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50 or More Employees? Here’s What You Need to Know

When your organization reaches 50 or more employees there are some additional federal, state and local laws you need to start following to ensure you are in compliance. Here are two important areas of compliance that affect employers with 50 or more employees.

Harassment Prevention Training

Since 2005 employers with 50 or more full-time, part-time, and temporary employees or independent contractors have been required to provide supervisory employees with two hours of sexual harassment prevention training within six months of hire or promotion, and once every two years thereafter.

Under recently passed legislation, employers with five or more employees are now required to provide anti-harassment training to all employees – both supervisors and non-supervisors – every two years. California SB 1343 requires that all employees be trained by the end of 2019. Training for non-supervisors must be at least one hour. Training for supervisors must be two hours.

Family and Medical Leave Act (FMLA)

The Family and Medical Leave Act (FMLA) is a federal law that requires covered employers to grant an eligible employee up to a total of 12 work weeks of unpaid leave during any 12-month period for one or more of the following reasons:

For the birth and care of the newborn child of the employee;
For placement with the employee of a son or daughter for adoption or foster care;
To care for an immediate family member (spouse, child, or parent) with a serious health condition; or
To take medical leave when the employee is unable to work because of a serious health condition.

Companies fall under FMLA when they have 50 or more employees in any (not just consecutive) 20 calendar weeks of the current or preceding year.

Eligibility

Employees who satisfy certain criteria are eligible for Family or Medical Leave of up to 12 weeks during each rolling 12-month period in accordance with applicable law. Employees eligible for Family and Medical Leave are those who:

Have completed 12 months of employment with their employer;
Have worked at least 1,250 hours for their employer during the previous 12 months; and
Work in a facility with at least 50 employees or in a facility where there are at least 50 employees within 75 surface miles. Employees with no fixed work site will be considered to work from the site to which they report, or the site from which their work is assigned, or the site designated as their home base.

NOTE: Companies must continue the same health plans in which the employee was enrolled before the first day of the leave at the same level and under the same conditions of coverage as if they had remained an active employee for the lesser of the duration of such leave or 12 work weeks.

California Family Rights Act (CFRA)

The California Family Rights Act (CFRA) is very similar to FMLA and applies to employers in California. CFRA allows eligible employees to take up to 12 weeks of unpaid job-protected leave during a 12-month period.

CFRA covers private employers with 50 or more workers within 75 miles of the worksite, and public employers with any number of workers. CFRA runs concurrently with FMLA.

CFRA was enacted to provide employees with work leave rights for reasons such as:

Birth of a child.
Placement of the employee’s child through adoption or in a foster care home.
A serious health condition incurred by the worker’s spouse, child, or parent.
The employee is unable to work because of a serious health condition.

Eligibility

Employee eligibility for CFRA is similar to FMLA. For both CFRA and FMLA, time off for sick leave, vacation/annual leave, administrative time off (ATO), compensating time off (CTO), holidays, informal time off (ITO) or personal leave (PL) are not to be counted toward the 1,250 hours of work.

Training Leave for Emergency Rescue Personnel

Employers with 50 or more people must allow temporary leaves of absence — up to a total of 14 days per calendar year—for employees who are volunteer firefighters, reserve peace officers and emergency personnel to engage in fire, law enforcement or emergency rescue training.

You cannot terminate, threaten with termination, demote, suspend or otherwise discriminate against an employee who takes time off to engage in fire or law enforcement training. An employee who suffers any of these consequences is entitled to reinstatement and reimbursement for lost wages and work benefits. The employee can file a claim with the Division of Labor Standards Enforcement (DLSE).

San Francisco Paid Parental Leave

This San Francisco ordinance requires employers with 50 or more employees to supplement California’s Paid Family Leave (PFL) for employees working in the city. The purpose is to allow employees to 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. Employees may receive these benefits for up to six weeks in a 12-month period. San Francisco’s law requires covered employers to provide additional wage replacement benefits of up to 45% of the employee’s wages, subject to the weekly maximum.

Please contact me at michelle@connecttohr.com for more information about what you need to consider as a business with 50 or more employees.

The ABC Test – Defining Independent Contractor vs. Employee

I have been getting a lot of calls recently from clients asking for clarification about the distinction between an independent contractor and an employee.

Misclassification can be extremely costly for employers in legal fees, back wages and benefits, and penalties. In addition, you run the risk of having the IRS or Department of Labor audit your business. This can be extremely time consuming and costly.

Of course, you should always consult your employment attorney for questions about specific situations, but here are some guidelines.

Last year, based on a decision in Dynamex Operations West, Inc. v. Superior Court, the California Supreme Court adopted the “ABC Test” as a standard for determining whether workers in California should be classified as employees or independent contractors. In their decision, the Court held that workers are presumed to be employees and that it is up to the employer to prove that they should be classified as an independent contractor based on the ABC Test.

Under the ABC Test, in order to classify a worker as an independent contractor the hiring entity must establish that the worker meets EACH of the following three factors:

The worker is free from the control and direction of the hiring entity in the performance of the work, both under the contract for the performance of the work and in fact; AND
The worker performs work that is outside the usual course of the hiring entity’s business; AND
The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.

One of the things I tell clients is that it’s essential to consider how you define your core business (B) and how does the worker assist you in that core business.

In light of this change in the way employees and independent contractors are determined, it’s a good (and timely!) idea to do an overall review of how you’ve classified your workers. Again, as a reminder, it’s important to consult with an employment attorney if you plan to audit your records and reclassify your contractors.

Please feel free to contact me at michelle@connecttohr.com if you need assistance.

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.

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.

Bad Behavior is Bad for Business

You only have to glance at the news to get the feeling that workplace bullying and harassment are on the rise. Bill O’Reilly was called out recently for his behavior toward women at Fox News, as Roger Ailes had been accused before him. As of a few days ago, more than 50 companies had pulled their advertising dollars from The O’Reilly Factor.

Clearly, bad behavior is bad for business.

Most of us are familiar with what constitutes harassment. However, I think a reminder is useful.

California law prohibits workplace discrimination and harassment in employment based on:

Ancestry
Age (40 and above)
Color
Disability (physical and mental, including HIV and AIDS)
Genetic information
Gender, gender identity or gender expression
Marital status
Medical condition (genetic characteristics, cancer or a record or history of cancer)
Military or veteran status
National origin
Race
Religion (includes religious dress and grooming practices)
Sex (includes pregnancy, childbirth, breastfeeding and/or related medical conditions)
Sexual orientation

Harassment may refer to derogatory comments, slurs or propositions; epithets; assault; blocking movement; offensive touching; physical interference with normal work or movement; and visual insults, such as derogatory posters or cartoons.

California law also requires that employers with 50 or more employees provide sexual harassment and abusive conduct prevention training for all supervisors. This training should be given when someone is first promoted to a supervisor position, and then every two years thereafter.

Workplace bullying, as defined by the Workplace Bullying Institute, is repeated, health-harming mistreatment of one or more persons (the targets) by one or more perpetrators. It is abusive conduct that is:

Threatening, humiliating or intimidating, or
Work interference that prevents work from getting done, or
Verbal abuse

Workplace situations of harassment or bullying impact not only the victims, but also other employees and, potentially, customers who either witness or experience the abusive behavior. Bullies tend to be equal opportunity perpetrators.

In my next blog, I’ll share a specific example of how bullying nearly lost a company several key clients, and I’ll give you some tips for recognizing and preventing bad behavior in your organization.

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!