Recent court opinions and bills passed by the State are requiring employers to update certain employment practices. Below are the major changes from this summer that affect your business.

Rejection of the De Minimis Rule

Federal law permits employers to disregard insubstantial or insignificant periods of time beyond the scheduled working hours under the De Minimis Rule. Examples of this include an employee clocking out and then turning on a security system alarm and locking doors. Setting the alarm and locking doors are done at the employer’s instruction and benefit, but are done after clocking out. The Federal De Minimis Rule states that this time does not need to be tracked and paid.

In Troester v. Starbucks, Starbucks employees sued for not being paid for time spent performing closing procedures after clocking out at night. The plaintiffs claimed that even though the Federal De Minimis Rule permits employers to disregard insubstantial and insignificant time, no such equivalent California State law exists. Starbucks argued that Starbucks could rely on the Federal De Minimis Rule in not tracking and paying time spent performing closing procedures. The California Supreme Court held in favor of the plaintiffs and stated that the De Minimis Rule does not exist in any California law, regulation, or Wage Order, and that the time spent on closing procedures must be tracked and paid.

This decision sets a difficult precedent for California employers for at least two reasons. First, employers who relied on the Federal De Minimis Rule must now change employment practices so that all insubstantial and insignificant time spent working off the clock is tracked and paid. Second, employers must now be conscious of other practices that rely on Federal law protections that do not exist under California State law.

No Re-Hire Provisions Violate State Law

Settlement agreements between employers and employees often contain a “no re-hire” provision that states that the employee is not eligible to be re-hired by the employer or any of its affiliates. The Ninth Circuit Court of Appeals held in Golden v. California Emergency Physicians Medical Group, et al., that “no re-hire” provisions in settlement agreements between an employer and an employee violate Business and Professions Code 16600 and are unenforceable. Employers should have their form Severance and Release Agreements and Settlement Agreements reviewed to ensure that “no re-hire” provisions are removed.

AB 2282 – Salary History Ban (Effective January 1, 2019)

Beginning on January 1st of this year, a new California State law went into effect that prohibits employers from inquiring into an applicant’s salary history and requires employers to provide an applicant, upon reasonable request, the pay scale for a position the applicant is applying for. If your company has not revised its applications or had them reviewed for compliance with this new law, we recommend doing so now.

AB 2282 was recently passed for the purpose of defining “pay scale”, “reasonable request”, and “applicant”, and clarifying that employers may ask applicants about salary expectations. “Pay scale” will now mean a salary or hourly wage, but does not include other forms of compensation such as bonus or long-term compensation. “Reasonable request” will mean after an applicant has completed an initial interview. “Applicant” will mean an individual who is seeking employment and is not currently employed with that employer. The law does not specifically state what the penalty is for improperly inquiring into an applicant’s prior salary history, so the default PAGA penalties would apply.

AB 2282 also amends the Fair Pay Act, which prohibits employers from having pay differentials for employees of different genders or race performing substantially the same work. Previously, prior salary history could be considered in certain circumstances to justify a pay differential. AB 2282 will prohibit employers from using prior salary history entirely to justify a pay differential. An employee who improperly receives less than the wage the employee is entitled to may recover the difference in wages multiplied by 2.

We recommend that all employers contact us to review their employee arbitration agreements and discuss the value of including a class action waiver. Please contact Kurtis Urien at Kurtis@mrclaw.com for assistance with employee arbitration agreements

Recent court opinions and bills passed by the State are requiring employers to update certain employment practices. Below are the major changes from this summer that affect your business.

Rejection of the De Minimis Rule

Federal law permits employers to disregard insubstantial or insignificant periods of time beyond the scheduled working hours under the De Minimis Rule. Examples of this include an employee clocking out and then turning on a security system alarm and locking doors. Setting the alarm and locking doors are done at the employer’s instruction and benefit, but are done after clocking out. The Federal De Minimis Rule states that this time does not need to be tracked and paid.

In Golden v. California Emergency Physicians Medical Group, et al., Starbucks employees sued for not being paid for time spent performing closing procedures after clocking out at night. The plaintiffs claimed that even though the Federal De Minimis Rule permits employers to disregard insubstantial and insignificant time, no such equivalent California State law exists. Starbucks argued that Starbucks could rely on the Federal De Minimis Rule in not tracking and paying time spent performing closing procedures. The California Supreme Court held in favor of the plaintiffs and stated that the De Minimis Rule does not exist in any California law, regulation, or Wage Order, and that the time spent on closing procedures must be tracked and paid.

This decision sets a difficult precedent for California employers for at least two reasons. First, employers who relied on the Federal De Minimis Rule must now change employment practices so that all insubstantial and insignificant time spent working off the clock is tracked and paid. Second, employers must now be conscious of other practices that rely on Federal law protections that do not exist under California State law.

No Re-Hire Provisions Violate State Law

Settlement agreements between employers and employees often contain a “no re-hire” provision that states that the employee is not eligible to be re-hired by the employer or any of its affiliates. The Ninth Circuit Court of Appeals held in Golden v. California Emergency Physicians Medical Group, et al., that “no re-hire” provisions in settlement agreements between an employer and an employee violate Business and Professions Code 16600 and are unenforceable. Employers should have their form Severance and Release Agreements and Settlement Agreements reviewed to ensure that “no re-hire” provisions are removed.

AB 2282 – Salary History Ban (Effective January 1, 2019)

Beginning on January 1st of this year, a new California State law went into effect that prohibits employers from inquiring into an applicant’s salary history and requires employers to provide an applicant, upon reasonable request, the pay scale for a position the applicant is applying for. If your company has not revised its applications or had them reviewed for compliance with this new law, we recommend doing so now.

AB 2282 was recently passed for the purpose of defining “pay scale”, “reasonable request”, and “applicant”, and clarifying that employers may ask applicants about salary expectations. “Pay scale” will now mean a salary or hourly wage, but does not include other forms of compensation such as bonus or long-term compensation. “Reasonable request” will mean after an applicant has completed an initial interview. “Applicant” will mean an individual who is seeking employment and is not currently employed with that employer. The law does not specifically state what the penalty is for improperly inquiring into an applicant’s prior salary history, so the default PAGA penalties would apply.

AB 2282 also amends the Fair Pay Act, which prohibits employers from having pay differentials for employees of different genders or race performing substantially the same work. Previously, prior salary history could be considered in certain circumstances to justify a pay differential. AB 2282 will prohibit employers from using prior salary history entirely to justify a pay differential. An employee who improperly receives less than the wage the employee is entitled to may recover the difference in wages multiplied by 2.

We recommend that all employers contact us to review their employee arbitration agreements and discuss the value of including a class action waiver. Please contact Kurtis Urien at Kurtis@mrclaw.com for assistance with employee arbitration agreements