U.S. Supreme Court Rules in Favor of Pregnant Employees

Earlier today, the U.S. Supreme Court ruled in favor of a pregnant woman on her claim that her employer discriminated against her on account of her pregnancy.  The case, entitled Young v. United Parcel Service, Inc., involved a pregnant UPS worker whose doctor recommended that she not life heavy objects while pregnant.  When the employee requested an accommodation, UPS refused it and told the employee she could not work while under a lifting restriction.  This refusal occurred even though UPS routinely granted accommodations to other employees under non-pregnancy related lift restrictions.  The employee therefore brought a disparate treatment discrimination claim in federal court against UPS, claiming that she was being treated differently than other “similarly situated” employees.

The federal District Court granted summary judgment in favor of UPS, holding that the employee could not state a successful disparate treatment claim.  The Fourth Circuit Court of Appeals affirmed the decision, concluding that “UPS has crafted a pregnancy-blind policy that is at least facially a ‘neutral and legitimate business practice,’ and not evidence of UPS’s discriminatory animus toward pregnant workers.”

But the U.S. Supreme Court reversed in a 6-3 vote and held that:

1.  Pregnant workers may bring discrimination claims based on disparate treatment by showing that (a) the employee belongs to a protected class; (b) that she sought an accommodation; (c) that the employer failed or refused to accommodate the employee; and (d) and that the employer did accommodate others “similarly in their ability or inability to work.”

2.  If a pregnant employee makes this prima facie case, then the burden of proof shifts to the employer to offer “legitimate, non-discriminatory reasons” for denying the accommodation.

3.  If the employer offers persuasive “legitimate, non-discriminatory reasons,” then the employee can attempt to show that those reasons are, in fact, a mere pretext for actual discriminatory animus.  If the employee can show that the employer’s policies impose a “significant burden” on pregnant workers, that can give rise to a claim for discrimination, especially when the employer’s “legitimate, non-discriminatory” reasons offered are not strong or persuasive.

4.  The plaintiff can create a genuine issue of material fact as to whether a “significant burden” exists merely by showing that “the employer accommodates a large percentage of non-pregnant workers while failing to accommodate a large percentage of pregnant workers.”

Based on these principles, the U.S. Supreme Court concluded that the employee created a triable issue as to “whether UPS provided more favorable treatment to at least some employees whose situation cannot reasonably be distinguished from hers.” Therefore, the U.S. Supreme Court vacated the Fourth Circuit Court of Appeals decision in favor of UPS and sent the case back down for further proceedings.

Justice Breyer delivered the opinion of the Court, which can be found here.


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Court Invalidates Wage Order Meal Period Waiver Rules for Healthcare Employees

Wage Orders 4 and 5 have long permitted employees in the “healthcare industry” who work longer than 8 hours in a day to voluntarily waive one of their two meal periods.

However, on February 10, 2015, California’s Fourth Circuit Court of Appeal ruled in Gerard v. Orange Coast Memorial Medical Center that these provisions of Wage Orders 4 and 5 violated California Labor Code §512(a).  That Labor Code statute states that employees may waive their second meal period only then there shift is “no more than 12 hours.”  To the extent that Wage Orders 4 and 5 contained provisions allowing healthcare industry employees to waive their second meal periods for shifts longer than 12 hours, the Gerard court ruled that those provisions in Wage Orders 4 and 5 were void.

As a result of Gerard, employees in the healthcare industry who by waiver (or otherwise) are denied a second meal period for shifts longer than 12 hours may now sue their employers for damages, including “premium pay” under California Labor Code §226.7 equal to one hour of pay for each meal period not provided.

California employers in the healthcare industry should therefore review (and, if necessary, revise) their meal period policies to ensure that employees who work over 12 hours are guaranteed their right to an off-duty meal period of at least 30 minutes.

You can read the Court’s decision in Gerard v. Orange Coast Memorial Medical Center here.


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San Francisco’s “Retail Workers Bill of Rights” Becomes Law

On November 25, 2004, San Francisco’s Board of Supervisors unanimously passed a first-in-the-nation “Retail Workers Bill of Rights.”  This new legislation requires “formula retail” employers (chain stores with at least 20 outlets worldwide) who have 20 or more employees in San Francisco to provide the following job protections:

1.  “Good faith” written estimate of work days, shifts, and hours for new employees:  Before a retail employee begins work, his/her formula retail employer must provide the employee with a written “good faith” estimate of the number of shifts, days, and hours the employee can expect to work.

2.  Advance notice of work schedules and scheduling changes:  Formula retail employers must provide employees with at least 2 weeks’ advance notice of their work schedules.  If a formula retail employer changes an employee’s schedule more than 24 hours’ notice but less than 7 days’ notice, then the employer must pay the employee an additional 1 hour of pay.  If the employer changes the schedule within 24 hours or less notice, then the employee is entitled to between 2 and 4 hours of pay, depending on the employee’s regular shift.

3.  Payment for on-call employees:   If a formula retail employee is required to be on-call and available for work, and if that employee is not called in to work, then the employee must be paid between 2 and 4 hours of pay, depending on the duration of the on-call shift, subject to various exceptions.

4.  Equal treatment for part-time employees:  Formula retail employers must treat part-time workers (those working under 35 hours per week) equally to full-time workers in terms of starting hourly wages, access to time off, and eligibility for certain promotions.

5.  Protection of current part-time employees:  Formula retail employers must offer additional, available work shifts and hours to current part-time employees before hiring new employees or using employee staffing agencies.

6.  Employees protected upon sale of the business:  If a formula retail business is sold, the purchaser is required to retain for at least 90 days all of the seller’s non-managerial employees who worked for the seller at least 6 months prior to the sale.

Mayor Ed Lee sided with business leaders and refused to sign this new law.  In fact, the Mayor returned the legislation unsigned to the Board of Supervisors on December 5, 2014.

However, the Mayor’s signature was unnecessary given that the Board of Supervisors passed the legislation on a 10-0 vote.  As a result, the “Retail Workers Bill of Rights” will become effective on January 4, 2015 and legally operative 180 days thereafter.  Accordingly, San Francisco formula retail employes have until July 3, 2015 to become compliant with this new law.  

The San Francisco Office of Labor Standards Enforcement will enforce this new law.  In addition, the San Francisco City Attorney’s Office may file civil actions against offending employers.

You can find the full text of the new laws here and here.

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New IRS Mileage Rates for 2015

Beginning January 1, 2015, the new standard IRS mileage rates are:

  1. $0.575/mile for business miles driven;
  2. $0.23/mile for medical or moving purposes; and
  3. $0.14/mile for service to charitable organizations.

Employers that use the standard IRS rates for employee reimbursement purposes should review and adjust their expense reimbursement policies to be consistent with these new guidelines.

You can find the IRS’ announcement about the new rates here.

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Labor Commissioner Posts New “Wage Theft Notice” and Template Poster for AB 1522 Compliance

With AB 1522 (California’s new Paid Sick Leave Law) set to become law on January 1, 2015, the Labor Commissioner has posted two new items that should be of interest to California employers.

The first is an updated “Wage Theft Prevention Act” notice, which is required to be given to all new non-exempt hires at the time of hire.  This notice sets forth important information about the employer, the calculation of wages, paydays, and workers’ compensation.  Now, as a result of the passage of AB 1522, the revised notice also contains information about employees’ rights under California’s Paid Sick Leave law.  Employers are free to use this state-provided template, or they can create their own that provides this minimum information.  You can find the revised notice here.

The second is a new poster concerning the new sick leave rights granted to employees under AB 1522.  All employers must conspicuously display this new poster at the workplace in a location where employees can read it.    You can find the new poster here.

For more information about AB 1522 see my prior blog post here.  Or, you can read a summary of the new law on the Labor Commissioner’s website here.


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SF and Oakland Pass Laws Raising the Minimum Wage

The California statewide minimum wage is currently $9.00 per hour.  It will increase to $10.00 per hour on January 1, 2016 as a result of the passage of AB 10, which I blogged about here.

But local jurisdictions are always free to set higher minimum wages, and that is exactly what voters in both Oakland and San Francisco have done.

Oakland’s new law states that, effective March 2, 2015, its new minimum wage will be $12.25.  Thereafter, Oakland’s minimum wage will increase each January 1st based on increases in the cost of living.  (In addition, the new Oakland law requires that, effective March 2, 2015, Oakland employers grant paid sick leave to their employees at the rate of 1 hour of paid sick leave for every 30 hours worked.  This gives Oakland a paid sick leave ordinance that is virtually identical to San Francisco’s.)

San Francisco’s new law states, that effective January 1, 2015, its new minimum wage will be $11.05.  That increases to $12.25 on May 1, 2015; then to $13.00 on July 1, 2016; then to $14.00 on July 1, 2017; then to $15.00 on July 1, 2018.  Thereafter, just like Oakland’s minimum wage, San Francisco’s minimum wage will increase every year based on increases in the cost of living.

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Q2 2014 Halo Report Shows Decline in Angel Investing

Silicon Valley Bank, the Angel Resource Institute, and CB Insights just released their Q4 2014 Halo Report.  The report shows that angel investment for the quarter has decreased, with the median round size ($600K) down 39% from Q1 2014 levels ($990K). Other notable findings include:

  1. Internet, healthcare, mobile, and telecom deals constituted almost 70% of all deals closed;
  2. Healthcare deals enjoyed the largest increase in median round size, increasing to $2.56M from $1.56M in Q1 2014;
  3. Internet deals suffered the largest decrease in median round size, dropping to $0.85M from $1.85M in Q1 20143;
  4. The median pre-money valuation of early-stage angel deals increased slightly to $3.0M;
  5. The Mid-Atlantic leads all states and regions in terms of angel dollars invested (23.3%);
  6. California leads all states and regions in terms of total angel deals (19.0%), followed by New England (15.6%) and Texas (11.7%).

You can find the full Q2 2014 Halo Report here.

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Governor Brown Signs AB 2617, Further Restricting Arbitration in California

On September 30, 2014, California Governor Jerry Brown signed AB 2617.  This new law prohibits mandatory, pre-dispute arbitration agreements in contracts for goods and services, to the extent the agreement purports to waive rights provided by California Civil Code 51.7 (the “Ralph Civil Rights Act”) and/or 52.1 (the “Bane Civil Rights Act”).  No person can be required to waive these rights — including the right to bring a civil action for violation of these statutes — as a condition of entering into a contract for goods and services.  The new law applies to contracts entered into, modified, renewed or extended on or after January 1, 2015.

Any person or entity seeking to enforce an arbitration agreement waiving either/both of these statutes will bear the burden of proving that the waiver was entered into (1) knowingly and voluntarily, and (2) not as a condition of entering into the contract.

Although AB 2617 does not on its face apply to employees, it likely applies to independent contractor agreements given that those agreements are contracts for “services.”  In addition, you can expect plaintiff’s lawyers to argue that written employment agreements are also contracts for “services,” thus rendering mandatory arbitration clauses potentially illegal in employment agreements to the extent they try to force arbitration of rights protected by Civil Code §51.7 and/or §52.1.

However, the U.S. Supreme Court has held that the Federal Arbitration Act prohibits states from enacting laws that unduly restrict arbitration.  It is therefore not clear whether this new law will ultimately survive legal challenge.  We’ll have to wait for lawsuits to be filed and courts to issue rulings before we have more clarity.  Stay tuned!

You can read the full text of the new law here.

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Governor Brown Signs AB 802 Requiring Arbitration Companies to Disclose Private Arbitration Stats

On  September 30, 2014, California Governor Jerry Brown signed AB 802.  Under this new law, which takes effect on January 1, 2015, private arbitration companies (e.g., AAA, JAMS) will be required to collect and publish certain information about private arbitrations they administer.  The previously private information which must now be made publicly available includes:

1.  Whether the arbitration was demanded pursuant to a pre-dispute contractual clause.

2.  The name of the non-consumer party and whether that non-consumer party was the initiating party or the responding party.

3.  The nature of the dispute involved, to be listed as one of the following: goods; credit; other banking or finance; insurance; health care; construction; real estate; telecommunications, including software and Internet usage; debt collection; personal injury; employment; or other.

4.  Whether the consumer or non-consumer party was the prevailing party.

5.  The total number of occasions, if any, the non-consumer party has previously been a party in an arbitration administered by the private arbitration company.

6.  The total number of occasions, if any, the non-consumer party has previously been a party in a mediation administered by the private arbitration company.

7.  Whether the consumer party was represented by an attorney and, if so, the name of the attorney and the full name of the law firm that employs the attorney, if any.

8.  The date the private arbitration company received the demand for arbitration, the date the arbitrator was appointed, and the date of disposition by the arbitrator or private arbitration company.

9.  The type of disposition of the dispute, if known, identified as one of the following: withdrawal, abandonment, settlement, award after hearing, award without hearing, default, or dismissal without hearing.

10.  The amount of the claim, whether equitable relief was requested or awarded, the amount of any monetary award, the amount of any attorney’s fees awarded, and any other relief granted, if any.

11.  The name of the arbitrator, his or her total fee for the case, the percentage of the arbitrator’s fee allocated to each party, whether a waiver of any fees was granted, and, if so, the amount of the waiver.

Under AB 802, this information must be provided in a searchable format and must be accessible from a conspicuous link on the arbitration company’s website.

You can find the full text of the new law here.

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Governor Brown Signs AB 1522 Granting Paid Sick Leave to California Employees

Earlier today, Governor Jerry Brown signed AB 1522 guaranteeing paid sick leave to most California employees.  The new law, which is entitled the “Healthy Workplaces, Healthy Families Act of 2014,” goes into effect on July 1, 2015 and covers all employers in California.  Here’s a quick summary of the new law’s major provisions:

1.  California employees will accrue 1 hour of paid sick leave for every 30 hours worked in California.

2.  California employees will be allowed to use their accrued sick leave for the diagnosis, care, or treatment of an existing health condition, or for preventative care, for themselves or a “family member” (which includes a child, parent, spouse, registered domestic partner, grandparent, grandchild, or sibling).

3.  Although sick leave accrues from the first date of employment, the right to use paid sick leave begins only at 90 days of employment.

4.  California employers may limit an employee’s use of paid sick leave to 24 hours (3 days) in each year of employment.

5.   Accrued but unused sick leave carriers over from year-to-year, but the employer may place a “cap” on further accruals at 48 hours (6 days).

6.  At termination, accrued but unused sick leave is not paid to the employee.

7.  The new sick leave law works in conjunction with California’s “Kin Care Law.”  Thus, an employee who has accrued and available paid sick leave may use that leave (up to a maximum amount equal to half of his or her annual accrual amount at the then-current rate of entitlement) to care for his or her child, parent, spouse, or domestic partner.

8.  If a California employer currently has a sick leave or PTO plan that allows an employee to take sick leave on terms at least as generous as the new law’s, then the employer has no obligation to offer any additional sick leave.

9.  California employers cannot discriminate or retaliate against employees who request/use paid sick leave.

10.  California employers must give each employee a statement of accrued and available sick leave on the employee’s pay stub or wage statement.  Employers must also update their Wage Theft Prevention Act notice to include a discussion of employee rights under the new sick leave law.  In addition, employers must also post a new workplace poster regarding the new law.

11.  The new law exempts certain employees from coverage.  For example, certain employees covered by collective bargaining agreements are not covered.  Nor are certain employees in the in-home support industry or airline flight deck or cabin crew employees who are already provided with compensated time off equal to or exceeding the law’s requirements.

12.  The new sick leave law has no private right of action, so employers cannot be sued by employees for alleged violations.

13.  However, the new sick leave law will enforced by the Division of Labor Standards Enforcement (DLSE) and the California Attorney General.  If an employer is found to have violated the law, the employer will face a maximum administrative penalty of $4,000 per aggrieved employee plus all other legal remedies “as may be appropriate to remedy the situation,” including reinstatement, back pay, payment of sick days unlawfully withheld, and attorneys’ fees.

You can find the full text of the new law here.

UPDATED:  You can read the Labor Commissioner’s FAQ’s about the new law here.

Employers who lack a leave policy will need to adopt a new sick leave policy that meets the new state law’s minimum requirements.  Employers who lack a sick leave policy but who have a PTO policy will need to review their existing PTO policy to see if it meets the minimum requirements of the new law.  Similarly, employers who have an existing sick leave policy will need to review that policy to ensure that it meets the minimum requirements of the new law.  Finally, employers in San Francisco who are already subject to the City’s Paid Sick Leave Ordinance will need to integrate the new state law’s minimum requirements into their existing city-mandated policy.

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Governor Brown Signs AB 2053 Requiring Sexual Harassment Training to Include Material on Bullying

Earlier today, California Governor Jerry Brown signed AB 2053.  This new law requires that mandatory sexual harassment training now include information about “abusive conduct” in the workplace.  Abusive conduct is defined to include:

“Conduct of an employer or employee in the workplace, with malice, that a reasonable person would find hostile, offensive, and unrelated to an employer’s legitimate business interests.  Abusive conduct may include repeated infliction of verbal abuse, such as the use of derogatory remarks, insults, and epithets, verbal or physical conduct that a reasonable person would find threatening, intimidating, or humiliating, or the gratuitous sabotage or undermining of a person’s work performance.”

Now, California employers with 50 or more employees are required to make all supervisors attend at least 2 hours’ of sensitivity training every 2 years to prevent “abusive conduct” as well as sexual harassment.

You can find the full text of the new law here.

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“Wage Theft” a Nationwide Problem?

“Wage theft” occurs when an employer confiscates an employee’s tips or otherwise fails to properly pay an employee.  It has long been recognized as a problem in California.  That’s why Governor Brown signed one of the nation’s first wage theft laws, AB 469, back in 2011.  You can find my prior blog post about that law, and what requirements it imposes on California employers, here.

Fast-forward several years and now everyone is talking about “wage theft.”

A story in yesterday’s New York Times discusses a “flood of recent cases” across the country accusing employers of violating minimum wage and overtime laws, erasing work hours, and wrongfully taking employee’s tips.  The story includes a quote from California’s Labor Commissioner, Julie Su, who said, “My agency has found more wages being stolen from workers in California than any time in history.”  Employers and their advocates disagree, of course.  They claim that most employers operate with great integrity and that, therefore, “wage theft” is actually a rare phenomenon.  The increase in lawsuits, they claim, has nothing to do with actual “wage theft” and everything to do with greedy, “opportunistic” trial lawyers.  You can find the full New York Times story here.

Interestingly, the New York Times comes only a few months after California launched it’s “Wage Theft is a Crime” campaign.  That campaign, which is aimed at educating workers and employers about California’s labor standards, includes campaign-specific websites in English (www.wagetheftisacrime.com) and Spanish (www.robodesueldoesuncrimen.com) that provides details on how to identify and report wage theft.   You can find the California Labor Commissioner’s press releases announcing this new campaign here.

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