New Year, New Laws for California Employers – Deposition Limits, San Francisco Ordinances and Meal Periods

In the final part of our series, “New Year, New Laws for California Employers,” we take a look at new deposition limits, San Francisco ordinances and meal periods.   Prepared by Mark Terman, partner in the Los Angeles office, this series looks at some of the significant new regulations becoming law in 2013 affecting private employers doing business in California.

Deposition Limits

AB 1875 limits a deposition of any person to seven hours of total testimony, similar to the requirement in federal courts.  Excepted from this limitation are depositions in employment and complex cases, and of expert witnesses.

San Francisco City Ordinances

For an employer who directly or indirectly employs or exercises control over an employee’s wages, hours and working conditions in the city of San Francisco, Minimum Wage, Health Care Security (HCS) and Paid Sick Leave (PSL) Ordinances benefit those employees (http://sfgsa.org/index.aspx?page=430).

For 2013, hourly minimum wage for employees in San Francisco increases to $10.55 from $10.22, while the statewide minimum wage outside San Francisco remains at $8. The required 2013 “spend per employee,” under the HCS Ordinance for employers with 100 or more employees increases to $2.33 from $2.20 per hour.  For employers of 20-99 employees, spend increases to $1.55 from $1.46.  Exempt from the HCS Ordinance are employers with 19 or fewer employees, managers and supervisors salaried at $86,593 or more and nonprofit employers of less than 50 employees.  So far, there is no change in the PSL Ordinance.

Meal Periods

Of the many court decisions this year affecting employers, perhaps none impact as many employers as the California Supreme Court’s meal period directive in Brinker Restaurant Corp. v. Superior Court.

Before Brinker, California employers were relegated to policing and disciplining employees to ensure they took at least one, 30-minute nonworking meal periods and, if employers did not, they stood to risk class-action and single-plaintiff litigation over regular wages, overtime wages, wage premium (an extra hour of pay for each meal period lost), interest and attorneys’ fees.

By contrast, Brinker ruled that an employer’s obligation is to relieve its employees of all duty, with employees then at liberty to use the meal period for whatever purpose, but the employer need not ensure that no work is done during the meal period.  Likewise, an employee may not capitalize on premium pay by intentionally working through provided meal periods, and an employer may not “impede or discourage” a full, uninterrupted meal period. Finally, the court held that an employer must provide a reasonable opportunity to take meal periods of at least 30 uninterrupted minutes, within the proper time frame, and relieve employees of all duties.

While this case is welcome news, employee claims may still surface. For example, some employees may contend that they were impeded or discouraged from taking lunch or leaving their work area, thus triggering premium pay.  Some employees may habitually decline to take a meal period to try to consume “regular rate” working time midday and assure that some overtime is worked, forcing the employer to pay overtime rates for those hours. Consequently, some employers may still prefer to require by their own policies that meal periods are actually taken, rather than made available.

 

Links to the other posts from this series are below.

New Year, New Laws for California Employers – Employer Access to Social Media

New Year, New Laws for California Employers – Religious Dress and Grooming Protected and Breastfeeding Further Protected

New Year, New Laws for California Employers – Added Whistle-blower Protections, With Whom Will the EDD Share Employer Reports and Contracts with Commission Employees

New Year, New Laws for California Employers – Right to Inspect and Receive Employment Records and Right to Inspect and Copy Wage Records

New Year, New Laws for California Employers – Right to Inspect and Receive Employment Records and Right to Inspect and Copy Wage Records

Next in our series, “New Year, New Laws for California Employers,” we take a look at the rights of the right to inspect and receive employment records and the right to inspect and copy wage records.  Prepared by Mark Terman, partner in the Los Angeles office, this series looks at some of the significant new regulations becoming law in 2013 affecting private employers doing business in California.

Right to Inspect and Receive Employment Records

Under existing law, an employee has the right to inspect the personnel records relating to the employee’s performance or to any grievance concerning the employee, and has a right to copies of documents the employee has signed. AB 2674 requires employers to provide a current or former employee—or the employee’s representative authorized by the employee in writing—an opportunity to inspect and receive a copy of those records at reasonable intervals and at reasonable times. Deliverance of these papers is not to exceed 30 days of a written request, except during the pendency of a lawsuit filed by the employee or former employer relating to a personnel matter.

Employers are also required to create a records request form, but information requestors are not required to use it.  Current and former employees can bring legal action to recover a $750 penalty from the employer and their attorney’s fees, and obtain court orders compelling compliance.

This new law also adds some employer protections. Employers are not required to comply with more than 50 requests from a representative in one calendar month, may redact names of non-supervisory employees before producing records, and may charge no more than the actual cost of reproduction and, if mailed, postage.  The new law generally does not apply to employees covered by a valid collective bargaining agreement.  And it does not apply to: “(1) Records relating to the investigation of a possible criminal offense. (2) Letters of reference. (3) Ratings, reports or records that were: (A) Obtained prior to the employee’s employment; (B) Prepared by identifiable examination committee members; (C) Obtained in connection with a promotional examination.”

Right to Inspect and Copy Wage Records

Labor Code Sec. 226(a) continues to require employers to provide an itemized statement or paystub with timely wage payment that states gross wages, total hours worked and rates of pay for the hours of a nonexempt employee, all deductions, net wages earned, payroll period dates and other mandatory information.  (See, paystub requirements: http://leginfo.legislature.ca.gov/faces/codes.xhtml, click on “LAB” and “226”).

Employers are required to keep a copy of these wage records for at least three years at the place of employment, or at a central location within California.  Current or former employees may inspect or copy these records upon 21 days written or oral notice.  An employee suffering injury as a result of a knowing and intentional failure by an employer to comply with its Labor Code Sec. 226(a) paystub requirements is entitled to recover the greater of all actual damages or a specified sum, not exceeding an aggregate penalty of $4,000, and is entitled to an award of costs and reasonable attorney’s fees.

AB 2674 clarifies that the term “copy,” for purposes of wage record retention, includes a duplicate of the itemized statement provided to an employee or a computer-generated record that accurately shows all of the information existing law requires to be included in the itemized statement.

SB 1255 makes it easier to pursue penalties against employers by presuming injury when wage statements do not have all required information.  Under the new law, an employee is deemed to suffer injury if the employer fails to provide:

1. A wage statement; or

2. Accurate and complete information required (the employee cannot promptly and easily determine from the wage statement alone the amount of the gross or net wages paid to the employee during the pay period or other specified information, the deductions the employer made from the gross wages to determine the net wages paid to the employee during the pay period, the name and address of the employer or legal entity that secured the services of the employer and other specified information).

 

Links to the other posts from this series are below.

New Year, New Laws for California Employers – Employer Access to Social Media

New Year, New Laws for California Employers – Religious Dress and Grooming Protected and Breastfeeding Further Protected

New Year, New Laws for California Employers – Added Whistle-blower Protections, With Whom Will the EDD Share Employer Reports and Contracts with Commission Employees

 

 

New Year, New Laws for California Employers – Added Whistle-blower Protections, With Whom Will the EDD Share Employer Reports and Contracts with Commission Employees

Continuing with our series “New Year, New Laws for California Employers,” we take a look at newly added whistle-blower protections, with whom the EDD will share employer reports and contracts with commission employees.  Prepared by  Mark Terman, partner in the Los Angeles office, this series looks at some of the significant new regulations becoming law in 2013 affecting private employers doing business in California.

Added Whistle-blower Protections

The California False Claims Act prohibits submission to the government of a false claim for money, property or services, and authorizes actions for treble damages and penalties. An example could be charging a government entity for goods or services that were not provided.

Employees, as “relators,” can inform the government or law enforcement, participate in these actions after satisfying certain requirements and share in the recovery.  Employers cannot prevent employees from disclosing information to the government or law enforcement agency, or from acting in furtherance of a false claims action.  There are similar statutes under federal law.

AB 2492 provides that contractors and agents can also be whistle-blowers under Cal-FCA.  The new law also makes clear that retaliation for trying to prevent a false claim is prohibited, and that relief in a whistleblower or “Qui Tam” action can include reinstatement, double back-pay, interest on the back pay, special damages, punitive damages and attorneys’ fees.

With Whom Will the EDD Share Employer Reports? 

Existing law requires employers to provide employee wage information, new employee information and new independent contractor information to the Employment Development Department for use in the administration of tax and unemployment insurance.

We are entering an era of enhanced information sharing designed to make government agencies more effective in enforcing tax and other laws, including billions of dollars that state agencies believe are lost in tax revenue due to improper classification of independent contractors. AB 1794 now permits the EDD to share employer and employee information with the Joint Enforcement Strike Force on the Underground Economy for the purposes of auditing, investigating and prosecuting violations of tax and cash-pay reporting laws and other agencies.

The strike force includes the EDD; Department of Industrial Relations, Division of Labor Standards Enforcement and Division of Occupational Safety and Health; Contractors’ State License Board; Department of Insurance, State Compensation Insurance Fund; and Department of Justice (see www.edd.ca.gov/payroll_taxes).  Information sharing is also permitted with the California Department of Health Care Services, the California Health Benefit Exchange, the Managed Risk Medical Insurance Board, county departments and agencies, the Agricultural Labor Relations Board, the Franchise Tax Board and the State Board of Equalization.

Contracts with Commission Employees

Enacted in 2011, Labor Code Sec. 2751 becomes effective Jan. 1, 2013.  It requires an employer, when entering into a contract of employment calling for commissions as a method of payment, to create a contract that must be in writing and that describes the method of computation and payment of commissions. The employer must give a signed copy of the contract to the employee and obtain a signed receipt for the contract from the employee. If the contract expires and the parties nevertheless continue to work under the terms of the expired contract, the contract terms are presumed to remain in full force and effect until the contract is superseded or employment is terminated by either party.

“Commissions” generally mean the same as in Labor Code Sec. 204.1: “Compensation paid to any person for services rendered in the sale of such employer’s property or services and based proportionately upon the amount or value thereof.”

Commissions do not include: short-term productivity bonuses (such as are paid to retail clerks) and bonus and profit-sharing plans— unless there has been an offer by the employer to pay a fixed percentage of sales or profits as compensation for work to be performed. AB 2675 adds that temporary, variable incentive payments that increase commissions but do not decrease payment are not covered.

 

Links to the other posts from this series are below.

New Year, New Laws for California Employers – Employer Access to Social Media

New Year, New Laws for California Employers – Religious Dress and Grooming Protected and Breastfeeding Further Protected

Court of Appeals Refuses to Enforce NLRB Ban on Offensive Employee Clothing

By:  Mark D. Nelson

Many employers have dress codes that regulate what employees can wear, particularly employees who have contact with customers, clients, patients and business partners, in order to convey the organization’s image, brand, values and mission.  The National Labor Relations Board issued a decision striking down an employer’s discipline of an employee for wearing a t-shirt that ridiculed its employee recognition program.  On appeal, the U.S. Court of Appeals for the D.C. Circuit took the Board to task for its ruling.  According to the Court, the Board held this employer to a higher standard than it imposed on employers in the past and the Board provided no justification for the new standard.  Medco Health Solutions of Las Vegas, Inc., v. NLRB, No. 11-1282 (D.C. Cir. Dec. 14, 2012)

To encourage excellent performance by employees, the employer introduced an employee recognition program—the WOW program. The program did not offer monetary rewards nor did they influence promotions or wage increases. The employer believed the program showed its commitment to excellence, and customers were regularly shown the wall of recognition when they came to the employer’s facility.

One day an employee wore a t-shirt to work that had the union logo on the front and on the back it read: “I don’t need a WOW to do my job.” That same day representatives of a customer were scheduled to tour the facility and the employee was instructed to remove the “insulting” t-shirt. The employee was told that if he did not feel he could support the WOW program, “there are plenty of jobs out there.” The employee changed shirts before the customers arrived, and he did not wear the t-shirt again.

The union filed an unfair labor practice charge alleging that the employer’s dress code policy was too broad and that instructing the employee not to wear the t-shirt violated the National Labor Relations Act.

The Board ruled that the employee had the right to wear the t-shirt and the employer’s ban on “phrases, words, statements, pictures, cartoons or drawings that are confrontational, slanderous, insulting or provocative” was too broad and interfered with employee rights to engage in protected concerted activity, which includes the right to criticize work rules and working conditions.

The Court of Appeals disagreed.  The Court was troubled by the fact that in the past the Board upheld discipline of union employees at a grocery store for wearing shirts that read “Don’t Cheat About the Meat!” or bagel shop employees’ shirts that stated “If its not Union, its not Kosher.” (grammatical error was in the slogan).  In neither case did the employer provide, nor did the Board require, evidence that the slogan “reasonably raised the genuine possibility of harm to the customer relationship.”  In the Court’s view, the Board failed to offer any explanation as to why the slogan about the WOW program was different from these other two cases.

The Court noted that Board decisions are entitled to deference and that the Board has a “fund of knowledge and expertise all its own.”  But the Court further observed that “this expertise is surely not at its peak in the realm of employer-customer relations.”  In chastising the Board for its ban on “provocative and confrontational” slogans worn by an employee in a workplace visited by customers, the Court stated that “such expressions are seldom found in civil and decent places of employment.”  The Court sent the case back to the Board to reconsider its ruling in light of the flaws cited by the Court.

On remand, the Board may be able to explain to the Court’s satisfaction why it has ignored its own prior rulings on provocative and confrontational anti-employer statements on clothing worn at work.  The Court’s opinion conveys skepticism that the Board will be able to do so.  In the meantime, employers should recognize that  the Board is likely to continue to substantially limit an employer’s ability to prohibit employees from wearing clothing to work with provocative or confrontational messages that could harm customer or client relationships.

FTC Approves Settlement of Noncompetition Case Against Renown Health Voiding Ten Physicians’ Noncompetition Agreements

By: Mark E. Furlane

On November 30, 2012, the Federal Trade Commission voted 5-0 to approve the settlement of a complaint it filed against Renown Health on August 3, 2012.  A settlement was promptly reached between the FTC and Renown Health avoiding the unwinding of two acquisitions made by Renown Health of two independent local cardiology groups.

The complaint alleged that Renown Health’s acquisition of competitor cardiology groups in Reno, Nevada, Sierra Nevada Cardiology Associates, Inc. (“NCA”) and Reno Heart Physicians, Inc. (“RHP”), and the employment of the 32 physicians employed by these entities, “is likely to lead to anticompetitive effects including increased prices and reduced non-price competition.”  The acquisitions resulted in Renown Health employing approximately 97% of the cardiologists serving private patients in the Reno area.  The FTC complaint focused on the fact that all of the employed physicians were subject to employment agreements containing noncompetition and non-solicitation provisions prohibiting them from practicing medicine or soliciting former patients for two years in the Reno area after termination of their employment.  As a result of the noncompetition and non-solicitation agreements, competition for cardiology services would have to come from without, which the complaint alleged to be unlikely because of certain barriers to market entry.  The State of Nevada, through its attorney general, worked with the FTC in investigating and resolving the matter.  The Nevada AG filed a similar complaint and entered into an agreement with Renown Health similar to the FTC consent decree.

The parties reached a settlement this fall through an agreed consent decree that would avoid having to unravel the mergers.  The FTC has now approved the consent decree under which Renown Health released up to ten cardiologists previously employed by NCA or RHP from their noncompetition and non-solicitation restrictions.

This result signals a cautionary note for those hospitals and health care systems with an overly large market share in a geographical market who seek to further expand their employed physicians in a given practice area.  In this case, the 88% market share for the cardiologists was a daunting statistic for Renown Health to overcome.  Going forward, this is just one more potential road block that health care providers must consider before acquiring additional physician practices and increasing its employed physician roles.

 

New Year, New Laws for California Employers – Religious Dress and Grooming Protected and Breastfeeding Further Protected

Next in our series, “New Year, New Laws for California Employers,” we take a look at new protections given to Religious Dress and Grooming and Breastfeeding under the California Fair Employment and Housing Act.  Prepared by  Mark Terman, partner in the Los Angeles office, this series looks at some of the significant new regulations becoming law in 2013 affecting private employers doing business in California.

Religious Dress and Grooming Protected

California employers should know that the Fair Employment and Housing Act protects the right of individuals to seek, obtain and hold employment without discrimination on account of religions creed, observance and belief. Similarly, employers are required to reasonably accommodate religious belief or observance of an individual unless the accommodation would be an undue hardship to the employer.

AB 1964 extends these protections to “religious dress practice” and “religious grooming practice.” Religious dress practice includes the wearing or carrying of religious clothing, head or face coverings, jewelry, artifacts and any other item that is part of the individual’s observance of his or her religious creed. Religious grooming practice includes all forms of head, facial and body hair that are part of the individual’s religious observance.

This law may cause some employers to act with more tolerance of religious practices than in the past. For example, the law also states that an accommodation is not reasonable if it requires segregation of the employee from the public or other employees. As such, employees who interface with clients or customers may not be disqualified from those positions based upon their religious dress or grooming. Because the bill does not state that it supersedes existing health and safety laws and regulations, workplace safety rules—such as dress and grooming required of employees who operate machinery—should not be affected by the new law.

Breastfeeding Further Protected

The FEHA also protects against discrimination in employment on the basis of sex, which includes gender, pregnancy, childbirth and medical conditions related to pregnancy and childbirth. AB 2386 adds breastfeeding and medical conditions related to breastfeeding to the FEHA’s definition of “sex.” This clarification in the law, also dovetails with Labor Code secs. 1030-1033, which require reasonable amounts of break time and an adequate private place for mothers to express breast milk at work.

See our earlier post in this series here.