Hill, Farrer & Burrill LLP

Employment Updates

The California Supreme Court Severely Narrows the Application of the De Minimis Doctrine as a Defense to Wage Claims

On July 26, 2018, the California Supreme Court issued its long-awaited decision in Troester v. Starbucks Corporation, No. S234969 (July 26, 2018) holding that the de minimisdoctrine did not apply under either the Fair Labor Standards Act (“FLSA”) de minimis doctrine or general principles of California law where an employee worked approximately 4-10 minutes off-the-clock per shift.  Federal courts have applied the de minimisdoctrine in some circumstances to excuse the payment of wages for small amounts of otherwise compensable time upon a showing that the small amounts of time are administratively difficult to record.

The California Supreme Court departed from the rationale of several federal courts and held that the time the plaintiff spent working off-the-clock performing tasks such as locking the door, activating the alarm, and walking coworkers to their cars for security purposes was not administratively difficult to record and was not de minimisMore>>

Reminder Regarding Minimum Wage Increase Effective July 1, 2018

This is a reminder to all employers conducting business in Los Angeles that effective July 1, 2018, minimum wage will increase from $12 to $13.25 per hour for employers with 26 or more employees, and will increase from $10.50 to $12 per hour for employers with 25 or fewer employees.

The California minimum wage remains $11 per hour for employers with 26 or more employees, and $10.50 per hour for employers with 25 or fewer employees.  The California minimum wage will increase on January 1, 2019 to $12 per hour for employers with 26 or more employees and $11 per hour for employers with 25 or fewer employees. More>>

U.S. Supreme Court Approves Employer-Mandated Arbitration Agreements with Class-Action Waivers

In an important victory for employers, on May 21, 2018 the United States Supreme Court ruled that employers may lawfully require employees to enter into arbitration agreements with class action waivers.  The Court in Epic Systems v. Lewis struck down a series of decisions by the Obama-era National Labor Relations Board that prohibited employers from requiring employees to sign arbitration agreements containing class action waivers.  The NLRB had held that employees taking part in class actions were engaged in “concerted activity” protected by the National Labor Relations Act.  The high court disagreed, holding that the Federal Arbitration Act governed arbitration agreements and required that the agreements be enforced according to their terms. More>>

The California Supreme Court Severely Limits When It Is Appropriate To Classify A Worker As An Independent Contractor

On April 30, 2018, the California Supreme Court issued a landmark decision in the matter of Dynamex Operations W., Inc. v. Superior Court, No. S222732, 2018 WL 1999120 (Cal. Apr. 30, 2018), severely restricting when it is appropriate for an employer to classify a worker as an independent contractor for purposes of the California Wage Orders.

The Court adopted the “ABC” test, utilized in several other jurisdictions, as the appropriate test to determine whether a worker is an employee or an independent contractor.  The “ABC” test clarifies the definition of “employ” (“to engage, suffer, or permit to work”) that is set forth in the California Wage Orders.  More>>

New California Employment Bills Approved by the Governor

October 15, 2017 was the deadline for Governor Brown to decide whether to approve or veto several employment bills that were passed by the California Legislature in 2017.  The laws signed by Governor Brown are summarized below and will become effective January 1, 2018.

AB 450 (Immigration Worksite Enforcement Actions):

AB 450 prohibits employers from allowing federal immigration enforcement agents to access non-public areas of the workspace without a judicial warrant or subpoena.  It further requires employers to provide notice to employees when their I-9 or other employment records are inspected within 72 hours of the inspection.  Penalties for violating these provisions of the new law are: $2,000-$5,000 for the first violation and $5,000-$10,000 for any subsequent violations.  More>>

The California Supreme Court Clarifies Day of Rest Statutes

On May 8, 2017, the California Supreme Court issued its decision in Mendoza v. Nordstrom, Inc., No. S224611, 2017 WL 1833143 (Cal. May 8, 2017), clarifying California’s day of rest statutes (California Labor Code Sections 550-558.1), which prohibit an employer from “caus[ing] his employees to work more than six days in seven,” but do not apply “when the total hours of employment do not exceed 30 hours in any week or six hours in any day thereof.”  The California Supreme Court answered three important questions.

(1) Is the day of rest calculated by workweek or does it apply on a rolling basis to any seven-consecutive-day period? More>>

City of Los Angeles Passes Ban The Box Ordinance

On November 30, 2016, the Los Angeles City Council passed the “Fair Chance Initiative,” also known as the “Ban the Box Initiative,” which prohibits employers that do business in Los Angeles from inquiring about or asking about a job applicant’s criminal history.  The ordinance will go into effect on January 1, 2017.

An employer may only inquire about an applicant’s criminal history if the applicant is going to work in Los Angeles after offering the applicant a “conditional offer of employment.”  After providing the applicant this conditional offer, the employer is prohibited from taking any adverse action, including withdrawal or cancellation of the applicant’s conditional offer, unless the employer performs a written assessment linking the applicant’s criminal history with the risks inherent in employing the applicant.  More>>

New Retirement Plan Requirements for Certain California Employers

Governor Jerry Brown recently signed legislation approving the California Secure Choice Retirement Program (S.B. 1234) (“Secure Choice”), which provides access to retirement savings accounts (“Secure Choice Accounts”) established and maintained by the state of California for the estimated 7.5 million employees in California that currently do not have access to employer-sponsored retirement plans.  Employees are automatically enrolled in Secure Choice unless they opt out.  Employees enrolled in Secure Choice automatically contribute 3 percent of their annual salary or wages to their Secure Choice Accounts, unless they specify a different contribution rate or opt out.  Private employers that do not offer employer-sponsored plans are required to enable their employees to make these contributions to their Secure Choice Accounts directly from their paycheck. More>>

Ninth Circuit Strikes Down Class Action Waiver in Arbitration Agreement

On August 22, 2016 the Ninth Circuit Court of Appeals in Morris v. Ernst & Young, LLP ruled that class action waivers in arbitration agreements required by employers as a condition of employment are illegal and unenforceable, because they violate the National Labor Relations Act (NLRA).  The opinion was a split 2-1 decision with a strong dissent by Judge Ikuta, who noted that three other Federal Courts of Appeal have decided that class action waivers in employer promulgated arbitration agreements are valid and enforceable and that several recent U.S. Supreme Court decisions have favored individual rather than class-based arbitration under the Federal Arbitration Act. More>>

City of Los Angeles Doubles Paid Sick Leave Entitlement Effective July 1, 2016

Mayor Eric Garcetti approved Los Angeles’ new sick leave entitlement ordinance on June 2, 2016.  The Ordinance will provide employees who work in the City of Los Angeles at least 2 hours per week with the ability to accrue and use up to 48 hours of sick leave per year, twice the amount provided by state law.  Enacted as an urgency matter, the new sick leave obligations become effective for employers on July 1, 2016.

Many of the requirements of the Ordinance track California’s existing sick leave law, but the following changes are unique to Los Angeles:

  • The Ordinance doubles the amount of sick leave for all employees, regardless of the size of the employer, and requires that employees be permitted to use up to 48 hours of accrued sick leave each year.
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