On May 2, 2019, the Ninth Circuit in Vazquez v. Jan-Pro Franchising Int’l, Inc. held that the California Supreme Court’s 2018 decision in Dynamex Operations West v. Superior Court applied retroactively. Dynamex adopted the “ABC” test for independent contractor classification for claims arising under California’s Wage Orders. For those claims, an employer must show that all three prongs of the ABC test are met to justify independent contractor status. For information on Dynamex’s adoption of the ABC test, read our prior coverage here. READ MORE
In April 2018, an en banc Ninth Circuit held in Rizo v. Yovino that an employer cannot justify a wage differential between male and female employees under the Equal Pay Act by relying on prior salary. Before the Ninth Circuit published its decision, though, Judge Stephen Reinhardt passed away. On February 25th, the U.S. Supreme Court vacated the Ninth Circuit’s decision, reasoning that the appellate court should not have counted Reinhardt’s vote because he passed away before the decision was issued. Instead, the Ninth Circuit should not have released the opinion. READ MORE
2018 saw some major developments in employment law, particularly in California. The California Supreme Court embraced the ABC test for independent contractors in Dynamex, and rejected the de minimis doctrine for Labor Code claims in Troester. While 2019 has already brought legislative changes through the #metoo laws effective January 1, attention should also be on cases before the California Supreme Court. These cases may present new challenges for all employers, but particularly for media companies and employers doing business across state lines. The Court’s decisions in these cases have the potential to increase employers’ exposure to liability. We highlight some such cases here. READ MORE
You may be asking yourself: How is it already almost 2019?! With the New Year fast approaching, for those employment law enthusiasts out there, here are some legal issues that you want to keep in mind as you look back on 2018 and forward to 2019:
Year-End Bonuses: Employers distributing holiday bonuses, holiday gift cards, year-end merit bonuses, and other types of compensation to nonexempt employees should consider whether the compensation must be included in a nonexempt employee’s “regular rate” of pay when calculating overtime. The Code of Federal Regulations carves out some specific types of pay that need not be included in an employee’s regular rate of pay. For example, Section 778.211 excludes purely discretionary bonuses and section 778.212 excludes gifts for Christmas and other special occasions. So, an employer giving employees gift cards for the holidays or other special occasions is not required to incorporate the value of those gift cards into an employee’s regular rate of pay as long as the amounts “are not measured by or dependent on hours worked, production, or efficiency.” See 29 C.F.R. § 778.212(a); 29 U.S.C.A. § 207.
On December 10, the California Supreme Court issued an impactful decision for the healthcare industry. In Gerard v. Orange Coast Memorial Medical Center, the unanimous Court endorsed the Hospitals’ meal break policy, over which the parties had battled for more than a decade.
The policy permitted employees who worked shifts longer than 10 hours to voluntarily waive one of their two meal breaks, even if their shifts lasted more than 12 hours. The Plaintiffs alleged the meal period waivers they signed were illegal because under the California Labor Code, waivers were not permissible for shifts greater than 12 hours.
As part of its effort to close gender-based pay gaps, California will now require companies to increase female representation on boards of directors.
Currently, one in four publicly held corporations in California have no women on their boards of directors. SB 826, which Governor Jerry Brown signed into law at the end of September, requires that all publicly held corporations based in California have at least one woman director by December 31, 2019. That is not the end of the requirements; by December 31, 2021, companies with five authorized directors must have a minimum of two female board members, and companies with at least six directors must have a minimum of three females on the board. The California Secretary of State will publish the names of compliant and non-compliant companies on an annual basis. In addition to the “name and shame” provisions, non-compliant companies face fines of $100,000 for the first violation and $300,000 for subsequent violations.
The sponsors of the bill, Sens. Hannah-Beth Jackson (D-Santa Barbara) and Toni Atkins (D-San Diego), stated when introducing the bill: “More women directors serving on boards of directors of publicly held corporations will boost the California economy, improve opportunities for women in the workplace, and protect California taxpayers, shareholders, and retirees. . . . Yet studies predict that it will take 40 or 50 years to achieve gender parity, if something is not done proactively.” The bill cites numerous independent studies stating that publicly held companies perform better in terms of profitability, productivity, and workforce engagement when women serve on their boards of directors. It follows the lead of Germany, France, Spain, Norway, and the Netherlands that have addressed the lack of gender diversity on corporate boards by instituting quotas requiring 30 to 40 percent of seats be held by female directors.
Gov. Brown noted in his signing letter that corporations have been considered “persons” for more than a century, so they should reflect the “persons” who make up America as a result. The California Chamber of Commerce and a coalition of other businesses opposed the bill and argued that the mandate is unconstitutional and a violation of California’s civil rights statutes. While Gov. Brown acknowledged that the law could face legal challenges, he noted that “recent events . . . make it crystal clear that many are not getting the message.” Therefore, he felt signing the bill into law was a necessary measure. No lawsuits have yet been filed.
In the meantime, California-based publicly held companies should act promptly to ensure that their boards of directors include the number of women directors needed to comply with the statute.
Last week, the Court of Appeal for California’s Fourth Appellate District ruled that an agreement prohibiting former staffing company recruiters from soliciting their former employer’s employees is unenforceable under California Business & Professions Code section 16600. The court reasoned that the employee non-solicitation provision was too onerous on the recruiters’ ability to practice their profession i.e., recruiting employees. In rendering the decision, the court called into question long-standing precedent that upheld employee non-solicitation provisions, which are routinely included by California employers in employment and confidentiality agreements with their employees.
On October 15, 2017, the #MeToo movement began in earnest following a tweet by actress Alyssa Milano. To commemorate the one-year anniversary of the #MeToo movement, the Orrick Employment Law and Litigation Blog will analyze the effects of the movement from the employment perspective. Part 1 reviewed the movement’s impact on sexual harassment claims in the workplace, Part 2 below focuses on the legislative reaction to the movement, and Part 3 discusses how employers have responded to #MeToo. READ MORE
San Francisco recently added significant teeth to its “Fair Chance” ordinance, which is designed to give applicants who have criminal histories a chance to get their foot in the door without being automatically disqualified.
This is the next step in the “ban the box” movement, for which several cities, counties and states have passed laws restricting employers from inquiring about a job applicant’s criminal background. The term “ban the box” refers to questions on an employment application that ask a job applicant about past convictions. Proponents of “ban the box” laws argue they will help remove unfair employment barriers to job applicants with criminal histories.
In California, San Francisco and Los Angeles have instituted “Fair Chance” ordinances that require employers to state on their job postings that an arrest or conviction will not automatically disqualify a qualified application from consideration from employment. Recent amendments to the San Francisco Fair Chance Ordinance went into effect on October 1, 2018. These amendments:
- Expand the scope of the law to cover any employer with 5 or more employees. Previously, the law covered employers with 20 or more employees.
- Prohibit employers from inquiring about a person’s criminal history until after a conditional offer of employment has been made.
- Prohibit employers from considering any convictions for decriminalized behavior (e.g., marijuana related convictions). Previously, the law had allowed such inquiries for convictions that were seven years old or less.
- Increase penalties for non-compliance from a per-violation maximum of $100 to $2,000.
- Direct that penalties must be paid directly to affected employees. Penalties were previously paid to the City.
- Creates a new private right of action for any employee or applicant whose rights have been violated. Previously only the City Attorney could sue to enforce the law.
- Requires that covered employers display a new poster in the workplaces as of October 1, 2018.
In addition to fair chance ordinances like San Francisco’s, California employers must also be mindful of other recent legislation that will have an impact on the hiring process, including state-wide legislation enacted in July 2018 that prohibits employers from inquiring into the salary history of their applicants. More on that here.
As always, employers are well advised to reach out to Orrick counsel for assistance navigating this complex area of law.