Diana Dowell
Diana Dowell
Shareholder, COO, Los Angeles
Formerly: Pizza Cook
Education
  • B.S., Political Science and Economics, University of California at San Diego;
  • J.D., California Western School of Law.

On countless occasions we have come across the valet, bellhop, or housekeeper who tirelessly worked her way up to General Manager or higher. The hospitality industry is truly one full of opportunity for dedicated talent. So it is only fitting that I have found myself representing such a rewarding industry. I am a first-generation Mexican-American and the daughter of a back-hoe operator. English is my second language and I am the first person in my family to attend graduate school. 

I realized what I had accomplished when my dad came to my first trial several years ago, and his eyes watered with pride. Although my background may be unconventional, it is well-suited to serve the growing hospitality industry. I understand that opportunity yields rewards, but only through a balance of hard work, honesty, discipline and dedication. When partnering with my clients, I apply all of these traits to achieve their goals. The results speak for themselves.    Even when I am not on-the-clock representing my clients, I seem to find myself in the hospitality industry. I am a passionate foodie who frequently travels the globe with my husband, Dan. And while Los Angeles is home for me, I frequently spend time with my growing “family” of clients all over the country.

Governor Brown, Jr., recently signed five employment bills into law that affect all California employers. The following laws are effective starting January 1, 2018.

Small Businesses Must Now Provide Paid Parental Leave (SB 63) Small businesses (20-49 employees) must provide 12 weeks of unpaid parental baby bonding leave to employees. If an employee takes this leave, an employer must maintain and pay for health care coverage. Employers can be sued for failing to provide the leave, failing to return the employee to the same or comparable position after the leave, failing to maintain benefits while the employee is out on leave or taking adverse employment action against an employee who uses the leave.

Employers May No Longer Ask About Prior Salary on Job Applications (AB 168) Employers may not ask about, or consider, an applicant’s prior salary history in determining whether to hire the applicant or how much to pay the applicant. Employers may also be penalized for not providing a pay scale for the position upon demand.

Ban-the-Box Legislation Now Applies to All California Employers (AB 1008) Employers with 5 or more employees may not inquire or consider an applicant’s conviction history at any time before making a conditional offer of employment. California has officially banned the box on applications. An employer may not deny an applicant a position solely or in part because of conviction history until the employer performs an individualized assessment.

New Requirements for Mandatory Sexual Harassment Prevention Training (SB 396) Employers with 50 or more employees must include information on gender identity, gender expression, and sexual orientation in their sexual harassment prevention trainings.

*Notice Requirement – Employers must also display a workplace poster on transgender rights: * English // Spanish

Employers Must Provide Additional Protections to Immigrant Workers (AB 450) Employers may not provide federal immigration enforcement agents (“ICE” agent) access to a business records without a warrant. Employers must also notify its employees of Form I-9 inspections performed by federal immigration enforcement officials.

Download a PDF version of this update by clicking this link.

On Sunday, October 1, 2017, a gunman shot into a crowd of 22,000 people from his 32nd-story room in the Mandalay Bay Resort and Casino. After 11 minutes, 59 people were killed and more than 500 were injured. Whether hotels can or will respond to this tragedy with security measures capable of preventing future mass shootings remains to be seen. In the wake of this tragedy, however, hotel security practices undoubtedly will come under severe scrutiny. As many of our hospitality clients have contacted us over the past three days to discuss their security obligations, we thought this short article might prove helpful by identifying certain legal principles applicable to hotel security and by outlining several security measures hotels will likely evaluate and implement in the near future.

An Innkeeper’s Liability for Guest Safety

Innkeepers are obligated to exercise “reasonable care” for the safety of their guests. This duty of reasonable care requires vigilance in the protection of guests from foreseeable risks — a duty that requires not only warning guests, but also adequately policing the hotel premises. More specifically, innkeepers and hoteliers are liable for injuries to guests caused by the accidental, negligent, or intentional harmful acts of other guests, patrons, or strangers, if, by the exercise of reasonable diligence, the innkeeper could have discovered that such acts were being done or were about to be done and could have protected against harm either by controlling the conduct or giving an adequate warning to allow guests to avoid harm. That being said, innkeepers are not required to anticipate and guard against the unusual, unlikely or abnormal, or against something that reasonable care, skill, or foresight could not have discovered or prevented.

In the context of a guest suffering a violent assault by another guest, a hotel may be held responsible if the hotel knew or should have known that the offending guest may become violent and it could have evicted that attacking guest. Guests of an inn, hotel, restaurant, or similar establishment are entitled to rely on that establishment operator to exercise reasonable care for their safety. In addition, the operator may provide its own security employees or use the services of a private security vendor. Further, innkeepers owe a duty to protect strangers from the acts of guests while at the establishment. Nevertheless, innkeepers are liable to such strangers for the act of a guest only when the hotel knew or, by the exercise of ordinary care, could have known the guest was likely to commit some act resulting in injury to the stranger.

Whether a hotel is liable to its guests or strangers for a violent act by one of its guests primarily hinges upon the foreseeability of the act. Unfortunately for Mandalay Bay, hindsight is 20/20 and many questions will be asked about whether it should have noticed a guest making multiple trips to equip his 32nd floor room with an arsenal of guns and ammunition.

Possible Next Steps in Hotel Security

It is no easy feat to balance the safety of guests with their desire for privacy. Also, the many intrusions and encumbrances of thorough security measures may at times seem antithetical to notions of luxury and hospitality. Most hotels have safety, security, and emergency response procedures in place that are reviewed frequently, tested, rehearsed and updated accordingly. Still, hotel security and guest safety measures remain imperfect. In fact, advances in hotel security have largely developed in response to breaches in security, changes in technology and other unfortunate acts. Admittedly, security in the hospitality industry is more reactive than proactive. However, given the devastation caused during the Las Vegas massacre, hotels must become vigilant in pursuing preventative measures.

While many hotels already use closed-circuit surveillance systems, one such preventative measure may include installing state-of-the-art window locks and sensors to alert security personnel and law enforcement when a hotel window has been opened or broken. Additionally, many hotels may need to revisit their firearm policies to decide whether they will prohibit firearms on premises, or place restrictions on firearm possession, such as allowing guests to bring permitted, unloaded firearms for storage purposes only, and requiring that firearms remain locked in a firearms safe or container.

With regard to the implementation of security checkpoints, some hotels may consider installing entryway deterrents, such as dog sniffs, metal detectors, X-ray machines and the like. However, despite having proven to be an effective method of deterring individuals from checking in at airlines with firearms, establishing a visible security presence at hotel entryways collides with the immense premium hotel guests place on their privacy. And, while replacing seemingly loose hotel security protocols with more robust security measures that target guest luggage may be an obvious solution for some, the fact remains that such deterrents often make guests feel less safe — a concern that many in the hospitality sector can ill-afford to ignore.

In short, any overhaul in hotel security practices would likely have to be at an industry level. Absent an industry-wide change in security practices, it is unlikely that hotels will undertake the expense of implementing state-of-the-art security measures. This is especially true if hotels fear a potential loss of business to competitors with less intrusive security measures. What is likely, however, is that the impact of the Las Vegas massacre will force those in the hospitality industry to take a closer look at their security measures and adapt accordingly.

What does this mean for you? Before October 1, 2017, it may not have been reasonably foreseeable that a guest was going to check in to a hotel, arm himself, and use his room as a turret. Now, it very well may be. As a result, we suggest your hotel add this scenario to its list of considerations as it refines or develops a security program. At bare minimum, your hotel should ask itself (1) what measures are in place to prevent this type of tragedy; (2) if it occurred, what guidance is in place to ensure an appropriate and immediate response; and, (3) on a more mundane level, does the hotel’s insurance policy provide or exclude coverage for such events?

Hotel security will never be perfect, but hotels have a longstanding legal duty to protect their guests and other visitors. Let’s all take a moment and reflect upon what else we may be able to do to ensure that safety remains a cornerstone of hospitality.

By Diana L. Dowell and Ikedi O. Onyemaobim

Security Shortcomings Exposed By Las Vegas Massacre Prompt Sweeping Security Overhaul Discussions Among Hotels In The United States

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Nationwide

EEO-1 Amendments on Pause

To promote equal pay in the workforce, in September 2016, the EEOC revised requirements on the EEO-1 form. Starting in March 2018, private employers with more than 100 employees will be required to disclose data on an employee’s wages and hours, in addition to reporting data on race, gender, and ethnicity.

Although approved, these regulations are not final. In February 2017, the Chamber of Commerce and several trade associations petitioned to the Office of Management and Budget (“OMB”) to reconsider its approval of the revised EEO-1 form. They argued that the new requirements are overly burdensome on employers, and the EEOC underestimated the time and money employers would have to spend to produce the data on summary pay and hours worked. On the other hand, civil right and workers’ organizations contend that the EEOC’s estimated burden was based on rigorous and transparent analysis. As the debate between the two groups continue, the decision of the OMB remains pending.

What should employers do? There is no word on whether the OMB will move forward with the revised form. In light of costly time and resources, employers should wait for the OMB’s decision before revamping their existing data systems.

Working Families Flexibility Act May Convert Overtime to Comp Time

On May 2, 2017, the House of Representatives passed the Working Families Flexibility Act (“the Act”) to amend the Fair Labor Standards Act (“FLSA”) and allow employers to offer overtime eligible employees the option of either being paid in cash for the additional hours or accruing an hour and a half of paid time off (“comp time”). Under this Act, non-unionized private employers can offer workers the option to accrue up to 160 hours of “comp time” for hours worked beyond 40 in a workweek.

Under the Act’s current language, employees would have to voluntarily agree to such an arrangement, which includes the option to change their mind, cash out their unused time off and return to a cash compensation structure for overtime at any time. Similarly, employers can choose to stop offering comp time as an option at any time so long as they give employees 30 days’ notice.

To qualify for the accrual option, employees must work at least 1,000 hours in a 12-month period before they agree to any comp time arrangement. If an employee’s accrued time goes unused at the end of the year, employers must reimburse the employee in cash for that time within 30 days. For union employees, any comp time policy an employer seeks to enact is subject to the CBA.

Although viewed as employer-friendly, the Act will require significant oversight and create administrative burdens to maintain compliance with the law, including keeping track of employees who opt in along with their flex time.

What should employers do? Employers should note that this Act is not yet the law. The Act now must pass the Senate, which analysts agree will be difficult without substantive changes.

Update on Proposed Change to Federal Overtime Regulations

There have not been any changes to the new overtime rules that were stayed as a result of a preliminary injunction entered by a federal court in Texas last year.

On February 22, 2017, the U.S. Court of Appeals for the Fifth Circuit granted a request by the Department of Justice for a 60 day extension, in which to file its final reply brief. Subsequently, two additional extension requests were made and granted. As a result, the final reply brief will not be led until June 30, 2017, with the oral argument scheduled sometime this summer. This extension not only pushed off the briefing schedule, but it also allowed the Senate to con rm Alexander Acosta, a Trump administration nominee, as the Secretary of Labor.

Many predict Mr. Acosta will not defend the new overtime standards. He has stated that he questions whether the Labor Department had authority to update the overtime rules. However, during his Senate confirmation hearing, he expressed that he found it “troubling” that the salary threshold had not been adjusted since 2004 and that he would look at the matter “very closely.”

What should employers do? Employers should remain alert for new white-collar-exemption rule-making that aims to dial-back the $913 salary threshold, but not down to a $455-a-week level.


Circuit Courts

Ninth Circuit Rules on Equal Pay Act

Federal and California law prohibits employers from paying one sex a higher salary than that paid to members of the other sex for equal work. In 2016, California amended its Fair Pay Act to state that “prior salary shall not, by itself, justify any disparity in compensation.” However, a recent Ninth Circuit decision stirs up debate whether prior salary legally justifies a wage difference.

The Ninth Circuit (covering Alaska, Arizona, Hawaii, Washington, Montana, Oregon, Idaho, and California) recently held that an employer’s use of prior salary does not automatically violate federal law. An employer may use an employee’s prior salary to justify a wage difference if the employer can prove that the use of prior salary was (1) to effectuate a business policy and (2) reasonable in light of the employer’s purpose and practices. The Court did not address California law when it held that an employee’s prior salary may fall under the fourth exception of the federal Equal Pay Act – “a differential based on any other factor other than sex”. The Ninth Circuit reasoned that it was merely affirming a prior opinion from 1982, Kouba v. Allstate Ins. Co., 691 F.2d 873 (9th Cir. 1982).

What should employers do? Given the Court’s decision, employers in California should be wary of relying solely on prior pay as a justification to wage disparity. Employers should review their policies and practices to ensure that any use of prior salary in determining wages is part of a broader business policy and reasonable in light of the employer’s purposes and practices and employees’ experience and qualifications.

Seventh Circuit Overrules Binary Gender Identity Precedent

After decades of rejecting claims of LGBTQ discrimination, the Seventh Circuit (covering Illinois, Indiana, and Wisconsin) became the first U.S. Court of Appeals to overrule precedent that “sex” under Title VII applies only to binary male-female biological identities. In Kimberly Hively v. Ivy Tech Community College, the Court found that “sex” as a Title VII protected class has expanded under recent Supreme Court precedents.

As a result, the Seventh Circuit now interprets “sex” to include orientation and prevents employers from discrimination because an employee does not act in accordance with sex stereotypes. Employers should note that the Court’s lopsided 8-3 vote shows that it had no difficulty deciding that discrimination on the basis of sexual orientation violates Title VII. This decision is in line with recent EEOC decisions and exemplifies the growing trend nationwide. In response, employers should evaluate all policies and procedures to ensure continued compliance with Title VII, and counsel managers to ensure that all employees are treated fairly and equally under the law.


California

Updated Sexual Harassment Guide

On May 2, 2017, the California Department of Fair Employment and Housing (“DFEH”) issued a new “Workplace Harassment Guide for California Employers” (the “Guide”). The Guide provides directions and recommendations for employers to implement an anti-harassment program that meets an employer’s legal obligations under the Fair Employment and Housing Act (“FEHA”).

The Guide details requirements for an employer’s written anti-harassment policy and mandatory two-hour training, including: management’s modeling of appropriate behavior, specialized training for complaint handlers, policies and procedures for responding and investigating complaints, thorough and fair investigations of complaints, and prompt and fair remedial action.

Key points from the DFEH’s recommendations are:

  • Utilize open-ended questions, limit confidentiality, and prepare appropriate documentation to help reach effective conclusions to investigations;
  • Make credible determinations based on credibility factors (e.g., inherent plausibility, motive to lie, corroboration, history of honesty/dishonesty, habit/consistency, inconsistent statements, demeanor);
  • Enforce anti-retaliation measures (counsel witnesses and parties not to retaliate);
  • Take appropriate remedial steps when there is proof of misconduct, even if the misconduct does not rise to the level of a violation of Company policy or the law.

What should employers do? Employers should review and distribute the Guide with those who are involved in the company’s investigation process (e.g., Human Resources).

New Employer Background Check Regulations

The California Fair Employment and Housing Commission (“CFEH”) recently adopted new regulations that complicate employers’ use of criminal background checks in employment decisions, paving the way for expanded liability under the Fair Employment and Housing Act (“FEHA”).

Starting July 1, 2017, these regulations prohibit the use of any criminal background information that has an “adverse impact” on a protected class under FEHA. In light of these new regulations, employers should be wary in implementing “bright-line” policies of disqualifying applicants for certain criminal histories, such as felony convictions. Employers must carefully assess whether their policy of using criminal background information disproportionately impacts member(s) of a protected class, whether it relates to hiring, promotion, demotion, transfer, discipline, termination, etc. If so, the employer must be able to prove that the use of criminal history information in making the decision is “job related and consisted with business necessity.”

What should employers do? Employers should conduct an “individualized assessment” of each applicant to determine whether their criminal history is similarly tailored to the job the applicant seeks. Employers must engage in an interactive process: (1) inform the applicant of a potential adverse decision, (2) give the applicant an opportunity to explain the circumstances, and (3) consider whether the explanation justifies an exception to the employer’s policy on excluding applicants with criminal history.

Employers who fail to follow these regulations will likely face increased exposure to discrimination lawsuits under FEHA. In addition, to assess whether a background check policy complies with state and federal laws with regard to objective criteria – i.e., what may be reported and how it is obtained – employers must now consider whether their policies violate subjective criteria related to its potential “adverse impact.” The crime statistics referenced in the regulations suggests that all criminal background information may adversely impact a particular protected class.

More FEHA Protections On the Way for Transgender Employees

California law protects individuals who identify as transgender, providing protections on the basis of both gender identity and gender expression. More protections are on the way after the Federal Employment and Housing Council (FEHC) unanimously voted to adopt proposed FEHA amendments regarding transgender identity and expression on March 30, 2017. The amended regulations have been sent to the Office of Administrative Law for approval. If approved, the final text would be effective on July 1, 2017.

Importantly, the amended regulations will:

  • Expand the definition of gender identity and expression to include “transitioning” employees; • Add specific protections against discrimination for transitioning employees;
  • Prohibit employers from requiring applicants to disclose their sex, gender, gender identity, or expression on application materials;
  • Require employers to honor an employee’s preferred name, gender, and pronoun;
  • Require employers to provide equal access to bathrooms, locker rooms, and similar facilities – regardless of an employee’s sex.

What should employers do? Employers should familiarize themselves with these amendments to prepare for the possible July 1, 2017 effective date.

California Employees’ Day of Rest

California law now entitles an employee one day of rest per workweek. Periods of more than six consecutive days of work that stretch across more than one workweek are not prohibited per se. Employers and employees are given some latitude, as employees can still choose to work on their day of rest. However, employers may not encourage or force an employee to work on their day of rest. Employers must ensure that an employee receive “days of rest equivalent to one day’s rest in seven.” Thus, on balance the employee must average no less than one day’s rest for every seven.

Employees who work more than thirty hours per workweek are entitled to this day of rest. The Day of Rest requirement does not apply to employees who work shifts of six hours or less on each day of the work week. In other words, if an employee works less than six hours every day, they can work seven days in a workweek without premium pay.

What should employers do? If your employees are working 7 days within a work week, consider the following practices (which should be tailored to your property):

  • De ne work week in your handbook;
  • Include a “Day of Rest” policy in your handbook;
  • Train managers on how this new case affects their scheduling practices.

New York

Freelance Isn’t Free Act (FIFA)

On May 15, 2017, New York City Local Law 140 of 2016 took effect. The law establishes and enhances protections for freelance workers, specifically the right to a written contract, timely and full payment, and protection from retaliation. Violations of these new rights will allow freelance employees, to seek statutory damages, double damages, injunctive relief, and attorney’s fees in state court. If there is evidence of a pattern or practice of violations, the Corporation Counsel may bring civil actions against employers to recover penalties up to $25,000.

What should employers do? Employers who hire independent contracts must:

  1. Have a Written Contract: All contracts worth $800 or more must be in writing. If, in the aggregate, any agreements amount to more than $800 in any 120-day period, those agreements must also be in writing. The contracts must include an explanation of the work to be done, the pay for the work, and the payment date. Both the employer and the independent contractor must maintain copies of the agreement.

  2. Make Timely Payments: Employers must pay a freelance worker for all completed work on or before the contracted date. If there is no contracted payment date, payment must be issued within 30 days of the completion of services.

  3. Must Not Retaliate: It is illegal to penalize, threaten, or refuse to work with freelance workers because they have exercised their rights pursuant to FIFA.

Equal Pay Legislation

On October 31, 2017, New York City employers will no longer be permitted to inquire about previous compensation data under a new law. The law bans employers from asking about previous salary information in an attempt to halt systematic wage discrimination. The bill is in response to a report that found that women in New York City earn approximately $5.8 billion less than men in wages each year.

The legislation follows executive orders from both New York Governor Cuomo and Mayor de Blasio to ban hiring practices that incorporate questions about salary history.

New York City is not the first to ban such inquiries. It joins the State of Massachusetts, the territory of Puerto Rico, and the city of Philadelphia in passing the legislation. In sum, 20 other legislatures have introduced similar provisions. At a Federal level, the Paycheck Fairness Act, has been introduced by Rep. Rosa DeLauro.

What should employers do? To ensure compliance with this changing legal trend, employers should implement policies that ban inquiries into an applicant’s historical pay data.

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This quarter’s newsletter includes useful information about Federal and California law updates.

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Federal Updates

DOL’s Exempt Employee Salary Requirements on Hold

Employers nationwide were bracing for the increase in the federal threshold for exempt employees. At the 11th hour a Texas judge issued a nationwide preliminary injunction and thereafter the U.S. House of Representatives passed a bill that would delay the implementation of the $47,476 threshold to June 1, 2017. The bill still requires Senate and Presidential approval.

If You Have a Mandatory Drug Testing Policy After an On-the-Job Injury, You Need to Read This

Although we mentioned the new OSHA Final Rule in our last Quarterly Report, it is worth mentioning again. Employers should re-visit their drug-testing policy, specifically their policy regarding drug testing after an on-the-job injury. Post-accident drug testing has been a staple due to most workers’ compensation insurance policies, however OSHA’s Final Rule effective January 1, 2017, is a gamer changer. The Final Rule requires that an employer’s reporting procedure not deter or discourage employees from reporting on-the-job injuries. The Rule explicitly states that employers conducting post mandatory accident drug testing will face penalties unless substance abuse LIKELY contributed to the accident and the test identified impairment.

Arbitration Agreements in the Ninth Circuit

Arbitration agreements with mandatory class action waivers have long been under attack by the National Labor Relations Board (“NLRB”). The NLRB claims that mandatory class action waiver provisions in employee arbitration agreements violate the National Labor Relations Act (“NLRA”). If you have an arbitration agreement with a class action waiver and operate within the jurisdiction of the 9th Circuit (CA, AZ, NV, OR, WA, ID, MT, AK), it is arguable the arbitration agreement is invalid. Employers within those jurisdictions should reach out to their employment counsel to determine whether an arbitration “opt-out” will save the arbitration agreement.

EEO-1 Filings To Include Salary Information Starting March 2018

As anticipated, the EEOC issued its final revisions to the EEO-1 reporting requirements on September 29, 2016, in an effort to promote equal pay in the workforce. Beginning March of 2018, private employers with more than 100 employees will be required to disclose data on the wages and hours of its workforce in addition to the existing EEO-1 reporting requirements. Currently, covered employers are only required to report data on the race, gender, and ethnicity of its workforce. As noted above, the new requirements contain two major additions to the reporting requirements:

Summary Pay Data – Employers will be required to report the total number of full and part-time employees by demographics in 12 pay bands for each EEO-1 job category according to W-2 wages;

Data on Hours Worked – Employers will be required to report the aggregate number of hours worked by the workers accounted for in each pay-band. For non-exempt employees, employers should consult records already kept to remain compliant with the Fair Labor Standards Act. For exempt employees, employers have the option to report 20-hours per week for part-time employees and 40-hours per week for full-time employees or track report the actual number of hours worked.

What should you do now? – In preparation for the March 31, 2018 filing deadline, Stokes Wagner recommends the following:

  • Assess your company’s current data system and determine if adjustments need to be made for recording required data;
  • Analyze and assess risk address pay issues that could lead to an EEOC investigation;
  • Consult the EEOC’s Q&A page on the new EEO-1 Revisions; and
  • Contact Stokes Wagner with additional questions

New I-9 Compliance

On November 14, 2016, USCIS released a revised version of Form I-9, Employment Eligibility Verification (for new hires and employees requiring re-verification) so that it would reduce error rates and to make it more user friendly. Employers must use the revised form by January 22, 2017.

Your Investigation is Only as Credible as Your Employees

On August 29, 2016, the U.S. Court of Appeals for the Second Circuit joined several other federal courts1, and for the first time, adopted the “cat’s paw” theory of liability in Title VII discrimination claims. The term “cat’s paw” refers to a situation in which an employee is subjected to an adverse employment action by a decision maker who has no discriminatory motive but who has been manipulated by an employee who does have such intent to bring about an adverse employment action through his or her own bad acts.

In these jurisdictions an employer can be liable for acting on bad information from any employee when firing another worker – even a low-level, non-managerial employee.

1 The following five federal circuit courts of appeals have previously adopted and applied this cat’s paw theory of liability to Title VII retaliation claims: the 3rd Circuit, the 5th Circuit, the 6th Circuit, the 7th Circuit, and the 8th Circuit.

Law Enforcement’s Right to Inspect Hotel Guest Records

Until recently, hotels in many jurisdictions routinely provided the police with access to their guest registers without much concern about the privacy issues that might be involved. After all, numerous cities and towns possessed ordinances that required hotels to collect specific guest information and allowed the police inspect the information upon request.

In 2015, however, the U.S. Supreme Court decided the landmark case of City of Los Angeles v. Patel, 135 S.Ct. 2443 (2015), which recognized that a hotel has a privacy interest in the information it collects from its guests. Moreover, the court held that a hotel which objects to providing the police with access to this information must be able to obtain an impartial review of whether the request by the police is proper.

In view of these developments, hotels should take several steps, including determining applicable local ordinances and developing a policy tailored to comply. Stokes Wagner has published a thorough article on this subject that can be found here.


California/Local Update

Minimum Wage & Exempt Employees

As of January 1, 2017, the minimum wage in California is $10.50. The new minimum wage also affects any California employer’s analysis of an exempt employee. Generally, exempt employees must be paid 1.5 times the minimum wage. Thus, generally, an exempt employee in California must make at least $43,680 per year to qualify as exempt. This necessarily makes the Department of Labor’s proposed increase to $47,476, seem less extreme.

Fair Pay Applies to Gender and Race

A year ago California enacted the Fair Pay Act requiring employers to provide equal pay for male and female employees who perform substantially similar work. The Fair Pay Act has been amended to extend its application to prohibit pay disabilities based on not only gender, but also race and ethnicity. Stokes Wagner recommends reviewing all pay policies and using the new EEO-1 form (which requires a break down of pay based on race and gender) as a tool in the analysis.

All Gender Restrooms

Starting March 1, 2017, any single-user toilet facility in California must have signage identifying it as an all-gender facility.

Weed While You Work?

The State of California recently legalized the recreational use of Marijuana through Proposition 64. Nonetheless, the Proposition does not impact an employer’s right to prohibit marijuana use, nor does it require employers to accommodate use of the substance. Stokes Wagner recommends issuing a reminder to all employees explaining that the recent Proposition does not change existing anti-marijuana work policies.

The City of LA Bans the Box

Los Angeles passed the Fair Chance Initiative for Hiring - colloquially referred to as the “Ban the Box Ordinance.” The Ordinance makes pre-offer criminal background checks by private employers illegal. As a result, City of Los Angeles employers cannot include questions on any application for employment that seeks the disclosure of an applicant’s criminal history. Such inquiries are only permitted once a conditional offer of employment has been extended. Additionally, the Ordinance sets forth rigid procedures (coined, the “fair chance process”) for employers who wish to take an adverse action against an applicant after discovering the existence of the applicant’s criminal history after a conditional offer has been extended. The Ordinance is slated to become effective January 22, 2017, with monetary fines effective July 1, 2017.

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Senate Bill 654 – Extending Family Leave Mandates to Small Businesses

Dubbed the “New Parent Leave Act,” SB 654 currently awaits Governor Brown’s signature. If approved, the law will provide six weeks of job-protected unpaid maternity and paternity leave for employees of companies with 20 to 49 employees. To be eligible, the employee must have been employed by the company for at least 12 months, and work at least part time. Current law provides employees of larger companies with 49 or more workers with 12-weeks of job protected leave. If signed, the law will take effect January 1, 2018.

House of Representatives Bill 6094 - New Overtime Regulations

On September 28, 2016, the U.S. House of Representatives passed H.R. 6094 which would delay the implementation of the Department of Labor’s new overtime regulations raising the salary threshold to $47,476 for exempt employees. The bill still requires Senate and Presidential approval. If approved, the bill would delay the implementation of the new salary threshold for overtime exemption until June 1, 2017. The bill will also offer some relief for small and non-profit businesses. We will monitor this bill’s progress through the legislative procedure and update you to any new developments.

EEOC Issues Final Guidance on Retaliation

On August 29, 2016, the EEOC issued the long-anticipated “Enforcement Guidance on Retaliation and Related Issues” 1 (“the Guidance”), replacing the 1998 Compliance Manual on Retaliation. Importantly, the Guidance is instructive on how the EEOC will interpret retaliation claims. The highlights include:

Protected Employee Activity – “Protected activity” generally includes participation in or reasonably opposing conduct made unlawful by an EEO law, such as filing an EEO complaint, participating in an EEO matter – even if the underlying claim is ultimately unsuccessful. Furthermore, an employer must not retaliate against an employee who has voiced opposition to a perceived EEO violation. Protection for opposition is limited to that in which there is a good faith reasonable belief in unlawful activity.

Employer Actions Potentially Amounting to Retaliation – Employer conduct that might amount to retaliation under the Guidance, includes: engaging in conduct that would deter a reasonable person from engaging in protected activity; examining an employee’s work or attendance more closely; or adversely changing work assignments.

Elements of a Retaliation Claim - A claim for retaliation may be established by showing (through material or circumstantial evidence) that:

  • The employee engaged in protected activity;
  • The employer took a materially adverse action; and
  • Retaliation caused the employer’s action.

To rebut retaliation claims, the employer can seek to establish legitimate non-retaliatory reasons for any adverse action(s) or show it was unaware of the employee’s involvement in a protected activity.

Rules against interference with the exercise of rights under the ADA. The Guidance provides rules against interference with exercise of ADA rights, including conduct that is reasonably likely to interfere with the exercise or enjoyment of an ADA right.

Remedies for retaliation. Remedies for retaliation include:

  • Preliminary relief such as an injunction;
  • Compensatory or punitive damages;
  • Equitable relief such as back pay, or job reinstatement

Recommendations:

  • Revise and maintain written anti-retaliation policies;
  • Train all employees on anti-retaliation policies;
  • Address current practices and responses to retaliation complaints;
  • Immediately follow up and document any alleged claims of retaliation;
  • Review proposed adverse employment actions to ensure compliance with new Guidance.

Contact Stokes Wagner for additional information on these guidelines, or for assistance reviewing and revising current retaliation policies and procedures.

1 https://www.eeoc.gov/laws/guidance/retaliationguidance.cfm The Guidance also includes a quick Q&A sheet, which can be found here: https://www.eeoc.gov/laws/guidance/retaliation-qa.cfm

Ninth Circuit Concludes Class Action Waivers Violate NLRA

In an important decision for employers, a 2-1 panel of the Ninth Circuit recently widened the divide between the federal appellate courts with regard to class waivers in employee arbitration agreements, concluding that such waivers violate the National Labor Relations Act (“NLRA”).2

Historical Background - In 2011, the United States Supreme Court upheld the validity of class arbitration waivers in the context of consumer class actions in the landmark case AT&T Mobility v. Concepcion.3 As a result, employers across the nation have implemented such waivers in their employee arbitration agreements to protect against costly, drawn out class-litigation. Many courts have since upheld the validity of such waivers under the authority of Concepcion. The NLRB, however, has continued to challenge class-waivers in the employment context leading to a divide between the circuit courts.

The Circuit Divide - On May 26, 2016 the 7th Circuit became the first appeals court to adopt the NLRB’s position and strike down class waivers in Lewis v. Epic Systems, holding that class waiver violate Section 7 of the NLRA because they interfere with workers’ rights to engage in concerted activity for their mutual benefit and protection. The 9th Circuit echoed this reasoning in Morris v. Ernst & Young.

Conversely, the 2nd, 5th, 8th, and 11th Circuits have rejected the NLRB’s position and maintain that arbitration agreements with a waiver of class actions are enforceable.

In reaching its decision, the 9th Circuit sided with the 7th Circuit and the National Labor Relations Board (“NLRB”) holding that mandatory class action waiver provisions in employee arbitration agreements violate the National Labor Relations Act (“NLRA”).

Notably, the court left open the option for “opt-out” provisions in a footnote of the opinion, suggesting that class waivers may be permissible when the employee is not required to sign such waivers as a condition of employment. As such, we recommend revising policies to include an opt-out provision.

Importantly, this ruling does not change the law in most jurisdictions, which have rejected the NLRB’s position, and maintain that arbitration agreements containing class waivers are enforceable.

How Does this Decision Affect You? - At this point, employers under the 9th Circuit’s jurisdiction should assume that mandatory class waivers in employment arbitration agreements are invalid under this ruling. However, there is hope that a full panel will agree to hear the case on an en banc basis. Furthermore, the continued divide between the circuit courts might be the silver lining needed for the U.S. Supreme Court to address the issue.

Unless and until the 9th Circuit reverses its own decision or the Supreme Court intervenes to settle the matter, employers in the jurisdiction of the 9th Circuit should be prepared to adjust to this new ruling. Specifically, we recommend revising current policies and agreements to include “opt-out” provisions. Stokes Wagner will keep you informed as to any changes in the ruling, including whether and when the United States Supreme Court decides to address the issue.

2 Morris v. Ernst & Young (9th Cir., August 22, 2016)
3 AT&T Mobility v. Concepcion 563 U.S. 333 (2011)

EEO-1 Filings To Include Salary Information Starting March 2018

As anticipated, the EEOC issued its final revisions to the EEO-1 reporting requirements on September 29, 2016, in an effort to promote equal pay in the workforce. Beginning March of 2018, private employers with more than 100 employees will be required to disclose data on the wages and hours of its workforce in addition to the existing EEO-1 reporting requirements. Currently, covered employers are only required to report data on the race, gender, and ethnicity of its workforce. Importantly, these changes have no effect on the EEO-1 reports due September 30, 2016. As noted above, the new requirements contain two major additions to the reporting requirements:

Summary Pay Data – Employers will be required to report the total number of full and part-time employees by demographics in 12 pay bands for each EEO-1 job category according to W-2 wages;

Data on Hours Worked – Employers will be required to report the aggregate number of hours worked by the workers accounted for in each pay-band. For non-exempt employees, employers should consult records already kept to remain compliant with the Fair Labor Standards Act. For exempt employees, employers have the option to report 20 hours per week for part-time employees and 40 hours per week for full-time employees or track report the actual number of hours worked.

How will salary data be reported?

Employers will tabulate and report the number of employees whose W-2 earnings for the prior 12 months fell within 12 pre-identified pay bands.

The pay bands are:

Paybands

What should you do now?

In preparation for the March 31, 2018 filing deadline, Stokes Wagner recommends the following:

  • Assess your company’s current data system and determine if adjustments need to be made for recording required data;
  • Analyze and assess risk address pay issues that could lead to an EEOC investigation;
  • Consult the EEOC’s Q&A page on the new EEO-1 Revisions; and
  • Contact Stokes Wagner with additional questions.

Second Circuit Adopts “Cat’s Paw” Liability for Employer Negligence

On August 29, 2016, the U.S. Court of Appeals for the Second Circuit joined several other federal courts4, and for the first time, adopted the “cat’s paw” theory of liability in Title VII discrimination claims. The term “cat’s paw” refers to a situation in which an employee is subjected to an adverse employment action by a decision maker who has no discriminatory motive himself but who has been manipulated by an employee who does have such intent to bring about an adverse employment action through his or her own bad acts.

The plaintiff in Vasquez v. Empress Ambulance Service, Inc. was fired as a result of a “he said, she said” situation where Vasquez accused her co-worker of sexual harassment and he concocted a story in retaliation, claiming that she had been sexually harassing him. In her lawsuit, Vasquez claimed that her employer negligently failed to recognize that her co-workers actions were retaliatory. The Court held that an employer can be held liable for acting on bad information from any employee when firing another worker – even a low-level, non-managerial employee.

What does this decision mean for employers?

Proper investigation procedures are crucial. Employers must thoroughly investigate, in a non-negligent manner, all workplace allegations before taking disciplinary action or making a termination decision. Employers should consider the following questions:

  • Which coworkers of the employee were involved in reaching the decision?
  • Did anyone involved in the decision harbor animosity toward the employee?
  • Has the employee offered any credible evidence that the decision was based on an unfair motive or on false factual conclusions?
  • Is it is possible that such false conclusions stem from a discriminatory or retaliatory motive relating to the employee’s membership in a protected class?

Any investigation should be impartial and should consider both claims and all possible evidence. Investigations should never conclude without speaking to the accused and entertaining all of his/her defenses.

This decision isn’t all bad news for employers. The Court stated that an incorrect finding of an employee’s misconduct, without more, is insufficient to prove retaliation. As long as the employer can prove that it performed a good faith, reasonable investigation supported by objective evidence, liability for any disciplinary action will not attach.

4 The following five federal circuit courts of appeals have previously adopted and applied this cat’s paw theory of liability to Title VII retaliation claims: the 3rd Circuit, the 5th Circuit, the 6th Circuit, the 7th Circuit, and the 8th Circuit.

Post-Injury Drug Testing Under New OSHA Workplace Injury Rules

In our July 2016 Legal Update, we addressed OSHA’s new rule on the reporting of workplace injury data. As a result of the rule taking effect on 8/11/16, employers who have policies and procedures which mandate drug and alcohol testing after the occurrence of a workplace accident may be open to penalties of more than $12,000 for first time violations and more than $120,000 for each willful or repetitive violation.

While the final rule does not directly address the issue of post-injury drug testing, the penalties stem from the requirement that reporting procedures must be reasonable. OSHA’s commentary accompanying the final rule states that OSHA views mandatory post-accident drug and alcohol testing as a deterrent to reporting, and that employers who enforce such practices will be subject to scrutiny and penalties. Specifically, OSHA’s commentary states that, “Although drug testing of employees may be a reasonable workplace policy in some situations, it is often perceived as an invasion of privacy, so if an injury or illness is very unlikely to have been caused by employee drug use, or if the method of drug testing does not identify impairment but only use at some time in the recent past, requiring that employee to be drug tested may inappropriately deter reporting.”

As a result, employers should evaluate their own post injury drug testing policies and procedures to ensure that the procedure is not retaliatory, does not deter employees from reporting incidents, and is not utilized in situations where drug or alcohol use is very unlikely to have been a factor. OSHA did note that any employer who is required to administer a post-accident drug or alcohol test under the requirements of a State or Federal law will be allowed to continue such testing as compliance with applicable laws shall not be deemed to be retaliatory actions.

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