Seven hot issues and best practices for California HR managers

by Christopher W. Olmsted, Ogletree Deakins, San Diego

Here are seven hot-button topics that California HR leaders should stay on top of. Practical advice will help you comply with a shifting employment law landscape.

1. Waive goodbye to class actions

In 2015, you may—and you probably should—require your employees to sign an agreement waiving the right to file a class-action lawsuit.

In 2014, the Supreme Court of California issued its long-awaited decision in Iskanian v. CLS Transportation, (No. S204032, California Supreme Court, 2014). The court examined an arbitration agreement that required employees to bring their legal claims on an individual basis, not as a class action. The court held that class-action waivers in arbitration agreements were permissible under the Federal Arbitration Act (FAA). Further, the court ruled that the FAA preempted state law and prior court decisions holding to the contrary.

Advice: Consider rolling out arbitration agreements or updating the ones you already have to take advantage of this landmark ruling.

2. Dial in on cellphone policies

Employers that expect em­­ployees to use personal cellphones for work should update their policies to include an expense-reimbursement plan.

In Cochran v. Schwan’s Home Service, the Court of Appeal of California held that employers must always reimburse employees for the “mandatory” use of personal cellphones, pursuant to Labor Code section 2802. Generally, that code section requires employers to reimburse employees for necessary business expenditures.

Advice: To minimize the risk of class-action claims, review your reimbursement policies and consult with an attorney regarding compliance alternatives. Possibilities to consider: prohibiting or limiting the use of personal cellphones, issuing corporate phones to employees or devising a reimbursement policy.

3. It’s mandatory: Prescribe a healthy dose of sick pay

Beginning July 1, paid sick leave is mandatory in California. The benefit will be owed to all full- and part-time employees, with limited exceptions.

Existing paid time off (PTO) or sick pay plans might satisfy the new obligation, provided that all of the new law’s technical requirements are met.

Advice: Plan now for this new benefit requirement. Have you posted the new notice and started distributing the Labor Code 2018.5 notice? The state’s labor agency required employers to do so since Jan. 1.

4. Close the deal on pay for commissioned employees

It’s time to master the pay rules for commissioned employees. A 2014 court decision clarified that commissions paid in one pay period may not be attributed to prior pay periods to satisfy minimum wage obligations and California’s inside sales commissioned employee overtime exemption.

This means that big commissions paid at the end of the month do not satisfy pay obligations for the first half of the month, when sales were still in the pipeline.

Advice: Also note that if your commission plans have changed for 2015, you should update the written commission agreement in compliance with Labor Code section 2751.

5. Beat the clock

Lawsuits that include claims for off-the-clock work remain common. Such claims often involve preparatory activities before shifts, concluding activities after shifts, and after-hours work outside of the office. While you may understand the rules, supervisors often do not.

Advice: Train managers to capture all staff hours worked. That simple effort could translate into less time (and money) spent dealing with legal claims.

6. Put a headlock on bullying

California’s harassment prevention training law has been amended to include an abusive conduct prevention component.

As defined by AB 2053, abusive conduct may include “repeated infliction of verbal abuse, such as the use of derogatory remarks, insults, and epithets, verbal or physical conduct that a reasonable person would find threatening, intimidating, or humiliating, or the gratuitous sabotage or undermining of a person’s work performance.”

AB 2053 provides that a single act does not constitute abusive conduct, unless it is especially severe and egregious. The new law does not prohibit abusive conduct; it merely requires training on its prevention.

Advice: Incorporate this new training requirement into your existing two-hour harassment-prevention training obligation. Along with the training, employers may choose to formulate policies that discourage such misconduct and describe how a victim can seek assistance.

7. Take a seat

Lawsuits alleging the failure to provide employee seating will continue in 2015.

Most California Wage Orders require employers to provide employees with “suitable seats” when the work reasonably permits, and with seats in reasonable proximity for use when not required to stand. In 2015, the Supreme Court of California is expected to issue a key ruling on this topic.

Advice: In the meantime, conduct an audit to ensure compliance with the Wage Order requirement.


Christopher W. Olmsted is a shareholder in the San Diego office of Ogletree Deakins.