or that an employee disclose his or her own wages in response to a co-worker’s inquiry.

Action Items
The first step is a salary/pay rate review. Employers should determine if any differences exist for pay rates for the same or similar jobs that are tied to gender. If disparities exist, check to see whether they can be justified within the new law. Whenever an employer is reviewing pay practices (read: potential exposure to wage and hour claims), we recommend that the analysis be conducted with the advice and assistance of an attorney (read:  attorney-client privilege).

Employers should also reassess hiring and compensation practices to ensure sufficient documentation. The reasons why an employee is hired at a different salary than another must be explained. For example, a new-hire’s wage could be dictated by the current job market, the financial status of the company, the outcome of salary negotiations, or competitive offers from other companies. The company’s personnel documents should confirm the reason, and document any / every factor that led to raises down the line.

Final Comment

This may be the issue that finally pushes me to bust out a separate blog for commentary! The aggressive comments I have seen about this law –ignoring the fact it doesn’t even go far enough when it comes to differentials in pay based on race and disability, to name a few—are shocking.For now, we can have coffee and discuss in more detail.

On Friday, October 2, 2015, Governor Brown signed AB 1506 – a “pro-employer” law (!). But . . . well, “meh.”

To slightly paraphrase the official Legislative Counsel Digest, current California law requires an employer to provide employees with certain information regarding wages, such as the inclusive dates of the period for which the employee is paid and the name and address of the legal entity that is the employer, either semimonthly or at the time of each wage payment. The law did not allow an employer a “cure period” when an employer discovered mistakes – an employee could simply bring an action.

AB 1506 – which is effective immediately – changes things a wee bit. The law provides an employer with the right to cure a violation of the rules: the requirement that an employer provide its employees with the inclusive dates of the pay period and the name and address of the legal entity that is the employer before an employee may bring a civil action. The bill provides that a violation is only considered cured upon a showing that the employer has provided a fully compliant, itemized wage statement to each aggrieved employee, as specified. The bill would limit the employer’s right to cure with respect to the specified violations once in a 12-month period, as specified.

So great, right? Well, it is nice to have something in the wage and hour rules that an employer can cure when a mistake is made – but to offer some rare commentary, I view this as one of those rules where the cure opportunity is kind of “meh.” I’d be more excited about the opportunity to cure alleged violations where employers have historically had troubles – and not always because of some nefarious, evil impetus, but rather because the wage and hour rules are confusing! Like how about a cure where the Administrative Exemption was mis-applied, or the Learned Profession Exemption, or any exemption with “factors” that are subject to subjective analysis (in my humble opinion).   I don’t think I’m out on a limb to say many employers would embrace a penalty-free opportunity to cure! – while making the employee “whole” of any lost wages.

Just read a great article on the importance of D&O insurance for nonprofits entitles – including the increasingly valuable Employment Practices Liability Insurance (“EPLI”). Enjoy!

Governor Brown signed AB 304 and it is effective immediately. While it doesn’t fix or clarify everything, it does offer some guidance. Here are the highlights:

Unlimited Time Off programs. If your company provides “unlimited” or “nonaccrual” time off for some workers, you don’t have to also provide separate paid sick leave. The old rule required a bit of a fiction where the amount of paid sick leave had to be listed on the paystub (or other notice document) and tracked, even though the worker could really take “unlimited” time off. Now, unlimited sick time or PTO may show available paid sick leave on employees’ itemized wage statement by indicating that paid sick leave is “unlimited.” (The paid sick leave still requires in all other circumstances that employers communicate the amount of accrued sick leave an employee has on an itemized wage statement (or at the same time as the paystub is given).

Accrual Rates. The law required that employees accrue paid sick leave at the rate of one hour for every 30 hours worked. For some employers, this was confusing and limiting as existing programs were more generous, just providing the benefit pursuant to a different method. Now, employers may use any accrual method that provides at least 24 hours of paid sick leave by the 120th calendar day of employment.

Calculation of Paid Sick Leave. Employers can calculate the paid sick time using any of the following methods:

• Paid sick time for nonexempt employees shall be calculated in the same manner as the regular rate of pay for the workweek in which the employee uses paid sick time, whether or not the employee actually works overtime in that workweek; or
• Paid sick time for nonexempt employees shall be calculated by dividing the employee’s total wages, not including overtime premium pay, by the employee’s total hours worked in the full pay periods of the prior 90 days of employment; or
• Paid sick time for exempt employees shall be calculated in the same manner as the employer calculates wages for other forms of paid leave time.

Reason for Use. Employers are not required to inquire into or record purposes for which an employee uses any type of paid sick leave or PTO.

Yesterday, the New Mexico Court of Appeals ruled that a patient in the state’s medical marijuana program who was injured on the job must be reimbursed by his employer for the expense of marijuana used for treatment.

That’s a pretty narrow ruling (involving a state program and workers compensation for on the job injury), but it sparked discussion on the interweb about medical marijuana in the workplace.

Can a company fire an employee for marijuana use? Should employers fire anyone who fails a drug test that shows marijuana use? As usual with California employment law – the answers are . . . “it depends”!

In California, individuals have a legal right to use medical marijuana and employers have a legal right to prohibit or restrict the use of alcohol and drugs at the workplace.

Use of medical marijuana is generally exempt from certain California criminal laws, but it remains a crime under federal law. This means that a worker’s legal right to use medical marijuana is protected from criminal prosecution, but not from an employer’s policies about the use of alcohol and drugs.

California employers can prohibit workers from possessing, using or being under the influence of marijuana at work, just as they can forbid them from being drunk on the job. But they cannot fire or refuse to hire workers because they have a medical condition they are using marijuana to treat.

An employer does not need to accommodate medical marijuana use. Employers are protected in firing or refusing to hire persons who use marijuana or test positive for marijuana use, even when the use was prescribed by a physician to alleviate a disability. An employer may require pre-employment drug tests and take drug use into consideration in making employment decisions.

As a general rule, employers must accommodate employees with medical conditions or disabilities, but they do not have to let them use marijuana in the workplace, even if medically prescribed. Disability discrimination laws prohibit employers from discriminating against workers or applicants because of a mental or physical disability. Employers must make reasonable accommodations for the disability, unless it would pose an undue hardship, or unless the disability poses a health or safety threat. What qualifies as an undue hardship depends on the size of the employer, the cost of the accommodation and other individual factors.

A California employer can elect not to hire someone who reveals their use of medical marijuana, or fails a pre-employment drug test. But this should not be your automatic, no-analysis-performed policy. Before using any pre-employment drug test program, an employer must analyze if the position is such that a drug test is appropriate. Is this a job for which drug testing is necessary and/or reasonable? For example, for some jobs it is critical to know if the applicant is using drugs or alcohol: a butcher where knives are used, an industrial bakery with a huge mixing apparatus, a transportation company. For these workplaces, everyone’s safety may be compromised by an employee impaired by drugs or alcohol. Other jobs, such as those in an office setting, a pre-employment drug test may not be necessary.

In California, employers can require job applicants to pass a drug test as a condition of employment. But they generally cannot test a current employee unless they have a reasonable suspicion the worker is under the influence.
Random testing of unsuspicious employees is allowed in only a few cases. Federal law requires random testing of certain transportation industry employees. California law allows it for certain safety-sensitive jobs, but there are many rules and safeguards. San Francisco bans random testing in employment, except when required by federal law.

In the end, I usually suggest the following: Make it explicitly against company policy to be under the influence of drugs and/or alcohol at work, no matter when the product was ingested. Then, look at specific jobs to determine if testing is appropriate (and legal). Simple!

An update on some of the issues California employers are facing with the new law. . .
In my last post, I wrote about some of the basic rules an employer with California employees needs to follow. Since then, I’ve been asked more questions, and wrestled with crafting plans, and attended a few conferences, and read more from California’s Division of Labor Standards Enforcement. . . Here’s some more information:

The start date really is July 1, 2015. The law says that an employee qualifies for paid sick leave if he or she works 30 days in California. Some commentators have stated that this means the rule doesn’t really “start” until those 30 days are up – July 31, 2015. The DLSE clarified that employees start to accrue on July 1, 2015 or their hire date, if later.

The law covers pretty much every employee in California (and thus every employer). If you have a collective bargaining agreement or provide home health services, you need to take a close look at the coverage rules – don’t assume you aren’t a part of this fun!

Employees can start using their paid sick leave after 90 days of employment. Depending upon what method you have elected to use, this could mean different things. If you are relying upon your PTO or sick leave program that already exists and satisfies the rule, don’t put that program on hold for 90 days, or some other “cost-saving” trickery. . .

If you have chosen the “three day grant” method, you must provide no less than 24 hours or three days of paid sick leave for an employee to use each year. The three days (or more, if the employer is more generous) must be available to the employee from the start of the grant year. For initial hires, however, the employee must still meet the 90 day employment requirement prior to taking any paid sick leave.

Another thing about the three day grant – three days must be granted as of July 1, 2015. There is no pro rata or other exception to the three days. And then, on January 1, 2016 you’ll need to grant three days again.

Temporary employees of a staffing agency are covered by the new law. Whoever is the employer or joint employer is required to provide paid sick leave to qualifying employees. Staffing companies and their clients need to address how this will be accomplished.

If you offer “no accrual” or “unlimited” time off, you still need to comply with the law. The employer must separately track sick leave accrual and use. Don’t worry, your employees won’t be confused if you explain it!

The DLSE clarified that where employees work an Alternative Workweek Schedule and the employer has elected the grant method, then the employee will have the days placed into in his or her bank. This means that an employee who works four ten-hour days must be granted three days (30 hours).

If you have an attendance policy that docks unexcused absences for counseling / discipline, etc., you need to take a close look at it and likely revise it. The new law prohibits an employer from disciplining an employee for using sick days accrued under the statute. If an employee properly used paid sick leave and is disciplined for taking an unexcused absence, he or she could raise a retaliation claim. This doesn’t mean your policy must be trashed, just revised.

Electronic paystubs that provide employees with notice of the amount of statutory paid sick leave (or PTO that can be used for statutory paid sick leave) appear to satisfy the rule that you provide the information on an itemized wage statement.

As always, if you have questions, please contact us!