Author Archives: dfrankel

2017 New Laws

Employment

Choice of Law and Venue in Employment Contracts.  California employers cannot require employees who primarily live and work in California to agree to litigate or arbitrate claims against the employer somewhere other than California and agree to apply law other than California law to resolve employment disputes.  Labor Code § 925.

Applicants for Employment.  Existing law prohibits an employer from asking an applicant for employment to disclose information concerning an arrest or detention that did not result in a conviction, or information concerning a referral or participation in, any pretrial or post-trial diversion programs, with limited exceptions.  Effective January 1, 2017, the same prohibitions exist while the person was subject to the process and jurisdiction of juvenile court.  Labor Code §432.7.

Posters – new CA minimum wage poster is required.

Wage Inequality Claims: The California Fair Pay Act now goes beyond gender wage inequality to address racial/ethnic wage disparity.  Employers are prohibited from paying any of its employees wage rates that are less than the rates paid to employees of another race or ethnicity for substantially similar work.  Prior salary cannot, by itself, justify a disparity in compensation.  Employers are prohibited from paying any of their employees less than employees of the opposite sex or of another race or ethnicity for “substantially similar work.” The burden is on employers to justify pay differentials from an acceptable list of factors that must be applied reasonably. The relied upon factors must account for the entire wage differential. The California Fair Pay Act does not require an employee to show any discriminatory intent. Labor Code § 1197.5

California’s minimum wage is $10.50 per hour for employers with 26 or more employees and $10 per hour for employers that employ 25 or fewer people.​

Minimum Salary Requirements for Exempt Employees.  Properly classified exempt employees generally must meet a specific minimum salary test. Under California law, the most common exemptions require employees to earn a minimum monthly salary of no less than two times the state minimum wage for full-time employment, and the salary must be a pre-determined sum. There are different rules for some employees, such as hourly physicians, computer professionals and outside salespersons. However, placing an employee on a salary does not exempt that employee from wage and hour laws. A nonexempt employee placed on a “salary” earns overtime just as hourly wage earners do.

The minimum monthly salary requirement for exempt executive, administrative and professional employees is no less than two times the state minimum wage for full-time employment. It is based on the current state minimum wage, not any applicable local minimum wage. Accordingly, the 2017 minimum salary threshold for these exemptions is as follows:

For employers with 26 or more employees, the state minimum wage is $10.50 per hour.  The minimum monthly salary test for these exemptions is $3,640 per month ($43,680 per year) for 2017.

For employers with 25 or fewer employees, the state minimum wage does not increase. It remains at $10 per hour in 2017. Accordingly, the minimum monthly salary test remains at $3,466.67 per month ($41,600 per year) for 2017.

Verifying Hiring Documents.  Employers may not request more or different documents than required under federal law to verify employment eligibility.  Employers cannot refuse to honor documents that on their face reasonably appear to be genuine or reinvestigate or re-verify an incumbent authorization to work using an unfair immigration-related practice. The financial penalty for violating these provisions is up to $10,000. Labor Code §1019.1.

Marijuana in the Workplace.  Proposition 64 (effective 11/8/16) states that it is intended to “allow public and private employers to enact and enforce workplace policies pertaining to marijuana.” The initiative also provides that it will not be construed or interpreted to amend, repeal, affect, restrict or pre-empt:

“The rights and obligations of public and private employers to maintain a drug and alcohol free workplace or require an employer to permit or accommodate the use, consumption, possession, transfer, display, transportation, sale or growth of marijuana in the workplace, or affect the ability of employers to have policies prohibiting the use of marijuana by employees and prospective employees, or prevent employers from complying with state or federal law.”

Marijuana remai​ns an illegal Schedule I substance under federal law.  Employers with drug- and alcohol-free workplace policies may continue to maintain and enforce them in California.

Rest Breaks.  ​​​​Employers must authorize and permit paid rest periods for all nonexempt employees whose total daily work time is at least 3.5 hours. These mandatory rest breaks must be offered at the rate of 10 “net” minutes for every four hours worked, or “major fraction thereof.”  The rest period begins when the employee reaches an area away from the workstation that is appropriate for rest.  Rest periods as paid as hours worked. Employers may not require employees to remain “on call” during rest periods.  Augustus v. ABM Security Systems, Inc., No. S224853 (December 22, 2016).Content 1

Victims of domestic violence, sexual assault and stalking (applicable to employers of 25 or more employees) may take protected time off for medical treatment or legal proceedings, have rights to accommodation, and protections against discrimination.  Effective July 1, 2017, a required form must be given to all new employees when hired and to current employees upon request, which will be developed by the Labor Commissioner. Employers are not required to comply with this notice requirement until the Labor Commissioner posts the new form on its website. Labor Code § 230.1(h).

Licensure Requirements for Hair Salons/Nail Salons

Effective July 1, 2017, any establishment that is licensed by the Board of Barbering and Cosmetology (BBC) (e.g., hair salons, nail salons, estheticians, etc.) must post a notice regarding workplace rights and wage-and-hour laws. The Labor Commissioner must create the model notice by June 1, 2017. The BBC is required to inspect for compliance with the posting requirement; failure to post the notice will result in a fine.

The model notice shall include information, including, but not limited to, all of the following:

(1) Misclassification of an employee as an independent contractor.

(2) Wage and hour laws, including, but not limited to, minimum wage, overtime compensation, meal periods, and rest periods.

(3) Tip or gratuity distribution.

(4) How to report violations of the law.

(5) Business expense reimbursement.

(6) Protection from retaliation.

(c) The model notice shall include full text translations in Spanish, Vietnamese, and Korean.

Labor Code § 98.10

Appeal of Labor Commissioner ruling on minimum wages must post bond to cover amount owed which must be paid within 10 days of conclusion of the proceedings.  Labor Code § 1197.1.

Smoking in the Workplace.  The smoking ban extends to covered parking lots, lobbies, lounges, waiting areas, elevators, stairwells and restrooms for owner-operated businesses.  In addition, former exemptions are now eliminated for hotel lobbies, bars and taverns, banquet rooms, warehouse facilities and employee breakrooms. Labor Code §6404.5.

Business

Consumer Review Fairness Act of 2016: prohibits restriction on online posts.  Under the federal law, terms that disparage, restrict, or penalize poor customer reviews will be void. Any company that attempts to restrict customers or punish them for reviews will be subject to Federal Trade Commission enforcement of the law, with potential penalties. Enforcement authority is provided to the Federal Trade Commission (FTC) and states. The FTC must provide businesses with nonbinding best practices for compliance. Public Law No: 114-258

New IRS mileage reimbursement rate: $ 53.5/mile

Limited liability company dissolution: now requires 50% or more of the voting interests of the LLC members rather than a majority of the LLC members.  Corporation Code §§ 17707.01 and 17707.02.

Single-user restrooms are open to all genders, effective 3/1/17.  Health & Safety Code § 118600.

Real Estate

Land suitable for residential development” includes airspace above sites owned or leased by cities and counties.  Government Code § 65583.2.

Disclosure of death on residential property.  There is no affirmative duty for seller’s to disclose to prospective buyer/tenant of residential property that someone died on the property.  But if a prospective buyer or tenant asks about deaths on the property, the seller/landlord/agent must answer truthfully.  Civil Code §1710.2.

Accessibility Standards.  Commercial landlords must give prospective tenants a copy of any Certified Access Specialist (CASp) report at least 48 hours before a lease is signed or the tenant can rescind the lease within 72 hours after signing the lease.  If the property has not had a CASp inspection, the tenant may request one and the parties would then have to agree on arrangements for the inspection and how to pay for any needed repairs.  Civil Code § 1938.

Litigation

Court reporters OK in arbitration proceedings, paid by requesting party.  Code of Civil Procedure §1282.5

Businesses that are proactively trying to comply with ADA will have a chance to fix any violations prior to commencement of litigation.  Civil Code §§ 53.53, 55.56.

Sex offense perpetrators cannot require confidentiality provisions in settlement agreements relating to facts underlying a civil claim for a felony sex offense, an act of childhood sexual abuse, sexual exploitation of a minor, or an act of sexual assault against an elder or dependent adult.  Code of Civil Procedure § 1002.

Unless landlord prevails within 60 days after filing an eviction suit against a tenant, the case record will remain sealed and not accessible to unlawful detainer registries.  Code of Civil Procedure § 1161.2.

Family Law

“Separation” does not require living separately.  The date of separation is the date that a “complete and final break in the marital relationship has occurred,” as evidenced by the spouse (1) expressing to the other spouse his or her intent to end the marriage, and (2) acting consistently with his or her intent to end the marriage.  Family Code §§ 70 and 771.

“Registered domestic partner” is the same as “spouse.”  Family Code §143.

Reminder of 2016 Employment Law

Harassment and Discrimination Prevention and Correction.

(a) Employers have an affirmative duty to take reasonable steps to prevent and promptly correct discriminatory and harassing conduct. (Gov. Code, § 12940(k).)

(1) A determination as to whether an employer has complied with Government Code section 12940(k) includes an individualized assessment, depending upon numerous factors sometimes unique to the particular employer including, but not limited to, its workforce size, budget, and nature of its business, as well as upon the facts of a particular case.

(2) There is no stand-alone, private cause of action under Government Code section 12940(k). In order for a private claimant to establish an actionable claim under Government Code section 12940(k), the private claimant must also plead and prevail on the underlying claim of discrimination, harassment, or retaliation.

(3) However, in an exercise of its police powers, the Department may independently seek non-monetary preventative remedies for a violation of Government Code section 12940(k) whether or not the Department prevails on an underlying claim of discrimination, harassment, or retaliation.

(b) Employers have an affirmative duty to create a workplace environment that is free from employment practices prohibited by the Act. In addition to distributing the Department’s DFEH-185 brochure on sexual harassment, or an alternative writing that complies with Government Code section 12950, an employer shall develop a harassment, discrimination, and retaliation prevention policy that:

(1) Is in writing;

(2) Lists all current protected categories covered under the Act;

(3) Indicates that the law prohibits coworkers and third parties, as well as supervisors and managers, with whom the employee comes into contact from engaging in conduct prohibited by the Act;

(4) Creates a complaint process to ensure that complaints receive:

(A) An employer’s designation of confidentiality, to the extent possible;

(B) A timely response;

(C) Impartial and timely investigations by qualified personnel;

(D) Documentation and tracking for reasonable progress;

(E) Appropriate options for remedial actions and resolutions; and

(F) Timely closures.

(5) Provides a complaint mechanism that does not require an employee to complain directly to his or her immediate supervisor, including, but not limited to, the following:

(A) Direct communication, either orally or in writing, with a designated company representative, such as a human resources manager, EEO officer, or other supervisor; and/or

(B) A complaint hotline; and/or

(C) Access to an ombudsperson; and/or

(D) Identification of the Department and the U.S. Equal Employment Opportunity Commission (EEOC) as additional avenues for employees to lodge complaints.

(6) Instructs supervisors to report any complaints of misconduct to a designated company representative, such as a human resources manager, so the company can try to resolve the claim internally. Employers with 50 or more employees are required to include this as a topic in mandated sexual harassment prevention training, pursuant to section 11024 of these regulations.

(7) Indicates that when an employer receives allegations of misconduct, it will conduct a fair, timely, and thorough investigation that provides all parties appropriate due process and reaches reasonable conclusions based on the evidence collected.

(8) States that confidentiality will be kept by the employer to the extent possible, but not indicate that the investigation will be completely confidential.

(9) Indicates that if at the end of the investigation misconduct is found, appropriate remedial measures shall be taken.

(10) Makes clear that employees shall not be exposed to retaliation as a result of lodging a complaint or participating in any workplace investigation.

(c) Dissemination of the policy shall include one or more of the following methods:

(1) Printing and providing a copy to all employees with an acknowledgment form for the employee to sign and return;

(2) Sending the policy via e-mail with an acknowledgment return form;

(3) Posting current versions of the policies on a company intranet with a tracking system ensuring all employees have read and acknowledged receipt of the policies;

(4) Discussing policies upon hire and/or during a new hire orientation session; and/or

(5) Any other way that ensures employees receive and understand the policies.

(d) Any employer whose workforce at any facility or establishment contains 10 percent or more of persons who speak a language other than English as their spoken language shall translate the policy into every language that is spoken by at least 10 percent of the workforce.

  • CCR § 11023

Rest Periods: Employees Must Be Relieved Of All Duties

On December 22, 2016, the California Supreme Court decided a landmark case regarding rest periods that is applicable to California employers.  The issue relates to California’s rest period obligations, holding that employers must “relieve employees of all duties” and “relinquish all control over employees” during rest periods.

“California law requires employers to relieve their employees of all work-related duties and employer control during 10-minute rest period.”

Security guards employed by ABM Security Services were required to keep their pagers and radio phones on, remain vigilant, and respond when needs arose when on their rest breaks.  The security guards sued ABM for failing to consistently provide uninterrupted rest periods.  The Supreme Court affirmed a trial court judgment against ABM for $90 million.

The California Supreme Court held that Labor Code Section 226.7(a) prohibits an employer from requiring “any employee to work during any meal or rest period mandated by an applicable order of the Industrial Welfare Commission (“IWC”).”  IWC Wage Order 4, 12(a) provides that “[e]very employer shall authorize and permit all employees to take rest periods…”

Employers that require employees to remain “on-call” during their rest periods violate wage order requirements that a rest period means “uninterrupted.”

Employers unable to comply with providing employees an uninterrupted rest period have other options, including rescheduling rest periods, providing new rest periods when interruptions occur and paying the premium pay remedy for missed rest periods.  The retroactive applicability of the decision is unclear.

 

Augustus v. ABM Security Services, Inc. (12/22/16), 2016 DJDAR 12608).

Employment Agreement Protection Now Available for California Employees

Employment Agreement Protection Now Available for California Employees
Choice of Law and Venue

Effective January 1, 2017, an employer cannot require an employee who primarily resides and works in California, as a condition of employment, to agree to a provision that would do either of the following:

  1. Require the employee to adjudicate outside of California a claim arising in California.
  2. Deprive the employee of the substantive protection of California law with respect to a controversy arising in California.

Any provision of a contract that violates this law is voidable by the employee, and if a provision is rendered void at the request of the employee, the matter shall be adjudicated in California and California law shall govern the dispute.

The employee may be awarded attorney’s fees for enforcing his or her rights.

This section does not apply to a contract with an employee who is individually represented by counsel in negotiating choice of law and venue for adjudicating disputes.

Most California employees do not enter into written employment agreements.  For those employees that have a written employment contract, this statute is designed to protect employers that insert contractual provisions that the laws of another state shall control and the location for any lawsuit shall be outside of California.  This is done for the convenience of the employer and, in some cases, because the employer believes the employer will obtain a more favorable result.

Anonymous Complaints on Social Media

Business owners sometimes get heartburn when reading anonymous complaints about their business on various websites.  Individuals sometimes get heartburn when posting complaints about a business that may trigger the business filing a lawsuit against them.

On August 18, 2016, the San Francisco Daily Journal, a newspaper for the legal profession, reported on a pending lawsuit in a Los Angeles County Superior Court.

Nine anonymous workers posted negative reviews on Glassdoor’s website about their employer.  Glassdoor publishes information about employers derived from anonymous persons purporting to be current or former employees.  The employer contacted Glassdoor about 12 allegedly defamatory reviews posted in the past year, six of which Glassdoor removed after being served with a subpoena to uncover the identities of the posts’ authors.  The posts described the employer as a hostile workplace with unsatisfied clients, and alluded to questionable ethical practices.

The employer filed a lawsuit against the nine persons as “Doe” defendants for defamation and unfair competition.  Once the identities of the persons is known, the complaint will be amended to show the true identity of the individuals.

Glassdoor, not a party to the litigation, refused to reveal the identities of its posters.  Glassdoor then retained legal counsel on behalf of the users to accept service of the employer’s lawsuit and then file an anti-SLAPP (“strategic lawsuit against public participation”) claim against the employer.

The judge dismissed most of the defamation claims on grounds that the negative posts were made in a public forum on a topic of public interest, considered protected speech.  Other claims against four defendants were not dismissed because the judge believes that their posts contained statements of fact rather than protected opinion.

The employer believes that the judge should not have dismissed any claims because the jury should decide whether the posts are fact or opinion.  Glassdoor plans to appeal the judge’s decision not to dismiss all claims.

Employer’s Required to Update Policy on Harassment and Discrimination

Effective April 1, 2016, all employers should have updated employer policy on harassment and discrimination to comply with new California requirements as set forth below.

2 California Code of Regulations

  • 11023. Harassment and Discrimination Prevention and Correction.

(Effective April 1, 2016)

(a) Employers have an affirmative duty to take reasonable steps to prevent and promptly correct discriminatory and harassing conduct. (Gov. Code, § 12940(k).)

(1) A determination as to whether an employer has complied with Government Code section 12940(k) includes an individualized assessment, depending upon numerous factors sometimes unique to the particular employer including, but not limited to, its workforce size, budget, and nature of its business, as well as upon the facts of a particular case.

(2) There is no stand-alone, private cause of action under Government Code section 12940(k). In order for a private claimant to establish an actionable claim under Government Code section 12940(k), the private claimant must also plead and prevail on the underlying claim of discrimination, harassment, or retaliation.

(3) However, in an exercise of its police powers, the Department may independently seek non-monetary preventative remedies for a violation of Government Code section 12940(k) whether or not the Department prevails on an underlying claim of discrimination, harassment, or retaliation.

(b) Employers have an affirmative duty to create a workplace environment that is free from employment practices prohibited by the Act. In addition to distributing the Department’s DFEH-185 brochure on sexual harassment, or an alternative writing that complies with Government Code section 12950, an employer shall develop a harassment, discrimination, and retaliation prevention policy that:

(1) Is in writing;

(2) Lists all current protected categories covered under the Act;

(3) Indicates that the law prohibits coworkers and third parties, as well as supervisors and managers, with whom the employee comes into contact from engaging in conduct prohibited by the Act;

(4) Creates a complaint process to ensure that complaints receive:

(A) An employer’s designation of confidentiality, to the extent possible;

(B) A timely response;

(C) Impartial and timely investigations by qualified personnel;

(D) Documentation and tracking for reasonable progress;

(E) Appropriate options for remedial actions and resolutions; and

(F) Timely closures.

(5) Provides a complaint mechanism that does not require an employee to complain directly to his or her immediate supervisor, including, but not limited to, the following:

(A) Direct communication, either orally or in writing, with a designated company representative, such as a human resources manager, EEO officer, or other supervisor; and/or

(B) A complaint hotline; and/or

(C) Access to an ombudsperson; and/or

(D) Identification of the Department and the U.S. Equal Employment Opportunity Commission (EEOC) as additional avenues for employees to lodge complaints.

(6) Instructs supervisors to report any complaints of misconduct to a designated company representative, such as a human resources manager, so the company can try to resolve the claim internally. Employers with 50 or more employees are required to include this as a topic in mandated sexual harassment prevention training, pursuant to section 11024 of these regulations.

(7) Indicates that when an employer receives allegations of misconduct, it will conduct a fair, timely, and thorough investigation that provides all parties appropriate due process and reaches reasonable conclusions based on the evidence collected.

(8) States that confidentiality will be kept by the employer to the extent possible, but not indicate that the investigation will be completely confidential.

(9) Indicates that if at the end of the investigation misconduct is found, appropriate remedial measures shall be taken.

(10) Makes clear that employees shall not be exposed to retaliation as a result of lodging a complaint or participating in any workplace investigation.

(c) Dissemination of the policy shall include one or more of the following methods:

(1) Printing and providing a copy to all employees with an acknowledgment form for the employee to sign and return;

(2) Sending the policy via e-mail with an acknowledgment return form;

(3) Posting current versions of the policies on a company intranet with a tracking system ensuring all employees have read and acknowledged receipt of the policies;

(4) Discussing policies upon hire and/or during a new hire orientation session; and/or

(5) Any other way that ensures employees receive and understand the policies.

(d) Any employer whose workforce at any facility or establishment contains 10 percent or more of persons who speak a language other than English as their spoken language shall translate the policy into every language that is spoken by at least 10 percent of the workforce.

Social Media and the First Amendment

When do comments on social media provide sufficient facts for a successful lawsuit?

A recent case in the U.S. District Court, Northern District of California, may be helpful.

Anonymous comments were posted on Twitter about a company called Music Group Macao Commercial Offshore Limited (“Music Group”).  There were two criticisms of Music Group.   The first relates to business practices and products.    The second indirectly accuses the company’s CEO of tax evasion and also of traveling internationally while concealing things inside his body.  “The first comment is troubling, the latter merely crass.  But they are both one-time comments.  Even the tax-evasion remark would likely be read as what it is: one rant among countless others from someone with an obvious grudge against Music Group’s CEO.  The court does not think that, in the eyes of an ordinary person, this one-time comment would lower the CEO in the community’s estimation.”  The court goes on to hold that the comments must be read “in context.”  “This single comment does not outweigh the defendant’s First Amendment interest in anonymous speech. “

The Twitter posting stated that Music Group intentionally designs its products to break within three to six months, that the company “encourages domestic violence and misogyny,” and that the company’s CEO “engages with prostitutes.”  The court held that the first comment falls within the realm of legitimate commercial criticism and the last comments are plainly defamatory.  The CEO was not a party to the lawsuit.  The plaintiff was Music Group only.  “The First Amendment ….requires that the challenged statement be ‘of and concerning’ the complainant.”

Even the statement about domestic violence and misogyny requires the court to “compare the magnitude of the harms that would be caused to the [plaintiffs’ and defendants’] competing interests” if the court were to order the defendant’s identity be disclosed.  “Furthermore, in making this assessment, the court must ask ‘whether disclosure of the defendant’s identity would deter other critics from exercising their First Amendment rights.’”  Nonetheless, this anonymous comment was the most troubling for the court.  “That comment, on its face and read alone, is less like legitimate commercial criticism and more like the ‘fighting works and obscenity’ that are not protected by the First Amendment at all.”  Unfortunately for Music Group, the court also viewed a short video produced by the anonymous defendants that placed the words in context.  The court found the video was a short comedic ad, nothing other than joking and ironic.  “It does not fall outside the First Amendment for being in poor taste.”

The court denied Music Group’s motion to enforce the subpoena on Twitter to identify the source of the anonymous comments.

So what is the “teachable moment?”  Filing a lawsuit is a public record.  Music Group may have brought a good deal more publicity to these comments by choosing to file a lawsuit rather than simply ignoring the Twitter posting.  The First Amendment provides for strong protection of speech, albeit not unlimited protection.  Depending upon the court assignment, conclusions may vary under the balancing test comparing harm and competing speech interests.  Absent a “real evidentiary basis” with competent evidence, litigation for social media defamation claims may succumb to the protection of the First Amendment.

On the other hand, anonymous postings may not always remain anonymous.  There are no assurances that defendants will prevail.  If the defendants lose, their anonymity most likely disappears.  Their loss may be broadcast over the same Internet used to state the disparaging facts about a business or person(s).  This may provide an unflattering side to the defendant’s character for all to view – forever.  It’s a two-way street.

Music Group Macao Commercial Offshore Limited, et al v. John Does, (2015) 82 F.Supp.3d 979