New Laws Affecting Employers/Employees for 2013

Every year the California legislature adds a few wrinkles to the practice of employment law.  This year is no different.  While there are many others, the following are 3 new laws that affect areas that I deal with quite often.

     Mistakes on Wage Statements (SB 1255/Labor Code § 226):

It has been the law for some time that employers are required to provide nine categories of information on an employee's wage statement.  However, this new law makes clear that if an employer fails to provide that information, employees are deemed to suffer an "injury" for the purpose of recovering a penalty: $50 for the initial pay period; $100 for each subsequent pay period, with a maximum penalty of $4,000, as well as attorneys' fees.  To avoid costly mistakes, employers should ensure that the following nine pieces of information appear on each employee's wage statement:

1.    Name and address of the legal entity who is the employer; and

2.    Gross wages earned;

3.    Total hours worked (except for exempt employees);

4.    Piece rate units or piece rates (if applicable);

5.    All deductions;

6.    Net wages earned;

7.    The inclusive dates of the period for which the employee is paid;

8.    Employee name and last four digits of the social security number or employee ID;

9.    All applicable hourly rates in effect during the pay period and corresponding number of hours worked.

Employers Barred From Requesting Social Media Information. (AB 1844/Labor Code § 980): 

This new law increases privacy protections for social media users in the state by prohibiting employers from asking employees or job applicants to disclose any information related to their personal social media accounts, which includes an employee's e-mail account and text messages.  This protection includes demanding usernames, passwords, and information related to social media accounts from employees and job applicants. The law also prohibits employers from retaliating against anyone who refuses to provide such information.

However, the law provides an exception where the employer reasonably believes that the employee has engaged in misconduct or has violated the law, and the social media information is used solely for the purpose of an investigation.  Further, nothing in this section precludes an employer from requiring or requesting an employee to disclose a username, password, or other method for the purpose of accessing an employer-issued electronic device.

Current and Former Employees Get Greater Access to their "Personnel Files." 

A new bit of legislation (AB 2674 ) modifies Labor Code §§ 226 and 1198.5.  Under these revised sections, Employers are required to provide current and former employees with access to and copies of their personnel records "relating to the employee's performance or to any grievance concerning the employee" within 30 days of the request.  (The law previously required only that they be made “available for inspection.”)

The new law does not clearly define "personnel records" but some examples of personnel records are: handbook acknowledgment forms; signed arbitration agreements; employment applications; payroll authorization forms; warnings, discipline and/or termination notices; notices of layoff, leave of absence, or vacation; garnishment notices; training notices; performance reviews; and attendance records.  Failure to comply with this new law may subject an employer to a penalty of $750 per violation, as well as attorneys' fees. With regard to all employees, employers are also required to maintain a copy of each employee's personnel records for a period of not less than three years after termination of employment.

Federal employee receives a 5-page written warning for . . . passing gas!

Okay, so the year is winding down and we don't always want to hear/read stories that are "too legal."  So, we offer the following story from The Smoking Gun website about a Social Security Administration employee disciplined for being to gaseous.  

According to the Smoking Gun account, the federal employee was formally reprimanded this month for excessive workplace flatulence, a sanction that was delivered to him in a five-page letter that actually included a log of representative dates and times when he was recorded “releasing the awful and unpleasant odor” in his Baltimore office.  (To view the memo, click the following link http://www.thesmokinggun.com/file/gas-attack-work?page=0, provided via the Smoking Gun, which provided content for this post.) 

The reprimand, which apparently came after at least three flatulence related meetings with his supervisors, accused the employee of “conduct unbecoming a federal officer,” and he  was informed that his “uncontrollable flatulence” had created an “intolerable” and “hostile” environment for coworkers, several of whom have lodged complaints with supervisors. 

I guess this will all make us think twice about overindulging at "Taco Tuesday."  


[Substantial content for this post derived from http://www.thesmokinggun.com/documents/coworkers-attacked-by-gas-645132 ]

'Price Is Right' Model Wins $7.7 Mil In Pregnancy Discrimination Lawsuit

Brandi Cochran, a former Price is Right model, was awarded $7.7 Million (including $7 Mil. in punitive damages) against the producers of the day-time TV game show, for allegedly discriminating against her based on her pregnancy. 

Under California law, employees who have been discriminated against can recover a wide range of damages, including compensatory damages (lost wages from the date of firing up through trial, future earnings, the costs of medical care, and interest on damages), emotional distress damages and, in many cases, attorney’s fees.  In some cases, such as this Price is Right case, employers may be vulnerable to punitive damages, designed to punish the employer and deter further discriminatory acts.

Ms. Cochran had worked on the show for seven years before getting pregnant.  Cochran alleged that, shortly after she told producers that she was pregnant, her executive producer asked about how long was she planning to work, and whether she would try to work if she got "really big." Then, after gaining weight, other show employees teased her about the weight gain and called her insulting names such as "wide load."  She also claimed that the producers pressured to announce her pregnancy on the air, and when she delivered the news that she was carrying twins, she was given less work. Ms. Cochran further alleged that, after taking maternity leave in 2010, the producers refused to call her back and then fired her after four months.  She filed suit.

The LA jury agreed with Ms. Cochran and awarded the former model $7,763,440 in damages, including $776,000 in compensatory damages and a substantial $7 million in punitive damages.  

The show’s producers, FremantleMedia, have stated that they would be appealing the ruling because they claim that the court refused to allow the jury to hear evidence that the show had allowed other models to appear on the show while pregnant.  (I would also expect the punitive damages award to be challenged, based on the Supreme Court case of State Farm Mut. Auto. Ins. Co. v. Campbell (2003) 538 US 408, 133 S.Ct. 1513, which held that punitive damages awards ordinarily should not exceed compensatory damages by more than a single-digit ratio.) 

Employers' Meal/Rest Period Obligations Under Brinker

The Second District California Court of Appeal, Division Eight, ruled for the second time, in an order published Aug. 21, 2012, that a Mexican fast food chain need only provide its workers with breaks, not ensure that the employees actually take the breaks. [Rogelio Hernandez v. Chipotle Mexican Grill, Inc., No. B216004, --- Cal.Rptr.3d ----, 2012 WL 3579567 (Cal.App. 2 Dist.), 12 Cal. Daily Op. Serv. 10,126]

In so deciding, the 2d District explicitly referred to Brinker, stating that Brinker has conclusively resolved this issue, and noted:

Our Supreme Court determined that “[a]n employer's duty with respect to meal breaks under both section 512, subdivision (a) and Wage Order No. 5 is an obligation to provide a meal period to its employees. The employer satisfies this obligation if it relieves its employees of all duty, relinquishes control over their activities and permits them a reasonable opportunity to take an uninterrupted 30–minute break, and does not impede or discourage them from doing so. [¶] On the other hand, the employer is not obligated to police meal breaks and ensure no work thereafter is performed.

The "tip" for employers is to make sure that their policies correctly dictate that employees are required to take their meal and rest breaks and "relieve" them of all employment duties during such breaks.  However, as noted, the employer is not required to "police" such break taking.  

No Attorneys' Fees in Meal/Rest Break Cases in California

Coming on the heels of its decision in Brinker Restaurant Corporation v. Superior Court (2012) 53 Cal.4th 1004, 139 Cal.Rptr.3d 315, on April 30th, the California Supreme Court issued another ruling limiting the scope of recovery in lawsuits alleging failure to provide the employee meal and rest breaks required by California law. As set forth in Kirby v. Immoos Fire Protection, Inc. (2012) --- P.3d ----, 2012 WL 1470313 (Cal.) ("Kirby"), the Supreme Court held that a neither a plaintiff nor a defendant can recover attorneys’ fees as a "prevailing party" in action for an employer’s alleged failure to provide rest breaks brought under California Labor Code § 226.7.

In Kirby, the former employee plaintiffs brought an action against the employer for various labor and wage law violations. After their motion for class certification was denied, the former employees dismissed the case. The defendant employer then moved to recover attorneys' fees as the "prevailing party." The trial court granted the employer's request for attorney fees, and the employees appealed, arguing that only prevailing employees should be entitled to recoup attorneys’ fees in actions brought under Section 226.7. The employer, on the other hand, argued that because it was the prevailing party in the lawsuit, it should be allowed to recover its attorneys’ fees from the plaintiffs. The Supreme Court rejected both arguments.

Perhaps foreshadowing their conclusion, the Court noted initially that it "granted review to consider when, if ever, a party who prevails on a section 226.7 action for an alleged failure to provide rest breaks may be awarded attorney's fees." (Emphasis added)

First, the Court assessed the possible recovery of attorneys' fees under the "one-way" attorney fee shifting provisions of Labor Code § 1194, which entitles “any employee receiving less than the legal minimum wage or the legal overtime compensation ... to recover in a civil action the unpaid balance of the full amount of this minimum wage or overtime compensation ... [and] reasonable attorney's fees..." [Labor Code § 1194(a)] The Court held that this section was inapplicable, finding: "[w]e conclude that [Labor Code] section 1194 does not authorize an award of attorney's fees to employees who prevail on a section 226.7 action for the non provision of statutorily mandated rest periods."

Secondly, the Court addressed the defense argument that it was entitled to recover fees under Labor Code § 218.5, which authorizes "prevailing parties" (i.e. either the defense or the plaintiff) to receive attorneys’ fees in actions for the nonpayment of wages or fringe benefits. The question, as phrased by the Court was "whether a section 226.7 claim, which concerns an employer's alleged failure to provide statutorily mandated meal and rest periods, constitutes an 'action brought for the nonpayment of wages' within the meaning of section 218.5." The Court concluded that it does not.

The Supreme Court analyzed the potential recovery of attorneys' fees for Section 226.7 violations from the perspective of two other sections of the Labor Code dealing with attorneys' fees; one of which provides for prevailing employees to recover attorneys’ fees in actions for any unpaid legal minimum wages or legal overtime compensation (Labor Code § 1194), while the other authorizes prevailing parties to receive attorneys’ fees in actions for the nonpayment of wages or fringe benefits (Labor Code § 218.5). The Court found that neither of the attorneys' fees statutes applied to Section 226.7. ("We conclude, in light of the relevant statutory language and legislative history, that neither section 1194 nor section 218.5 authorizes an award of attorney's fees to a party that prevails on a section 226.7 claim.")

Brinker Finally Decided

The California Supreme Court finally handed down its decision in Brinker Restaurant Corporation v. Superior Court ("Brinker") on April 12, 2012. Though important in both the Class Action and "wage & hour" contexts, our focus here is on the latter.

For some background, Brinker involved a class action case where a group of hourly non-exempt employees brought a class action against the restaurant employer claiming that the employer failed to comply with meal and rest period obligations and also required employees to work off the clock. The employees specifically claimed that: 1) the employer’s practice of having employees take “early lunches” shortly after starting their shift and then requiring them to work another five to ten hours without receiving another meal period violated Labor Code section 512(a) and the wage orders; 2) they were not provided their rest periods between their second and fourth hour of work, and were not provided the rest period before the first meal period; and 3) they were required to work off the clock when they were clocked out for their meal periods.

The 4th District Court of Appeal held that "while employers cannot impede, discourage, or dissuade employees from taking" rest periods or meal breaks, "they need only provide, not ensure" that rest breaks and meal periods are taken. (Emphasis supplied.) In so holding, the Court of Appeal adopted both the legal and the policy rational of White v. Starbucks Corp., 497 F. Supp. 2d 1080 (N.D. Cal. 2007), agreeing with the principle that it would be logistically impracticable for large corporations to police whether their employees actually took the provided meal and rest breaks and that such a law would provide perverse incentives to the workforce to shorten or skip meal periods (and presumably attempt to reap the benefits of additional compensation in the form of "meal penalties").

Though Brinker is largely a decision on the propriety of class certification, the Supreme Court noted that the parties had requested guidance on the wage and hour issues and obliged them (and those of us who deal with these issues) with this decision. The Court then weighed in on "the nature of an employer's duty to provide meal periods," concluding that an "employer's obligation is to relieve its employee of all duty, with the employee thereafter at liberty to use the meal period for whatever purpose he or she desires, but the employer need not ensure that no work is done."

A particularly important passage from the decision provides:

To summarize: An employer’s duty with respect to meal breaks under both section 512, subdivision (a) and Wage Order No. 5 is an obligation to provide a meal period to its employees. The employer satisfies this obligation if it relieves its employees of all duty, relinquishes control over their activities and permits them a reasonable opportunity to take an uninterrupted 30-minute break, and does not impede or discourage them from doing so. What will suffice may vary from industry to industry, and we cannot in the context of this class certification proceeding delineate the full range of approaches that in each instance might be sufficient to satisfy the law.

On the other hand, the employer is not obligated to police meal breaks and ensure no work thereafter is performed.

(Emphasis added)

As to the timing of when those meal breaks should be taken, the Court held that: "we conclude that Wage Order No. 5 imposes no meal timing requirements beyond those in section 512. Under the wage order, as under the statute, an employer‟s obligation is to provide a first meal period after no more than five hours of work and a second meal period after no more than 10 hours of work."

While it is hard to distill a 62-page decision down into a single blog post, from a "wage and hour" perspective, we believe that the 3 most important aspects of the decision are these:

(1) Employers do NOT have a legal duty to permit their employees a rest period before any meal period;

(2) Under Wage Order No. 5 and Labor Code section 512, subdivision (a), an employer must relieve the employee of all duty for the designated period, but need not ensure that the employee does no work; and

(3) That an employer has great flexibility in scheduling the meal periods, since its obligation is simply to provide a first meal period after no more than five hours of work and a second meal period after no more than 10 hours of work.

New CA Law Affects Employers Using Credit Reports in Making Hiring Decisions

A new law, effective January 1, 2012, substantially limits when and how an employer in California can use consumer credit information in making hiring and other employment decisions.

Assembly Bill 22 (which can be viewed by going to http://www.leginfo.ca.gov/pub/05-06/bill/asm/ab_0001-0050/ab_22_bill_20050921_chaptered.pdf) strictly prohibits employers and prospective employers from using a consumer credit report for employment purposes, unless the position of the person for whom the report is sought meets any of the following criteria:

• A “managerial” position (AB 22 defines a “managerial position” as an employee covered by the executive exemption set forth in the Industrial Welfare Commission’s Wage Order 4, Section 1, paragraph (A)(1);8 Cal. Code Regs. § 11040.);
• A position in the state Department of Justice;
• A sworn peace officer or other law enforcement position;
• A position for which the information contained in the report is required by law
to be disclosed or obtained;
• A position involving “regular access” to (1) the bank or credit card account
information, (2) the Social Security number, and (3) the date of birth of any
one person;
• A position held by (1) a named signatory on the employer’s bank or credit
card account, (2) someone authorized to transfer money on behalf of the
employer, or (3) someone authorized to enter into financial contracts on
behalf of the employer;
• A position that involves access to "trade secrets" (For the purposes of AB 22, trade secrets are defined in the same way as in California’s Uniform Trade Secrets Act, Cal. Civ. Code § 3426 et seq.);

Employers should keep these new guidelines in mind when hiring new employees.