Employment Law

California Employers Face Multiple New Laws

Why it matters

With several new employment-related measures recently signed into law, California employers should start preparing themselves now. Beginning on Jan. 1, 2018, employers with five or more employees in the state are prohibited from inquiring into applicants’ conviction histories prior to making an offer of employment. A.B. 1008 also sets forth a number of requirements about how employers may use conviction history to deny employment. Another law, the New Parent Leave Act, extends unpaid leave to bond with a new child within one year of the child’s birth, adoption or foster care placement to employers with at least 20 workers. Prior to S.B. 63, the leave was triggered only when employers had 50 or more employees. California also joined Oregon, Massachusetts, New York and a number of cities that ban employers from asking applicants for “salary history information,” a term that includes both compensation and benefits. Finally, S.B. 396 expanded the scope of the sexual harassment training that employers with at least 50 employees must provide to supervisors, with an additional mandate that as of Jan. 1, 2018, the training must cover harassment based on gender identity, gender expression and sexual orientation. Employers should take the time to familiarize themselves with all the new laws and coming changes.

Detailed discussion

Employers in California are facing a busy future with several new employment laws set to take effect in the coming months. The following provides an overview of some of the biggest changes.

  • After limiting employers’ ability to ask job applicants about any juvenile court matters last year, the California legislature enacted a broader “Ban the Box” law in 2017 that will take effect on Jan. 1, 2018. A.B. 1008 amended the Fair Employment Housing Act with a new provision that restricts an employer’s ability to make hiring decisions based on an applicant’s conviction records, forbidding consideration of conviction history until a conditional offer of employment has been extended. Applicable to employers with five or more workers, the law contains minimal exemptions (such as positions with criminal justice agencies) and prohibits inquiring about, considering or including on an application questions about conviction history. If an employer decides not to hire an applicant because of a prior conviction, the employer is required to conduct an individualized assessment to determine whether the history has a “direct and adverse relationship with the specific duties of the job that justif[ies] denying the applicant the position,” taking into account the nature and gravity of the criminal offense, the time that has passed, and the nature of the job. Once a preliminary determination has been made that the conviction history disqualifies the applicant from employment, written notice must be provided, giving the applicant five business days to respond and dispute the decision. A second notice must be provided with the final decision not to hire. Applicants can sue for alleged violations of the provision, requesting compensatory damages, attorneys’ fees and costs.
  • The California Family Rights Act required employers with 50 or more workers to provide unpaid leave of up to 12 weeks to bond with a new child within one year of the child’s birth, adoption or foster care placement. Now the New Parent Leave Act has broadened this requirement to employers with 20–49 employees in a 75-mile radius. Pursuant to S.B. 63, workers will be eligible to take leave once they have worked for the employer for at least 12 months and at least 1,250 hours. While an employee is on leave, the employer must continue to pay its share of the employee’s healthcare premiums, although it may recover this money under certain circumstances (if the employee fails to return to work after his or her leave expires, for example). If both parents work for the same company, leave can be limited to a combined total of 12 weeks and the employer can require the leave be taken concurrently. The new law takes effect in January 2018.
  • Joining a growing number of jurisdictions—including Delaware, Massachusetts, New York, Oregon and several cities—California employers are now prohibited from asking job applicants for “salary history information,” defined to include both compensation and benefits. A.B. 168 does permit employers to rely upon information that is shared by the applicant “voluntarily and without prompting,” although the state’s Fair Pay Act bans employers from relying solely on prior salary to justify any disparity in compensation. The new law, which takes effect on Jan. 1, 2018, applies to both public and private employers and also requires employers to provide applicants with the pay scale for a position upon “reasonable request.”
  • Mandatory sexual harassment training for supervisors got a tweak pursuant to S.B. 396. Beginning on Jan. 1, 2018, employers with 50 or more employees must now address harassment based on gender identity, gender expression and sexual orientation as part of the already required two hours of supervisory training that must be conducted every two years or within six months of an individual’s assumption of supervisory duties. The measure also contains an updated poster requirement.

To read A.B. 1008, click here.

To read S.B. 63, click here.

To read A.B. 168, click here.

To read S.B. 396, click here.

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NLRB Correctly Applied New Standard Only Prospectively

Why it matters

The U.S. Court of Appeals, Ninth Circuit affirmed that the National Labor Relations Board (NLRB) properly applied a new standard prospectively and was correct not to retroactively reverse an arbitral decision against an employee. A forklift and crane operator filed an unfair labor charge after she was terminated for inappropriate conduct, alleging that she was actually fired because of her union activities. The NLRB issued a complaint. An administrative law judge (ALJ) upheld an arbitral decision in favor of the employer, finding just cause for the termination based on the employee’s use of profanity and insubordination. When the NLRB considered the case, it announced a new standard for determining whether to defer to an arbitral decision, but elected to apply it only prospectively and not to the case at hand. The employee appealed and the Ninth Circuit sided with the NLRB. Balancing the interests in considering retroactive application of the new standard, the federal appellate panel said the NLRB reached the proper conclusion, in part because the employee never advocated for the change in standard and both parties relied upon the prior standard that had been in place for almost six decades.

Detailed discussion

A forklift and crane operator, Coletta Kim Beneli, served as a job steward for her union, the International Union of Operating Engineers. After roughly two months of employment at Babcock & Wilcox Construction Co., Inc. (B&W), she was terminated for cause because of repeated safety violations and inappropriate conduct.

On the day she was fired, Beneli was called to a meeting where she was told she was being suspended without pay for two safety violations. She responded with profanities and was then terminated. The union filed a grievance over her suspension and termination. Pursuant to the collective bargaining agreement (CBA) in place, binding arbitration was conducted before a joint labor-management Grievance Review Subcommittee.

The subcommittee denied the grievance and upheld Beneli’s discharge. The National Labor Relations Board (NLRB) reviewed the decision and issued a complaint against the employer. After a hearing, however, an administrative law judge (ALJ) issued an order recommending that the NLRB defer to the subcommittee decision and dismiss the complaint.

The ALJ’s decision to defer was based on a long-standing NLRB precedent originally established in 1955 and affirmed in 1984, known as the Spielberg/Olin standard. The NLRB filed exceptions to the ALJ’s decision and recommended that the NLRB revisit the standard.

Upon review, the NLRB adopted the ALJ’s decision and denied Beneli’s complaint. However, the NLRB also decided to change the standard for determining when to defer to an arbitration decision. Under the new standard, the NLRB will defer if the party urging deferral shows that “(1) the arbitrator was explicitly authorized to decide the unfair labor practice issue; (2) the arbitrator was presented with and considered the statutory issue, or was prevented from doing so by the party opposing deferral; and (3) Board law reasonably permits the award.”

While this standard shifts the burden of proof and makes deferral to an arbitral decision less likely, the NLRB applied the new standard only prospectively and declined to apply it to Beneli’s case. The employee asked the U.S. Court of Appeals, Ninth Circuit to reverse and apply the new standard to her case.

But the federal appellate panel—giving “considerable deference” to the NLRB’s expertise—sided with the NLRB and ruled the new standard should be applied only prospectively.

Using a five-factor test, the court noted that the case was one of first impression but that the standard was changed on the recommendation of the NLRB, not Beneli, and that the new rule represents “an abrupt departure from well-established practice.” Importantly, the Spielberg/Olin standard was in place when the union and B&W entered into their CBA in 1996, the grievance procedure was amended in 2004, the subcommittee heard Beneli’s grievance in 2009 and the ALJ issued his decision in 2012.

“At each of those steps, B&W would have relied upon the Spielberg/Olin standard in formulating its decisions with regard to negotiating the CBA with the Union, determining whether to oppose the Union before the subcommittee, and developing and presenting its case to the Subcommittee,” the Ninth Circuit said. “These reliances and similar equitable considerations support the prospective application of the new standard.”

Retroactive application would severely burden the employer, the court added, because the subcommittee hearing and decision occurred in 2009, creating problems with faded memories, the likely dispersal of witnesses and the subsequent closure of the B&W work site. Finally, the panel said the balance of statutory interests favored prospective application, as the stability of labor relations would be undermined by retroactively adopting a new standard that “detract[s] from final and binding arbitration procedures to which employers and unions have previously agreed.”

With the Spielberg/Olin standard in place, the Ninth Circuit’s substantive review of the subcommittee decision was brief, with the panel concluding that “the arbitration decision that Beneli was discharged for cause was susceptible to an interpretation consistent” with the National Labor Relations Act.

To read the opinion in Beneli v. National Labor Relations Board, click here.

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California Court: FCRA Violation Not Sufficient for Standing

Why it matters

Citing Spokeo, Inc. v. Robins, a California federal court tossed a background check suit against Home Depot. The plaintiff charged the employer with violating the Fair Credit Reporting Act by combining a waiver with a disclosure form, arguing the statute requires they be kept separate. Home Depot moved to dismiss, contending that the applicant failed to state an injury-in-fact as required by Spokeo. The court agreed, finding that the plaintiff’s mere allegation of a statutory violation was insufficient to establish concrete harm. “Because [the plaintiff] failed to allege a concrete injury, the court finds that [she] failed to sufficiently plead the requisite elements of standing in her complaint,” the court wrote, dismissing the suit.

Detailed discussion

Katherine Saltzberg sought employment with Lifetime Solutions, a Home Depot service provider, in March 2016. In addition to her employment application, Saltzberg completed Home Depot’s standard background check forms, which consisted of two pages. The first page, titled “Background Check Applicant/Employee Information,” contained blanks for an applicant’s personal contact information, provisions stating that information obtained would not be used for purposes that violate equal opportunity laws or regulations, a liability waiver, and a signature line.

The second, separate page was titled “Authorization” and included language disclosing Home Depot’s intent to conduct a background investigation, which would involve investigating the applicant’s work record, references and education, as well as a signature line.

Saltzberg was hired to work for Lifetime in May 2016. But earlier this year, she filed a putative class action against Home Depot, alleging that the company violated the Fair Credit Reporting Act (FCRA) by failing to make proper disclosures and neglecting to obtain proper authorization.

The combination of the two forms constituted one document, Saltzberg claimed, and ran afoul of the statutory requirement that each disclosure be provided in a separate document.

Home Depot responded with a motion to dismiss, arguing that Saltzberg failed to allege an injury-in-fact as required by the Supreme Court’s 2016 decision in Spokeo, Inc. v. Robins. In that case, the justices held that a “bare procedural violation” of a statute is insufficient to confer standing where there is no real harm and that a plaintiff must show a “concrete” injury-in-fact to satisfy Article III.

Applying this standard, U.S. District Judge R. Gary Klausner dismissed the case.

“Saltzberg failed to plead even general allegations of injury in her Complaint,” the court said. “Saltzberg alleges that Home Depot violated [the statute] by ‘obtain[ing] consumer reports without proper authorization.’ This is ultimately an allegation of a statutory violation, not an injury-in-fact. The injury-in-fact requirement is not ‘automatically satisfie[d] … whenever a statute grants a person a statutory right and purports to authorize that person to sue to vindicate that right.’”

As the plaintiff failed to sufficiently plead the requisite elements of standing in her complaint, the court lacked subject matter jurisdiction to hear the dispute.

“The Supreme Court has made it clear that ‘Article III standing requires a concrete injury even in the context of a statutory violation,’” Judge Klausner wrote. “Merely asserting a violation of the FCRA is insufficient without connecting it to a concrete injury.”

To read the order in Saltzberg v. Home Depot, click here.

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Converse Runs Away With Dismissal Over De Minimis Bag Checks

Why it matters

As the plaintiffs failed to establish that the employer’s bag checks took long enough to merit compensation, a California federal court dismissed the action. Eric Chavez alleged that he and other workers at Converse retail stores in the state were due wages for the unpaid time they spent waiting for and undergoing bag inspections when they exited the store premises. Converse countered with a study showing that the average combined time per employee was less than two minutes. Although the plaintiffs presented testimony from workers that some bag checks took more than one minute, the court ruled the unpaid time was de minimis. Chavez has already filed notice of appeal, arguing that the court should have waited to decide the case given that the California Supreme Court is currently considering whether de minimis time is compensable, answering a certified question from the U.S. Court of Appeals, Ninth Circuit in a case involving Starbucks.

Detailed discussion

A nonexempt hourly employee at a Converse retail store in Gilroy, CA, Eric Chavez was required to undergo an exit inspection each time he left the store during or after a shift. Each departure during his employment from September 2010 to October 2015 consisted of a visual inspection as well as a bag check, if he was carrying a bag. Converse did not pay Chavez for the time these exit inspections took or for the occasions when he had to wait for a manager to come to conduct the inspection.

Alleging violations of California’s Labor Code, Chavez filed a putative class action in 2015. The court certified a class of employees dating back to 2011, and Converse then filed a motion for summary judgment.

The employer offered a time and motion study that considered 436 exit inspections, breaking down each part of the process into waiting time, bag checks and visual inspections. The study found that 290 of the exits (66.5 percent) observed no wait time, while 120 out of 146 inspections (82.2 percent) had a wait time of 30 seconds or less.

As for the inspections themselves, the majority—67.7 percent—did not include a bag check. Where only a visual inspection occurred, the average duration was 2.3 seconds, with bag checks lasting less than 3 seconds and 100 percent of the bag checks observed taking less than 30 seconds.

Combining wait time, visual inspections and bag checks, the study found that 99.5 percent of the employees spent less than two minutes before exiting the premises. Relying on these findings, the employer argued that the unpaid time was de minimis and the suit should be dismissed.

Chavez challenged the study, providing an expert to critique it, although he did not offer his own study in response. He also proffered the deposition testimony of several coworkers, which he said demonstrated that employees spent a longer period of time for the inspections than shown by the study.

Considering the employer’s motion for summary judgment, U.S. District Judge Nathanael M. Cousins first acknowledged that whether the de minimis doctrine—which originated in the context of the federal Fair Labor Standards Act—applies to state law remains an unsettled question of law currently being decided by the California Supreme Court.

However, while the issue remains pending, the court said it remained bound by existing precedent applying the doctrine to claims under the Labor Code and moved forward with its analysis.

After a detailed review of the employer’s study, the critique offered by Chavez’s expert and the deposition testimony of 23 class members, the court concluded the time spent on exit inspections was de minimis and therefore not compensable.

Although Chavez argued the depositions refuted the employer’s study, the greatest time any deponent testified that an individual bag check took was 60 seconds, and several class members never underwent bag checks because they never brought a bag onto the premises, the court said. The study’s findings “strongly suggest the exit inspections took barely a few seconds and are thus not compensable.”

Further, “[o]nly Eric Chavez testified to always having to wait more than one minute for exit inspections,” the court wrote, Chavez having testified that he “always” had to wait at least four minutes. “The rest of the class members testified to either never waiting for an exit inspection, or waiting for an inspection less than 50 percent of the time.”

Converse’s timekeeping system records time in one-minute intervals. The study found that 95.9 percent of exit inspections took one minute or less and 99.5 percent of exit inspections had a wait time of two minutes or less. “These findings are significant because Converse’s timekeeping system cannot measure time in less than 1 minute increments … [and] the overwhelming majority—95.9 percent—of exit inspections would not have been measurable because they lasted less than one minute,” the court wrote.

Even taking into account the testimony of Chavez that he once waited 18 minutes for an exit inspection as well as that of two other workers—one who testified to waiting one to two minutes and the other who testified to waiting two minutes or more—the court was not convinced the time was enough to warrant compensation.

“[Three] out of 24 class member[s] arguably testified that their exit inspection took greater than one minute with regularity,” Judge Cousins wrote. “This testimony is insufficient to rebut the [study’s] finding that the overwhelming majority of exit inspections took less than one minute, especially where 21 other class members did not experience compensable exit inspections with any regularity,” Judge Cousins said.

The court granted Converse’s motion for summary judgment.

To read the order in Chavez v. Converse, Inc., click here.

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