Employers Beware: On-Duty and On-Call Rest Breaks Are Prohibited

On December 22, 2016, the California Supreme Court issued a decision, Augustus v. ABM Security Services, Inc., concluding that state law prohibits on-duty and on-call rest periods. This decision reverses a January 2015 decision in which the Court of Appeal ruled that such rest periods were lawful, even though employees might have to respond to an emergency call during a rest period.

The Supreme Court held that “during rest periods, employers must relieve employees of all duties and relinquish control over how the employees spend their time,” relying upon their 2012 decision in Brinker Restaurant Corporation v. Superior Court. In other words, employees cannot be restricted in how they use their time, where they spend their time, and cannot be subjected to any other employer restrictions during their 10 minute legally mandated rest breaks. The Supreme Court made clear that its holding applied both to on-duty rest periods (where an employee is actually working) as well as on-call rest periods (where an employee is not working, but is prepared to and will return to work during the rest period upon request from the employer).

Acknowledging there are times an employer may “find it especially burdensome to relieve their employees of all duties during rest periods- including the duty to remain on call,” the Court provided that Employers “may (a) provide employees with another rest period to replace one that was interrupted, or (b) pay the premium pay set forth in [the Wage Order].”

This decision creates genuine problems for employers who have a legitimate business need for on-duty or on-call employees. For example, there are certain employees who may lawfully be able to agree to have on-duty meals due to the nature of the job (see e.g. Wage Order 4-2001 11(A)). Because there is no similar provision for rest breaks, however, based on this decision, employers who need employees to remain on duty during rest breaks should review the impact of this case and the potential need to pay a premium if a lawful off-duty rest break is not authorized or permitted.

Recommendations for Employers:

  • Advise managers against calling employees while they are on break.
  • Do not require that employees carry a cell phone other mandated communication devices (such as a “walkie talkie”) during breaks.
  • Do not restrict employees from leaving the premises during a break.
  • Consider implementing a policy advising employees to inform management if a rest break is interrupted, or if they feel they are unable to take a rest break so that management can provide either an uninterrupted rest break or a rest break premium.

-Sarah Hamilton

City of Los Angeles “Bans The Box” Regarding Applicants’ Criminal History for Private Employers

As we first discussed here, “ban the box” state laws and local ordinances are picking up traction nationwide.  Both California and Los Angeles (in 2013 and 2014 respectively) passed legislation regulating public entities’ ability to inquire about a job applicant’s prior criminal history.  Beginning January 1, 2017, Los Angeles will join the growing number of jurisdictions also regulating a private employer’s ability to make such an inquiry.

Who Is Covered? 

The ordinance covers private employers that are located or do business in the City of Los Angeles and who employ 10 or more employees.  For the purposes of this ordinance, an employee is any person who performs at least two hours of work on average each week in the City of Los Angeles and who qualifies as an employee entitled to minimum wage under California’s minimum wage law.

Notably, the ordinance defines “employment” to include, but not to be limited to, temporary or seasonal work, part-time work, contracted work, contingent work, work on commission, and work through the services of a temporary or other employment agency, as well participation in a vocational or educational training program with or without pay.

The ordinance specifically exempts (1) employers who are required by law to obtain conviction information; (2) positions where the applicant would be required to use a firearm in the course of employment; (3) positions where a prior conviction would legally bar employment; and (4) employers who are prohibited by law from hiring an applicant convicted of a crime.

Requirements

Prohibited inquiries: Employers subject to the ordinance may notinclude on any job application any questions seeking the disclosure of an applicant’s criminal history.  An employer may also not at any time or by any means inquire or require the disclosure of an applicant’s criminal history unless and until a conditional offer of employment is made.

What if I make a conditional job offer and discover an applicant’s criminal history? – Acting upon the information: If an applicant’s criminal history is revealed after the employer makes a conditional offer of an employment, the employer may not take any adverse action against the applicant unless the employer first performs a written assessment linking the applicant’s criminal history with risks inherent in the duties of the job sought.

    • At a minimum, the written assessment must consider 8 factors identified by the EEOC (https://www.eeoc.gov/laws/guidance/arrest_conviction.cfm) and any other factors as may be required by any rules or guidelines promulgated by the City’s Department of Public Works, Bureau of Contract Administration (Department), which will have responsibility for administering the Ordinance.
    • Additionally, prior to taking any adverse action the employer must provide the applicant with a “Fair Chance Process.”  This process allows the applicant at least five business days to review a copy of the written assessment and provide information regarding the accuracy of the criminal record or any other information including but not limited to evidence of rehabilitation or other mitigating factors.  The employer must consider this new information and provide a written reassessment.  If after performing the reassessment, the employer still decides to take adverse action against the candidate, the employer must notify the candidate and provide the applicant with a copy of the reassessment.

No Retaliation: An employer may not take any adverse employment action against an employee for asserting his or her rights under this ordinance.  Activity protected from retaliation is broad, including but not limited to complaining to the City regarding an employer’s compliance or anticipated compliance, opposing a practice proscribed by the ordinance, participating in proceedings related to the ordinance, seeking to enforce his or her rights or otherwise seeking to assert any rights under the ordinance.

Notice: An employer must (1) affirmatively state on solicitations or advertisements seeking applicants for employment that the employer will consider applicants with criminal histories in a manner consistent with this law; (2) post a notice in a conspicuous place at each worksite informing applicants of the provisions of this ordinance.

Record Keeping: An employer must retain all records related to an applicant’s employment applications for a period of three years.

Enforcement: an applicant may bring a civil action an employer and is may seek the penalties set forth in the ordinance as well as any other legal or equitable relief appropriate to remedy the violation.  Before filing a private lawsuit against an employer the applicant must report the alleged violation to the City’s Department of Public Works, Bureau of Contract Administration, which must be filed within one year of the alleged violation, and a determination before a hearing officer has been reached, including conclusion of any hearing.  Any civil action must be filed within one year of the completion of the Department’s enforcement process or the issuance of any decision by a hearing officer, whichever is later.

Penalties for violations of the notice and recordkeeping requirements are set at $500.  Violations of other provisions are set at $500, $1,000, and $2,000 for the first, second, and third-or-subsequent violation respectively.  The Department will not impose any penalties or fines until July 1, 2017.  Before that date, the Department will only issue written warnings.

Takeaways

Employers should review existing applications and policies to ensure that they are in compliance with the ordinance.  Additionally, it will be critical to provide appropriate training for managers and supervisors responsible for hiring decisions.  The training should cover both the scope of permissible inquiries as well as implementation of the “Fair Chance Process.”  Employers may also wish to take the opportunity to review their pre-employment screening policies with respect to running background checks and credit checks as regulated by both federal and state law.

Benjamin Treger

Recreational Marijuana Is Now Legal in California: How Does This Affect Employer Workplace Drug Policies?

In what might once have been viewed as a remarkable development, but now generates little surprise, recreational marijuana use is now legal in California. On November 9, 2016, Californians approved Proposition 64, known as the Control, Regulate and Tax Adult Use of Marijuana Act (the Act), legalizing the recreational use of marijuana. Contrary to California’s typical position as a legislative frontrunner, the Golden State is bit more of a follower here, joining several other states, including Colorado, Oregon and Washington, where the personal possession and use of marijuana has already been decriminalized. Maine, Massachusetts and Nevada also recently passed recreational use laws, which have not yet taken effect.

Impact of the Control, Regulate and Tax Adult Use of Marijuana Act

The Act amends, repeals, and adds sections to California’s Business and Professions Code, the Food and Agricultural Code, the Health and Safety Code, the Labor Code, the Revenue and Taxation Code, and the Water Code. The Act does not alter California’s existing medical marijuana law, the Compassionate Use Act of 1996.

The Act legalizes recreational marijuana use for adults aged 21 or older under California state law and establishes certain taxes on the cultivation and sale of nonmedical marijuana, including marijuana products. While the recreational use provisions are effective immediately, other tax and licensing provisions of the law will not take effect until January 2018.

Under the Act, it is legal to smoke marijuana in a private home or at a business licensed for on-site marijuana consumption. Smoking marijuana remains illegal while driving a vehicle, in all public places, and anywhere smoking tobacco is. The law makes it legal to possess up to roughly one ounce of marijuana; however, possession on the grounds of a school, daycare center, or youth center while children are present remains illegal. Individuals are permitted to grow up to six plants within a private home, as long as the area is locked and the plants are not visible from a public place.

Marijuana businesses will need to acquire a state license to sell marijuana for recreational use and local governments can also require businesses to obtain a local license and can restrict where such businesses can be located. Local governments are also allowed to completely ban the sale of marijuana from their jurisdictions.

What the Adult Use of Marijuana Act Means for California Employers

Marijuana (whether for medical or recreational use) remains illegal under federal law. This is the foundation for understanding how California’s recreational and medical marijuana laws affect—or don’t affect—employer policies. In short, employers can continue to rely on federal law and enforce their workplace substance abuse policies. Also, the Act itself explicitly allows public and private employers to enact and enforce workplace policies pertaining to marijuana, including any drug-testing policies.

Nothing in the Act is intended to affect or interfere with the rights and obligations of employers to maintain a drug-free workplace or to require an employer to accommodate the use or possession of marijuana in the workplace. Employers may continue to have policies prohibiting the use of marijuana by employees and prospective employees, and the Act does not prevent employers from complying with state or federal law.

In California, employers can require job applicants to pass a drug test as a condition of employment, provided they test all applicants for particular job positions and do not single out certain applicants based on protected characteristics. Drug tests performed after an individual has been hired are permissible if there is reasonable suspicion that the worker is under the influence, in certain safety-sensitive jobs, or pursuant to a narrowly-tailored, post-accident testing policy. In the case of a positive drug test, California employers have the discretion to not hire an applicant, or to discipline an employee, up to and including termination of employment. This is the case even if the individual has been prescribed marijuana due to a medical condition. In the 2008 case, Ross v. RagingWire Telecommuns., Inc., the California Supreme Court upheld the right of an employer to fire an employee who failed a pre-employment drug test as a result of marijuana use recommended by his physician. The court found that employers are not required to accommodate an employee’s medicinal marijuana even though such use was legal in California under the Compassionate Use Act of 1996. (It seems logical that the Ross v. Ragingwire decision might be tested on appeal down the road, but for the present, it is good law.) Likewise, the legalization of recreational marijuana use under the Control, Regulate and Tax Adult Use of Marijuana Act does not require employers to accommodate such use by their employees.

Further, any employers who contract with or receive grants from the State of California are required, under California’s Drug-free Workplace Act of 1990 to certify that they provide a drug-free workplace.

Similarly, any employers who enter into a federal contract for the procurement of property or services valued at $100,000 or more, or receive any federal grant, must follow the regulations of the Drug-Free Workplace Act of 1988.

What Actions, if Any, Should Employers Take?

While the Act does not prevent employers from continuing to rely on federal law and enforce their workplace substance abuse policies, in light of California’s recent legalization of recreational marijuana use, employers may want to consider updating their policies to clarify any expectations with respect to employee marijuana use—but again, this new law should not meaningfully impact such expectations or policy.

What Action Might the Federal Government Take, Given that Marijuana Remains Illegal Under Federal Law?

This is very much an open question. Despite frequent calls for changes to the federal Controlled Substances Act of 1970 (the CSA), marijuana remains a “Schedule 1” banned substance. The issue, then, is not so much any contemplated change in the CSA, but enforcement of it (or not). Although the Department of Justice (DOJ) under President Obama has not prosecuted most individuals and businesses following state and local marijuana laws, it remains to be seen whether the DOJ’s approach will change under the Trump Administration. Even if the Trump Administration’s DOJ does change its approach, however, and increases enforcement efforts, this likely will not impact employer drug-related policies for the reasons discussed above.

-Erin Dolly

Trump Nominates Andrew Pudzer To Head Department of Labor

President-Elect Donald J. Trump intends to nominate Andrew F. Pudzer to head the U.S. Department of Labor, according to numerous sources familiar with his office. Pudzer is the CEO of the holding company that operates the fast food chains Hardee’s and Carls, Jr., an avid blogger, and an outspoken opponent of raises to the federal minimum wage and the minimum salary requirements for “white collar” exemptions. Like most other nominees, Pudzer has no government experience, having spent his entire career in the private sector.   Continue reading

U.S. DOL Appeals Texas Injunction of FLSA Salary Regs

As we previously reported, a federal judge in Texas recently issued a nationwide injunction putting a halt to regulations issued by the U.S. Department of Labor (DOL), which would have doubled the minimum salary needed to satisfy the “white collar” exemptions to overtime and minimum wage under the Fair Labor Standards Act (FLSA).  Yesterday, the DOL appealed that decision to the U.S. Court of Appeals for the Fifth Circuit and it is expected to seek emergency consideration of the appeal.  If the Fifth Circuit hears the appeal on an expedited basis, it may prevent the incoming Trump Administration from abandoning a defense of those regulations, as would be widely expected.  We will keep you updated with any additional developments.

- Dan Handman 

Texas Federal Court Permanently Enjoins DOL “Persuader Rule”

It has been a busy month for the federal courts in Texas, and a long one for the United States Department of Labor (the “DOL”). As we blogged here last week, on November 21, 2016, the United States District Court for the Eastern District of Texas blocked implementation of the DOL’s rule that would have nearly doubled the minimum salary level for the “white collar” exemptions. That ruling somewhat overshadows the fact that, just 6 days earlier, the United States District Court for the Northern District of Texas permanently enjoined enforcement of the DOL’s so-called “Persuader Rule,” leaving the viability of this rule in grave doubt, in light of the likely policy shifts in the administration of President-Elect Donald J. Trump. (See here for our blog entry of potential policy shifts under the new administration.)

As we previously blogged here, here, and here, the thrust of the “Persuader Rule,” a regulation first proposed by the DOL in 2011, and enacted in April of this year, is to essentially eliminate the “Advice Exception” to the Labor Management Reporting and Disclosure Act of 1959 (“LMRDA”). The enactment of the “Persuader Rule” precipitated the filing of multiple lawsuits in federal District Courts across the country by employer-business associations and others. In a significant victory for employers, on June 27, 2016, the Court granted a nationwide, preliminary injunction against the DOL and others, preventing the enforcement of the new Persuader Rule. With the Court’s November 16 ruling, that permanent injunction is now permanent.

The Persuader Rule modifies the “Advice Exception” under the LMRDA, in place since the Kennedy Administration, which allowed employers to receive confidential and privileged counsel from attorneys on union organizing and election efforts. The Advice Exception was and is consistent with state law interpretations of the confidential attorney-client communications privilege, and also consistent with an attorney’s duty of confidentiality to his/her client under state law and rules of professional conduct. The only caveat to this bright line that no disclosure was required under the LMRDA was that, in providing such counsel, the attorney had no direct contact with employees and the employer was free to accept or reject any recommendations. Although billed as a modification of the Advice Exception, in this case, Plaintiffs and notably, the American Bar Association (which filed a “friend of the court” brief), saw the Persuader Rule as creating an irreconcilable conflict: forcing lawyers to document and disclose their advice to employer-clients, in violation of their duties under state law and professional rules of conduct, in order to comply with the new DOL rule. Plaintiffs also argued that the new Persuader Rule violated their First Amendment rights to free speech and association: specifically, that the Persuader Rule would impose a content-based burden on speech about union organizing. They further argued that the rule was impermissibly vague and violated their right to due process under the Fifth Amendment.

In the Court’s 86-page ruling of June 16, the Court agreed with and expanded on all of these positions, but most significantly found that the changes to the Persuader Rule “effectively eliminate[ed]” the Advice Exemption to the disclosure requirements of LMRDA. On November 16, 2016, in a mere two pages, the Court referred to and incorporated the reasoning of its preliminary injunction order, and ruled that the Persuader Rule “should be held unlawful and set aside.”

What comes next is not certain, but the chances of the Trump Administration adopting the Obama Administration’s position on the Persuader Rule seem remote. The DOL has appealed the preliminary injunction order to the 5th Circuit, and it may well be that the DOL abandons that appeal in the next administration. Importantly, for the present, for employers who seek advice of counsel on union organizing and election matters, this permanent injunction means that the content and other details of such advice will be kept confidential, and will not be disclosed, on the same terms that existed prior to the April 2016 implementation of the final Persuader Rule; however, employers would be well advised to stay abreast of this issue over the coming months.

-Monte Grix

Expect Big Changes in Labor and Employment From the Trump Administration

Since at least the 1920s, Republicans have been viewed as the party of commerce, small government and less regulation. And, to be sure, most Republicans still are. But Donald Trump challenged all of those assumptions by running a populist campaign directed to the working class in which he has often touted “yuge” government. Indeed, Trump garnered more votes from union households than any Republican candidate in decades.

  Continue reading

United States District Court Issues Nationwide Injunction Halting Implementation of New “White Collar” Exemption Regulations

On November 22, 2016, the United States District Court for the Eastern District of Texas blocked implementation of the Department of Labor’s rule that nearly doubles the minimum salary level for the “white collar” exemptions. This means that the rule is not going into effect as planned on December 1, 2016, unless a higher court lifts the injunction.

For many years, the minimum salary level for the so-called “white collar” exemptions – those covering qualifying executive, administrative and professional employees – has been set at $455 per week. In May 2016, the Department of Labor (DOL) issued new regulations increasing the minimum salary level to $913 per week ($47,476 annually), with scheduled increases every three years beginning January 1, 2020.

In October 2016, the State of Nevada and 21 other states filed an emergency motion for a preliminary injunction to halt the implementation of the new minimum salary regulations, arguing that the DOL exceeded the authority delegated by Congress in adopting the new salary level. The suit was filed in U.S. District Court in Texas, and consolidated with another lawsuit challenging the rule brought by over 50 businesses and the U.S. Chamber of Commerce. Yesterday, Judge Amos Mazzant, an appointee of President Obama, granted the states’ motion and imposed a nationwide injunction preventing the regulations from going into effect. The court agreed that although the FLSA gives the Department “significant leeway” to establish the job duties that may qualify an employee for a “white collar” exemption, it did not authorize the DOL to define the exemption with respect to a minimum salary or to limit it with respect to salary.

This is surprising reasoning, given that the DOL “white collar” regulations have imposed minimum salary levels since 1949 that have never been challenged. But the court cited a report issued in conjunction with the original 1949 regulations, explaining that the salary level had been “purposefully set low to screen[] out the obviously nonexempt employees, making an analysis of duties in such cases unnecessary.” Indeed, at that time the DOL admitted that it had no authority to create a test based on salary alone. Yet because the new salary level is set so high, the court explained, it “creates essentially a de facto salary-only test,” noting that the DOL itself has estimated that 4.2 million workers who are currently exempt will lose their exemption under the new rule. Because Congress did not intend that salary alone exclude employees from exempt status, the court held, the DOL had exceeded its authority and the rule was invalid.

The preliminary injunction stays the implementation of Department of Labor’s new “white collar” exemption regulations for all employers covered by the FLSA nationwide, pending further proceedings in the District Court. An immediate appeal to the Fifth Circuit Court of Appeals is almost certain. However, given the election results and certainty of a shift in direction and priorities at the Department of Labor, it is doubtful that the agency will seek to defend the rule after Inauguration Day.

In the meantime, employers who have previously announced salary increases to maintain exempt status under the new rule face the very real dilemma of whether to go forward with the increases or put them off, given employee morale issues as well as the fact that already-announced increases could constitute a contractual promise. Employers considering withdrawing such an announced increase should consider this issue carefully in conjunction with counsel.

Felicia Reid and Christin Lawler

Employers Get a Break on Disclosure of Union Organizing Efforts and Advice: Texas Court Blocks Implementation of the DOL’s “Persuader Rule”

In this blog, we have previously covered the United States’ Department of Labor’s controversial efforts to effect a significant change to the so-called “Persuader Rule,” a regulation first proposed by the United States Department of Labor in 2011, and finally enacted in April of this year, to essentially eliminate the “Advice Exception” to the Labor Management Reporting and Disclosure Act of 1959 (“LMRDA”). (See here and here.)  The enactment of the “Persuader Rule” precipitated the filing of multiple lawsuits in federal District Courts across the country by employer-business associations and others.  In a significant victory for employers, on June 27, 2016, in the Federal District Court for the Northern District of Texas, that court granted a nationwide, preliminary injunction against the DOL and others, preventing, for the present, the enforcement of the new Persuader Rule.

The Persuader Rule modifies the “Advice Exception” under the LMRDA, in place since the Kennedy Administration, which allowed employers to receive confidential and privileged counsel from attorneys on union organizing and election efforts. The Advice Exception was and is consistent with state law interpretations of the confidential attorney-client communications privilege, and also consistent with an attorney’s duty of confidentiality to his/her client under state law and rules of professional conduct.  The only caveat to this bright line that no disclosure was required under the LMRDA was that, in providing such counsel, the attorney had no direct contact with employees and the employer was free to accept or reject any recommendations.  Although billed as a modification of the Advice Exception, in this case, Plaintiffs and notably, the American Bar Association (which filed a “friend of the court” brief), saw the Persuader Rule as creating an irreconcilable conflict: forcing lawyers to document and disclose their advice to employer-clients, in violation of their duties under state law and professional rules of conduct, in order to comply with the new DOL rule.  Plaintiffs also argued that the new Persuader Rule violates their First Amendment rights to free speech and association: specifically, that the Persuader Rule would impose a content-based burden on speech about union organizing.  They further argued that the rule was impermissibly vague and violated their right to due process under the Fifth Amendment.

In an 86 page ruling, the Court agreed with and expanded on all of these positions, but most significantly found that the changes to the Persuader Rule “effectively eliminate[ed]” the Advice Exemption to the disclosures requirements of LMRDA.

What comes next is not entirely certain, although an appeal by the DOL to the 5th Circuit would not be surprising.  The DOL could also go back to the drawing board to revise the new Persuader Rule.  Regardless of its next steps, the DOL will need to better articulate and support its rationale for any proposed change.  The DOL apparently believes that the playing field regarding union organizing and elections has somehow become unlevel, and the new Persuader Rule was supposed to address this perceived imbalance.  (Notably, however, the court here was unmoved by the DOL’s arguments and found that the DOL had provided little evidence to support such conclusions.)  Importantly, for the present, for employers who seek advice of counsel on union organizing and election matters, this injunction means that the content and other details of such advice will be kept confidential, and will not be disclosed, on the same terms that existed prior to the April 2016 implementation of the final Persuader Rule; however, employers would be well advised to stay abreast of this issue as it works its way through the courts.

Monte Grix