Employment Law Basics 2019

1. Employment Law Basics 2019 DIANNA SALTZ HR BUSINESS PARTNER

2. EMPLOYMENT LAW Protects employees from discriminatory practices of employers. Each of the below situations could implicate the employment laws. The way a manager deals with it could impact the employee, the manager and the business. • A Jewish employee wants to leave work early each Friday • A job applicant is deaf • A long-time employee uses the company e-mail system to forward jokes to other employees

3. Employment Actions EMPLOYMENT ACTIONS • Compensation, assignment or classification of employees • Transfer, promotion, layoff or recall • Job advertisements • Recruitment • Testing • Use of company facilities • Training and apprenticeship programs • Fringe benefits • Pay, retirement plans and disability leave • Termination • Other terms and conditions of employment

4. Protected Status PROTECTED STATUS • Identifies a group protected by law • Federally protected classes include: • Race • Color • Sex (whether or not of a sexual nature) • Religion • National Origin • Age of 40 or older • Uniformed services (employees on active or inactive duty) • Disability • Genetic • Citizenship • Pregnancy

5. Protected Status PROTECTED STATUS • State protected classes may include: • Pregnancy • Mental Disability • Physical Disability • Marital Status • Sexual Orientation

6. At-Will Employment AT-WILL EMPLOYMENT Employers and employees have the right to terminate the employment relationship at any time, with or without cause. The following are the exceptions: • Employment contracts • Implied contract exceptions • Public policy exceptions • Implied covenants of good faith • Unlawful discrimination Avoid a problem! Act as if at-will employment does not exist!

7. Federal Statutes– Who is protected? FEDERAL STATUTES – WHO IS PROTECTED?

8. FEDERAL STATUTES – WHO IS PROTECTED?

9. Federal Statutes– Who is protected? FEDERAL STATUTES – WHO IS PROTECTED?

10. EQUAL • Ensuring Proof of Equality: • Job Postings • Selection Tests • Interview Questionnaires • Performance Evaluations • Development Programs

11. In Detail • Americans with Disability Act (ADA) • Applies to a person who has a physical or mental impairment that substantially limits one or more major life activities • Amendment (ADAAA) 2008: EEOC states an impairment does not need to be severe and individual assessment is required

12. In Detail • Americans with Disability Act (ADA) • Protects a person with a record of a substantially limiting impairment • A person with a history of cancer that is now in remission

13. In Detail • Americans with Disability Act (ADA) • Protects a person who is regarded (or treated by an employer) as if they have a mental or physical impairment • Employer perceives an employee to be pregnant and denies her the opportunity for a promotion

14. In Detail • Americans with Disability Act (ADA) • Protects a person who is associated with a person who falls within the above mentioned categories • Caregiver

15. In Detail • Americans with Disability Act (ADA) • Protects recovering alcoholics and drug addicts • An employee needs to attend AA meetings

16. In Detail • Americans with Disability Act (ADA) • Confidentiality • Information regarding an employee’s disability must be kept confidential • What may be disclosed: • To managers where they need medical information in order to provide reasonable accommodation • To provide first aid and safety

17. In Detail • Americans with Disability Act (ADA) • Requirements of employee: • Must meet the job-related requirements such as education, training and skill requirements • Must be able to perform the job’s essential functions with or without a reasonable accommodation • Why job descriptions are necessary

18. In Detail • Americans with Disability Act (ADA) • Requirements of the Employer Regarding People with Disabilities • Have an equal opportunity to apply for jobs and to work in jobs for which they are qualified • Have an equal opportunity to be promoted once they are working • Have equal access to benefits and privileges of employment that are offered to other employees • Not harassed because of disability

19. In Detail • Americans with Disability Act (ADA) The only law that requires employers to treat employees different and the interactive process must be followed Rodriquez vs. Valley Vista Services, Inc. Economic Damages = $528,185.00 Emotional Damages = $4,700,000.00 Punitive Damages = $16,570,261.00 Total = $21,798,446.00 (21.8 Million) Nealy v. City of Santa Monica, 2015

20. In Detail • Fair Labor Standards Act (FLSA) • All employees must be paid at least the minimum wage • Defines an exempt and non-exempt employee • Defines an independent contractor • Restrictions on employing minors • Record keeping

21. In Detail • Fair Labor Standards Act (FLSA) • Definition of an Exempt • Exempt from Overtime, Meal and Rest break requirements • Based on their job duties and salary, they are expected to get their job done however long or short it takes • They are not paid based on the amount of time they work. They are on a set salary • Must spend more than 50% of their workweek or be “primarily engaged in”, performing exempt job duties.

22. In Detail • Fair Labor Standards Act (FLSA) Executive/Managerial Exemption • Must supervise more than two employees Use caution: The Labor Commissioner generally finds that a managerial employee supervising as few as two employees rarely spends as much as 50% of his/her time primarily engaged in managerial duties • Regularly exercises discretion and independent judgment • Earns a minimum of $455 per week.

23. In Detail • Fair Labor Standards Act (FLSA) Administrative • Primarily performs non-manual work substantially important to the general business operations of the organization Cannot be routine work • Regularly exercises discretion and independent judgment • Earns a minimum of $455 per week.

24. In Detail • Fair Labor Standards Act (FLSA) Professional • Primarily performs non-routine work requiring knowledge of an advanced type or primarily on invention/imagination: Law, Medicine, Dentistry, Optometry, Architecture, Engineering, Teaching, Accounting or job is recognized as a learned or artistic profession • Regularly exercises discretion and independent judgment • Earns a minimum of $455 per week.

25. In Detail • Fair Labor Standards Act (FLSA) Computer Employees • Primary duty of application of systems analysis techniques, software applications, design, development, testing and modification of computer systems • Regularly exercises discretion and independent judgment • Earns at least $27.63 an hour

26. In Detail • Fair Labor Standards Act (FLSA) Sales • The employee’s primary duty must be making sales or obtaining orders or contracts for services or for the use of facilities for which a consideration will be paid by the client or customer • The employee must be customarily and regularly engaged 50% of the time away from the employer’s place or places of business. • Minimum salary

27. In Detail • Fair Labor Standards Act (FLSA) • Payment to Exempt Employees • Can be paid monthly, bi-weekly, semi-monthly and weekly

28. In Detail • Fair Labor Standards Act (FLSA) • Definition of an Nonexempt: • NOT exempt from Overtime, Meal and Rest requirements • Paid for “Hours Worked” • The time during which an employee is subject to the control of an employer • Includes all the time the employee is suffered or permitted to work, whether or not required to do so • Overtime is 1.5 times for all hours worked over 40 in a workweek

29. In Detail • Gray Areas: • On-Call: Employees you use for specific projects or as needed • Off-The-Clock Work: Employees working on “their own time” with or without authorization • “Waiting Around” time while earning piece rate • Security lines before/after work, changing into protective equipment, clock in/clock out time • Seventh workday in a workweek • Training Time

30. In Detail • On-Call – What to consider: • On-premises living requirements • Excessive geographical restrictions on employee’s movements • Whether the frequency of the calls was unduly restrictive • Whether a fixed time limit for response was unduly restrictive • Can employee trade call responsibilities • Can employee engage in personal activities

31. In Detail • Off-The-Clock Work: • If an employee works, responds to questions/emails or phone calls during nonworking hours Be aware of employees who have work access via smartphones, for example • Employees who arrive in “early” but are getting their coffee, socializing, etc. • Time is compensable if considered “hours worked” unless “de minims”

32. In Detail • Piece Rate Pay Issues: • Employee paid by piece rate/flat rate must be paid by the hour for all time spent on tasks not specifically included in the piece rate • The average wage rate must be used to pay for break periods: Labor Code section 226.2: It establishes compensation and wage statement requirements for rest and recovery periods and “other nonproductive time” for piece-rate employees http://www.dir.ca.gov/pieceratebackpayelection/AB_1513_FAQs.htm

33. In Detail • Security Lines, Waiting Time, Changing Clothes Time Compensable: • Time spend changing clothes/washing up/waiting around at work is compensable if it is necessary for the business • Bag checks maybe compensable

34. In Detail • Seventh Day Work • Define your workweek • Employees cannot be forced to work the seventh day, but can volunteer • If employee works more than 6 hours in any day during the workweek and they work the full seven days: • Time and a half for the first 8 hours work on the seventh day in that workweek • Double time for all hours worked over 8 on the seventh day in that workweek

35. In Detail • What is Training Time? • Training time is NOT “hours worked” if: • Attendance is outside of work hours • Attendance is voluntary • The training is not directly related to the employee’s job • The employee does not perform any productive work during such attendance

36. In Detail • Varying Rates of Pay for Nonexempt: • Travel time that is time spent only traveling (planes, trains and automobiles) may be paid at minimum wage • Piece rate based on completing a particular tasks or making a particular piece of goods, but for “waiting around” time, employee can be paid at the minimum wage, resulting in two or more rates of pay

37. In Detail Overtime The regular rate of pay includes base pay, plus non-discretionary bonuses, shift premiums, production bonuses, commissions and the value of meals and lodging. Example: Employer pays employees weekly Employee works 52 hours (40 regular, 12-overtime) Hourly rate: $20 Bonus: $138 Overtime due on regular hourly rate: 12 hours overtime x $30 = $360.00 Bonus attributable to the work week: $138.00 Regular bonus rate: $138.00/40 hours worked = $3.45 x 1.5 = $5.175 Total earnings for the workweek: Straight time = $800.00 (40 hours x $20) Overtime = $360.00 (12 hours x $30) Bonus = $138.00 Overtime on bonus = $5.175 x 12 hours overtime = $62.10 Total = $1,360.10

38. In Detail • Classification of exempt/non-exempt is based solely on the essential functions of the job and not the title. Why job descriptions are important

39. In Detail • Fair Labor Standards Act –(FLSA) • Independent Contractors IRS 20-Factor Tests Level of Control • Behavioral Control • Financial Investment • Permanence of The Relationship • Method of Payment The Plumber Example California Supreme Court Clarification 2018 (ABC Test): • (A)that 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; and • (B) that the worker performs work that is outside the usual course of the hiring entity’s business; and • (C) that the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.

40. In Detail O’Connor v. Uber Technologies, Inc. 2015: Three drivers who believe they should be treated as employees and not independent contractors. Granted class action status in December 2015 including all drivers in CA since 2009 even if they did not opt out of the arbitration agreement. Plaintiffs contend they are employees and entitled to reimbursement for expenses, including gas and vehicle maintenance.

41. In Detail O’Connor v. Uber Technologies, Inc. 2015: An ultimate finding that drivers are employees could raise Uber's costs beyond the lawsuit's scope and force it to pay Social Security, Medicare, workers' compensation, and unemployment insuranceas well as follow the Affordable Care Act. Settlement: $84M $16M if Uber goes public Drivers can dispute deactivation through appeals panel Drivers are still Independent Contractors

42. In Detail • Office of Federal Contract Compliance Programs (OFCCP) • Equal Employment Opportunity Requirements (EEO) • Posters • Include EEO tag in employment advertising • File an annual EEO Report

43. In Detail • Office of Federal Contract Compliance Programs (OFCCP) • Equal Employment Opportunity Requirements (EEO) • Keep records:

44. In Detail • Office of Federal Contract Compliance Programs (OFCCP) • Equal Employment Opportunity Requirements – EEO • Permit access to books and records during compliant investigations & evaluations • File an annual EEO-1 Report • 50 + employees and $50,000 + in contract = Affirmative Action Plan

45. Unlawful Discrimination UNLAWFUL DISCRIMINATION Employer actions may be used as evidence • Direct evidence of discrimination • The smoking gun • Indirect evidence of discrimination • Appears neutral on the surface, but has discriminatory results that may be illegal

46. Legal Implications – Juror Perceptions LEGAL IMPLICATIONS – JUROR PERCEPTION • Majority of jurors believe that companies care more about making money than their own employees • Majority of jurors believe that companies are less ethical than they were 20 years ago • A majority of jurors believe that too many employees are treated unfairly Consistent progressive disciplinary process helps protect the organization: • Helpful if employee files a discrimination claim • May prevent employee from filing discrimination claim in the first place

47. Progressive Discipline PROGRESSIVE DISCIPLINE Progressive Discipline is a formal process that provides employees the opportunity to improve their performance. When using disciplinary action, keep the end in mind. Be able to clearly show, through documentation, a tolerant, sophisticated, respectful work environment.

48. Progressive Discipline PROGRESSIVE DISCIPLINE Formal: • Pertaining to company policies and procedures • Is conducted in a similar manner no matter who is involved • Has guidelines, so that those giving the discipline know what to do and those receiving the discipline know what to expect • Is documented • Has clear expectations and consequences

49. Assume your documents will be read by a third party! Documentation Guidelines DOCUMENTATION GUIDANCE • Don’t wait to write it down • Identify eyewitnesses • Use full names • Specify rules violated • Be consistent • When quoting – write the actual word • Fully and accurately describe conduct • Do not include subjective comments • Recap discussion • Ask employee to sign • Provide opportunity for “employee version” • Don’t over document

50. Termination TERMINATION Considerations: • Timing of the termination • Location of the termination • Do you need witnesses? • Prepare for how the employee will respond • Does the employee need to return company property? • How will the employee leave the building? Final Pay Check