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Governor Brown’s Proposed 2017-18 Budget – What Do Employers Need to Know?

Last month, Governor Jerry Brown released his proposed state budget for the 2017-18 fiscal year. This move represents only the opening salvo in a months-long budget negotiation that will occur over the next six months between the Governor and the Legislature. The Governor will release a revised budget proposal in May, and the final budget will be negotiated and voted upon by June 15, 2017.

Local and State Developments Impact San Francisco Paid Parental Leave Obligations

Developments at the local and state level have affected what employers must do to comply with the San Francisco Paid Parental Leave Ordinance (“SF PPLO” or the “Ordinance”).1 The SF PPLO took effect on January 1, 2017 (for employers with 50 or more employees), and the San Francisco Office of Labor Standards Enforcement (“SF OLSE”) has also adopted final rules implementing the SF PPLO,2 published a required form and poster, and issued supplemental compensation calculation instructions. Additionally, the California Employment Development Department (“EDD”) has increased the maximum weekly benefit under the California Paid Family Leave (“CA PFL”) insurance program, which impacts the SF PPLO supplemental compensation amount that must be paid to employees.

CBA Arbitration Provision Does Not Cover Wage and Hour Claims, Court Holds

This week, a California Court of Appeal issued its opinion in Vasserman v. Henry Mayo Newhall Memorial Hospital, rejecting the hospital’s appeal of a trial court order denying its motion to compel the plaintiff to arbitrate wage and hour claims she brought against the hospital. The court acknowledged that the applicable collective bargaining agreement included a provision requiring arbitration of claims arising under the agreement, but held that it was not “clear and unmistakeable” from this provision that the parties intended to waive a judicial forum for claims based on statute (i.e. meal and rest breaks, overtime). As such, the plaintiff could not be required to arbitrate her wage and hour claims.

California Court Provides Additional Guidance on Timekeeping Rounding, Grace Period Claims

Under California law, employers’ policies may permit rounding of employee timecard entries to the nearest tenth of an hour (six minutes), the Fourth Appellate District of the California Court of Appeal has affirmed. Silva v. See’s Candy Shops, Inc., No. D068136 (Dec. 9, 2016, published Jan. 5, 2017) (“See’s Candy II”). The Court also offered guidance on the circumstances that comply with the timekeeping standards.

Part-Time Employees Get First Chance at Extra Hours under New San José Ordinance

Employers in San José, California, must offer additional work hours to existing qualified part-time employees before hiring new employees beginning March 13, 2017, under the Opportunity to Work Ordinance.

Final FEHC Criminal History Regulations Approved, Move One Step Closer to Implementation

On January 10th, the California Fair Employment and Housing Council (FEHC) approved proposed regulations related to employer use of criminal history information. The regulations will be filed with the Office of Administrative Law and will likely go into effect July 1, 2017.

California Employers Beware: Your Employee May Be A “Private Attorney General”

In just the last two years, there has been an explosion in the number of claims being brought against California employers under the state’s Private Attorney General Act (PAGA).

California Court Rules Sarbanes-Oxley Preempts California Law Regarding Privileged Communications in Suit by Former In-House Counsel

By determining that the Sarbanes-Oxley Act (“SOX” or the “Act”) preempts California’s ethical rules, the Northern District of California ruled that an in-house attorney can rely on privileged communications and confidential information to the extent they are reasonably necessary to assert a claim or defense. Wadler v. Bio-Rad Laboratories, Inc., et al., No. 3:15-cv-02356 (N.D. Cal. Dec. 20, 2016).

Background Check Disclosure/Consent Form That Includes a Liability Waiver Violates the FCRA

On Friday, the Ninth Circuit Court of Appeals issued its opinion in Syed v. M-I, LLC, holding, on an issue of first impression, that an employer willfully violated the Fair Credit Reporting Act (“FCRA”) by including a liability waiver on the background check disclosure and consent form it provided to prospective employees. The Ninth Circuit held that the FCRA expressly states that before obtaining a consumer report for employment purposes, an employer must disclose its intent to secure a consumer report for employment purposes and inform the consumer of his/her rights under the FCRA. The FCRA states that this information must be provided in writing in a document “consisting solely of the disclosure.” The FCRA goes on to state that the employer must obtain the consumer’s authorization to procure the report and that the authorization can be on the same document as the disclosure. In this case, the employer had a disclosure and consent form, as required by the FCRA. However, the employer’s form included a provision stating that the applicant signing the form agrees to release the employer from any and all liability stemming from its reliance on information derived from the consumer report. The Ninth Circuit held that the inclusion of this liability waiver on the disclosure and consent form violated the FCRA’s express mandate that the disclosure consist “solely of the disclosure.” The Ninth Circuit reasoned that the inclusion of extraneous information, such as a liability waiver, in the disclosure form violates the law. Worse, the Ninth Circuit held, as a matter of law, that the employer’s violation was both “objectively unreasonable” and “willful” (thereby exposing the employer to statutory and punitive damages), even though this was an issue of first impression that no Circuit Court had before decided. The full text of the Ninth Circuit’s opinion is available here. This case will only serve to promote more FCRA lawsuits against employers. Employers may wish to review their background check disclosure and consent forms to ensure that they do not improperly include “extraneous” information and that they otherwise comply with the FCRA (and California law, as applicable).

2017 Is Still Young, But California Legislative Proposals Are Already Here

Although we have barely scratched the surface on 2017, the California Legislature is already active on the labor and employment front, with a number of new (or not so new) proposals being introduced in the first weeks of the legislative session.