2019 EMPLOYMENT LAW UPDATE - TOP TEN CHANGES
- California Minimum Wage Raised – On January 1, 2019, employers of 26 or more employees must pay $12.00 per hour as the minimum wage. Employers of fewer than 26 employees must pay $11.00 per hour. These increases will continue until 2022, when minimum wage will reach $15.00/hr. Action: Review your payroll to ensure all employees are being paid the new minimum wage, send written notice of the wage change to affected hourly employees, and be sure your salaried exempt employees are earning at least 2x minimum wage ($49,920 for large employers and $45,760 for small employers). Please note that many cities and counties in California have passed higher minimum wage requirements (Belmont, Berkeley, Cupertino, El Cerrito, Emeryville, Los Altos, Los Angeles City and County, Malibu, Mountain View, Oakland, Palo Alto, Pasadena, Redwood City, Richmond, San Diego, San Francisco, San Jose, San Leandro, San Mateo, Santa Clara, Santa Monica and Sunnyvale).
- Anti-Harassment Training Requirements Greatly Expanded – The Fair Employment and Housing Act has been amended to greatly expand the mandated training requirements. Previously, only large employers (with 50+ employees) were required to provide training, and only to supervisory employees. Now, by January 2020, employers with 5 or more employees must provide training to all employees (not just supervisors). This training consists of 2 hours for all supervisors, and 1 hour to non-supervisors, every two years and within six months of hire or promotion. It also includes temporary and seasonal employees (within 30 calendar days after hire, or within 100 hours worked if work is expected to be less than six months). The DFEH will be making training materials available to employers at no cost. Employers must keep records on attendance to demonstrate compliance. Action: Schedule harassment training before year end for all employees, and add this to your new-hire checklist.
- Overtime for Agricultural Workers - Agricultural employers under Wage Order 14 have historically only been required to pay overtime for work in excess of 10 hours/day or 60 hours/week. Effective January 1st, agricultural employers with more than 25 employees will now have to pay overtime after 9.5 hours/day or 55 hours/week. Smaller employers will be phased in between now and 2022. Action: Update your overtime pay calculations and, if using an outside payroll service, ensure they do the same.
- Use of Salary History in Hiring - Labor Code §432.3 was amended to clarify last year’s legislation prohibiting employers from asking an applicant about their current salary. The amendments clarify that employers can ask applicants about salary “expectations,” and that the law only applies to new applicants, not internal candidates applying for a new position in the company. Action: Revise your interview questions.
- Payroll Statements – Labor Code §226 was amended to clarify that, upon request, employers need to supply employees with copies of their payroll records, but can charge for the “actual cost of reproduction.” Action: If you receive a written request for payroll records, it generally means a claim will be following. Ask your legal counsel for assistance in producing the required records.
- Lactation Accommodation – Under current law (Labor Code §1031), employers must provide a reasonable amount of break time to accommodate an employee who wishes to express breast milk, and requires an employer to make reasonable efforts to provide the employee with the use of a private room or other location, other than a toilet stall, in close proximity to the employee’s work area. Section 1031 has been amended to make the other location something other than a bathroom (vs. toilet stall). Action: Work with lactating employees to designate a private room, other than the bathroom, that they can use, as needed, to express milk.
- Sexual Harassment Claims and Confidentiality – The #Metoo movement led to a number of new laws to protect employees claiming sexual harassment. First, newly added Code of Civil Procedure §1101 provides that settlement agreements involving claims of sexual harassment, sexual assault, gender discrimination and/or retaliation cannot include a provision requiring that the underlying allegations be kept confidential. The amount of the settlement may, however, still be subject to confidentiality. Additionally, if claims have not yet been filed in a civil or administrative matter, the allegations can be subject to a confidentiality/non-disclosure agreement. Second, Civil Code §1670.11 was added to make confidentiality provisions entered into after 1/1/19 void and unenforceable to the extent that a person waives the right to testify about harassment or criminal conduct when required by a court order, subpoena, or written request from an administrative agency or legislative body. Third, Civil Code §47, which pertains to defamation, was amended to protect victims making harassment complaints from defamation claims, and employers from defamation claims resulting from communication with prospective employers regarding sexual harassment complaints against former employees. It allows companies to tell potential employers calling for reference checks that a former employee is not eligible for rehire based on the company’s determination that the former employee engaged in sexual harassment. Fourth, the FEHA has broadened the definition of sexual harassment by now expressly stating "A single incident of harassing conduct is sufficient... if the harassing conduct has unreasonably interfered with the plaintiff's work performance or created an intimidating, hostile, or offensive working environment." Also the statute rejects the "stray remarks doctrine" so that "a single discriminatory remark, even if not made directly in the context of an employment decision or uttered by a non-decisionmaker, may be relevant evidence of discrimination." Action: Review your form settlement agreements and your reference check policy. Also, consider editing your handbook and investigation materials to include “single incident” and “single remarks” as potentially constituting sexual harassment.
- Mediation Confidentiality – Under current law, all communications, negotiations and settlement offers made during mediation are strictly confidential and cannot be used by either party if a case does not settle. Evidence code §§1122 and 1129 now require that attorneys provide their clients with written disclosure forms explaining the confidentiality restrictions related to mediation before the client agrees to participate in mediation, and provides the format of the required disclosure. The client must sign the disclosure. It is unclear what the penalty is for noncompliance, but it will not invalidate the mediation settlement.
- Women on Boards of Directors - Publicly traded companies whose principal executive offices are located in California are required to appoint at least one female to their board of directors by the end of 2019. By the end of 2021, Boards with five directors must appoint two women, and with six directors, three women. Action: Start looking for some great new female board members.
- Key Cases From 2018 - As usual, there were a large number of employment law cases decided by our courts this year, but three California Supreme Court cases stand out: Dynamex, Starbucks, and Dart Container. In Dynamex Operations v. Superior Court, the Court established a new, much harder, test for independent contractors, called the “ABC test.” Under the “ABC test,” the key change is element “B,” which requires that “the worker performs work outside the usual course of the hiring entity’s business.” This means that many workers previously classified as independent contractors need to be reclassified as employees.
In the Troester v. Starbucks case, the Supreme Court clarified use of the “de minimus doctrine,” holding that Starbucks employees who worked “off the clock” 4-10 minutes every day closing up must be compensated. The take away is to be very wary of using the de minimus doctrine unless the time spent is very irregular and brief (a minute or less).
Lastly, in Alvarado v. Dart Container Corp., the Supreme Court determined how an employee’s overtime pay rate should be calculated when the employee has earned a flat sum bonus during a single pay period, holding that the total wages (including the bonus) are to be divided by the number of non-overtime hours the employee worked during the pay period.