Gender and Pay Equity - Page 21 of 24

Summary of Key New California Laws for 2016: What Employers Should Know

Governor Brown has signed several laws impacting California employers. A summary of some of the key new laws follows. The effective date of the particular new law is indicated in the heading of the Assembly Bill (AB) and/or Senate Bill (SB). As a reminder, the minimum wage in California is increasing to $10 per hour on January 1, 2016 based on previous legislation signed by Governor Brown in 2013.

AB 622 – E-Verify System (Effective January 1, 2016)

By way of background, under U.S. law, companies are required to employ only individuals who may legally work in the United States – either U.S. citizens, or foreign citizens who have the necessary authorization. E-Verify is an internet-based system that allows employers to determine the eligibility of their employees to work in the United States. The E-Verify system is administered by the United States Citizenship and Immigration Services, the United States Department of Homeland Security (DHS), and the United States Social Security Administration (SSA).

In an effort to prevent discrimination in employment rather than to sanction the potential hiring and employment of persons who are not authorized for employment under federal law, AB 622 prohibits employers from using the E-Verify system to check the employment authorization status of existing employees or applicants who have not received an offer of employment, except as required by federal law or as a condition of receiving federal funds. The new law, which is codified in new Labor Code Section 2814, does not change employers’ rights from utilizing E-Verify, in accordance with federal law, to check the employment authorization status of a person who has been offered employment.

Further to the extent, the employer receives any notification issued by the SSA or the DHS containing information specific to the employee’s E-Verify case or any tentative nonconfirmation notice, which indicates the information entered in E-Verify did not match federal records, the employer will be required to provide the notification to the affected person, as soon as practicable.

Finally, in addition to other remedies available, an employer who violates this new law may be liable for a civil penalty not to exceed $10,000 for each violation, and each unlawful use of the E-Verify system on an employee or applicant constitutes a separate violation.

AB 970 – Enforcement of Employee Claims by Labor Commissioner (Effective January 1, 2016)

AB 970 expands the enforcement powers of the Labor Commissioner to enforce local laws regarding overtime hours or minimum wage provisions and to issue citations and penalties for violations, except when the local entity has already issued a citation for the same violation. This bill amends Labor Code Section 558 (pertaining to overtime) and Sections 1197 and 1197.1 (pertaining to minimum wage).

This bill also amends Labor Code Section 2802 pertaining to indemnification of employees by employers for expenses or losses incurred by the employee in direct consequence of the discharge of the employee’s duties or as a result of obeying the employer’s directions. In addition to a private right of action by the employee under Section 2802 to recover for these expenditures, this bill now authorizes the Labor Commissioner to issue citations and penalties against employers who fail to properly indemnify employees.

AB 987 – Employment Discrimination (Effective January 1, 2016)

AB 987 is in response to findings by the California Court of Appeal, such as Rope v. Auto-Clor System of Washington, Inc., 220 Cal.App.4th 635 (2013), where the Court found that a request for accommodation by an employee for a disability or religious belief or observance, without more, is not a “protected legal activity” and does not support a claim for retaliation under the Fair Employment and Housing Act (codified in Government Code Section 12940 et. seq.). This bill makes it an unlawful employment practice for an employer to retaliate or otherwise discriminate against an employee for “requesting” an accommodation for a disability or religious belief or observance, regardless of whether the request was granted.

AB 1506 – Labor Code Private Attorneys General Act of 2004 (Effective October 2, 2015)

AB 1506 amends Labor Code Sections 2699, 2699.3, and 2699.5 which codify California’s Private Attorneys General Act of 2004 (PAGA) and took effect as of October 2, 2015.

By way of background, PAGA authorizes an allegedly aggrieved employee to bring a civil action to recover specified civil penalties, that would otherwise be assessed and collected by the Labor and Workforce Development Agency, on behalf of the employee and other current or former employees for certain Labor Code violations. Under PAGA, an employer has the opportunity to cure certain alleged violations before a lawsuit is filed. However, there are also Labor Code violations that PAGA does not provide the employer with an opportunity to cure the alleged violation before a lawsuit is filed, such as violations under Labor Code Section 226, where an employer is required to provide an itemized wage statement (or paystub) containing very specific information, including but not limited to, wages, the inclusive dates of the pay period and the name and address of the legal employer.

Due to various lawsuits (including class action lawsuits) filed against employers on technical violations of Section 226 that did not in any way cause any injury to employees, this bill provides an employer with the right to cure a violation of the requirement that an employer provide its employees with the inclusive dates of the pay period and the name and address of the legal employer before an employee may bring a civil action under PAGA. The employer may cure the alleged violation within 33 calendar days of the postmark date of the notice it receives. This bill also provides that the alleged violation is deemed cured only upon a showing that the employer has provided a fully compliant paystub to each aggrieved employee and limits the employer’s right to cure with respect to alleged violations of these provisions to once in a 12-month period.

AB 1509 – Protections for Family Members (Effective January 1, 2016)

AB 1509 amends Labor Code Sections 98.6, 1102.5, 2810.3 and 6310, which generally prohibit an employer from discharging or taking any adverse action against any employee or applicant for employment because the employee or applicant has engaged in conduct protected by these code sections. Section 98.6 pertains to complaints of discrimination, retaliation or any adverse action made to the Labor Commissioner. Section 1102.5 pertains to complaints by whistleblowers. Section 6310 pertains to complaints about unsafe working conditions. And Section 2810.3 pertains to retaliation in alternative staffing context, such as temporary workers from staffing agencies or in the construction/contractor context.

This bill extends the protections of the foregoing provisions to an employee who is a family member of another person (i.e., where multiple family members work for the same employer) who engaged in, or was perceived to engage in, the protected conduct or made a complaint protected by these provisions. That is, an employer, or a person acting on behalf of the employer, shall not retaliate against an employee because the employee is a family member of a person who has, or is perceived to have, engaged in any acts protected by these provisions. The term “employer” or “person acting on their behalf” includes “client employers” (i.e., a business entity, regardless of its form, that obtains or is provided workers to perform labor within its usual course of business from a labor contractor) or a “controlling employer” (i.e., an employer listed in Labor Code Section 6400(b) regarding multi-employer worksites).

The bill further amends Labor Code Section 2810.3 to exclude liability on certain client employers, such as client employers that use Public Utilities Commission-permitted third-party household goods carriers.

AB 1513 – Piece-Rate Compensation (Effective January 1, 2016) (see footnote 1)

AB 1513, which adds new Labor Code Section 226.2 and repeals others, applies to employees who are compensated on a piece-rate basis for any work performed during a pay period. This new law requires that employees be compensated for rest and recovery periods and “other nonproductive time” (see footnote 2) separate from any piece-rate compensation as follows:

AB 1513, which adds new Labor Code Section 226.2 and repeals others, applies to employees who are compensated on a piece-rate basis for any work performed during a pay period. This new law requires that employees be compensated for rest and recovery periods and “other nonproductive time” separate from any piece-rate compensation as follows:

Rest and Recovery Periods. Employers are to compensate their employees for rest and recovery periods at a regular hourly rate that is no less than the higher of:

(i) An “average hourly rate” determined by dividing the total compensation for the workweek, exclusive of compensation for rest and recovery periods and any premium compensation for overtime, by the total hours worked during the workweek, exclusive of rest and recovery periods;

(ii) The “applicable minimum wage,” which is defined as “the highest of the federal, state or local minimum wage
applicable to the employment.”

For those employers who pay on a semimonthly basis, employees shall be compensated at least at the applicable minimum wage rate for the rest and recovery periods together with other wages for the payroll period during which the rest and recovery periods occurred. Any additional compensation required for those employees pursuant to the average hourly rate requirement is payable no later than the payday for the next regular payroll period.

Certain employers (see footnote 3) – who comply with the applicable minimum wage requirement – will have until April 30, 2016 to program their payroll systems to perform and record the calculation required under the average hourly rate requirement and comply with the itemized statement (or paystub) requirements (see below), so long as such employers pay piece-rate employees retroactively for all rest and recovery periods at or above the applicable minimum wage from January 1, 2016, to April 30, 2016, inclusive, and pay the difference between the amounts paid and the amounts that would be owed under the average hourly rate requirement, together with interest by no later than April 30, 2016.

Other Nonproductive Time. Employers are to compensate their employees for other nonproductive time at an hourly rate that is no less than the applicable minimum wage. The amount of other nonproductive time may be determined either through actual records or the employer’s reasonable estimates, whether for a group of employees or for a particular employee, of other nonproductive time worked during the pay period.

Further, Section 226.2 requires that additional information be added to wage statements, making compliance with wage statements more difficult. In addition to the list of items that are required by Labor Code Section 226 for itemized statements, Section 226.2 requires that the itemized statements include (a) the total hours of compensable rest and recovery periods, (b) the rate of compensation, and (c) the gross wages paid for those periods during the pay
period.

Further, those employers that do not pay an hourly rate for all hours worked in addition to piece-rate wages, then such employers must also list on the itemized statements (a) the total hours of other nonproductive time, (b) the rate of compensation for that time, and (c) the gross wages paid for that time during the pay period.

In addition, this new law provides that, until January 1, 2021, an employer has an affirmative defense to any claim or cause of action for recovery of wages, damages, liquidated damages, statutory penalties, or civil penalties based solely on the employer’s failure to timely pay the employee the compensation due for rest and recovery periods and other nonproductive time for time periods prior to, and including, December 31, 2015, if the employer complies with certain specified requirements by no later than December 15, 2016, which include: (a) making payments to each of its employees, for previously uncompensated or undercompensated rest and recovery periods and other nonproductive time from July 1, 2012, to December 31, 2015; (b) paying accrued interest; and (c) providing written notice to the Department of Industrial Relations of the employer’s election to make payments to its current and former employees by no later than July 1, 2016.

Finally, it appears that Section 226.2 applies to companies with a unionized workforce as Section 226.2 does not have a collective bargaining exemption.

SB 327 – Wage Orders: Meal Periods (Effective October 5, 2015)

By way of background, Labor Code Section 512 requires two meal periods for work periods of more than 10 hours. However, employees are allowed to waive their second meal period if the total hours worked in their shift is no more than 12 hours. Under Section 11(D) of Wage Order 5, however, health care industry employees who work shifts in excess of 8 total hours in a workday are permitted to waive their second meal period.

A recent appellate court decision, Gerard v. Orange Coast Memorial Medical Center, 234 Cal.App.4th 285 (2015), held that Section 11(D) of Wage Order No. 5 is invalid to the extent that it conflicts with Labor Code Section 512 and that the California Industrial Welfare Commission exceeded its authority by creating an exception to Section 512’s meal period requirements.

Concerned that, without immediate clarification, hospitals will alter their scheduling practices as a result of uncertainties created by the Gerard decision, Governor Brown signed SB 327 on October 5, 2015 to amend Labor Code Section 516 effective immediately. Accordingly, this bill provides that the health care employee meal period waiver provisions in Wage Order 5 were valid and enforceable, and continue to be valid and enforceable.

SB 358 – Equal Pay Act (Effective January 1, 2016)

Under SB 358, known as the California Fair Pay Act, employers will be subject to one of the strictest and most aggressive equal pay laws in the country. The California Fair Pay Act is intended to increase requirements for wage equality and transparency and amends Labor Code Section 1197.5 relating to private employment. For a more thorough discussion of this new law, please click here.

SB 501 – Wage Garnishment Restrictions (Effective July 1, 2016)

SB 501 amends, repeals, and adds Section 706.050 of the Code of Civil Procedure, relating to wage garnishment. The new law reduces the prohibited amount of an individual judgment debtor’s weekly disposable earnings subject to levy under an earnings withholding order from exceeding the lesser of 25% of the individual’s weekly disposable earnings or 50% of the amount by which the individual’s disposable earnings for the week exceed 40 times the state minimum hourly wage, or applicable local minimum hourly wage, if higher, in effect at the time the earnings are payable.

SB 579 – Employee Time Off (Effective January 1, 2016)

SB 579 amends Labor Code Section 230.8, which applies to employers with 25 or more employees. Under Section 230.8, employers are prohibited from discharging or discriminating against an employee who is a parent, guardian, or grandparent having custody of a child in a licensed “child day care facility” or in kindergarten or grades 1 to 12, inclusive, for taking off up to 40 hours of unpaid time off each year for the purpose of participating in school activities, subject to specified conditions. The new law revises references to a “child day care facility” to instead refer to a “child care provider” and defines “parent” for these purposes as a parent, guardian, stepparent, foster parent, or grandparent of, or a person who stands in loco parentis to, a child, thereby extending these protections to an employee who is a stepparent or foster parent or who stands in loco parentis to a child. This new law also allows employees to take unpaid time off to enroll or reenroll their children in a school or with a licensed child care provider.

SB 579 also amends Labor Code Section 233, which applies to all employers. Under Section 233 (aka “California’s Kin Care Law”), employers are required to allow employees to use one-half of their accrued sick leave to care for a “family member” (as defined). In light of the Healthy Workplaces, Healthy Families Act of 2014 (Labor Code Section 245 et. seq.), which went into effect on July 1, 2015, this bill requires an employer to permit an employee to use sick leave for the purposes specified in the Healthy Workplaces, Healthy Families Act of 2014, redefines “sick leave” as leave provided for use by the employee during an absence from employment for these purposes, and prohibits an employer from denying an employee the right to use sick leave or taking specific discriminatory action against an employee for using, or attempting to exercise the right to use, sick leave for these purposes. In other words, employees may use paid sick leave for their own health condition or preventative care; a family member’s health condition or preventative care; if the employee is a victim of domestic assault, sexual violence, and/or stalking and needs to take time off. Further, “family member” now includes: a child regardless of age or dependency (including adopted, foster, step, or legal ward); parent (biological, adoptive, foster, step, in-law, or registered domestic partner’s parent); spouse; registered domestic partner; grandparent; grandchild; or siblings.

SB 588 – Judgment Enforcement by Labor Commissioner (Effective January 1, 2016)

Among the key provisions of this new bill, SB 588 provides the California Labor Commissioner with additional means to enforce judgments against employers arising from the employers’ nonpayment of wages. The new law authorizes the Labor Commissioner to use any of the existing remedies available to a judgment creditor and to act as a levying officer when enforcing a judgment pursuant to a writ of execution. The new law also authorizes the Labor Commissioner to issue a notice of levy if the levy is for a deposit, credits, money, or property in the possession or under the control of a bank or savings and loan association or for an account receivable or other general intangible owed to the judgment debtor by an account debtor.

For instance, if a final judgment against the employer remains unsatisfied after a period of 30 days after the time to appeal the judgment has expired and no appeal of the judgment is pending, the employer cannot continue to conduct business unless the employer has obtained a bond up to $150,000 (depending on the unsatisfied portion of the judgment) and has filed a copy of that bond with the Labor Commissioner. The bond shall be effective and maintained until satisfaction of all judgments for nonpayment of wages.

As a result of the foregoing new laws and amendments, employers should consult with legal counsel to ensure their policies are compliant and their employee handbooks are up to date.

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^1. AB 1513 also makes amendments to provisions of workers’ compensation for injuries sustained in the course of employment.

^2. “Other nonproductive time” is defined as time under the employer’s control, exclusive of rest and recovery periods, that is not directly related to the activity being compensated on a piece-rate basis.

^3. These employers are defined as: those acquired by another legal entity on or after July 1, 2015, and before October 1, 2015; those who employed at least 4,700 employees in California at the time of the acquisition; those who employed at least 17,700 employees nationwide at the time of the acquisition; and those that were a publicly traded company on a national securities exchange at the time of the acquisition.

Strict New California Fair Pay Act Will Become Effective January 1, 2016

In only a few months, employers in California will be subject to one of the strictest and most aggressive equal pay laws in the country. This week, Governor Jerry Brown signed the California Fair Pay Act (“Act”), Senate Bill 358, a new law intended to increase requirements for wage equality and transparency. The Act amends Section 1197.5 of the California Labor Code relating to private employment.

New “Substantially Similar Work” Standard

Under the Act, an employer is prohibited from paying employees of the opposite sex lower wage rates for “substantially similar work, when viewed as a composite of skill, effort, and responsibility, and performed under similar working conditions.” Previously, the equal pay statute was more limited. It prohibited employers from paying employees of the opposite sex in the same establishment for equal work on jobs the performance of which requires equal skill, effort, and responsibility, and which are performed under similar working conditions. The new standard permits an employee to bring an unequal pay claim based on employee wage rates in any of their employer’s facilities and in other job categories as long as the work is substantially similar. The employer’s defense burden has also increased under the Act. An employer must establish that the entire wage differential is based on the reasonable application of one or more of the following:

• A seniority system;
• A merit system;
• A system which measures earnings by quantity or quality of production; or
• A bona fide factor other than sex, such as education, training, or experience. This factor will apply if the employer shows that the factor is not the result of a sex-based differential in compensation, is job related to the position, and is consistent with business necessity. An employee can defeat this defense by proving that an alternative business practice exists that would serve the same business purpose without producing the wage differential.

Increased Wage Transparency

The Act also seeks to decrease pay secrecy by further prohibiting employers from enacting rules, policies or otherwise engaging in conduct that prohibits employees from disclosing their own wages, discussing the wages of others, asking about other employees’ wages or aiding and encouraging employees to exercise rights under the Act. Yet, no one, including an employer, is obligated to disclose employees’ wages.

Additional Remedies and Cause of Action for Discrimination and Retaliation

The statute currently allows employee recovery of wages and interest, plus an equal amount as liquidated damages, and attorneys’ fees. The Act also prohibits discharge, discrimination and retaliation of employees for asserting rights under the Act and permits a civil action seeking reinstatement, reimbursement for lost wages and interest, an equal amount as liquidated damages, lost benefits, and other equitable relief. Such a claim must be brought within one year of the prohibited conduct. There is no requirement that an employee exhaust administrative remedies prior to filing suit.

Increased Record Keeping Requirement

Additionally, this new law requires that an employer maintain records of employees’ “wages and rates of pay, job classifications, and other terms and conditions of employment” for a three-year period.

Practical Takeaways

This new law goes into effect January 1, 2016. Employers would be wise to use this time to assure that their compensation practices are in defensible compliance with these new requirements. We suggest the following proactive steps:

• Conduct a wage audit/review of employee pay equity, including identifying opposite sex pay practices for “substantially similar” work;
• Review all pay and compensation-related policies and procedures, including job descriptions, employee handbooks, review and evaluation protocols;
• Consider the scope of information and documents that may fall within the Act’s three-year record retention requirement and modify policies and practices accordingly;
• Provide internal training to members of management who make decisions regarding employees’ pay and compensation; and
• Consider performing some or all of the foregoing under the shield of attorney work-product.

If you have any questions or concerns about this alert please contact the authors named below or your usual Drinker Biddle contact.

The DOL Announces Final Rule for the Obama Administration’s 2014 Pay Transparency Executive Order

As we’ve previously covered here, on April 8, 2014 President Obama signed Executive Order 13665 (“Non-Retaliation for Disclosure of Compensation Information), at an event commemorating National Equal Pay Day, an annual public awareness event that aims to draw attention to the gender wage gap. On September 10, 2015, the Department of Labor’s Office of Federal Contract Compliance Programs (“OFCCP”) announced the Final Rule implementing the Order, which will take effect on January 11, 2016.

In its press release announcing the Final Rule, the DOL highlighted its intent to specifically address the gender pay gap, stating that “a culture of secrecy keeps women from knowing that they are underpaid, and makes it difficult to enforce equal pay laws. Prohibiting pay secrecy policies and promoting pay transparency helps address the persistent pay gap for women . . .”

The Final Rule seeks to promote pay transparency by, among other things:

Revising the Equal Opportunity Clause included in covered federal contracts to include a provision prohibiting employers from discriminating against employees or job applicants for discussing or disclosing their or their co-workers’ compensation;
Requiring covered contractors to notify employees and applicants of these nondiscrimination protections in existing policies;
Enabling employees and job applicants who believe they have been discriminated against for discussing or inquiring about pay to file discrimination complaints with the OFCCP.

The Final Rule outlines two defenses that a contractor may assert where a violation of the nondiscrimination requirement is alleged. The first is a “general defense” that the contractor “disciplined the employee for violation of a consistently and uniformly applied company policy . . . [which] does not prohibit, or tend to prohibit, employees or applicants from discussing or disclosing their compensation or the compensation of other employees or applicants.” The second is the “essential job functions” defense, which essentially permits a contractor to take action against an employee (such as a Human Resources Director) whose job duties and functions necessarily entail access to compensation information, and who discloses such information other than in response to a formal complaint, charge, investigation, or proceeding.

The Obama administration has in the past few years issued multiple orders or memoranda to accelerate change in employment-related areas it believes are within the authority of the Executive Branch, without the need for legislation. As described in more detail here, there is an often lengthy rule-making process required for these mandates to become effective law, but the DOL is close to (or has) announced Final Rules on many of the administration’s proposals. Accordingly, employers should be aware that many of the prospective regulatory changes discussed in the past few years are, in the near future, set to become reality.

CA Paid Sick Leave: DLSE Opinion Letter Not a Cure-all

Last week, on August 7, 2015, the DLSE issued its first opinion letter interpreting the Healthy Workplaces, Healthy Families Act of 2014 (“Paid Sick Leave Law”), which is codified at California Labor Code section 245 et. seq. and which was recently amended by AB 304, effective July 13, 2015.

As most California employers should now be aware, the Paid Sick Leave Law generally requires employers to provide three days or 24 hours of paid sick leave to an employee who works at least 30 days within a year in California, including part-time, per diem, and temporary employees. Employers may either grant the paid leave up front or, alternatively, allow employees to accrue the paid time off. The question presented to DLSE was how to address the sick leave requirement for an employee who regularly works a ten-hour shift where the employer has opted to follow the front-loading method. Does the employer have to front load thirty hours (the equivalent of that employee’s three days)? Or, rather, does the employer have to front load 24 hours (as referenced in the statute, and because a “day” is typically eight hours)?

The DLSE responded in a three page letter, in which it opined that the Paid Sick Leave Law requires an employer to front load thirty hours in this ten-hour a day scenario. The DLSE reasoned that the Paid Sick Leave Law establishes minimum standards for paid sick leave, and defines “paid sick days” as “time that is compensated at the same wage as the employee normally earns during regular work hours.” (emphasis in original). In order to give effect to this minimum labor standard for all employees, including those that may work more or less than eight hours per day, the language necessarily must be interpreted to require 24 hours or three days, “whichever is more for an employee.” (emphasis in original).

So, with respect to an employee who regularly works a ten hour day, a paid sick day would be the normal full day and the employer with a ten hour per day employee must therefore front load thirty hours in the beginning of the 12 month period. However, an employee who regularly works a six hour day would also be entitled to the minimum amount of leave required under the Paid Sick Leave Law, which for him or her would be 24 hours (e.g., the greater of 24 hours or three days).

The DLSE also clarified that the same analysis would apply when the employer elects to proceed under an accrual system. Under the Paid Sick Leave Law, an employer must allow the employee to accrue up to six days or 48 hours, though the employer may limit the time off to three days or 24 hours. However, in the case of an employee who regularly works a ten hour day, if an employee has accrued 30 hours in his or her sick leave bank, then the employee must be able to use and be paid for the full three days at 10 hours per day. Similarly, the employee who works six hours per day must be permitted to take a minimum of 24 hours of paid sick leave, not only three part-time days.

So far so good, but what happens when the employee normally earns daily or weekly overtime? For example, employers who have not adopted an alternative work week schedule may normally pay overtime to employees who work over eight hours in a day. Some employers may regularly schedule employees for six-day work weeks and pay overtime on the sixth day. If the employee is to be paid “at the same wage as the employee normally earns during regular work hours,” does that include overtime wages? What happens when some employers adjust the shift schedules of employees during their busy season (assume 3 months out of the year) from a regular 8 hour day to a 9 or 10 hour day? How much paid sick leave should the employer provide to such employees if, for instance, the employer has implemented the front load method? We expect more DLSE answers in the weeks and months to come as DLSE is revising their FAQ section of their website. Please check with us for further updates.

Right to Marry But Not to Work? Pennsylvania Catholic School Terminates Gay Married Teacher

Last month, Waldron Mercy Academy, a K-8 Catholic school located in Merion, Pennsylvania, fired Margie Winters from her position as Director of Religious Education, a job she had held for 8 years. According to Ms. Winters, her employment contract was not renewed because she is gay and married to her partner. A few days later, the United States Supreme Court issued its landmark opinion in Obergefell v. Hodges, in which it held that same-sex couples may exercise the fundamental right to marry. The majority opinion in Obergefell stated that religious believers may continue to “advocate” and “teach” their views of marriage, but did not however, address or reverse the precedent established by the Supreme Court in Hosanna-Tabor Evangelical Lutheran Church and School v. Equal Employment Opportunity Commission, in which the Supreme Court held, in an unrelated context, that churches have the right to make employment decisions free from government interference, including compliance with anti-discrimination laws.

Indeed, in an e-mail to parents, the principal of Waldron Mercy Academy advised that Ms. Winters was no longer working at the school, and reiterated the school’s dedication to Catholicism, stating: “Many of us accept life choices that contradict current church teachings . . . but to continue as a Catholic school, Waldron Mercy must comply with those teachings.”

Based on the 2012 precedent established in Hosanna, it is not clear that Ms. Winter has any valid legal challenge to Waldron Mercy’s termination decision, which would violate the laws of many states, if a non-religious organization were involved. Currently, twenty-one states and the District of Columbia have laws prohibiting employment discrimination based on sexual orientation, and 18 states and D.C. also prohibit discrimination based on gender identity. And, Lower Merion Township, the home of Waldron Mercy Academy, also has a local antidiscrimination ordinance which provides that it is the public policy of Lower Merion Township to foster the employment of all individuals in accordance with their fullest capacities regardless of a person’s sexual orientation, gender identity or gender expression. The ordinance further provides, however, that it is not unlawful for religious institutions that are “not supported in whole or in part by governmental appropriations” to refuse to hire or employ an individual on the basis of actual or perceived sexual orientation, gender identity or gender expression.

In Hosanna, still the leading case on the application of anti-discrimination laws to religious organizations, the Court barred the Plaintiff from bringing an employment discrimination suit against the school. The plaintiff had been promoted to a “called” teacher at the “Christ-centered education” school, but had taken leave after being diagnosed with narcolepsy. After her leave, school officials refused to hire her back. Plaintiff argued that she was fired from the school in violation of the ADA and Michigan state law. The Supreme Court found that the First Amendment’s “ministerial exception,” (which exempts religious organization from anti-discrimination laws) applied because the school held the Plaintiff out as a minister, and because her job duties reflected a role in conveying the church’s message and carrying out its religious mission.

Thus, even with the passing of numerous state and local ordinances and the Supreme Court’s landmark decision in Obergefell v. Hodges, it appears for the moment that religious institutions will continue to be exempt from statutes prohibiting employment discrimination on the basis of sexual orientation and/or gender identity and that certain employees of such religious institutions may be barred from bringing suit against the organizations. In Hosanna, the Supreme Court stated that the “ministerial exception” should apply to any employee “who leads a religious organization, conducts worship services or important religious ceremonies or rituals, or serves as a messenger or teacher of its faith.” The recent termination at Waldron Mercy and the Obergefell decision are a reminder to employers operating religious institutions that significant questions may remain about the scope and proper application of the ministerial exception.

Amendments to California’s New Paid Sick Leave Law

As California employers, and those non-California employers with employees in California, know by now, as of July 1, 2015, such employers were required to provide paid sick leave to any employee who works 30 days or more within a year under the Healthy Workplaces, Healthy Families Act of 2014 (the “HWHFA”).

The HWHFA provides, among other things, that eligible employees are entitled to paid sick days for prescribed purposes to be accrued at a rate of no less than one hour for every 30 hours worked, or alternatively, be provided at least 3 days or 24 hours on a lump sum method. The accrual rate method imposed by the HWHFA created several challenges for employers who were already providing paid sick leave, albeit under a different accrual method, such as per pay period, per month, per week etc. To provide some flexibility to employers in complying with the HWHFA and provide further clarifications to the HWHFA, on July 13, 2015, Governor Brown signed into law AB 304 to amend the HWHFA. The amendments are effective immediately and a summary of its key provisions are as follows:

1. An employer is now able to provide for employee sick leave accrual on a basis other than one hour for each 30 hours worked, provided that the accrual is on a regular basis and the employee will have 24 hours of accrued sick leave available by the 120th calendar day of employment, each calendar year, or each 12-month period. This means that employers no longer have the obligation to track actual hours worked (i.e., one hour for each 30 hours worked), on the condition that the employee accrues 24 hours of leave within the first 4 months of employment.

2. An employer is able to keep their pre-January 1, 2015 paid sick leave and/or paid time off (PTO) policies as long as:

a. these policies existed prior to January 1, 2015;

b. these policies provide for time off for the same purposes as specified in the HWHFA (including carry-over and use requirements);

c. these policies continue to provide an employee paid sick leave and/or PTO on an accrual and on a regular basis so that an employee, (including an employee hired into that class after January 1, 2015):

(i) has no less than one day (or 8 hours) of accrued paid sick leave or PTO within 3 months of each year of employment of each calendar year, or each 12-month period; and

(ii) was eligible to earn at least 3 days (or 24 hours) of paid sick leave or PTO within 9 months of each year of employment.

3. If an employer modifies the accrual method used in the policy it had in place prior to January 1, 2015, the employer must comply with the one hour for each 30 hours worked accrual method, or alternatively, provide for the lump sum method.

4. The amendments provide for a new method for calculating the rate of pay:

a. For non-exempt employees with different hourly rates, an employer now has an option on how to pay sick days. Paid sick time for nonexempt employees shall be calculated using either of the following two options:

(i) in the same manner as the regular rate of pay for the workweek in which the employee uses paid sick time, whether or not the employee actually works overtime in that workweek; or

(ii) by dividing the employee’s total wages, not including overtime premium pay, by the employee’s total hours worked in the full pay periods of the prior 90 days of employment.

b. For exempt employees, paid sick time must be calculated in the same manner as the employer calculates wages for other forms of paid leave time.

5. An employee must work for the same employer for at least 30 days in California in order to qualify for paid sick leave.

6. Employers who provide unlimited sick leave to their employees can satisfy notice requirements by indicating “unlimited” on the employee’s itemized wage statement.

7. The provisions of the original text of the HWHFA required an employer to reinstate accrued paid sick days to returning employees within one year of termination, resignation, or separation from employment. This requirement is unchanged by the amendments. However, if an employer paid out accrued PTO to an employee upon termination, resignation, or separation from employment, an employer is not required to reinstate accrued PTO if the employee is rehired within one year.

8. An employer no longer has the obligation to inquire into or record the purposes for which an employee uses sick leave or paid time off. However, as provided under the original text of the HWHFA, an employer is still required to keep records for three years documenting the hours worked and paid sick days accrued and used by an employee and to make those records available to the Labor Commissioner upon request.

9. The original text of the HWHFA contained an exemption for employees in the construction industry covered by a valid collective bargaining agreement (which met certain requirements). The HWHFA previously defined “employee in the construction” to mean an employee performing onsite work associated with construction, including work involving alteration, demolition, building, excavation, renovation, remodeling, maintenance, improvement, repair work …”. (Emphasis added). The amendments removed the term “onsite”, which now broadens the exemption for employees in the construction industry because the focus is no longer on where the work is performed but rather on the work that employee is assigned to perform.

10. For employers governed by Wage Orders 11 (Broadcasting Industry) and 12 (Motion Picture Industry), the amendments delay to January 21, 2016 the requirements that these covered employers provide to their employees written notice setting forth the amount of paid sick leave and/or PTO available on each wage statement or other document on each pay date.

While most of the provisions of the amendments are welcomed news to employers because the amendments provide some flexibility and much needed clarifications, the amendments may perhaps be a little too late especially for those employers who expended significant resources to modify their PTO policies to be compliant as of July 1, 2015.

Non-compliance with the HWHFA and its amendments carry significant liabilities, and as such, employers should consult with legal counsel to ensure their paid sick leave and/or PTO policies are compliant.