Our colleagues , at Epstein Becker Green, have a post on the Hospitality Employment and Labor blog that will be of interest to many of our readers in the retail industry: “Ninth Circuit’s Decision Holds That Salary History Is Not a Defense to Equal Pay Claims.”

Following is an excerpt:

The federal Equal Pay Act (“EPA”) mandates equal pay for equal work regardless of sex.  Employers that pay men and women different wages for the same work are strictly liable for violations of the EPA unless they can show that one or more of four exceptions apply to explain the wage disparity. The four statutory exceptions are seniority, merit, the quantity or quality of the employee’s work, or “any other factor other than sex.”  The Ninth Circuit recently took up the question of the meaning of the fourth, catchall exception – “any factor other than sex” – in order to consider whether an employer may rely, in whole or in part, on an employee’s prior salary as a basis for explaining a pay differential in Aileen Rizo v. Jim Yovino. …

Read the full post here.

Our colleagues , at Epstein Becker Green, have a post on the Health Employment and Labor blog that will be of interest to many of our readers in the retail industry: “DFEH Publishes Materials to Assist Employers With Handling Harassment Allegations.”

Following is an excerpt:

The Department of Fair Employment and Housing (DFEH) recently released a brief, nine-page guide for California employers, which was prepared in conjunction with the California Sexual Harassment Task Force.  This guide is intended to assist employers in developing an effective anti-harassment program, including information about how to properly investigate reports of harassment and understand what recourse is available.  The guide addresses all forms of workplace harassment, including harassment based on sex. …

Read the full post here.

This issue of Take 5 encapsulates the incredible breadth of societal changes and challenges facing the entire retail workplace. The topics addressed below reflect a microcosm of the many issues currently facing our overall society, covering growing political activism in the workplace, increasing expectations to accommodate religious beliefs, otherwise outrageous employee speech that may very well enjoy protection under the law, and the ever-increasing requirements for criminal background checks enacted piecemeal by states and cities. These extremely topical subjects often tap into broader emotionally charged concerns encountered by retailers.

We also address the ever-timely issue of wage and hour classification, in this case, focusing on the classification of assistant store managers.

The articles in this Take 5 include:

  1. Managing Employees’ Political and Social Activism in the Workplace
  2. Religious Accommodation: Handling Unusual Requests
  3. Second Circuit Agrees with NLRB That Employee’s Vulgar Facebook Tirade Against Manager Is Protected Concerted Activity
  4. Increasing Criminal Background Check Requirements Pose Challenges for National Retailers
  5. Correctly Classifying Assistant Store Managers to Avoid Wage and Hour Misclassification Claims

Read the full Take 5 online or download the PDF.

On December 9, 2016, Los Angeles Mayor Eric Garcetti signed ordinances no. 184652 and 184653, collectively referred to as the “Fair Chance Initiative.” These ordinances prohibit employers and City contractors (collectively “Employers”), respectively, from inquiring about job seekers’ criminal convictions until after a conditional offer of employment has been made. Both ordinances will go into effect on January 22, 2017 and will impact all employers in the City of Los Angeles and for every position which requires an employee to work at least an average of two hours per week within the City of Los Angeles and all City contractors and subcontractors, regardless of their location.

No Criminal Inquiry Until After Offer

Specifically, these ordinances prohibit Employers from inquiring about a job applicant’s criminal history, at any time or in any manner, unless and until a Conditional Offer of Employment has been made to the applicant. Following the Conditional Offer of Employment, Employers are permitted to request information regarding the applicant’s criminal history. However, Employers can only withdraw or cancel the conditional offer as a result of the applicant’s criminal history after engaging in the “Fair Chance Process.”

New “Fair Chance Process” Required

The “Fair Chance Process” requires Employers to prepare a written assessment highlighting the specific aspects of the applicant’s criminal history that pose an inherent conflict with the duties of the position sought by the applicant. Employers must provide the applicant with written notification of the proposed withdrawal of the conditional offer, a copy of the written assessment regarding the risks posed by the applicant’s criminal history, and any other relevant documentation. The applicant is then given an opportunity to provide the Employer a response to the written assessment, including any supporting documentation. Employers must wait at least 5 business days after the applicant is informed of the proposed withdrawal before taking any action, including filling the position for which the applicant applied.

New Posting and Recordkeeping Requirements

Additionally, Employers’ job postings must now include a notice stating that they will consider all qualified applicants regardless of their criminal histories, in compliance with these ordinances. Employers must also conspicuously post a notice regarding the “Fair Chance Initiative” in a location in the workplace visible to all job applicants; this notice must also be sent to each union or workers’ group with which the employers have any agreement that governs over employees. Further, Employers must retain all job application documents for three years. Penalties for violations of these ordinances may be assessed at up to $500 for the first violation, up to $1,000 for the second violation, and up to $2,000 for subsequent violations. The City may then, at its discretion, distribute a maximum of $500 from that penalty directly to the applicant. The penalty provision of the ordinances will not go into effect for employers in Los Angeles City until July 1, 2017. However, the penalty provision for City contractors is effective immediately.

Exceptions from these ordinances include: (1) employers who are required by law to seek a job applicant’s criminal history; (2) positions for which an applicant would be required to possess or use a firearm; (3) positions which, by law, cannot be held by an individual with a criminal history; and (4) employers who are prohibited, by law, from hiring persons with criminal convictions.

Employers with operations in the City of Los Angeles should:

  1. Remove questions regarding criminal history from job applications;
  2. Ensure future job postings include required equal employment notices;
  3. Defer inquiries regarding criminal history until making conditional job offers; and
  4. Ensure the Fair Chance Process is followed before denying employment based on criminal history.

By: Amy B. Messigian

In a major blow to California employers who utilize a monthly commission scheme but pay biweekly or semimonthly salary to their commission sales employees, the California Supreme Court ruled earlier this week in Peabody v. Time Warner Cable, Inc. that a commission payment may be applied only to the pay period in which it is paid for the purposes of determining whether an employee is exempt from overtime.  Employers may not divide the commission payment across multiple pay periods in order to satisfy the minimum compensation threshold for meeting the exemption in any earlier pay period.  California employers who classify their commission sales employees as exempt should immediately take action to ensure compliance with the law.

The plaintiff in the case, Susan Peabody, worked approximately 45 hours per week as a commissioned salesperson for Time Warner Cable.  Peabody received biweekly paychecks, which included her salary for the pay period, as well as commission wages on a monthly basis.  After leaving her employment, she sued for a variety of wage and hour violations.  Peabody alleged that Time Warner Cable had misclassified her as an exempt employee for which it was not required to pay overtime.

In order to meet the commission sales exemption under California law, among other things, an employee must earn more than one and one-half times the minimum wage.  Peabody was paid less than one and one-half times the minimum wage in any pay period in which she did not also receive her commission payment; however, she was paid far in excess of one and one-half times the minimum wage on each pay period in which she also received her commission payment and her total monthly wages exceeded one and one-half times the minimum wage.  Based on the fact that the commission payment was reflective of commissions earned over the course of a month, Time Warner Cable argued that it should be permitted to split the commission payment between the pay periods in the month for the purposes of determining Peabody’s exemption from overtime.

The California Supreme Court rejected this approach holding that commission wages paid in one biweekly pay period cannot be attributed to other pay periods for purposes of meeting the exemption.  Rather, whether the minimum earnings prong of the commission sales exemption is satisfied depends on the amount of wages actually paid in a pay period.  “An employer may not attribute wages paid in one pay period to a prior pay period to cure a shortfall.”  This holding further differentiates that California commissioned sales exemption from the federal exemption, which permits employers to defer paying earned commissions so long as the employee is paid the minimum wage each pay period.

The Peabody ruling greatly impacts the manner in which companies structure their commission plans and payroll for commissioned employees.  Because a commission payment may only be allocated to the period in which it is paid for purposes of meeting the exemption, employers should consider adopting biweekly or semimonthly payroll structures for both salary and commission payments or allocating a greater distribution of employee income to base salary as opposed to commissions in order to meet the minimum salary threshold each pay period.

The ruling also forebodes a new wave of misclassification suits for unpaid overtime in cases such as this where an employee may only meet the exemption part of the time.  Of great concern will be the ability of employers to defend such suits where they have not kept good records of the hours worked by the employee, or their meal or rest breaks, due to the mistaken belief that they were exempt from overtime.  Employers with large numbers of commissioned salespeople should consult employment counsel to perform misclassification auditing and assess the risks of class litigation.

 

By Amy B. Messigian

The EEOC has just published guidance to employers on accommodating religious dress and grooming practices pursuant to Title VII of the Civil Rights Act. This guidance comes on the heels of several high profile religious discrimination cases that have brought the issue of religious dress and grooming accommodation to the forefront.  Employers with 15 or more employees are covered by Title VII and should take note of the new guidance.

Title VII requires employers to provide reasonable accommodations for “sincerely held religious practices, unless the accommodation would cause an undue hardship” and prohibits workplace or job segregation based on religion, harassment based on religion or retaliation for requesting a religious accommodation.  Certain states, including California, have adopted similar protections for religious practices in their non-discrimination statutes, expressly requiring the accommodation of religious dress and religious grooming absent undue hardship.  Taken together, these laws require employers to make exceptions to “their usual rules or preferences to permit applicants and employees to observe religious dress and grooming practices.”  This means, among other things, allowing for some flexibility to dress codes or uniform policies.

The EEOC provides the following examples of religious dress and grooming practices: “wearing religious clothing or articles (e.g., a Muslim hijab (headscarf), a Sikh turban, or a Christian cross); observing a religious prohibition against wearing certain garments (e.g., a Muslim, Pentecostal Christian, or Orthodox Jewish woman’s practice of not wearing pants or short skirts), or adhering to shaving or hair length observances (e.g., Sikh uncut hair and beard, Rastafarian dreadlocks, or Jewish peyes (sidelocks)).”  While this list is helpful, employers should be cautioned that it is not exhaustive.

Rather, the guidance makes clear that the EEOC takes a jarringly broad view of what constitutes a religious practice or belief that may require accommodation.  For example, the guidance notes that Title VII “defines religion very broadly to include not only traditional, organized religions such as Christianity, Judaism, Islam, Hinduism, Buddhism, and Sikhism, but also religious beliefs that are new, uncommon, not part of a formal church or sect, only subscribed to by a small number of people, or may seem illogical or unreasonable to others.”  The guidance further states, “an employee’s belief or practice can be ‘religious’ under Title VII even if it is not followed by others in the same religious sect, denomination, or congregation, or even if the employee is unaffiliated with a formal religious organization.” Because the EEOC takes such a broad view, employers may find it difficult to refute that a practice or belief is “religious.”  Nevertheless, the guidance provides that “if a dress or grooming practice is a personal preference, for example, where it is worn for fashion rather than for religious reasons, it does not come under Title VII’s religion protections.”  Employers should obviously approach such matters cautiously and engage legal counsel for assistance on anything that may be a “close call.”

The guidance reiterates that the Title VII accommodation requirement only applies to sincerely held religious beliefs.  However, it may be challenging for an employer to decide whether a belief is sincerely held.  This is particularly true because the guidance makes clear that “an individual’s religious beliefs – or degree of adherence – may change over time, yet may nevertheless be sincerely held.”  Indeed, many of the recent cases of religious discrimination relate to a requested accommodation of a newly observed religious belief, such as a request by a Muslim employee to begin wearing a headscarf.  Likewise, a change in company policy may lead to new requests for accommodations.  For example, just last week, the U.S. Department of Justice sued the School District of Philadelphia for failing to accommodate a Muslim police officer who sought a variance from a new grooming policy that required a trimmed beard, which the officer claimed was forbidden by his religion. If there is a legitimate reason to question the sincerity of the belief or practice, the employer may ask for “information reasonably needed to evaluate the request.”

For example, in response to an employee’s request to wear a hijab, the employer may require that the hijab match the colors of a company uniform.  Unless there is a legitimate religious basis for a variance from the uniform colors, it will be difficult for an employee to demonstrate that it was not a reasonable accommodation of her religious beliefs to approve the wearing of a hijab in a certain color.  Employers should be cautioned, however, that requiring a certain color of dress may necessitate reimbursement for the costs of the religious garb if it would not otherwise be a typical part of the employee’s wardrobe.

The EEOC guidance provided some helpful examples to aid employers with addressing accommodation requests.  These examples further demonstrate that requests for accommodations should be considered on a case-by-case basis and with an understanding of the religious custom at issue and the employee’s beliefs regarding that custom.

By David Jacobs and Amy B. Messigian

We would like to call your attention to a significant change to the whistleblower statute in California that went into effect on January 1.  The statute, Cal. Lab. Code section 1102.5, has been substantially expanded beyond its prior form to now protect employees from retaliation for making internal complaints or even potential complaints about suspected violations of federal, state or local law.

California previously protected employees from retaliation for reporting reasonably suspected violations of state or federal laws to a government agency. The new law also extends whistleblower protections to employees who report behavior that they reasonably believe to be illegal to a supervisor or other employee with authority to “investigate, discover or correct,” or to a “public body conducting an investigation, hearing or inquiry.”   The new law also expands these protections to cover complaints about local laws.  Thus, it is possible that a complaint relating to the purported violation of an obscure ordinance could give rise to protection under the amended statute.

Therefore, under the new law any complaint made to human resources that relates to purportedly unlawful conduct may result in the protection of California’s whistleblower statute.  Moreover, these protections will apply regardless of whether the employee is required as a function of his or her job to disclose purported illegal activity.

Also of concern, under the revised provisions of Labor Code section 1102.5, it is unlawful for any person acting on behalf of the employer to retaliate against the employee based on a belief “the employee disclosed or may disclose” the information, either internally or to a government agency.  In effect, the revamped law protects employees who have not yet even complained against “anticipatory retaliation.”

Due to the expansive scope of the new provisions, it is possible that the changes in the law may lead to an increase in whistleblower claims and claims under the Private Attorney General Act brought on behalf of the public welfare.  As violations of Labor Code section 1102.5 may subject an employer to a variety of damages, including civil penalties of up to $10,000 per violation, California employers should consider training their supervisors and human resources personnel on the expansion of the new law in order to prevent against unwitting violations or becoming a test case on the scope of these new provisions. Particularly, supervisors should be reminded to document performance issues as they occur to avoid someone turning into a “whistleblower” to forestall disciplinary action.

Our colleague Amy B. Messigian at Epstein Becker Green recently posted “Supreme Court Decision Sets High Bar for Establishing Retaliation Claims Under Title VII” on the Health Employment and Labor blog, and we think retail employers will be interested.

Following is an excerpt:

In University of Texas Southwestern Medical Center v. Nassar, one of two employment-related opinions issued on Monday by the Supreme Court, a narrow majority held that a retaliation claim brought under Title VII of the Civil Rights Act of 1964 must be proved according to a strict but for causation standard. Under such a standard, a plaintiff must present proof that “the unlawful retaliation would not have occurred in the absence of the alleged wrongful action or actions of the employer.”

The underlying facts of the Nassar case are somewhat complicated. The plaintiff, a medical doctor employed as a faculty member of the defendant medical center and staff physician for its affiliated hospital entity, resigned from the faculty claiming that the chief of infectious disease medicine at the medical center was biased against individuals of Middle Eastern heritage such as plaintiff. The hospital entity offered the plaintiff a full time position as staff physician, but later rescinded the offer after plaintiff’s former supervisor protested the job offer. The plaintiff sued, alleging that the medical center retaliated against him for his discrimination complaints by encouraging the hospital to rescind its job offer. A jury returned a verdict in the plaintiff’s favor and awarded more than $3 million in damages.

Read the full post here.