News & Events

AB 9 – Employment Discrimination Statute of Limitations Extension

by Sara Boyns

November 1, 2019

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.

Continue Reading

The Golden Rule Applies to Workplaces Too

by Sara Boyns

October 18, 2019

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.

Continue Reading

Independent Contractor Classification Legislation

by Sara Boyns

October 4, 2019

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

Continue Reading

CALSAVERS: RETIREMENT PLANNING MADE EASY

by Fenton & Keller

September 20, 2019

Question: Is it mandatory to provide a retirement plan for all of my employees?

Answer: Not exactly.  California established the CalSavers Retirement Savings Program (“CalSavers”), an IRA designed to benefit employees whose employers do not offer traditional retirement plan programs.  With minimal action required and no fees or liability for employers, CalSavers is a simple and effective way for employees to save money and plan for retirement.

With automatic enrollment and contributions made through payroll deductions, CalSavers makes it easier for employees to save for retirement. Once an employee is enrolled, the money saved belongs solely to the employee and the account can move freely with the employee from one job to the next.  CalSavers is not sponsored by the employer, meaning the employer is neither responsible nor liable for an employee’s decision to participate in the program or the performance of investments.  An employer’s responsibilities under CalSavers are limited to registering for CalSavers, providing employee information to the CalSavers administrator, and remitting employee contributions through payroll deductions.

CalSavers is mandated for all California private for-profit and non-profit employers that do not already sponsor a retirement plan for their business and that have more than five full- or part-time employees over the age of 18 with at least one employee working in California.  Eligible employers that fail to enroll are subject to a penalty per eligible employee.  Employers that maintain or contribute to a Tax-Qualified Retirement Plan which qualifies for favorable federal income tax treatment, regardless of whether all employees are eligible for the Plan, as well as employers with fewer than five employees, are prohibited from participating in the CalSavers program.

Prior to the effective dates listed below, employers must log on to the CalSavers site to either register online or certify their exemption from CalSavers by stating that their business already maintains a retirement plan:

Existing employees of employers that participate in CalSavers must be enrolled within 30 days after the employer registers with CalSavers. Employees hired after the employer registers will be automatically enrolled within 30 days of their date of hire or date of eligibility.  Despite this automatic enrollment, participation in CalSavers is voluntary, and employees may choose to opt out at any time.

Once the employer is enrolled, on each payroll date, it must deduct and transfer each participating employee’s contribution to the CalSavers administrator. All employee contributions must be remitted as soon as administratively possible, not to exceed seven business days from the date of deduction.

When providing information about CalSavers to employees, employers are required to remain neutral about their employees’ participation in the program. The CalSavers regulations expressly preclude employers from requiring, endorsing, encouraging, prohibiting, restricting, or discouraging employee participation in CalSavers, or from providing any advice or direction regarding any employee decision about CalSavers (e.g., investment choices, contribution rate, etc.).  To maintain neutrality, CalSavers will provide an email template at the time of registration that employers may share with employees to inform them that CalSavers will reach out to them.  The employees can then communicate with CalSavers directly to get further information and to ask any questions they may have.

Although CalSavers becomes effective next year, employers may begin registering now at the following link: https://employer.calsavers.com/californiaertpl/enroll/createEmp/viewCollectEmpPreRegDetails.cs.

Continue Reading