New York City Enacts Predictable Scheduling Law

By William R. Horwitz

On May 30, 2017, New York City Mayor Bill de Blasio signed legislation regulating employee schedules in the retail industry. The new “predictable scheduling” law, which is set to take effect on November 26, 2017, prohibits “on-call” shifts and otherwise limits employer flexibility in creating work schedules.

Employers Covered By the Law

The law applies to any “retail employer,” which is defined as an employer:  (1) with at least 20 employees (including fulltime, part-time and temporary employees); and (2) that is primarily engaged in selling “consumer goods” at a store or stores in New York City.  The law defines “consumer goods” as “products that are primarily for personal, household, or family purposes, including but not limited to appliances, clothing, electronics, groceries, and household items.”
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The Unanswered Question: Do “Call-In” Schedules Trigger California Reporting Time Pay Obligations?

By Cheryl D. Orr, Philippe A. Lebel and Irene M. Rizzi

On June 8, 2017, plaintiffs Mayra Casas and Julio Fernandez (“Plaintiffs”) filed an unopposed motion seeking approval of a $12 million settlement reached against defendant Victoria’s Secret Stores, LLC (“Victoria’s Secret”) in a closely watched case challenging the legality of Victoria’s Secret’s “call-in” scheduling practices. The case, Casas v. Victoria’s Secret Stores, LLC, was pending before the Ninth Circuit Court of Appeals at the time the parties’ settled the case, and was one of many currently pending class action lawsuits challenging similar practices by retailers. As a result of the parties’ settlement, the ultimate question in Casas remains unanswered: Are employees who are required to call their employer to determine if they are required to show up for call-in shifts entitled to reporting time pay?

Retail Industry Reporting Time Pay Requirements

In addition to the Labor Code, employers in California must adhere to the requirements of industry-specific Wage Orders, promulgated by the now-defunct Industrial Welfare Commission. Wage Order 7, which applies to the “mercantile” industry (i.e., retailers), requires employers to pay non-exempt employees for certain unworked but regularly scheduled time. Such compensation is known as reporting time pay. Under Wage Order 7, retailers are required to pay reporting time pay if an employee “is required to report for work and does report, but is not put to work or is furnished less than half …[of his or her] usual or scheduled day’s work.” When this occurs, the employee must be paid the greater of (1) half his or her usual or scheduled day’s work (up to four hours), or (2) two hours at his or her regular rate of pay.

In the past, most reporting time pay litigation concerned situations where non-exempt employees were called in to work for special meetings or were sent home early on regularly scheduled days of work.

Casas v. Victoria’s Secret Stores, LLC

Filed in 2014, Casas called into question the legality of call-in scheduling, a common practice among retailers. Victoria’s Secret’s call-in policy required employees to call their managers two hours before the start of certain scheduled call-in shifts to determine if the employees needed to show up for work. When employees were required to come in to work, they were paid for their work time. However, when employees were told that they did not need to report to work, they were not paid. Plaintiffs argued that this policy violated Wage Order 7 because employees “reported to work” by calling their manager and were thus entitled to reporting time pay when Victoria’s Secret failed to furnish or cut short their call-in shifts.

In December 2014, U.S. District Court Judge George H. Wu rejected Plaintiffs’ argument and dismissed their call-in claims, reasoning that both the common meaning of “report” and legislative history held that “reporting for work” entailed physically appearing for work. Thereafter, Plaintiffs took an interlocutory appeal to the Ninth Circuit.

During oral argument, the three-judge Ninth Circuit panel expressed concerns about rendering a decision on the legality of uncompensated call-in procedures, and suggested that the question might be better resolved by the California Supreme Court.

Following oral argument, but before the Ninth Circuit rendered any decision, the parties settled the case, depriving the appellate court of the ability to render an opinion. Under the terms of the proposed settlement, Victoria’s Secret will pay $12 million to settle the claims of the 40,000 putative class members.

Questions Left Unanswered

While Casas was pending, numerous other retailers (including Club Monaco, Hollister, Abercrombie & Fitch, and Zumiez) were hit with similar putative class action lawsuits challenging their respective call-in scheduling practices. Several of those cases were stayed pending resolution of Casas, and will now proceed without a definitive answer from the Ninth Circuit regarding the law.

Several large retailers, including Victoria’s Secret, have done away with call-in shifts. However, such practices remain commonplace in the retail industry. Whether employers—retailers in particular—are required to pay reporting time pay for unworked call-in shifts remains an open issue.1 We will continue to monitor case law and legislative developments in this area.


1 Several state attorneys general have put pressure on large retailers to abandon call-in scheduling and certain jurisdictions (e.g., San Francisco) have proposed and/or enacted legislation prohibiting employers from such practices. However, to date, California has not passed any state-wide legislation addressing the practice.

Do You Have At Least 20 Employees in California?

By Pascal Benyamini

Currently, if you are an employer with 50 or more employees within 75 miles, you are required, under the federal Family and Medical Act (FMLA) and the California Family Rights Act (CFRA), to provide an unpaid protected leave of absence of up to 12 weeks during any 12 month period to eligible employees for various reasons, including, for the birth or placement of a child for adoption or foster care; to care for an immediate family member with a serious health condition, or to take medical leave when the employee is unable to work because of a serious health condition.

A pending California Senate Bill (SB), if passed, would extend some of the benefits of the FMLA and CFRA to California employers with 20 to 49 employees. SB 63, aka Parental Leave, would add Section 12945.6 to the Government Code, and prohibit employers with 20 to 49 employees within a 75 miles radius from refusing to allow an employee with more than 12 months of service and at least 1,250 hours of service with the employer during the previous 12-month period, 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.

SB 63 would also prohibit employers from refusing to maintain and pay for coverage under a group health plan for an employee who takes this leave (assuming an employer has a group health plan). Further, under proposed SB 63, eligible employees will be entitled to utilize accrued vacation pay, paid sick time, or other paid time off during the period of parental leave.

If an employer employs both parents who are eligible for leave, SB 63 would authorize, but not require, the employer to grant simultaneous leave to both employees.

This bill would also prohibit an employer from taking any adverse action, such as refusing to hire, or from discharging, fining, suspending, expelling, or discriminating against, an employee for exercising the right to parental leave or giving information or testimony as to his or her own parental leave, or another person’s parental leave, in an inquiry or proceeding related to rights guaranteed under this bill.

Finally, SB 63 would prohibit an employer from interfering with, restraining, or denying the exercise of, or the attempt to exercise, any right provided under this bill.

It remains unclear whether SB 63 will pass and be signed into law by Governor Brown. We will continue to monitor any developments on SB 63 and other pending bills that may impact employers in California.

Challenge to Philadelphia Pay History Ordinance Dismissed, But Ordinance’s Future Remains In Doubt

By David J. Woolf

Last week, District Court Judge Mitchell Goldberg granted the City of Philadelphia’s Motion to Dismiss the Philadelphia Chamber of Commerce’s lawsuit challenging Philadelphia’s controversial new pay history ordinance. As we have discussed previously (see Here’s What that New Philadelphia ‘Pay History’ Law Means for Your Business and Philadelphia Wage Equity Ordinance On Hold … For Now), the ordinance would make it unlawful for an employer to inquire about a job applicant’s pay history and would severely restrict an employer’s ability to base a new hire’s initial pay on his or her compensation history. The ordinance had been scheduled to go into effect on May 23, but was stayed by Judge Goldberg, with agreement of the City, pending resolution of the City’s motion to dismiss the Chamber’s lawsuit challenging the ordinance.

Judge Goldberg’s decision is likely not the last word however, as it did not address the merits of the ordinance. Rather, the Court held that the Chamber, because of the way the lawsuit was worded, did not have standing to challenge the ordinance, and it gave the Chamber until June 13, 2017 to file an amended complaint to cure those deficiencies. The Chamber is now expected to do just that.

In the meantime, the question is whether and, if so when, Philadelphia employers need to start complying with the ordinance. Despite the fact that Judge Goldberg’s decision, in dismissing the Chamber’s lawsuit, arguably lifted the stay, the City announced the following position through a spokesperson:

If the chamber files an amended complaint that cures the standing defects identified by the court, the city will adhere to its agreement not to enforce the order until the chamber’s motion for preliminary injunction is resolved. If no amended complaint is filed within the period stipulated by the court, the city will begin taking steps to enforce the ordinance….

Given this statement, we believe that the best approach is for Philadelphia employers to continue to prepare to comply with the ordinance, but to hold off on implementation until we see what the Chamber does between now and June 13. If, as expected, the Chamber files an amended complaint, we will be back to playing the waiting game for a little while longer.

We will continue to provide updates as developments occur.

Bill Strengthens Enforcement Powers of Philadelphia Commission on Human Relations

By Matthew A. Fontana

Philadelphia is poised to strengthen the enforcement powers of the Philadelphia Commission on Human Relations (“PCHR”), the City’s primary civil rights and anti-discrimination agency.  Under legislation that passed City Council on May 8, 2017, the PCHR would have the authority to issue cease and desist orders—closing a business’s operations for an unspecified length of time—if the agency determines the business has engaged in “severe or repeated violations” of the Philadelphia Fair Practices Ordinance (“the Ordinance”).  The authority to shut down a business’s operation is an unheard of remedy for employment related civil rights violation and—given the significant ramification for employers— it is critical for Philadelphia employers to be aware of the potential consequences of the PCHR’s enhanced powers for  their business operations

The Ordinance prohibits discrimination based on age, ancestry, color, disability, ethnicity, gender identity, sexual orientation, national origin, race, religion, and sex.  The Ordinance is enforced by the PCHR.  The PCHR’s enforcement powers are limited to traditional remedies for employment discrimination, including back pay, emotional distress damages, punitive damages and orders to eliminate or redraft a policy found to be discriminatory.  Prior to using its enforcement powers, the PCHR encourages parties to mediate their dispute or to reach a voluntary settlement.

In response to concerns about a pattern and practice of racial discrimination at bars and restaurants in the gayborhood—a neighborhood in Philadelphia that derives its name from its historic association with LGBTQ residents—Councilman Derek Green proposed legislation that would strengthen penalties against Philadelphia businesses found to discriminate against their employees, as well as against tenants or customers.  The bill gives the PCHR the authority to order a business to cease operations for an undefined “period of time” when the PCHR has issued a finding that the business has engaged in severe or repeated violations of the Ordinance and the business has refused to resolve the case by mediation or settlement.  While Rue Landau, executive director of the PCHR, provided some solace to employers by stating that “it would only be implemented under egregious circumstances after a full hearing by the PCHR,” he also stated that “[t]he law sends a strong message to business that the City will not tolerate discrimination … .”

The bill, which Philadelphia’s Mayor signaled he will sign into law, certainly sends a strong message.  The authority to shut down the operations of a business as a remedy for employment related civil rights violations is unprecedented.  No other employment civil rights agency has this type of authority.  Given the unique power being vested in the PCHR and its lack of any precedent, it is likely that the measure will be challenged in court.  However, until that happens, Philadelphia businesses need to be aware that a PCHR investigation can lead to serious consequences, particularly if the PCHR believes a pattern of discrimination is present.

The employment lawyers at Drinker Biddle will continue to monitor the implementation of the PCHR’s new cease and desist powers and provide any updates so that you can stay ahead.

 

California Cracks Down on Employers’ Use of Criminal Background Information

By Kate S. Gold and Jessica A. Burt

California employers using employees’ criminal convictions to make employment-related decisions should be aware of the recent flurry of new regulations and pending state legislation that place increased limitations on employers’ use of such information.

New FEHC Regulations Prohibit Consideration of Criminal History When Doing So Has An Adverse Impact On Individuals in A Protected Class

California’s Fair Employment and Housing Commission (FEHC) issued new regulations on employers’ use of criminal background information when making employment decisions, including hiring, promotion, discipline, and termination. The new regulations take effect on July 1, 2017, and are intended to clarify how the use of criminal background information may violate the provisions of the Fair Employment and Housing Act (“FEHA”).  The regulations prohibit employers from seeking or using any criminal history information that has an adverse impact on an individual within a protected class, such as race, national origin or gender. The new regulations provide that an adverse impact may be established through the use of state or national level statistics or by offering “any other evidence” that establishes an adverse impact.

If an employee or job applicant can demonstrate that an employer’s criminal background check policy or practice creates an adverse impact, the burden shifts to the employer to prove that the policy or practice is nonetheless justifiable because it is: (1) job-related and (2) consistent with business necessity. The criminal conviction policy or practice must bear a demonstrable relationship to successful performance on the job and measure the person’s fitness for the specific position, not merely evaluate the person in the abstract.  An employer must demonstrate that the criminal background check policy is “appropriately tailored” to the job, taking into account: (i) the nature and gravity of the offense; (ii) the amount of time that has passed since the offense and/or since the sentence for the offense was completed; and (iii) the nature of the job the employee holds or seeks.

An employer can demonstrate that its policies or practices are “appropriately tailored” to the job by either: (1) conducting an individualized assessment of the circumstances and qualifications of the applicant or employee and providing the individual with notice (before any adverse action is taken) that he or she has been excluded based on a conviction and affording the individual an opportunity to show that the criminal history exclusion should not apply due to their particular circumstances; or (2) demonstrating that a “bright line” rule regarding conviction disqualification can distinguish between those employees who actually pose an unacceptable risk and that the convictions being used to disqualify, or otherwise adversely impact the status of the employee or applicant, have a direct and specific negative bearing on the person’s ability to perform the duties or responsibilities necessarily related to the position.

The new regulations further provide that any bright-line policy that includes conviction-related information that is seven or more years old is subject to a rebuttable presumption that the policy is not specifically tailored to meet the job-related and consistent with business necessity defense.

Under the new regulations, even if an employer’s background check policy meets the new stringent standard, employers may still be liable if an individual employee can demonstrate that there is a less discriminatory policy or practice that serves the employer’s goals as effectively, such as a more narrowly targeted list of convictions or another form of inquiry that evaluates job qualification or risk as accurately.

Employers that are required to comply with federal or state laws or other regulations that mandate a criminal history screening process or require an employee or applicant to possess or obtain a required occupational license can rely on the applicable laws as a defense to an adverse impact claim.

The Regulations Require Employee Notification of an Adverse Action and Opportunity to Present Evidence of Factual Inaccuracy

The federal Fair Credit Reporting Act currently requires employers to provide notice to employees or job applicants when an adverse employment decision is made based on information obtained by an employer through a background check. In addition, the FEHC’s new regulations require that employers notify an employee or applicant of the disqualifying criminal conviction if the information was obtained from any source other than the applicant or employee (e.g., through a consumer report or internally generated search).

Under the regulations, the employee or applicant must be given a “reasonable opportunity to present evidence that the information is factually inaccurate,” and the criminal record may not be considered if the employee establishes that the information is inaccurate.

Similar Pending California Legislation

Employers should also note that pending Assembly Bill (AB) 1008 goes even further than the FEHC regulations and would make it unlawful for a California employer to: (1) include on any job application questions that seek the disclosure of an applicant’s criminal history; (2) inquire or consider an applicant’s prior convictions before extending a conditional offer of employment; and (3) when conducting a criminal background check, to consider, distribute, or disseminate information on (i) an arrest not followed by conviction, (ii) referral to or participation in a pretrial diversion program, (iii) convictions that have been sealed, dismissed, expunged, or statutorily eradicated pursuant to law, (iv) misdemeanor convictions for which no jail sentence can be imposed, or (v) misdemeanor convictions for which three years have passed since the date of conviction or felony convictions for which seven years have passed since the date of conviction.

If passed, AB 1008 would also require California employers that intend to deny employment to an applicant because of prior convictions to perform an individualized assessment of whether the applicant’s criminal history has a direct and adverse relationship to the specific job duties. The employer must then notify the applicant of the reasons for the decision and provide the applicant with 10 days to respond and challenge the accuracy of the information or provide evidence of rehabilitation, which the employer must then consider before making a final employment decision.

The bill is scheduled for a hearing before the California Committee on Labor and Employment on May 3, 2017.

Best Practices for California Employers Conducting Criminal History Checks

California employers that screen applicants and employees for criminal convictions should review and evaluate their criminal conviction policies, background check policies, and job applications for compliance with the new regulations and, potentially, for compliance with pending AB 1008.