New Qualification for What Constitutes a “Serious” Reportable Injury!

October 8, 2019

As most employers should be aware, any serious injury or death in connection with the workplace is immediately reportable to Cal/OSHA.  “Immediately” means as soon as practicable, and in no event later than 8 hours after the employer knows, or with diligent inquiry would have known, of the death or serious injury. Now, Governor Newsom has signed Assembly Bill No. 1805 into law which actually broadens the scope of injuries that qualify as “serious” under the California Labor Code.

While the timing requirements have stayed the same, the definition of what qualifies as a “Serious” injury has changed.  For instance, in the past, an injury which required hospitalization for less than 24 hours would not be reportable, even if the employee was admitted during this period for purposes other than medical observation.

Now, the new law requires that the injury be reported no matter the time that elapses in the hospital, as long as the treatment is for other than medical observation or testing.  What this means is that any treatment for the injury or illness by a hospital or clinic – outside of just for “observation” or “testing” purposes – will now be reportable.  As a real-world example, a muscular skeletal strain or broken bone, which can often times be attended to, diagnosed, and medically treated within a 24-hour period at the hospital, will no longer fall outside the reporting requirement.

Employers will also now need to report any “amputation” to Cal/OSHA, versus the old requirement which applied to any “loss of a member.”  This helps clarify and put into law the often litigated issue as to what qualified as a “loss of a member.”  For instance, prior decisions issued by the Cal/OSHA Appeals Board – the administrative agency that decides all OSHA matters in California – have determined that even the loss of the tip of a finger qualified as a “loss of a member” and was therefore reportable.

The new law retains the current requirement to report any injury resulting in a “serious degree of permanent disfigurement,” but adds the requirement to report the loss of an eye.  Employers should be careful not to assume that a particular injury is not severe enough to be a “serious disfigurement,” as cases in the past have held that a toe or finger that sets or heals in an awkward manner, qualifies as a serious disfigurement.

Furthermore, in the past Serious injuries or deaths caused by the commission of a penal code violation (such as criminal battery or murder) did not need to be reported.  Under the new law, such crimes are now reportable to Cal/OSHA, as long as it occurs in connection with work.

What this all boils down to is the following:

  1. Employers should be aware of the broader situations which will trigger the requirement to report serious injuries to Cal/OSHA.
  2. In particular, supervisors should be aware of the new requirements so they can promptly report and follow up as necessary regarding any hospitalization of an employee.
  3. Employers should not assume that any minor level of disfigurement is not reportable.
  4. Proper reporting to OSHA avoids penalties associated with a late or failure to report citation, while at the same time alerting OSHA to the accident so they can timely assess and begin their investigation.

The new law goes into effect January 1, 2020, so employers and their safety professionals should be aware of the changes and train accordingly.

 

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Minimum Salary for Federal Overtime Exemption is Increasing January 1, 2020

October 1, 2019

You may have heard on the news that the United States Department of Labor issued its final rule increasing the minimum salary for a worker to be exempt from overtime compensation under the Fair Labor Standards Act (“FLSA”), effective January 1, 2020.  This new standard sets the floor for all employees who are classified by their employers as exempt from overtime.  However, some states, including California, have higher minimum salary thresholds than federal law, and employers are reminded that they must comply with whichever law is more favorable to the employee.  The changes to the FLSA overtime exemptions, and the implications for California employers, are described more fully below.

Increase In Minimum Salary for Exempt Status

For exempt managerial, administrative, and professional employees, the minimum salary will now be $35,568 per year (compared to the current $23,660).  Federal law also recognizes a separate highly compensated employee exemption, which involves a simpler test for determining whether an employee is exempt from overtime.  Under the new rule, the minimum “total annual compensation” to qualify for this exemption is increasing to $107,432 (compared to the current $100,000), and at least $684 per week must be paid on a salary or fee basis.  The new law also sets special salary levels for workers in U.S. territories and the motion picture industry.  (If you have workers covered by these specialized rules, you’ll want to familiarize yourself with the unique requirements applicable to these workers).  The new salary thresholds take effect January 1, 2020.

The increases to the salary level are much more modest than those that had been adopted by the Department of Labor under the Obama administration.  Those earlier changes never took effect, but would have raised the minimum salary for exempt managerial, administrative, and professional employees to $47,476, and the minimum salary for highly compensated employees to $134,004.

Non-Discretionary Bonuses May Be Included

Under the new FLSA rule, employers will be able to count certain bonuses and incentive compensation toward meeting 10% of the minimum salary thresholds for exempt managerial, administrative, and professional employees.  More specifically, employers may count non-discretionary bonuses, incentives, and commissions that are paid annually or more frequently.  An employer may designate and utilize any 52-week period it chooses for this purpose (e.g. calendar year, fiscal year, anniversary year).  If, by the last pay period of the 52-week period, the employee’s total compensation (salary plus non-discretionary bonuses, incentive compensation, and commissions) is less than $35,568, the employer may make one final payment to meet this threshold no later than the next pay period following the end of the year.  Importantly, this payment may only be counted toward the prior year’s threshold and not also the current year’s threshold.  If an employer fails to make this catch-up payment, the overtime exemption will be lost for that 52-week period.

For the highly compensated employee exemption, the rule is similar.  These employees must be paid total annual compensation of at least $107,432, at least $35,568 of which must be paid on a salary basis (i.e. a predetermined, guaranteed amount each pay period that is not based on production).  Employers may count commissions, non-discretionary bonuses, and other non-discretionary compensation toward meeting the $107,432 annual threshold.  [Employers may not count board, lodging, or other facilities, and/or fringe benefits.]  If, by the end of the 52-week period, the employee’s total annual compensation is not at least $107,432, the employer may make one final payment to the employee to meet this threshold within one month after the end of the 52-week period.  If the employer fails to make such a payment, the highly compensated employee exemption will be lost.

No Changes to “Duties” Tests

As all employers should be aware, exempt status depends not only on compensation level, but also on an employee performing duties (e.g. professional, managerial, and/or administrative) that are associated with exempt status.  The new overtime rule does not change the existing duties tests under the FLSA.

Impact on California Employers

The increases to the salary levels for exempt status under the FLSA do not directly impact California employees because California has its own laws requiring a higher minimum salary to qualify for exempt status.  Employers with California employees have to comply with the higher California salary thresholds for their California employees.  As a reminder, the current minimum annual salary for most exempt managerial, administrative, and professional employees in California is $49,920  ($45,760 for employers with 25 or fewer employees).  There are also unique California requirements for certain computer professionals and doctors.

Importantly, unlike federal law, California does not recognize a “highly compensated employee” exemption.  California also does not have any provision allowing bonuses, commissions, and incentives to be counted in reaching the minimum salary thresholds for exempt status.  Furthermore, the duties test in California remains much more stringent than the duties test under federal law.  In California, an employee must spend more than 50% of his or her time performing exempt duties each workweek in order to qualify as exempt from overtime.

Employers with employees in states other than California should review their compensation levels for their exempt employees and implement any changes necessary to comply with the changing federal requirements by January 1, 2020.  These changes may include re-classifying exempt employees to non-exempt employees, and/or increasing salary levels as necessary to retain exempt status.

 


Pending Legislative Bills: Part Two!

September 24, 2019

Here is the second part to pending bills. These will have a big impact if signed into law.

AB 9 (extended statute of limitations for FEHA claims):  This bill would greatly expand the statute of limitations to file a claim for employment discrimination, harassment, and/or retaliation under the Fair Employment and Housing Act (FEHA).  As most employers know, under current and long-standing law, an employee who wants to sue for employment discrimination is required to first file an administrative complaint with the Department of Fair Employment and Housing (DFEH).  The administrative complaint must be filed within one year after the alleged discriminatory act, and then the employee has one year from the date of the DFEH’s issuance of a right to sue notice to file a lawsuit.  This bill extends the employee’s time to file the administrative complaint from one year to three yearsThe effect of this bill would be to allow employees to wait to file a lawsuit against an employer until four years after the alleged unlawful employment practice.  This is a horrible bill that all employers should oppose.  It will invite stale discrimination claims that are hard to defend based on fading memories and inability to locate relevant evidence.  Indeed, the proposed extended statute of limitations is longer than employers are even required to keep personnel records (which would have information relevant to a claim of discrimination).  This is a poorly thought bill that will have bad consequences.  The current statute of limitations is plenty long (and much longer than the federal counterpart).

AB 171 (rebuttable presumption of retaliation):  This bill would establish, effective July 1, 2020, a “rebuttable presumption” of unlawful retaliation for any adverse action taken by an employer against an employee within 90 days of the employee informing the employer that she is the victim of sexual harassment, domestic violence, sexual assault, or stalking.  The employer can rebut the presumption based on evidence of a legitimate, non-retaliatory reason for the action.  This is a totally unnecessary bill that should be opposed.  There is already a burden-shifting framework for these claims that requires the employer to demonstrate the legitimate reasons for its actions.  Adding a “rebuttable presumption” against the employer to that framework serves no valid purpose and unfairly increases the risk to employers.

SB 218 (mini-DFEHs):  This bill would allow cities within the County of Los Angeles to adopt their own anti-discrimination ordinances (mini-FEHAs) and to create their own agencies (mini-DFEHs) for processing and remedying complaints of discrimination.  This too is an unnecessary bill that will only serve to complicate things for employers who already have enough to deal with in trying to navigate California employment laws, particularly in areas where there are state statues and local ordinances with conflicting requirements.

SB 142 (lactation accommodation):  This bill, which is modeled after a local San Francisco lactation accommodation ordinance, would codify specific lactation accommodation requirements for employers (even though California employers are already required by law to accommodate the lactation needs of new mothers).  Under the bill, an employer must provide an affected employee with a private space (other than the bathroom) that can be used for lactation. The space must have electricity, a table or other surface to hold equipment, and a place to sit.  The employer must also provide a sink and refrigerator or other cooling device (for storing milk) in close proximity to the employee’s work space.  An employee’s normal work space may be used if it otherwise complies.  There are additional provisions for multi-tenant buildings and agricultural employers.  Employers with less than 50 employees may seek an exemption from these specific requirements if compliance would pose an undue hardship, in which case the employer still has to accommodation lactation needs but may provide a bathroom (or other space) for this purpose.  The bill also requires employers to adopt a written lactation accommodation policy (which may be freestanding or included in an employee handbook) and to distribute that policy upon hire and at the time of any relevant inquiry by an employee.  The bill would make a failure to comply with these provisions a failure to provide a rest break under the Labor Code.

I do not know which of these may be signed into law but hopefully it will not be AB 9 nor SB 218. They will truly, once again, open up the flood gates of litigation. We will know by October 13th. Fingers crossed.


Pending Employment Bills!

September 17, 2019

Last Friday was the last day for California’s legislature to pass bills and present them to the Governor for signature or veto.  The legislature passed a number of employment-related bills this session. A couple of these bills have already been signed into law, but most await approval or veto by Governor Newsom, which will occur between now and October 13, 2019.  There are a number of them and I will have to put them out between this week and again next week. Here’s a partial list of noteworthy, and largely unfavorable, bills that were passed:

AB 5 (Independent contractors v. employees):  This bill is the legislature’s effort to codify the California Supreme Court’s 2018 ruling in Dynamex v. Superior Court, as the test (with only a handful of enumerated exceptions) for determining whether a worker is an employee or an independent contractor in California.  As has been widely reported, the Dynamex ruling greatly narrowed the classes of workers who will qualify for independent contractor status, causing significant outcry from both the business community and freelance workers.  Despite this, the democrat-controlled legislature won’t overturn the Dynamex ruling and instead has passed a bill codifying it.  However, industries that can afford lobbyists and whose workers aren’t the target of unions (and their influence on the legislature) managed to negotiate some exemptions from Dynamex.  AB 5 exempts the following types of workers from the Dynamex test: certain insurance agents/brokers; physicians, surgeons, dentists, podiatrists, psychologists, and veterinarians; lawyers, architects, engineers, private investigators, and accountants; securities brokers and investment advisors; direct salespersons as described in Section 650 of the Unemployment Insurance Code; commercial fishermen; certain real estate licensees; repossession agents; certain construction industry contract work, including trucking services; motor club services; referral agency work; and certain professional services contracts, including marketing, human resources, travel agent services, graphic design services, grant writing, fine artist work, work of certain agents who practice before the IRS, payment processing services with independent sales organizations, services provided by certain still photographers or photojournalists, services provided by certain freelance writers, editors, and newspaper cartoonists, and services provided by certain estheticians, electrologists, barbers, manicurists, and cosmetologists.  The bill also exempts business-to-business contracting relationships from the Dynamex test if specified conditions are met.  For workers not covered by the Dynamex test, the prior Borello multi-factor test will apply to determine whether the worker qualifies as an independent contractor (i.e. their independent contractor status may be still be challenged but a different test will apply).  To the extent the bill provides exemptions from the Dynamex test, the bill expressly states that the exemptions are intended to apply retroactively to relieve employers of liability.  For workers who are not exempt from Dynamex, the bill clarifies that the Dynamex test will apply to claims brought under the Labor Code, the Wage Orders, and/or the Unemployment Code.  This is a highly detailed bill, with carefully crafted exemptions for only certain industries.  Employers with potentially covered workers and contracting relationships should review the bill closely for possible coverage.  Because this bill appears to be the product of a significant amount of backroom dealing, it is expected to be signed into law.

 AB 170 (independent contractors v. employees): This bill, which was a last minute “gut and amend” of an entirely different bill, is similar to AB 5, but adds newspaper distributors and carriers to the list of negotiated exemptions from the Dynamex test.

AB 51 (employment arbitration agreements):  This bill would make it unlawful for an employer to require employees to agree to arbitrate most employment disputes (those alleging violations of the Fair Employment and Housing Act and/or the Labor Code).  This bill would include within its prohibition agreements that allow employees an opportunity to opt-out of an arbitration agreement.  The bill is very similar to last year’s AB 3080, which the legislature passed but the Governor vetoed.  However, this year’s bill includes a provision stating that the law is not “intended to invalidate a written agreement that is otherwise enforceable under the Federal Arbitration Act.”  This addition is intended to avoid the problem of FAA preemption, which made last year’s bill invalid on its face.  Given the way the bill is written, there is a chance that it will be enforceable as to agreements that are not covered by the FAA, but will not be a bar to agreements that are covered by the FAA.  An employer’s arbitration agreement generally should expressly state that it is governed by the FAA, but not all agreements actually are governed by the FAA.  An employer must be involved in interstate commerce in order to invoke the FAA.  This term is very broadly defined, but I expect plaintiffs’ attorneys to challenge the applicability of the FAA much more often in California courts.  Of note, the FAA also does not apply to many trucking employees.  If an employer does not know whether it can successfully argue FAA coverage, and the employer has a mandatory arbitration agreement, the employer is at risk for a finding that its arbitration agreement violates California law.  Any challenge to the agreement would be amenable to being brought on a class/representative basis with a threat of PAGA penalties.  The bill, which most believe Governor Newsom will sign, will apply to “contracts entered into, modified, or extended on or after January 1, 2020.”  Thus, arbitration agreements entered into prior to January 1, 2020 appear to be safe, but not if they are modified or contractually “extended” after the effective date.  One final note – the bill does not apply to negotiated severance agreements or post-dispute settlement agreements.

AB 749 (no-rehire provisions in settlement agreements):  This bill would prohibit a settlement agreement entered into on or after January 1, 2020 from containing a provision whereby the settling employee agrees that he/she may not seek re-employment with the employer and is not eligible for rehire.  However, a no-rehire provision is allowed if the employer found, in good faith, that the settling employee committed sexual harassment or sexual assault.

 

 


Common Sense and the Timing of Terminations!

September 9, 2019

Employers, you have to start using common sense with timing when it comes to terminating employees. Retaliation claims are on the rise because managers and supervisors finally take action against a bad employee but have chosen to do so at the wrong time.

As an example, you have a lousy employee, whom we’ll call “Lestor” You’ve been meaning to do something about Lestor for a while but just haven’t gotten around to it. You decide it’s time to take action, but since you haven’t even said anything to Lestor, much less issued any formal performance feedback, you decide it’s only fair to start out with some oral counseling sessions and work your way up from there.

You meet with Lestor four or five times, and discuss the things he isn’t doing well and offer constructive suggestions for improvement.

Well, Lestor may be lousy, but he’s not stupid. He sees what’s coming. A week after your last undocumented oral counseling session, you find an EEOC charge in your “in” box or maybe a request to file a workers compensation claim.

Why, that little . . .!

OK, no more Mr. Nice Guy. (Or Ms. Nice Gal.) The next day, you give Lestor his first write-up, based on the issues you discussed with him before. You tell him to shape up immediately. He doesn’t. So you progress to a written warning. He still doesn’t shape up. So you move on to a final warning, and when he doesn’t respond to that, you fire him.

Lestor amends his charge or workers compensation claim to include an allegation of retaliation. He eventually sues you in federal court (or wherever), and you try to get his lawsuit thrown out because of all of the “legitimate, non-retaliatory reasons” for the termination.

What was the problem here? Poor timing. In any retaliation case, timing is critically important. Here are two general rules to keep in mind:

RULE 1: Any adverse action you take before you know of the employee’s protected activity is probably ok (assuming it was legal to begin with).

RULE 2: Any adverse action you take after you know of the employee’s protected activity is suspect and will be scrutinized by plaintiffs’ lawyers, government agencies, judges, and juries. That doesn’t mean it’s retaliatory, but it does mean you will need to be able to justify your actions.

And one more tip: Plaintiffs’ attorneys know all about retaliation. If your employee has an attorney, you can expect the attorney to notify you right away that the employee has filed a charge. Maybe even before the EEOC gets its copy. Why? They are hoping that you will freak out and fire the employee, handing them a retaliation case on a silver platter.

Don’t get played. If you learn that an employee has filed a charge or engaged in other legally protected activity (including internal complaints about allegedly unlawful activity), immediately notify your employment counsel. You can terminate a “protected” employee who deserves it, but it will not be easy. Quite honestly you should have been in front of Lestor’s issue from the beginning.

Even though it’s hard to take action against a “protected” employee, it’s not hopeless for employers. California employers need to be especially careful.

Even if an employee’s underlying complaint or charge of discrimination, harassment, wage and hour violations, unfair labor practices, safety violations, or whatever, is groundless, you as the employer can still be liable for retaliation. An employee will be protected as long as the complaint or charge was made or filed in good faith.

Finally, even if you’re only giving an “oral” counseling to an employee, you should document the fact that it was given and what the issue was. That documentation might save you in a retaliatory discharge case.

Please start using common sense with the issue of timing. It may save you.


Another Decision on Arbitration Agreements: The Font Size??

September 3, 2019

Another decision about arbitration agreements! Despite having its anti-arbitration rulings reversed several times (and counting) by the United States Supreme Court, the California Supreme Court issued another questionable anti-arbitration decision recently in Oto, LLC v. Kho, furthering the Golden State’s ongoing agenda to try to disallow these agreements in the employment setting.   In this particular ruling, the Court reversed an order compelling arbitration of an employee’s administrative wage claim that had been filed with the Department of Labor Standards Enforcement (“DLSE”) by the employer.

Here is what happened. The employee filed in Superior Court to appeal the decision of the DLSE and with appeals going back and forth on the issue of arbitration agreements the case went to the California Supreme Court for a determination.  The Court could not hold that such disputes are categorically exempt from arbitration (because the Court already had its hand slapped on this issue by the U.S. Supreme Court a few years ago), so the Court found another way to invalidate the agreement by holding that it was too procedurally unconscionable to be enforced.  In layman’s terms, this basically means that the Court found that the manner in which the agreement was presented to the employee (the print was purportedly small and hard to read and the employee was not given sufficient time to review the agreement or ask questions) was unfair and deprived the employee of meaningful choice in signing the agreement.

Note: The California Supreme Court has quite a record of anti-arbitration decisions, most of which have been reversed by the United States Supreme Court.

Action Steps for Employers

This recent decision does not change the standards for employment arbitration agreements in California.  It just presents another example of circumstances a court can cite to in order to find the agreement unconscionable and refuse to enforce it.  Employers should consider whether they need to make changes in the way they present arbitration agreements to their employees, and whether the terms of those agreements are fair and understandable.  Finally, the arbitration provision should be obvious and not hidden or buried.


Obesity as a Protected Category? Maybe Not!

August 26, 2019

The issue of obesity has plagued employers for a long time. This is a case that, at a minimum, touches on the issue. In, Valtierra v. Medtronic, the plaintiff worked for Medtronic for 10 years and apparently was obese throughout his employment.  Plaintiff, whose job was to maintain and repair Medtronic’s manufacturing equipment, admittedly falsified computer records to indicate that he had completed repair assignments when, in fact, he had not done the work.  Medtronic fired him.  Unable to accept personal responsibility for his own misconduct, Plaintiff sued Medtronic, alleging that he was fired because of his purported disability – morbid obesity.  Medtronic moved for summary judgment in the trial court, arguing that morbid obesity is not a “disability” within the meaning of the Americans with Disabilities Act (ADA) and that Plaintiff did not have a valid legal claim as a result.  Medtronic alternatively argued that even if Plaintiff’s obesity was a protected disability, Medtronic did not fire him because of it, but rather because of his admitted misconduct.  The trial court granted summary judgment in favor of Medtronic, holding that Plaintiff’s obesity was not a protected disability as a matter of law.  Not to be deterred, Plaintiff appealed the ruling to the Ninth Circuit.

Today the Ninth Circuit issued its opinion, affirming the win for Medtronic, but on different grounds than the trial court (of course).  The Ninth Circuit acknowledged that four other circuit courts of appeal have held that morbid obesity is not a protected disability under the ADA, unless the obesity itself is caused by an underlying physiological condition.  The Ninth Circuit further noted that Plaintiff did not produce any evidence suggesting that his obesity was caused by an underlying physiological condition.  However, rather than simply agree with the four other circuit courts that Plaintiff did not have a protected disability as a matter of law, the Ninth Circuit punted on the issue, holding that it need not decide whether Plaintiff’s obesity was a protected disability.  [The EEOC submitted a brief in the case, urging the court to hold (contrary to the EEOC’s own regulations and interpretive guidance) that obesity is a protected disability because of its physiological effects on the body.]  The Court held that regardless of whether or not Plaintiff’s obesity was a disability (or whether the effects of his obesity on his knees and ability to function was a disability), there was no evidence that Medtronic terminated him because of this.  Medtronic had produced evidence that Plaintiff admitted falsifying his reports of completed work and that this is the only reason he was fired.  Plaintiff produced no evidence that Medtronic treated other similarly situated (but non-obese) employees differently, and Medtronic convincingly explained that it was absurd to suggest that it fired Plaintiff for being obese, given that Medtronic had hired and employed Plaintiff for 10 years, all the while aware of his obesity.  If Medtronic had some motive to discriminate against obese people, presumably it would not have hired Plaintiff in the first place or would have fired him much earlier.  For these reasons, the Court upheld the judgment in favor of Medtronic.

While a good result, today’s Ninth Circuit decision leaves the door open for Plaintiffs’ attorneys in states covered by the Ninth Circuit (including California) to continue arguing that obesity is a protected disability under the ADA and/or applicable state law.  That is unfortunate, given that it is very costly to litigate an employment discrimination case through summary judgment (and appeal) and the employer almost never can recover the attorneys’ fees and costs it incurs on this type of litigation.  Meanwhile, employees have zero disincentive to sue because they get legal representation on a contingency fee basis (meaning they only pay their lawyer if they obtain a settlement or win the case) and, therefore, have little to lose and much to gain.

Final note. It was the documentation that was a key factor in the win! I cannot stress enough the importance of managers and supervisors documenting performance issues and other violations of company policy.