1. What You Need to Know About COVID-19 in 2022.
In 2020 and the first half of 2021, employers focused primarily on COVID-19 supplemental paid sick leave and emergency family and medical leave issues. For 2022, that focus shifts to vaccine mandates, medical and religious exemptions, and, as a result, updated emergency temporary standards.
What you will find here are the California and federal requirements currently in place. You also will find here a summary of the current status of the federal vaccine mandates, but because all three are (or likely will be) impacted by upcoming challenges made to the U.S. Supreme Court, we are not reiterating the specific requirements. You can read our prior Newsletters (mostly from October on) for a nice summary of the federal mandates as presently drafted. And we promise, we will send a Newsletter as soon as the guidance is clear.
What this means for your workplace?
- You will want to review your COVID Prevention Plan to bring it into compliance with the updated requirements;
- Train your managers on the new requirements;
- The federal mandates likely will be considered by the U.S. Supreme Court. We cannot predict the outcome. Given OSHA’s aggressive stance on moving forward with compliance, it behooves you to at least prepare for that mandate to move forward. In the short term, if you would be covered by either mandate, you may want to assess what you would need to do to be in compliance. There is a lot to know!
2. There are New, Harsher Penalties for “Wage Theft.”
Effective January 1, 2022, company “theft” of wages of more than $950 from any individual employee, or $2,350 total from 2 or more employees, in a 12-month period will be punishable as grand theft. “Wages” include “wages, gratuities, benefits, or other compensation.” Some examples of wage theft include: paying less than minimum wage, failing to pay overtime, prohibiting or preventing workers from taking meal and rest breaks, having workers perform work off the clock, or keeping workers’ tips.
Complainants must prove the theft was intentional through fraud and while knowing that the wages were due. Managers or supervisors charged with wage theft would be guilty of a misdemeanor. For example, a manager who allows an employee to work off the clock or who encourages an employee not to report hours worked could fsce a criminal conviction.
Lesson learned? Train your employees, and particularly your managers, on your wage and hour expectations and legal compliance.
3. Some Significant Developments in Arbitration.
California Employers Face Uncertainty in Attempting to Mandate Arbitration.
Many of you know that California allows employers and employees to agree to waive class actions via an enforceable arbitration agreement with a class action waiver clause. In large part due to the significance of this rule on narrowing or eliminating class actions, we see a lot of activity in court cases around arbitration agreements. In September 2021, a panel of the Ninth Circuit Court of Appeals reversed a lower court’s injunction, putting the fate of mandatory arbitration again at issue. Now employers aren’t sure what to do – require arbitration or make it voluntary? Click here for further background and detail on the recent developments.
Next steps: Do you have an arbitration agreement, either voluntary or mandatory?
- If the answer is no, consult with an attorney on the pros and cons of an arbitration agreement.
- If the answer is yes, and arbitration is voluntary, we recommend having that agreement reviewed because the law in this area changes so frequently.
- If you have mandatory arbitration, let's talk about next steps in response to the recent decision.
The Status of Arbitration of PAGA Cases is Uncertain
This month the U.S. Supreme Court agreed to hear the case of Viking River Cruises, Inc. v. Moriana. At issue is whether employers can mandate that Private Attorney General Actions ("PAGA claims") be subject to an arbitration agreement.
By way of background, in 2014, the California Supreme Court held that waivers of employees’ right to pursue PAGA actions through arbitration violated California public policy and therefore were unenforceable under state law. In other words, by virtue of the ruling California employees could bring PAGA claims even if they had signed arbitration agreements. That court held that the the Federal Arbitration Act (“FAA”)(which is more favorable toward arbitration agreements) does not preempt California state law (which in that case prohibited PAGA waivers).
A year later, the U.S. Court of Appeals for the Ninth Circuit similarly ruled that the FAA does not preempt California’s rule that an employer cannot, by way of an arbitration agreement, block employees’ rights to pursue a PAGA action.
Now the issues is before the U.S. Supreme Court, so let's watch what happens!
4. Meal and Rest Break Premiums Must be Paid at the Regular Rate of Pay.
As you know, California requires that companies pay employees a “premium” equal to an hour of pay when an employee is not provided a compliant meal or rest break or “cool-down recovery period.” For example, if an employee starts their meal break late (after the fifth hour of work) because of a work-related reason, they are then owed a premium.
For years, it was unclear whether the premiums were to be paid at the “regular rate of pay” or the base hourly rate of pay, and in our experience most employers paid them at the base hourly rate. The “regular rate of pay” is a rate that might be higher than the base hourly rate, as it takes into account any additional compensation, including nondiscretionary bonuses, commissions, piece rate pay, etc. that is earned in the workweek.
This year, the California Supreme Court unanimously ruled that employers must pay meal and rest break premiums at the “regular rate of pay” (not the hourly base rate of pay). This decision applies retroactively to meal and rest premium pay previously made or owed.
What to do in response?
- Audit your practices to ensure your meal and rest break policies are compliant; that there is a protocol in place for employees to report non-compliant meal and rest breaks; that employees and managers are trained; and that there is a process in place for reviewing meal and rest break compliance and paying premiums.
- Pay correctly going forward!
- Ensure your pay practices are capturing all non-compliant meal and rest breaks, which may include a review of the settings in timekeeping systems that automatically capture non-compliant meal breaks, attestation responses, or the manual review process, whichever is applicable.
- Ensure all additional compensation that is required to be factored into the regular rate of pay is included – for example, evaluate bonuses to determine whether they are discretionary or non-discretionary, and ensure all nondiscretionary bonuses are included in the regular rate.
- Ensure the correct formulas are being used to calculate the regular rate, and that the payroll system is correctly applying the formulas to employees’ pay.
- Ensure all overtime, sick leave and PTO used for sick leave purposes, and reporting time pay are paid correctly based on the regular rate.
- Ensure premiums and all pay items are properly listed on the pay stubs.
- Consider paying unpaid premiums – many clients have taken a proactive approach and have conducted pay audits to determine the amount, if any, of unpaid premiums and wages due to regular rate of pay issues.
This is a very general overview of a complex and potentially expensive issue. Reach out to us to understand how to protect yourself and your workplace.
5. Take Note of Minimum Wage Increases.
On January 1, 2022, California’s minimum wage will increase to $15 per hour for employers with 26 or more employees and $14 per hour for employers with 25 or fewer employees. Local minimum wages also increase in some cities and counties. Employers with employees working in the City of West Hollywould should pay special attention, as a new ordinance will require employers to pay the highest minimum wage in the United States.
Minimum compensation for exempt computer professionals and physicians also is going up. Beginning January 1, 2022, the threshold minimum salary for an exempt computer professional is $104,149.81 annually or an hourly wage of $50 per hour. Effective January 1, 2022, the minimum hourly rate for licensed physicians and surgeons to meet the exemption will be $90.07 (up from $86.49).
6. Overtime Entitlement Modifications for Agricultural Workers.
Effective January 1, 2022, employees involved in the preparation and treatment of farmland or the care and harvesting of crops, sheepherding, irrigation, and licensed crew members on commercial fishing vessels are eligible for overtime according to the following schedule:
- Employers with 26 or more employees: Employees are entitled to 1.5 times the employee’s regular rate of pay after working 8 hours in a workday, 40 hours in a workweek, and the first eight hours worked on a seventh consecutive day of work, and double the employee’s regular rate of pay for time worked after 12 hours and all work performed in excess of eight hours on a seventh consecutive workday.
- Employers with 25 or fewer employees: Employees are entitled to overtime after working 9.5 hours in a workday or 55 hours in a workweek.
These changes are part of a 2019 amendment made to Wage Order 14. A more detailed breakdown of the pay schedule can be found here.
7. California Residents Working Outside California and Remote Employees of California Companies May Be Covered by Certain California Wage Laws.
Pay close attention to this one if during the pandemic you allowed your workers to work in another state, or if you otherwise have remote workers. In Bernstein v. Virgin Am., Inc., the court reinforced that
- Non-California-resident employees are entitled to the rights and protections of California overtime and meal and rest break laws for work performed in California for a California-based employer.
- California-resident employees who perform work outside of California for a California-based employer are entitled to the same protections and rights offered under California labor law, notwithstanding that they perform the services outside California. Be careful, they may be covered by local laws as well.
- An employer must provide California-compliant wage statements to employees who perform a majority of their work in California or who are based in California for work purposes and do not perform a majority of their work in any one state.
- Waiting time penalties apply to interstate employees.
- Rather than look at the job situs (where the employee lives or is a resident) to determine if California law applies, the court will review the connections the employee/employer have with the state.
8. Per Diem Expense Reimbursement May Constitute Compensation and Need to be Included in Calculating the Regular Rate of Pay for Purposes of Overtime.
Generally, amounts paid to reimburse employees for expenses incurred in furtherance of the employer's interests are excluded when calculating employees' regular rate of pay. However, where it can be determined that the function of per diem pay is more characteristic of compensation for hours worked (vs. expense reimbursements), the per diem needs to be included in calculating the regular rate of pay. For example, in Clarke v. AMN Services, LLC, employees were not required to submit proof of expenses, the per diem amount changed depending on the number of shifts worked (similar to compensation for hours worked), and it was discovered that nearby clinicians received the same per diem amount yet their per diem was reported as taxable wages (as an incentive for the employees to work their required shifts each week). The per diem was paid in advance to travelling clinicians based upon the hours that they worked over 7 days a week, regardless of how many days they worked. It was also used as an incentive to recruit travelling clinicians.
The court ruled that the per diem was compensation and should have been included to calculate the clinicians’ regular rate of pay for calculating overtime.
The lesson here? Expense reimbursements should be commensurate with actual expenses. If you are paying a flat rate without regard to actual expenses, this may be at risk of being considered part of the employee's regular rate of pay.
9. A Rare Bright Spot: PAGA Cases Must be Manageable to Proceed.
Under California’s Private Attorneys General Act ("PAGA"), an “aggrieved employee” may bring a representative action on behalf of him/her/theirself and other “aggrieved employees” for civil penalties for various violations of the California Labor Code. These cases can be incredibly expensive, and to date cannot be compelled to arbitration. In Wesson v. Staples the Office Superstore, LLC, the California Court of Appeal held that a PAGA claim must be able to be fairly and efficiently tried. As a result, trial courts have the authority to limit or strike unmanageable PAGA claims. PAGA cases are not regulated in the same way that class actions are when certifying a class; therefore, this result gives employers a better opportunity to litigate their defenses.
And on the PAGA Horizon: A proposed proposition has been filed with the California Attorney General (“Californians For Fair Pay and Employer Accountability Act”), which aims to repeal PAGA. Supporters of the initiative have until June 6, 2022, to collect at least 623,212 valid signatures to qualify the measure for the November 2022 general election. Assuming all required signatures are valid, the proposition would be voted upon by the general public in November 2022. If California voters approve the proposition, it would repeal PAGA and eliminate the Labor Commissioner’s authority to contract with private organizations or attorneys to assist with enforcement actions. Instead, the California Legislature would provide funding for the Labor Commissioner to enforce Labor Code violations. The proposition also would require pre-enforcement advice from the Labor Commission and an opportunity for employers to cure alleged violations without penalties. Willful violations would result in increased penalties. Run, don't walk, to your nearest petition!
10. Eligibility for Family Leave for Caring for a Family Member Expanded Slightly.
Beginning January 1, 2022, an employee’s entitlement under the California Family Rights Act (“CFRA”) to leave to care for a family member with a serious health condition is available to care for a parent-in-law. Previously, the leave was available to care for a child, parent, grandparent, grandchild, sibling, spouse, or domestic partner with a serious medical condition. Interestingly, the same bill establishes requirements for completing the DFEH mediation program before an employee may pursue a civil action..
11. DFEH Aims to Strictly Enforce Fair Chance Act.
The Department of fair Employment and Housing (“DFEH”) recently announced it would be pursuing new efforts to reduce violations of the Fair Chance Act (which prohibits employers with five or more employees from asking an applicant questions that would disclose their conviction history). The DFEH specified that it considers blanket statements in job advertisements that the company will not consider anyone with a criminal history to violate the Fair Chance Act. The DFEH now is using online technology to identify words and phrases in job advertisements that suggest a violation of the Fair Chance Act. This is a good time to audit your online job postings, along with your applications, offer letters and other pre-employment practices, to ensure you are in compliance with the law.
12. New Reporting Requirements for Jobs with Supervision Over Children.
As of January 1, 2022, companies with employees in these roles will be required to report to parents or guardians any instance in which an employee with supervision over a child is convicted of specified felonies. The requirement does not apply for misdemeanor convictions.
13. Records Maintenance and DFEH Authority is Expanded.
Effective January 1, 2022, employers must retain personnel records for applicants and employees for four years (expanded from a previous two-year requirement). Two years were added to match the new maximum time period during which personnel documents could be relevant to a legal claim. Employers who become aware of a lawsuit are required to maintain relevant records until the matter reaches resolution or the worker’s statute of limitations has expired. Further, the period in which an individual can file a civil action for violations of certain statutes is suspended while the DFEH investigates and/or takes action on a complaint, and the DFEH now has two years to complete an investigation/issue a right-to-sue notice for claims treated by the DFEH as a class or group complaint.
14. “Silence No More Act” Limits Non-Disparagement and Confidentiality Clauses In Settlement, Severance, And Employment Agreements.
Presently, employers cannot use agreements to restrict or prevent employees from disclosing factual information related to claims regarding workplace harassment or discrimination based on sex. The new law expands this restriction to prohibit agreements from restricting or preventing the disclosure of factual information related to any type of workplace harassment or discrimination claims.
Also of significance: In offering a separation agreement, employers now are required to notify employees that they have the right to consult an attorney regarding the agreement (not new) and provide the employee with at least five (5) business days to do so (This is new! The prior rule was “a reasonable period.” Acceptance of an agreement prior to the end of the five (5) days is only permitted if it was “knowing and voluntary” and not a result of fraud, misrepresentation, or threat to withdraw or alter the offer by the employer.
15. Cal/OSHA enforcement powers are expanding.
As of January 1, 2022, there will be a rebuttable presumption that an employer with multiple work locations has committed an “enterprise-wide” violation if Cal/OSHA determines that the employer maintains a non-compliant written procedure or policy or finds evidence of a pattern or practice of the same violation or violations committed by that employer involving more than one of the employer’s worksites. For more detail on the implications of this new power, click here.
Cal/OSHA also may issue an “egregious violation” if it discovers one of the following occurred within the past five years.
16. Domestic Workers Now Are Entitled to Cal/OSHA Protections.
Effective January 1, 2022, domestic workers no longer will be excluded from the Cal/OSHA protections. This legislation mandates Cal/OSHA to construct an advisory committee to provide voluntary guidance and make recommendations on policies the state may adopt to protect the health and safety of privately funded household domestic service employees.
17. Security and Breach Laws Are Broadened.
Effective January 1, 2022, the definition of “personal information” under data security laws is expanded to include genetic data. The Information Practices Act of 1977 currently requires personal information be “reasonably protected” and that companies and state agencies report breaches of systems that handle personal information to residents whose unencrypted data was compromised. Genetic data is any data that results from analyzing a biological sample or an equivalent element from a consumer that concerns genetic material. For example, DNA, RNA, genes, chromosomes, alleles, genomes, alterations or modifications to DNA or RNA, and SNPs.
18. Have Your Managers Been Sufficiently Retrained on Sexual Harassment to Comply with the January 1, 2022 Deadline?
Recall that California employers with five (5) or more total employees must provide one (1) hour of sexual harassment and abusive conduct prevention training to non-managerial employees AND two (2) hours of sexual harassment and abusive conduct prevention training to managerial employees once every two years. If you satisfied this obligation when the law first took effect, you may very well be due for training now.
When you train, find a training with a focus not just on the law but on practical and immediate steps your employees can take today to create an environment in which the conduct is less likely to happen and employees have comfortable, clear and pragmatic steps for resolving their concerns before they escalate. Do not hesitate to contact us if you need help and/or if you would like to explore partnering with us to conduct your training.