DLSE's Digest of New California Employment Laws

The California Division of Labor Standards Enforcement compiled a booklet of new California employment laws, as well as some bills that did not make the cut.

The digest includes the new wage-hour related laws, organized by subject matter, a brief description, and whether the law was passed or vetoed.  Download your own copy here.

Don't ever say I did not give you anything for Festivus.

Greg

California Confusion over Paid Sick Leave

DLSE: The Wage Theft Templates Need Updating!  Or do they?

Per Labor Code 2810.5, employers must provide non-exempt workers with a Wage Theft Notice at the time of hire and after certain changes to wages and other covered matters.

The DLSE publishes a template on a website, called Wage Theft Protection Act.  The template forms are available in several languages.

California's new paid sick leave law, AB 1522,  modified Lab. Code section 2810.5.  The revised law requires the Wage Theft Notice to include information about paid sick leave. Although no sick leave accrues until July 1, 2015, employers must issue a new Wage Theft Notice beginning January 1, 2015.

So, DLSE should have issued a revised template.  Oh, you want the revised template notice?  DON'T look at the Wage Theft Protection Act page linked above.  Instead, go over to the DLSE's paid sick leave page, here. There, you will find the new Wage Theft form.

DLSE, please fix this.

Exempt Employees

Section 2810.5, the Wage Theft Protection Act, requires the notice discussed above. But exempt employees (i.e., executive, administrative and professional exempt) do not count. They are not required to receive the notice.

At the same time, exempt employees ARE required to receive paid sick leave under the new law.  Do you have to provide exempt employees within individualized information about paid sick leave?

Nobody knows. It appears that exempt employees are required to have their accrued sick leave balances on their checks, and they must be able to see the poster.  But, because section 2810.5 does not apply to exempt employees they do not have to receive a Lab. Code section 2810.5 notice.

* * * *

Merry Christmas!

IRS Increases Standard Mileage Reimbursement Rate to $0.575

Please see the Chamber's post on the increase to the standard mileage rate. (Here).  Most employers are concerned with the business reimbursement rate, which goes up to $0.575 per mile effective January 1, 2015.

Here's a quick spiel on the significance of the standard mileage rate:

Employers in California are required to reimburse employees for reasonably necessary expenses incurred in connection with their work via Labor Code section 2802.  Expenses associated with personal use of their vehicles are included within 2802.

Most employers pay the IRS reimbursement rate. It is not mandatory to do so. But how do you calculate how much oil, tires, and brake shoes that an employee's business trip will consume?
Right, you can't.  That's why it pays to pay the standard rate.

Employees may argue that the standard rate is not enough. But it's their burden to show that their actual, reasonably necessary expenses were worth more than the standard rate. And it's going to be hard for them to measure the "actual" necessary costs of operating a car for a 30 mile trip.

NLRB Overrules Itself and Appropriates Companies' Email Systems for Employees' Protected Communications

In 2007 the National Labor Relations Board held, in The Guard Publishing Company, dba Register Guard, 351 NLRB 1110 (2007), that employers do not have to permit union organizing activity over their own email system.  Here's the essence of that decision:

An employer has a “basic property right” to “regulate and restrict employee use of company property.” Union Carbide Corp. v. NLRB, 714 F.2d 657, 663–664 (6th Cir. 1983). The Respondent’s communications system, including its e-mail system, is the Respondent’s property and was purchased by the Respondent for use in operating its business. The General Counsel concedes that the Respondent has a legitimate business interest in maintaining the efficient operation of its e-mail system, and that employers who have invested in an e-mail system have valid concerns about such issues as preserving server space, protecting against computer viruses and dissemination of confidential information, and avoiding company liability for employees’ inappropriate e-mails. * * * *In numerous cases, however, where the Board has addressed whether employees have the right to use other types of employer-owned property—such as bulletin boards, telephones, and televisions—for Section 7 communications, the Board has consistently held that there is “no statutory right . . . to use an employer’s equipment or media,” as long as the restrictions are nondiscriminatory. * * * *Accordingly, we hold that the Respondent may lawfully bar employees’ nonwork-related use of its e-mail system, unless the Respondent acts in a manner that discriminates against Section 7 activity.

Good times.  But, to paraphrase a talking head's recent statement in another context, "dude, that was like 7 years ago!"  Relying in part on "scholars," second only to referencing "studies" when justifying a peremptory exercise of raw power, the Board has overruled itself.  As a result, employers may not prohibit employees' personal use of email, during non-work time, about a host of subjects covered under section 7 of the National Labor Relations Act, including union activity.

The new decision, following a long tradition of colorful NLRB precedent names, is Purple Communications, Inc., 361 NLRB No. 126 (2014). There, the Company had an email policy that will remind you of your company's policy:

INTERNET, INTRANET, VOICEMAIL AND ELECTRONIC COMMUNICATION POLICY
Computers, laptops, internet access, voicemail, electronic mail (email), Blackberry, cellular telephones and/or other Company equipment is provided and maintained by the [sic] Purple to facilitate Company business. All information and messages stored, sent, and received on these systems are the sole and exclusive property of the Company, regardless of the author or recipient. All such equipment and access should be used for business purposes only.

Prohibited activities
Employees are strictly prohibited from using the computer,  internet, voicemail and email systems, and other Company equipment in connection with any of the following activities
2. Engaging in activities on behalf of organizations or persons with no professional or business affiliation with the Company.
. . . .
5. Sending uninvited email of a personal nature.

All agreed that the policy was lawful under Register Guard, by the way.  Rather, the union and NLRB's general counsel specifically asked the NLRB to overrule the prior decision.

Challenge accepted.  Here's the Board's ruling:

we will presume that employees who have rightful access to their employer’s email system in the course of their work have a right to use the email system to engage in Section 7-protected communications on nonworking time. An employer may rebut the presumption by demonstrating that special circumstances necessary to maintain production or discipline justify restricting its employees’ rights.66 Because limitations on employee communication should be no more restrictive than necessary to protect the employer’s interests,67 we anticipate that it will be the rare case where special circumstances justify a total ban on nonwork email use by employees. In more typical cases, where special circumstances do not justify a total ban, employers may nonetheless apply uniform and consistently enforced controls over their email systems to the extent that such controls are necessary to maintain production and discipline.

(emphasis mine)

I will spare you the detailed rationale. The opinion is above. But the gist of it is that email is a ubiquitous form of communication; employees have special rights to communicate at work about section 7 issues; and the special nature of email warrants treating it different from other company property like bulletin boards. And the employer's property rights must yield to section 7 rights.

Finally, the NLRB decided to apply its decision "retroactively" to pending cases.  So, employers must take action.

So, what does this change mean?

1.  Email policies must allow employees to communicate about activities protected by Section 7 of the National Labor Relations Act.  The catch is that Section 7 is very broad, and permits communications about "wages, hours, and other terms and conditions of employment."  That means, for example, that it's unlawful to prohibit employees' criticism of a boss related to working conditions, or to share salary information over email, and more.

2. The Board's decision applies only to employees.  It does not grant outsiders' access to the Company's email.  It may be, although this is unclear, it means that the employer can ban non-work-related communications over its email system with outsiders.

3.  The decision allows employers to prohibit use of its email system during working time, as long as the policy remains non-discriminatory.

4.  Employers must re-draft their electronic communications policies now, as this decision applies to the unionized and non-unionized workforce, at least those within the jurisdiction of the NLRB.

5. Employers are not required to grant email access to employees for the purpose of making such communications.

6. The decision does not apply to other types of communication (e.g., instant message, text). However, my prediction is that the Board will address those modes in another case.

7.  There will be litigation over what will qualify as allowed "uniform and consistently enforced controls over their email systems to the extent that such controls are necessary to maintain production and discipline."  So, prepare for more handbook updates.

8. The decision may be appealed to the U.S. Court of Appeals, which could decline to enforce it. But this case is Board precedent, which will guide future decisions by Administrative Law Judges.  Also, Courts of Appeals usually (almost always) enforce the Board's interpretation of the NLRA.

What of employer monitoring?

You may ask, rightly, whether an employer who monitors email will be accused of "spying" in violation of the NLRA.  Of course it will!  But, to its credit, the Board addressed this issue, and allows employers to continue email monitoring as a general practice, so long as it is not targeted at section 7-related communications, including of course union organizing activity:

Our decision does not prevent employers from continuing, as many already do, to monitor their computers and email systems for legitimate management reasons, such as ensuring productivity and preventing email use for purposes of harassment or other activities that could give rise to employer liability.73 The Respondent and some amici assert that such monitoring may make them vulnerable to allegations of unlawful surveillance of employees’ Section 7 activity. We are confident, however, that we can assess any surveillance allegations by the same standards that we apply to alleged surveillance in the bricks-and-mortar world. Board law establishes that “those who choose openly to engage in union activities at or near the employer’s premises cannot be heard to complain when management observes them. The Board has long held that management officials may observe public union activity without violating the Act so long as those officials do not ‘do something out of the ordinary.’”74 An employer’s monitoring of electronic communications on its email system will similarly be lawful so long as the employer does nothing out of the ordinary, such as increasing its monitoring during an organizational campaign or focusing its monitoring efforts on protected conduct or union activists. Nor is an employer ordinarily prevented from notifying its employees, as many employers also do already, that it monitors (or reserves the right to monitor) computer and email use for legitimate management reasons and that employees may have no expectation of privacy in their use of the employer’s email system.

So, it's not illegal to monitor for harassment, trade secret misappropriation, etc. 

Happy holidays!

Greg

Unanimous U.S. Supreme Court: Security Screenings Non-Compensable Under FLSA

The Supreme Court further explained how to determine whether time spent at work is "preliminary" or "postliminary" and therefore not compensable under the federal Fair Labor Standards Act.  Per the Court:

The employer in this case required its employees, warehouse workers who retrieved inventory and packaged it for shipment, to undergo an antitheft security screening before leaving the warehouse each day.

The case involved temporary workers at an Amazon warehouse.  They were actually employed by Integrity Staffing Solutions, an agency.  Naturally, with all of that inventory around, security was important to minimize theft. So, 

Integrity Staffing required its employees to undergo a security screening before leaving the warehouse at the end of each day. During this screening, employees removed items such as wallets, keys, and belts from their persons and passed through metal detectors.

Busk and other employees filed a class action, claiming that the time spent on the screenings should be compensated because they were required to wait to be screened, because screening was for the employer's benefit, and because the screening process could take considerably more than a couple of minutes in some cases (sometimes up to 25 minutes even).

In a 9-0 opinion by Justice Thomas, with a concurrence by Justice Sotomayor with Justice Kagan joining, the Supreme Court reversed the 9th Circuit Court of Appeals.

The legal issue here involves the "Portal to Portal Act," which modified the federal Fair Labor Standards Act.  The P2P Act, as I like to call it today,  exempts from compensable time "activities which are preliminary to or postliminary" to "principal activities.” If they are pre- or post-luminary, they are not compensable.

Security screenings obviously are not "principal" actives. But that does not render them automatically pre- or postliminiary. That is because the term, "principal" activities, includes "all activities which are an ‘integral and indispensable part of the principal activities."

The Court explained what "integral and indispensable" means:

An activity is therefore integral and indispensable to the principal activities that an employee is employed to perform if it is an intrinsic element of those activities and one with which the employee cannot dispense if he is to perform his principal activities.

Again, if it's "integral and indispensable" then it's compensable time under the FLSA.

So, the court applied the above definition of integral and indispensable to security screenings, thusly:

The security screenings at issue here are noncompensable postliminary activities. To begin with, the screenings were not the “principal activity or activities which [the] employee is employed to perform.” 29 U. S. C. §254(a)(1). Integrity Staffing did not employ its workers to undergo security screenings, but to retrieve products from ware- house shelves and package those products for shipment to Amazon customers.

The security screenings also were not “integral and indispensable” to the employees’ duties as warehouse workers. As explained above, an activity is not integral and indispensable to an employee’s principal activities unless it is an intrinsic element of those activities and one with which the employee cannot dispense if he is to perform those activities. The screenings were not an intrinsic element of retrieving products from warehouse shelves or packaging them for shipment. And Integrity Staffing could have eliminated the screenings altogether without impairing the employees’ ability to complete their work.

(emphasis mine)

The Court rejected the 9th circuit court of appeals's conclusion that the time was compensable because the employees were "required" to undergo the screenings, and also rejected the notion that the time was compensable because it was for the employer's benefit:

If the test could be satisfied merely by the fact that an employer required an activity, it would sweep into “principal activities” the very activities that the Portal-to-Portal Act was designed to address. The employer in Anderson, for instance, required its employees to walk “from a timeclock near the factory gate to a workstation” so that they could “begin their work,” . . . . A test that turns on whether the activity is for the benefit of the employer is similarly overbroad.

The plaintiffs argued that the employer could have reduced the screening time by adding more screeners or by staggering break and shift times.  But the Court held that the employer's power to reduce the time it took did not change the character of  the activity from non-compensable to compensable. 

So, big victory for employers under the FLSA.  California employers, not so fast.

There is no P2P Act under California law.  Rather, all time is compensable if the employee is "subject to the control of the employer." That's why what may seem as "preiminary" or "postliminary" under California law may nonetheless be compensable.  As the California Supreme Court once wrote in rejecting importation of the P2P Act: "we conclude that the federal statutory scheme, which differs substantially from the state scheme, should be given no deference." Morillion v. Royal Packing Co., 22 Cal. 4th 575, 588 (2000).

Therefore, my opinion is, and I say that emphasizing this is NOT legal advice: employers should not change practices in California unless or until the California courts adopt the holding in this case, or unless or until a wage-hour lawyer with really good insurance says it's ok. 

Good luck out there.

The opinion in Integrity Staffing Solutions, Inc. v. Busk is here.

Greg 

About My Post Below on McLean v. California

I just learned the California Supreme Court has granted review in the McLean case that discussed below (here). So, as Emily Litella said, "never mind" until the high court rules...

Court of Appeal: Employees Who "Retire" Have Quit Under the Labor Code

McLean v. California involves public sector employees, but it's applicable to the private sector as well.  McLean worked as a deputy attorney general. She retired in November 2010.  On her last day, she alleges, the state did not pay her final wages.

In California, all wages (including base pay, unused vacation, vested bonuses or commissions, etc.) are due on the termination date, subject to a few, narrow exceptions.  Employees who resign with less than 72 hours notice are due their wages within 72 hours of the termination date.   These provisions are contained within sections 201 and 202 of the Labor Code. There are various statutory exceptions applicable to certain industries. 

This requirement by law generally applies to state agencies.  However, state employees may elect to transfer accrued leave pay to a retirement account rather than take payment.  The state is deemed timely if it makes that transfer within 45 days of termination.

When employers pay employees after the deadline, Labor Code section 203 says that employers owe a penalty of one day's pay for each day that the pay is late, up to a maximum of 30 days' pay.  (Example: employee earns $100 per day. Employer is 31 days late with final pay. Employer owns penalty of 30 X $100 = $3,000).   The failure to pay must be "willful," which is a liberal definition and means that the employer intentionally did not pay what was owed.  Mistakes may not be deemed "willful" but many are.  Genuine disputes over what is owed (such as the calculation of a commission "earned" as of the termination date) do not count as "willful."

Attempting to avoid penalties, the state argued that "retirement" is not "quitting" under the Labor Code.  McLean and the state argued the dictionary definition and other issues to the court of appeal.    Not surprisingly, to me anyway, the court of appeal held that a retirement is a type of "quit."

So, when a person "retires," that person also "quits" within the meaning of Labor Code section 202.  If you think this post is too long, consider that it took about 14 pages for the court to get there.  

This case is McLean v. California and the opinion is here.