A Checklist for Separation Agreements!

April 30, 2018

We consistently receive calls regarding “what should been in the separation agreement so I thought it would be helpful to go over what we typically see in a separation agreement/separation report. Just as an “FYI” employers should not attempt to do this on their own.

First a big caveat: My description of a “typical” agreement does not mean that these provisions are in every agreement or even that these provisions ought to be in some agreements. Each separation or settlement has differing facts that may make certain provisions more important than others. And some employers or employees negotiate differently.

In other words, there is not a one-size-fits-all to this and employers should definitely not attempt to do this without some professional guidance especially if the separation appears to be froth with “issues.”

So what are typical provisions?

  1. Last Day of Employment
  2. Benefits Upon Separation of Employment
  3. A Release of all possible claims related to employment (maybe even broader) with lots of legalese
  4. Confidentiality of Agreement
  5. Non-disparagement of one or more of the parties
  6. No Admission of Liability
  7. No Obligation by Employer to Re-Hire
  8. Return of Property
  9. Affirmation of Any Prior Restrictive Covenants
  10. References or Removal of Negative Information from Personnel File
  11. Many more technical provisions regarding what the governing law is, indemnification in case of breach, incorporation provisions making sure this agreement supersedes prior agreements.

So, before you read headlines or “expert” commentary expressing shock that a separation agreement contains a confidentiality provision, understand that typically these are sought by both an employer and employee.  There may be good reasons that both have for wanting to keep the reasons for the separation and any separation agreement private.

There you are. Again, please consider getting professional assistance with the development of such agreements!


Arbitration Agreements May Be Out Soon!

April 23, 2018

Fueled by the need of legislators to politicize the “me-too” movement, there has been a lot of media attention in recent months on proposed legislation in many states to limit arbitration and/or confidentiality of sexual harassment-related claims.  California, like several other states, has proposed its own legislation along these lines, but now has gone even further, introducing legislation to prohibit employers from requiring employees to arbitration of any claims brought under the Fair Employment and Housing Act (FEHA) or the California Labor Code.  AB 3080 (Gonzalez Fletcher) was a spot bill/placeholder bill that, in original form, was drafted to make non-substantive changes to laws related to use of E-verify.  In late March, however, the bill was gutted and amended and is now an anti-arbitration bill.  This bill would add sections 432.4 and 432.6 to the Labor Code and would prohibit California employers from (1) requiring an applicant or employee to agree to arbitration of FEHA or Labor Code claims as a condition of employment, continued employment, or receipt of any employment-related benefit; (2) contractually prohibiting an employee or independent contractor from disclosing sexual harassment suffered, witnessed, or discovered by the employee/independent contractor.  These practices would also be made “unlawful employment practices” under FEHA, entitling employees to remedies under both FEHA and the Labor Code for violations.  In current form, the bill would not appear to prevent “voluntary” arbitration agreements (which may include agreements with limited opt-out rights), but it would still have a significant impact on the ability of employers to resolve employment-related disputes in arbitration instead of court.  If ultimately passed by the legislature and signed into law, the new law would apply to contracts for employment entered into, extended, or modified after January 1, 2019.

It is important to note that similar legislative efforts to limit employment arbitration agreements have been introduced in California in recent years, but have not succeeded.  It is unclear whether this bill will meet a similar fate.  Even if passed, it seems to me that this law still would be subject to legal challenge based on preemption by the Federal Arbitration Act (which preempts state laws that discriminate against arbitration).  Of course, the likely success of such a challenge, which would take years to resolve, would not be of much aid or protection to employers in the meantime.

This bill is opposed by many industry groups, including the California Chamber of Commerce.  We will keep you posted about further developments with this bill.

Travel Time Pay: A Clarification

April 16, 2018

Under California law, an employee must be compensated for all time during which he/she is subject to the “control” of the employer, regardless of whether or not the employee is actually being “suffered or permitted to work.”  Based on this standard, California law (in contrast to the FLSA) does not recognize a distinction for compensability purposes between out-of-town travel that takes place during “normal working hours” and travel that takes place outside of normal working hours. If an employee has to undertake out-of-town travel, all travel time spent on public transportation or in a car is compensable as hours worked (except that where the employee travels to the airport/train station and the airport/train station is the same or substantially similar distance as the employee’s normal commute to the workplace, the time getting to the airport/train station is not compensable).  The employee must be paid for all time from when he/she arrives at the airport until he/she reaches the hotel destination.  After that, the employee need not be paid for time spent staying at a hotel (except to the extent actual work is being performed, of course).  Additionally, if an employee takes a break from “traveling” to engage in personal pursuits (e.g. sightseeing after arriving in city but before going to hotel), that personal time need not be compensated.

California law is similar to that of the FLSA (and DOL guidance) on the issue of compensability of travel time during a normal work day.  In other words, normal commute time from an employee’s home to/from the worksite is not compensable.  This is subject to the caveat that if an employee is required to drive a company vehicle under strict conditions that prevent the employee from engaging in any personal pursuits during their commute (e.g. restrictions that disallow passengers and similar restrictions), the time the employee is required to drive the vehicle will be deemed time that is subject to the control of the employer and, therefore, compensable.  Finally, as is the case under the FLSA, all time spent traveling during the course of the workday (after reporting to the first worksite) is compensable, and if an employee is required to report to a different worksite than usual, the commute time to that workplace is compensable to the extent it exceeds the employee’s normal commute.

Employers are reminded, however, that even in California, they may establish a different rate of pay for travel time than usual work time, as long as the travel rate is at least minimum wage and communicated to the employee before the travel begins

Are Service Advisors Now Exempt? Hold on, Maybe Not!

April 9, 2018

On April 2, 2018 the U.S. Supreme Court ruled that service advisors at car dealerships are exempt under the federal Fair Labor Standards Act (FLSA).  Dealers in California, however, should seek advice of legal counsel before concluding that the decision is the final word.

Under §213(b)(10)(A) of the FLSA, overtime pay requirements do not apply to any salesman engaged in selling or servicing automobiles if his employer is engaged in the business of selling vehicles to ultimate purchasers.  Between 1978 and 2011, consistent with several federal court decisions, the Department of Labor (DOL) interpreted this language to mean that service advisors were exempt from overtime pay.  But in 2011, the DOL reversed course, finding the term “salesman” to exclude service advisors.

Relying on the DOL’s 2011 finding, in 2012 service advisors sued the dealer seeking overtime pay.  Encino Motorcars, LLC defended, rejecting the DOL’s last interpretation and contending that, under the FLSA, service advisors interact with customers and sell them services for their vehicles.  The dealer noted that service advisors meet customers, hear their concerns, suggest repairs and maintenance services, sell new accessories or replacement parts; record service orders, follow up as services are performed, and explain repairs and maintenance work when customers pick up their cars.

The Ninth Circuit (which covers California), citing the principle that exemptions to the FLSA be construed narrowly and the absence of any reference to service advisors in the legislative history, concluded that Congress did not intend to exempt service advisors.  It identified service advisors as “salesmen” and associated them only selling, rather than servicing.

The U.S. Supreme Court reversed, rejecting the narrow approach to interpreting the FLSA in favor of one that is “fair”.  Relying on Encino Motorcars’ list of tasks performed, the Court determined that a service advisor is obviously a salesman, that is, a man who sells goods and services.  The Court found that the exemption covers a service advisor primarily engaged in either selling or servicing, and, going back to the language of the FLSA, concluded that an advisor is a “salesman. . .primarily engaged in …servicing automobiles.”

While dealers across the country may breathe a sigh of relief, dealers in California should be cautious in considering whether to reclassify or treat service advisors as exempt.  First, California courts do not follow the “primarily engaged” test found in the FLSA.  Rejecting that standard in favor of a quantitive test, the California Supreme Court in Ramirez v. Yosemite Water Co., 20 Cal.4th 785 (1999), ruled that a California employer claiming that an employee is exempt must demonstrate that the individual spends more than 50% of his time performing exempt tasks.  Whether the tasks identified by Encino Motorcars in defending its position occupy more than 50% of service advisors’ time at a dealership, as opposed to time spent directing service technicians or their supervisors, completing warranty paperwork for the manufacturer, and other tasks unrelated to credited by the Court, is fact specific to each dealership and invites a time study analysis.

Second, California courts have held that California wage laws often diverge from the minimal standards established by federal law, and when state law is more favorable to employees, state law prevails.  Mendoza v. Nordstrom, Inc, 2 Cal.5th 1074 (2017); Tidewater Marine Western, Inc. v. Bradshaw, 14 Cal.4th 557 (1996).  Payment of overtime to service advisors may be more favorable to them in some cases, and California courts would be more inclined than not to determine that a service advisor is non-exempt under state law.

Finally, employees in California aggressively pursue perceived rights in court, unfazed by existing precedent and inventive of novel theories of liability and damages.  Controlling the overtime hours worked by service advisors, who often stay late to meet customers, may be difficult.  Consequently, a dealer must carefully weigh the risks of liability and damages as well as the costs of defense in deciding whether to classify service advisors as exempt.

The Above was written by Art Silbergeld.

Art Silbergeld, a partner at Thompson Coburn in Los Angeles, defends employers, including many car dealerships, in federal and state court wage and employment litigation.  Recognized by his peers as one of the top management defense attorneys in California, Art has worked closely with Jim Potts over three decades.  He may be reached at (310) 282-9412 and asilbergeld@thompsoncoburn.com.


Criminal Law Background Checks: An Update!

April 2, 2018

California’s Fair Employment and Housing Council (“FEHC”) has proposed new revised regulations addressing the state’s new ban-the-box and parental leave laws.  The regulations are not yet final or in effect, but are being considered by the FEHC and likely will be adopted, potentially with some modifications based on input from public comments and public hearings in the near future, with the first hearing scheduled for April 4, 2018.

Ban the Box/Criminal History Inquiry Regulations

You may will recall that last year, the FEHC adopted new regulations regarding the use of criminal history information in employment decisions.  Those regulations “encouraged” employers to conduct an individualized assessment of the relationship between a criminal conviction and the job sought.  Then, later last year, AB 1008 was signed into law, prohibiting employers from inquiring about an applicant’s criminal history at any time before a conditional offer of employment is made, and setting forth a specific procedure employers must follow if they ultimately intend to deny employment based on criminal history.  The FEHC has now proposed revised criminal history regulations to reflect the state’s enactment of the ban-the-box law.

For the most part, the proposed regulations simply incorporate the requirements of AB 1008 and combine them with the pre-existing standards for using criminal conviction information in employment decisions.  However, the proposed regulations provide some clarifying guidance in a couple of areas.  First, under AB 1008, if an employer makes a preliminary decision to deny employment to an applicant based on criminal history information, the law provides that the employer must give the applicant written notice and at least 5 business days to respond before the employer makes a final decision regarding employment.  The proposed regulations clarify that the 5 business days runs from the applicant’s date of receipt of the notice.  The proposed regulations further provide, “If notice is transmitted through a format that does not provide a confirmation of receipt, such as a written notice mailed by an employer without tracking delivery enabled, the notice shall be deemed received five calendar days after the mailing is deposited for delivery for California addresses, ten calendar days after the mailing for addresses outside of California, and twenty calendar days after mailing for addresses outside of the United States.”

Another area of clarification is on the subject of what type of information qualifies as evidence of rehabilitation or mitigating circumstances.  (AB 1008 provides that in response to a notice informing the applicant that the employer intends to deny employment based on a criminal conviction, the applicant may submit evidence challenging the accuracy of the conviction information and/or evidence of rehabilitation or mitigating circumstances.)  The proposed regulations provide that evidence of rehabilitation or mitigating circumstances may include (but is not necessarily limited to) “the length and consistency of employment history before and after the offense or conduct; the facts or circumstances surrounding the offense or conduct; and rehabilitation efforts such as education or training.”

We will keep you posted.

Note: Our Violence in the Workplace Preparedness Program is soaring to new heights! If interested send an email to paaerrep@aol.com to schedule a 15 minute appointment. Our Active Shooter training includes information to protect you at work and away from work.

Transgender Restrooms: An Update!

March 26, 2018

The issue of “transgender restrooms” has been on the lips of newscasters, politicians, employers and employees for the past few years. It is not a new subject and now there is not only some general guidance on the issue but some legislation as well. New, and not so new, legislation have been proposed in a number of states including Illinois, South Dakota, Washington, and Missouri, that aim to restrict the access of transgender people to bathrooms and locker rooms.

Many of these bills focus on public facilities and, frequently, the rights of students under Title IX of the Civil Rights Act of 1964. These bills while addressed to the public sector, raise important questions for employers. Indeed, employers with increasing frequency are navigating “the restroom question” in their workplaces.

To guide employers through this issue, both the Federal government and certain states have issued guidance. The California Department of Fair Employment and Housing released its own set of bathroom-related guidelines. The guidelines also addressed a number of other transgender employment related topics as well. No surprise here.

The DFEH guidelines provide that “all employees have a right to safe and appropriate restroom facilities.” The guidelines go on to instruct employers that transgender employees have the right to use a restroom or locker room that corresponds to the employee’s gender identity regardless of the employee’s assigned sex at birth. The guidelines underscore that there is not a particular medical or legal event required for an employee to be transgender, and that transgender employees should not be required to show proof of medical or legal status changes in order to be accommodated appropriately.

The DFEH notes that employers should also consider offering a single-occupancy restroom option. Such a bathroom ensures employee privacy. The DFEH guidelines further provide that if an employer provides a single-occupancy bathroom, it must make clear that use of this restroom is voluntary. Employees should not be required to use a single occupancy restroom. A practical benefit of offering a single-occupancy restroom option is that it provides an alternative restroom for employees who do not wish to share a restroom with a transgender coworker.

The instructions provided by the DFEH align with the U.S. Occupational Safety and Health Administration (OSHA). OSHA’s Guidelines provide that transgender employees must be provided access to the restroom that matches their gender identity. OSHA notes that refusal to provide such access can result in health problems and potential liability.  Like the DFEH, OSHA also recommends providing a single-occupancy restroom, which employees can use who are uncomfortable with using gendered restrooms.

This guidance of the DFEH and OSHA underscores that Employers should increase their awareness of and sensitivity to issues related to gender identity and expression in the workplace. Employers should also continue to evaluate and update their internal policies, practices and procedures with an eye towards these state and federal guidelines.

I am writing this article to also update my trainings on sexual orientation which is a training that is now required for California employers effective January 1, 2018. In trainings over the past few months (and quite frankly before this year) this issue has regularly been brought up. I have recently become aware of the DFEH guidelines and want to ensure that I get the proper information out there. For some, this is not going to be comfortable, however keep in mind that we have to be respectful of others in the workplace to ensure a harmonious workplace. These laws are put in place for a reason and they need to be respected regardless of one’s personal feelings.

New Laws on the Horizon! NOT Good News!

March 19, 2018

Well, here is more bad news for employers in the state of California. Hopefully many of these will not pass but it never ceases to amaze me on far these legislatures will go. Let’s keep our fingers crossed.

AB 2841 (Paid Sick Leave Expansion):  This bill would expand the current paid sick leave law by requiring employers to provide more paid sick leave to employees.  Under current law, employers must allow employees to accrue at least one hour of paid sick leave for every 30 hours worked (but may limit an employee’s use of sick leave to 3 days/24 hours per year) and may impose a carryover accrual cap of 6 days/48 hours.  Alternatively, an employer may provide at least 3 days/24 hours of paid sick leave “up front” to employees (rather than allowing them to accrue it over time) allow employees to take up to 5 days (40 hours) of paid sick leave per year (up from the current 3 days/24 hours) and to accrue up to 10 days (80 hours) of paid sick leave.  Under this bill, an employer who front loads paid sick leave would have to provide at least 5 days/40 hours up front.  An employer who allows employees to accrue paid sick leave but wishes to impose a cap on carryover and accrual of unused sick leave could not use a cap that is less than 10 days/80 hours.

AB 2069 (Employment Protection for Medical Marijuana Users):  This bill would amend the Fair Employment and Housing Act to make it an unlawful employment practice for an employer to take adverse action against an applicant or employee because of a positive drug test for marijuana (by a medical marijuana card holder) or because of one’s status as a medical marijuana card holder.  The bill makes clear that an employer may still discipline an employee for being under the influence while working or on the employer’s property, but would change the law in California with respect to whether an employer must accommodate medical marijuana use.  The California Supreme Court has held that the answer is no, and that is the current law in California. This bill would undo the California Supreme Court precedent and give employment protections to medical marijuana users.  The law would provide an exception for employers who would lose a license-related or monetary benefit under federal law if they hired or did not fire an individual who tested positive for marijuana.

SB 937 (Lactation Accommodation):  California already has a law requiring employers to accommodate the break needs of lactating employees.  At least one city (San Francisco) has enacted its own more detailed local ordinance on the subject.  This statewide bill would impose more detailed requirements on employers similar to those under the San Francisco ordinance and guidance on the subject under federal law.  More specifically, the bill would require employers to provide a lactating employee with a lactation room (other than the bathroom) that (1) is close to the employee’s work area, (2) is free from intrusion, (3) is shielded from view, (4) is free of toxic or hazardous chemicals, (5) contains a surface on which to place a breast pump and similar items, (6) has a place to sit, and (7) has access to electricity.  The employer would also have to ensure that the employee has access to a sink and refrigerator in reasonable proximity to the workspace.  Employers would be required to develop a written lactation accommodation policy and to respond to lactation accommodation requests within 5 days.  Employers with less than 5 employees who believe they cannot comply with the law could petition the Labor Commissioner for an exemption based on undue hardship (good luck with that).  The bill of course provides for penalties for non-compliance, and avenues of recourse through the Labor Commissioner and/or a private right of action with recovery of attorneys’ fees to a successful plaintiff.  Interestingly, the bill goes even farther, in proposing to require the California Building Standards Commission to adopt new rules that would require the construction of a lactation accommodation space in new or remodeled buildings that are at least 15,000 square feet.  The bill also sets forth specific parameters for these newly constructed lactation rooms.

SB 826 (Female Representation on Corporate Boards of Directors):  This bill would require publicly held corporations with their principal place of business in California to have at least one female on their board of directors by December 31, 2019.  By 2021, the number would increase to 2 where the board has five members and to 3 where the board has 6 members.  Similarly, SB 984 would require that state boards and commissions be comprised of at least 50% women.

SB 1284 (Annual Pay Data Reporting):  Similar to an unsuccessful bill last year, this bill would require employers that are incorporated under the laws of the State of California with 100 or more employees to annually report to the Department of Industrial Relations certain information on earnings by race, gender, and ethnicity, beginning September 30, 2019 and annually thereafter.  This information would be shared with the Secretary of State, Department of Fair Employment and Housing, and another entity referred to as the Commission on the Status of Women and Girls.

AB 2946 (Expanded Limitations Period for DLSE Discrimination Complaints):  This bill would allow employees up to three years (instead of six months) to file a charge of discrimination with the DLSE.  The bill would also amend Labor Code section 1102.5 to allow for recovery of attorneys’ fees by a prevailing plaintiff (but not by a prevailing employer) in a whistleblower retaliation case.

AB 1870 (Expanded Limitations Period for DFEH Charges):  This bill would allow employees up to three years (instead of one year) to file administrative charges of discrimination/harassment/retaliation with the Department of Fair Employment and Housing.  Thus, the bill effectively would extend the statute of limitations for an employee to file a lawsuit against the employer to approximately 4 years from the alleged unlawful employment action.  This would impact employer records retention policies and expose employers to threats of stale legal claims that are made more difficult to defend based on the passage of time, fading memories, employee (witness) turnover, etc.

AB 1867 (Records Retention – Sex Harassment Complaints):  This bill would require employers with 50 or more employees to retain records of sexual harassment complaints for 10 years.

SB 1038 (Personal Liability for Retaliation):  This bill would provide for individual liability for retaliation under the Fair Employment and Housing Act.  Under current law, an individual may be held personally liable for harassment, but not for discrimination or retaliation.

SB 1300 (Failure to Prevent Discrimination/Harassment):  This bill would change existing law by providing that where an employee alleges a claim for failure to prevent discrimination/harassment, the employee need not prove the underlying discrimination or harassment occurred in order to state a valid claim.  Separately, the bill would also prohibit a release of FEHA claims as a condition of employment or continued employment or in exchange for a raise or bonus.  The bill would also prohibit an employer from requiring an employee to sign a non-disparagement agreement or other document that prevents the employee from discussing unlawful acts, including sexual harassment or any other unlawful or “potentially unlawful” conduct, in the workplace.  Finally, the bill would expand California’s sexual harassment prevention training requirements to apply to all employers regardless of size (currently the training requirement only applies to employers with 50 or more employees) and would require that all employees (not just supervisors, as under current law) be trained within 6 months of hire and every two years thereafter.  It would also expand the scope of the required training to include bystander intervention training.

SB 1343 (Sexual Harassment Prevention Training):  This bill would require employers with 5 or more employees to provide sexual harassment prevention training to all employees by 2020 and once every two years thereafter.  The DFEH would be required to make available a two-hour training video for employers to use.

SB 820 (Confidentiality Provisions in Settlement Agreements):  These bills would prohibit provisions in settlement agreements that prevent disclosure of factual information relating to claims of sexual harassment/assault/abuse and gender discrimination.

AB 2366 (Leave for Victims of Sexual Harassment):  This bill would prohibit employers from taking adverse action against employees who are victims of sexual harassment (or whose immediate family member is a victim of sexual harassment) for taking needed time off work to attend court proceedings or to seek treatment (or to provide assistance or support to an immediate family member in these circumstances).

AB 2613 (Increased Penalties for Payday Timing Violations):  Provisions of the California Labor Code require employers to pay their employees at certain intervals, generally (with some exceptions) twice per month on designated paydays.  Because there aren’t already enough avenues for employees to collect penalties against their employers for technical Labor Code violations, this bill would add even more penalties for a violation of the payday timing requirements.  Specifically, the bill would provide for “statutory” penalties of $100 per employee per day, up to seven days, for an initial late payment.  For subsequent or willful violations, the penalty would be $200 per employee per day, up to seven days.  The penalties would be recoverable by the Labor Commissioner or by employees in a civil action, and would be “in addition to” any other penalties the employees may be entitled to recover for the same violation under the Labor Code.

SB 1252 (Copies of Payroll Records):  This bill would provide that employees are entitled to be provided with copies of their payroll records (not just the right to inspect or copy them) upon request.

AB 2587 (Paid Family Leave/Use of Vacation):  Current law allows employers to require an employee to use up to two weeks of vacation prior to, and as a condition of, receipt of paid family leave benefits through the state.  This bill would disallow this practice.

AB 1885 (Undocumented Agricultural and Service Workers):  This bill would require the State of California to work with the United States government to try to create a guest worker program in California whereby undocumented agricultural or service industry employees would be granted a permit to live and work in California.

AB 2496 (Janitorial Workers/Employee Presumption):  This bill would create a rebuttable presumption that a worker is an employee rather than an independent contractor where the worker performs work for which a property service registration is required by law.

AB 1938 (Inquiries re Familial Status):  This bill is vague in current form, but would generally employers from inquiring about an applicant’s or employee’s familial status (having custody of a child under 18 years of age).

AB 3109 (Confidentiality and No Re-employment Provisions):  This bill would prohibit contract provisions (including settlement agreement terms) that limit a party’s right to free speech in connection with a public issue or that limit a party’s right to seek employment or re-employment in a given occupation or profession.

We will be tracking these bills and will keep you posted as to significant developments.