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Managers Increasingly Held to a Higher Standard

As I discussed in my last blog, recent legislation establishes that managers can now be held personally liable for not following the law, even if they do so unintentionally. Two key areas where this has played out in court are hostile work environments and wage and hour violations.

Managers are being held to a much higher standard.

This means that business owners and senior leaders must be sure they understand and follow the laws, and they must also ensure that their managers and supervisors understand and follow the laws. Some ways to accomplish this are through management training, effective communication, and/or one-on-one coaching.

In the wake of the #MeToo Movement and other workplace harassment situations, the threshold for acceptable behavior has been revised. In the past, plaintiffs had to show a pattern of behavior for a workplace to be deemed a hostile work environment. Today it can be considered as such based on one or two incidents. “But we’ve always had an informal, joking environment,” is not an acceptable excuse.

Managers need to pay attention to behaviors that may be offensive to some and stop them before they become part of the culture. If not, they could be held personally liable for creating a hostile environment. Encourage managers to periodically gauge team interactions and speak with individuals to proactively identify any issues and to promote a positive culture.

Also, senior leadership and all managers and supervisors should model the appropriate behavior they expect from others.

In the past it was very rare for a manager to be named in a wage and hour dispute. Not so today. California’s Labor Code 558.1 states that “a company’s owners, directors, officers and even managing agents can be held personally liable for wage and hour violations.” It’s not enough to say that not following the law was unintentional, or a mere oversight.

If you need help ensuring that you are legally compliant, or in coaching managers around any of these issues, please contact me at michelle@connecttohr.com.

New Laws on Harassment, Wage and Hour Violations

In my work with organizations I have two focus areas – Executive Coaching and HR Consulting. Keeping clients abreast of new and changing legislation in the dynamic world of California labor law falls into the HR Consulting bucket, but is also important for the executives I coach.

Here’s an update on some key legislation affecting employers in 2019.

New Restrictions on Sexual Harassment Settlement Agreements

Two recently enacted laws will make it more difficult for employers to resolve workplace sexual harassment and discrimination disputes.

The Code of Civil Procedure Section 1001 prohibits settlement agreements that bar the disclosure of facts related to claims filed for:

Sexual assault
Sexual harassment
Workplace harassment or discrimination based on sex
Failure to prevent harassment or discrimination based on sex
Retaliation against a person for reporting harassment or discrimination based on sex

The law allows the identity of the claimant, and any facts that could lead to the discovery of that identity, to remain confidential if requested by the claimant. Employers are still allowed to enter into settlement agreements that prohibit the disclosure of the settlement amount.

Another new law, SB 1300, amends California’s Fair Employment and Housing Act (FEHA) by placing additional limits on settlement agreements. Employers are now prohibited from requiring an employee, as a condition of employment or in exchange for a bonus or raise, to sign a non-disparagement agreement that prevents the employee from disclosing information about unlawful acts in the workplace. The law also adopts a lower standard for liability, as such:

A plaintiff does not need to prove that tangible productivity has declined as a result of the harassment.
A single incident of harassing behavior may be enough to create a hostile work environment. Proof of a pattern of harassing behavior in the past is no longer required.
Harassing behavior is not acceptable based on historical norms, or industry or company custom.

As an employer you should review your harassment policies to ensure that they align with the recent changes in law. Also, take complaints seriously! Remember to always investigate claims using qualified, impartial investigators, and take corrective action. Create a culture that makes it very clear to leaders and employees that harassment of any kind will not be tolerated.

California has expanded mandatory anti-harassment training to smaller employers

Employers with at least five employees must conduct mandatory sexual harassment training by the end of this year to comply with SB 1343, passed in 2018. SB 1343 requires that training of both supervisors and non-supervisors be completed by January 1, 2020. Training for supervisors must be at least two hours, and training for non-supervisors must be at least one hour. Training must be repeated at least every two years. Remember to keep records of training received by employees and supervisors.

Managers may be personally liable for wage and hour violations

According to a recent decision by a California appellate court (Atempa v. Pedrazzani), an owner, officer or managing agent of a corporate employer can be held personally liable for civil penalties for unpaid wages or overtime.

The plaintiff in this case worked at a restaurant owned by Pama, Inc. He sued the company for unpaid overtime, meal period and rest break violations. When Pama, Inc. filed for bankruptcy, the plaintiff successfully pursued recovery from the restaurant owner, Paolo Pedrazzani.

What this means for you as an employer is that you need to be sure that you and your managers consistently follow wage and hour rules. Even unintentionally failing to comply with the law can create personal liability.

Other legal decisions of note

Caldera v. Department of Corrections and Rehabilitation. The plaintiff in this case sued for harassment on the basis of disability after being taunted by his coworkers about his stuttering over a period of two years. The employer argued that the company had an informal, “joking” culture and that the behavior was not severe. The plaintiff won a $500,000 settlement.

This goes back to what I said earlier about creating a culture that is non-tolerant of harassment in any form. Again, the threshold for harassment has been lowered and a pattern of behavior is no longer necessary to prove harassment. If one of your employees is offended by harassing conduct you face potential liability even if the majority of employees are not bothered by the behavior. Again, take complaints seriously and investigate claims right away.

Hurley v. Department of Parks and Recreation. In this case a manager had disclosed private information about a subordinate to a non-manager, violating the plaintiff’s right to privacy. This decision points up the fact that managers should only disclose information about subordinates on a need-to-know basis and never to non-managers. The manager in this case maintained a “drop file” on the plaintiff, containing work performance as well as private information. Private information about employees should only be stored in files maintained by human resources with proper confidentiality protections.

Important updates on the use of arbitration agreements in CA

Epic Systems v. Lewis. In this case the U.S. Supreme Court ruled that the National Labor Relations Act (NLRA) does not prevent employers from making mandatory arbitration agreements a condition of employment, even with a provision waiving the employee’s right to a class action claim.

Along these same lines, two other opinions favored employers with regard to arbitration agreements.

In Sonic Calabasas Al, Inc. v. Moreno, the court ruled that an employer may require an employee to resolve wage disputes through binding arbitration. In Iskanian v. CLS Transportation Los Angeles, LLC, the court rule that an employer may require an employee to pursue claims as an individual and not as part of a class action suit. If you have not implemented mandatory arbitration agreements, I suggest you seek legal advice about the pros and cons of implementing an agreement for your organization.

If you would like more information about any of these legal updates and how they apply to your organization, please contact me for a consultation. Michelle@connecttohr.com.

Use It or Lose It

Still have dollars left to spend in your Human Resources budget this year? This is the perfect time to invest those dollars in the needs or challenges that are still on your TO DO list.

Do you need help with…

An experienced executive who is struggling as a leader and needs coaching and guidance?
A recently-promoted manager who needs support and guidance as they transition
to leadership?
Someone new to HR who needs to be quickly brought up to speed?
That innovative, highly impactful HR program you haven’t had time to implement?

Whatever the challenge, Connect to HR is here to help! We’ve achieved outstanding results for companies facing these same situations.

Contact Michelle at michelle@connecttohr.com TODAY to schedule a FREE consultation.

What Our Clients Are Saying About Connect to HR

“Michelle’s approach, ideas and fostering of my own insights pushed me forward as a boss, helped our organization and was quite meaningful to me.” – Jake L., CEO of Intact U.S.

“Michelle is a leadership development professional who looks at the total organization, the individuals and the current dynamics to align the best possible scenarios for the Executive, and for the vision of the governing board.” – Lisa C., Former Executive Director, SCA

“Before we started working with Michelle, we had looked at HR platforms, but Michelle was a live person with experience and knowledge, who could share examples with us, versus us interacting with a computer screen. She’s a great sounding board as different situations come up. Thanks to Michelle, I’ve gained confidence in what I’m doing and how I handle situations. I also know that as new issues come up I can reach out to her for advice. She’s accessible and easy to work with.” – Marci H., HR Manager of IDW Publishing

“As a trained chef and business owner with no HR experience, I had to learn HR on the job. Michelle was a great teacher in that she walked me through things step by step. She was thorough and comprehensive, yet kept it simple: here’s your issue, here are some scenarios, here are the rules. She didn’t throw a lot of legal language at me.” – Lourine W., Owner (Left Coast Catering)

New Parent Leave Act Benefits Employees Not Covered by FMLA/CFRA

California’s New Parent Leave Act (NPLA), which goes into effect on January 1, 2018, will expand family leave benefits to employees who are ineligible for FMLA (Family Medical Leave Act) and CFRA (California Family Rights Act). The new law allows eligible employees to take up to 12 weeks of leave to bond with a new child. The law applies to employers with at least 20 employees, whether or not they are covered by FMLA/CFRA. This is lower than the 50-employee threshold required by FMLA/CFRA.

The NPLA provides eligible employees with 12 weeks of leave to bond with a child within one year of the child’s birth, adoption, or foster care placement. This is in addition to any leave provided under the Pregnancy Disability Leave (PDL) law.

In order to be eligible for the NPLA, employees must have more than 12 months of service with the employer, and have worked at least 1250 hours during the previous 12-month period. Also, they must not be eligible for FMLA/CFRA.

The law applies to all California employers who have at least 20 employees, including those already covered by FMLA/CFRA who have locations with between 20-49 employees. Employers must continue group health insurance coverage for employees on parental leave, and must provide a guarantee of employment in the same or similar position upon the employee’s return.

Unlike FMLA, the NPLA does not provide leave to recover from the employee’s own serious health condition, or to care for family members with a serious health condition, or for pregnancy disability.

If you are an employer who will be affected by the new law, be sure that you update your form leave letters, Maternity Leave policies, and Employee Handbook to reflect this new benefit.

New Criminal History “Ban the Box” Law Takes Effect January 1, 2018

A new law recently signed by Gov. Jerry Brown will prohibit employers in California from including criminal history inquiries on employment applications before making a conditional offer of employment. AB 1008 applies to all California employers with 5 or more employees and will go into effect January 1. California has had a “ban the box” law for city, county and state employers since 2014. The new law extends the ban to private sector employers. Fifteen local jurisdictions, including San Francisco and Los Angeles, already have such private sector bans in place.

The goal is to give Californians with a prior arrest or conviction a fair chance at finding a job and moving forward.

AB 1008 makes it unlawful for employers to:

Include questions on employment applications about criminal history
Ask about or consider the conviction history of an applicant before the applicant receives a conditional offer of employment; and
Consider, distribute, or disseminate information about arrests that did not result in a conviction.

The bill also requires that, before rejecting an applicant based on criminal history, the employer must first make an “individual assessment” to determine whether the applicant’s conviction history has a direct and adverse relationship with the specific duties of the job. The employer must consider each of the following:

The nature and gravity of the offense or conduct;
The time that has passed since the offense or conduct and completion of the sentence; and
The nature of the job held or sought.

If the employer makes a preliminary decision not to hire the applicant in part or solely due their criminal history, they must notify the applicant in writing and give them at least 5 business days to respond. If the applicant notifies the employer in a timely manner that they dispute the accuracy of the conviction history, and are taking steps to obtain evidence to prove its inaccuracy, the employer must provide the applicant 5 additional business days to respond. By law, the employer must consider the applicant’s response before making a final decision.

From a business perspective, banning “the box” can expand the pool of potential employees in what is a very competitive market. Individuals with arrest records or convictions for even minor offenses often have difficulty getting that first opportunity to begin turning their life around. A former client of mine who gave someone that opportunity had a very positive experience. Through a program with the EDD, she hired someone who had served time for a minor offense to work in the company call center. The individual was anxious to get some experience, and to be able to support their family. The program had very specific requirements that the employee had to adhere to, e.g., weekly drug testing, and attending meetings with their parole officer. It turned out to be a win-win. The employer got a motivated employee, and the employee got a fresh start.

Remember that in light of the new law, AB 1008, you may need to make changes to your employment application form and hiring procedures. Please contact me if you need help in doing so.

HR Alert: Revised I-9 Form and New Employee Notice Requirement

Here are some recently-implemented requirements you should be aware of.

Revised I-9 Form Now Available

On July 17, the U.S. Citizenship and Immigration Services (USCIS) released a revised version of the Employment Eligibility Verification form, Form I-9. Employers may continue to use the existing form, with a revision date of 11/14/16 through September 17, 2017. As of September 18, employers must use the new form with a revision date of 07/17/17. Existing storage and retention rules still apply.

The revised I-9 form contains some minor changes to wording, as well as changes to Acceptable Documents List C. All changes are documented in the revised Handbook for Employers: Guidance for Completing Form I-9.

New Domestic Violence Employee Notice Required

As of July 1, employers with 25 or more employees are required to inform all employees, in writing, about protections for victims of domestic violence, sexual assault or stalking. The notice is a requirement of California Assembly Bill 2337, which was signed by Governor Jerry Brown last September, and outlines protections under Labor Code Sections 230 and 230.1. The California Labor Commissioner recently published a sample notice. The notice contains information on victims’ rights to accommodation and protections against discrimination and retaliation.

New Minimum Wage and Hiring Rules in Effect

As of July 1, the minimum wage has increased in a number of California cities. If you have employees in any of the following cities, be sure that you have changed their pay rates accordingly. Note that in some cities, the minimum hourly wage is based on the number of employees. Also, if an employee works in (or telecommutes from) a city with a higher minimum wage than the state, the employer must follow both the state wage requirements and the city’s wage requirements for that employee. The current minimum wage in the state of California is $10.50/hour for employers with 26 or more employees, and $10/hour for employers with 25 or fewer employees.

New minimum wages are as follows:

San Jose: $12/hour
Milpitas: $11/hour
San Francisco: $14/hour
San Leandro: $12/hour
Emeryville:
• $15.20/hour for companies with 56 or more employees
• $14/hour for companies with 55 or fewer employees
Los Angeles, Malibu, Pasadena, Santa Monica, and unincorporated areas in Los Angeles County:
• $12/hour for companies with 26 or more employees
• $10.50 for companies with 25 or fewer employees

Effective January 1, 2018, the state-wide minimum wage will increase to $11/hour for employers with 26 or more employees and $10.50/hour for employers with 25 or fewer employees.

Use of Criminal Histories in Hiring Decisions
Also effective July 1, the Fair Employment and Housing Council implemented new rules regarding the use of criminal history in hiring decisions.

The new rules require that employers consider whether their use of criminal histories will have an adverse impact on any protected class. If an applicant or employee claims that the policy or practice of using criminal histories has an adverse impact on a protected class, the employer will have to show that the policy was job-related and consistent with business necessity.

Employers must also be able to show that there wasn’t a less-discriminatory policy or practice that could have achieved the same result. Employer policies must allow for an individual assessment that considers the nature of the offense, how long ago it took place, and how it relates to the position, if at all.

In addition, applicants or employees must be notified if an adverse action will be taken because of their criminal history, and they must be given an opportunity to address any factual inaccuracies. If a record is shown to be inaccurate, it must not be considered.

Please note that the following criminal records should not be considered in California:

• Arrests that did not result in conviction (unless trial is pending)
• Detentions that did not result in conviction
• Sealed records
• Convictions that have been judicially dismissed, including through expungement
• Misdemeanor marijuana convictions more than two years old
• Participation in pre-trial or post-trial diversions programs
• Proceedings in juvenile court

If you have questions about a specific hiring situation, contact your employment counsel.

Now is the Time for Your HR Planning

As the New Year gets underway, this is the perfect time to do some planning for the various HR activities that need to occur throughout the year. If you haven’t already, I highly recommend that you get out your calendar to schedule the following HR activities and begin developing a plan for each of them. It’s very easy to get so caught up in day-to-day operations that these activities sneak up on you, and then are either delayed, not done well, or missed entirely.

Here’s a framework of common activities you can start with. You may have additional ones, based on your business.

Company goals. What are you planning to/need to accomplish this year? This is important in driving your planning and decisions for all HR activities. And also, in driving individual and team goals.

Workforce planning. To accomplish your goals, what are the skills, knowledge and number of employees you’ll need? Where are the gaps in your current workforce? What plans do you have in place for upskilling current employees to meet new demands of the business?

Budgeting for headcount. If you’ll be adding to your workforce this year, what’s your budget?

Job descriptions. Job descriptions should be reviewed at least once a year or and/or whenever a job position’s responsibilities change. As new positions are created job descriptions need to be created. Up-to-date, accurate, and detailed jobs descriptions as essential for effective hiring, employee development and performance management.

Employee Handbook. Your Employee Handbook should be thoroughly reviewed and updated annually, with periodic updates as new laws are implemented. When was the last time you updated your Handbook to reflect new company polices or employment laws?

Open enrollment. Even though this activity typically occurs in the fall, it’s important to plan for it well in advance, especially if you are thinking about changing brokers or adding or changing benefits.

Performance reviews. Waiting until the performance review date to manage performance is a disservice to employees and to the company. Make performance management an ongoing activity and then plan well in advance for the annual or semi-annual performance review.

Salary increases. What is your budget /criteria for salary increases? What surveys will you use to determine current market data?

Employee surveys. Giving employees the opportunity to provide feedback (and then doing something in response) is important in keeping employees engaged and motivated. Questions need to be thoughtfully prepared and relevant. You also need to consider how you will administer the survey (paper, online, focus groups…) and develop a plan for reviewing, communicating and implementing any changes resulting from the survey. Don’t conduct a survey unless you plan to do something with the information!

The most important thing is to be proactive rather than reactive. It’s much better to carve out some time now – as busy as you might be – to plan for these items ahead of time. Leaving it until the last minute or overlooking an activity altogether can be very costly in time, money and employee morale.

“If you fail to plan, you are planning to fail.” – Benjamin Franklin

New Year to Bring New Wage and Leave Requirements

As we head into the home stretch for 2016, it’s important to know about new employment-related requirements that will go into effect next year. Here’s a summary of those requirements. As always, we will keep you updated about any changes or additions.

New overtime rules delayed
The new overtime rules that were to go into effect on December 1 have been temporarily blocked due to a lawsuit filed by 21 states to block enforcement. The new overtime regulations would have increased the salary required for an employee to be considered exempt to $913 per week, or $47,476 annually. Enforcement will be blocked until a final decision is made in the case or an appellate court overturns it.

The current California minimum annual salary for exempt employees is $41,660. This means that, if the new regulations go forward, California employers with employees who are currently classified as exempt and earn between $41,660 and $47,476 would need to decide whether to reclassify these employees as nonexempt, or increase their salaries to at least $47,476.

Electronic Unemployment Insurance reporting
Starting January 1, 2017, employers with 10 or more employees will be required to submit their unemployment insurance reports to the Employment Development Department electronically. Under the new requirements, employers must also remit contributions for unemployment insurance premiums by electronic funds transfer. The requirement will apply to all employers beginning January 1, 2018.

California minimum wage increase
Effective January 1, 2017 California’s minimum wage will increase to $10.50/hour for employers with 26 or more employees. Earlier this year, Governor Brown signed legislation that will increase California’s minimum wage annually, reaching $15/hour by January 1, 2022. For employers with 26 or more employees the minimum wage will increase per the following schedule:

January 1, 2017 – $10.50/hour
January 1, 2018 – $11/hour
January 1, 2019 – $12/hour
January 1, 2020 – $13/hour
January 1, 2021 – $14/hour
January 1, 2022 – $15/hour

Employers with 25 or fewer employees will be on a schedule one year behind the above schedule, reaching $15/hour on January 1, 2023.

San Francisco Paid Parental Leave
Also effective January 1, a new San Francisco ordinance will require employers with employees in San Francisco to supplement California’s Paid Family Leave (PFL) so that employees receive 100% of their gross weekly wages while on a parental leave of absence. PFL currently provides eligible employees with up to 55% of their regular wages, subject to a maximum weekly benefit of $1,129. Employees may receive these benefits for up to six weeks in a 12-month period. San Francisco’s law will require covered employers to provide additional wage replacement benefits of up to 45% of the employee’s wages, subject to the weekly maximum.

This law goes into effect on January 1, 2017 for employers with 50 or more employees; July 1, 2017 for employers with 35 or more employees; and January 1, 2018 for employers with 20 or more employees.

Paid Sick Leave changes
An amended San Francisco paid sick leave law, which goes into effect January 1, 2017, simplifies the sick leave pay calculation to match that of the California state law. For non-exempt employees, this means paying them for sick leave using either their regular rate of pay, or, a rate calculated by dividing total wages (excluding overtime) by total hours worked in the previous 90 days of employment. Exempt employees should be paid for sick leave at the same rate they are for other leaves.

The amended law will also prohibit an employer from requiring employees to take sick leave in increments of more than one hour.

Los Angeles also recently passed a sick leave ordinance. This new law allows employees working in the City of Los Angeles the ability to accrue and use up to 48 hours of sick leave. This is twice the amount provided by California state law. The ordinance went into effect on July 1 for employers with 26 or more employees, and will go into effect on July 1, 2017 for employers with 25 or fewer employees.

San Diego’s paid sick leave law went into effect on July 11 and provides employees with 40 hours of sick leave per year.

Note that San Francisco, Oakland, San Diego, Emeryville, Santa Monica, and Los Angeles all have sick leave laws that vary slightly from the California law. If you have employees working in those cities, be sure to check with your employment counsel to ensure you are complying with the appropriate requirements.

With all these changes on the horizon, and as we head into year end, this is an excellent time to review your Employee Handbook. Need Assistance? Contact me at michelle@connecttohr.com to get started!

Guest Article – Maximum Individual Mandate Payment for 2016

As we reach year end and start to think about the approaching tax season, it’s important to keep up to date on tax-related items in the Affordable Care Act (ACA). To assist you in that, I’m sharing this article from Patrick Whitaker at Whitaker Financial Services. You can find more information on his website.

The Affordable Care Act’s individual mandate provision requires every individual to have minimum essential health coverage for each month, qualify for an exemption, or make a penalty payment when filing his or her federal income tax return. Recently, the Internal Revenue Service (IRS) issued Revenue Procedure 2016-43, which provides the information needed to determine the maximum penalty that may be due for 2016.

Calculating the Payment
For tax year 2016, individuals will generally pay whichever of the following penalty amount is higher:

2.5% of the individual’s yearly household income above his/her applicable filing threshold, OR
$695 per person for the year ($347.50 per child under age 18)

The maximum penalty is capped at the cost of the national average premium for a bronze-level health plan available through a Health Insurance Marketplace in 2016. According to the IRS, the monthly national average premium for qualified health plans that have a bronze level of coverage and are offered through a Health Insurance Marketplace in 2016 is:

$223 per individual; and
$1,115 for a family with five or more members

See the Health Care Reform Updates section on our website for additional articles related to the Affordable Care Act.

About the author, Patrick Whitaker

Whitaker Financial Services has been providing professional financial and insurance services for over 25 years. At WFS, it’s our business to help you plan ahead. The most important point we make with clients is this: strategy is everything. We offer business owners an alternative to the impersonal treatment they receive from the large brokerage agencies. The benefits programs you invest in affect multiple facets of your business, from company morale, to employee retention, to administrative efficiency, to your bottom line.