Employment Law

LA Doubles Down on Sick Leave, Minimum Wage Increase

Why it matters

Already facing new California employment-related requirements—including the adoption of mandatory sick leave and an uptick in the minimum wage—Los Angeles employers now have an added wrinkle to deal with. Mirroring the state, the L.A. City Council passed a new ordinance implementing a citywide raise to the minimum wage, as well as sick leave benefits for all employees who perform at least two hours of work within city boundaries, effective immediately. Beginning July 1, 2016, employers with 26 or more workers must begin raising their minimum wage payments to reach $15 per hour by July 1, 2020 (those with 25 or fewer employees have an extra year to begin their increases). The new more expansive sick leave requirements begin the same day, with employers required to provide employees with a total of 48 hours of sick leave each year—twice the state mandate of 24 hours or three days—for workers to take paid time off to care for themselves or a covered family member. Employers in Los Angeles should waste no time in familiarizing themselves with the new law and implementing the necessary requirements.

Detailed discussion

On June 2, Los Angeles Mayor Eric Garcetti signed Ordinance No. 184320, increasing the minimum wage paid to workers in the city and adding four additional days of paid sick leave per year.

"The City has recognized that income inequality is one of the most pressing economic and social issues facing Los Angeles," according to the purpose of the ordinance. "Therefore, by paying a higher than state-mandated minimum wage and providing sick time benefits, the City seeks to promote the health, safety and welfare of thousands of workers by ensuring they receive a decent wage for the work they perform and are able to attend to illnesses."

The new law applies to all employers, defined as "any person … including a corporate officer or executive, who directly or indirectly or through an agent or any other person, including through the services of a temporary service or staffing agency or similar entity, employs or exercises control over the wages, hours or working conditions of any Employee."

Covered by the new law: all employees who work at least two hours within the city boundaries each week and qualify as an employee entitled to a payment of a minimum wage from any employer under California state law and the California wage orders.

To reach the goal of $15 per hour on July 1, 2020, the ordinance establishes stepped increases beginning July 1 for employers with 26 or more employees, when the minimum wage will jump to $10.50 per hour. On July 1, 2017, the minimum wage will rise to $12 per hour, followed by $13.25 on July 1, 2018, and $14.25 on July 1, 2019.

Employers with 25 or fewer workers are being provided with an extra year to increase their minimum wage payments, which will rise to $10.50 per hour on July 1, 2017, and then will follow the same schedule of increases to reach $15 on July 1, 2021. For each year thereafter, the minimum wage will increase based on the Consumer Price Index for Urban Wage Earners and Clerical Workers for the Los Angeles metropolitan area published by the Bureau of Labor Statistics, with adjustments to the rates announced in February to take effect in July.

To determine their number of employees for coverage purposes, employers should calculate the average number of workers employed during the previous calendar year. For new businesses, the number of employees employed during the first pay period will be the determining factor. The ordinance does include a process for nonprofits to apply for a deferral rate schedule, but does not contain any other exemptions from coverage.

As for the new sick time benefits, paid sick days will begin to accrue on July 1 for employees who work in the city of Los Angeles for the same employer for 30 days or more within a year from the commencement of employment. Workers can begin to use paid leave beginning on the 90th day of employment or July 1, whichever is later, and are entitled to take up to 48 hours of sick leave in each year of employment, calendar year, or 12-month period.

Employers have options regarding how to provide the sick leave, i.e., either giving a worker the entire 48 sick pay hours at the beginning of each year of employment, calendar year, or 12-month period (front loading) or having employees accrue one hour of sick leave per every 30 hours worked. Accrued unused paid sick leave will carry over to the following year of employment but may be capped at 72 hours, with employers able to set a higher cap or to elect not to set a cap at all.

If an employer already has a paid leave or paid time off policy which provides payment for compensated time off that is no less than 48 hours per year, no additional sick days are required by the ordinance.

Employees can request leave either orally or in writing for themselves or a family member, which includes children (biological, adopted, and stepchildren, as well as those with whom the employee stands in loco parentis), siblings, spouses, registered domestic partners, parents (biological, adoptive, foster, step, or the legal guardian of an employee or of an employee's spouse or registered domestic partner), grandparents, and grandchildren. In addition, leave may be taken for "any individual related by blood or affinity whose close association with the employee is the equivalent of a family relationship."

Employers are permitted to require workers to provide "reasonable documentation" for paid sick leave. Employers do not have to provide compensation for accrued or unused sick leave upon termination, resignation, retirement, or other separation from employment. However, if an employee separates from an employer and is rehired within one year, the previously accrued and unused paid sick time has to be reinstated.

Waivers of an employee's rights under the new law are invalid and unenforceable, and retaliation for requesting to use or actually using paid sick leave is prohibited. A notice regarding the ordinance must be posted at every site where an employee works in every language spoken by at least 5 percent of the site's workforce. Employers must also maintain payroll records for four years to demonstrate compliance.

Violations of the ordinance trigger daily penalties of $120 to the employee until the employer cures the violation, as well as payment for any sick leave that should have been paid for. Treble paid sick leave, lost wages, and penalties may result if an employee can demonstrate that he or she has been retaliated against in connection with the sick pay requirements. Employees have the right to file a lawsuit or seek administrative remedies.

To read the Los Angeles ordinance, click here.

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Take a Seat: District Courts to Consider Merits of Seating Suits

Why it matters

High-profile litigation seeking suitable seating for cashiers and bank tellers is moving forward after the Ninth Circuit Court of Appeals reversed dismissal of the suits and remanded the cases. The plaintiffs alleged that their employers had violated state wage orders by not providing seats. A federal district court dismissed the actions and the workers appealed to the Ninth Circuit, which turned to the California Supreme Court for help. The state's highest court ruled that seats should be provided to employees if the "nature of the work" reasonably permits, using a totality of the circumstances test that includes consideration of the employer's business judgment and the tasks performed by the employee. In light of that decision, the three-judge federal appellate panel sent the cases back down to the district court for further proceedings. In a separate order, the panel also affirmed class certification of a group of cashiers in a similar suit. The federal courts will now face the challenge of applying the California Supreme Court's standard.

Detailed discussion

The dispute began when Nyketa Kilby, a cashier at CVS Pharmacy, and Kemah Henderson, a teller at a bank, brought putative class actions against their employers. Both women alleged that the companies violated California Wage Orders by failing to provide employees with seats.

Wage Order 4-2001 covers professional, technical, clerical, mechanical, and similar occupations, while Wage Order 7-2001 applies to the mercantile industry. Both orders provide that "[a]ll working employees shall be provided with suitable seats when the nature of the work reasonably permits the use of seats."

Kilby and Henderson argued that the requirement to provide seating should apply to specific tasks performed by employees. So if a bank teller can accept deposits and cash checks while seated or a CVS cashier can operate a register while sitting down, then the bank and retailer must provide suitable seats, the plaintiffs told the court.

The employers advocated for a look at the bigger picture. Under this "holistic approach," the companies argued that courts should consider the entire range of job functions the employee is required to perform—not discrete tasks. Other considerations like the layout of the workplace and the business judgment of the employer should also be taken into account, the companies contended.

Both federal district courts adopted the holistic approach advocated by the companies and granted summary judgment. The employees appealed.

But the Ninth Circuit Court of Appeals was stumped. The wage orders do not define "nature of the work," "reasonably permits," or "suitable seats," the panel said, and while the different approaches advocated by the parties would produce drastically different results, "the text of the regulation precludes neither." Uncertain about what to do, the federal appellate panel certified three questions to California's highest court.

In a unanimous opinion, the California Supreme Court determined that the "nature of the work" refers to an employee's tasks performed at a given location for which a right to suitable seat is claimed, rather than a "holistic" consideration of the entire range of an employee's duties anywhere on the jobsite during a complete shift. "If the tasks being performed at a given location reasonably permit sitting, and provision of a seat would not interfere with performance of any other tasks that may require standing, then a seat is called for," the court said.

Whether the nature of the work reasonably permits sitting is a question to be determined objectively based on the totality of the circumstances, the court explained. The analysis should begin with an examination of relevant tasks, grouped by location, and whether the tasks can be performed while seated or require standing, the court said. This task-based assessment must be balanced against considerations of feasibility, however, such as whether providing a seat would unduly interfere with other standing tasks and whether the frequency of transition from sitting to standing may interfere with the work.

"This inquiry is not a rigid quantitative analysis based merely upon the counting of tasks or amount of time spent performing them," the court noted. "Instead, it involves a qualitative assessment of all relevant factors." Relevant factors include the employer's business judgment (including expectations regarding customer service), although the court cautioned that the standard is an objective one and "does not encompass an employer's mere preference that particular tasks be performed while standing."

While the physical layout of a workspace is also a relevant factor, employers may not unreasonably design a workspace to further a preference for standing, the court wrote, with reasonableness as "the ultimate touchstone." The court agreed with the plaintiffs that physical differences between employees are a relevant factor.

In light of the April decision, the Ninth Circuit returned the cases to the district court. "We reverse and remand to the district court to reconsider in light of the California Supreme Court's opinion," the panel wrote in an unpublished memorandum.

The same day, the federal court affirmed certification of a class of Wal-Mart cashiers in a similar suit brought by Nisha Brown. On appeal, the employer challenged the certification by raising concerns that there was insufficient commonality among the proposed class members and that common issues did not predominate, but the panel found the proposed class met the requirements of the Federal Rules of Civil Procedure.

"The district court concluded that 'Wal-Mart had a common policy of not providing seats for its cashiers,' " the Ninth Circuit wrote. "The district court also concluded that there was a common nature of work among the proposed class, finding that (1) 'Wal-Mart cashiers spent the majority of their time working at registers during the class period,' and (2) the work done by cashiers at registers was generally the same across stores, register locations and configurations, shifts, and physical activities."

These findings supported the district court's conclusion that a trier of fact could determine whether these common tasks could reasonably be performed while seated and that such a determination would apply to all Wal-Mart cashiers in California stores, the panel said.

The court also rejected Wal-Mart's argument that California's Private Attorneys General Act (PAGA) requires individualized penalty inquiries that would defeat the commonality or predominance requirements for purposes of class certification. The statute specifies civil penalties for violations of the state's Labor Code, but courts are permitted to award a lesser amount based on the facts and circumstances of a particular case.

"However, even if the district court decides to reduce the mandatory civil penalty, [the Labor Code] calls for a case-wide (rather than individualized) inquiry," the court said, affirming class certification and moving the case forward.

To read the memorandum in Kilby v. CVS Pharmacy, click here.

To read the memorandum in Brown v. Wal-Mart Stores, click here.

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OFCCP Finalizes Rule on Sex Discrimination

Why it matters

The Office of the Federal Contract Compliance Programs (OFCCP) published its final rule on sex discrimination, the agency's first update to the relevant guidance since 1970. With a goal of eliminating gender-based barriers to equal employment opportunity, the "Discrimination on the Basis of Sex" rule covers a broad variety of topics from compensation discrimination to accommodations for pregnant workers. The final rule—which applies to all federal contractors and some subcontractors—makes clear that gender identity falls under the heading of sex discrimination, including harassment based on transgender status, requiring covered employers to allow workers to use restrooms, changing rooms, and other facilities consistent with the gender the worker identifies with. With respect to another hot-button issue, the final rule prohibits compensation discrimination against "similarly situated" employees on the basis of sex. To help guide employers, the OFCCP also provided examples of what the agency considers to be gender discrimination, such as the use of strength tests that exceed the actual demands of the job and negatively impact women more than men, as well as "word-of-mouth" recruitment that has an adverse impact on female employees. The final rule takes effect on August 15.

Detailed discussion

"Women make up a significant share of the U.S. workforce, but sex discrimination remains an unfortunate reality," the Office of the Federal Contract Compliance Programs (OFCCP) wrote, explaining the agency's new guidance on the issue in more than 40 years. While the prohibition against sex discrimination is well established, the prior guidelines were out of touch with current law and the realities of today's workforce and workplaces, the agency stated.

To reflect modern laws and modern times, the OFCCP published a Notice of Proposed Rulemaking in January 2015. After considering the 553 comments received on the proposal, the OFCCP released its final rule, set to take effect on August 15.

Articulating the general ban on both disparate treatment and disparate impact discrimination, the final rule defined "sex" to include gender identity, transgender status, pregnancy, and sex stereotyping. Also prohibited is sexual harassment, including unwelcome sexual advances, requests for sexual favors, offensive remarks about a person's sex, and other verbal or physical conduct of a sexual nature when such conduct unreasonably interferes with an individual's work performance, becomes the basis for employment decisions, or creates a hostile working environment.

Protections related to pregnancy, childbirth, and related medical conditions were added to the new guidance in line with the U.S. Supreme Court's March 2015 decision in Young v. UPS, requiring contractors to provide workplace accommodations (such as extra bathroom breaks and light-duty assignments) to an employee who needs such accommodations in certain circumstances where those contractors provide comparable accommodations to other workers, such as those with disabilities or occupational injuries.

Examples of unlawful pregnancy discrimination listed by the OFCCP ranged from refusing to hire pregnant applicants to limiting a pregnant employee's job duties based on pregnancy, to providing employees with health insurance that does not cover hospitalization and other medical costs related to pregnancy, childbirth, or related medical conditions when hospitalization is provided for other medical conditions.

The final rule also addressed compensation discrimination. Contractors may not deny opportunities for overtime work, training, better pay, or higher-paying positions because of a worker's sex, according to the guidance. Nor can contractors pay similarly situated workers differently because of their sex. Unless the contractor can meet the high bar of demonstrating that requirements based on an applicant's or employee's sex are a bona fide occupational qualification, such mandates are discriminatory, the OFCCP said.

In addition, requirements that adversely affect applicants because of their sex—such as height or weight qualifications—are not allowed unless a contractor can demonstrate the qualifications are job-related and consistent with business necessity. Similarly, "word-of-mouth" recruitment and "tap-on-the-shoulder" promotion efforts raise concerns about having an adverse impact on women, absent a demonstration of business necessity.

An evaluation of whether employees are similarly situated requires consideration of factors such as the tasks performed, skills, effort, levels of responsibility, working conditions, job difficulty, minimum qualifications, and other objective factors. A new provision in the final rule permits employees to recover lost wages any time a contractor pays compensation that is the result of discrimination, not only when the decision to discriminate is made.

The promotion of fair pay practices extends to equal benefits for those participating in fringe benefit plans, the OFCCP said, such as medical, hospital, accident, life insurance, and retirement benefits; profit-sharing and bonus plans; leave; and other terms, conditions, and privileges of employment.

In another change from the 1970s guidance, the final rule makes clear that discrimination based on gender identity, transgender status, and sex stereotypes is covered by the prohibition on sex discrimination. To that end, the rule requires contractors to allow workers to use bathrooms, changing rooms, showers, and similar facilities consistent with the gender with which the workers identify. Further, the preamble to the final rule states that an explicit, categorical exclusion of coverage for all care related to gender dysphoria or gender transitioning is facially discriminatory by singling out services and treatments for individuals on the basis of their gender identity or transgender status.

Adverse treatment on the basis of failure to conform to particular gender norms and expectations, whether in regard to appearance, attire, or behavior, also constitutes unlawful sex discrimination, the OFCCP said. This principle applies to stereotypes about caregiving responsibilities, preventing contractors from denying mothers employment opportunities that are available to fathers based on a faulty assumption that their childcare responsibilities will conflict with their job performance, for example, or denying fathers flexible workplace arrangements that are available to mothers, assuming that men do not have childcare responsibilities.

For additional guidance, an appendix to the final rule identifies best practices for contractors to ensure compliance.

To read the OFCCP's Sex Discrimination Final Rule, click here.

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First Circuit Sides With NLRB on Dress Code

Why it matters

The First Circuit Court of Appeals recently sided with the National Labor Relations Board (NLRB) in the NLRB's continuing enforcement activity related to certain provisions in employment agreements. The case involved union workers at Boch Imports that protested a company rule banning employees from wearing pins, insignia, or "message clothing." An administrative law judge agreed that the dress code violated the employees' rights under the National Labor Relations Act (NLRA) and the NLRB affirmed in 2015. The car dealership appealed to the First Circuit, but the majority of a three-judge panel upheld the NLRB's decision. The NLRB's ruling was "supported by substantial evidence and by reasoning that is not arbitrary and capricious," the court wrote. One member of the panel dissented, writing that he believed the employer had demonstrated "special circumstances" warranting the dress code and expressing concern about the NLRB—and the court system—acting as "fashion police."

Detailed discussion

Boch Imports, a Massachusetts-based car dealership, provided a handbook to employees in 2010 that included a "Dress Code and Personal Hygiene Policy." The policy stated: "Employees who have contact with the public may not wear pins, insignias, or other message clothing."

Union members filed a charge with the National Labor Relations Board (NLRB) arguing that the rule violated Section 8(a)(1) of the National Labor Relations Act (NLRA) as it interfered with employees' Section 7 rights.

An administrative law judge (ALJ) agreed and ordered the rule to be struck from the handbook, with notice of the action posted at the employer's worksite, but ruled that the pins could be prohibited because they posed a safety risk. Boch appealed. A split panel of the NLRB affirmed the ruling with regard to the dress code and reversed on the issue of pins, finding that the employer failed to justify the ban.

Given the "well settled" rule that an employer violates Section 8(a)(1) by prohibiting employees from wearing union insignia at the workplace absent special circumstances and a narrowly tailored rule, the majority of the panel found that the dealership's policy could not survive scrutiny.

"Clearly, the [dealership's] proscription curtails employees' Section 7 right to wear union insignia," the NLRB wrote. "As such, it is overly broad. Absent special circumstances, then, it is unlawful." The dealership's justification for the rule—maintaining its public image—did not constitute a special circumstance justifying its prohibition, the majority said.

Boch appealed again, this time to the First Circuit Court of Appeals. The panel upheld the NLRB's decision, which it said used an approach that attempted to "strike a balance between the employer's legitimate business interests and the statutorily protected workplace rights to organize."

Despite the dealership's argument that the dress code was intended to further its goal to cultivate a general, professional environment, the court said this was not enough. Boch did not provide evidence that the dress code was intended to create a specific and unique environment and the employer was willing to tolerate a fair amount more variation in dress as to the employees to whom the ban applied than in cases where the NLRB upheld dress codes to create a "unique, fantasy-like ambiance."

"Boch simply failed to explain why the additional increment of variation that might arise from non-uniformed employees' wearing a small and unobtrusive union pin (for example) would unreasonably interfere with the general professional environment Boch sought to create," the panel wrote. "After all, it stands to reason that the more distinctive the public image the employer seeks to cultivate, and the less variation in dress the employer permits in promoting that image, the more likely any deviation in employee dress will unreasonably interfere with the employer's promotion of that image."

The court was not persuaded by the fact that the dress code was not promulgated in response to union activity or enforced in a discriminatory manner. "[W]hile the presence of these circumstances may constitute grounds for invalidating a dress ban, it does not necessarily follow that the absence of these circumstances constitutes a ground for upholding a dress ban of this breadth."

As for Boch's interests in promoting workplace safety and preventing damage to vehicles as justification for its ban on pins, the dress code "was not narrowly tailored to address the safety and damage risks that Boch itself identified, insofar as the ban was neither crafted narrowly to target, nor was intended to target, Boch's claimed interests in workplace safety and preventing damage to vehicles," the court's panel majority wrote.

The pin ban applied to employees who do not typically have contact with vehicles (such as administrative and finance personnel) and during the performance of tasks that did not require vehicle contact. "[T]he burden was on Boch to prove that special circumstances justified the scope of the ban, and it was thus incumbent on Boch to explain why a ban that applied as broadly as the Board found this one to apply was warranted," the court said. "[T]he record provides scant basis for concluding, as Boch contends, that a ban on pins of this breadth was needed, either for reasons of safety or for reasons of preventing damage to vehicles."

A dissenting member of the panel wrote that he believed the car dealership sufficiently demonstrated "special circumstances" warranting its policy. The judge decried what he characterized as "the silent, unexplained creep" of the NLRB's presumptions and wrote that an employer should be able to "demonstrate special circumstances as a matter of law if the employer reasonably believes that a dress code will enhance its public image and the employer shows that it has maintained, and neutrally enforced, a clear and consistent dress code policy for public-facing employees who are on duty."

Further, "none of this is the Board's concern," according to the dissenting opinion. "By rubber-stamping the NLRB's arbitrary infatuation with the uniqueness and uniformity of workplace dress codes, the majority has done little more than grant the Board the authority to play 'fashion police.' "

To read the opinion in Boch Imports, Inc. v. NLRB, click here.

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