Prohibition of English-Only Policies
California employers having five (5) employees or more may not prohibit or restrict the use of any language in the workplace unless they are able to prove three stringent requirements under the new California Law affecting national origin discrimination. Specifically, an employer must prove the following three things:
Business necessity is specifically defined in the new law as "an overriding legitimate business purpose such that the language restriction is: [a] necessary to the safe and efficient operation of the business, [b] that the language restriction effectively fulfills the purpose it is supposed to serve, and [c] that there is no alternative practice . . . with a lesser discriminatory impact."
Although by regulation and case law, California had restricted English only policies before this new law, now the employer has the burden to prove the specific elements listed above. Employers who are considering restricting or prohibiting any language in the workplace are advised to consult with an attorney and plan carefully how the requirements of this new law will be met.
Expanded Benefits for Domestic Partners
A domestic partner, who has registered with the California Secretary of State, may be entitled to receive health and group disability insurance coverage, and sick leave for his/her domestic partner. Although employers are not required by state or other law to provide health insurance or group disability insurance, if an employer does provide either type of insurance for an employee's spouse, it now must provide insurance for a registered domestic partner.
These benefits are only for domestic partners who have registered with the Secretary of State. For insurance purposes, you may ask for proof of registration, but there is no provision in the law for verification for sick leave purposes. Doing so may be construed as sexual orientation discrimination.
Normally, employers are not required by law to provide sick pay to their employees. However, if sick pay is provided to the employees, prior California law required the employer to provide up to one-half of that sick pay for an employee to care for a spouse, child or parent. This law applies to employers with five or more employees. Under the new law, registered domestic partners are included along with spouses, children and parent, meaning that an employee can use up to one-half of sick time for the illness of the domestic partner, as well as to care for a child of a domestic partner. However, domestic partners are not covered by the Federal Family Medical Leave Act. This is an example of greater employee rights in California which are not part of federal law.
This California law requires each employer to provide both time and place during work hours for an employee to express breast milk. Employers are required to provide a reasonable amount of break time for employees desiring to express milk. The break time, if possible, will run concurrently with any break time already provided. However, if that is not possible, the time for expressing milk will be unpaid. The law does not state how long the "reasonable" break time will be or how frequent.
Employers are also to provide the use of a room or other location, other than a toilet stall, in close proximity to the employee's work area for this purpose. The place where the employee normally works, for example, the employee's office, may be used as long as the location meets other requirements.
Employers are exempt if they can prove their operations would be "seriously disrupted" by providing break time for lactation. Employers who violate this law are subject to civil penalties and citations issued by the labor commissioner. The rate of $100 per violation is specifically provided. The law makes no provision for refrigeration needs of the employees.
Strict Liability for the Employer if a Supervisor Harasses an Employee
Federal courts created some doubt that an employer can avoid strict liability for sexual harassment by a supervisor if the employer did all it could in acting promptly to investigate and stop the harassment. The federal courts also provided a defense to the employer if the employee unreasonably failed to take advantage of any sexual harassment procedure.
However, the California Supreme Court put an end to these defenses for the employer. There is no doubt now in California that an employer is strictly liable for the sexual harassment of an employee by any supervisor, manager or other agent of the employer even if the employer is unaware that the supervisor/manager is sexually harassing an employee. Therefore, it is imperative that employers train all supervisory and management personnel to remedy sexual harassment before it happens. Again, California courts are adamant that employers are in the better position to stop sexual harassment and once it happens, liability cannot be avoided. All employers are cautioned to take this matter very seriously, as the courts do.
Education and training are the keys. Obviously, this rule would also apply to other types of illegal harassment, such as race, age, disability, religion, sexual orientation, medical condition (cancer), ancestral heritage and national origin. Shannon Jenkins provides training on illegal harassment tailored to your organization from top to bottom, your board of directors, the executives, managers, supervisors and non-supervisory employees. This is very serious business.
Employer's Obligations When Employee Called Up to Active Military Duty
Since September 11, 2001, thousands of employees who were in the military reserves or national guard have been called up to active military duty. The employer may ask for a copy of the military orders but cannot impede the employee from following such orders. There are no excuses available to the employer or the employee for that matter.
The employee is guaranteed reinstatement to his/her job with no loss of seniority. Additionally, if the employee would have been promoted if he/she has not left employment for active military duty, the employee is entitled to that promotion upon return. While on military leave, the employee is entitled to the same benefits provided to other employees on unpaid leave, such as health insurance or family medical leave.
This is a good time to double check what benefits your employees on any type of leave receive. We recommend that your policy specifically state that an employee who is not actively working will not accrue any vacation or sick time. Additionally, we recommend that after a certain time period, for example 90 or 120 days, of not actively working, an employee must pay the health insurance premiums to the employer for oneself and dependents or lose such coverage. We suggest such policies be reviewed by legal counsel before they are put into effect.
United States Supreme Court Upholds Mandatory Arbitration
Until this last year, employers were faced with a split of authority as to whether mandatory arbitration agreements with their employees would be enforced. The California Supreme Court allowed enforceablity of arbitration agreements as long as certain criteria was met, but some federal jurisdictions would not enforce these agreements.
The United States Supreme Court in the case of Circuit City Stores v. Adams, clearly resolved this split. Now mandatory arbitration agreements, where employees give up their right to a jury, are enforceable both in California and federal courts. However, the Supreme Court quickly backtracked, clarifying that the EEOC can sue in federal court despite an arbitration agreement. Typically, arbitration agreements provide that all disputes involving one's employment should be arbitrated rather than resolved in the courthouse before a judge and jury. In California, these agreements are only enforceable when they (1) provide for a natural arbitrator, (2) allow for adequate discovery, (3) provide for the issuance of a written arbitration award sufficient to permit a limited form of judicial review, (4) do not preclude or limit any of the rights an employee would have in a court of law, such as punitive damages, and (5) require the employee to pay no more than the cost of filing a lawsuit. These restrictions on arbitration agreements have made them less attractive to employers but the most important advantage continues, that being the elimination of a jury trial.
Restrictions Of Lawful Conduct During Non-Working Hours
New California law creates a new cause of action under the labor code against an employer for discharging, demoting, suspending or discriminating against an employee for lawful conduct during non-working hours. For example, some employers have a policy regarding their employees having a second job, or dating coworkers. These policies now must be revisited with this new law.
Mischaracterizing Employees As Exempt May Result in Back Overtime Obligations and Penalties.
Imagine being forced by a court to pay your salaried employees overtime pay back three years, or maybe even four years, plus interest, penalties and your employees' attorneys fees as well as your own. This was the experience of Farmer's Insurance who suffered a $90 Million verdict in Northern California for not paying overtime to their salaried claims adjusters. Starbucks is fighting this battle against its managers now while other employers have settled out of court on similar claims.
The key is whether salaried employees are properly classified as exempt from the overtime laws. In California, there are three basic exemptions to the overtime law. However, the professional exemption only applies to specific professionals licensed by the State of California such as attorneys, accountants, dentists, physicians, optometrists, architects, engineers and teachers. Therefore, most salaried employees must fit within the executive or administrative exemptions.
To be exempt as an executive employee, one must meet the following four criteria:
To come within the administrative exemption, an employee must:
Of course, the monthly salary and whether one supervises at least two employees are easy to determine. The harder analysis is whether the employee performs production or non-management work more than 50% of the time. This is where the Starbucks' managers are claiming that they are pouring lattes and cappuccinos more than half of their work day, rather than doing the management functions of hiring, firing, supervising, ordering, scheduling, forecasting, etc.
The stakes are high in these lawsuits. Typically, they are filed as class actions and just require one employee or ex-employee as the class representative. The use of the California Unfair Business Practices, allows damages to go back four years and attorneys fees awards are automatic. When former employees are involved, an additional thirty days of damages are allowable as a penalty. Most importantly, typically insurance does not cover either the claim or the defense of the lawsuit.
We strongly suggest that you fully analyze whether each of your salaried employees are truly exempt under the executive or administrative exemption. You may wish to have your employees, who typically prefer the status of being exempt, to list their duties and how much time a day they spend doing what. The law is clear that an employee cannot waive his or her right to overtime but can, once a claim has been made, agree to a settlement and sign a release.
If you come to the conclusion that your employees are wrongfully classified, much thought should be put into what to do to remedy the situation as there is a three-year statute of limitations for failure to pay overtime pay. The obvious answer is to pay the employee correctly in the future. The harder part is to decide what to do about the past underpayment of the employees. One viewpoint is to wait the three years out. Another is to estimate the overtime your miscategorized employees worked and pay them accordingly in exchange for a release of all claims. We would be happy to help with both the classification analysis, as well as remedying any situations you may find yourself in. The important point is not to sit back and assume that your employees are properly paid merely because they are salaried. This is a ticking time bomb.
There is also a new exemption in the computer software field. Employees who are paid at least $41 an hour may qualify if they are (1) primarily (meaning more than 50% of the time) engaged in the design, development, documentation, analysis, creation, testing or modification of computer systems or programs, and (2) are primarily engaged in work that is intellectual or creative and that requires the exercise of discretion and independent judgment.
An audit of your independent contractors who may be indeed classified by the State of California as employees is also appropriate at this time. Even if the company and the individual agree that he or she is an independent contractor and even have an agreement to that effect, these do not control. There are many factors to be considered. Remember that the State of California and Federal Government has a strong policy in finding individuals to be employees rather than independent contractors for tax and regulatory reasons.
Bonuses May Increase the Base Salary for Overtime Calculation
Bonuses which are based upon individual merit, such as meeting production or sales quotas, as opposed to a flat Christmas or year-end bonus given to all employees irrespective of their performance, must be added to an employee's base compensation rate for purposes of calculating overtime. As more and more companies are going to incentives for employees, the base rate for calculation of overtime must be carefully computed.
Bonuses intended to increase an employee's efforts are considered part of the employee's contractual pay rate and must be included in the regular rate computations for overtime pay purposes. Examples include bonuses for production, efficiency, quality and accuracy of work, attendance, duration of service, and bonuses promised when an employee is hired. Bonuses that are announced to employees to induce them to work more steadily, more rapidly, or more efficiently or to remain with the company are regarded as part of the regular rate.
When including such bonuses in the regular rate, they must be apportioned back over the workweeks of the period in which they were earned. Depending on the payment of the bonuses, be that monthly, quarterly or annually, the obligations to increase the base rate for overtime calculation is calculated for that time period and then an adjustment is made to increase the base hourly rate for any overtime earned during that particular time period. Failure to do so can result in interest and penalties.
In contrast, bonuses paid purely as gifts for past services and not measured by or dependent on an individual employee's hours worked, production, or efficiency are not construed as wages and are disregarded when computing the employee's regular rate of pay for overtime purposes.
Makeup Time Is a Legal Way Around an Overtime Pay Obligation (Not new but of value to employers)
An employee may wish to leave early to visit the doctor, see a child's game or for whatever personal reason, and want to make the time up on a different day. Legally, this is possible at the employer's option without paying overtime pay, if 1) the employees give you a written request, 2) the time is made up in the same work week and, 3) the employee does not work more than 11 hours in any day. This means that an employee can work more than eight hours per day at straight time without any overtime obligation as long as all 3 requirements are met. This is a big win/win situation for both employee and employer.
The minimum wage requirement in California was raised to $6.75 per hour for all hours work effective January 1, 2002.
Unemployment Insurance Benefits Increase
Unemployment insurance benefits, administered by Employment Development Department of the State of California, have increased to forty-five (45%) percent of the employees weekly rate, not to exceed $330.00. Further increases of $40.00 per year will continue into the year 2005. In comparison with the other 49 states, California will go from a ranking of 46th to 16th in terms of the amount of unemployment benefits paid.
Standard Mileage Rate Increase
The IRS increased the standard mileage rate in reimbursement for business miles driven from 35.5 cents per mile to 36.5 cents per mile for the year 2002.
Cleaning of Required Uniforms (Not new but not widely known)
When an employer requires uniforms to be worn by the employee, the employer has the legal obligation to clean the uniforms. The term "Uniform" is defined to include wearing apparel and accessaries of a distinctive design or color. This may be as simple as a polo shirt. Remember if it is required, then the employer must clean it.
The California Highway Patrol and local police must now report driving distractions that are known or suspected to play a part in car accidents, including the use of cellular phones. California state law now requires this information to be disclosed on a traffic accident report. This is widely viewed as the first step to the prohibition of the use of cell phones while driving.
Now is a good time to check your procedures to make sure proper documents are kept on all employees who drive for work purposes. They should both be properly licensed and carry adequate car insurance. Documentation should be verified, and a photocopy made, at least on an annual basis. Now with this new law, you may wish to consider prohibiting the use of cell phones while driving for work purposes.
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