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California nixes forum selection, choice-of-law provisions

A new California law prohibiting employers from imposing a  foreign forum selection and choice of law clause on California employees became effective on January 1, 2017. Here’s what you need to know:

Labor Code section 925

Under California Labor Code section 925 (previously known as SB 1241), an employer may not impose, as a condition of employment, any provision requiring an unrepresented employee who primarily lives and works in California to agree to a provision requiring the employee to adjudicate disputes arising in California in a forum outside of California or under other than California law. The law applies to all employers who enter employment agreements inside California, regardless of size.

The new law governs in arbitration as well as traditionally litigated matters.

Exceptions to section 925’s ban largely relate to voluntary, negotiated agreements — where both sides were represented by counsel.

Under section 925, any provision of an agreement that violates the law is voidable by the employee. Moreover, any disputes about whether a provision is voidable must be litigated in California, under California law. The court has a range of remedies to choose from in case of a violation of section 925, including injunctive relief and attorneys’ fees. On top of that, of course, violations of section 925 can trigger unfair business practices claims, violations of public policy, and other consequences. Don’t forget Labor Code section 432.5, too — which prohibits an employer forcing an employee to sign a provision that the employer knows violates the law.

Section 925 applies to agreements entered into, modified, or extended on or after January 1, 2017. The meaning of “extended” is not entirely clear, but employees will certainly argue that it includes provisions entered into before the law passed which remain in place after the statute’s effective date.

What can you do to avoid liability?

Multi-state employers should begin reviewing handbooks, policies and other related documents for non-compliant provisions immediately. They should also take steps where appropriate to ensure that truly voluntary agreements are properly memorialized to include involvement of counsel for the employee.

Of course, a conversation with your favorite consultant or employment attorney (my number is up and to the right), would be a good idea as well.


New rest break headache for CA employers

California law generally requires employers to provide paid rest breaks of 10 minutes for each four or so hours worked. A new case from the California Supreme Court just confirmed that “rest” means real, uninterrupted, duty-free relief — and that almost any employer imposition during that time won’t fly.

The case is Augustus v. ABM Security Services, and the opinion can be found here.

ABM provides security at residential, retail, office, and industrial sites in California. Guards are responsible for providing immediate and correct response to emergency/life safety situations and physical security for the building, its tenants and their employees.

ABM acknowledged it did not relieve guards of all duties during rest periods.

ABM required guards to keep their radios and pagers on, remain vigilant, and respond when needs arose, such as escorting tenants to parking lots, notifying building managers of mechanical problems, and responding to emergency situations.

Plaintiff Jennifer Augustus (for herself and all her co-workers, of course) sued, claiming she (and all other ABM employees) were entitled to uninterrupted rest breaks. ABM asserted, and the Court of Appeal concluded, ABM’s “on-duty” rest breaks were permissible.

The Supreme Court disagreed. Citing both statutes (Labor Code 226.7) and wage order provisions, the Court held that uninterrupted rest breaks were required:

Our construction of [the wage order]  cannot be reconciled with permitting employers to require employees to remain on call. As we explained, a rest period means an interval of time free from labor, work, or any other employment-related duties. And employees must not only be relieved of work duties, but also be freed from employer control over how they spend their time. Given the practical realities of rest periods, an employer cannot satisfy its obligations under Wage Order 4, subdivision 12(A) while requiring that employees remain on call.

Employers need to act immediately to ensure that their handbooks, policies and procedures to comply with this new interpretation of the law. And your handbook is only as helpful as it is implemented — so train supervisors about the change and keep records showing consequences for non-compliance in action.

Employees who were forced to work “on-call” rest breaks in the past may now be entitled to additional compensation for missing those breaks.

Call your favorite employment lawyer (or yours truly) for additional information.

New discrimination regulations coming to California

Lost-in-Literature-8-Big-Books-for-2015-MainPhotCalifornia’s anti-discrimination laws just got a bit more complicated for employers. The Fair Employment and Housing Commission, the ultimate guardians of FEHA’s galaxy of laws, recently promulgated new regulations you need to be aware of. (Just in case: FEHA = California’s Fair Employment and Housing Act.) And since the new regs are effective April 1, 2016 (no fooling), you need to act fast.

Here’s what you need to know.

More companies are covered under FEHA.

Five employees is the legal standard, and that didn’t change – employers with fewer than five employees are exempt from FEHA. But the regs did implement a new rule that includes non-California-based employees in the company count. So if you have one person in a satellite office in Oakland and four more in your Phoenix branch, congratulations, you are officially playing with the big boys.

Things are changing a bit with gender.

The regulations provide new definitions for gender identity, gender expression, and transgender. In general, “gender expression” refers to appearance and behavior; “gender identity” is how a person identifies him/herself; and “transgender” means someone whose gender identity differs from the person’s sex at birth. They are all protected under FEHA.

More nit-picky rules for handbooks.

The new regulations are extremely detailed with respect to what your written anti-discrimination policy needs to say and how it needs to say it. (You don’t have a written anti-discrimination policy? Time for a heart-to-heart with your favorite employment lawyer.)

For instance:

  • It needs to be in writing (duh).
  • It needs to list each one of the protected classes referenced in FEHA – depending on how you count, that’s north of 30 different categories.
  • It needs to specify that harassment, discrimination, and retaliation are no-nos whether done by a manager, a supervisor, a co-worker, a contractor, a client, a vendor, or pretty much anyone else employees are likely to meet in a workplace setting.
  • It must include an explicit and legally adequate complaint procedure to ensure any complaints (1) get a timely response; (2) are kept confidential to the extent possible; (3) can be reported somewhere outside the chain of command; (4) get investigated quickly, by competent and impartial personnel; (5) are tracked and documented; and (6) lead to discipline if the facts warrant.
  • It must prohibit retaliation of any kind. This means in the real world, as well as written policy land.
  • The policy needs to be disseminated to employees before April 1, 2016, in hard copy, on an intranet site, and/or through new hire training. Does more than 10% of your workforce speak a language other than English? Well then, translate and disseminate into all such languages.

Make sure you’re training your people to avoid conduct that isn’t even illegal yet.

Yes, you read that right. Stick with me here.

Employers big enough to require biennial discrimination and harassment training under California law (50 employees or more), must also tweak your training program. Specifically, the training has to include matters relating to “abusive conduct” in the workplace, including

  • Its negative effects, like reduced productivity and bad workplace morale.
  • What it is, generally conduct taken with malice that a reasonable person would find hostile or offensive and that is not related to an employer’s legitimate business interests.
  • That a single really egregious act can trigger, uhh, well, something that will make your teacher very disappointed (see next paragraph). Although most instances of abusive conduct require more frequent occurrences.

Interestingly, abusive workplace conduct isn’t technically illegal in California – at least not yet – although in many cases it’ll get you sued for harassment or other bad employer behavior. But maybe you can read the tea leaves about where this is going.

Consider yourselves up to date (for now — gotta love California, there’s always more coming). And make sure to get these new items incorporated into your manuals and procedures, and avoid a love note from the DFEH in your Easter basket.

Thanks for reading – and please let me know if we can make these updates more useful (or at least more entertaining).

What to expect at work when you’re expecting (California edition)

Pregnancy-Discrimination-WorkplaceThere are lots of ways to say it — the stick is blue, the stork is coming, there’s a bun in the oven, you’re harboring a fugitive — but it all adds up to the same thing: you’re pregnant.

We sincerely hope worrying about work is the last thing on your mind. But we also think you’ll rest easier knowing the ins and outs of pregnancy in the workplace. (And if you haven’t heard, rest is soon going to be in short supply.)

So here are the basics:

  1. California has got your back. California law is extremely strict when it comes to pregnancy. Discrimination or harassment on grounds of pregnancy is completely prohibited. And the law takes an expansive view about what “pregnancy” means — it includes serious prenatal issues requiring bed rest, less serious matters like morning sickness or pregnancy related fatigue, and even just additional time needed for normal doctor visits. If your boss or coworker is making snide comments about your prenatal appointments or morning sickness, they’re looking at a lawsuit. Think of it as an expensive shower gift.
  2. Doesn’t matter if you’re a brand new employee. There is no waiting period for protection to kick in for most purposes. (Bonding leave, discussed below, is an exception.) If your pregnancy is announced the first day you’re hired, you’re still protected.
  3. Doesn’t matter if it’s a small company. The pregnancy disability and discrimination laws apply to companies with as few as five employees (including you). Anti-harassment laws apply to companies with just a single employee.
  4. Accommodations must be made. If you can’t do everything you used to do, no one’s going to blame you. Your boss actually has to make accommodations to help you do what you can. For instance, you may be entitled to work from home. Or to a light duty assignment if you can’t lift boxes or other heavy things. Or to avoid work entirely if you are put on bed rest. Ask your employer if you are having trouble, and they’re obligated to discuss with you ways to make it easier.
  5. You’re entitled to a long leave if you need it. California employees disabled as a result of pregnancy are entitled to up to four months of leave. That doesn’t mean every pregnant employee gets all four months — the leave lasts only as long as the pregnancy-related disability. A normal pregnancy generally involves about 10 weeks of disability (four pre-partum, six post-partum), but if your doctor says you were disabled for longer, you get the leave.
  6. You may be entitled to a really long leave. If you meet the criteria for FMLA or its California partner CFRA leave, you are also entitled to 12 weeks off to bond with Junior. And bonding leave generally does not run concurrently with disability leave. So pregnant employees who qualify for bonding leave can get up to seven months of leave — up to four month’s disability and up to three months bonding.
  7. You and your spouse can even get some money. Employers aren’t usually required to pay you if you take pregnancy disability leave or bonding leave. But California does provide a short amount of Paid Family Leave for new parents bonding with their offspring. And the employer generally has to keep your benefits going during your leaves. It ain’t Denmark by a long shot, but better than a sharp stick in the eye.
  8. Your doctor — not the company’s doc — is in charge. When it comes to pregnancy disability, if your doctor says you’re disabled, you’re disabled. You may need to provide medical certification of the need for leave, but the employer can’t get a second opinion. And all your doctor needs to say is (1) you are disabled as of a particular date, (2) you’re probably going to be disabled for a particular time, and (3) a general statement that the employee can’t work at all or can’t do some of the job functions without risk to mother or child.
  9. In most cases, you get your old job back. If you come back directly after your disability ends, you are generally entitled to be reinstated to your old job. (Unless it doesn’t exist anymore, for reasons other than that you left work to have a baby.) If you take bonding leave too, you must be returned to a comparable job, but not exactly the same one you had before.
  10. You don’t have to pump in the restroom. Under both California and federal law, employers have to provide appropriate time and private space for new mothers to express breast milk. And no, a bathroom stall doesn’t qualify.

Very best wishes on the impending arrival! Take care of yourself and your baby.

And if you need to take care of your job, too, well, now you know what you need to know.

Beat the summertime blues: Internships and employment law

intern1-1024x645Raise your hand if you’ve ever hired, or worked as, an intern — exchanging labor for nothing but experience, contacts, perhaps some academic credit, and maybe even a small (read, “under the minimum wage”) financial stipend. A business gets a break on employee expense, and a newbie gets a resume boost and “real-world” experience. Great deal for everyone, right?

Wrong. In fact, in most cases, people called “interns” are actually nothing more or less than a garden-variety employee. And the part where the intern gets experience rather than money is a tremendous legal risk for the employer. Because for some reason courts don’t like employers who don’t pay their employees minimum wages, overtime, etc.

Talk about your summertime blues.

True “interns” under the law are actually called trainees. And they must meet six criteria before they will be recognized as a true “trainee” and exempt from federal and state wage and hour laws, rather than an employee.

  1. The training, even though it includes actual operation of the employer’s facilities, is similar to that which would be given in a vocational school;
  2. The training is for the benefit of the trainees or students;
  3. The trainees or students do not displace regular employees, but work under their close observation;
  4. The employer derives no immediate advantage from the activities of trainees or students, and on occasion the employer’s operations may actually be impeded;
  5. The trainees or students are not necessarily entitled to a job at the conclusion of the training period; and
  6. The employer and the trainees or students understand that the trainees or students are not entitled to wages for the time spent in training.

These factors are assessed according to the “totality of the circumstances.” No one of the factors is more important, and the particular facts and circumstances are critical to the conclusion. As a result, there is very little predictability about whether a particular trainee is or isn’t an employee. That’s bad for employer certainty, and it’s terrible if litigation results — because that kind of fact-driven analysis virtually ensures a lengthy, risky, and expensive trial.

A few points can be made about these criteria, however — none of them particularly helpful to the employer. First, the “internship” experience has to benefit the trainee, and it has to be sufficiently general that it provides the trainee with experience that will benefit the trainee in other industry-related employment. So learning how to fix a variety of different computer systems may be OK; building or repairing specific components of the employer’s proprietary systems is probably not.

Second, the employer can’t receive any immediate benefit from the trainee’s work. This factor very likely sinks almost all purported “internships.” If an intern is building the widgets or providing the services that are the employer’s stock in trade, the employer is deriving an immediate benefit from her work. That means the trainee is an employee, and has to be paid.

Third, and related, the trainee must not “displace regular employees.” So if an employer is reducing staff at the same time it is hiring “trainees,” it’s probably in trouble. Same problem if the employer is ramping up production and hiring trainees at a disproportionately higher rate than new employees. In fact, an employer may have to show a detriment to employee productivity as a result of hiring a trainee before the trainee will be considered exempt from wage and hour laws.

Fourth, although an “understanding” between employer and intern is part of the test, it is not terribly difficult for a young, unsophisticated, hungry intern to disclaim really knowing all of the rights he or she may be giving up by accepting that unpaid internship. And an employer will find it difficult to prove equal bargaining power under most circumstances.

The consequences of misclassification can be disastrous. In California, minimum wage violations come with liquidated damages that effectively double the employer’s financial exposure. Daily and weekly overtime, civil penalties, and attorneys’ fees — the employer’s and the successful employee’s — add significantly to the potential pain. Don’t think you’ll just be fighting about one or two interns, either. Any misclassification case will probably be brought as a representative or class action, on behalf of all the interns you’ve hired in the past four years. Employee attorneys live for this kind of stuff.

Employers should think long and hard about hiring unpaid or underpaid interns. And they should definitely talk to their attorneys first. Far better to bring them in as employees if you need people to do the work, and leave the education to the colleges and vocational schools if you don’t. Anything you save in wage cost will be dwarfed by even a single complaint.

10 quick tips to limit the risk of an employment lawsuit

gavel moneyWhether you are thinking of starting a business, are hiring your first employee, or have been in business for years, this short list of tips can help you avoid some of the big legal pitfalls that come with employees.  (Adapted from a presentation I frequently give to business groups and anyone else who will listen to me for an hour or so.)

10.  Draft, and use frequently, written job descriptions.  Include the job title, essential duties of the job, and the skills, experience, and physical requirements necessary to do it.  Specify whether it’s an exempt position or hourly.  Use the job description when advertising openings, interviewing candidates, evaluating and disciplining employees, and considering ADA accommodations.  Review your job descriptions at least annually to make sure they comport with reality, and fix them if they don’t.

9.  Publish a compliant employee handbook.  A good handbook is a roadmap for dealing with employee issues and managing employee expectations.  Each state has differing laws, and those laws change with some regularity (paid sick leave in California, anyone), so having a lawyer or HR consultant help with drafting is a pretty good investment.  The internet is not a reliable source of handbook forms.

8.  Train supervisors regularly.  Don’t let that handbook gather dust.  Make sure your supervisors are trained in what it says.  In some states, like California, supervisors must receive certain training (on discrimination, harassment and, new for 2015, workplace bullying) every couple of years.  Well-trained supervisors can help nip potential problems in the bud.  Poorly-trained supervisors can create significant problems for which the business will almost always be liable (after an expensive lawsuit.)

7.  Tell your employees they are “at will”, but don’t rely too much on the concept.  Most states presume employees are employed at will, and can be fired (or can quit) at any time and for any reason or no reason at all.  Put at will language in your handbook and offer letters to confirm that the employees know it.  But also make sure you have a business justification for all your employment decisions, because you’ll need one to defend a discrimination case.

6.  Conduct regular employment practices audits.  Hire a consultant or lawyer to look over your handbook and other practices on an annual or biennial basis, and follow their advice regarding fixes.  It’s a modest expense that can limit major liability down the road. This is particularly true in the wage and hour/overtime area.  Almost by definition, practices problems affect every employee, and there can be long look-back periods in lawsuits.  By some studies $1 billion changes hands in wage suits each year.  Keep your share of that in your pocket.

5.  Evaluate employees regularly, and honestly.  Let everyone know how they are doing — it’s the fair thing to do, and it limits the kinds of surprises that lead to lawsuits.  Use a standardized form in you can, and train supervisors so that grading fluctuations are minimized.  And be honest, about good and bad.  Evaluations can be one of an employer’s best defenses against discrimination suits, but only if they honestly document deficiencies.

4.  Don’t fire a pregnant woman.  State and federal laws are extremely protective of expectant mothers, and juries do not like employers who treat them poorly.  (And the jury will see Mama and Baby at trial, you can be sure.)  Maternity leaves may be disruptive in the workplace, but far less so than a lawsuit.

3.  Get insurance.  There are many good insurance products that will protect against some of the risks of an employment lawsuit.  The market for those products is competitive, and the coverage is not expensive.  Don’t face a five- or six-figure defense bill by yourself if you don’t have to.  Talk to your insurance broker.

2.  Keep your eyes open and act promptly to correct problems.  Lawsuits don’t come without warning.  Train supervisors to look for trouble before it erupts into something that can’t be fixed without a jury.  The ostrich approach to employment risks is not a good one.

1.  Write everything down.  Many employment cases come down to documentation, and it’s always the employers job to keep it.  Juries often find that things that are not written down did not happen — or else they would have been written down, right?  An employer will never be given the benefit of the doubt in this context.  Save yourself the trouble and write down important facts, incidents, and discussions.

As a business owner or manager, you have enough to worry about.  Follow these tips and — hopefully — you can leave defending an employee lawsuit out of it.

Employers may owe for employees’ personal cell phone use

expensive billBYOD — “bring your own device” — policies have gained quite a bit of popularity among employers. These policies acknowledge the ubiquitous possession of cell phones and other mostly mobile devices by employees, and encourage or sometimes require employees to use their devices to do their jobs.

That’s a problem in California. The reason is California Labor Code section 2802, which says:

“An employer shall indemnify his or her employee for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties, or of his or her obedience to the directions of the employer….”

So employees who use their cars to do the employer’s business need to be reimbursed by the employer for that use. But it goes well beyond that, as the court held recently in Cochran v. Schwan’s Home Service, Inc.

In Cochran, a class of customer service managers sought reimbursement for their personal cell phone use on the job. Cochran sought damages for violation of section 2802. The trial court denied certification of the class (which for these cases generally means the case is over), holding that there were too many individual questions relating to employees’ personal usage plans, etc.

The court of appeal reversed. According to the Court of Appeal, the trial court mistakenly assumed that (1) an employee does not incur any expenses if the cell phone charges are paid by a third person or if the employee did not purchase a different cell phone plan because of work-related cell phone usage, and (2) liability could not be determined without examining the specifics of each class member’s cell phone plan.The Court of Appeal determined that the details of a cell phone plan are essentially irrelevant. When cell phone use is mandatory, an employer must always reimburse an employee for “some reasonable percentage” of the personal cell phone bill, whether or not the employee incurred extra fees or changed plans to accommodate work-related cell phone usage.

The California Supreme Court turned down Schwan’s appeal in late 2014. So this is the law of the land, employers.

Here are the big takeaways for employers:

  1. Employees must be reimbursed for expenses necessarily incurred on the job. Not terribly controversial, but important from the standpoint of the terms and limits of your BYOD policy. If employees are using their own phones for their own purposes, no reimbursement. If they’re using them to do things the employer requires them to do, and doesn’t provide an alternative way of doing without fishing their own phone out, it’s a problem.
  2. How much an employee must be reimbursed is an open question. The court said “some reasonable percentage.” That’s court-speak for, “Don’t bother us with facts, ask a jury.” Which for most employers is a troubling prospect, since it means you don’t know what you owe until two years after the fact, when it’s well too late to do anything about it. This aspect of the decision is likely to spawn a mini-wave of suits to bring some clarity to what is essentially a completely meaningless phrase.
  3. Employee expenses must be reimbursed even if the employee can’t point to any “extra” expense he incurred. Most cell phone plans today come with unlimited or extremely liberal usage plans that are rarely exceeded. And thus, most employees won’t see — and employers won’t be able to quantify — any additional amount due on their bills for the work calls made on the employees’ phones. Doesn’t matter. Employers owe their share, whatever that may be.
  4. It’s helpful for employers to give employees the tools they need to do their jobs. If an employer can show the employees are using their own devices for their own convenience, it will be easier to avoid reimbursement. Employers who try to save a little bit by counting on employees’ devices are looking at a fairly open-ended obligation.
  5. Process counts. Regardless of the expense or how the employer reimburses it (mileage? percentage of personal/business use? flat percentage per month?), it’s a good idea to give employees an opportunity to argue that they are out more than the employer thinks. That idea works for automobile use, anyway, and might be useful to at least minimize penalties or attorneys’ fees if the process is there but the employee doesn’t use it.

Employers need to act to make sure the meter’s not running on their employees’ cell phone bills. Have your HR rep or lawyer check your reimbursement and BYOD policies in California. Otherwise, you’re apt to get an expensive surprise.