Limitations On No Rehire Provisions

Question:  I want to settle a lawsuit with a former employee.  Can I include language in the settlement agreement that says the former employee agrees that I will never rehire him?

Answer:  No.  Under new Code of Civil Procedure section 1002.5 (AB 749), effective January 1, 2020, a settlement agreement or severance agreement in an employment dispute cannot contain a provision prohibiting, preventing, or restricting an “aggrieved person” from obtaining future employment with the employer, parent company, subsidiary, division, affiliate, or contractor of the employer.  The new law explicitly states that a “no rehire” provision is void as a matter of law and against public policy.  One reason for the new law is to prevent the situation where an employee reports unlawful harassment but then faces the prospect of having to give up his or her job to settle the claim.

The law defines an “aggrieved person” as someone who has filed a claim against his or her employer in court, before an administrative agency, in an alternative dispute resolution forum, or through the employer’s internal complaint process.   This definition prohibits the use of “no rehire” provisions in settlement agreements that resolve employment disputes filed in forums such as the courts, the Division of Labor Standards Enforcement (“DLSE”), the Department of Fair Employment and Housing (“DFEH”), or an alternative dispute resolution forum.

The new law also prohibits the use of a “no rehire” provision when an employee has alleged a claim using an employer’s “internal complaint process.”  This term is not specifically defined.  Consequently, employers should be mindful of their complaint procedures and determine whether such procedures are, or could be, considered an “internal complaint process.”

An employer may include a “no rehire” provision in a severance or separation agreement if the employee has not filed a claim against the employer. Also, an employer can include a “no rehire” provision in a settlement agreement if the employer has made a good faith determination that the settling employee engaged in sexual harassment or sexual assault.

“No rehire” provisions in settlement agreements were often used to make it clear that the settling former employee could not apply for a job and then bring a claim for retaliation if he or she was not offered the job.  While the new law eliminates the use of “no rehire” provisions in most situations, this does not automatically mean that an employer has to continue to employ a current aggrieved employee, or rehire a former aggrieved employee.  Rather, the employer can discontinue employment or not hire the aggrieved person if the employer has a legitimate, non-discriminatory, or non-retaliatory reason for doing so.  Employers should ensure that they consistently apply their performance evaluation procedures and regularly document employee performance issues so that if they choose to discharge an employee and then not rehire him or her, they will have sufficient documentation to support that decision.

Employers should review their severance agreements and settlement agreements to ensure that they comply with Code of Civil Procedure section 1002.5.  Some options to consider are to not use a “no rehire” provision in any situation; or include the provision in those limited circumstances where the new law does not apply.


Workplace Investigations and Confidentiality

Question:  I just completed a workplace investigation. Unfortunately during the investigation there was a lot of discussion and gossip about the investigation, which had a negative impact on the investigation and my employees.  I am considering implementing a policy that prohibits employees from discussing workplace investigations with anyone other than the investigator, and establishes disciplinary action for violations.  Is this permissible?

Answer:  California law requires employers to promptly investigate employee claims of unlawful workplace harassment, discrimination, and other employee misconduct.  Employers are required to keep such investigations confidential to the extent possible.  Most workplace investigators will tell you that employees feel more comfortable disclosing truthful information when they know their statements are confidential.  Thus it would seem that a policy like the one you propose would be appropriate.

However, in recent years the National Labor Relations Board (the “Board”) has ruled that blanket confidentiality policies that prohibit employees from discussing investigations of employee misconduct act to “chill” employees’ rights under Section 7 of the National Labor Relations Act (the “Act”).  Section 7 of the Act applies to union and non-union employees and provides employees "the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection," as well as the right "to refrain from any or all such activities.”  In its 2015 Banner Estrella opinion, the Board found that mandatory confidentiality policies and instructions restricted employees’ exercise of their Section 7 rights, and placed the burden on the employer to demonstrate, on a case-by-case basis, that the need for confidentiality outweighed employees’ Section 7 rights.

On December 16, 2019 the Board issued a decision in Apogee Retail LLC d/b/a Unique Thrift Store, stating the rule in Banner Estrella was “deficient” and was overruled.  In Apogee Retail, an employer maintained two confidentiality rules regarding workplace investigations.  The first rule required employees to “cooperate fully in investigations and answer any questions truthfully and to the best of their ability,” and that both reporting persons and interviewees were “expected to maintain confidentiality.”  The second rule provided for disciplinary action when employees engaged in unauthorized discussions with other employees about the investigations.

The Apogee Retail opinion states that rules requiring confidentiality during open, active workplace investigations are presumptively lawful.  However, confidentiality policies that are not limited on their face to open investigations, i.e., apply post-investigation, require a case-by-case analysis of their impact on employees’ Section 7 rights.  This decision is ultimately a win for employers.  It is important to keep workplace investigations confidential.  Doing so allows the employer greater access to information by minimizing employee fear of reprisal from coworkers for participating in the investigation, and makes it easier to maintain the integrity of a workplace investigation.

So what does the Board’s decision mean for your proposed policy? The Apogee Retail ruling means your policy is likely lawful, as long as your confidentiality rules only apply during open and active workplace investigations.    However, if you intend to enforce the confidentiality policy after the close of an investigation, you will need to analyze each investigation and be prepared to prove that the legitimate business reasons for requiring confidentiality post-investigation outweigh any adverse impact on employees’ Section 7 rights to discuss their wages, hours and working conditions.


Is Gluten Sensitivity a Disability?

Question: I am a restaurant owner and we have seen an increasing number of guests with gluten sensitivity.  We offer gluten-free options on our menu to accommodate these guests.  Does that meet our legal obligations?

Answer:  In a recent federal case, the U.S. Court of Appeals found that gluten sensitivity may be a disability under the Americans with Disabilities Act (ADA).

The U.S. Congress enacted the ADA to remedy discrimination against disabled individuals and provide clear, enforceable standards addressing such discrimination. Title III of the ADA provides that no individual shall be discriminated against on the basis of his or her disability in the full and equal enjoyment of the goods, services, facilities, privileges, advantages, or accommodations of any place of public accommodation. The ADA similarly prohibits employment discrimination on the basis of workers’ disabilities.

In J.D. v. Colonial Williamsburg Foundation the Court of Appeals found that a restaurant violated the ADA when its staff refused to allow a gluten-sensitive child – who was on a school trip with his class – to eat his home-prepared gluten-free meal inside the restaurant because the restaurant’s policy banned the consumption of outside prepared food in the restaurant. Instead, the restaurant manager gave the child three options: 1) Let the chef prepare a gluten-free meal; 2) Eat his pre-prepared meal off of the restaurant property; or 3) Stay inside the restaurant with his class and not eat.

The restaurant was sued and requested that the lawsuit be dismissed arguing it was following health and safety codes that prohibited outside food from being consumed inside the restaurant, that if offered to prepare a gluten-free meal, and that gluten sensitivity is not a disability.

The ADA defines a “disability” as “a physical or mental impairment that substantially limits one or more major life activities.”  In analyzing whether gluten sensitivity is a disability, the court emphasized that the only medically accepted treatment for the condition is a strict gluten-free diet, that eating is a major life activity and, as such, that gluten sensitivity could be considered a disability.

The court then looked at whether the restaurant’s actions constituted discrimination.  Discrimination under the ADA occurs when there is a failure to make reasonable modifications in policies, practices, or procedures when such modifications are necessary for a business to afford its goods, services, or privileges, to an individual. Businesses must contemplate three inquiries when determining whether to accommodate an individual:

  1. Is the requested modification "necessary" for the disabled individual;
  2. Is it "reasonable"; and
  3. Would it "fundamentally alter the nature" of the business’ services.

In its analysis, the court noted that the child had regularly gotten sick from “gluten-free” food prepared by restaurant kitchens.  Additionally, this restaurant had previously made exceptions to its rule prohibiting outside food.  The court held that, arguably, bringing a gluten-free meal into the restaurant was necessary for the child; the request was reasonable since it cost nothing to the restaurant; and it could be argued that allowing him to eat the gluten-free meal in the restaurant did not alter the nature of the restaurant’s services.  The Court of Appeals sent the case back to the trial court for further proceedings.

This case highlights that when faced with a customer or employee requesting an accommodation for a disability, it is important for a business to analyze each request on a case-by-case basis.


Employee Handbook Alert - New Law Requires Employers to Develop & Implement a Lactation Accommodation Policy

Question: Are there any new employment laws that will require me to revise my Employee Handbook in 2020?

Answer: Yes.

One of these new laws is Senate Bill (SB) 142, which expands lactation accommodation requirements for employees who wish to express breast milk during the work day.   This new law applies to all employers. There are two major implications for California employers. First, all employers are required to develop and implement a lactation accommodation policy.  Second, employees are permitted to take a “reasonable amount” of break time to express milk.  Employers who have existing lactation accommodation policies in their employee handbooks will need to revise them, and employers who do not have a lactation accommodation policy will need to develop and implement one.

SB 142 requires the employer to provide a lactation room close to the employee’s work area, shielded from view and free from intrusion, safe, clean, and free of toxic or hazardous materials.  The lactation room cannot be a bathroom. The lactation room must contain seating, a surface to place a breast pump and other personal items, and access to electricity or alternative power devices.  The employer must provide access to a sink with running water and a refrigerator or other cooling device suitable for the employee to store breast milk close to the employee’s workspace.

Where a multipurpose room is used for lactation, among other uses, the use of the room for lactation shall take precedence over the other uses, but only for the time it is in use for lactation purposes. Employers may designate a lactation location that is temporary due to operational, financial, or space limitations.  Employers in a multitenant building or multiemployer worksite may comply with the law by providing a space shared among multiple employers within the building or worksite if the employer cannot provide a lactation location within the employer’s own workspace.

The employer’s lactation accommodation policy must contain the following:

  • A statement about an employee’s right to request lactation accommodation.
  • The process by which the employee makes the request.
  • An employer’s obligation to respond to the request.
  • A statement about an employee’s right to file a complaint with the Labor Commissioner for any violation of the lactation accommodation law.

There are special provisions for agricultural employers.  Additionally, employers with fewer than 50 employees may apply for an exemption from one or more of the requirements if it can demonstrate that a requirement would impose an undue hardship by causing the employer significant difficulty or expense when considered in relation to the size, financial resources, nature, or structure of the employer’s business. However, even if an exemption is granted the employer must still make reasonable efforts to provide the employee with the use of a room or other location, other than a toilet stall, in close proximity to the employee’s work area, for the employee to express milk in private.

The penalties for non-compliance are significant. Denial of reasonable break time or failure to provide adequate space to express milk will now be deemed a failure to provide a rest period in accordance with state law. The Labor Commissioner may assess civil penalties.

The text of this new law is available on the Legislature’s website at https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=201920200SB142.  Be sure to update your employee handbook with this important new policy and comply with the lactation accommodation requirements.


Tis the Season for Holiday Pay?

Question: Now that the holiday season is upon us I plan to keep my coffee shop open on Thanksgiving, Christmas Day, and New Year’s Day.  Am I required to pay my hourly employees overtime if they work on any of these holidays?  Also, if I decide to close on these holidays, do I have to pay my employees for their regularly scheduled hours not worked during the holiday?

Answer: No.  Absent a collective bargaining agreement or other employment agreement to the contrary, California law does not require employers to close on holidays or pay premium wages for hours worked on a holiday.  Hours worked on a holiday are paid at the employee’s regular hourly rate unless the employee works over eight hours on the holiday or works more than 40 hours in the applicable workweek.  If an employer closes in observance of a holiday, the employer is not required to pay its hourly non-exempt employees holiday pay for hours not worked on the holiday.  However, if you employ exempt salaried employees, you cannot pro-rate their salary based on the holidays not worked due to business closure.

Although California law does not require employers to pay holiday pay for non-overtime hours worked on a holiday, employers desiring to pay a premium to employees who work on an observed holiday or to pay employees when the business is closed in observance of a holiday may do so.  Such employers should implement a clear written policy and distribute it to all employees so that employees are not confused about compensation for work performed or not performed on a holiday.  The policy should include the following information:

  • A list of the holidays you will observe;
  • Whether the business is closed on an observed holiday;
  • A definition of which employees are eligible for holiday pay (e.g., full-time and/or part-time employees);
  • Whether employees working on an observed holiday will be compensated at a premium rate; and
  • That holiday time paid for non-working hours is not counted as hours worked for purposes of determining overtime.

If you intend to remain open for the upcoming holidays and your employees are paid the minimum wage, be sure you pay the correct minimum wage for any regular hours worked on New Year’s Day 2020.  The minimum wage for 2019 is $11.00 an hour if you have 25 or fewer employees and $12.00 an hour if you have 26 or more employees.  On January 1, 2020 the minimum wage will increase to $12.00 an hour if you have 25 or fewer employees and $13.00 an hour if you have 26 or more employees.  Therefore, make sure that you pay the correct minimum wage rate for New Year’s Day if you will be staying open for the holiday.

Also remember that you may be required to pay a higher minimum wage if your city or county has adopted a higher minimum wage than California.  If so, you must pay the higher minimum wage rate if you employ individuals in a city or county that has a minimum wage ordinance.  If you’re unsure if the city or county in which you have employees is subject to a higher minimum wage than California, you should contact your employment law attorney or human resources professional.


AB 9 – Employment Discrimination Statute of Limitations Extension

Question:  An employee who quit over two years ago is now threatening to file a claim against my company for discrimination.  Can the employee file such an old claim?

Answer:  No.  But under AB 9 (the Stop Harassment and Reporting Extension Act (“SHARE”)), which Governor Newsom signed into law on October 10, 2019, beginning January 1, 2020, employees will have up to three years to file discrimination, harassment, or other claims of violation of California’s Fair Employment and Housing Act (“FEHA”) with the Department of Fair Employment and Housing (“DFEH”).  This new limitations period is three times the length of California’s current one-year standard and could impede employers’ abilities to defend older claims.  While AB 9 does not revive claims that have already expired, like your former employee’s potential claim, employees with unexpired claims will soon benefit from the new three-year limitations period.

When an employee wishes to bring a formal complaint of a FEHA violation, before filing a lawsuit in court, the employee must first file a complaint with the DFEH either requesting that the DFEH immediately issue a Right to Sue Notice, or that the DFEH investigate the claim, which can take a year or longer, and then issue the Right to Sue Notice when the investigation concludes.  The employee then has one year from the date of receipt of the Right to Sue Notice to file the lawsuit.  Under existing law, an employee has one year from the date of the alleged unlawful act to file that complaint with the DFEH.  Under AB 9, the one year to file the DFEH complaint has been tripled to three years.  As such, at least four full years can pass before an employee files the lawsuit against the employer.

In proposing the bill, the SHARE Act’s author said, “victims of all forms of discrimination and harassment may be initially unclear about what happened, unaware of their rights, or reluctant to report misconduct to their boss.”  The California Chamber of Commerce and 49 other groups opposed the bill stating, “While AB 9 is being promoted as an anti-sexual harassment bill, it actually has a broad, sweeping effect on all employment harassment, discrimination and retaliation complaints . . . and will impose a statute of limitations that is six-times the length of the federal standard and three-times the length of the state standard . . . . If the statute of limitations is tripled for FEHA complaints, the employer will not have the ability to eradicate the inappropriate behavior in a timely and efficient manner. Extending the statute of limitations will reduce the motivation for the victims to quickly come forward. If the employer is not made aware of the harassing or discriminatory conduct, it cannot take the appropriate remedial measures necessary to properly deal with the offender.”  With a lengthy delay in reporting complaints, memories fade and potential witnesses move away, making it much more difficult to achieve a fair and timely resolution of claims.

Because good records are critical in the employment context, employers should be diligent and consistent with their documentation of employee complaints and performance issues, and should review internal document preservation policies to ensure that emails and other relevant documents are archived for at least four years.


The Golden Rule Applies to Workplaces Too

Question:  What is one of the best ways to avoid workplace lawsuits?

Answer:  The answer is simple yet elusive in some workplaces:  Be nice.


Whether you are an employer or an employee, kindness and civility can defuse and often prevent workplace disputes that may otherwise escalate to litigation.  The Golden Rule that you learned in elementary school is the maxim to live by and to help avoid workplace litigation.  Treat others the way you want to be treated.  While you do not need to be best friends with or even like everyone you work with, you should interact with others in a kind and respectful manner in the workplace and require your employees to do the same.  Below are a few examples of how employers can help foster a workplace where disputes can be resolved by respectful communication and action rather than litigation.

Be Respectful and Open in Daily Interactions

In creating a productive workplace, it is important to implement a respectful workplace policy requiring all employees to work cooperatively with one another, and add to your code of conduct that all employees must be professional and respectful in their interactions at work. You may have heard the adage that employees quit managers, not companies.  It could also be said that employees sue managers, not companies.  While neither of these statements rings true in every situation, employees are more likely to bring a workplace grievance to the attention of their supervisor rather than an attorney when employees feel that management treats them with respect and is open to their concerns.  Moreover, supervisors and other managers who show respect and civility in daily interactions with others are less likely to be accused of harassment or retaliatory actions.

Beyond setting a positive example with their own actions, those in management positions must address inappropriate behavior that affects the workplace, both by other employees (supervisors and non-supervisors alike) and by non-employees, such a customer or vendor.  Appropriate policy implementation and training are critical tools for employers, but they are no substitute for common courtesy and respect in everyday interactions. Employers should be particularly mindful to not lose this sense of courtesy while conducting terminations, as an embarrassing or terse termination can quickly motivate an employee to explore legal claims.

Avoid and Address Workplace Gossip

Rumors and gossip can lead to tension in the workplace potentially damaging relationships, lowering morale, and decreasing productivity.  Managers should avoid participating in or condoning gossip, which could be alleged as an act of harassment or workplace bullying.  Supervisors may also have a duty to investigate the underlying complaint or rumor.  There may be legitimate concerns in rumors that can be addressed by management before they escalate into a lawsuit.  Training staff to effectively and respectfully communicate with one another to resolve problems will also help prevent and resolve conflicts that could lead to litigation.  Employers should keep in mind that workplace policies prohibiting gossip should not be overly broad, as they could be interpreted as inappropriately restricting the rights of employees to discuss wages, hours, and working conditions.

Whether you are an employer or an employee, being a jerk at work is never a good idea.  Erring on the side of kindness in your daily interactions will reduce your chances of being drawn into a workplace lawsuit, and will likely make your workday more enjoyable.


Independent Contractor Classification Legislation

Question:  I read your newsletter about the court case involving independent contractors, but now I’m hearing about a new rule regarding worker classification.  What’s the status?

Answer:  On September 18, 2019, California Governor Gavin Newsom signed Assembly Bill (AB) 5 codifying the stringent three-part “ABC” test that was set forth by the California Supreme Court last year in Dynamex Operations West, Inc. v. Superior Court of Los Angeles (Dynamex) to evaluate whether a worker is correctly classified as an independent contractor.

Historically, in determining whether a worker was an employee or an independent contractor, California courts, the Labor Commissioner, Internal Revenue Service, and the Employment Development Department used the eleven-factor test set forth in S.G. Borello & Sons, Inc. v. Department of Industrial Relations (Borello). The Borello test primarily focuses on whether a business has control over the means and manner of performing contracted work, while considering additional secondary factors such as the method of payment, the length of time the services are to be performed, and who provides work tools.

In Dynamex, the California Supreme Court adopted a new test for determining whether a worker is properly classified as an independent contractor as opposed to an employee.  The Dynamex “ABC Test” presumptively considers all workers to be employees for purposes of Wage Order claims unless the employer can prove that the worker satisfies the following three conditions:

(A) the worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact;

(B) the worker performs work that is outside the usual course of the hiring entity’s business; and

(C) the worker is customarily engaged in an independently established trade, occupation, or business.

Under Dynamex, failure to satisfy any one of these three elements means that a worker must be classified as an employee for purposes of the California Wage Orders (e.g., claims for minimum wage, overtime, etc.).  Under AB 5, the Dynamex  test applies not only for purposes of the California Wage Orders, but also for all Labor Code and Unemployment Insurance Code claims, meaning that now the “ABC Test” will apply to additional claims to which it previously did not apply.

Notably, due to extensive lobbying efforts during its drafting, AB 5 contains numerous exemptions from the Dynamex test for particular occupations and relationships.  Subject to certain licensing and other requirements, the following occupations are subject to the Borello test instead of the Dynamex test:

  • Doctors (physicians, surgeons, dentists, podiatrists, veterinarians, psychologists)
  • Professionals (lawyers, architects, engineers)
  • Professional service providers (marketing, human resources administrator, travel agents, graphic designers, grant writers, fine artist)
  • Financial services (accountants, securities broker-dealers, investment advisors)
  • Insurance brokers
  • Real estate agents
  • Direct sales (compensation must be based on actual sales)
  • Builders and contractors
  • Freelance writers and photographers (no more than 35 submissions to an outlet in a year)
  • Hair stylists and barbers (must be licensed, set own rates and schedule)
  • Estheticians, electrologists, and manicurists (if licensed)
  • Tutors (that teach their own curriculum, and that are not public school tutors)
  • Commercial fishermen
  • AAA-affiliated tow truck drivers.

AB 5 is very complex and the risks of misclassification are significant and can include back taxes owed to the federal and state government, as well as unpaid overtime and missed meal and rest period penalties.  If you use independent contractors, be sure to analyze their classification under AB 5, which can be viewed at https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201920200AB5


Changes to California’s Mandatory Sexual Harassment Prevention Training Law

Changes to California’s Mandatory Sexual Harassment Prevention Training Law
By Sara Boyns

On August 30, 2019 Governor Newsom signed Senate Bill 778, which extends the date for employers with five or more employees to provide mandatory sexual harassment prevention training to most of their employees.  Prior law stated that the training had to be completed by January 1, 2020, but SB 778, which takes effect immediately, extends the time limit for providing the mandatory training and education to January 1, 2021.  However, this new law still requires new nonsupervisory employees to be provided the mandatory training within six months of hire, and new supervisory employees to be provided the training within six months of becoming a supervisor.  The new law requires the training to be provided once every two years.

Other important provisions of this new law include:

  • Employers who provided mandatory sexual harassment prevention training and education in 2019 do not have to provide it again until 2021, and every two years thereafter.
  • The training may be completed by employees individually or as part of a group presentation, and may be completed in shorter segments, as long as the applicable hourly total requirement is met.
  • Employers are defined as any person or company regularly employing five or more persons or regularly receiving the services of five or more contract workers, or any person acting as an agent of an employer, directly or indirectly, the state, or any political or civil subdivision of the state, and cities.
  • Employers must also include prevention of abusive conduct as a component of the training and education.  “Abusive conduct” means conduct of an employer or employee in the workplace, with malice, that a reasonable person would find hostile, offensive, and unrelated to an employer’s legitimate business interests.
  • Employers must also provide training inclusive of harassment based on gender identity, gender expression, and sexual orientation as a component of the sexual harassment prevention training and education. The training must include practical examples inclusive of harassment based on gender identity, gender expression, and sexual orientation, and must be presented by trainers or educators with knowledge and expertise in those areas.
  • Beginning January 1, 2020, for seasonal, temporary, or other employees that are hired to work for less than six months, an employer shall provide the mandatory training within 30 calendar days after the hire date or within 100 hours worked, whichever occurs first.
  • If a temporary employee is employed by a temporary services employer to perform services for clients, the training shall be provided by the temporary services employer, not the client.
  • Different rules apply to agricultural workers.
  • Employers may develop their own training, may send their employees to a live or web based training provided by a trainer who meets the required qualifications, or may direct employees to view the online training course that the Department of Fair Employment and Housing (DFEH) will develop and make available on its internet website. The DFEH states the training will be available “by late 2019.”

You can see the full text of the new law at https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=201920200SB778.  While employers have more time to comply with the mandatory sexual harassment prevention education and training requirements, it is important to accurately calendar training deadlines for all new hires, new supervisors, and other employees to ensure compliance with the law.


Can Accrued Vacation Time Requests Be Denied?

Question:  I offer my full time employees paid vacation benefits.  Some of my employees have asked for vacation during the upcoming U.S. Open.  As a restaurant, I will need all hands on deck during this busy time.  Can I deny vacation requests even when an employee has accrued vacation?

Answer:  Yes.

California employers are not required to provide paid vacation or paid-time-off (PTO) under California law, but if they choose to do so there are rules that must be followed.  It is important to have a written vacation pay policy so your employees understand the rules.  You may place reasonable restrictions on the use of paid vacation time, and many businesses in the hospitality and retail industries restrict their employees from using vacation time during the busy tourist season and special events.  Conversely, employers may require employees to take vacation time off during specified periods.  It is important to let employees know about these restrictions ahead of time, and to administer the policy fairly.

Your vacation policy can state that an employee has to work for you for a specific period of time before vacation benefits begin to accrue. In California, employers cannot adopt a “use it or lose it” vacation policy. Earned vacation time is considered wages, and vacation time is earned as work is performed. For example, if an employee is entitled to 10 days of vacation per year, after six months of work the employee will have earned five days of vacation. Vacation pay accrues as it is earned and cannot be forfeited, even upon termination of employment, regardless of the reason for the termination.

It is also important to define how vacation time will be accrued.  For example, an employer's vacation plan may provide for the earning of vacation benefits on a daily or weekly basis, each pay period, or some other periodic basis. Many employers use a pay period method of accrual.  While employers are not required to list employees’ accrued vacation on the employees’ paystubs, they are required to keep accurate records of accrual and use of vacation time.

In order to encourage employees to take time off for rest and relaxation, and to control vacation accrual liability, many employers place a cap on the number of vacation hours an employee can accrue.  In California, employers must provide employees a “reasonable” amount of time to use their accrued vacation, so most vacation caps are 2 times the employee’s annual accrual.  For example, if an employee accrues 80 hours of vacation time each year, that employee’s vacation cap would be 160 hours.  If the employee’s accrual reached the cap, accrual would stop until the employee used some vacation time to bring the accrued vacation under the 160 hour cap.  Another option is to cash out unused accrued vacation time at the end of the year.

Employers can require employees to follow a procedure to request vacation time off.  For business planning purposes, most employers require employees to request vacation time in writing at least 30 days in advance.  Your policy can also allow employees to take vacation time in full or partial day increments.

When the employment relationship ends, remember that all accrued but unused vacation or PTO must be paid at the employee’s final rate of pay and included in the employee’s final paycheck unless otherwise stipulated by a collective bargaining agreement.

 


Workplace Implications of Emerging Consumer Privacy Laws

Question:  Someone told me that California has a new privacy law.  What does this mean for my business?

Answer: There is an increasing belief that we have lost control of our personal information. In 2018, California passed a sweeping consumer privacy law to combat recent privacy scandals, including the Cambridge Analytica incident involving Facebook user data.  The new law is complex and its language creates many ambiguities for regulators, businesses, and consumers.  Although lawmakers are still attempting to refine and clarify the law, its fast-approaching January 1, 2020, effective date makes it important to understand the law as it is currently written.

The new law—the California Consumer Privacy Act (“CCPA”)—affords California residents an array of new rights, starting with the right to be informed about what kinds of personal data companies have collected and why it was collected. Among other new protections, the law stipulates that consumers have the right to delete their data, say no to the sale of their personal information, be free from discrimination, and seek legal action against businesses that violate these rights.

At first blush, it appears the CCPA only protects the privacy of consumers.  However, the law’s broad definition of “consumer” includes employees as long as they are natural persons who are California residents because they are either domiciled in California for a temporary or transitory purpose or are in California for more than a temporary or transitory purpose.  While the application of the CCPA to employee data remains an open question, employers should be ready to face the law’s direct implications for employment-related data.

With some limited exceptions, employers must comply with the CCPA if they satisfy at least one of the following three criteria: (1) have annual gross revenues in excess of $25 million; (2) derive at least half of their annual revenues from selling consumers’ personal information; and (3) handle, buy, share, or sell personal information belonging to at least 50,000 California residents annually.  The law clearly reaches large employers, but even small businesses might find themselves covered by the CCPA if they have significant amounts of data.

For example, under the CCPA, employees’ performance reviews, compensation information, and most human resource records may constitute “personal information.” Non-employee California consumers (as defined under CCPA), including customers or clients, will also likely count towards the 50,000 threshold that mandates compliance.  In addition, because “personal information” as defined under the CCPA includes IP address and device identification numbers captured by operating an application or website, the 50,000 number could be relatively easily achieved by many employers.  If an employer finds itself subject to the CCPA, its employees and consumers will have numerous rights under the CCPA.

Still, it is not clear if the CCPA is intended to protect employment-related data, and there have been efforts to amend and clarify the legislation before it goes into effect on January 1, 2020.  One such amendment is Assembly Bill 25, which would specifically exclude employees and job applicants from the definition of “consumer” under the CCPA.  In addition, the Attorney General is working on regulations to implement the CCPA that may clarify the reach of the CCPA.

While the proposed amendment and expected regulations may alleviate some uncertainty, employers should consider proactively reviewing their privacy policies and practices and watching for updates on regulations that may make the CCPA applicable to employee data.


For the 4th Year in a Row, Fenton & Keller Named County’s Top Law Firm in Monterey County Weekly Reader Polls

In its March 28, 2019 edition, the Monterey County Weekly announced that its readers have once again voted Fenton & Keller the Best Law Firm in Monterey County. This is the fourth consecutive year Fenton & Keller has received this honor.

All of us at Fenton & Keller would like to express our gratitude to the readers of Monterey County Weekly for honoring and expressing their confidence in our firm in this way. We would also like to thank our clients for trusting in us and allowing us to serve their changing legal needs for over 50 years!