California’s CFRA Expansion Brings Increased Leave Rights

With the new year came a significant expansion of the California Family Rights Act (“CFRA”), which provides up to 12 weeks of unpaid, protected family and medical leave for certain employees. 

Under CFRA, specified employers are prohibited from refusing to grant certain leave requests by employees.  Employees granted a CFRA leave request must be guaranteed employment in the same or a comparable position upon termination of the leave.  CFRA also generally requires employers to maintain and pay for coverage under the employee’s group health plan for the duration of the leave at the level coverage would have been provided if the employee had continued working during the leave.

Under Senate Bill 1383, which went into effect January 1, 2021, private employers covered by CFRA now include any person who directly employs 5 or more employees.  Prior to this expansion, private employers covered by CFRA were only those with 50 or more employees. 

Qualifying Reasons For Leave

Qualified employees may be eligible for up to 12 workweeks of unpaid protected leave during any 12-month period:

1. for the birth of a child of the employee or placement of a child with an employee in connection with the adoption or foster care of the child by the employee;

2. for the employee’s own serious health condition that makes the employee unable to perform the functions of the position of that employee;

3. to care for certain family members who have a serious health condition;

4. due to a qualifying exigency related to the covered active duty or call to covered active duty of an employee’s spouse, domestic partner, child, or parent in the Armed Forces of the United States.

Covered family members used to include a spouse, domestic partner, parent, minor child, or dependent adult.  Now covered family members also include a child (not just minor child), grandparent, grandchild, and sibling.  Child, as defined, includes a biological, adopted, or foster child, a stepchild, a legal ward, a child of a domestic partner, or person to whom the employee stands in loco parentis.  This definition now includes adult children.  Parent, as defined, includes a biological, foster, or adoptive parent, a stepparent, a legal guardian, or other person who stood in loco parentis to the employee when the employee was a child.  A grandchild means a child of the employee’s child and a grandparent means a parent of the employee’s parent.  Sibling includes a person related to another person by blood, adoption, or affinity through a common legal or biological parent.

Given these expanded categories covered by CFRA, such leave may not always run concurrently with the Federal Family and Medical Leave Act (“FMLA”).  Employers will want to carefully track all leave requests to properly comply with both the CFRA and FMLA.

You may also recall that California recently expanded its baby-bonding leave to smaller employers.  Specifically, California’s 2018 New Parent Leave Act (“NPLA”), provided for 12 workweeks of unpaid protected baby-bonding leave for employees working at a worksite in which the employer employs at least 20 employees within 75 miles.  The protections of the NPLA are now included within CFRA, and the separate NPLA has been repealed.

Eligibility for Leave

CFRA still requires an employee to have at least 1,250 hours of service with the employer during the previous 12-month period in order to qualify for leave.

Significantly, employees no longer need to be among 50 employees within 75 miles to qualify for leave; there is now no geographic limitation to eligibility for CFRA leave, so long as the employer has 5 or more employees.

The CFRA expansion also eliminated the so-called “key employee” exception.  Specifically, there is no longer an exception from complying with CFRA for an employee who is a salaried employee and is among the highest paid 10% of the employer’s employees. 

Finally, there is no longer an ability to split the total leave among two parents when both parents of a child are employed by the same employer.  Now, the total amount of leave would need to be granted to each such parent.  Employers can no longer require parents split the leave in any way.

A Note About Pregnancy Leave

Although the CFRA expansion touches on leave for baby-bonding, the legislation specifies that existing pregnancy, childbirth, and related medical condition leave provisions are separate and distinct protections from CFRA protections.  By definition, use of CFRA leave to care for an employee’s own serious health condition does not include any leave taken for disability on account of pregnancy, childbirth, or related medical conditions.

Small Employer Family Leave Mediation Pilot Program

Under Government Code Section 12945.21, the California Department of Fair Employment and Housing (“DFEH”), the state agency that enforces CFRA, is tasked with creating a small employer family leave mediation pilot program for employers with between 5 and 19 employees.  Under the pilot program, an employer may, within 30 days of receipt of a right-to-sue notice alleging a violation of CFRA, request all parties to participate in the DFEH’s dispute resolution division.  The DFEH is supposed to include in a right-to-sue notice information about the right to participate in the mediation pilot program.  If an employer or employee requests such mediation, the employee cannot file suit under CFRA until the mediation is complete.  An employee’s statute of limitations, including for all related claims not under CFRA, are tolled upon receipt of a request to participate in the DFEH’s dispute resolution division until mediation is complete.  Section 12945.21 remains in effect until January 1, 2024.

Next Steps for Employers

Now is a good time to revisit your handbooks, leave policies and training to make sure your company’s policies and procedures comply with the expanded CFRA requirements.  The DFEH has added updated facts sheets, required posters, and other leave-related information on its website.  We will also keep an eye on the CFRA regulations in effect.  Employers with questions about how to comply with the new requirements or how to navigate tricky leave questions are encouraged to consult with employment counsel.

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What Do State and Local Stay-At-Home/Shelter-In-Place Orders Mean For Employers?

By Conn Maciel Carey’s COVID-19 Task Force

COVIDGovernors across the nation have signed various “stay-at-home” or “shelter-in-place” orders in an increased effort to slow the spread of COVID-19.  Many cities and counties have also signed such orders as well, including in states with no statewide order in place.  These orders vary in their scope in the restricted activities and affected industries but they typically address: (1) the continued operations of critical businesses; (2) restrictions on non-essential businesses; (3) the activities individuals may continue to perform; and (4) other limitations on gatherings.

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Challenges to New California Independent Contractor Law and Ban on Mandatory Arbitration Agreements Wind Through the Courts

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As expected, there have been a number of legal challenges to California Assembly Bills 5 and 51, both of which were signed into law by California Governor Gavin Newsom and set to go into effect on January 1 of this year.

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2020 Legislative Update for California Employers

California flagBy Andrew J. Sommer and Megan S. Shaked

Following the 2018 legislative session, which was dominated by laws responding to the #MeToo movement, 2019 has produced a long list of new employment laws on a myriad of topics.  From a new test for determining independent contractor status to a ban on no rehire agreements and revamped reporting standard for serious workplace injuries and illnesses, 2020 brings significant changes for California employers.  Though many of these laws will add items to the HR to-do list, employers have at least secured a one-year reprieve for completing mandatory harassment prevention training introduced last year.

Key changes affecting private sector employers are summarized below.  Unless otherwise indicated, these new laws take effect January 1, 2020.

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California’s Expansion of Dynamex’s ABC Test Severely Restricts When Employers May Properly Classify Workers as Independent Contractors

Last month, California Governor Gavin Newsom signed Assembly Bill 5 into law.  This lengthy bill generally codifies and expands the applicability of the three-part ABC test from the Dynamex decision in determining whether a worker is an employee or independent contractor for purposes of California Labor Code, Unemployment Insurance Code, and the Wage Orders.

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California Employers Are Not Required To Reimburse Restaurant Workers For The Cost Of Slip-Resistant Shoes Under Labor Code Section 2802

shutterstock_34577875A recent California Court of Appeal decision, Townley v. BJ’s Restaurants, Inc., has further defined the scope of reimbursable business expenses under California Labor Code section 2802, this time in the context of slip-resistant shoes for restaurant workers.

A former server filed an action under the California Labor Code Private Attorneys General Act of 2004 (PAGA), seeking civil penalties on behalf of herself and other “aggrieved employees” for California Labor Code violations, including the failure to reimburse the cost of slip-resistant shoes.  Plaintiff alleged a violation of Labor Code section 2802, which requires an employer to reimburse employees for all necessary expenditures incurred by the employee in direct consequence of the discharge of their duties.

Plaintiff argued that, because the restaurant required employees to wear slip-resistant, black, closed-toes shoes for safety reasons, such shoes should be provided free of cost or employees should be reimbursed for their cost.

The Court of Appeal, persuaded by the reasoning in an unpublished Ninth Circuit Court of Appeals decision, Lemus v. Denny’s, Inc., and guidance from the California’s Division of Labor Standards Enforcement (DLSE), held that section 2802 did not require the restaurant employer to reimburse its employees for the cost of slip-resistant shoes.  Specifically, the Court held that the cost of shoes does not qualify as a “necessary expenditure” under section 2802.

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Court Finds that Employer Compensation Program Did Not Violate California Law Against Averaging Paid and Non-Paid Time to Meet Minimum Wage Requirements

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Under a line of California cases, employees must be separately compensated at least minimum wage for all time worked.  These cases have stated that employers may not meet the requirement by showing employees are effectively paid at least minimum wage by averaging the amount an employee receives for paid and non-paid work hours.  For example, in Armenta v. Osmose, the court found an employer’s refusal to pay an hourly wage for workers’ time spent driving to job sites or processing paper work violated California minimum wage requirements even though the employer’s higher hourly rate averaged over all hours worked was above the minimum wage.  The court concluded the federal model of averaging all hours worked in a work week to calculate an employer’s minimum wage obligation was inappropriate under California law.

A recent decision out of the California Court of Appeal added some nuance to the analysis of minimum wage compliance in an established line of case law.  In Certified Tire and Service Centers Wage and Hour Cases, the California Court of Appeal for the Fourth District considered whether the defendant tire and service centers violated California law with its compensation program.

In Certified Tire, employees in a certified wage and hour class action argued the employer violated the applicable minimum wage and rest period requirements with its compensation program, which allowed technicians to earn a higher hourly wage for all hours worked during each pay period based on certain productivity measures.

Under the compensation program, technicians were assigned an hourly wage upon hire that exceeded the legal minimum wage.  However, technicians had the opportunity to earn a higher hourly rate under a set formula that rewarded technicians for work billed to a customer as a separate labor charge.  The employer applied the formula to determine a technician’s “base hourly rate” for a given pay period.  If the base hourly rate exceeded the technician’s regular hourly rate, the technician was paid the higher rate for all time worked during the pay period.  If the base hourly rate was less than the technician’s regular rate, the technician was paid the regular rate for all time worked during the pay period.

The employees relied on Armenta and similar cases in arguing its employer secretly paid nothing for work that could not be billed to a customer and through averaging made it look like they were paying at least minimum wage for the “non-billed” time.  The employees further argued that since a technician could not increase his or her base hourly wage when working on activities not associated with “billed time” or during rest breaks, such non-billed time was essentially uncompensated.

The court rejected the employees’ argument that the compensation program ran afoul of California minimum wage requirements.  Unlike in cases violating the Armenta rule, the employer in Certified Tire did not have to average employee’s hourly rate to show compliance with minimum wage requirements.  It directly established such compliance by paying technicians an hourly rate that is above minimum wage for all hours on the clock, including rest breaks.  Technicians were required to be clocked in during all work hours, except for their lunch period, and were paid an hourly rate for all hours on the clock.  Technicians also took rest breaks as required by law and did not clock out during such breaks.

The court distinguished Armenta and three other cases on which Plaintiff relied because in each case employers failed to compensate employees for certain work time and/or rest breaks.  (In Armenta the employer failed to pay for workers’ time spent driving to job sites or processing paper work; in Gonzalez v. Downtown LA Motors, automobile service technicians paid under a piece-rate compensation system were not directly compensated for non-repair tasks; in Bluford v. Safeway Stores, Inc., truck drivers paid under a piece-rate compensation system were not separately compensated for rest periods; in Vaquero v. Stoneledge Furniture LLC, furniture employees paid under a commission-based system were not separately compensated for rest periods.)

Takeaways

Certified Tire is certainly a win for an employer providing an incentive to earn more than the regular hourly rate for all hours worked based on certain productivity measures.  The key was the Certified Tire system did not violate the rule against averaging non-paid and paid work hours to comply with minimum wage requirements.  Certified Tire is a good reminder to periodically review your company’s pay practices for compliance with California wage and hour law, including the applicable California wage order and the constantly changing body of case law.