Employment Law Goes Local - acc.com · Employment Law Goes Local ... New Orleans Houston Dallas ......

Employment Law Goes Local

Jim McNeill Peter [email protected] [email protected]

September 22, 2016

Dentons Overview

September 22, 2016

dentons.com

3

CalgaryVancouver

ChicagoSt. Louis

Kansas City

Edmonton

Toronto

San Francisco/Oakland

Silicon ValleyLos Angeles

Orange CountySan Diego

PhoenixDenver

OttawaAlbanyMontréal

Boston

New YorkShort HillsWashington, DCTysonsMiamiAtlantaNew OrleansHouston

Dallas

Mexico CityBogotá

Milan

Frankfurt

Luxembourg CityBrussels

ParisLondon

Milton Keynes

Watford

AlgiersBarcelona

MadridCasablanca

Nouakchott

Praia

BissauAccra

LagosSão Tomé

Luanda

Lusaka

Cape TownJohannesburg

Maputo

TripoliBudapest

Bucharest

IstanbulCairo

AmmanRiyadh

Doha

NairobiKampalaKigali

Port Louis

Perth

Adelaide

Port Moresby

Brisbane

Sydney

Beirut

Ashgabat

Tashkent

AstanaAlmaty

Lhasa

Urumqi

XiningYinchuan

UlaanbaatarXi'an

TaiyuanHohhot

Shijiazhuang

WarsawBratislava

PragueBerlin

St. PetersburgMoscow

Muscat

Rostov-on-Don

TbilisiBaku

DubaiAbu Dhabi

ZhengzhouWuhan

ChengduKunming

ChongqingNanning

HaikouChangsha

HuangshiSingapore

Guangzhou, Zhuhai,Hong Kong, Shenzhen

Krasnodar

BeijingTianjinDalianShenyang

Changchun

HarbinJilin

JinanQingdaoChangzhou, Nanjing

Seoul

Hefei

Zhoushan, Ningbo,Nantong, Hangzhou,Shanghai, Suzhou, Wuxi

TaipeiWenzhouFuzhouXiamenNanchang

Minsk

Kyiv

LegendLocations in grey reflect combinations that have been approved but are not yet effective

Global coverage

Rome

Munich

September 22, 2016 4

Dentons Scope

* Figures reflect all combinations that were announced in 2015 and reflect headcount as of December 31, 2015.


Dentons Overview

Africa 40

Australia 410+

Canada 495+

Central Asia 40

Central and Eastern Europe 350+

China 3800

Hong Kong 15

Latin America and the Caribbean 75+

Middle East 90

Russia, CIS and the Caucasus 135+

Singapore 180

United Kingdom 425+

United States 960+

Western Europe 310

Lawyers by locations

* Figures reflect all combinations that were announced in 2015 and reflect headcount as of December 31, 2015.

• Minimum wage hikes go local

• Sick pay laws go local

• DOL overtime rule impacts California

• Status of arbitration agreement class / PAGA waivers

• New FEHA regulations / transgender issue update


Agenda

• Nationwide focus on minimum wage

• $15 per hour movement

• Presidential campaign

• Federal minimum wage - $7.25 per hour

• Congressional standstill

• Federal government contractor raises

• 2014 Executive Order 13658 - $10.10

• 2016 DOL Rule - $10.15

• 2017 - $10.20

• California minimum wage

• $15 per hour by 2022

• Municipal minimum wage raises


Minimum Wage Hikes Go Local

• April 2016 - Increase approved to $15 per hour by 2022 for employerswith 26 or more employees and by 2023 for employers with 25 or feweremployees

• How did we get here?

• 2014 San Francisco voters passed proposition raising $15 per hour by 2018

• 2015 LA City Council voted to raise to $15 per hour by 2020

• 2015 Sacramento City Council approved ordinance raising minimum wage to$12.50 per hour by 2020

• 2015, California Council for Service Employees International Union and ServiceEmployees International Union submitted separate ballot initiatives designed toincrementally raise minimum wage

• March 2016 - California legislature met with stakeholders and introduced bill


California Minimum Wage Increase - April 2016

Effective Date Employers with 26 or moreemployees

Employers with fewer than 26employees

January 1, 2017 $10.50 per hour $10.00 per hour






January 1, 2023 A rate annually adjusted for inflation $15.00

January 1, 2024 A rate annually adjusted for inflation (withmaximum annual increase of 3.5%)


California Minimum Wage Raise Table

City 2016 2017 2018 2019 2020 2021 2022

Berkeley $12.53Oct. 1

N/A N/A N/A N/A N/A N/A

LA City /County (25+employees)

$10.50July 1

$12.00July 1

$13.25July 1

$14.25July 1

$15.00July 1

N/A N/A

LA City /County (25 orfeweremployees)

N/A $10.50July 1

$12.00July

$13.25July 1

$14.25July 1

$15.00July 1

N/A

Sacramento N/A $10.50Jan. 1

$11.00Jan. 1

$11.75Jan. 1

$12.50Jan. 1

N/A N/A

San Diego $10.50July

$11.50Jan. 1

N/A CPIJan. 1

CPIJan. 1

CPIJan. 1

N/A

San Francisco $13.00July 1

$14.00July

$15.00July

N/A N/A N/A N/A

Santa Monica(26 or more)

$10.50July 1

$12.00July 1

$13.25July 1

$14.25July 1

$15.00July 1

N/A N/A

Santa Monica(25 or fewer)

N/A $10.50July 1

$12.00July 1

$13.25July 1

$14.25July 1

$15.00July 1

N/A


Municipal Minimum Wage Changes

• Trigger dates

• Within calendar week, at least two hours within geographic boundaries of city

• Sometimes required to qualify as an employee entitled to minimum wage

• Transient jobs

• Overtime calculations

• Civil actions / Civil enforcement

• Notice provisions

• Anti-retaliation provisions


Minimum Wage Goes Local - Trigger Dates

• No federal paid sick leave law

• States pick up the slack - Connecticut, Massachusetts, Oregon, WashingtonD.C., Vermont

• California Paid Sick Leave Law

• Paid sick leave goes local


Paid Sick Leave Goes Local


California Paid Sick Leave Overview

Features California Law

Who is covered? Workers employed for 30 or more days

Accrual rate 1 hour for every 30 hours worked; or

Lump sum up front (24 hours / 3 days)

Accrual commencement After 90th day of work

Accrual cap 48 hours (6 days)

Use cap 24 hours (3 days)

Carryover Yes

Civil action Silent

Preemption No


Sick Pay Goes LocalCalifornia San Francisco Oakland Emeryville LA City San Diego City Santa Monica

EffectiveDate

7/1/15 2/5/07 3/2/15 7/2/15 7/1/16 7/11/16 1/1/17

Coveredemployers

All employersregardless ofsize







Coveredemployees

Worked at least30 days inCalifornia

Works in City Works atleast twohours in theCity in aweek

Works at leasttwo hours inthe City aweek

Works at leasttwo hours inthe City in aweek and atleast 30 dayswithin a year inthe City fromstart

Works at leasttwo hours in theCity in one ormore calendarweeks

Works at leasttwo hours in theCity in a week

AccrualMethod

Option 1: 1hour for every30 hoursworked

or

Option 2: Lumpsum of 24hours (3 days)

Option 1: 1 hourfor every 30hours worked

or

Option: (1/1/17)Lump sum atstart of year, solong as accrualof additional ispermitted

1 hour forevery 30hours worked


or

Option 2:Lump sum (72hours foremployerswith 55 ormoreemployees, 48hours foremployerswith 55 orfewer)


or

Option 2:Provide a lumpsum of 48hours

1 hour for every30 hours worked

Option 1: 1 hourfor every 30hours worked

or

Option 2:Employers with26 or moreemployees -1/1/17 40 hours1/1/18 72 hours

Employers with25 or feweremployees1/1/17 32 hours1/1/18 40 hours


Sick Pay Goes LocalCalifornia San Francisco Oakland Emeryville LA City San Diego City Santa Monica

Accrual Caps 48 hours 10 or moreemployees - 72hours

10 employeesor less - 48hours

10 employeesor more - 72hours

10 employeesor fewer - 48hours

Employerswith 55 ormoreemployees -72 hours

Employeeswith 55 orfeweremployees -48 hours

72 hours No provision 26 or moreemployees - 40hours (1/1/17)

26 or moreemployees - 72hours (1/1/18)

25 or lessemployees - 32hours (1/1/17)

25 or lessemployees - 40hours (1/1/18)

Use Caps 24 hours Not permitted Not permitted Not permitted 48 hours peryear

40 hours peryear

Equal to accrualcap per year

Enforcement No privateright of action

PAGA unclear

Civilenforcement

Civil action

Civilenforcement

Civil action

Civilenforcement

Civil action

Civilenforcement

Civil action

Civilenforcement

Civil action

Civilenforcement

Civil action

• Amount of time allowed may vary by jurisdiction

• Trigger periods may complicate analysis

• Accrual caps / use caps may vary by jurisdiction

• Expanded use justifications


Sick Leave Takeaways

• Overview of new rule

• Practical tips / impact on California employers


DOL Overtime Rule Goes Local

• New regulations promulgated by the US Department of Labor / Wageand Hour Division

• Impacts Fair Labor Standards Act (FLSA) "white collar" exemptions

• Part of larger federal effort


Who Promulgated New Rule & Why

• Salary basis test

• Salary level test (CA v Fed)

• Duties test


FLSA Overtime Evaluation - Overview

EXECUTIVE ADMINISTRATIVE PROFESSIONAL

Salary Basis Test • Employee must be paidon a salary basis

• Employee must bepaid on a salary basis

• Employee must bepaid on a salarybasis

Salary Level Test • $913 per week ($47,476per year for full-timeworker)

• CA 2017 $43,680 =2x min wage

• $913 per week($47,476 per year fora full-year worker)

• Special salary levelfor certain academicadministrativepersonnel

• $913 per week($47,476 per yearfor a full-yearworker)

• Salary level testdoes not apply todoctors, lawyers, orteachers

Duties Test • The employees "primaryduty" must be managingthe enterprise (includingmanagement of 2 FTEs)

• CA - 50% of time spenton exempt duties (i.e.,management); noconcurrent duties

• The employee's"primary duty" mustinclude the exerciseof discretion andindependent judgmentwith respect tomatters ofsignificance

• CA 50% rule

• The employee's"primary duty" mustbe to primarilyperform work thatrequires advancedknowledge in a fieldof science orlearning

• CA 50% rule


White Color Exemption Tests

• White Collar Exemption Salary Threshold Raise - $913 per week, or$47,476 per year (based on 40th percentile of lowest wage CensusRegion). Adjusted every three years

• HCE Salary Threshold Raise - [Outside CA] Total compensation for HCEexemption increasing from $100,000 per year to $134,000 (90thpercentile of earnings for full-time salaried workers in the U.S., withoutregard to regional differences). Adjusted every three years

• Nondiscretionary bonuses and incentive payments (includingcommissions) may count up to 10% of the Fed standard salary level.

• No change to $43,000 ($42,728.40) + commissions (10% = $4,747.60.)

• Quarterly "catch up" allowed

• No change to the duties test, meaning CA 50% rule still applies

• 60 day implementation period (December 1, 2016 deadline)


Overview of New Overtime Rule

Previous Rule Proposed Rule New Rule

White CollarExemptions(Administrative,Executive,Professional)

$455 per week /$23,660 per year



40th percentile ofSE USA comp

HCE Exemption[Outside CA]

$100,000 per year 90th percentile ofweekly earningsfor full-timesalaried workers

$134,004 per year

Duties Test Primary duty test Sought comments No change

Future ChangesTo Thresholds

No ties Update annually,tied to CPI

Updated everythree years, tied topercentages ofCensus


New Rule Overview

• Should you raise salaries?

• Should you lower salaries?

• Should you cut your workforce?

• Should you expand your workforce?

• Are your employees misclassified?


Practical Implications / Strategies

• Take the opportunity to assess all exempt positions

• Collect & Analyze Salary and Pay Information

• Identify currently exempt positions that will fall under the newrequired salary level

• Collect & Analyze Information Regarding Work Hours and Needs

• For those currently exempt positions that will fall under the new required salarylevel, assess actual average work hours to estimate overtime exposure

• Assess staffing level needs for the work of such positions

• Assess Non-Exempt Timekeeping Policies

• Are revisions necessary?


Practical Steps

• Challenge in Congress

• 21 states recently sued DOL

• Change in administration


What's Next?

• Are class action waivers enforceable?

• What about representative action waivers (PAGA)?

• What are the latest decisions on the federal level?


Arbitration Clauses - Class / PAGA Waivers

• California Rule - Class Waivers Enforceable

• Discover Bank v. Superior Court (Cal Sup. Ct. 2005) - Class waivers areunenforceable

• Rejected by AT&T Mobility LLC v. Concepcion (SCOTUS 2011), refaffirmed inDIRECTV, Inc. v. Imburgia (SCOTUS 2015)

• Iskanian v. CLS Transp. Los Angeles, LLC (Cal. Sup. Ct. 2014) - FAA Preemptsstate law; class action waivers generally enforceable

• 9th Circuit Rule - Class Waivers Unenforceable

• Morris v. Ernst & Young (August 2016) - Class waivers violate NLRA

• NLRB Rule - Class Waivers Unenforceable

• D.R. Horton - Class waivers violate NLRA

• 2nd, 5th and 8th Circuits reject, 7th and 9th Circuits agree


Class Waiver Progression

• PAGA features

• Action for civil penalties on behalf of State

• 75% recovery for State, 25% recovery for plaintiff

• Iskanian leaves door open, holding right to bring representative actionunder PAGA is unwaivable (a dispute between employer & the state)

• 9th Circuit - Sakkab v. Luxottica Retail North America (2015)

• FAA does not preempt Iskanian rule on PAGA claims

• Consistent with NLRA?


What About PAGA?

• New regulations impact employment discrimination and harassmentprovisions under the Fair Employment Housing Act (FEHA)

• Effective April 1, 2016

• Promulgated by California Department of Fair Employment andHousing’s (DFEH) new Fair Employment and Housing Council (FEHC)

• FEHC charged with promulgating regulations implementing FEHA


New FEHA Regulations


New FEHA Regulations

• Expanded coverage under FEHA

• Expanded compliance obligations on employers (policies / training)

• Clarified legal standards

• “Employer” - any person regularly employing “five or more persons[.]”

• Includes both in and out-of-state individuals

• Includes individuals out on leave

• Individuals need not be “employees” to be counted


FEHA Regulations - Expanded Coverage

• Must be in writing

• Must list all current protected categories covered under FEHA

• Must create a complaint process that meets certain requirements,including a timely response and impartial investigation with tracking

• Complaint process should not require an employee to complain directlyto his or her immediate supervisor

• Instructs supervisors to report any complaints of misconduct to adesignated company representative. Special requirement for employerswith 50 or more employees

• Specific requirements about steps to be taken re: receiving allegations ofmisconduct


FEHA Regulations - Written Policy Requirements

• Impose new requirements for conducting discrimination and harassmenttraining

• Gives DFEH the authority to obtain "non-monetary preventativeremedies" against an employer who fails to prevent discrimination andharassment, even in the absence of evidence of underlyingdiscrimination and harassment (but bans private right of action)

• Update definitions of "gender identity," "gender expression" and"transgender" under FEHA


Additional Features

• Gender identity - Every person's identification as male, female, a genderdifferent from the person's sex at birth, or transgender

• Gender expression - A person's gender-related appearance or behavior,whether or not stereotypically associated with the person's sex at birth

• Transgender - Refers to a person whose gender identity differs from theperson's sex at birth. A transgender person may or may not have agender expression that is different from the social expectations of the sexassigned at birth


Transgender Law Update - Definitions

• State law makes clear gender identity and gender expression isprotected under FEHA

• Recent state guidance on bathroom access - advised to move towardsingle stall, unisex bathrooms (bill on Governor's desk)


Transgender Law Update


State Transgender Bathroom Guidance

• Title VII - "Sex" only

• 1989 - Supreme Court "sex stereotyping"

• Federal courts - reluctant to expand "sex" beyond sex stereotyping andbiological considerations

• 11th, 4th Circuit - Protected

• Administrative agencies - Expansive approach


Transgender Rights Nationwide

May 2012 - EEOC / Macy v. Holder

June 2014 - DOL enforcement protocol update

July 2014 - HHS memorandum

July 2014 - Amending Executive Order No. 11478

August 2014 - DOL OFCCP Directive No. 2014-02

December 2014 - DOJ memorandum

2015 - EEOC lawsuits

March / April 2016 - DOJ / DOE North Carolina suits and letters

May 2016 - DOE / DOJ joint letters to public schools


Transgender Rights - Administrative Agency

• North Carolina

• Mississippi

• 4th Circuit weighs in…

• What's the Deference?

• Chevron?

• Auer?

• Skidmore?


Transgender Bathroom Battle - Federal

• Title VII & Title IX - Prohibition against "sex" discrimination

• Does "sex" include gender identity and/or expression?

• Distinction re: gender identity as a protected category per se

• Biological v. Choice

• Implications for race? Social constructs in question?


Transgender Rights - Issues To Watch


Jim McNeillPartnerDentons US LLPEmployment and Labor

D 619-595-5445E [email protected]

Peter StockburgerManaging AssociateDentons US LLPEmployment and Labor

D 619-595-8018E [email protected]

Presenters

Thank you

Dentons US LLP

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Suite 700

San Diego, CA 92121-1980

United States

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