In July, the California Supreme Court issued its opinion in Troester v. Starbucks Corp., holding that the federal wage laws that excuse companies from paying workers for de minimis work, i.e. small amounts of time that are difficult to record, do not apply under the California wage and hour standards.
The de minimis rule
As part of our efforts to update employers regarding the newly-enacted statutes that will affect employers in the coming year, this post addresses a bill recently signed into by California Governor Jerry Brown that prohibits employers from requiring most employees who live and work in California to agree to a forum selection or choice of law clause that would designate a forum or substantive law of a jurisdiction outside California.
The bill, designated as Senate Bill 1241, is straightforward on its face adding section 925 to the California Labor Code. It prohibits any employer from requiring an employee who “primarily resides and works in California” to adjudicate outside of California a claim arising in California, or to deprive California-based employees of “the substantive protection of California law” with respect to such a claim. “Adjudication” is defined to include litigation and arbitration. The statute becomes effective on January 1, 2017, with respect to contracts entered into after that date.
From city to county to state, in the past three years, Californians have witnessed extensive propagation of minimum wage legislation at the local level. After staying silent for several years, the upper echelons of California’s state government eventually responded. For those who were paying attention to their legislative surroundings, the state’s reaction to the growth of local ordinances was likely unsurprising. However, to those unfamiliar with the growing trend, California’s idiosyncratic imposition of a statewide minimum wage was likely unexpected. Especially given that the increase was not won by popular demand on a ballot. Instead, the new bill was signed into law only months before an impending vote to raise the minimum wage, which the Service Employees International Union expended great money and effort lobbying to secure.
California is unquestionably more employee friendly than most states, which often means it is on the forefront with respect to its comparatively “progressive” legislation. However, if you live in a less employee-friendly state or even a state that has never addressed its minimum wage, that time may be coming.
During his 2013 State of the Union address, President Obama made a nationwide call to action touting the need for an increase in the minimum wage at the federal, state, and local levels. Since that mobilization, 18 states and Washington, D.C. have passed laws to raise their minimum wage. While state legislation often garners more attention than a city ordinance, in fact many local governments had already initiated steps to address the minimum wage at the local level. Since being armored with the Commander in Chief’s stamp of approval, almost 40 cities and localities have enacted legislation to increase the minimum wage; still more localities are considering pending initiatives. No matter how immediate or distant future legislative action might be, it is always important to stay informed about the legal landscape, especially in your geographic region, and to communicate regularly with your attorney to ensure your legal compliance as that landscape continues to evolve.
The idea of a “minimum wage” might sound simple on its face; however, increases in the minimum wage don’t just affect a company’s bottom line. Pay practices themselves are directly affected. Examples of pay practices impacted by increases to the minimum wage rate include: the lowest permissible average hourly rate, the applicable overtime rate, exempt vs. non-exempt status, notice requirements to employees who receive a pay rate change; and compensation calculations for piece-rate, salaried, and commission-based employees.
Because employers must comply with federal, state, and local minimum wage laws, potential conflict between thrice-layered legal requirements can create compliance issues for large employers – especially those who operate in multiple cities. Further, where there is a conflict between layers, employers must follow the law that is most beneficial to the employee.
While legislation is often synonymous with onerous obligations, taking the time to understand legislation can actually serve to relieve some of the potential burden. As is exemplified by Santa Monica’s recent wage ordinance, the rules governing that ever-important number can also contain beneficial exceptions, additional requirements, and useful guidance. Examining this recent Santa Monica ordinance in the context of the state’s minimum wage legislation offers a real world of example of the type of intricacies that can be embedded within.
Labor Days co-editor Barbara Hoey was interviewed on Bloomberg Television’s Bloomberg West regarding interim Reddit CEO Ellen Pao’s gender discrimination lawsuit against her former employer, venture capital firm Kleiner Perkins Caufield & Byers, LLC. Ms. Pao claimed that Kleiner Perkins paid and promoted men more than women and engaged in workplace retaliation by terminating her
On July 1, employers in California and Massachusetts (with few exceptions) must begin providing paid sick leave to their employees. California and Massachusetts will be joining Connecticut, the District of Columbia, New York City, and over 15 other cities throughout the country as jurisdictions to require paid sick days.
While the California and Massachusetts laws
As was discussed on Fox Business News’s Willis Report, Friday’s jury’s verdict in California rejecting Ellen Pao’s claims of gender discrimination and retaliation was undoubtedly a huge victory for the venture capital firm Kleiner Perkins. However, before employers start popping champagne corks, all companies should consider the lessons learned from this case.
A brief background: Ellen Pao, a junior partner at Kleiner, claimed that she had been harassed and discriminated against while employed there because she is a woman. Ultimately, she alleged that after she complained about this perceived discrimination, she was then terminated. She sought many millions of dollars in damages – and potentially multiples of that in punitive damages.
Some of the 24 days of testimony included tales of workplace romances, alleged sexual advances on business trips, and firm events which excluded women, like a high-end ski trip that was “men only.” The jury, however, also heard from other witnesses, including women at Kleiner, who said that the firm was a fair place to work, that it was a competitive atmosphere for women and men alike, and that Ms. Pao was the cause of her own difficulties . Clearly, the jury believed Kleiner’ s version of events, rejecting out of hand all of Ms. Pao’s claims.
Looking at it from afar, many are already saying that – even with a loss – the Pao case has sent some powerful messages through the high tech industry in Silicon Valley.
But, if you are not in the high tech world, you are probably asking, “What does this case have to do with my company?” The answer is: a great deal.
First, any time there is a high profile harassment, case – whether it results in a plaintiff’s verdict or not – it brings sexual harassment back into the media and the spotlight, raising the specter of a spike in new claims. Some women may see and hear about this case and be tempted to become the next Pao. Although a jury found that Pao could not connect the industry’s male-dominated culture to Kleiner’s failure to promote her or to fire her, the case underscores how a work environment can provide fodder for discrimination claims and shine a spotlight on your culture.
Second, all employers should remember that any victory like this comes at a huge cost for the defendant/employer. There are first the direct costs of hundreds of thousands (maybe millions) of dollars in legal fees. There are also indirect costs, like the time taken away from the business by senior management because of the ligation, and then the public “airing” of the company’s dirty laundry in court and in the newspapers. No company wants either, and depending on your business the reputational harm from a case like this – win or lose- may be substantial. In fact, that’s what much of the post-trial press has been about: Pao lost in court, but her former employer may have lost in reputational terms.
Thus, the real win for a company is to avoid being the next Kleiner Perkins. But how can you do that?
Continue Reading A Victory for Kleiner Perkins Should Still be a Red Flag for All Employers – “It’s All About Your Culture”
