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Creating the Sustainable Workplace:
Reducing Your Risk of Liability in 2015
This year brought fewer but significant, changes for California employers.  We have detailed below the changes we think are most important for your workplace.  We encourage you to ask "What kind of employer do you want to be in 2015?"  And year-end is a great time to review policies and practices to ensure your company is protected in the new year. 

In this Newsletter, you will find: 
Would you like to attend our 2015 New Year Breakfast Briefing?  Please join us on January 14, 2015 to discuss recent developments in employment law and what they mean to your workplace.  Click here for more details.  You are welcome to share this invitation (and this Newsletter) with companies you believe would benefit from the information. 

Changes To Make Today Based on New Laws
California employers have some significant changes to make based on new laws that apply to California employers.  The most signicant changes are outlined below. 

1.     California's Minimum Wage for Computer Professionals is Modified.  Effective January 1, 2015 the minimum hourly rate needed to satisfy the Computer Professional exemption will be $41.27 and the minimum annualized salary will be $85,981.40.  Remember that to maintain their exempt status, all your exempt employees must earn the statutory minimum of two times new minimum wage presuming a forty hour workweek.  Non-exempt employees need to receive notice under the Wage Theft Notice requirements of any change to their wages (either by way of DLSE notice or equivalent notice or through accurate pay stubs), and your minimum wage postings must be updated.  You should confirm that employee pay stubs reflect this change if it affects employee wages.   And don't forget, beginning January 1, 2016, California's minimum wage will increase to $10.00 per hour.  You will also want to be mindful of city-specific minimum wage increases, for example in Oakland and San Francisco.

2.     California Employers Must Provide Sick Leave to Eligible Employees.  California's sick leave law becomes effective July 1, 2015.  Although we anticipate (and hope) there will be clarifications to this new law, here is what we know today. 

     a.     An employee who works in California for 30 or more days within a year from commencing employment is eligible for paid sick days under the law.

     b.     Eligible employees must accrue at least one hour of sick leave for every thirty (30) hours worked.  Exempt employees are deemed to work forty (40) hours per workweek unless the exempt employee's normal workweek is less than 40 hours, in which case the employees accrue sick days based on their normal workweek. 

     c.     Employees begin to accrue sick days upon commencing employment (presuming they meet the 30 days in California test outlined above), but an employer may limit the employees' use of sick days until the 90th day of employment, after which time employees may use sick days as they are accrued.  

     d.     Unused sick days must carry over to the following year of employment, but an employer may limit the employee's use of sick days to 24 hours or three days per year of employment.  No carry over is required if the employer provides the full amount of available leave (which appears to be the 24 hours/3 days amount) at the beginning of each year.

     e.     An employer need not cash out unused sick days and need not pay out accrued sick days on termination.  Having said this, in the event a terminated employee returns to employment within one year of termination, any sick days that were accrued but unused at termination must be reinstated and available for immediate use.  

     f.    An employer may define the increments in which an employee may take sick leave, but that increment must be no greater than two hours. 

     g.     Sick days generally will be earned/taken at an employee's hourly wage.  If the employee in the 90 days of employment before taking accrued sick days had  . . .  to read more, click here

3.     Manager Training on Harassment Must Include Training Against Bullying.   As you know, employers with 50 or more employees must provide their managers with training on how to prevent sexual harassment.  Effective January 1, 2015 this training must include the prevention of "abusive conduct," which is defined as "conduct of an employer or employee in the workplace, with malice, that a reasonable person would find hostile, offensive, and unrelated to an employer's legitimate business interests."  According to the statute, this abusive conduct may include repeated infliction of emotional abuse, such as the use of derogatory remarks, insults and epithets, verbal or physical conduct that a reasonable person would find threatening, intimidating or humiliating or the gratuitous sabotage or undermining of a person's work performance.  A single act will not constitute abusive conduct, unless especially severe and egregious, and the new law does not create a cause of action for bullying.  Additionally, employers may want to add a policy to the employee handbook prohibiting conduct of this nature.

4.     The Laws Preventing Retaliation Against Complaining Employees are Expanded.  As you know from last year, effective January 1, 2014 an employer may not respond to an employee's bona fide complaint by reporting or threatening to report an employee's, former employee's, or prospective employee's (or family member of the same) suspected citizenship or immigration status to a federal, state, or local agency.  Pursuant to developments in this law, a potential $10,000 penalty may be awarded to the aggrieved employee.  Also, the prohibition is expanded to prohibit an employer from discharging, discriminating, retaliating, or taking any adverse action against an employee because the employee updates or attempts to update personal information.  

5.     Interns are Protected by Discrimination Laws.  Employers may not discriminate against unpaid interns in selection, termination, training or other terms or treatment because of their membership in a protected category.  Please also be very careful in using "unpaid" interns.  The rules on internships are very rigid, and interns must be paid except in very limited circumstances! 

6.     Employers may not Discriminate Against Employees with Special Drivers' Licenses.   If an employee can provide satisfactory proof of identity and California residency and meet other requirements for licensure, an employer may not discriminate against an employee who has a special driver's license.  Also, an employer may not require that an employee produce a driver's license, unless a driver's license is a bona fide occupational qualification.   This law expands the prohibitions against national origin discrimination. 

7.     New Obigations for Reporting Occupational Safety and Health Violations.  Employers already must report to the Division of Occupational Safety and Health all serious occupational injuries, illnesses or deaths.  The new law requires that every case of illness, injury or death be reported to the Division by e-mail or telephone.

8.     Employers are now Joint Employers with Labor Contractors.   Businesses with more than 25 employees who hire more than 5 workers at a time will now automatically share liability with a "labor contractor," such as a temporary staffing agency, if that agency fails to pay wages or provide workers' compensation insurance to those employees that the labor contractor assigns to work at the business.  This means you need to be very sure that the staffing agency is in compliance with wage and hour laws!  

9.     Consider the New Requirements for Arbitration When Considering Whether to Adopt Mandatory Arbitration Provisions.  One of the reasons employers elect to mandate arbitration is to avoid public knowledge of the claims and results.  That privacy opportunity is largely eliminated by AB802.  Under the law, Arbitration Providers (e.g. JAMS and AAA) must publish at least quarerly detailed information about arbitrations handled by those Providers.  Published information is to include (a) the name of the employer; (b) the nature of the dispute; (c) whether the employer initiated or responded to the claim; (d) the annual wage earned by the employee (by range); (e) the amount of the claim; (f) which party prevailed; (g) the amount of any award, including attorneys fees; (h) whether the employee was represented by an attorney and, if so, the name of the attorney; (i) the name of the arbitrator and the arbitrator's fees; and (j) the total number of times that employer previously has been a party in arbitration or mediation before the dispute resolution provider. 
What We Learned From the Courts
Here are some of the most interesting and instructive lessons we learned from the courts in 2014. 

1.     The NLRB Likes "Liking".  Did you know that "liking" a post on Facebook may be protected concerted activity?  So says the National Labor Relations Board.  If the "like" relates to working conditions and terms of employment, an employer should not take action against the "liking" employee.  

2.     Employers Who Pay Piece Rate or Commission Need to Audit Their Practices for Paying Rest Periods.  In a case similar to last year's Gonzalez v. Downtown LA Motors holding, the Bluford v. Safeway court held that under the California Wage Orders employees who are paid on a piece rate basis may be entitled to separate compensation for their rest periods, notwithstanding that their total piece rate compensation exceeds minimum wage.  This is a reminder to employers that they must be very clear in defining the work that is compensated by their piece rate schedule, and conservatively piece rate employees should be paid at least minimum wage for rest periods.

3.     Employers Need to Consider Each Pay Period's Compensation for Inside/Commissioned Salespeople to Comply with Minimum Compensation Requirements.  In order for an inside/commission-based salesperson to be exempt from overtime (a) the employee must earn at least one and one-half minimum wage in each pay period and (b) at least half the employee's compensation in each pay period must be commission.   In Peabody v. Time Warner Cable the California Supreme Court confirmed that the calculation of whether the employee meets the exemption must occur each pay period.  In other words, an employer may not consider commissions from one pay period in order to satisfy minimum compensation requirements in a prior pay period.  Remember, these employees may be exempt from overtime, but are not exempt from meal and rest period requirements.

4.     Employers Must Reimburse Employees for "Some Reasonable Percentage" of their Personal Cell Phone Costs.   If employees use their cell phones for work, employers are required to reimburse some portion that aligns with their actual business-purpose usage.  This is true even if the employee's personal cell phone plan allows for unlimited use (in other words, the employee would pay the same whether the employee did or did not make work-related calls), if a third party has paid the bill or the employee changed plans in order to accommodate work-related usage. 

5.     Partial Day Absences May be Deducted From Accrued Leave.  The legislation on the subject of partial day absences seemed clear, and the Division of Labor Standards Enforcement issued an opinion in 2009 confirming that partial day absences from an exempt employee's accrued leave (vs. deductions from that employee's salary) do not threaten an employee's exempt status.  Now we have a published decision from the California Appellate Court confirming this opinion.  Remember, you should have a written policy in place that allows the Company to make partial day deductions from vacation, sick or PTO banks.  You can make deductions in full day absences from those banks as well if an exempt employee has exhausted the bank and absents himself for a full day so long as that policy is in writing

6.     The Latest News on Arbitration

        The NLRB issued an opinion affirming its prior decision in DR Horton Inc. & Cuda, and reiterating its belief that requiring employees to waive their rights to pursue class relief through mandatory arbitration violates the National Labor Relations Act.  Several circuits have rejected the DR Horton holding.  We will need to wait to see whether this recent NLRB opinion (Murphy Oil) will have any more impact than DR Horton.

        The California Supreme Court in Iskanian v. CLS Transportation Los Angeles similarly rejected the NLRB's position regarding DR Horton.  On the one hand, the decision was helpful to those employers hoping to enforce mandatory arbitration, including arbitration of wage and hour claims and class actions.  The Iskanian court kept open a door that "courts may find arbitration agreements unconscionable if they do not provide protections similar to the wage claim statute."  The Court also held that employers may not require waiver of "representative" actions in arbitration, which means that employees who are prevented from bringing class actions in arbitration can continue to pursue claims under the Private Attorney General Act in court or in arbitration. 

New Year's Resolutions: 
Prevent Liability and Increase Productivity
What will you do to make your workplace more sound in 2014?  We have a few ideas!  
1.      Audit Your Handbook.  Does your sick leave or PTO policy satisfy the law?  Have you captured the relevant expectations for wage and hour?  Are your discrimination policies providing you protection?  New laws make an audit more important than ever.    
2.     Double Check Your Payroll Practices.  Are you paying inside salespeople correctly?  Have you correctly calculated employees' entitlement to commission?  To meal and rest periods?  To overtime?  Have you adjusted your pay practices to account for changes in minimum wage?  Are you reimbursing expenses correctly?  Small, correctable mistakes in time keeping practices mean significant potential financial risk to your Company. Take the time to be sure you are getting it right.
3.     Empower Your Managers.  Remember, what your managers do and what they don't do can make the difference in whether your Company does or does not have exposure.  Do they understand what they should and should not say in interviews?  How to manage performance without creating liability?  Do they understand bullying, or the ways in which their "we didn't mean it that way" conduct can create a hostile work environment?  Are they complying with wage and hour laws?  Give them the tools they need to help keep your workplace productive and protected.

How Can We Help?
Our mission is to help our clients to create productive workplaces that are protected from liability.  We would love to partner with you to make your workplace thrive.  Here are some ideas for how we may work together to make 2015 your best year yet:
1.     Create Accurate, Clear and Legal Guidelines.  Your handbook can be a powerful tool for increasing productivity and decreasing distraction and risk.  We are happy to review your employee handbook, or help you create a new one, to make sure you have captured the changes to the law described above and that you are creating clear and shared expectations.

2.     Review of Your Compensation Practices.  We know this is an area of susceptibility for many well-intentioned companies. We are happy to review your practices to ensure they are legally compliant.
3.     Management Training to Reduce Risk and Increase Productivity. Make this the year your managers have the tools they need to have difficult conversations about performance.  
4.     Join us for our New Year Breakfast Briefing on January 14, 2015 to learn more about the recent developments you need to know. We will be hosting our Breakfast Briefing from 7:30 a.m. to 10:00 a.m., Discovery Conference Centre, 401 West A Street, Suite 750, San Diego, CA 92101. We would love to see you there! Click here to rsvp, or give us a call at 619-906-2400.   You are welcome to share this Newsletter and invitation with other companies you believe may benefit from the information. 
Our best wishes to you for a happy, healthy and sustainable New Year! It is our pleasure to work with you, and we are honored to be your counsel of choice.  Please let us know if we can help, 619 906 2400 or by e-mail.