San Jose Opportunity to Work Ordinance:  What You Need to Know

By Squire Patton Boggs on Posted in California, Compensation, Employment Policies, Hours, Legislation, Minimum Wage, News

On November 8, 2016, voters in the City of San Jose approved the “San Jose Opportunity to Work Ordinance.”  The Ordinance is well-intentioned, but open to significant interpretation.  This is important, given the potential exposure to steep penalties and legal liability for failure to comply.  Here, we break down what you need to know, and identify some of the highlights of the new measure:

What is the Ordinance?

The Ordinance, previously Measure E on the ballot, will take effect on March 13, 2017.  Section 4.101.040 of the Ordinance provides:

Before hiring additional Employees or subcontractors, including hiring through the use of temporary services or staffing agencies, an Employer must offer additional hours of work to existing Employees who, in the Employer’s good faith and reasonable judgment, have the skills and experience to perform the work, and shall use a transparent and nondiscriminatory process to distribute the hours or work among those existing Employees.

Which employees are “qualified” to perform the work and therefore eligible for the additional hours is a decision left to the employer, so long as any decision is exercised in good faith and in a reasonable manner.

Further, the Ordinance requires employers to maintain the following records for four years:

  1. Work schedules and employment and payroll records pertaining to current and former Employees;
  2. Copies of written offers to current and former part-time employees for additional work hours (the Ordinance does not appear to require the offer be written, but this provision suggests employers ought to ensure all offers are, in fact, made in writing); and
  3. Any other records the Office of Equality Assurance may require that Employers maintain to demonstrate compliance.

Finally, employers must post a notice informing employees of their rights under the Ordinance.

Who does the Ordinance affect?

The Ordinance applies to part-time employees, defined as any person who (1) performs at least two hours of work for an employer, and (2) is entitled to payment of the minimum wage under California law.  Executive, administrative, and professional employees are not covered by the ordinance.

Employers affected by the Ordinance include any person (or business) who (1) directly or indirectly, including through a staffing agency, employs or controls the wages, hours, or working conditions of any employee, (2) is either subject to the Business License Tax Chapter 4.76 of the San Jose Municipal Code or has a place of business in the City of San Jose that is exempt under state law from the tax imposed by Chapter 4.76, and (3) employs 36 or more employees.  The 36 employee-threshold is assessed by counting all part-time and full-time employees at all of the employer’s locations (except for executive, administrative, and professional employees, as defined by the California Department of Industrial Relations).

What is an Employer’s Liability?

A first violation of the Ordinance is subject only to a warning by the San Jose Office of Equality Assurance.  However, any subsequent violation may expose an employer to substantial civil penalties, and even civil litigation.  Remedies available to individuals harmed by a violation include:  (1) the right to sue in court to enforce their rights; (2) award of back wages; (3) civil penalties of $50 per day to each harmed employee; and (4) recovery of reasonable attorneys’ fees and costs.  These fines can add up quickly, and the availability of statutory attorneys’ fees creates a strong incentive for employees (and the plaintiff’s bar) to test the scope of the ordinance.  On the other hand, the extremely subjective nature of deciding which employees are “qualified” to perform the additional hours of work, may create a high bar for proving any violation.

Can a Business Be Exempt from the Ordinance?

The short answer is yes, but in very limited circumstances.  The Ordinance creates a narrow, twelve-month hardship exception for employers who demonstrate that they have undertaken all reasonable steps to comply with the Ordinance, and full and immediate compliance would be impracticable, impossible, or futile.  Exemptions are made on a case-by-case basis, and may be extended.  Generally, a hardship exemption will be granted where the work or need is unpredictable, or the work requires a specialized skill and there is a need to have employees on call.

Additional information about the Ordinance has been provided by the City of San Jose via a list of Frequently Asked Questions.  Employers should take precautionary measures and develop a protocol to address the Ordinance and its obligations before it becomes effective on March 13.

Will the permanent residence rules and process for EU nationals be simplified?

By Annabel Mace on Posted in Brexit, Immigration

Hot on the heels of the House of Lords’ proposed amendment to the Brexit Bill to safeguard the status of EU nationals in the UK, the Select Committee for Exiting the EU has published a report stating that the ‘current process for consideration of permanent residency applications is not fit for purpose and, in the absence of any concrete resolution to relieve the anxiety felt by the estimated three million EU citizens resident in the UK, it is untenable to continue with the system as it stands.’

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DOL Officially Proposes Delay of Fiduciary Rule

By Squire Patton Boggs on Posted in Department of Labor, ERISA, Pensions, Regulation

The US Department of Labor has announced a proposed extension of the applicability dates of the fiduciary rule from April 10 to June 9, 2017 (read our prior blog post here) The proposal, issued March 1, comes in response to a directive from President Donald Trump to review the rule. The proposed extension is intended to give the department time to collect and consider information related to the issues raised in the memorandum before the rule and exemptions become applicable.

The department is offering a short period of time-15 days-for comments on its proposal. The DOL will also be taking comments for 45 days on the issues raised in Trump’s memo.

Premium (Expedited) Processing to be Suspended for all H-1B Petitions Starting April 3, 2017

By Gregory A. Wald on Posted in Business Immigration

US Citizenship and Immigration Services (USCIS) announced on March 3, 2017 that it will temporarily suspend premium processing for all H-1B filings starting April 3, 2017, and this suspension could last up to six months. The temporary suspension applies to Fiscal Year (FY) 2018 H-1B cap filings as well as other cap-exempt cases including change of employer, extension and amendment petitions. USCIS claims that the suspension will allow them to address a backlog of long-pending H-1B petitions. At present, H-1B petitions, without premium processing, are taking 6 to 11 months to process.

The suspension announcement comes right before USCIS is about to receive thousands of H-1B cap petitions on April 3rd. Last year USCIS received approximately 236,000 H-1B cap petitions that were randomly selected for processing through the so-called H-1B lottery. We anticipate that a high volume of petitions will be filed again this year where USCIS will use the lottery system to select petitions for processing. However, unlike previous years, the FY 2018 H-1B cap cases will not be eligible for the 15-day premium processing. While premium processing does not affect the chances that an H-1B petition will be selected in the lottery, it does provide greater certainty to certain beneficiaries, specifically, F-1 students who are changing status to H-1B and whose Optional Practical Training (OPT) work authorization will terminate between April 3 and October 1. This is known as the “cap gap” period.

International Travel during Cap Gap

The suspension of premium processing may also delay a beneficiary’s ability to travel internationally between the filing and approval of the H-1B cap petition. If the beneficiary travels while a change of status is pending and before it is approved, the request for a change of status will be deemed abandoned. However, the employer’s underlying H-1B petition could still be approved, but will require the beneficiary to depart the US and obtain a visa abroad.

Change of Employer and Extensions

This suspension also presents problems for H-1B employers and employees seeking to change jobs or extend their status with the same employer after April 3rd. For change of employer situations, this suspension will add delay and uncertainty. While the law permits an employee maintaining valid H-1B status to “port” over to a new H-1B employer after a petition is filed and prior to approval, there is never a guarantee that the petition will be approved. Therefore, employers and employees will be faced with a difficult choice: wait several months for the H-1B transfer to be approved or commence employment while the petition is pending. If the employee starts employment with the new company, and the petition is ultimately denied, the employer loses an employee after investing significant time and expense and the employee not only loses their new job, but most likely will be unable to return to their previous H-1B job and will be left without lawful immigration status. For those timely extending their H-1B status (before expiration of status), the current regulations provides for automatic work authorization of 240 days beyond their H-1B status expiration date. USCIS will now need to prioritize these extensions to prevent H-1B workers from losing work authorization prior to approval of their extension requests.

In addition, many States tie the issuance and renewal of a driver’s license to an individual’s immigration status. Therefore, many H-1B holders may be unable to renew their expired driver’s licenses for several months while they await approval of their extension of H-1B status petition.

USCIS advises that in urgent situations, employers can request faster processing if a case meets USCIS’ longstanding expedite criteria. Employers and employees should be aware that expedite requests are granted at USCIS’ discretion and only issued for emergencies, humanitarian reasons, in cases of severe financial loss to the employer or employee, and in a few other very limited circumstances.

Going forward, employers should plan accordingly and commence H-1B extensions as early as possible. Current regulations permit filing of H-1B extensions six-months prior to the petition’s validity expiration date.

NLRB Acting Chair Dissent Opinions Indicate A Shift Back to Pro-Employer Decisions

By Traci Martinez on Posted in NLRB

The NLRB was intended to be an unbiased arbiter of labor disputes, ensuring workers were protected from unfair labor practices. As we have seen in previous blogs, in the past several years, the NLRB has been unapologetically pro-union. President Trump’s appointment of Philip A. Miscimarra, a tenured board member who has been a tireless advocate for pro-employer and employee policies that protect workplace freedom,  to serve as Acting Chair of the Board could bring meaningful change in how the Board interprets and applies the Act. As two vacant seats are filled by likely two pro-business board members, a new majority is able to act. Additionally, current General Counsel Richard F. Griffin, Jr.’s term runs through November 4, 2017.

Changes are anticipated as Unfair Labor Practice issues get before the Board. It is likely that any new Members appointed by the President will almost certainly share Acting Chair Miscimarra’s views on such issues as use of employer email systems (employers should be able to control the uses of their own property, provided they do not discriminate against NLRA- protected communications) and the review and enforcement of workplace rules, handbooks and the like.  A new balancing test such as that proposed in the Beaumont Hospital (William Beaumont Hospital, 363 NLRB No. 162) dissent is quite foreseeable. In that case, Miscimarra urged a balancing test not only focusing on employee rights, but on employers legitimate justifications for a particular policy or rule.

With the Amended Election Rule (the rule to streamline the process and reduce the time between the filing of a representation petition and the vote down to 21 days from the typical 40-45 days), changes may be a bit more problematic. The Rule itself was the result of formal rule making and changes will be subject to the same processes, although there is certainly room for the Board to make changes in how it administers and processes cases even under this Rule, before any change to the Rule itself would become effective. The Acting Chair’s comments concerning the right of employers and other parties to due process, including the right to develop a complete factual record on disputed, material issues is something that can be changed through the administration and application of the Rule even without formal change.

The takeway for employers? Stay tuned as we keep you apprised of new developments!

New York Revokes Proposed Direct Deposit and Debit Card Wage Payment Regulations

By Meghan Hill on Posted in Compensation, Regulation

On February 16, 2017, the New York State Industrial Board of Appeals (IBA) issued a Resolution of Decision invalidating and revoking regulations that would have required employers to satisfy certain notice requirements and obtain employees’ informed consent in connection with payment by direct deposit or debit card as well as regulated fees charged by vendors. The IBA concluded that the prohibitions on fees contained in the regulation exceeded the scope of the NYSDOL’s authority because it regulated financial services products under Labor Law Article 6. The NYSDOL now has sixty days to appeal the IBA’s decision to the New York State Supreme Court. Until any further decision is issued, the regulation is deemed revoked and employers are not required to comply. The NYSDOL may choose to appeal the decision, or seek to implement revised regulations to comply with the IBA’s decision. In the meantime, employers should monitor the status of legal developments on this issue for employees working in the state of New York, but also remember to be mindful that other states and cities may have their own laws governing this topic.

Saliva tests, breathalysers, protection of whistleblowers: time for employers in France to update their internal rules

By Squire Patton Boggs on Posted in drug and alcohol, Litigation, Recent Cases

Several recent developments require companies with at least 20 employees in France to update their current internal rules: the new discriminatory criterion (i.e. the ability to speak another language) recently added by law to the list of prohibited ones, the so-called “Sapin Law II” which introduced legal protection for whistle-blowers and the obligation for employers to implement a specific procedure to record disclosures (once the implementation Decree is adopted), and the practice of saliva testing and/or breathalysing of employees.

Regarding saliva tests, the Supreme Administrative Court (Conseil d’Etat) recently issued in Ministry of Labour v. SAS Sud Travaux on 5 December 2016 a decision which offers scope for balanced and pragmatic solutions for employers, but which contrasts sharply with the Labour Authority’s position on the subject.

In this case, the Labour Authority had requested the company Sud Travaux to amend its internal rules setting out for its staff the possibility of saliva tests to detect the consumption of illegal drugs. It considered that only an occupational doctor could perform those tests and that the results were subject to medical secrecy, so that punishing employees on the basis that they had tested positive in any other circumstances was illegal.

On the contrary, the Conseil d’Etat allowed companies to conduct saliva tests on their own employees, subject to certain conditions and without the presence of the occupational doctor.  This applied where those staff had roles in which their being under the influence of drugs would pose a great danger for themselves and others, in order to detect any use of drugs and sanction them in the event of a positive result, provided that the sole purpose of the test is, by an immediate reading of the result, to reveal the existence or the recent consumption of proscribed drugs.

The results of this test are not protected by medical secrecy, but the employer (or its agent or representative) must still comply with strict professional secrecy.

The employee who has been tested is entitled to ask for a medical second opinion, any cost of that process being borne by the employer.

The Supreme Administrative Court recommends that the employer or the manager conducting such a test should be assisted by a witness. A positive result will allow employers to contemplate disciplinary sanction up to dismissal.

We highly recommend that companies employing employees holding safety-sensitive positions (construction, public works, clinics, security companies, transportation, etc.) should review the drafting of (i) their internal rules, and clearly identify in them the job positions that may be controlled this way, and (ii) the employment contracts for these employees to incorporate express reference to the right to require a test and the consequences of its being refused or failed.

Mediation with bite – giving your dispute resolution process some teeth

By David Whincup on Posted in Mediation, Misconduct, Termination

If we assume that your asking an employee and his manager to try to mediate a falling-out between them is a reasonable management request, what rights do you have as employer if one of them refuses?

This came up at the 1st February Civil Mediation Council seminar on introducing mediation as a proactive part of grievance and disciplinary procedures.  It is a good question because it highlights the possible tension between the employer’s right to require its employees to act in line with its reasonable instructions (and ultimately to dismiss if they don’t) on the one hand, and the notionally voluntary nature of mediation on the other.

I do not suggest that a simple refusal to mediate without more is grounds for dismissal. It is a more complicated question than the “average” disobedience issue.  For one thing, the objector (whether manager or employee) may have good grounds to decline.  This would make the refusal reasonable and so not culpable.  Additionally, we must remember that entering a mediation does not fix the problem, but merely begins a process which may well produce a settlement (approximately 80% of employment mediations do), but in no sense definitely will.  There is little ability on the part of the employer to control what a party will or will not agree to within the confidential “bubble” of the mediation, and so no real way of its compelling a reasonable or pragmatic approach.  You may not even know how things went within the mediation or why no agreement was reached, and the mediator ought not to tell you.  That means that there is no necessary connection between whether the employee agrees to mediate and whether a satisfactory resolution is reached.

But that does not mean that the offer of mediation is without teeth if it is unreasonably refused. Take a typical conflict issue, which is damaging the necessary working relationships between Manager A and Subordinate B.  Assuming B is the complainant, ask him what he wants – what would his ideal outcome be?  Secretly, he may want A warned or dismissed, but he is more likely to say that he wants A to behave differently in some respect and for that necessary relationship to be restored.  As employer, you might consider that the problem is a handbags-at-dawn spat which has got out of control or that there is genuinely some work to be done by one or both parties.  In the end, however, the corporate imperative for you is the restoration of the relationship.  You know that a formal grievance process will probably hole that relationship below the waterline and that if ultimately A and B can’t work with each other, one will have to go.

On the face of it, a request to mediate here is clearly a reasonable management request, in particular for A who as manager is under an even stronger duty to subjugate his own feelings to the best interests of the business. If there is a mediation but it fails, neither party can be blamed because what happens in that bubble is confidential.  That leaves you having to resolve the grievance on ordinary principles.  However, if A or B unreasonably refuses to mediate, he takes a clear and non-confidential step directly inimical to the restoration of the relationship which you need as employer.  All else being equal, it would not be hard for you then to blame him for its not being retrievable and to pick him as the one who has to leave as a result.

This is not dismissal for refusing to mediate (i.e. for disobedience), but it could be dismissal for the contribution which a persistent refusal to mediate makes to the irretrievable breakdown of an important workplace relationship (i.e. for “some other substantial reason”).

Of course, all else rarely is equal.  The employer will need to look also at the parties’ respective importance to the business, other evidence for or against and the scope for moving one rather than dismissing him.  In the end, however, it must be the case at its very lowest that the refusal to mediate of a party to a dispute like this puts him at a pronounced disadvantage when it comes to how the employer chooses to break the deadlock.

DOJ Seeks Another Extension of Time to Respond In Appeal On DOL Overtime Rule

By Daniel Pasternak on Posted in Department of Labor, Fair Labor Standards Act, Legislation, Minimum Wage, Overtime, Regulation, Wage and Hour

As we previously reported, in November 2016, a Texas District Court’s temporary restraining order halted implementation of the Obama administration’s Department of Labor (DOL) regulations that were set to expand overtime pay for many US workers starting in December 2016.  The Obama administration’s Department of Justice (DOJ) appealed that order, and asked for expedited review by the Fifth Circuit Court of Appeals.  However, shortly after President Trump’s inauguration, the DOJ – now under a new administration – asked the federal appeals court for a delay in the appeal process for an additional thirty days, until March 2, 2017, to file a brief in connection with the appeal.  The DOJ argued the additional time would give the new administration the opportunity to determine its appeal strategy.  Many assumed this signaled the Trump administration would not support the overtime regulations.

On February 21, 2017, the DOJ requested a second extension, this time of sixty days, until May 1, 2017, to submit its brief on appeal.  As before, the DOJ explained to the court that this additional time will allow the Trump administration to finalize its position on the Obama administration’s proposed overtime regulations.  The court is likely to grant the DOJ’s unopposed request for more time.

Delays in President Trump’s appointment of a new Secretary of Labor may be cause, in part, for this most recent extension request.  Confirmation hearings are not yet scheduled for President Trump’s second nominee, Alexander Acosta, who the President nominated after the first nominee, Andrew Puzder, withdrew in the face of fierce opposition.  (For more on Mr. Acosta’s nomination, please see our prior blog post here.)  Meanwhile, the underlying litigation continues.  The Texas district court is considering a motion to permanently enjoin the DOL overtime regulations.  It is unclear whether the district court will rule on these motions while the government’s appeal of the temporary restraining order is pending.  We will continue to update on further developments.

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