Articles

Employment Bills Awaiting the Governor’s Signature

Posted on: September 28th, 2017 by ksilvers No Comments

Kim Silvers, SPHR- CA, SHRM-SCP

As the triple digit temperatures fade in Sacramento, the state legislature wraps up its bills for the Governor’s signature or veto. We watch the employment related bills closely throughout the year and call our state Senator and Assemblymember’s offices to weigh in on the contents. Here are a few bills that are particularly concerning to us. The summaries are from the Legislative Counsel’s Digest sans any personal or professional remarks/kvetching from yours truly. (Just the facts, ma’am.) We’ll keep you posted on the outcome.

AB 168 (Salary Information) This bill would prohibit an employer from relying on the salary history information of an applicant for employment as a factor in determining whether to offer an applicant employment or what salary to offer an applicant. The bill also would prohibit an employer from seeking salary history information about an applicant for employment and would require an employer, upon reasonable request, to provide the pay scale for a position to an applicant for employment. The bill would not prohibit an applicant from voluntarily and without prompting disclosing salary history information and would not prohibit an employer from considering or relying on that voluntarily disclosed salary history information in determining salary, as specified.

AB 450 (Immigration Worksite Enforcement Actions) This bill would impose various requirements on public and private employers with regard to federal immigration agency immigration worksite enforcement actions. Except as otherwise required by federal law, the bill would prohibit an employer or other person acting on the employer’s behalf from providing voluntary consent to an immigration enforcement agent to enter nonpublic areas of a place of labor unless the agent provides a judicial warrant, except as specified. Except as required by federal law, the bill would prohibit an employer or other person acting on the employer’s behalf from providing voluntary consent to an immigration enforcement agent to access, review, or obtain the employer’s employee records without a subpoena or court order, subject to a specified exception. …Penalties for failure to satisfy the prohibitions described above of $2,000 up to $5,000 for a first violation and $5,000 up to $10,000 for each subsequent violation.

AB 1008 (Ban the Box) This bill would repeal the prohibition on a state or local agency from asking an applicant for employment to disclose information regarding a criminal conviction. The bill would, instead, provide it is an unlawful employment practice under FEHA for an employer with 5 or more employees to include on any application for employment any question that seeks the disclosure of an applicant’s conviction history, to inquire into or consider the conviction history of an applicant until that applicant has received a conditional offer, and, when conducting a conviction history background check, to consider, distribute, or disseminate information related to specified prior arrests, diversions, and convictions.
This bill would also require an employer who intends to deny an applicant a position of employment solely or in part because of the applicant’s conviction history to make an individualized assessment of whether the applicant’s conviction history has a direct and adverse relationship with the specific duties of the job, and to consider certain topics when making that assessment. The bill would require an employer who makes a preliminary decision to deny employment based on that individualized assessment to provide the applicant written notification of the decision.

AB 568 (School Districts/Community Colleges Paid Maternity Leave) This bill would require the governing board of a school district, the governing body of a charter school, and the governing board of a community college district to provide at least 6 weeks of a leave of absence with full pay for a certificated employee, or an academic employee, of the district or charter school who is required to be absent from duties because of pregnancy, miscarriage, childbirth, and recovery therefrom.

AB 1701 (Labor Related Liabilities for Original Contractor)  This bill would, for all contracts entered into on or after January 1, 2018, require a direct contractor, as defined, making or taking a contract in the state for the erection, construction, alteration, or repair of a building, structure, or other work, to assume, and be liable for, specified debt owed to a wage claimant that is incurred by a subcontractor, at any tier, acting under, by, or for the direct contractor for the wage claimant’s performance of labor included in the subject of the original contract.

SB 63 (Parental Leave Rights for Smaller Employers) This bill would prohibit an employer, as defined, from refusing to allow an employee with more than 12 months of service with the employer, who has at least 1,250 hours of service with the employer during the previous 12-month period, and who works at a worksite in which the employer employs at least 20 employees within 75 miles, to take up to 12 weeks of parental leave to bond with a new child within one year of the child’s birth, adoption, or foster care placement. The bill would also prohibit an employer from refusing to maintain and pay for coverage under a group health plan for an employee who takes this leave.

Department of Labor Exempt Salary Ruling Struck Down

Posted on: September 27th, 2017 by Katrina Murphy No Comments

By Susan Breslauer, SPHR-CA, SHRM-SCP 

Employers breathed a sigh of relief at the recent court ruling that the Department of Justice overstepped its bounds last year in raising the minimum salary for certain exempt employees to $913/week ($47,476 per year).  This is good news for most US employers, although CA employers beat to a different (and more costly) drum.  

The US Department of Labor (DOL) announced in May of 2016 the final rule on how/when employees will be exempt from overtime payment.  However, on November 22, 2016, Judge Amos L. Mazzant, U.S. District Court Judge, granted a temporary injunction blocking the Department of Labor’s rule raising the minimum salary for certain exempt employees to $913/week ($47,476 per year).  The rule was to go into effect on December 1, 2016.  The court ruled that the regulations were unlawful because the new salary level excluded consideration of the employee’s duties (there is a salary test and duties test for these exemptions from overtime) as well as the regulations improperly allow an automatic increase to the salary level every three years.

The new rule was temporarily blocked up until August 2017.  As we expected, further litigation followed.  On June 30, 2017, the Department of Justice (DOJ) filed its reply brief with the Court.  Then following this on August 31, 2017, The case was heard in the US District Court, Eastern District of Texas, Sherman Division.

As a result, employers do not have to raise exempt employees to a federal minimum salary.  However, CA employers will still be required to pay exempt employees at least two times the state minimum wage, which will rise again on January 1, 2018.  

The CA state minimum wage is currently $10.00 per hour for employers with fewer than 26 employees and $10.50 per hour for employers with 26 or more employees.  Beginning January 1, 2018, this will rise to $10.50 per hour for employers with fewer than 26 employees and $11.00 per hour for employers with 26 or more employees.  That will result in exempt employees’ minimum salaries, at two times minimum wage, rising to $43,680 for employers with fewer than 26 employees, and $45,760 for employers with 26 or more employees.  There is an exception and a different salary test for private schools, computer professionals and physicians, but all other  CA positions are subject to this salary test.

With all of this being said, keep your eyes open for the proposed AB 1565, which would increase the CA minimum salary for exempt status to $47,472 per year.  The Bill was passed in the Assembly earlier this year and is now placed in an inactive status. 

We will continue to update you as bills are signed and we have more updates

Waiting Periods for Vacation Reaffirmed – A Win for Employers

Posted on: September 27th, 2017 by Katrina Murphy No Comments

 

By Susan Breslauer, SPHR-CA, SHRM-SCP

Vacation and paid time off (PTO) are optional benefits, not required by law in California.  However, if vacation/PTO is provided to employees, it is considered a deferred wage.  (PTO is usually a combination of vacation and sick leave. For this article we speak to vacation, but PTO is also covered.)  This means that once vacation is earned, it cannot be taken away.  Overall, there are not many rules regarding vacation.  Labor Code 227.3 covers the “no forfeiture” requirement;  there have been a few court rulings and Department of Labor Standards Enforcement (DLSE) Opinion Letters on various vacation provisions.  Otherwise it is up to employers to define how their vacation practices work.  Some of the vacation rules CA employers must follow include: 

  • Employers may not have a “use it or lose it” policy, but vacation earnings can be limited by imposing a maximum “cap”. 
  • Employers can impose a waiting period before vacation is earned. 
  • Employees must be compensated for paid vacations, and to be paid a lump sum upon termination if they have accrued, unused vacation.

 

Employers have received a win in a recent case regarding the waiting period for vacation in Minnick v. Automotive Creations, Inc. No. D070555 (Cal. Ct. App. 4th Jul. 28, 2017).  The plaintiff left the company after six months of employment.  He was not paid any vacation because the employer had a one year waiting period before vacation was earned.  The court deemed the employer’s policy was written unambiguously and lawfully. Here’s the key language:

 
All employees earn [one] week of vacation after completion of one year [of] service and a maximum of two weeks’ vacation after two years of service. This means that after you have completed your first anniversary with the company, you are entitled to take one week of paid vacation, and after the completion of two years’ service, you will accrue two weeks [of] paid vacation per year. This does not mean that you earn or accrue 1/12th of one week’s vacation . . . each month during your first year. You must complete one year of service with the company to be entitled to one week [of] vacation.

The employee challenged the employer’s vacation policy arguing that the policy unlawfully contracted around the rule against forfeiture of vacation wages and the employer’s policy did not clearly provide for a waiting period.  The trial court entered into judgement in favor of the employer, and the plaintiff appealed.

 

The Court of Appeal then affirmed the trial court’s ruling and ruled that an employer may lawfully decide not to provide vacation at all, and it can provide vacation after a specified waiting period.  Once an employee becomes eligible to earn vacation benefits, he/she is entitled to payment for unused vacation upon separation and cannot forfeit this entitlement.  (CA Labor Code 227.3)

 

The key take aways from this case are: 1) the vacation policy must state the waiting period before vacation accrual can begin; it should be clear that vacation does not accrue at all until the waiting period has been completed, and 2) vacation may not be forfeited after it has been accrued.  Although this is not new, it provides a definitive statement that the employer may define how and when vacation is earned.  Minnick v. Automotive Creations, Inc. is the first case to validate a one-year waiting period.

This case is a good reminder that detailed, written vacation policies are important.  We continue to recommend that Paid Time Off policies are separate and distinct from CA Paid Sick Leave (PSL), since PTO is a deferred wage and PSL is not.  Also, it is recommended that the waiting period is stated in the policy, the offer letter, and explained to employees during new hire orientation.  Silvers HR has a legally-reviewed vacation/PTO policy available for its retained clients.

You didn’t ask, but….  Just because an employer can require a lengthy waiting period before vacation is earned does not mean it is a competitive practice.  

The Litigation Risk that Many Small and Mid-Size Employers May Be Needlessly Holding On To

Posted on: June 26th, 2017 by Katrina Murphy No Comments

By John Wood

The latest edition of The Betterly Report noted that, when it comes to Employment Practices litigation risk, “The larger employer is much more likely to transfer risk than are smaller employers.  Ironically, it is the smaller employer that probably needs EPLI insurance protection the most, as their ability to self-assume losses is limited.”

The report went on to note that only about 2.4% of small employers (1-49 employees) carried Employment Practices Liability insurance (EPL), while only 36.6% of mid-sized employers (50-999 employees) did so.

So why the inverted result, where the large employers (who are better suited, financially, to retain their Employment Practices litigation risk) are transferring that risk, while the small and mid-size companies (who have less financial capacity to retain the risk) aren’t?

Perhaps this latter group is unaware of the level of risk that they’re assuming, or presume that the cost of transference is prohibitive.  This article will try to shed some light on both factors.

The Scary Stuff

According to the latest edition of the Hiscox Guide to Employee Lawsuits (which was based upon 2014 EEOC charge statistics), U.S. Companies had at least an 11.7% chance of incurring an employment litigation event.

The figures varied greatly by State, however, and in California the risk of employee litigation was 40% higher than the national average – perhaps, in part, because California is one of 10 States in the country whose Anti-Discrimination and Fair Employment Practices State laws exceed U.S. Federal regulations.

A representative study of 446 closed cases showed that, for firms with 500 or fewer employees, 19% of the cases resulted in defense and settlement costs averaging a total of $125,000, with an average length of litigation spanning 275 days.

For those cases that ended up in court, the median judgment (which does not include defense costs) was $200,000, with 25% of the cases resulting in a judgment of $500,000 or more.

Even if an Employer wins a case, it often loses financially.  To give just three examples from actual lawsuits:

* After a downsizing, a group of former, older, long-term employees alleged that the downsizing had a disparate impact on them compared to younger workers.  The Employer prevailed at trial, but incurred $975,000 in defense costs.

* A former employee demanded $500,000 and other benefits (including paid-for COBRA coverage), alleging that she was terminated in retaliation for being involved in a romantic relationship with her supervisor.  The Employer won at trial, but racked up $205,000 in legal bills along the way.

* A released-to-duty worker sued to have a “no lifting” position created as an accommodation to her temporary work restriction made permanent.  A jury found in favor of the Employer, but it was still out $90,000 in defense costs.

For many mid-sized companies – and certainly for smaller ones – this type of unexpected legal expense could be crippling if the employment litigation risk were to materialize with no financial escape valve for the employer.

Fortunately, an Employment Practices Liability insurance policy can provide that escape hatch.

But What Does It Cost?

The cost to transfer one’s Employment Practices litigation risk is rather low, compared to the above-noted costs of retaining that risk.

As a rough estimate, the annual cost for Employment Practices Liability insurance can range from $150 to $350 per employee, depending upon the number of employees (the higher the employee count, the lower the cost-per-employee). 

To give you an example, here’s a sampling of the annual costs charged by a major player in the “small company segment” of the EPL insurance market:

            10    Employees = $3,473

            25    Employees = $5,345

            50    Employees = $10,026

            75    Employees = $12,786

            100 Employees = $16,243

Prices will vary, depending upon the specifics of each company, but the reader might agree that the cost to transfer a company’s Employment Practices litigation risk is a far easier figure to digest than the litigation figures above.

If a small to mid-size company has not considered Employment Practices Liability insurance because of 1) an underestimation of the risk involved; or 2) an overestimation of the cost to transfer that risk, hopefully this article will encourage a second look at the economics of the options.

John Wood is a Principal of McGee & Thielen Insurance Brokers, Inc. in Sacramento, CA, and can be reached at jwood@mcgeethielen.com

 

A Day of Rest is Clarified –

Posted on: June 26th, 2017 by Katrina Murphy No Comments

By Kim Silvers, SPHR-CA, SHRM-SCP

 

California employers who have employees working beyond a regular five-day schedule will be happy to see the California Supreme Court’s recent ruling in Mendoza v. Nordstrom.  Although Nordstrom may have felt like it “moved heaven and earth” to finalize this case law, it’s a positive ruling for employers.

The premise of the lawsuit from two employees at Nordstrom was around an interpretation of how to define the California Labor Code sections 551 and 552.  Section 551 notes that “every person employed in any occupation of labor is entitled to one day’s rest therefrom in seven.”  Section 552 prohibits employers from “causing their employees to work more than six days in seven.”  Further, section 556 of the CA Labor Code allows employers to make an exception to the one day of rest in seven “when the total hours of employment do not exceed 30 hours in any week or six hours in any one day thereof.” 

There were three primary issues on the court’s desk:

  1. Is the day of rest required by sections 551 and 552 calculated by the workweek, or does it apply on a rolling basis to any seven-consecutive-day period?

The court determined: A day of rest is guaranteed for each workweek.  Periods of more than six consecutive days of work that stretch across more than one workweek are not per se prohibited.

In essence, the seven-day period CA employers must denote as the workweek for payroll and overtime purposes is the period to review for the day of rest requirement. It is not a rolling seven-day period. For example, an employee on a predesignated seven-day workweek,  say, Sunday through Saturday, may work 12 consecutive days, but there is no day of rest required. This is because the schedule cuts across two pay periods, e.g., Monday to the Friday of the following pay period (such as July 10 – 21, 2017).  However, if the employee works seven consecutive days in the workweek (Sunday through Saturday in the example workweek above) then a day of rest may be required and/or overtime may be due to the non-exempt employee. See below for more.

  1. Does the section 556 exemption for workers employed six hours or less per day apply so long as an employee works six hours or less on at least one day of the applicable week, or does it apply only when an employee works no more than six hours on each and every day of the week?

The court determined:  The exemption for employees working shifts of six hours or less applies only to those who never exceed six hours of work on any day of the workweek.  If on any one day an employee works more than six hours, a day of rest must be provided during that workweek, subject to whatever other exceptions might apply.

The court did not address the situation where the employee works more than six hours on one or two days in the workweek, but the total hours are fewer than 30 in the week.

 

 

  1. What does it mean for an employer to cause an employee to go without a day of rest:  force, coerce, pressure, schedule, encourage, reward, permit, or something else? 

The court determined:  An employer causes its employee to go without a day of rest when it induces the employee to forgo rest to which he or she is entitled.  An employer is not, however, forbidden from permitting or allowing an employee, fully apprised of the entitlement to rest, independently to choose not to take a day of rest.

We encourage employers to make it clear and in writing that an employee who volunteers to work a seventh consecutive day in a workweek has done so at his/her own choice.  Get the employee’s offer to work in writing!  We offer a sample waiver for this in our HR Library for our clients.

 

Employers are permitted to average the days of rest over a calendar month. Section 554 of the Labor Code notes “Nothing in this chapter shall be construed to prevent an accumulation of days of rest when the nature of the employment reasonably requires that the employee work seven or more consecutive days, if in each calendar month the employee receives days of rest equivalent to one day’s rest in seven.”

 

Keep in mind that the day of rest laws apply to exempt and non-exempt employees.  However, overtime payment applies to non-exempt employees who do work seven consecutive days in the workweek.  The first eight hours worked on the seventh workday are paid at 1.5 times the regular rate of pay, and 2.0 times the regular rate of pay for hours worked beyond eight on the seventh consecutive workday in the workweek.

New California Regulations: Consideration of Criminal History in Employment Decisions

Posted on: June 26th, 2017 by Katrina Murphy No Comments

By Susan Breslauer, SPHR-CA, SHRM SCP

 

New California regulations entitled “Consideration of Criminal History in Employment Decisions Regulations”, will limit an employer’s right to use criminal background information in hiring and other employment decisions.  These regulations (or “the Act”) approved by the Fair Employment and Housing Council (“FEHC”), the state agency charged with enforcing civil rights laws in California, will take effect right around the corner on July 1, 2017.

The FEHC regulations are largely based on existing federal guidelines, specifically the Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Decisions Under Title VII of the Civil Rights Act of 1964, issued by the U.S. Equal Employment Opportunity Commission (“EEOC”) on April 25, 2012.

The FEHC regulations expand on the EEOC requirements and place additional burden on employers in selection and testing of applicants, placement, promotion and transfer of employees, specific practices in the use of criminal records and permissible selection devices.  In Section 11017.1 of the regulations, it states: “Employers are prohibited under the Act from utilizing other forms of criminal history in employment decisions if doing so would have an adverse impact on individuals on a basis enumerated in the Act that the employer cannot prove is job-related and consistent with business necessity or if the employee or applicant has demonstrated a less discriminatory alternative means of achieving the specific business necessity as effectively.”  Therefore, it is evident that employers must exercise even more caution as of July 1st when using criminal records in making employment decisions. 

Existing law currently prohibits CA employers from considering or seeking the following types of criminal records or information concerning:

  • An arrest or detention that did not result in conviction;
  • An arrest, detention, processing, diversion, supervision, adjudication, or court disposition while a person was in juvenile court;
  • A non-felony conviction for possession of marijuana that is two or more years old;
  • A referral to or participation in a pre-trial or post-trial diversion program; or
  • A conviction that has been judicially dismissed, expunged or sealed

These rules and the new regulations do not prohibit an employer from considering criminal history. Quite simply, they are intended to prevent employers from discriminating against employees in protected classes when the use of conviction records results in an adverse impact on protected classes, e.g., race, national origin and gender.   The regulations do not just pertain to hiring decisions, but they have to be taken into account when promoting, reprimanding or terminating an employee.  If the employee feels his/her rights have been violated, he/she may use this regulation to sue the employer.

The FEHC regulations require that employers must establish policy that is “job-related and consistent with business necessity” when using criminal information.  They can do so by demonstrating that the policy or practice is tailored to the job and takes into account at least the following factors:

  • The nature or gravity of the offense or conduct;
  • The time that has passed since the offense or conduct and/or completion of the sentence; and
  • The nature of the job held or sought

Employers may justify using a criminal record to determine if an individual is right for a job using one of the following approaches:

  • Rather than just looking at whether or not an applicant has a criminal record, conduct a personalized search (aka “individualized assessment”) of the circumstances of an offense. This must involve notice to the adversely impacted employee or applicant (before any adverse action is taken) that s/he has been screened out due to a criminal conviction.  The individual must have a reasonable opportunity to show that the exclusion should not apply to their circumstance. Subsequently, the employer must consider when the individual’s information deserves an exception to the disqualification.

 

  • Use a “bright-line” conviction disqualification test (One that is not “individualized” as defined in the Act, akin to an across-the-board standard) to demonstrate whether one’s offense does or does not merit a risk to his/her position. In this case, the employer does not consider an individual’s “individualized” circumstances when making the employment decision based on criminal history. Conviction information that is more than seven years old will not likely be defensible

The burden of proof has been shifted to the employer to show that a background check is job-related and consistent with business necessity if an applicant or employee establish adverse impact. 

The new regulations further require that before an employer may take adverse action (such as declining to hire or promote, discharging, or laying off) based on a conviction history obtained by a source other than the applicant or employee (e.g., through a credit report or internally generated research) the employer must give the individual notice of the disqualifying conviction and a reasonable opportunity to present evidence that the record is factually inaccurate.

Compliance with federal or state laws or regulations that mandate a criminal history screening processes or requiring that an employee or applicant possess or obtain any required occupational licenses (such as peace officers, employees at health facilities and pharmacies where there is access to patients or medical or controlled substances) constitute rebuttable defenses to an adverse impact claim by an individual.

 

BEST PRACTICES AND ACTIONS REQUIRED OR RECOMMENDED: 

 

  • If you have a background check policy, it should be revised to ensure that off-limits information is not being requested or considered.
  • Eliminate employment applications, policies and practices which automatically disqualify all applicants for all positions based on a criminal record. Consult legal counsel if you wish to have a “bright line” disqualification.
  • Comply with the notice requirement in the regulations prior to taking adverse action.
  • Review the regulations and ensure all requirements are followed.
  • Train supervisors and managers involved in the hiring process on appropriate screening inquiries.
  • Comply with Fair Credit Reporting Act (FCRA) notice requirements in the background check process.
  • If you have employees in San Francisco and Los Angeles, review related ordinances (aka “ban-the-box”) to ensure criminal history on job applications is removed. See our Ezine article Ban-the-Box Article – Spring 2017 for more details.  These cities have much more restrictive requirements around background checks.
  • The Silvers HR sample employment application was revised in December 2016 and again this week removing criminal background inquiries from the basic form (This information may not be asked in San Francisco and Los Angeles in the initial stages of the screening process.) and updating the marijuana convictions language. We recommend using this application if you have not already adopted it.
  • If you require criminal background checks due to contracts or industry-specific requirements, ensure background check forms state that any convictions arising from a juvenile court proceeding need not be listed.

 

Lastly, there is an Assembly Bill (AB 1008)  in the California Legislature that, if passed, will further restrict the use of criminal conviction information in the employment setting.  And it requires a tedious notification process.  We’ll keep you posted on this.  (The FEHC regulations here look quite do-able compared to AB 1008’s requirements as drafted.)

 

A copy of the FEHC “Consideration of Criminal History in Employment Decisions Regulations” can be found here

 

A copy of the EEOC Enforcement Guidance on the Consideration of Arrest and Conviction Records can be found at:

https://www.eeoc.gov/laws/guidance/arrest_conviction.cfm

Commissioned Employees are Entitled to Separate Pay for Rest Breaks

Posted on: March 27th, 2017 by Katrina Murphy No Comments

By Kim Silvers, SPHR-CA, SHRM-SCP

 

California employers received another surprise court decision requiring commissioned sales employees to be paid separately for their state-required rest breaks.  This decision is somewhat related to earlier decisions (and eventual state law) requiring piece rate workers to be compensated separately for rest breaks. If you have commissioned (inside sales) employees, read on and be prepared to review and edit your current compensation plans.

In Vaquero v. Stoneledge Furniture LLC, two former sales associates filed a class action suit against their former employer, Stoneledge Furniture, claiming that the company’s commission plan did not compensate them correctly for their mandatory rest breaks (minimum 10 minutes for every 4 hours worked, or major fraction thereof).[1] 

From 2009 through March 2014, Stoneledge Furniture paid their sales associates under a commission plan that included a base pay guarantee of at least $12.01 per hour. The base pay was applied toward commission earned (aka a “recoverable draw”).  If the sales associate earned less than $12.01 per hour in commission in any pay period, the company paid him/her a draw against future advanced commissions.  The commission plan noted that “The amount of the draw will be deducted from any future Advanced Commissions, but an employee will always receive at least $12.01 per hour for every hour worked.”  The commission plan did not note or allow separate compensation for non-selling time such as training, meetings or rest breaks.

The trial court sided with the employer agreeing that employees were paid at least $12.01 per hour even if they made no sales in the pay period.  This paid time included rest breaks.  However, the plaintiffs appealed to the CA Court of Appeal and won.  This case has a significant impact on other employers paying commission.

Appellate Court Rules Wage Order No. 7 Requires Employers to Separately Compensate Covered Employees for Rest Periods

The Court of Appeal took another look at the Industrial Wage Order (IWO) 7 language around rest periods.  (IWO 7 applies to the mercantile industry, but this rest period language is very similar in other wage orders.)  The IWO requires that “Authorized rest period time shall be counted as hours worked for which there shall be no deduction from wages.”  When a sales associate’s commission did not exceed the minimum rate in each week, Stoneledge deducted from future paychecks any wages advanced to compensate him/her for hours worked, including rest periods.  The appellate court determined that the “advances or draws against future commissions were not compensation for rest periods because they were not compensation at all. At best they were interest free loans…. Taking back money paid to the employee effectively reduces either rest period compensation or the contractual commission rate, both of which violate California law.”

The appellate court noted: “…Wage Order No. 7 applies equally to commissioned employees, employees paid by piece rate, or any other compensation system that does not separately account for rest breaks and other nonproductive time.” The court further noted: “The problem with Stoneledge’s compensation system, however, is that the formula it used for determining commissions did not include any component that directly compensated sales associates for rest periods.”   

For now, this ruling will apply to CA trial courts for similar cases.  It is not known if the ruling will be appealed further.

Here are our recommendations if you have commissioned employees:

 

  1. Ensure your commission plan is in writing and signed by each employee. This is a state law.
  2. Reconsider your use of a recoverable draw. It is risky for a commission plan to pay employees a guaranteed minimum hourly rate as a draw against their future commissions. (This is the kind of plan Stoneledge Furniture had.) The safer path is paying a base hourly rate for all hours worked (production and non-production time such as training, meetings and rest breaks) and a commission on top of that base rate.
  3. Remember that all time in and out should be recorded for hourly employees, including commissioned inside sales.
  4. Piece rate and commissioned employees should be compensated separately for rest break time and have this noted on the itemized wage statement. This rest break pay should not be subject to a draw against commissions.  (Piece rate employees’ itemized wage statements must also note the non-piece work pay rates and time as well.)
  5. Have an employment attorney review your commission pay plan each time you update it to ensure it is defensible.

[1] There was not an issue of whether rest breaks were authorized, permitted or any missed/shorted break premiums were owed.

 

Check Your New Hire Packet: A New Version of Form I-9 is in Effect

Posted on: March 27th, 2017 by Katrina Murphy No Comments

By Susan Breslauer, SPHR-CA, SHRM SCP

 

By January 22, 2017, all employers should be using the updated Form I-9, dated November 14, 2016, published by the US Citizenship and Immigration Services.  The new form has an expiration date of August 31, 2019.  All employers with one or more employees are required to complete Form I-9 and verify identification documents for newly hired employees by day three of employment.  Hopefully this is not new news to you!  These requirements were established in November 1986 by the Immigration Reform and Control Act (IRCA).  Since 1986, there have been many versions of Form I-9 published. 

Most notably, you may choose to complete the updated Form I-9 manually or via computer.  If you complete the form on the computer, you will find there are drop-down lists and calendars for filling in dates.  The instructions are programmed for each field, and there is quick access to the full instructions.  A handy feature is that you can clear the form and start over if errors are made.

There are several changes in the latest version that your I-9 verifier should be aware of.  Section 1 now asks for “other last names used” instead of “other names used” and it makes certification for certain foreign nationals more efficient.  Other formatting changes have been made, including:  Prompts have been added so that information is entered correctly; the instructions have been separated from the form and include specific instructions for completing each field; and there is an area for additional information so it does not need to be recorded in the margins.  In addition, a supplemental page for the preparer/translator has been added.

If you are a retained client, your Silvers HR Consultant has likely done an I-9 audit as part of your HR Practices Review and you are an ace in I-9 procedures.  Here are some reminders of proper procedures which are still in effect:

  • All new hires must complete Section 1 of Form I-9 by day one of employment.
  • Employers must verify documents and complete Section 2, including the certification portion, no later than day three of employment.
  • One document from List A, or one document from List B and List C, must be reviewed and recorded by the employer in Section 2. (We do not recommend keeping copies unless you are an E-Verify employer.)
  • The date of hire must be entered in Section 2 by the employer. (We find this is often missed).
  • The employer must complete all fields in certification box (section 2), including signing and dating the form.

We recommend appointing one person at each location to verify employment authorization documents for purposes of the Form I-9.  (It doesn’t work to have remote I-9 verifiers since actual I-9 documents, not photocopies, must be examined.)  This person should be trained in I-9 procedures, along with prohibited practices and unlawful types of immigration-related discrimination in hiring.  A handy tool to review is Part Four of the “Handbook for Employers – Guidance for Completing Form I-9”. The Handbook can be found in the Silvers HR Library or at this link.

Remember to keep all I-9s for active employees on file, preferably in a separate binder or file, not in the personnel files.  When an employee separates employment, retain his/her Form I-9 for one year from the termination date or three years from the hire date, whichever is later.

You may find the new Form I-9 in the Silvers HR Library.

 

 

More “Ban the Box” Laws; What Employers Need to Know

Posted on: March 27th, 2017 by Katrina Murphy No Comments

By Jennifer L. Lippi, J.D., SPHR

 

There are several local laws and a possible new state law that severely limit employer inquiry into criminal convictions.  On January 22, 2017, Los Angeles became the second city in California, after San Francisco, to adopt a “Ban the Box” ordinance that bars employers from inquiring about a job applicant’s criminal history until later in the hiring process.  Among other things, this means removing the check box questions common on many employment applications that ask, “Have you ever been convicted of a felony?” 

San Francisco’s Fair Chance Ordinance

San Francisco’s Fair Chance Ordinance took effect on August 13, 2014.  In general, the Ordinance prohibits employers from making any inquiry regarding criminal history until after an initial job interview.  Employers may ask about an applicant’s criminal history only after the first job interview or after a conditional offer of employment.  The Ordinance also prohibits employers from at any time inquiring into or taking an adverse action based on any of the following:

  1. An arrest not leading to a conviction;
  2. Participation in or completion of a diversion or a deferral of judgment program;
  3. A conviction that has been judicially dismissed, expunged, or otherwise rendered inoperative;
  4. A juvenile conviction;
  5. A conviction that is over seven years old from the date of sentencing; or
  6. An offense that is other than a felony or a misdemeanor, such as an infraction.

Furthermore, prior to conducting any criminal history inquiry, the employer must provide the applicant or employee with a written notice of their rights under the Ordinance.  The Ordinance also requires that the employer conduct an individualized assessment of the nature of the offense as it relates to the specific position at issue.  The offense may only be considered if it has a “direct and specific negative bearing on that person’s ability to perform the duties or responsibilities necessarily related to the employment position.”  In making this determination, the employer must consider whether the position “offers the opportunity for the same or a similar offense to occur” and whether “circumstances leading to the conduct for which the person was convicted will reoccur.”  The individualized assessment also requires consideration of the time that has elapsed since the conviction and any evidence of mitigating factors or rehabilitation.

If a San Francisco employer decides to take adverse action based on criminal history information, they must first notify the applicant or employee in writing of the intended decision, and allow the applicant or employee seven (7) days to respond with any evidence of inaccuracy in the information or to describe any evidence of inaccuracy.  The employer must also provide a copy of the background check or criminal conviction report.  Upon receiving such response, the employer must wait an additional reasonable time to reconsider the prospective adverse action in light of the new information.  After the employer has allowed the employee adequate time to respond, the employer may take final adverse action based upon the conviction history, but must notify the employee that the final adverse action was taken because of the conviction history. 

Los Angeles Fair Chance Initiative For Hiring

Los Angeles has taken a different and more rigid approach than San Francisco with its Fair Chance Initiative.  While the San Francisco Ordinance prohibits any type of criminal history inquiry until after the initial job interview, the Los Angeles Ordinance prohibits employers from inquiring about criminal histories until after a conditional offer of employment has been made.

The Los Angeles Ordinance prohibits:

  1. Asking any question on a job application about an applicant’s criminal history;
  2. Asking about or requiring disclosure of an applicant’s criminal history during a job interview; and
  3. Independently searching the internet for criminal conviction history or running a criminal background check before a conditional offer of employment has been made.

The Los Angeles Ordinance has a very specific “Fair Chance Process” that must be followed if an adverse action is taken as a result of an inquiry into criminal history.  Prior to taking any adverse action, the employer must:

  1. Perform a written assessment that links the specific aspects of the applicant’s criminal history with the risks inherent in the duties of the position. At a minimum, the employer must consider the factors identified by the Equal Employment Opportunity Commission (“EEOC”) and any rules or regulations issued by any agency designated with enforcement responsibilities;
  2. Provide the applicant with written notice of the proposed action, a copy of the written assessment, and any other information supporting the employer’s proposed adverse action;
  3. Wait at least five (5) business days after the applicant is informed of the proposed adverse action before taking any adverse action or filling the position, in order to give the applicant an opportunity to respond;
  4. Consider the applicant’s additional information or documentation and perform a written reassessment of the proposed adverse action.
  5. If the employer elects to continue with the adverse action after a reassessment, it must notify the applicant of the decision and provide the applicant with a copy of the written reassessment.

The San Francisco and Los Angeles Ordinances also contain detailed disclosure, posting, and recordkeeping requirements. 

Assembly Bill 1008 (“AB 1008”)

But wait, there is more.  Don’t do business in San Francisco or Los Angeles?  You may still not be off the hook.  There is a new bill pending in the California legislature that may “Ban the Box” for most employers in California.  AB 1008, as proposed, makes it an unlawful employment practice for an employer to include on any application for employment any question that seeks disclosure of an applicant’s criminal history, or to inquire into or consider the conviction history of an applicant until that applicant has received a conditional offer of employment. 

AB 1008 also proposed a “Fair Chance Process.”  An employer that intends to deny an applicant the position based solely or in part because of the applicant’s criminal history must make an individualized assessment of whether the applicant’s conviction history has a direct adverse relationship with the specific duties of the job that justify denying the applicant the position.  In making the assessment, the employer must consider the nature and gravity of the offense or conduct, the time that has passed since the offense, and the nature of the job held or sought.  In making the individualized assessment, employers must be consistent with the EEOC guidelines surrounding conviction records in employment. 

If the employer makes a preliminary decision that the applicant’s criminal history disqualifies him or her from employment, the employer shall notify the applicant of the decision in writing.  The notice must contain all of the following:

  1. Identify the conviction that is the basis for the potential denial or disqualification;
  2. Provide a copy of the conviction history report, if any;
  3. Provide examples of mitigation or rehabilitation evidence that the applicant may voluntarily provide; and
  4. Provide the applicant notice of the right to respond within ten (10) business days.

The applicant has ten (10) days to respond with information that challenges the accuracy of the information in the notice or include mitigation or rehabilitation evidence.  The employer is required to consider the information submitted by the applicant prior to making a final decision. The bill also states that an employer may not disqualify an applicant from employment if they showed evidence of mitigation or rehabilitation.

If an employer makes a final decision to deny employment because of a prior conviction, a second notice must be given that includes all of the following:

  1. The final denial or disqualification;
  2. Any existing procedure the employer has to challenge the decision or request reconsideration;
  3. Whether the applicant may be eligible for other employment or occupation with the employer;
  4. The earliest date the applicant may reapply for a position of employment; and
  5. The right to file a complaint with the Department of Fair Housing and Employment (“DFEH”).

We will continue to monitor the status of AB 1008.  However, in the meantime, if you are located in or do business in San Francisco or Los Angeles, you should revise all job application forms, advertisements, and job postings. Hiring staff should be trained as to what questions may be asked during the initial interview and how to process an individualized assessment when evaluating an applicant’s conviction history.

All Gender Restrooms Are on the Way

Posted on: December 21st, 2016 by Katrina Murphy No Comments

All Gender Restrooms Are on the Way

 

If you’ve combed through our 2017 employment law update, you’ll find a new bill (Assembly Bill 1732) tucked into the middle of this tome that requires all single-user toilet facilities be identified as an all-gender toilet facilities using proper gender neutral signage. A “single-user toilet” is defined to mean a toilet facility with no more than one water closet (aka flushing toilet) and one urinal, with a door locking mechanism controlled by the user and designated for use by no more than one occupant at a time or for family or assisted use.

The new requirement will apply to any business, place of public accommodation, or state or local government agencies on March 1, 2017. (more…)