Diana Lerma
Diana Lerma
Shareholder, COO, Los Angeles
Formerly: Pizza Cook
  • 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. And while Los Angeles is home for me, I frequently spend time with my growing “family” of clients all over the country.

Today the Los Angeles City Council passed an ordinance requiring proof of vaccination against COVID-19 for patrons to enter indoor public spaces in the city. The ordinance will require patrons to be vaccinated to enter certain establishments such as restaurants, bars, nightclubs, gyms, sports arenas, spas, salons, shopping malls, and others. The ordinance will also apply to large outdoor events.

Beginning October 21, 2021, covered establishments in the City of Los Angeles must prominently display an advisory notice informing patrons that proof of vaccination will be required as of November 4, 2021.

Starting November 4, 2021, the establishments must require patrons who appear to be age 18 years of age or older to provide proof of vaccination upon entering an indoor portion of the establishment and confirmed against photo identification. Patrons who may be entitled to a reasonable accommodation under any applicable law for a medical condition or sincerely held religious belief may provide a self-attestation that they qualify for such an exemption.

A patron who does not provide proof of vaccination and does not qualify for a medical or religious exemption may only use the outdoor portions of the establishment or enter an indoor portion of the establishment for a limited period of time, such as to use the restroom, order, pick-up, or pay for food/drink “to-go” only if the patron wears a well-fitting mask at all times while in the indoor location.

The ordinance applies to all city facilities and four categories of establishments located in the City of Los Angeles:

Food and beverage establishments

  • Restaurants & bars
  • Hotel ballrooms & banquet halls
  • Coffee shops
  • Fast food & food courts
  • Wineries, breweries, & distilleries

Gym and fitness venues

  • Gyms & recreation facilities
  • Hotel gyms & fitness centers
  • Yoga, Pilates, cycling, barre & dance studios

Entertainment and recreation venues

  • Live performance venues
  • Music & concert venues
  • Convention centers
  • Commercial event & party venues
  • Movie theaters & performing arts theaters
  • Sports arenas
  • Museums & exhibition halls
  • Malls & shopping centers
  • Bowling alleys, arcades, and other recreational game centers

Personal care establishments

  • Spas
  • Nail salons
  • Hair salons & barber shops
  • Massage therapy
  • Skincare & cosmetology services and other personal care establishments

Significantly, the ordinance does not create a private right of action. Enforcement of the ordinance will begin on November 29, 2021. Operators of covered establishments may be issued a citation for failing to comply with the ordinance up to $5,000 for each subsequent violation. However, the city has yet to determine which department will be responsible for enforcement activities. The ordinance will expire when the COVID-19 Declaration of Emergency is lifted.

Covered establishments must also develop and keep a written record describing the protocol for implementing and enforcing the requirements of the ordinance. Contact your Stokes Wagner attorney for guidance on how to implement a mandated vaccine policy tailored for your business.

For a printable PDF of this article, click here.


On April 16, 2021, Governor Newsom signed a statewide right to recall ordinance (SB 93) into law. SB 93 is effective immediately. SB 93 codifies Labor Code section 2810.8 and requires hotels with more than 50 guestrooms to recall laid-off employees based on hire-date seniority.

REHIRING AND RETENTION Hotel employers (and airport, building service, event center, and private club employers) must recall qualified laid-off employees by hire-date seniority. A laid-off employee is entitled to recall if they held the same or similar position at the time of the employee’s most recent layoff with the employer.

When a position becomes open, employers must ensure the following:

  • The position must be offered to qualified laid-off employees within 5 days of establishing the position;
  • The offer must be via mail, text, and email;
  • Laid-off employees have 5 BUSINESS days to respond to the recall; and
  • The most senior laid-off employee who accepts the position must be hired.

If the employer declines to recall an employee due to that employee’s lack of qualifications, and the employer instead hires someone else, the employer MUST provide the laid-off employee written notice within 30 days. This notice must include:

  • The length of service with the employer of those hired in lieu of the laid-off employee; and
  • All reasons for the decision.

Employers must retain the following records for at least 3 years (measured from the date of the written notice regarding the layoff) for each laid-off employee:

  • The employee’s full legal name;
  • The employee’s job classification at the time of separation from employment;
  • The employee’s date of hire;
  • The employee’s last known address of residence;
  • The employee’s last known email address;
  • The employee’s last known telephone number; and
  • A copy of the written notices regarding the layoff provided to the employee and all records of communications between the employer and the employee concerning offers of employment made pursuant to SB 93.

PENALTIES The Division of Labor Standards Enforcement (“DLSE”) has exclusive jurisdiction to enforce SB 93. Enforcement may be through either a Labor Commissioner hearing or by civil action in superior court.

If a laid-off employee files a complaint with the DLSE, the available awards include:

  • Hiring and reinstatement;
  • Front/back pay at a rate of compensation that is the highest of the following:(1) The average regular rate of pay during the last 3 years that the employee was in the same occupation classification; (2) The most recent regular rate; or (3) the regular rate paid to the employee who was hired in place of the laid-off employee.
  • Value of the benefits the laid-off employee would have received;
  • Civil penalty of $100 for each employee whose rights were violated;
  • Liquidated damages of $500 per employee for each day that the employee’s rights are violated (i.e., until the violation is cured).

Note that there is no employer right to cure as there are with other local ordinances.

RECOMMENDATIONS To effectively comply with the requirements of SB 93, employers must carefully and consistently document their recall efforts. Hotel employers should create and use standardized forms to recall laid-off employees. Hotel employers should also document the dates on which offers of employment are made and the laid-off employees’ deadline to respond to the offer. Offers of employment must be mailed, texted, and emailed.


Has the state published any FAQs? No. There are a lot of questions that are unanswered by the law. Thus, for the time being, we recommend strict compliance with the law until state FAQs are published.

Who qualifies as a hotel employer? Hotels with 50+ guest rooms. It also applies to any contracted, leased, or sublet premises operated in conjunction with the hotel.

Who qualifies as a laid-off employee? ANY employee who:

  • Was employed for 6 months+ between 1/1/2019 and 1/1/2020;
  • Who worked for at least 2 hours in any week between 1/1/2019 and 1/1/2020; and
  • Who was separated from employment due to a reason related to the COVID-19 pandemic, including a reduction in force.

What makes an employee “qualified” for a position? An employee is qualified for a position if the employee held the same or similar position at the time of the most recent layoff.

What if more than 1 employee is qualified? Preference for the position must go to the employee with the greatest length of service at the hotel. In other words, priority is given by hire-date seniority (not position seniority). SB 93 does allow employers to make simultaneous, conditional offers of employment to laid-off employees so long as a final offer of employment is based on hire-date seniority.

Does it apply to exempt employees? Yes.

How must an offer of employment be made to a laid-off employee? An offer of employment must be made in (1) writing to the employee’s last known address, (2) email to the employee’s last known email address, and (3) text to the employee’s last known cell phone number. These should be done simultaneously and on the same day.

How long does a laid-off employee have to respond to the recall? 5 business days. The employer should count 5 business days starting the date after the offer is made. A “business day” is any day except Saturday, Sunday, or any official state holiday.

Does it apply to employees who were part of a RIF? Yes.

Does SB 93 apply to furloughed employees too? Yes, under California case law, the recall includes furloughed employees. Therefore, laid-off employees and furloughed employees should be treated the same for the purposes of compliance with SB 93.

Does a severance agreement change the law’s application? This issue remains unclear. SB 93 allows for its waiver by a CBA but is silent as to waivers in other contexts. Certain local ordinances, for example Los Angeles County, specifically prohibit the waiver of recall rights.

Are union hotels exempt from the law? ONLY IF they obtain a specific waiver from the union.

Who is responsible for SB 93 violations? The employing entity as well as corporate officers and executives. SB 93 arguably allows for personal liability of these corporate officers and executives.

I am in a location where a local recall ordinance was passed. Do I have to comply with this statewide law at all? Yes, in as much as SB 93 imposes stricter standards. SB 93 specifically states, “nothing in this section shall prohibit a local government agency from enacting ordinances that impose greater standards than, or establish additional enforcement provisions to, those proscribed by this section.” Thus, a local ordinance sets lower standards than SB 93, compliance with SB 93 is required.

For a printable PDF of this article, 2021.04.21-CA.Recall.pdf.


We are proud to announce the release of our latest Quarterly Newsletter, which may be found here.

This quarterly covers topics including:

  • Anticipated changes in labor law under the Biden Administration,
  • The latest Assembly and Senate Bills for California,
  • Minimum Wage updates, and
  • Classification of independent contractors.

Our newsletter summarizes key developments in the employment law arena on a quarterly basis, with a focus on how these developments may impact the hospitality industry and your operations. As you may have noticed, the legal landscape changes on a far more frequent basis than four times a year. So, when a particularly significant development occurs, we immediately publish a “Legal Alert” and make it available to each of our clients and subscribers. If you would like to stay abreast of legal developments in real-time, and receive our legal updates in a more timely fashion, we invite you to follow us on Instagram @stokeswagner.


The recently enacted Paycheck Protection Program Flexibility Act of 2020 changes several provisions in the original PPP loan program enacted as part of the CARES Act. The PPPFA gives borrowers more flexibility and time to spend the PPP loan proceeds and allows the funds to be used on broader categories of expenses while still qualifying for loan forgiveness.

How much of the PPP loan needs to be spent on payroll costs?

  • The PPPFA reduced the payroll expense requirement from 75% to 60%.
  • This means 40% of the PPP loan funds may now be put towards overhead costs such as mortgage interest, rent, and utilities.
  • Word of Caution: The language of the PPPFA appears to suggest borrowers must spend at least 60% on payroll or no portion of the loan will be eligible for forgiveness. Congress has since indicated it did not intend to eliminate the sliding scale under the old PPP rules. Amendments to restore the sliding scale are anticipated. In the meantime, out of an abundance of caution, we recommend borrowers do not spend less than 60% on payroll until the fix has been made or until further guidance is issued from the federal government and/or the Small Business Administration (“SBA”).

How much time do I have to spend the PPP loan funds and still qualify for loan forgiveness?

  • The Covered Period has been extended to 24 weeks starting from the date of origination, or December 31, 2020, whichever is sooner.
  • To qualify for full loan forgiveness, borrowers using the new 24-week Covered Period must maintain payroll levels for the full 24-weeks.
  • Borrowers with existing PPP loans may choose to keep the original 8-week Covered Period. However, they will be required to maintain payroll levels through the original 8-week Covered Period in order to qualify for the full loan forgiveness amount. When do pre-pandemic employment and wage levels need to be restored?
  • The deadline for eliminating reductions in workforce and wages has been extended from June 30 to December 31, 2020.
  • Borrowers now have until December 31, 2020, to restore workforce levels and wages to pre-pandemic levels required for loan forgiveness.

Will the loan forgiveness amount be reduced if I can’t restore the original number of full-time employees?

  • No. The reduced-headcount penalty has been removed.
  • The loan forgiveness amount is now determined by, without regard to FTE headcount, documentation showing that the borrower was (1) unable to rehire former employees and unable to hire similarly qualified employees OR (2) unable to return to the same level of business activity due to compliance with federal guidelines related to COVID-19.
  • The SBA is expected to provide clarification as to what “documents” are necessary to satisfy this exception. When does the PPP loan mature?
  • For PPP loans with a remaining balance after an application for forgiveness has been made, the PPPFA establishes a minimum maturity of 5 years (instead of 2 years) for loans made after June 5, 2020.
  • For PPP loans taken out before June 5, 2020, the PPPFA allows lenders and borrowers to mutually agree to extend the loan term to 5 years.

When do I need to apply for PPP loan forgiveness?

  • Applications for PPP loan forgiveness should be submitted the day after the Covered Period ends or as soon thereafter. Don’t wait too long! Borrowers who fail to timely apply for loan forgiveness will be required to begin making loan payments 10 months from the close of the Covered Period.

I applied for PPP loan forgiveness; when do I start making payments?

  • For borrowers who submit a loan forgiveness application, PPP loan repayment is deferred until the date on which the SBA remits the loan forgiveness amount to the lender.

My lender issued a decision to forgive my PPP loan, can I still defer the payroll tax for the period from March 27 to December 31, 2020?

  • Yes! The PPPFA retroactively eliminates the restriction in the CARES Act, which prevented borrowers that received PPP loan funding from deferring additional payroll tax once the lender issued a decision to forgive the PPP loan.
  • Borrowers may now continue to defer the payroll tax for the entire period from March 27 to December 31, 2020, regardless of whether the PPP loan was forgiven during this period.

These changes apply to all PPP loans regardless of whether the PPP loan was taken out before or after the PPPFA was enacted, except for the change in loan maturity as indicated.

Note that the final date to apply for a PPP loan is still June 30, 2020. For a printable pdf, click here.


Businesses fortunate enough to receive a Paycheck Protection Loan (“PPP”) under the CARES Act are now asking, “what do I need to do to get this loan forgiven?” That answer gets more complicated as the days roll on without guidance from the Small Business Administration (“SBA”). Recall there were numerous changes/interpretations applicable to the application process as the application deadline neared.

Here is what we know so far:

  1. How must PPP funds be used to be forgiven?
    • PPP funds must be used on payroll, mortgage interest, rent, and utilities during the 8-week period following PPP loan funding.
    • No more than 25% can be spent on non-payroll costs (i.e. mortgage interest, rent, and utilities).
  2. Can PPP forgiveness be affected by not returning employees to work?
    • list text hereYes. A reduction in Full-Time Equivalent (“FTE”) employees during the Covered Period will reduce the forgivable amount.
  3. Is there a calculation for the forgiveness amount? See the attached interactive Excel document to run your own numbers.
    • A = B(X/Y)
      • A = Loan Forgiveness Reduction
      • B = Loan Amount
      • X = Average monthly FTEs during the Covered Period (8 weeks after loan funding)
      • Y = Average monthly FTEs during either:
        • 2/15/19 and 6/30/19 OR
        • 1/1/20 and 2/29/20

    Note: Reductions in FTE employees between 2/15/20 and 4/26/20 may not count if, by 6/30/20 the FTE employee count is equal to the count on 2/15/20. You can re-hire old employees or hire new employees to meet this.

Here is what we hope the SBA regulations will clarify:

  1. How should FTE employees be counted? Is the FTE employee count based on headcount, FT or PT classification, hours worked per employee, total hours worked divided by 40, etc.?
  2. Are people that have voluntarily quit counted against the employer for purposes of forgiveness?
  3. How long do people have to work to count as an FTE employee?
  4. Will PPP loan forgiveness be included as gross income for state and local income tax purposes?
  5. Are costs and expenses paid with forgiven PPP funds deductible for federal and state income tax purposes?

The term ‘‘covered period’’ means the 8-week period beginning on the date of the origination of a covered loan.

Stokes Wagner will continue to monitor PPP administration and keep you updated on developments.

For a printable PDF of this article, click here.


The City of Los Angeles passed an ordinance on March 27, 2020, requiring employers with more than 500 employees to provide up to 80 hours of Supplemental Paid Sick Leave (“PSL”) to employees. This Supplemental PSL is in addition to the 48 hours of PSL already required by the City.

To qualify for Supplemental PSL, an employee must request the leave for one of the following reasons:

  1. The employee takes time off because a public health official or healthcare provider requires or recommends the employee isolate or self-quarantine to prevent the spread of COVID-19;
  2. The employee takes time off work because the employee is at least 65 years old or has a health condition such as heart disease, asthma, lung disease, diabetes, kidney disease, or weakened immune system;
  3. The employee takes time off work because the employee needs to care for a family member who is not sick but who public health officials or healthcare providers have required or recommended isolation or self-quarantine;
  4. The employee takes time off work because the employee needs to provide care for a family member whose senior care provider or whose school or childcare provider caring for a child under the age of 18 temporarily ceases operations in response to a public health official or other public official’s recommendation.

The Ordinance specifically states that employers CANNOT require a doctor’s note or other documentation for the use of Supplemental PSL.

Supplemental PSL must be made available to employees who:

  • Work at least 40 hours per week; or
  • Are classified as full-time employees by the employer.

Part-time employees are also afforded benefits. The Ordinance requires they receive Supplemental PSL in an amount no greater than the employee’s average two-week pay over the period from 2/3/2020 through 3/4/2020.

Supplemental PSL benefits are capped at $511 (per day) or $5,110 in the aggregate.

Employers who provided their employees with paid leave between March 4, 2020 and today can use that paid leave to offset the requirements of the Supplemental PSL.

To enforce this new Ordinance, the City provided employees with a private right of action. Employees who prove their employers violated this ordinance will be entitled to reinstatement, back pay, attorneys’ fees, and any other relief deemed appropriate.

The Ordinance is in effect until December 31, 2020.

If you have any questions as to how this Ordinance applies to you, please contact your closest Stokes Wagner office. For a printable PDF of this article, click here.


Best Practices for Coronavirus

March 4, 2020  •  Diana Lerma

Category: Legal Updates

Coronavirus disease 2019 (COVID-19) is a respiratory disease caused by a new coronavirus, which has now been detected in almost 70 locations internationally, including in the United States.

COVID-19 has become a serious issue for all employers. Stokes Wagner has prepared the following best practices for you to consider in your business.

Companywide Communications: The seriousness of COVID-19 should be acknowledged in a companywide email. Include access to resources such as the CDC and the WHO. It is essential this message reach all employees – even those without email. Managers should spread this message during work shifts.

Communications with Employees, Guests, and Customers: Remind guests/customers of good personal hygiene practices. The World Health Organization has a great resource here. Also, consider reminding people of the following:

  • Use verbal salutations.
  • Do not share utensils, cups, or linens.
  • Keep a distance of 6 feet from people you do not know in public areas when possible.
  • Personal Protective Equipment (PPE) must be readily available for use. Provide masks and gloves to all cleaning employees.
  • Make sure all restrooms are stocked and can support frequent handwashing.
  • Clean and disinfect all frequently touched surfaces regularly (i.e., cleaning and disinfecting public restrooms, elevator buttons, front desk areas, and door handles hourly).

Employee Issues: Employees should be encouraged to stay home even if mildly ill. Now is the time to review your paid sick leave, vacation, or PTO policies. If an employee is sent home due to sickness during a shift, remember any applicable reporting time pay rules. Employees should be encouraged to alert management of any guest/customer who exhibits flu-like symptoms. Employers must prepare managers on how to handle these conversations with employees/guests/customers.

As COVID-19 continues to change and evolve every day, employers should stay apprised of all updates from the CDC and WHO. Stokes Wagner is happy to answer any specific questions you may have about your workplace. Please do not hesitate to call.

For a printable PDF of this article, click here.

On August 27, 2019, the Santa Monica City Council voted unanimously to pass an ordinance providing certain protections for hotel workers, with particular focus on Room Attendants, working in the city of Santa Monica. The City Council heard lengthy public comment on both sides of the proposed ordinance, with Unite Here’s Local 11 being both the most numerous and the most outspoken in favor of the ordinance.

At the close of public comment, changes were made to the ordinance as initially proposed. These changes, in large part, only made the ordinance more restrictive on hotel employers. The following is a summary of the ordinance’s requirements. All the following requirements will become effective on January 1, 2020, unless otherwise specified.

Panic Buttons
Effective 1/1/2020
All Santa Monica hotels, regardless of the number of rooms, will be required to provide a personal security device to any hotel worker assigned to work unaccompanied in a guest room or restroom facility.

Employers will be forbidden from retaliating against a worker who uses their panic button unless the employer can show that the worker knowingly and intentionally used the button to signal a false emergency.

All hotel workers must be trained on the use and maintenance of the personal security devices and the hotel’s protocol for responding to calls from these devices by January 1, 2020, or within one month of hire thereafter.

Protections for Victims of Guest-Initiated Violence
Effective 1/1/2020
Any hotel worker who reports violent or threatening conduct by a hotel guest must be given paid time off to report the conduct to law enforcement and to consult with a counselor or advisor of their choosing. Employers will be required, upon request, to provide reasonable accommodations to the employee-victim due to the incident.

Hotel employers may not prevent or attempt to prevent an employee from reporting such an incident, nor retaliate against a worker if that worker decides not to report such an incident.

All hotel workers must be trained on these rights and obligations by January 1, 2020, or within one month of hire thereafter.

Updated Door Notices
Effective 1/1/2020
Signage on the back of the entrance door to guest rooms and restroom facilities will be required to include, in at least 18-point font:

  1. The following language: “The Law Protects Hotel Workers From Threatening Behavior”;
  2. Notification that hotel workers are equipped with personal security devices; and,
  3. A citation to the ordinance.

Square Footage Caps for Room Attendants
Effective 1/1/2020
Hotel employees cleaning guest or meeting rooms, regardless of title, will be limited to cleaning no more than a specific square footage depending on hotel size based upon the length of their scheduled shift.

For hotels with 40 or fewer rooms, employees may not be required to clean more than 4,000 square feet of floor space, regardless of furniture, equipment, or amenities, in one eight-hour workday.

For hotels with 41 or more rooms, employees may not be required to clean more than 3,500 square feet of floor space, regardless of furniture, equipment, or amenities, in one eight-hour workday.

For hotel employers interested in modeling how such a change may affect their current workforce and scheduling, the following should be noted:

  1. If an employee is scheduled to work greater or fewer than eight hours in one workday, the square footage cap prorates to a greater or lesser amount, respectively.

  2. “Floor space” is not limited to guest rooms, but encompasses any combination of spaces within the property, including meeting rooms and ballrooms. If you have a large ballroom, for instance, assigning an employee to clean said ballroom alone (even to vacuum the floors) could massively cut into their daily square footage total.

  3. If an employee is assigned to clean seven or more “checkout rooms” or rooms with additional beds (i.e., cots or rollaways), these rooms must be counted as 500 square feet against the total, regardless of the actual square footage of the room.

If a Room Attendant is assigned work over the square footage cap during their workday, an employer must compensate them at twice their regular rate of pay for all hours worked – not just those hours worked on space beyond the square footage cap.

Elimination of Mandatory Overtime Past Ten Hours
Effective 1/1/2020
Hotel employers will be prohibited from requiring hotel workers to work more than 10 hours in a workday without written consent.

Hotel employers will be required to provide written notice to all hotel workers informing them that they are allowed to decline to work more than 10 hours in a workday and that the Hotel cannot take any adverse action against them for doing so.

Changes in Control: Notice and Employee Retention
Effective immediately on the effective date of the ordinance – projected October 2019
In the event of a change in control of a hotel property, the successor employer will be required to post written notice of the change in control in a conspicuous area.

Successor employers will also be required to offer continuing employment to eligible hotel workers for a period of not less than 90 days. Hotel workers are eligible for continuing employment if they were employed for at least two months prior to the change in control. Exceptions are provided where an eligible employee has prior performance or conduct issues, or where the successor determines it requires fewer employees than the predecessor.

During the 90 days, employees may only be terminated for cause. All employees must receive written performance reviews at the close of their 90-day period.

Mandatory Third-Party Training
Effective 1/1/2021
By January 1, 2021, the city will be responsible for certifying and naming a “Public Housekeeper Training Organization.” This organization will offer a training program called the “Public Housekeeper Training Program.” The program will be a six-hour training, and include training on:

  1. Hotel workers rights and hotel employer responsibilities;
  2. Identifying and responding to human trafficking, domestic violence, or threatening conduct;
  3. Effective cleaning techniques to prevent the spread of disease;
  4. Identifying and avoiding insect or vermin infestation; and,
  5. Identifying and responding to potential criminal activity.

At the close of training, attendees will be required to submit to an examination. Passing the examination will result in the issuance of a Public Housekeeping Certificate, which will remain valid for five years. No room attendant may be employed for more than 120 days without a valid Certificate.

Hotels will be required to contract with the Public Housekeeper Training Organization annually to provide this training and administer the examination.

Notice of New Rights and Obligations
Effective 1/1/2020
Written notice of the rights and obligations outlined in the ordinance must be provided to all employees by the ordinance’s effective date, or at the time of hire (whichever is later). Notices must be provided in English, Spanish, and any other language spoken by 5% or more of the hotel workers employed.

CBA Waiver
The ordinance’s provisions regarding square footage caps, written consent to overtime over 10 hours, and change in control are all waivable pursuant to a collective bargaining agreement.

Liability for Violation
Violations of the obligations noted above will expose employers to damages up to $100 per aggrieved person per day. Treble damages may be awarded for willful violations.

Attorney’s fees and costs are awarded similarly to FEHA. A prevailing defendant will not be entitled to attorney’s fees or costs unless they can show the action was frivolous, unreasonable, or groundless. Prevailing plaintiffs will be entitled to recover reasonable attorney’s fees and costs. Courts will not have the discretion to deny fees or costs to prevailing plaintiffs, as they do under the FEHA structure.

This ordinance is a sea change for Santa Monica hoteliers. These requirements will, in most cases, create a need for massive operational changes in a very short amount of time. Hotel employers are encouraged to work with an attorney or firm that can help ensure compliance from day one.

For a printable PDF of this article, click here.

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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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.


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


  • 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:

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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