Sacramento, Calif., July 21, 2017 – Aaron R. Claxton has joined Wilke Fleury as an Associate, expanding the firm’s capacity to serve the needs of clients in the areas of healthcare and corporate law. Previously, Mr. Claxton worked closely with clients at a local insurance brokerage and was a member of the Elder and Health Law Clinic where he participated in the successful appeal of a denied Medicare claim that resulted in a reimbursement in excess of $100,000 to the estate of a client.
Mr. Claxton graduated from University of the Pacific, McGeorge School of Law, Juris Doctor with Distinction, and St. Mary’s College, where he earned a Bachelor of Science in Business Finance with Honors. He lives in Natomas with his wife and son, and enjoys traveling, cycling, hiking and soccer. “The practice of law provides a unique opportunity to develop effective and creative solutions to advance the interests of clients,” Claxton states.
Wilke Fleury is thrilled to announce our 2017 Super Lawyers and Rising Stars! Twelve of our talented attorneys have been honored with the Super Lawyers distinction and an additional four attorneys were honored with the Rising Stars distinction.
Super Lawyers® is a service of the Thomson Reuters, Legal Division. Each year, the research team at Super Lawyers® undertakes a rigorous multi-phase selection process that includes a statewide survey of lawyers, independent evaluation of candidates by the attorney-led research staff, a peer review of candidates by practice area and a good-standing and disciplinary check. The Super Lawyers list represents only five percent of lawyers in California and Rising Stars reflects 2.5% of the state’s up-and-coming lawyers.
Congratulations to Wilke Fleury’s 2017 Super Lawyers and Rising Stars!
Background checks are oftentimes a condition of employment. Employers who seek to perform background checks must comply with applicable state and federal law before they can obtain such information. This generally includes statutory disclosures and obtaining authorization from the applicant. Employers who fail to comply with the letter of the law can be sued for violation of the statutory requirements, even when the employee has not suffered any actual damages from noncompliance.
Syed v. M-I, LLC (2017) 853 F.3d 492 is instructive. The employer was sued under the federal Fair Credit Reporting Act (“FCRA”) because its disclosure document for seeking a background check on applicants did not comply with the FCRA. The FCRA requires a clear and conspicuous written disclosure before a background check can be performed for employment purposes. The statute also requires a written authorization for the background check, and permits the authorization to appear in the same document as the disclosure. The problem in this case was that the disclosure document contained too much information. Besides the disclosure and the authorization, the employer also included a release of liability. The court of appeal determined that the FCRA was not ambiguous in its requirement of a document consisting “solely” of the disclosure. The only exception was for the authorization to be included as part of the disclosure document, so by including the release despite the statute’s unambiguous language, the employer willfully violated the FCRA.
Notably, the employee did not claim that he suffered any actual damages in his lawsuit. Afterall, he was hired. He subsequently learned of the error when he reviewed his personnel file and saw the release that he signed when he was as an applicant. Nevertheless, he was still able to sue his employer for statutory and punitive damages, and could seek to recover his attorney fees. This case is a lesson to employers of the importance of getting it right, particularly in an area so heavily regulated by statute as are background checks. Errors in records can stick around for quite some time, and employers may face lawsuits for seemingly harmless errors. Employees may even have help in looking for and finding problems because the FCRA, like numerous employment statutes, allow employees to recoup their attorney fees when they prevail on their statutory claims.
California statutes provide that employees are entitled to one day’s rest in seven and that employers cannot cause employees to work more than six days in seven. So just what does this mean? Are full-time employees entitled to one day of rest in each workweek or are employees entitled to one day of rest on a rolling basis, across workweeks? It took an employee class action lawsuit, but employers finally have the answer.
California statutes provide that employees are entitled to one day’s rest in seven and that employers cannot cause employees to work more than six days in seven. So just what does this mean? Are full-time employees entitled to one day of rest in each workweek or are employees entitled to one day of rest on a rolling basis, across workweeks? It took an employee class action lawsuit, but employers finally have the answer.
In Mendoza v. Nordstrom, Inc. (Cal. 2017) 216 Cal.Rptr.3d 889, employees filed a class action lawsuit after they had to work more than six days in a row. Nordstrom’s workweek ran from Sunday to Saturday. The lead plaintiff, Mendoza, worked seven or more days in a row over two workweeks on a number of occasions. For example, in one instance, Mendoza worked Monday, March 23 to Sunday, March 29, 2009, which equated to 6 days in the first workweek and 1 day in the second workweek. Nordstrom removed the case to federal court, and the federal court asked the California Supreme Court to determine whether the day of rest applies on a workweek basis or on a rolling basis. The California Supreme Court determined that it applies on a workweek basis.
California employers now know that employees get one day of rest in each workweek and should be mindful of the workweeks that they have established for their employees, particularly if they have established different workweeks for different employees. Employees can choose to work on their day of rest, but employers must be neutral with respect to that decision. In other words, employers cannot incentivize employees to forego their day of rest and must inform employees of their entitlement to the day of rest before allowing them to forego it.
Resignations by employees are a contractual matter in California. In other words, the resignation is an offer that the employee can withdraw before the employer accepts it. After it is accepted by the employer, the resignation is final. A recent case determined that the employee’s resignation was final even when the employee’s disability – unbeknownst to the employer at the time the employer accepted the employee’s resignation – caused the employee to resign.
“A special-needs trust is a family’s most important tool in making plans to pay for care. Key government benefits like Medi-Cal and SSI are restricted when a person with special needs has assets of more than $2,000. But special-needs trusts are a bucket into which family members and others can deposit an unlimited amount of money for a range of eligible expenses for their family member, like clothes, furniture, a car or education. The government doesn’t count such a special-needs trust as part of their assets.” – Steven Yoder, Comstocks
Resignations by employees are a contractual matter in California. In other words, the resignation is an offer that the employee can withdraw before the employer accepts it. After it is accepted by the employer, the resignation is final. A recent case determined that the employee’s resignation was final even when the employee’s disability – unbeknownst to the employer at the time the employer accepted the employee’s resignation – caused the employee to resign.
In Featherstone v. Southern California Permanente Medical Group, (Cal. Ct. App., Apr. 19, 2017, No. B275225) 2017 WL 1399709, the employee resigned by telephone, effective immediately, and confirmed her resignation in writing. The employer accepted her resignation. Subsequently, the employee attempted to rescind her resignation and alleged that a temporary disability resulting from her medication caused her to resign. When her employer did not allow her to rescind her resignation, the employee sued for discrimination based on disparate treatment because of her disability. In order to prevail, the employee had to demonstrate that she suffered an adverse employment action. She could not because her resignation was voluntary since the employer did nothing to coerce her resignation. Additionally, the employee was no longer an employee after she resigned, so the employer’s refusal to accept rescission of her resignation was not an adverse employment action. Since she could not prove an adverse employment action, the employer prevailed.
Employers who want to accept an employee’s resignation should act quickly before the employee withdraws the resignation. At will employees generally have no right to rescind voluntary resignations after acceptance unless they have entered other contractual arrangements with their employers permitting rescission. As demonstrated by Featherstone, a disability that allegedly causes the resignation will not undue a resignation either. Employers should keep in mind that the Featherstone employer was unaware of the employee’s disability at the time it accepted the employee’s resignation. The result would have been quite different if the employer had known about the disability before accepting the resignation.
California employers are required to authorize and permit employees who are not exempt from overtime (“non-exempt employees”) to take paid rest breaks, during which time they are relieved from work. Generally, employees paid on a commission basis are paid for their productive time, their sales. A recent court decision determined that when non-exempt employees are paid on a commission basis, employers must separately account, and pay, employees for their rest breaks.
In Vaquero v. Stoneledge Furniture LLC, (Cal. Ct. App., Feb. 28, 2017, No. B269657) 2017 WL 770635, the California Court of Appeal looked at a compensation system for employees paid on a commission basis. The employees were guaranteed a minimum weekly salary. When their commissions were insufficient to equal or exceed the minimum weekly salary, they were paid a minimum hourly rate for the shortage that was treated as an advance on future commissions. When commissions exceeded the weekly guarantee, the employer deducted the hourly compensation previously advanced to the employees. The Court of Appeal determined that this was illegal because the employees were not compensated for their rest breaks. Even when the employees were paid a minimum hourly rate, that compensation was taken back when the employees earned enough commissions to repay the hourly wage advance. In other words, the employees were only compensated for their productive time and not for their nonproductive time when they were not making commissions, such as rest breaks. This defeated the purpose of a rest break, which is not to work.
Rest break violations are common wage and hour claims made by employees against employers. Employers who do not pay their employees on an hourly basis should ensure that they do not reduce their employees’ wages for rest breaks by paying employees pursuant to a commission, piece-rate or other compensation system that does not provide compensation for rest breaks. Employers should also ensure employees are paid for other nonproductive time, such as company trainings and meetings.
California employers have to authorize and permit paid rest breaks to employees who are not exempt from overtime (i.e., non-exempt employees). On December 22, 2016, the California Supreme Court in Augustus v. ABM Security Services, Inc., 2 Cal.5th 257 (2016) ruled that an employer does not meet its rest break obligation when it requires its employees to take on-duty rest breaks.
Augustus involved a class action suit filed on behalf of ABM’s security guards. The guards alleged that ABM failed to provide uninterrupted rest breaks as required by California law. ABM acknowledged that it required its security guards to keep their radios and pagers on, and to respond to needs as they arose (such as escorting tenants to parking lots or responding to emergency situations) during their rest periods. The Supreme Court determined that being “on call” in the manner described by the security guards compelled the employees to “remain at the ready and capable of being summoned to action.” It further noted that the personal activities for which rest breaks were designed, such as going for a walk, completing a phone call, or arranging child care, could not be performed during on-call rest breaks. Given this, the Court held that employers must relinquish any control over how employees spend their breaks and relieve employees of all duties, including any obligation to remain on call. However, the Court noted that its holding did not preclude employers from “reasonably rescheduling” rest periods when needed. It also indicated that employers may seek an exemption from the Division of Labor Standards Enforcement from duty-free rest period requirements as provided in the pertinent Wage Orders.
In light of the Court’s ruling, employers should carefully evaluate their rest-break practices and policies. Employers should also evaluate their meal break practices and policies. Employees who fail to authorize and permit their non-exempt employees to take their rest breaks or meal breaks are subject to penalties for each day that their employees were denied off-duty and uninterrupted rest or meal breaks. Employers who are sued for failing to provide appropriate rest or meal breaks to their employees, including off-duty rest breaks, could face exposure to a significant judgment (the judgment against ABM was over $90 million), including penalties and interest.
A number of employment-related measures were passed in 2016. The measures became effective on January 1, 2017, unless otherwise specified. Employers will want to be aware of the effect, if any, of these new measures on their day-to-day operations. The highlights for the new employment-related measures follow:
California Fair Pay Act Amendments
The California Fair Pay Act significantly changed the approach employers should be taking when evaluating or developing their salary structures, and prohibits employers from paying members of one sex less than they pay to members of the opposite sex for substantially similar work when viewed as a composite of skill, effort, and responsibility, and when performed under similar working conditions. Exceptions exist for wage differentials based on a seniority system, merit system, a system of earnings by quantity or quality of production, or a bona fide factor other than sex (e.g., education, training, experience). SB 1063 and AB 1676 impose additional requirements for wage differentials among employees.
SB 1063:
SB 1063 expands the Fair Pay Act to race and ethnicity by prohibiting employers from paying members of one race or ethnicity less than they pay to members of the opposite race or ethnicity for substantially similar work. The various exceptions for wage differentials continue to apply, and the onus to prove an exception justifies the differential remains on the employer.
AB 1676:
AB 1676 expands the California Fair Pay Act by specifying that prior salary, by itself, cannot justify any disparity in compensation for employees of another sex, race, or ethnicity for substantially similar work.
Minimum Wage & Exempt Employee Salary
SB 3
SB 3 will gradually increase the California minimum wage to $15 per hour. It imposes six annual increases for employers based on the size of the employer, as follows:
Date of Increase
26 or more Employees
25 or fewer Employees
January 1, 2017
$10.50
January 1, 2018
$11
$10.50
January 1, 2019
$12
$11
January 1, 2020
$13
$12
January 1, 2021
$14
$13
January 1, 2022
$15
$14
January 1, 2023
$15
Employers should be aware of local minimum wage ordinances that may be more favorable than the state minimum wage during the increases. Employers will also need to post the new Minimum Wage Order (MW-2017) in the workplace.
The increased minimum wage affects the minimum annual salary for exempt employees (employees who are exempt from overtime). The exempt employee salary will increase to $43,680 in 2017 for employers with 26 or more employees, and remain the same for employers with 25 or fewer employees ($41,600).
Computer Software Employees
Certain computer software employees are exempt from overtime under California law when certain conditions are met, including the payment of a minimum hourly rate of pay or salary. The minimum hourly rate, monthly salary, and annual salary for computer software employees increased to $42.35, $7,352.62, and $88,231.36, respectively.
Licensed Physicians and Surgeons
Certain licensed physicians and surgeons are exempt from overtime under California law when certain conditions are met, including payment of a minimum hourly rate of pay. The minimum hourly rate of pay increased to $77.15.
SB 3- Sick Leave for In-Home Supportive Services Workers
The California Healthy Workplaces, Healthy Families Act of 2014 grants paid sick leave to most California employees. In-home supportive services workers were previously exempt from the sick leave law. SB 3 makes the law applicable to in-home supportive services workers, meaning they will also be entitled to paid sick leave beginning on or after July 1, 2018.
Federal Overtime Rule
Exempt employees must generally meet a duties test and a salary test in order to maintain their exempt status, meaning they are exempt from overtime. The Wage and Hour Division of the U.S Department of Labor issued a final rule more than doubling the federal minimum annual salary. The minimum salary under federal law would have jumped from $23,660 to $47,476, with automatic updates every 3 years, beginning on January 1, 2020. No change was made to the duties test under federal law. The regulation was set to take place on December 1, 2016. The regulation was enjoined by a federal court, and did not go into effect. That injunction has been appealed, and is currently pending.
SB 1015
California passed the Domestic Worker Bill of Rights in 2013, which regulates personal attendants and requires that overtime be paid to them for work in excess of 9 hours in any workday or 45 hours in any workweek. The Act was set to repeal as of January 1, 2017. SB 1015 deletes the repeal date and does not create a new repeal date, meaning that the Act will continue in effect for the foreseeable future.
Discrimination Regulation and Enforcement
AB 1732
Currently, California employers with single-user restrooms may label them for use by males or females. AB 1732 establishes new signage requirements for single-user restrooms, and requires that they be identified as “all-gender,” and not for use by only males or by females. The new signage requirement starts on March 1, 2017.
SB 1001
Federal law requires verification of an employee’s eligibility to work using the Form I-9 process. Asking for more or different documentation than is required by the Form I-9, refusal to accept documents that appear genuine on their face or to engage in other types of document abuse is prohibited. SB 1001 makes this conduct unlawful under California law, as well.
Leaves of Absence, Benefits, and Protections
AB 908
Employees are eligible for California wage replacement benefits provided by the Paid Family Leave and State Disability insurance programs for specific purposes, including caring for specified persons and bonding with a child. Currently an employee receives up to 55% of their base wages for up to 6 weeks. AB 908 will increase the amount of wage replacement benefits. Many low wage workers will see an increase to 70%, while higher wage earners will see an increase to 60%. AB 908 also eliminates the 7-day waiting period for family temporary disability benefits. The law takes effect January 1, 2018.
AB 1847
AB 1874 specifies that employers who are currently required to notify employees of their eligibility for the Federal Earned Income Tax Credit must also notify employees of their potential eligibility for the California Earned Income Tax Credit. California employers will need to provide updated notification forms to employees.
AB 2337
Existing California law permits employees who are victims of domestic violence, sexual assault and stalking to take time off for medical treatment or legal proceedings. AB 2337 requires employers to provide written notice to employees about those existing rights. The California Labor Commissioner is required to develop the notification form on or before July 1, 2017. The required form must be given to all new employees when hired and to current employees upon request. Employers are not required to comply with this notice requirement until the Commissioner makes the form available on its website.
AB 1843
California’s AB 1843 prohibits an employer from inquiring into an applicant’s juvenile conviction history. The bill also prohibits using those convictions as a factor in determining any condition of employment.
Employment Contracts & Workplace Policies
SB 1241
Employment contracts frequently designate venue (where employment disputes will be arbitrated or litigated) and choice of law (the law that will apply to the dispute). The venue may not be in California and the law chosen may not be California law. Under California’s SB 1241, employers will not be able to require employees who primarily work and reside in California to agree to non-California venue or choice of law provisions in new employment contracts or in preexisting employment contracts that are modified or extended after January 1. An exception exists when an employee is represented by an attorney in negotiating the venue and choice of law provisions in the employee’s employment contract.
2 CCR § 11023
The Fair Employment and Housing Act (FEHA), and its implementing regulations, constitute California’s discrimination, harassment and retaliation law. New regulations went into effect earlier this year on April 1, 2016. Among the new requirements, employers must now have harassment, discrimination and retaliation policies that meet certain criteria, including that the policy is in writing, lists each and every protected category under the FEHA, and provides a process for receiving and responding to complaints. Employers must disseminate the policy, and provide translated copies of the policy when 10% or more of their workforce speaks a language other than English.
Smoking
ABX2-5 & ABX2-7
California employers were prohibited from allowing a person to smoke tobacco products in an enclosed space in the workplace, subject to exceptions. ABX2-5 added electronic cigarettes and other vapor/electronic and oral smoking devices to the prohibition on smoking. ABX2-7 extends the smoking prohibition to owner-operated businesses, and eliminates many of the prior exemptions (e.g., hotel lobbies, bars and taverns, banquet rooms, warehouse facilities, and employee break rooms). The laws went into effect on June 9, 2016.
Proposition 64 – The Control, Regulate and Tax Adult Use of Marijuana Act
Proposition 64 legalizes recreational use of marijuana in California by individuals who are 21 years of age or older. Notwithstanding this new law, employers can still enact and enforce workplace policies concerning marijuana. The law does not require employers to permit or accommodate the use of marijuana in the workplace, or affect the ability of employers to have workplace policies prohibiting the use of marijuana. Portions of the law went into effect on November 9, 2016.
Cell Phones
AB 1785
Under existing California law, drivers could not use handheld wireless telephones or electronic wireless communications devices to text and drive unless they were configured to allow voice-operated or hands-free operation. AB 1785 now prohibits drivers from holding and operating wireless telephones or electronic wireless communications while driving. Drivers can only operate wireless telephones or electronic wireless communications while driving if they are mounted on the windshield, dashboard or center console, and the driver only needs to activate or deactivate them with a tap of the finger or a single swipe.
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“A special-needs trust is a family’s most important tool in making plans to pay for care. Key government benefits like Medi-Cal and SSI are restricted when a person with special needs has assets of more than $2,000. But special-needs trusts are a bucket into which family members and others can deposit an unlimited amount of money for a range of eligible expenses for their family member, like clothes, furniture, a car or education. The government doesn’t count such a special-needs trust as part of their assets.” – Steven Yoder, Comstocks
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