Does an employee who retires quit?  California employers are required to promptly pay final wages to employees when they “quit.”  Specifically, Labor Code section 202 provides that employees without a contract for a definite period are entitled to prompt payment of wages either within 72 hours of quitting or immediately upon quitting if they provide at least 72 hours advance notice of their intention to quit.  Employers who fail to make prompt payment of wages are subject to waiting time penalties up to 30 days of wages.  (Lab. Code § 203.)

In McLean v. State, 228 Cal. App. 4th 1500, 176 Cal. Rptr. 3d 734 review granted and opinion superseded, 338 P.3d 304 (Cal. 2014), the court of appeal concluded that an employee who “quits” includes an employee who retires.  There, a state employee retired and separated from her employer on the same day that she retired.  She did not receive her final wages on her last day of employment, nor did she receive them within 72 hours of that date.  Her employer argued that Labor Code section 202 and 203 only applied to employees who “quit” as opposed to those who “retire,” and that the distinction between a “quit” and a “retirement” was well-established in the civil service. The court of appeals disagreed; concluding that “quit” as used in Labor Code section 202 and 203 has one meaning for private and public employers, and includes employees who quit to retire.

That court of appeal decision is now being reviewed by the California Supreme Court.  In the meanwhile, both private and public employers are still subject to Labor Code sections 202 and 203.  Employers should be aware of the prompt payment requirements when employees resign, and the potential applicability of these requirements to employees when they retire.  The decision will have a profound effect, particularly as employees of the baby-boomer generation begin to retire.  It could also subject employers to potential actions by employees who have already retired for waiting time penalties if they did not receive timely payment of their final wages when they retired.

DID YOU KNOW…

Workers on a prevailing wage project are entitled to no less than the prevailing wage (i.e., a basic hourly rate).  This requirement seeks to ensure that the winning bidder is not awarded the project by paying lower wages to workers than the other bidders.  A court of appeal recently recognized that the second-place bidder can sue the winning bidder if the winning bidder only obtained the lowest bidder status because it did not pay workers the prevailing wage.  See, Roy Allan Slurry Seal, Inc. v. Am. Asphalt S., Inc., No. B255558, 2015 WL 738675 (Cal. Ct. App. Feb. 20, 2015).

By:  Branden M. Clary
Wilke Fleury Labor & Employment News
March 2015

Harassment, discrimination and retaliation can be costly for employers, even when employees do not suffer substantial injuries as a consequence of the conduct.  Employees who sue their employers under Title VII for harassment, discrimination or retaliation are subject to its statutory caps on compensatory and punitive damages.  The caps are based on the size of the employer, from 15 employees to more than 500 employees.  When punitive damages are recoverable under state common-law claims, they must be proportional to the violation.  However, a recent decision determined that proportionality does not need to be assessed for the statutory punitive damages caps established under Title VII.

In Arizona v. ASARCO LLC, 773 F.3d 1050 (9th Cir. 2014),  a female employee filed federal claims against her former employer for sexual harassment under Title VII (federal law).  The employer was a large employer with more than 500 employees.  The employee prevailed on her sexual harassment claims.  She apparently did not suffer a substantial compensable injury, so the jury awarded her nominal damages of $1 to formally recognize that she had been harassed.  The jury also awarded her $868,750 in punitive damages, which the court reduced to $300,000 in accordance with the statutory cap under Title VII based on the size of the employer.  The employer challenged the constitutionality of the award in light of the disparity between the nominal and punitive damage awards.  The court of appeal upheld the award despite the disproportionality because it determined that Title VII sufficiently informs employers of the conduct that subjects them to punitive damages and the maximum amount of such damages – in this case, capped damages of $300,000 for an employer with more than 500 employees.

Employers should take all allegations of harassment, discrimination and retaliation seriously.  If they have not already, employers should adopt and implement anti-discrimination and harassment policies.  Employers also need to enforce their anti-discrimination and harassment policies, investigate complaints, and take prompt and effective remedial action when a violation occurs.  While caps exist for punitive damages under federal law, punitive damages are not capped under California Law, the Fair Employment and Housing Act (“FEHA”).  And whereas Title VII applies to employers with 15 employees, FEHA’s discrimination and retaliation provisions apply to employers with just 5 employees, and its harassment protections apply to all employers, regardless of size.

DID YOU KNOW…

The FEHA imposes a continuing obligation on employers to communicate with employees or applicants to determine effective reasonable accommodations in response to a request for a reasonable accommodation (i.e., the interactive process).  Employers may be liable if they are responsible for a breakdown in the interactive process.  See, Swanson v. Morongo Unified Sch. Dist., 232 Cal. App. 4th 954 (2014).

By:  Samson Elsbernd,
Wilke Fleury Labor & Employment News
February 2015

Does an employee who retires quit?  California employers are required to promptly pay final wages to employees when they “quit.”  Specifically, Labor Code section 202 provides that employees without a contract for a definite period are entitled to prompt payment of wages either within 72 hours of quitting or immediately upon quitting if they provide at least 72 hours advance notice of their intention to quit.  Employers who fail to make prompt payment of wages are subject to waiting time penalties up to 30 days of wages.  (Lab. Code § 203.)

In McLean v. State, 228 Cal. App. 4th 1500, 176 Cal. Rptr. 3d 734 review granted and opinion superseded, 338 P.3d 304 (Cal. 2014), the court of appeal concluded that an employee who “quits” includes an employee who retires.  There, a state employee retired and separated from her employer on the same day that she retired.  She did not receive her final wages on her last day of employment, nor did she receive them within 72 hours of that date.  Her employer argued that Labor Code section 202 and 203 only applied to employees who “quit” as opposed to those who “retire,” and that the distinction between a “quit” and a “retirement” was well-established in the civil service. The court of appeals disagreed; concluding that “quit” as used in Labor Code section 202 and 203 has one meaning for private and public employers, and includes employees who quit to retire.

That court of appeal decision is now being reviewed by the California Supreme Court.  In the meanwhile, both private and public employers are still subject to Labor Code sections 202 and 203.  Employers should be aware of the prompt payment requirements when employees resign, and the potential applicability of these requirements to employees when they retire.  The decision will have a profound effect, particularly as employees of the baby-boomer generation begin to retire.  It could also subject employers to potential actions by employees who have already retired for waiting time penalties if they did not receive timely payment of their final wages when they retired.

DID YOU KNOW…

Workers on a prevailing wage project are entitled to no less than the prevailing wage (i.e., a basic hourly rate).  This requirement seeks to ensure that the winning bidder is not awarded the project by paying lower wages to workers than the other bidders.  A court of appeal recently recognized that the second-place bidder can sue the winning bidder if the winning bidder only obtained the lowest bidder status because it did not pay workers the prevailing wage.  See, Roy Allan Slurry Seal, Inc. v. Am. Asphalt S., Inc., No. B255558, 2015 WL 738675 (Cal. Ct. App. Feb. 20, 2015).

Harassment, discrimination and retaliation can be costly for employers, even when employees do not suffer substantial injuries as a consequence of the conduct.  Employees who sue their employers under Title VII for harassment, discrimination or retaliation are subject to its statutory caps on compensatory and punitive damages.  The caps are based on the size of the employer, from 15 employees to more than 500 employees.  When punitive damages are recoverable under state common-law claims, they must be proportional to the violation.  However, a recent decision determined that proportionality does not need to be assessed for the statutory punitive damages caps established under Title VII.

In Arizona v. ASARCO LLC, 773 F.3d 1050 (9th Cir. 2014),  a female employee filed federal claims against her former employer for sexual harassment under Title VII (federal law).  The employer was a large employer with more than 500 employees.  The employee prevailed on her sexual harassment claims.  She apparently did not suffer a substantial compensable injury, so the jury awarded her nominal damages of $1 to formally recognize that she had been harassed.  The jury also awarded her $868,750 in punitive damages, which the court reduced to $300,000 in accordance with the statutory cap under Title VII based on the size of the employer.  The employer challenged the constitutionality of the award in light of the disparity between the nominal and punitive damage awards.  The court of appeal upheld the award despite the disproportionality because it determined that Title VII sufficiently informs employers of the conduct that subjects them to punitive damages and the maximum amount of such damages – in this case, capped damages of $300,000 for an employer with more than 500 employees.

Employers should take all allegations of harassment, discrimination and retaliation seriously.  If they have not already, employers should adopt and implement anti-discrimination and harassment policies.  Employers also need to enforce their anti-discrimination and harassment policies, investigate complaints, and take prompt and effective remedial action when a violation occurs.  While caps exist for punitive damages under federal law, punitive damages are not capped under California Law, the Fair Employment and Housing Act (“FEHA”).  And whereas Title VII applies to employers with 15 employees, FEHA’s discrimination and retaliation provisions apply to employers with just 5 employees, and its harassment protections apply to all employers, regardless of size.

DID YOU KNOW…

The FEHA imposes a continuing obligation on employers to communicate with employees or applicants to determine effective reasonable accommodations in response to a request for a reasonable accommodation (i.e., the interactive process).  Employers may be liable if they are responsible for a breakdown in the interactive process.  See, Swanson v. Morongo Unified Sch. Dist., 232 Cal. App. 4th 954 (2014).

In 2014, Governor Brown signed a variety of employment-related measures. These bills became law on January 1, 2015, unless otherwise specified. These new measures will affect the day-to-day business of employers in 2015. The highlights for these new employment-related measures follow:

California law provides various forms of leave (paid and unpaid) to employees. Prior to January 1, 2015, paid sick leave was not mandated. AB 1522 enacted the “Healthy Workplaces, Healthy Families Act of 2014,” which now mandates paid sick leave, and applies to most California employers. The new paid sick leave law covers exempt and non-exempt employees (including part-time, per diem, and temporary employees). Specifically, the new law:

• Mandates that employers provide at least 24 hours of paid sick leave per year. This benefit will apply to California employees who work 30 or more days within one year from the commencement of their employment.
• Requires that employees accrue no less than one hour of sick leave for every 30 hours worked beginning on July 1, 2015, which employees are entitled to use beginning on the 90th day of their employment.
• Authorizes employers to limit the amount of sick leave used to 24 hours or 3 days in each year of employment, though employees may accrue up to 48 hours or 6 days. Accrued paid sick days generally carry over to the following year.
• Prohibits employers from discriminating or retaliating against employees who utilize paid sick leave.

Long-standing California law strictly prohibits harassment and discrimination of employees, applicants, employment training applicants, and apprentices. These protections are applicable on the basis of race, religious creed, color, national origin, ancestry, physical disability, mental disability, medical condition, genetic information, marital status, sex, gender, gender identity, gender expression, age, sexual orientation, or military and veteran status.

These protections have been extended to include individuals participating in an unpaid internship, volunteer opportunity, or other program that provides unpaid experience in a workplace or industry.

AB 2053 (Gonzalez) – Employment Discrimination: Education and Training: Abusive Conduct

Current law requires employers with 50 or more employees to provide training and education regarding sexual harassment to all supervisory employees. This training is to be a minimum of two hours and must be conducted within the first 6 months of an employee assuming a supervisorial position, and thereafter every two years.

This new law adds training on the prevention of abusive conduct to existing sexual harassment training requirements for supervisory employees. Abusive conduct is defined as malicious conduct that would reasonably be considered hostile, offensive, and unrelated to an employer’s legitimate business interests.

AB 326 (Morrell) – Occupational Safety and Health: Reporting Requirements

Current law requires an employer to file a complete report of every occupational injury or illness of each employee to the Division of Occupational Safety and Health within the Department of Industrial Relations. Immediate reporting via telephone or telegraph is required for cases involving serious injury, illness or death of an employee.
Employers must now make immediate reports by telephone or email to the Division of Occupational Safety and Health for every case involving an employee’s serious injury or illness or death.
Contracting

AB 1897 (Hernandez) Labor Contracting: Client Liability

State law regulates the terms and conditions of employment and provides specific obligations for employers in California. Employers, for example, are prohibited from entering into a contract for labor or services if the employer knows or should know that there are insufficient funds available for the contractor to comply with existing labor and employment laws.

In a significant expansion of employer-based liabilities, employers who contract with labor contractors for employees will now share civil legal responsibility and liability for the payment of wages and the failure to obtain valid workers’ compensation coverage for all workers who are supplied under the contract. Client employers are also prohibited from shifting legal duties and liabilities for workplace safety to the labor contractor. Employers and contractors are required to provide enforcement agencies and departments, upon request, with information and documentation of compliance with these provisions. Exemptions include nonprofit, labor, and motion picture payroll service organizations, as well as third parties engaged in employee leasing arrangements.

AB 2365 (Pérez) – Unlawful Contracts

Non-disparagement clauses are used in contracts to prevent individuals from making statements or taking any other action that can have a negative impact on the other party.
Responding to recent media reports identifying companies that were using non-disparagement clauses to silence unhappy customers, state law now prohibits a consumer goods or service contract from waiving a consumer’s right to make any statement relating to their retail experience, and also prohibits a consumer from being penalized for making statements about their retail experience.

SB 1446 was an urgency statute that went into effect in July of 2014 when it was signed. It permits renewal of small employer (employers with fewer than 50 employees) health plans that fail to meet the requirements of the Affordable Care Act through the end of 2015 for group health insurance that was in effect on December 31, 2013, and was still in effect in July of 2014 when the law took effect.

SB 1034 (Monning) Health Care Coverage: Waiting Periods

Under federal law, group health plans and insurance issuers are prohibited from applying a waiting period that exceeds 90 days. Current law in California allows group health plans and policies to apply waiting periods up to 60 days as a condition of employment, provided that the condition is applicable to all eligible employees and dependents.
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Health plans and health insurance policies in the group market are now prohibited from imposing waiting or affiliation periods in addition to the waiting period imposed by an employer. Group health plans or insurers are still permitted to administer a waiting period imposed by a plan sponsor or employer, though.

Under state law, the state Employment Development Department (EDD) considers the facts submitted by an employer to determine a claimant’s eligibility for unemployment compensation benefits. An administrative law judge could reconsider an unemployment eligibility determination if an appeal is filed by either the claimant or the employer within 20 days after mailing the notice of a determination.

The deadline for filing an appeal has now been extended. Beginning on or after July 1, 2015, claimants and employers have 30 days to appeal an unemployment eligibility determination.

AB 1792 (Gomez) – Public Benefits: Reports on Employers

AB 1792, referred to by some as the public shaming law, requires the state Department of Finance to identify and compile an annual list of private employers with 100 or more employees who are enrolled in public assistance programs. The Department will send a list of the 500 employers in the State with the most employees who are enrolled in public assistance programs to the Legislature and will post the list (a “list of shame”) on its website beginning in January of 2016, and continuing until January 1, 2020.