California
Not unexpectedly, the number of employment-related bills under consideration is increasing as the February 22d deadline for introducing new bills approaches. This newsletter will continue to highlight the key employment bills of general application as they move forward, including the following:
Annual Minimum Wage Adjustments Proposed (AB 10)
This bill would increase California’s minimum wage by specified amounts for three consecutive years beginning in 2014, with annual adjustments tied to inflation thereafter. Specifically, this bill would increase California’s minimum wage to $8.25 beginning on January 1, 2014, to at least $8.75 in 2015, and to at least $9.25 in 2016. This bill would also provide for annual adjustments beginning in 2017 to maintain employee purchasing power, calculated by using the California Consumer Price Index. The bill would also specifically prohibit the Industrial Welfare Commission from adjusting the minimum wage downward in years with negative inflation levels.
Similar versions of this bill are introduced annually and have repeatedly stalled in recent years, but the early introduction of this bill suggests it may be a legislative priority. This fact, coupled with minimum wage increases in several California municipalities and in numerous states, suggests a minimum wage increase is likely in 2013.
Social Media Password Prohibitions to Extend to Public Employers (AB 25)
Last year, AB 1844 was signed into law prohibiting private employers from requiring or requesting an employee or applicant for employment to disclose a username or password for the purpose of accessing personal social media. This bill would amend the newly-enacted Labor Code section 980 to specify that its various prohibitions apply to both public and private employers.
Since AB 1844 passed unanimously last year, and since many likely assumed these prohibitions already applied to both private and public employers, this bill seems likely to pass quickly and be signed into law.
Bill to Clarify that Employees, Not Employers, Get to Decide Whether the Employee Will Obtain a Copy or Inspect Payroll Records (AB 155)
Labor Code section 226 requires employers to provide itemized wage statements containing specific statutorily-enumerated items, to maintain copies of these statements for three years at specific locations, and to permit current or former employees to inspect or obtain a copy of these payroll records. This bill would slightly amend Labor Code section 226 to specify that the employee, and not the employer, makes the election whether they will inspect or copy, or receive a copy of, or any combination thereof, regarding his or her employment records. This bill is intended to legislatively overrule an unpublished decision that suggested an employer could, upon receiving an inspection or copying request, decide which of the two mechanisms it wanted to allow. This bill would make clear that only the employee can make this election, in effect meaning an employer could not refuse to provide copies simply because it decides to allow inspection instead.
This bill appears almost certain to pass and to be signed into law, although it seems unlikely to impact many employers, most of who likely already understood they could be compelled to provide copies of these records through a request under section 226.
Successor Liability for Farm Labor Contractor Wage and Hour Violations Proposed (SB 168)
Presently, farm labor contractors who fail to comply with specified employment laws may be guilty of a misdemeanor punishable by statutorily-enumerated fines or imprisonment, or both. This bill would make a successor to any farm labor contractor that owed wages or penalties or a former employee of the predecessor farm labor contractor liable for those wages and penalties, if the successor meets one or more specified criteria (e.g., using substantially the same or similar physical facility or workforce as the predecessor, sharing common management or interrelation of business operations with the predecessor, or employing predecessor managers responsible for controlling wages, hours, or working conditions, etc.).
Incentive for Early Resolution of DLSE Claims Proposed (AB 228)
Presently, the Labor Commissioner or his or her representatives are authorized to take assignments of certain claims for enforcement, including claims for lost wages. This bill would authorize the Labor Commissioner to waive any penalties against an employer for a qualified claim if this claim is the first of its type against the employer, and the claim is resolved within 30 days of the Commissioner’s issuance to the employer of notice of the claim and the potential waiver of penalties if resolved within 30 days.
Additional Exemption to Wage Garnishment Orders Proposed (AB 233)
California’s Wage Garnishment Law outlines the procedures whereby an employer may be ordered to withhold portions of an employee’s earnings to satisfy a debt owed to a creditor. This bill would prohibit the issuance of an earnings withholding order for purposes of collecting on a student loan that is not made, insured or guaranteed by the United States Government.
New Limits Proposed for Criminal Background Checks for Public Employers (AB 218)
California law presently precludes public and private employers from asking an applicant for employment to disclose either in writing or verbally, any information concerning an arrest or detention that did not result in a conviction. To reduce employment barriers to individuals who have previously been convicted of a crime, this bill would impose new conditions on a state or local agency’s ability to obtain an applicant’s criminal history. Specifically, this bill would generally prohibit a state or local agency from inquiring about criminal convictions until after the applicant’s qualifications for the position have been determined to meet the position’s requirements. The bill specifies that a state or local agency would be permitted to conduct a criminal history background check after the applicant has been deemed to meet the position’s requirements.
As presently drafted, this bill does not apply to private employers. If enacted, these new conditions would not apply to positions for which a state or local agency is required by law to conduct a criminal history background check, to any position within a criminal justice agency (as defined by Penal Code section 13101) or to any individual working for a criminal justice agency on a contract basis or on loan from another government agency.
Bill Would Permit Individuals Enrolled in Self-Employment Assistance Program to Receive Unemployment Benefits (AB 152)
Recognizing that some individuals laid off during the recent recession may not easily regain work in their former industries, this bill would establish a Self-Employment Assistance Program similar to the one California maintained between 1994 and 2005. Under this program which the Director of Employment Development would administer, individuals allowed to participate in this program to develop the ability to become self-employed would receive a weekly allowance equal to regular unemployment benefits, subject to various limits. This program would limit the overall number of persons able to participate and identify specific eligibility requirements to be selected to enroll, but would also waive the requirements relating to availability for work, active search for work, and refusal to accept work.
This bill is intended to immediately develop a Self-Employment Assistance Program that would enable California to be eligible for approximately $5.3 million in federal self-employment benefits authorized under the Middle Class Tax Relief and Job Creation Act of 2012. This bill has been identified as emergency legislation which would take effect immediately if passed, and the current identified goal is to have this program established by June 30, 2013. Given the amount of federal money potentially available, and since California has previously maintained a similar program, it seems likely this bill will enjoy considerable support.
California to Strengthen Commitment to Workforce Investment Systems (SB 118)
Under current law, California’s Workforce Investment Board is responsible for assisting the Governor in the development, oversight and continuous improvement of California’s workforce investment system. This bill would specify that this board would also be responsible for assisting the Governor in the alignment of the education and workforce investment systems to the needs of the 21st century workforce and the promotion and development of a well-educated and highly-skilled 21st century economy and workforce. This bill would require the board to assist the Governor in targeting resources to specified industry clusters that provide economic security (defined as allowing an employee sufficient wages to support their family and save for retirement, etc.) and leverage state and federal funds to ensure that resources are invested in activities that meet the needs of specified industry sectors.
This bill would also require, as part of California’s strategic workforce plan, the creation of a California Industry Sector Initiative to accomplish specified tasks, including aligning and leveraging state, federal, and local Workforce Investment Act funding streams, identifying specified industry sectors and clusters, providing skills-gap analysis, and establishing specified eligibility criteria for the Workforce Investment Act eligible training provider list.
AGENCY
California
Cal-OSHA Publishes Reminder About Form 300 Posting Requirement
Cal-OSHA has recently published a reminder (IR#2013-07) regarding California employers’ obligation to post their annual summary of all work-related injuries and illnesses. California employers are required to fill out and post this summary (also known as Form 300A) every year, even if no workplace injuries occurred. This form must be posted at the employer’s place of business in a visible and easily accessible area from February 1 through April 30. The Form 300A is available for free download on the DIR’s website, and the full text of Cal-OSHA’s reminder is available at www.dir.ca.gov/DIRNews/2013/IR2013-07.html.
Federal
DOL Issues Administrative Guidance Regarding FMLA Leave for Adult Children
The Family and Medical Leave Act (FMLA) entitles eligible employees to take up to 12 workweeks of unpaid, job-protected leave during a 12-month period to care for a son or daughter with a serious health condition. Recently, the Wage and Hour Division (WHD) of the Department of Labor (DOL) issued Administrator’s Interpretation No. 2013-1 to clarify the definition of “son or daughter” under the FMLA as it applies to an individual 18 years of age or older and incapable of self-care because of a mental or physical disability.
The FMLA regulation defines a "son or daughter" 18 years of age or older as one who is “incapable of self-care because of a mental or physical disability at the time that the FMLA leave is to commence.” (29 C.F.R. § 875.122(c).) The regulations, however, did not specify whether it is relevant if the disability occurs before or after the son or daughter turns 18 years old. In this new guideline, the WHD has determined the age at time of onset of the disability is irrelevant to the determination of whether an individual is considered a "son or daughter" under the FMLA. Consequently, an employee is entitled to take FMLA leave to care for a son or daughter with a serious health condition who is 18 years of age or older and incapable of self-care because of a disability regardless of when the disability commenced.
Further, the WHD provided guidance on the impact of the American with Disabilities Act Amendment Act of 2008 (ADAAA) on a parent's ability to take FMLA leave to care for an adult son or daughter with a disability. The ADAAA expanded the ADA's definition of disability by broadening the definition of "major life activities," and provided that (1) the definition of "substantially limited" does not require that the impairment prevent, or severely or significantly restrict, performing a major life activity, (2) an impairment that is "episodic or in remission" is a disability if, when active, the impairment would substantially limit a major life activity, and (3) there is no minimum duration required for an impairment to be a disability under the ADAAA. Because the FMLA’s definition of an adult “son or daughter” relies upon the ADA’s definition of “disability,” the broad changes to the definition of “disability” set forth in the ADAA are applicable to the definition of an adult son or daughter under the FMLA.
Finally, the Administrator analyzed the impact of its interpretation on FMLA leave to care for adult children wounded in military service. It determined that the expanded definition of disability under the ADAAA, as well as the clarification that when an adult son or daughter's disability commences is not determinative of whether or he or she qualifies as a "son or daughter" under the FMLA, may allow parents of adult children who have been wounded or sustained an injury or illness in military service to take FMLA leave beyond that already provided under the special military caregiver leave provision of the statute. Thus, parents may take FMLA leave in subsequent years due to the adult child's serious health condition.
The full text of the Administrator’s Interpretation No. 2013-1 is available at
http://www.dol.gov/WHD/opinion/adminIntrprtn/FMLA/2013/FMLAAI2013_1.htm
Department of Labor Delays Affordable Care Act Exchange Notice Requirements
Section 18B of the Fair Labor Standards Act (FLSA), as added by the Affordable Care Act (ACA), provides that employers subject to the FLSA must furnish all new hires and employees with a written notice by March 1, 2013, providing information related to Exchanges, which are government-regulated and standardized health care plans from which individuals may purchase health insurance eligible for federal subsidies. Specifically, these notices must: (1) inform employees about the existence of the Exchange and give a description of the services provided by the Exchange; (2) explain how employees may be eligible for a premium tax credit or a cost-sharing reduction if the employer’s plan does not meet certain requirements; (3) inform employees that if they purchase coverage through the Exchange, they may lose any employer contribution toward the cost of employer-provided coverage, and that all or a portion of this employer contribution may be excludable for federal income tax purposes; and (4) include contact information for the Exchange and an explanation of appeal rights.
However, on January 24, 2013, the Department of Labor (DOL) announced that employers will not be held to the March 1, 2013 deadline. Employers will not have to comply until final regulations are issued and a final effective date is specified. The DOL expects that the timing for distribution of notices will be the late summer or fall of 2013. To assist employers in satisfying the notice requirements, the DOL is considering providing model, generic language for employers to use.
JUDICIAL
California
California Supreme Court Issues Mixed-Result Regarding Applicability of “Mixed Motive” Affirmative Defense in FEHA Discrimination Cases
While FEHA’s statutory language unmistakably precludes discrimination “because of” an employee or applicant’s protected status (e.g., race, sex, disability, etc.), several important and unresolved issues had emerged in FEHA-related litigation, including the causation standard to prove liability and the applicability of the so-called mixed-motive affirmative defense otherwise available in federal Title VII litigation. For instance, considerable debate existed whether the language “because of” required a plaintiff to demonstrate the protected criterion was the “but for” cause of the challenged decision (as many employers preferred), or whether it need only be “a motivating factor” amongst potentially several (as many employees preferred), or something in between. Secondarily, debate existed whether under the FEHA employers would be permitted to argue that they would have made the same decision regardless of whether there was some discrimination and if so, whether this so-called “mixed motive” or “same decision” defense would be a complete defense to liability, or merely limit some types of damages. The California Supreme Court has recently decided these issues in an important decision which, although not as favorable perhaps as many employers had hoped, should make it easier for an employer to avoid liability and/or limit damages than had been the case under the standard jury instructions in use for the last decade.
In this case, a female bus driver sued for FEHA sex discrimination after she was informed she had not cleared her probationary status shortly after informing her supervisor she was pregnant. The employer argued it had not granted her full-time employment due to performance issues during her probationary period, including multiple accidents and several missed shifts. At trial, the court provided the standard judicially approved jury instruction requiring the employee to demonstrate her pregnancy was simply “a motivating factor,” which in turn was defined as “something that moves the will and induces action even though other matters may have contributed to the taking of the action.” The court also refused to instruct the jury on the so-called mixed motive affirmative defense whereby the employer could escape liability by demonstrating it would have made the same decision for lawful reasons regardless of the employee’s pregnancy. The jury returned a 9-3 verdict in the employee’s favor and awarded $170,000 in damages and the court subsequently awarded $400,000 in attorneys’ fees. The court of appeals, however, concluded the trial court should have instructed the jury on the mixed-motive affirmative defense and remanded the matter for a new trial. The California Supreme Court granted review on the applicable causation standard and the availability of the mixed-motive affirmative defense in FEHA litigation.
In a unanimous decision, the Court first effectively “split the baby” concerning the causation standard needed to demonstrate a challenged decision was “because of” an employee’s protected characteristic. By that, the Court declined to adopt the employer’s proposed “but for” standard (i.e., that the protected characteristic was the dispositive factor), and the employee’s proposed “a motivating factor” standard (i.e., that the protected characteristic was simply one factor among many). Instead, the Court seemingly chartered a middle course and concluded the employee must demonstrate the protected characteristic was a “substantial motivating factor.” Although the Court expressly declined to define this term for all purposes, thus ensuring future disputes, its criticisms of the currently applicable standard jury instructions using “a motivating factor” standard is a welcome development for employers. So too is the Court’s reference to several federal decisions applying a relatively high evidentiary standard as potential examples of “substantial motivating factor,” and its observation that the FEHA “does not purport to outlaw discriminatory thoughts, beliefs, or stray remarks that are unconnected to employment decision-making.”
In a second positive development for employers, the Court concluded employers may be entitled to the so-called “mixed motive” or “same decision” affirmative defense available under Title VII and that had previously been included in a prior version of California jury instructions, but omitted without explanation when the current set of standard jury instructions was adopted. The Court noted that when a plaintiff has shown by a preponderance of the evidence that discrimination was a substantial factor motivating the challenged employment decision, the employer is entitled to demonstrate that legitimate, nondiscriminatory reasons would have led it to make the same decision at the time.
However, the Court concluded this defense would not be a complete defense against all liability, but simply a defense against certain types of remedies otherwise available under the FEHA. Specifically, the Court held the employee would not be entitled to recover economic damages (back pay/future lost wages), non-economic damages (emotional distress) or reinstatement, but would be entitled to other potential remedies, including declaratory relief, injunctive relief and “reasonable attorneys” fees (which frequently are the lion’s share of any award on a claim arising from the FEHA, including in the underlying jury verdict in this case). The Court reasoned that awarding damages and reinstatement to an employee who would have been terminated regardless would constitute a “windfall” to that employee. On the other hand, public policy supported awarding those remedies (declaratory and injunctive relief and attorneys’ fees) that would further the FEHA’s deterrence goals to preclude ongoing discrimination, particularly since by definition, the employer seeking the “mixed motive” instruction would have effectively conceded discrimination played some role, even if not a legally dispositive role as to that particular employee. (Harris v. City of Santa Monica (2013) ___ Cal.4th ___, 2013 Cal.LEXIS ___.)
(NOTE: although not as decisive a victory as employers and management-sided practitioners might have hoped for, there are multiple favorable developments in Harris. First, the Court expressly disagreed with the currently applicable standard jury instructions using the very-employee-friendly “a motivating factor” standard. Second, the Court confirmed that the so-called “mixed motive/same decision” affirmative defense, which had inexplicably disappeared from the standard jury instructions without comment, remains viable in California and where applicable, will preclude economic and non-economic damages (e.g., emotional distress), the latter item which had been committed to the jury’s discretion and often resulted in runaway jury verdict awards. Third, although the Court expressly authorized the recovery of attorneys’ fees even where the mixed motive defense applies, its multiple references to “reasonable” fees and precluding “windfalls” to employees and applicants, suggests courts may scrutinize such requests when no economic or non-economic damages are recovered. Lastly, although the Court declined to define the “substantial motivating factor” standard it was adopting, its language suggests this will not be an easily met standard, and certainly a higher-standard than previously existed. This combination of factors may provide a disincentive for plaintiff’s attorneys to pursue weaker cases or at least to settle them earlier in the proceedings.)
California Supreme Court Depublishes Another Post-Brinker Case
Again signaling its apparent disapproval with a court of appeals’ interpretation of its decision in Brinker v. Sup. Ct., the California Supreme Court has ordered that another opinion be depublished. As reported here previously, in April of last year, the Supreme Court issued its decision in Brinker providing some guidance on what employers must do in order to “provide” employees with meal periods: they must relieve employees of all duty so that they are free to take an uninterrupted 30-minute meal period. In the months since, the courts of appeal have reviewed several of the cases returned to them for reconsideration in light of Brinker. In December, the Supreme Court ordered the opinions in two of these eight “grant and hold” cases — Lamps Plus Overtime Cases and Hernandez v. Chipotle Mexican Grill, Inc. — depublished.
On January 17th, the Court did the same in Tien v. Tenet Healthcare Corp., a case involving hourly non-exempt hospital employees.All three of these depublished opinions were by Division Eight of the Second District Court of Appeal. In all three cases, the court of appeal reaffirmed the trial courts’ denial of class certification of a meal period claim after Brinker. In doing so, the court of appeal arguably applied a more expansive definition of what it means to “provide a meal break” than that articulated by the Supreme Court. In particular, the Tien court announced that Brinker "conclusively established…that California requires only that an employer make a meal period available, not that employees must eat their meals.” The standard the Supreme Court has articulated is that, in order “to provide a nonexempt employee a meal period… an employer must relieve the employee of all duty for the designated period, but need not ensure that the employee does no work.” (Brinker v. Sup. Ct.(2012) 53 Cal. 4th 1004, 1034.)
Orders to depublish an opinion are not a ruling on the merits of the case. Nonetheless, it seems apparent that the Supreme Court was dissatisfied with some aspect of the decision — perhaps the reasoning if not the result.
Police Officer Unable to Perform Essential Job Functions Regarding Baton Use Could not Sue for FEHA Disability Discrimination or Failure to Accommodate
A correctional officer who was unable to use a police baton following a serious shoulder injury sued for FEHA disability discrimination and failure to accommodate after his employer failed to return him to his prior position or to an administrative position. The correctional officer argued that using a baton was not an essential job function of his prior position, and that an administrative correctional officer position would not typically need to use a baton. The State Personnel Board and a California court of appeal concluded the prison acted appropriately in not returning him to his prior position and in demoting him to an available non-peace officer position for which he was qualified and could perform the essential job functions.
The appellate court began its analysis by reiterating that the FEHA’s prohibition against disability discrimination does not preclude an employer from discharging or not reinstating an employee who cannot perform the essential job functions. The court noted the prison employer presented sufficient evidence, including job descriptions, detailed job function analyses and testamentary evidence, that being able to disarm and subdue inmates and use a baton are essential job functions of the correctional lieutenant position. The court also rejected the employee’s suggestion the prison should have assigned him to a purely “administrative” correctional lieutenant position (i.e., one that never used a baton) finding the prison reasonably expected all lieutenants to be able to use a baton even if a particular individual in a particular assignment might not typically perform this function. The court observed the employer reasonably expected its correctional officers to be able to perform the full range of duties, not just the ones to which they are typically assigned, because circumstances would forseeably arise (riots, sick call, etc.) that might require the officer to perform additional duties beyond those which they typically performed.
Drawing upon the recent decisions in Raine v. City of Burbank and Liu v. City and County of San Francisco, the court noted the employer did not need to create a full-time position never requiring baton use because this would not be an “accommodation” but would instead involve assigning away essential job functions. The court also noted the employer did not need to create a new “administrative” position that did not otherwise exist. The court concluded that the officer was not a “qualified” individual since, although injured during his employment, he was in the same position as an applicant who could not qualify for the job because he could not perform one or more of the essential job functions due to his disability. (Furtado v. State Personnel Bd. (2013) ___ Cal.App.4th ___, 2013 Cal.App.LEXIS ___.)
Note: this decision, coupled with the Liu case discussed last month, serves as a good reminder that something may qualify as an essential job function even though a particular employee may not always perform that function on a particular day or in a particular role. This case also serves as a good reminder of the importance for an employer to be able to demonstrate why something is an essential job function, above and beyond the fact the employer has listed it in a job description.
Ninth Circuit Concludes a Store Manager Unable to Work is Not a Qualified Individual with a Disability Under the FEHA
The former store manager of a boutique retail store in a mall sued for FEHA disability discrimination and retaliation after she was terminated because she needed a four-month leave of absence related to her arthritis. The employer contended it terminated Plaintiff because regular in-store attendance was an essential function for the boutique store manager position, and the requested leave coincided with the holiday season which generated one-third of annual sales and during which all employee vacations were prohibited. The district court granted summary judgment in the employer’s favor and the Ninth Circuit Court of Appeals affirmed.
The court first concluded the former store manager could not even establish a prima facie case of i