Between January 1 and September 30, 2021, California legislation mandated supplemental paid sick leave for specified COVID-related absences. (See Labor Code § 247 – 248.3) The legislation expired on September 30, 2021. On Tuesday, January 25, 2022, Governor Newsom and state lawmakers reached an agreement that will again require employers with 26 or more employees to provide eligible employees up to two weeks of supplemental paid sick leave to recover from COVID-19 or care for a family member with COVID-19. The details of the new program, which is part of a budget plan, must still be developed so the rules become more clear. The proposal is expected to be fast-tracked so it can be signed into law quickly.

Some of the features of the proposal and background are as follows:

1. Because it is intended to cover employers with 26 or more employees, smaller employers would be unaffected. They are nevertheless subject to the paid sick leave rules in Labor Code § 245 – 249 and California’s kin-care rules in Labor Code § 233 – 234. (See Section 12.13 of the Wage and Hour Manual For California Employers by Attorney Richard J. Simmons, Partner Sheppard Mullin.)

2. The proposal responds to the rapid spread of the Omicron coronavirus variant. It is intended to encourage employees with the virus to stay home and help slow transmission.

3. Employers must absorb the cost of the supplemental paid sick leave. However, separate proposals are expected to restore tax credits that were suspended and capped two years ago.

4. The new time off benefits are apparently in addition to “COVID exclusion pay.”

5. The proposal will require employers to provide up to 40 hours of flexible paid sick leave to full-time employees who are sick or caring for loved ones.

6. Employees could use up to three days of the paid sick leave to attend a vaccination appointment for themselves or family members and to recover from any symptoms after the vaccination. This provision is intended to make it easier for parents to immunize their children against the virus.

7. To qualify for the additional 40 hours of paid time off, employees must provide proof of a positive coronavirus test. This feature was not part of the 2021 law.

8. Part-time employees would be eligible for sick leave equal to the number of hours they typically work in a week or twice that amount with proof of a positive test.

9. The proposal will be retroactive. This will allow employees to obtain sick leave to cover coronavirus-related absences since January 1, 2022.

10. The legislation will remain in effect until September 30, 2022. It is, of course, possible that the expiration date will be extended at a later time.

11. The paid time off allows parents to stay home from work when their children are sent home from school due to illness or after being exposed.

12. When the prior law expired on September 30, 2021, employees were left with a state minimum of three paid sick days under the Healthy Workplaces, Healthy Families Act” discussed in Section 12.13 of the Wage and Hour Manual for California Employers. (The new 2022 edition will be available in February and will be featured as a textbook at Castle Publications upcoming Wage and Hour Laws Program scheduled for March 15, 2022).

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On November 18, 2021, the Ninth Circuit Court of Appeals issued a decision in Fried v. Wynn Las Vegas, LLC, __ F.4th __ (9th Cir. 2021). The issue before the court is whether an employee can bring a hostile work environment claim if the employee reports that a customer is sexually propositioning the employee, and the employee’s manager fails to respond appropriately to the complaint. The Ninth Circuit reversed the trial court’s decision granting summary judgment in favor of the employer, finding that at trial, a jury could conclude that the manager’s lack of response in this situation may be grounds to assert a hostile work environment claim. The court further instructed the trial court to reconsider the cumulative effect of related comments by the plaintiff’s coworkers that he should take the customer’s sexual proposition as a compliment and that he welcomed it. The decision serves as a cautionary tale on the importance of properly training managers and supervisors on how to respond to harassing conduct from a third party.

1. Employee Complains Of Harassing Conduct

The plaintiff was a former manicurist at a salon in the Wynn Las Vegas resort. He sued his employer for sex discrimination, retaliation, and creating a hostile work environment in violation of Title VII of the Civil Rights Act of 1964. In addition to alleging that more favorable treatment of female manicurists created a hostile work environment, the plaintiff based his claim against the employer on allegations stemming from a single incident with a customer.

The plaintiff alleged that in 2017, a male customer who was assigned to the plaintiff made an explicit sexual proposition. The plaintiff claims he immediately went to his manager to report the customer’s conduct and that he no longer felt comfortable interacting with the customer. In response, the manager allegedly told the plaintiff to “just go [finish the pedicure] and get it over with.” The plaintiff further alleges that during the twenty minutes it took to finish the pedicure, the customer made five or six inappropriate sexual references to the plaintiff, which made the plaintiff feel horrible and uncomfortable. He also alleges that the customer grabbed or held the plaintiff’s hand or arm for about a minute when he escorted the customer out of the salon after the pedicure.

After the customer left, the plaintiff claims he approached the manager to discuss what had happened, but she claimed she was busy and would talk to him later. The plaintiff claims he tried later that day to speak with his manager, but she again brushed him off. A week later, two female coworkers allegedly told the plaintiff that he should take the customer’s proposition as a “compliment” and accused the plaintiff of wanting to have sexual relations with the customer.

2. Requirements For A Hostile Work Environment Claim

To establish he was subjected to a hostile work environment in the sexual harassment context under federal law, the plaintiff needed to prove that: (1) he was subjected to verbal or physical conduct of a sexual nature; (2) the conduct was unwelcome; and (3) the conduct was sufficiently severe or pervasive to alter the conditions of employment and create an abusive working environment. Whether an environment is sufficiently hostile or abusive depends on the circumstances, including the frequency of the discriminatory conduct; its severity; whether it is physically threatening or humiliating, or a mere offensive utterance; and whether it unreasonably interferes with an employee’s work performance. Because the frequency of the conduct is only one factor in the analysis, a single incident of harassment can support a hostile work environment claim if it is extremely severe.

3. Trial Court Dismisses Claim

The trial court granted the employer’s motion for summary judgment on all of the plaintiff’s claims. The trial court found that the customer incident was insufficient to support a hostile work environment claim because (1) the plaintiff was not touched physically other than a brief touch on the arm; (2) the plaintiff was not alone with the customer; and (3) the plaintiff was able to complete the customer’s pedicure. The trial court also ruled that the coworker’s comments were insufficiently severe or pervasive to support the plaintiff’s claim.

4. The Court Of Appeal’s Decision

The Ninth Circuit held that the trial court erred when it focused on the customer’s conduct and not the employer’s response to that conduct. The court noted that several circuit courts, including the Ninth Circuit, have recognized that an employer’s response to a third party’s unwelcome sexual advances toward an employee can independently create a hostile work environment. The court noted that an employer’s response to a customer’s offensive conduct can create a hostile work environment where the response subjects an employee to further abuse or harassment.

The court determined that summary judgment was improper in the plaintiff’s case because the manager not only failed to take immediate corrective action, but also directed the plaintiff to return to the customer for an extended period of time to complete the pedicure. The court further pointed out that these actions discounted and effectively condoned the sexual harassment. Moreover, they went a step further by conveying that the plaintiff should tolerate the customer’s harassment as part of his job.

The court noted that at trial a jury could find the manager’s actions as alleged by the plaintiff do not rise to the level of creating a hostile work environment. However, the court also reasoned that a jury could also decide that the plaintiff’s manager condoned the customer’s conduct and conveyed that sexual harassment would be tolerated in the salon because she took no action to stop it (such as requiring the customer to leave the premises immediately). The court further held that in light of its ruling on the manager’s response, the cumulative effect of the related coworker remarks must be considered in determining whether that created a hostile work environment.

5. Conclusion

While the Ninth Circuit’s decision in Fried does not mean that the failure to immediately respond to a customer’s purported harassment instantly establishes a hostile work environment, the decision does demonstrate that a single incident of a customer engaging in harassing behavior, if left unchecked, can create an issue that could only be resolved by a jury at trial. An employer’s prompt corrective response, on the other hand, can help insulate an employer from liability for an employee’s hostile work environment claim. The Ninth Circuit’s decision reinforces the importance of training employees and managers to recognize and respond to third-party harassment quickly and appropriately.

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On November 12, 2021, the Fifth Circuit Court of Appeals issued an emergency stay prohibiting implementation of the Occupational Safety and Health Administration’s (“OSHA”) COVID-19 emergency temporary standard (“ETS”) mandating COVID-19 vaccinations or weekly testing for private employers with 100 or more employees. The fate of the ETS and the Fifth Circuit’s emergency stay of the ETS was before the Sixth Circuit Court of Appeals. Since then, there have been multiple developments on the ETS, including the U.S. Supreme Court’s issuance of a stay on the implementation of the ETS and OSHA’s subsequent withdrawal of the ETS. Consequently, employers under OSHA’s jurisdiction throughout the country are not required to comply with the ETS requirements.

1. The Sixth Circuit Dissolved The Fifth Circuit’s Stay

On December 17, 2021, the United States Court of Appeals for the Sixth Circuit dissolved the stay issued by the Fifth Circuit. In a 2-1 opinion, the three-judge panel held the ETS was within OSHA’s existing authority and power to regulate viruses and promulgate standards for the health and safety of employees in the workplace in response to “a novel and dangerous worldwide pandemic.” Immediately following the Sixth Circuit’s decision, numerous petitioners, including states attorney generals, businesses, and non-governmental organizations, sought review of the Sixth Circuit’s decision by the U.S. Supreme Court. The Supreme Court agreed to hear the petitioners’ request for emergency relief and scheduled a relatively unprecedented hearing for January 7, 2022.

2. OSHA’s Announcement On Enforcement Of The ETS

Originally, the majority of requirements under the ETS were set to become effective on December 5, 2021, while the mandatory weekly testing policy for unvaccinated employees was set to begin on January 4, 2022. Following the Sixth Circuit’s decision, OSHA announced that the original deadlines under the ETS remained in effect. However, OSHA also announced that due to uncertainty created by the Fifth Circuit’s stay, the agency would “exercise enforcement discretion” to allow employers time to comply with the ETS. OSHA stated it would not issue citations for noncompliance with any of the non-testing requirements of the ETS before January 10, 2022, and would not issue citations for noncompliance with the standard’s testing requirements before February 9, 2022, so long as an employer was exercising reasonable, good faith efforts to come into compliance with the ETS. California and the 21 other states with an OSHA-approved State Plan opted to wait until the Supreme Court’s decision before announcing their own adoption and enforcement of the ETS. Thus, in the remaining states where the ETS was effective, many employers were forced to scramble to prepare to comply with the January 10 enforcement deadline while awaiting the Supreme Court’s hearing on January 7 and subsequent ruling.

3. The Supreme Court’s Decision Staying The ETS

On January 13, 2022, the Supreme Court granted the request for a stay of OSHA’s ability to implement and enforce the ETS. The 6-3 majority opinion based its decision on the following arguments:

• A valid ETS under the Occupational Safety and Health Act of 1970 (“OSH Act”) requires (1) a grave danger to employees from an agent that is a toxic substance, physically harmful, or a new hazard, and (2) that the emergency regulation is “necessary.” Although COVID-19 has the potential to affect all employees, the Court noted that is not an “occupational hazard” or “grave danger” that inherently stems from the workplace.

• The Court concluded that although OSHA can regulate a “workplace safety standard,” the ETS reaches into the territory of broad public health measures, which is beyond OSHA’s jurisdiction. The Court explained that COVID-19 is a universal risk capable of spreading anywhere people congregate and likened its risk to that of “day-to-day dangers that all face from crime, air pollution, or any number of communicable diseases.” Consequently, the ETS would be a “significant encroachment into the lives—and health—of a vast number of employees.”

• Allowing OSHA to regulate so expansively because COVID-19 happens to affect the workplace would allow an unjust expansion of OSHA’s authority. Unlike other universal dangers that OSHA can regulate, such as fire or sanitation, a vaccine mandate would escape the confines of the workplace as employees cannot choose to become unvaccinated for the purposes of heading home after work.

• The Court recognized that OSHA does have the power to regulate specific occupational risks associated with COVID-19. For example, OSHA would have authority when a particular function of a job would place employees in a special danger (e.g., researchers who work with the COVID–19 virus, or broader regulations regarding particularly crowded or cramped environments). However, the ETS’ application to all industries in such a broad swath exceeded the specificity required to distinguish between a general public health measure and an “occupational safety or health standard.”

• Finally, the Court noted OSHA lacked any historical precedent for such a broad ETS. Of the nine previous ETS issued by OSHA, none have been as broad, six were challenged, and only one was fully upheld.

4. OSHA’s Withdrawal Of The ETS

The Supreme Court’s decision only addressed a stay of the immediate implementation and enforcement of the ETS. A ruling on the merits on whether the ETS could ultimately stand had yet to be briefed and decided by the Sixth Circuit. However, the Supreme Court’s decision made OSHA’s position at the Sixth Circuit an uphill battle because in granting the stay, the Court instructed that the “[a]pplicants are likely to succeed on the merits of their claim that the Secretary [of Labor] lacked authority to impose the mandate.” Additionally, a federal ETS may only exist for six months and must be replaced by a permanent standard to remain in effect thereafter.

In light of the above, OSHA announced its withdrawal of the ETS on January 25, 2022, effective the following day. OSHA’s announcement stated that while the agency was withdrawing the ETS as an enforceable temporary standard, the agency was not withdrawing the ETS as a proposed rule. The distinction between the two positions is that a proposed rule still allows OSHA to issue a subsequent permanent standard, which OSHA announced will be a permanent “COVID-19 Healthcare Standard.” OSHA’s initial Healthcare ETS, which required various protocols for employees in certain healthcare settings but did not contain a vaccine or testing requirement, expired in December 2021 without a related permanent standard. The new COVID-19 Healthcare Standard will likely feature some form of the ETS’ vaccine and testing requirement and will be issued at some point over the next few months.

5. The Next Steps For Employers

For employers who are not in the healthcare industry, it appears that the federal government has given up on instituting a nationwide vaccine or testing requirement via OSHA. For employers in healthcare settings, the vaccine or testing requirement will likely become effective by this summer. The permanent standard will be more difficult than the ETS to challenge in the courts. A permanent standard lowers the threshold for the standard from “necessary” to “reasonably necessary or appropriate.” Moreover, multiple Supreme Court Justices intimated during the ETS oral argument that a more focused standard that was industry-specific may be permissible. Employers in the healthcare industry should continue to monitor future announcements from OSHA, especially employers who have not instituted their own mandatory vaccination policy already.

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On September 15, 2021, a divided panel of the Ninth Circuit Court of Appeals issued its decision in Chamber of Commerce v. Bonta, No. 20-15291 (9th Cir. Sept. 15, 2021), finding that AB 51, a state law aimed at prohibiting mandatory arbitration agreements, is largely not preempted by the Federal Arbitration Act (“FAA”).

1. AB 51

As background, AB 51, which was signed into law in California in 2019, prohibits employers from requiring employees to arbitrate claims under the California Fair Employment and Housing Act (“FEHA”) and the Labor Code as a condition of employment, continued employment, or receipt of employment-related benefits. The law also places a prohibition on employers who “threaten, retaliate or discriminate against, or terminate any applicant for employment or any employee because of the refusal to consent to the waiver of any right, forum, or procedure for a violation of the [FEHA or Labor Code], including the right to file and pursue a civil action or a complaint with … any state agency … or any court.” Rather than invalidate arbitration agreements themselves, AB 51 instead subjects an employer who violates the law to civil and criminal penalties.

2. The District Court Ruling

Before AB 51 was set to go into effect, the law was challenged by the U.S. Chamber of Commerce as being preempted by the FAA. In January 2020, a federal District Court agreed with the U.S. Chamber of Commerce and enjoined enforcement of AB 51. The district court found that the law was preempted by the FAA, given the law’s specific impact on an employer’s ability to require arbitration agreements as a condition of employment.

3. The Ninth Circuit Decision

After the U.S. Chamber of Commerce appealed, the Ninth Circuit partially reversed, finding that AB 51 is not entirely preempted by the FAA. The Ninth Circuit held that the majority of AB 51 is not entirely preempted because the law only addresses “pre-agreement employer behavior” – the manner in which arbitration agreements are entered into – and not arbitration agreements themselves. Significantly, the Ninth Circuit determined that AB 51 does not invalidate or render unenforceable arbitration agreements covered by the FAA.

The court further explained that the Labor Code provision created by AB 51 (Labor Code Section 432.6) merely codifies that arbitration is a matter of contract and arbitration agreements must always be voluntary and consensual. The court stated, “[a]s we read California Labor Code § 432.6, the State of California has chosen to assure that entry into an arbitration agreement by an employer and employee is mutually consensual and to declare that compelling an unwilling party to arbitrate is an unfair labor practice.”

The court did, however, find that portions of AB 51 imposing civil and criminal penalties for mandating arbitration in violation of AB 51 do conflict with the FAA and are therefore preempted. This particular holding thus leaves open questions regarding what remedies or damages may be available to an employee who brings an action for a violation of Labor Code Section 432.6. The holding as a whole also leaves questions regarding what particular “pre-agreement employer behavior” would constitute a violation of the law.

The majority’s decision was heavily criticized by the dissent and it seems likely that the Chamber of Commerce will file a petition for rehearing en banc with the Ninth Circuit and may also appeal the decision to the United States Supreme Court, given that it conflicts with holdings of the First and Fourth Circuits. Of note, the court’s decision does not apply retroactively and it does not immediately lift the district court’s preliminary injunction on AB 51. Thus, it is imperative that employers who continue to require arbitration agreements as a condition of employment closely monitor the developments in this area.

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California employers are obligated to maintain a variety of records under the state and federal wage and hour laws. These include records regarding work time, meal periods, compensation, and several other types of information. As indicated by recent cases and several older ones, a failure to keep and produce required records can present serious ramifications. Indeed, as noted in the 2021 edition of Richard Simmons’ publication, California’s Meal and Rest Period Rules, it is imperative that employers adhere to California’s rules by making their time records their allies rather than their enemies. For example, earlier this year the California Supreme Court stated in Donohue v. AMN Services, 11 Cal.5th 58 (2021), that time records that show a late, short or missed meal period create a rebuttable presumption of a meal period violation. While employers can seek to overcome that presumption and prove no violation actually occurred, poor records can significantly increase an employer’s risks and lead to avoidable legal fees and defense costs.

1. The Landmark Decision In Hernandez v. Mendoza

More than 30 years ago, a California Court of Appeal decided an important case that shifts the burden of proof in wage-hour cases. The court examined the consequences employers may face if they fail to produce required information relating to an employee’s claims. Hernandez v. Mendoza, 199 Cal. App. 3d 721 (1988) established the principle that an adverse evidentiary inference can be drawn where an employer fails to produce required time records that accurately show all hours worked, including overtime work.

Specifically, the court determined that an employee met his burden by proving he performed work for which he was improperly compensated and produced sufficient evidence to show the amount and extent of that work as a matter of just and reasonable inference. The burden then shifted to the employer to come forward with evidence of the precise amount of work performed or evidence to negate the reasonableness of the inference to be drawn from the employee’s evidence. For example, if an employee testifies that he worked substantial amounts of overtime and the employer fails to produce accurate time records disproving the employee’s testimony, the employer will face exposure and an uphill legal battle.

2. The Employer’s Failure To Produce Records Hurt Its Regular Rate Of Pay Claim

In the September 22, 2021 case of Morales v. Factor Surfaces LLC, __ Cal.App.5th __ (2021), the court of appeal extrapolated from the Hernandez v. Mendoza decision to conclude that an employer who failed to keep required records of the compensation and commissions an employee received was required to treat all of the wages, including commissions, as salary for purposes of calculating the regular rate of pay. This increased the employer’s overtime liability because the methodology for calculating the regular rate of pay on commissions is more advantageous for employers than the methodology used to calculate the regular rate on salaries.

The employee testified that he was hired in 2016 to work six days a week for $120 per day, so his weekly salary was $720. He received a paycheck dated June 25, 2016 in the amount of $736.60. The court observed that the difference between $736.60 and $720 was likely attributable to commissions. But the employer failed to keep records required by statute indicating the portion of each weekly paycheck attributable to commissions.

Generally, the regular rate of pay for commissions is calculated by dividing commission earnings in a week by total hours worked. The employer then owes half the regular rate for each of the overtime hours in the workweek. However, where the employer agreed to pay the employee $120 per day for a six-day week, the court determined that a weekly salary was derived by the compensation records where the employer did not accurately record hours worked or the commission portion of the employee’s earnings. Because the regular rate of pay for a salaried employee is calculated by dividing the weekly salary by the non-overtime hours worked (40 hours) rather than total hours worked, the regular rate is higher under state law when an employee is paid a salary than when he is paid an equal amount in commissions. The court of appeal concluded that the trial court did not err by attributing Morales’s weekly paycheck to salary alone as opposed to speculating about the amount of commission paid each week.

3. There Is No Defense If Your Dog Ate The Records

The employer argued that it lacked proper records because they were located in a vehicle that was stolen and later recovered without the records. The court determined that the employer’s explanation was unbelievable. As a consequence of its failure to maintain the necessary records, the employer was required to divide the employee’s total earnings, including the $120 per day and the amounts alleged to be commissions, by 40 hours (instead of total hours) to compute the regular rate of pay. It was thus compelled to use the denominator of 40 hours rather than the total actual hours to calculate the regular rate of pay and overtime owed. This created larger liability for the employer than the sum that would have been owed had the employer kept the records required by law.

4. Practical Observations

There are lessons to be learned from each of these cases. First, employers should take their record-keeping and time-keeping obligations seriously and meet them head on. They should ensure their records are accurate, fully address their legal responsibilities, and show compliance with the law, including the obligation to provide 30-minute, duty-free meal periods that begin at proper times. Second, time-keeping systems should be devised and administered so they aid employers to demonstrate compliance. If they show violations or even suggest that violations may have occurred, they can create significant legal problems. Plaintiffs’ attorneys often cite records indicating the existence of missed, late or short meal periods as displaying a purported “violation rate,” even though they simply create a rebuttable presumption of a violation that can often be overcome with probative evidence. Employers should seek to avoid that presumption by taking proactive measures to make records their ally.

California’s time-keeping obligations are addressed in Chapters 7 and 13 of the Wage and Hour Manual for California Employers by Attorney Richard J. Simmons. The 2021 edition of the book is available from Castle Publications, LLC.

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On September 9, 2021, President Biden announced that the Occupational Safety and Health Administration (“OSHA”) would develop a COVID-19 emergency temporary standard (“ETS”) mandating COVID-19 vaccinations or weekly testing for private employers with 100 or more employees. OSHA published the ETS on November 5, 2021, and the following day, the U.S. Court of Appeals for the Fifth Circuit issued an emergency stay prohibiting implementation of the ETS in response to a petition by various states, employers, religious groups, and individual citizens. After expedited briefing, the Fifth Circuit issued an order on November 12, 2021, enjoining enforcement of the ETS based on multiple grounds.

Because of the multitude of challenges to the ETS pending throughout the country, all petitions for review were transferred and consolidated to the U.S. Court of Appeals for the Sixth Circuit as of November 16, 2021. The Sixth Circuit is generally considered a conservative court, with the majority of its judges appointed by Republican presidents, which suggests that it may decide the challenges in a manner similar to the Fifth Circuit. The Sixth Circuit’s ruling will then likely be subject to review before the U.S. Supreme Court.

Pending the Sixth Circuit’s decision and potential Supreme Court review, the ETS is stayed. OSHA issued a release stating it has “suspended activities related to the implementation and enforcement of the ETS pending future developments in the litigation.” Nonetheless, employers should familiarize themselves with the ETS requirements in case the stay is lifted and the ETS ultimately becomes enforceable.

1. Employers And Employees Covered By The ETS

The ETS applies to all private employers who are under OSHA’s jurisdiction and have 100 or more employees nationwide at any time the ETS is in effect. The count is company-wide and includes union and part-time employees, but does not include independent contractors. Additionally, if an employer’s workplace is covered under the Biden Administration’s Executive Order governing federal contractors and subcontractors, or if an employer’s employees work in certain healthcare or healthcare support settings covered by the federal Healthcare Emergency Temporary Standard, those regulations and requirements will apply instead. Employees of providers and suppliers participating in Medicare and Medicaid programs also may be required to comply with the vaccination mandate under the Centers for Medicare & Medicaid Services (“CMS”) Omnibus Interim Final Rule, which is complementary to the ETS.

Although the ETS may apply to an employer, its requirements may not apply to certain employees. The ETS does not apply to employees who work exclusively outdoors, work from home, or do not report to a workplace where co-workers or customers are present (i.e., the employee works entirely alone). Employees who spend any time on location working with others, including co-workers, clients, customers, or the public, are covered by the new ETS, even if they do not work at the employer’s worksite.

2. Employers In California And Other States With A State Plan

Employers in states like California that have an OSHA-approved State Plan are governed by the State Plan’s occupational safety and health standards and regulations. State Plans are required to adopt and enforce standards that are “at least as effective” as, or stricter than, OSHA’s requirements. OSHA initially gave State Plans 15 days to notify OSHA whether the State Plan will adopt the ETS or amend any COVID-19 emergency temporary standards currently in place to be identical or at least as effective as the requirements in the ETS. OSHA also initially required the State Plan’s standard to be published within 30 days of publication of the ETS and to remain in effect for the duration of the federal ETS. However, because OSHA has suspended implementation and enforcement of the ETS pending the current appeals of the ETS and therefore numerous State Plans have paused their adoption of the ETS.

California’s OSHA-approved State Plan, commonly known as “Cal/OSHA,” has already had a COVID-19 emergency temporary standard in place since November 2020. Although some of the requirements under the federal ETS are already a requirement under Cal/OSHA’s ETS (e.g., requiring unvaccinated employees to wear face coverings indoors and in vehicles with others), others are new. Cal/OSHA initially announced that it intended to adopt the federal ETS “as-is.” On November 18, 2021, however, Cal/OSHA’s Standards Board announced that it would not consider adoption of the federal ETS until the Sixth Circuit resolves the ongoing litigation over the ETS.

3. Requirement To Implement A COVID-19 Vaccination Or Testing Policy

The ETS requires employers to develop and implement a written policy that mandates that all covered employees be fully vaccinated against COVID-19 (unless an employee qualifies for a medical or religious exemption). Alternatively, employers who do not adopt a mandatory vaccination policy must implement a policy that allows employees to choose between showing proof of their full vaccination status or providing weekly test results and wearing face coverings indoors. Under the ETS, employees are considered fully vaccinated if two weeks have passed since the employee completed “primary” vaccination of a vaccine approved by the U.S. Food and Drug Administration (“FDA”) or World Health Organization (“WHO”). The ETS requires employers to provide employees with up to four hours of paid time at their regular rate of pay to receive each dose of the vaccine, and paid sick leave to recover from any side effects of the vaccine.

An employer’s written policy also must require employees to notify the employer upon learning that the employee tested positive for or was diagnosed with COVID-19, regardless of vaccination status. Employers must remove any COVID-19 positive employees from the workplace immediately. Although the ETS does not require employers to provide paid leave for removed employees, employers still must follow any applicable state/local wage and hour obligations or COVID-19 supplemental paid sick leave laws in effect. In order to return to work, an employee must: (1) receive a negative result on a COVID-19 nucleic acid amplification test (NAAT); (2) satisfy the return-to-work criteria under the CDC’s “Isolation Guidance;” or (3) be cleared to return to work by a licensed healthcare provider. Employers must report each work-related COVID-19 death to OSHA or the State Plan within eight hours of the employer learning of the employee’s death and must report each work-related COVID-19 in-patient hospitalization to OSHA or the State Plan within 24 hours of learning about the hospitalization.

a. Proof Of Vaccination Status

To comply with the ETS, employers must determine the vaccination status of each employee. The ETS requires employers to maintain a roster of each employee’s vaccination status, including whether the employee is fully, partially, or not vaccinated, and whether the employee is not vaccinated due to a medical or religious exemption. Employers also must maintain proof of each employee’s vaccination status, which can take the form of: (1) an immunization record; (2) a copy of the COVID-19 Vaccination Record Card; (3) a copy of medical records documenting vaccination; (4) any other official documentation that reflects the vaccine administered, the date of administration, and the name of the healthcare professional/site that administered the vaccine; or (5) a signed attestation from the employee which may be subject to criminal penalties (under Section 17(g) of the OSH Act for knowingly supplying false statements or documentation). Employers who previously collected vaccination records or attestations prior to the effective date of the ETS do not need to re-verify or collect new attestations. The roster and vaccination records must be maintained for as long as the ETS remains in effect and should be maintained as confidential employee medical records in accordance with federal and state laws.

b. Proof Of Weekly Testing For Unvaccinated Employees

Employees who do not provide proof of full vaccination must provide proof of COVID-19 testing once every seven days. Importantly, any employee who does not provide proof of testing must be excluded from the workplace until the employee provides a negative test result. Employees working remotely who are away from the workplace for a period of seven or more days must be tested within seven days prior to returning to the workplace and provide proof of a negative test result upon returning to the workplace. Employers must maintain a record of each test result provided by the employee or obtained during tests conducted by the employer. Records of test results must be kept for as long as the ETS is in effect and maintained as confidential employee medical records.

Tests used for compliance with the ETS must be cleared, approved, or authorized by the FDA. Tests may not be self-administered and self-read unless observed by the employer or an authorized telehealth proctor. Although the ETS does not require employers to pay for any costs associated with weekly testing, the ETS recognizes that employers may be required to cover these costs by other laws, regulations, or collective bargaining agreements. States with State Plans like California and/or states with laws requiring employers to reimburse employees for business-related expenses (which also includes California) may ultimately decide that employers must pay for the costs of testing under the ETS.

c. Face Coverings For Unvaccinated Employees

Employees who do not provide proof of full vaccination must wear a face covering when indoors and when occupying a vehicle for work with another person. Exceptions to this requirement include:

• When an employee is alone in a room with floor to ceiling walls and a closed door;

• For a limited time while the employee is eating or drinking at the workplace or for identification purposes in compliance with safety and security requirements;

• When an employee is wearing a respirator or facemask; and

• Where the employer can show that the use of face coverings is infeasible or creates a greater hazard that would exclude compliance.

The ETS also expressly prohibits employers from preventing any employee from voluntarily wearing a face covering or facemask unless the employer can demonstrate wearing such covering would create a hazard of serious injury or death. Like testing costs, the ETS does not require employers to cover the cost of face coverings, but the ETS acknowledges that payment may be required by other laws, regulations, or collective bargaining agreements.

d. Addressing Medical And Religious Exemptions

Employers who elect to require mandatory vaccination cannot require vaccination for employees:

• Who are medically contraindicated for a COVID-19 vaccine;

• For whom medical necessity requires a delay in vaccination; or

• Who are legally entitled to a reasonable accommodation under federal civil rights laws because they have a disability or sincerely held religious beliefs, practices, or observances that conflict with the vaccination requirement.

Employees who will be present in the workplace and who are granted a reasonable accommodation or otherwise exempted from the vaccination requirement, however, are still subject to the testing and face covering requirements for unvaccinated employees. If the testing and/or face covering requirements also conflict with the employee’s disability or religion, the employer will need to engage in the interactive process with the employee to determine if a potential reasonable accommodation that does not pose an undue burden is available. The ETS refers employers to the EEOC’s guidance for determining when reasonable accommodations may be needed due to an employee’s disability or religion, available at

e. Employee And OSHA Access To Vaccination And Test Results

Employers must make available, for examination and copying, the individual proof of COVID-19 vaccine documentation and any COVID-19 test results required by the ETS for a particular employee to that employee and to anyone with written authorized consent from the employee. Additionally, an employee/employee representative may request the total number of fully vaccinated employees at a workplace and the total number of employees at that workplace. In both instances, employers must comply with the request by the end of the next business day after the request. If requested by OSHA, employers must provide a copy of the employer’s written policy within four hours and all other records required by the ETS by the next business day.

4. Additional Requirements

In addition to implementing a written policy, employers must inform each employee, in a language and at a literacy level the employee understands, about the following:

• The ETS requirements and the policies and procedures implemented by the employer to comply with those requirements;

• COVID-19 vaccine efficacy, safety, and the benefits of being vaccinated, by providing employees with the CDC document entitled, “Key Things to Know About COVID-19 Vaccines;”

• The employer cannot discharge or otherwise discriminate or retaliate against an employee for reporting a work-related injury or illness; and

There are criminal penalties associated with knowingly supplying false statements or documentation related to an employee’s proof of vaccination or test result.

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The New York State Division of Human Rights (“NYSDHR”) recently announced a shift in policy such that complaints filed on or after October 12, 2021 can no longer be resolved through private settlement.

The NYSDHR implemented this change following its determination that approximately half of all settlements that follow a probable cause determination are private without public record. According the NYSDHR, it has “a vested interest in the ultimate resolution of all cases – even cases with private counsel – to ensure that the terms of any settlement comply with [its] basic standards and do not violate public policy.”

As a result of this change, after a probable cause determination, a complainant’s attorney will be required to set forth in writing the reasons why the complainant seeks an order discontinuing a case. If the reason is private settlement, a discontinuance will not be granted. Instead, the parties will be encouraged to settle the matter after a stipulation indicates the terms of the settlement or proceed through the NYSDHR’s public hearing process.

This change is illustrative of other efforts within New York to prohibit employers from shielding the facts and circumstances of any discrimination, harassment or retaliation claims. Recent changes to Section 5-336 of the General Obligations Law and Section 5003-b of the New York Civil Practice Law and Rules, for example, effectively ban nondisclosure clauses that would prevent the disclosure of the underlying facts and circumstances in settlements of harassment claims.

Parties proceeding before the NYSDHR will still be able to settle disputes, but confidentiality, often a key incentive, can no longer be a condition. Employers may be best served to explore resolution of a threatened action prior to an aggrieved employee filing a complaint.

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On August 3, 2021, New York City Mayor Bill de Blasio announced the “Key to NYC” program (“Key to NYC” or the “Program”), which implemented new mandatory COVID-19 vaccination requirements for employees and patrons of certain indoor establishments in New York City. New York City officially began enforcing the Program on September 13, 2021, and the United States District Court for the Eastern District of New York upheld the program’s validity by denying a motion for preliminary injunction brought by certain gym and restaurant owners on October 12, 2021. Important guidance issued by the City regarding how covered businesses can and should comply with Key to NYC is summarized below.

1. Indoor Dining Establishments: Any food establishment that is part of the NYC Department of Health and Mental Hygiene’s restaurant grading program that offers indoor dining or beverage service qualifies as a covered entity. Covered entities include restaurants, catering halls, event spaces, hotel banquet rooms, bars, nightclubs, cafeterias, grocery stores with indoor dining, coffee shops, fast food or quick service establishments with indoor dining, businesses that operate indoor seating at food courts (including in hotels and malls), and businesses that provide on-premises catering services. If a food establishment offers only take-out, delivery or outdoor dining, any indoor tables, chairs, or other furniture used for indoor dining must be removed or blocked off so that they are unavailable for use.

2. Indoor Fitness Establishments: Covered entities include standalone gyms and fitness centers, hotel gyms and fitness centers, gyms and fitness centers in higher education institutions, yoga, Pilates, dance and barre studios, boxing and kickboxing gyms, fitness boot camps, indoor pools, CrossFit or other plyometric boxes, and other places holding indoor group fitness classes. For purposes of the Program, a “group fitness class” is defined as two (2) or more participants led by an instructor.

3. Indoor Entertainment Establishments: Covered entities include movie theaters, music or concert venues, adult entertainment, casinos, botanical gardens, commercial event and party venues, museums and galleries, aquariums, zoos, professional sports arenas and indoor stadiums, convention centers and exhibition halls, performing arts theaters, bowling alleys, arcades, indoor play areas, pool and billiard halls, and other recreational game centers. If an indoor entertainment establishment has both indoor and outdoor portions, only the indoor portion is covered by the Program.

Indoor dining, entertainment and fitness establishments in the following settings are exempt from Key to NYC: (i) private residential buildings where the setting is only available to residents; (ii) office buildings where the setting is available only to office staff; (iii) pre-K through grade 12 schools; (iv) senior centers; (v) community centers; and (vi) child care programs.

An “indoor” space is one that has a roof or overhang and three or more walls. However, the following structures do not count as indoor spaces: (i) structures on a sidewalk or roadway that are entirely open on the side facing the sidewalk; and (ii) outdoor dining structures designed for individual parties (i.e., plastic domes) so long as the space has adequate ventilation.

Covered Entity Obligations

Covered entities must require all individuals (with certain exceptions noted below) to display proof that they have received at least one dose of a COVID-19 vaccine and, for anyone appearing to be 18 years of age or older, proof of identification. Specifically, a covered entity must require proof from: (i) employees; (ii) patrons; (iii) interns; (iv) volunteers; and (v) contractors. Businesses subject to the Program may choose to keep a record of people who have previously provided proof of vaccination and identification rather than requiring proof upon each entry into the establishment. At their option, covered entities may choose to limit entry only to fully-vaccinated individuals (i.e., individuals who have received two doses of a two-dose COVID-19 vaccination series, or one dose of a one-dose vaccination) rather than simply requiring proof of a single dose.

There are certain exceptions to this mandate. Specifically, covered entities need not require proof of vaccination or identification for: (i) individuals who need to use the bathroom or a locker room to change clothes; (ii) individuals making deliveries or pickups; (iii) individuals who enter the establishment solely for the purpose of making necessary repairs; or (iv) individuals picking up items for takeout or delivery. However, all of the individuals exempted above must wear a face mask if they cannot maintain social distancing.

Individuals Who Cannot Be Vaccinated

The Program does not require covered entities to provide a reasonable accommodation to individuals who cannot be vaccinated, though they are encouraged to “consider appropriate reasonable accommodations.” The scope and nature of such accommodations are not specified in the City’s guidance.

Individuals under the age of twelve (who are not currently eligible for vaccination) may enter a covered entity, but must wear a face mask, except when eating and drinking, whenever they are unable to maintain six feet of social distance.

Acceptable Forms Of Proof Of Vaccination And Identification

The following forms of proof of vaccination are acceptable: (i) a photograph or hard copy of a CDC vaccination card or other official vaccination record; (ii) the NYC COVID Safe App; and (iii) the New York State Excelsior App. Covered entities are not required to verify that a vaccination record is real, though are encouraged to report known fake vaccination records to 311.

Acceptable proof of identification (bearing the same identifying information as the proof of vaccination) must contain either: (i) the individual’s name and photograph; or (ii) the individual’s name and date of birth.

Responding To Individuals Who Refuse To Show Proof Of Vaccination

Covered entities must refuse entry to anyone who refuses to show proof of vaccination and identification, except for “very quick and limited purposes,” such as using the bathroom, picking up food, paying a bill or changing in a locker room. Anyone entering for such quick and limited purposes must wear a mask if they are unable to maintain social distancing. The New York City Office of Administrative Trials and Hearings has posted a webinar regarding methods of conflict resolution. Covered entities with safety concerns from an uncooperative person are encouraged to call 911.

Notice Requirements

Covered employees must post a sign notifying individuals about the vaccination requirement in a location that is easily visible to patrons before they enter an indoor area. Businesses may use a poster created by the City or create their own with identical language, so long as it is at least 8.5×11 inches and in at least 14-point font.

Recordkeeping Requirements

A covered entity must maintain on site a written record describing how it will verify proof of vaccination for staff and patrons and produce it for inspection on demand. A covered entity is not required to keep records showing that it has satisfied the Program’s requirements, but it may keep a log of people who have previously provided proof of vaccination and identification for administrative convenience.

Penalties For Noncompliance

A noncompliant establishment may be fined up to $1,000. Repeat violations may result in increased fines or other enforcement action.

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Effective July 29, 2021, most New York City employers will have additional obligations under the Fair Chance Act (“FCA”). Since 2015, the FCA has: (i) prohibited New York City employers from inquiring into an applicant’s criminal history prior to making a conditional job offer; and (ii) required New York City employers to engage in a detailed process prior to revoking a conditional offer on the basis of information learned through a background check. This existing law presented a number of compliance challenges with costly penalties of up to $250,000 and the amendments only add to the burden.

The amendments expand the coverage of the FCA to more employers and more persons in two respects. First, an employer is now covered if it has four persons working for it, whether as employees or as independent contractors. Second, the inquiries prohibited by the FCA and the process to be followed now apply to independent contractors as well.

The amendments also limit an employer’s ability to take an adverse action against a current employee who is convicted of a crime, arrest, or accused of criminal conduct, during their employment unless the employer has determined that either: (i) there is a direct relationship between the conviction or the arrest and the position held; or (ii) a continuation of employment would present an unreasonable risk to property or the safety of individuals or the general public.

An employer seeking to take an adverse action against a current employee must additionally comply with an updated FCA Process. Thus, prior to taking an adverse action against a current employee, employers must: (i) request information relevant to the FCA factors; (ii) perform an individualized analysis under the FCA and Article 23-A of the Corrections Law; (iii) provide a written copy of the analysis to the employee; and (iv) allow the employee a “reasonable time” before taking the adverse action. Employers can, however, place an employee on unpaid leave during this FCA Process.

The amendments also created additional factors for employers to use as part of the FCA Process. Employers considering arrests or convictions that occurred prior to employment, must consider: (i) the public policy favoring employment of persons with criminal histories; (ii) the specific duties performed by the employee; (iii) the bearing, if any, the criminal offense will have on the employee’s ability to perform his or her duties; (iv) the time that has passed since the criminal offense; (v) the age of the employee at the time of the offense; (vi) the seriousness of the offense; (vii) any information concerning rehabilitation and good conduct; and (viii) the legitimate interest the employer may have in protecting property or persons.

Employers considering arrests or convictions that are pending at the time of an application for employment (or promotion or transfer), must consider: (i) the policy of New York City to avoid the unnecessary exclusion of persons with criminal histories from employment; (ii) the specific duties performed by the employee; (iii) the bearing, if any, the criminal offense will have on the employee’s ability to perform his or her duties; (iv) whether the person was 25 or younger at the time of the offense; (v) the seriousness of the offense; (vi) any information concerning rehabilitation and good conduct; and (vii) the legitimate interest the employer may have in protecting property or persons.

Employers may continue to take adverse action against an applicant or employee who intentionally misrepresents his or her arrest or conviction history. However, employers must provide the affected person with any documents that lead the employer to determine that an intentional misrepresentation was made and provide the person with a reasonable amount of time to respond.

Violations of the FCA are often indefensible given that many violations are considered “per se” violations. Employers must be sure to revisit their background check policies for applicants as well as current employees to avoid significant penalties.

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On July 15, 2021, the California Supreme Court issued its anticipated decision in Ferra v. Loews Hollywood Hotel, LLC, ___ Cal. 5th ___ (2021), a case involving the meal and rest period premiums required by California law when violations occur. The Supreme Court disagreed with the trial and court of appeal decisions holding that premiums should be calculated at an employee’s base rate of pay. Instead, they must be computed based on the “regular rate of pay” used to calculate overtime pay. The decision will cause employers throughout California to reexamine the way they have calculated premiums. Many will also choose to reexamine the desirability of paying bonuses and wage incentives of any kind, including incentives paid weekly, biweekly, monthly or quarterly, due to their impact on the calculation of meal and rest period premiums along with overtime. They also create additional burdens regarding pay stub compliance.

1. The Statutory Structure

Labor Code Section 226.7 requires employers to pay premiums equal to an extra hour of pay at the “regular rate of compensation” if an employee is not provided meal and rest periods that comply with state law. The term used in Section 226.7 differs from the language used to address the overtime requirements in state and federal law, the “regular rate of pay.” The Supreme Court concluded that the terms are synonymous. Thus, the premium owed for meal and rest period violations must be calculated in the same manner the regular rate of pay is calculated for overtime purposes rather than an employee’s base hourly rate.

2. The Significance Of The Decision

This means that various elements of pay, such as incentive pay and shift differentials, must be factored into meal and rest premiums just as they are factored into the overtime rate. Premiums are owed when an employer fails to provide timely and compliant meal and rest periods. The Court stated “that the term ‘regular rate of compensation’ in Section 226.7(c) has the same meaning as ‘regular rate of pay’ in Section 510(a) and encompasses not only hourly wages but all nondiscretionary payments for work performed by the employee.”

The case was filed by a bartender of Loews Hollywood Hotel, LLC. She was paid hourly wages as well as quarterly nondiscretionary incentive payments. The Court viewed the term “nondiscretionary payments” to mean payments for an employee’s work that are owed pursuant to a prior contract, agreement or promise,” not “determined at the sole discretion of the employer.” See DLSE Enforcement Policies and Interpretations Manual § (3); 29 C.F.R. §§ 778.211, 778.213. This includes, for example, hourly pay, nondiscretionary bonuses and incentive pay, commissions, piece-rate earnings, shift differentials, and other items. Based on the holding, the quarterly incentive payments to the bartender who filed the Ferra case had to be incorporated into the premiums paid. (The regular rate of pay is discussed in detail in Sections 8.12 – 8.13 of the Wage and Hour Manual for California Employers, by Richard J, Simmons of Sheppard Mullin Richter and Hampton. The new, 24th edition of the Manual is now at the printer and will be available soon.)

3. The Decision Is Retroactive

Even though it recognized that the lower courts in the Ferra case and several federal courts had construed the same language to reach the opposite conclusion, the Supreme Court declined to limit its ruling to prospective application. It is thus retroactive. It is likely to result in a wave of new lawsuits, including class actions. Employers should immediately contact their legal counsel to examine the impact of the Ferra decision on their past and future practices.

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