LaborSphere, Author at Laborsphere

California Employers: What You Need to Know for 2014 – Discrimination and Retaliation

A new year means new legislation and regulations for employers with operations in California. This four-part series will take a look at some of the new laws and regulation affecting private employers doing business in California. Today we look at new laws and regulations in California dealing with discrimination and retaliation.

Discrimination and Retaliation

Retaliation. AB 263 expands employer liability for violating Labor Code 98.6, which currently protects employees from discharge or discrimination when they have asserted their rights under the Labor Code. As amended, the law will:

Prohibit any retaliation or adverse action against employees who have asserted any right under the Labor Code or who have updated or attempted to update their “personal information” in a manner unrelated to their skill set, qualifications, or knowledge required for the job;
Expand protected activity to include a written or oral complaint by an employee that they are owed unpaid wages; and
Provide a civil penalty to employers of up to $10,000 per employee per instance of retaliation.

New protected class. AB 556 adds “military or veteran status” to the list of classes protected from employment discrimination under the Fair Employment and Housing Act.

Sexual harassment. SB 292 clarifies that sexually harassing conduct is unlawful under FEHA regardless of whether the conduct is motivated by any sexual desire.

Whistleblower protections. Labor Code 1102.5 prohibits employers from retaliating against employees who report violations of a state or federal rule or regulation to a government agency, except for employees with duties related to company compliance. SB 496 extends whistleblower protections to employees with compliance duties and expands protected activity to include:

Reports alleging a violation of a local rule or regulation; and
Internal complaints to “a person with authority over the employee or another employee who has the authority to investigate, discover, or correct the violation or non-compliance.”

The new law also clarifies that retaliation is prohibited when the employer “believes the employee disclosed or may disclose information.”

Make sure to check out the first post in this series on new Wage and Hour Laws and Penalties.

California Employers: What You Need to Know for 2014 – Wage and Hour Laws and Penalties

Wage and Hour Laws and Penalties

Minimum wage increase. AB 10 raises the state-wide minimum wage from the current $8 per hour to $9 per hour, effective July 1, 2014, and then to $10 per hour, effective January 1, 2016. Employers should note that employees currently classified as exempt must still meet the salary basis test to qualify for the particular exemption claimed.

Minimum wage penalties. Under Labor Code section 1194.2, employees who have not been paid minimum wages may recover liquidated damages through civil actions or administrative wage hearings before the Labor Commissioner. AB 442 extends the authority of the Labor Commissioner to award liquidated damages to affected employees through the labor commissioner citations process. Thus, affected employees will be able to recover liquidated damages in an amount equal to the wages unlawfully unpaid plus interest thereon through either a civil action, an administrative hearing, or a citation issued by the Labor Commissioner.

Wage claim attorneys’ fees. Labor Code section 218.5 awards attorneys’ fees and costs to the prevailing party in any action for nonpayment of wages, fringe benefits, or health and welfare or pension fund contributions, regardless of whether the prevailing party is the employer or employee. Under SB 462, a prevailing employer may only recover attorneys’ fees and costs if the court determines that the employee filed suit in bad faith.

Domestic worker overtime. AB 241 enacts the Domestic Worker Bill of Rights, which provides that a “domestic work employee who is a personal attendant” will be eligible for overtime at 1.5 times his or her regular rate of pay if he or she works more than nine hours in any workday or more than 45 hours in the workweek. Individuals and entities employing in-home help should determine whether they or their employees qualify for an exemption.

Heat illness recovery periods. Under Cal/OSHA regulations, employees that work outdoors in temperatures exceeding 85 degrees Fahrenheit must be allowed, and encouraged, to take a cool-down rest for at least five minutes when they feel the need to do so in order to avoid overheating. SB 435 now adds this “heat illness recovery period” to the requirement in Labor Code section 226.7 that employers provide employees with meal and rest breaks. Thus, an employer’s failure to provide a heat illness recovery period to non-exempt employees will now result in penalties under Labor Code section 226.7 amounting to one additional hour of pay at the employee’s regular rate of compensation for each workday that the recovery period is not provided.

Criminal withholding. Labor Code section 218.5 makes it a crime for an employer to willfully fail to remit agreed-upon payments to health and welfare funds, pension funds, or other various benefit plans, with failure to remit more than $500 constituting a felony. SB 390 amends section 218.5 to include an employer’s failure to remit withholdings from an employee’s wages made for state, local, or federal tax purposes.

Prevailing wages. Employers who provide services or construction work for any public entities must pay current prevailing wages, which are usually significantly higher than the minimum wage. Prevailing wage laws have been updated for 2014 in the following ways:

AB 1336 and SB 377 amend the process and timeline for assessing prevailing wage violations. Under these provisions, a notice of completion of a public work filed with a county recorder must also be given to the Labor Commissioner, and the awarding body or political subdivision which accepts a public work must also provide notice of that acceptance to the Labor Commissioner. The new laws then extend the deadline for the Labor Commissioner to serve a civil wage and penalty assessment alleging a violation of the prevailing wage law from 180 days (roughly six months) to eighteen months after the filing of a valid notice of completion with the applicable county recorder, or after acceptance of the public work, whichever occurs last. Moreover, if notice is not given in a timely manner to the Labor Commissioner, the deadline to serve an assessment shall be tolled for the length of the delay.
AB 1336 also amends prevailing wage law to allow a court to award liquidated damages and civil penalties, whereas such relief was previously recoverable only in an administrative action brought by the Labor Commissioner.
Existing law requires affected contractors to keep detailed payroll records relating to public works and produce these as necessary, with names and social security numbers redacted, to a joint labor-management committee. AB 1336 amends this rule to require redaction of social security numbers only.
SB 377 also establishes specific deadlines for the Director of the Department of Industrial Relations to respond to a request for a determination of whether a specific project or type of work is a public work within the meaning of the prevailing wage law.
SB 7 prohibits a charter city from receiving or using state funding or financial assistance for a construction project if the city has awarded, within the prior 2 years, a public works contract without requiring the contractor to comply with prevailing wage provisions. Small project exemptions apply. SB 7 was enacted on the heels of a decision by the California Supreme Court holding that, under the California Constitution, the wage levels of workers employed by charter cities on locally funded public works projects are a municipal affair not subject to state regulation. Thus, the constitutionality of this new law may be the subject of future litigation.
SB 54 extends prevailing wage requirements to privately financed refinery construction projects.
SB 776 prohibits contractors from counting payments for monitoring and enforcing prevailing wage laws towards their obligation to pay prevailing wages.

Unless otherwise noted the laws and regulations discussed above go into effect on January 1, 2014. These summaries are not exhaustive, so employers who may be affected by California’s new laws should contact their attorneys to ensure that they are prepared for compliance and to update their employee policies and manuals as appropriate.

Court Rules In First of Five Church Plan Retirement Plan Cases Rejecting Dignity Health Retirement Plan Church Plan Status

By: Mark E. Furlane and David R. Levin

Last spring five complaints were filed against hospital systems challenging the church plan status of one or more of their plans. The Hospital systems were Dignity Health, San Francisco; Ascension Health Alliance, St. Louis; Catholic Health Initiatives, Englewood, Colo., Catholic Health East, Newtown Square, Pa.; and Saint Peter’s Healthcare System, New Brunswick, N.J. They all operated their pension plans under church plan status. Motions to dismiss were filed and fully briefed in four of those cases and oral argument was heard in two of them.

On December 12, 2013, the district court for the Northern District of California ruled in one of them, Rollins v. Dignity Health, agreeing with Plaintiff that the Dignity Health retirement plan was not a church plan. The suit claimed Dignity Health is “not a church or a convention or association of churches” nor does it meet any of the other criteria necessary to be considered a church plan sponsor under federal regulations.

In reaching its ruling that the retirement plan was not a church plan, the court rejected Dignity Health’s argument that its Pension Fund Sub-Committee met the committee approach to church plan status under 29 U.S.C. §1002(33)(C)(i). The court ruled that under 29 U.S.C. §1002(33)(A), only a church or convention of churches can establish a church plan. The court then rejected Dignity Health’s argument that the Plan met an alternative means of establishing a church plan found in 29 U.S.C. §1002(33)(C)(i). According to Dignity Health, that section allows church plan status for plans not established by a church or convention or association of churches so long as they are “maintained” by an “organization” controlled or associated with a church, where the “organization’s” principal purpose is the administration of benefits. The court rejected that argument, stating that it violates a cardinal rule of statutory construction, and concluding that the organization itself must have a principal purpose of benefit plan administration, not its Retirement Plan Sub-Committee.

The Dignity Health suit and the other four lawsuits demand that the pension plans be brought into compliance with ERISA and that the plans make whole any losses to participants; pay civil penalties and pay attorney fees and expenses to the plaintiff. If the Dignity Health ruling is followed in the other cases or affirmed on appeal it will have a significant impact on the plans, both operationally and financially. The financial implications of a binding ruling that upholds the position of the district court may include funding the plans to meet minimum funding levels, payment of PBGC premiums, and losses to participants harmed by plan terms and operations less favorable than those required by ERISA.

Employment Law Seminar Presented by the Federal Bar Association Chicago Chapter

Employment Law Seminar

The Chicago FBA invites you to attend its Employment Law Seminar on Thursday, January 23, 2014. This program will feature eight judges from the federal and Illinois judiciary, including the Seventh Circuit Court of Appeals, the Northern District of
Illinois and the Circuit Court of Cook County, as well as representatives from the Equal Employment Opportunity Commission, University of Chicago Law School and private practitioners.

Do not miss this opportunity to hear firsthand from these experts about the ever-changing landscape of federal and state laws and regulations. Panel discussions will cover recent developments in employment discrimination law, procedural developments in individual and class litigation, settlement and mediation, and EEOC investigations and litigation, among other topics of utmost
importance to employment law attorneys, employers and employees.

To view the agenda and pricing information, click here.

Date:
Thursday, January 23, 2014

Time:
1 to 5 p.m.
Cocktails and Hors d’oeuvres to follow

Location:
Hosted by Drinker Biddle & Reath LLP
191 North Wacker Drive
Chicago, Illinois

CLE:
3.75 Illinois MCLE credit hours*

Register online: www.fedbarchicago.org/employment-law-seminar

* FBA Chicago will be applying for accreditation for 3.75 Illinois MCLE credit hours. Continuing legal education credits for other states must be handled by individual attendees.

The Scoop on Revenue Sharing

Editor’s Note: The following post by Los Angeles Of Counsel Joe Faucher appears in the latest issue of the California HR Newsletter.

The Scoop on Revenue Sharing

The Issue: What do plan fiduciaries need to know about revenue sharing?

The Solution: Fiduciaries need to understand that revenue sharing is a common practice in the investment industry. They must be aware if revenue sharing payments are being made and the amount of those payments, determine how those payments are used, and evaluate whether the overall compensation of the party that receives them is reasonable.

Analysis: “Revenue sharing” occurs when an investment company, like a mutual fund company, issues compensation to another service provider – a recordkeeper or a third party administrator. The payments are typically made in exchange for services that the mutual fund company might otherwise have to provide itself. Service providers who expect to receive them are obligated to disclose the anticipated payments and how they are calculated to the responsible plan fiduciary. Fiduciaries need to understand what the service providers who receive revenue sharing do with the money they receive. In some cases, service providers “offset” or reduce their fees by these payments, or credit the payments back to the accounts of the participants. Others simply retain the payments. Since fiduciaries are obligated to know how much compensation their service providers receive, and to determine whether that compensation is reasonable, it is imperative that they understand who is paying revenue sharing, who is receiving it, how much it is being paid and how it is being used.

Inside the Beltway Audiocast to Discuss the State of the Retirement Income Industry

Please join us for the Inside the Beltway Audiocast on Thursday, December 5, 2013.

On Thursday, December 5 at noon eastern our colleagues Fred Reish, partner in the firm’s Los Angeles office, and Bradford Campbell, Counsel in the firm’s Washington, DC office, will give a free audiocast discussing developments in Washington that directly impact the retirement income industry. Topics to be discussed during the audiocast include:

End of the year review of what happened, and what it means
Budget negotiations and impact on plans
DOL proposal for 408(b)(2) guide
DOL Target date fund disclosure final regulation
Update on the fiduciary advice proposal
Update on projections of retirement income
The latest developments in retirement plan litigation
Other recent developments

Date: Thursday, December 5, 2013

Time: Noon to 1:00 PM (ET)

How: Click the above “RSVP Online” button to register for Inside the Beltway