UPDATE: Texas Legislature and Courts Clash With Cities Over Mandatory Sick Leave: What Employers Need to Know

This is an update to previous posts from June 24, 2019 and July 31, 2019.

On Friday, November 22, Bexar County Judge Peter Sakai ordered that San Antonio’s paid sick leave ordinance, which was scheduled to take effect December 1, be delayed once again. Implementation of the ordinance was first delayed in July of this year by agreement of the City of San Antonio and the business groups challenging the ordinance. Following court approval of that agreement, San Antonio revised its ordinance to attempt to appease local businesses. The revisions, which were passed by San Antonio’s City Council on Oct. 3, were not enough to satisfy the plaintiff businesses, which subsequently requested a temporary injunction to block the revised ordinance from taking effect on December 1. Following a hearing, Judge Sakai granted the injunction, which will prevent the ordinance from becoming effective while the case proceeds. A trial will be set to determine whether the ordinance should be enjoined permanently. In the meantime, the city may decide to appeal the injunction to the Fourth Court of Appeals in San Antonio.

The San Antonio Chamber of Commerce released a statement applauding Judge Sakai’s decision, calling San Antonio’s ordinance “a local infringement on the rights of private employers.” See Statement from Chamber on Injunction of Sick Leave Ordinance.

Meanwhile, Dallas and Austin also continue to face legal challenges to their own respective paid sick leave ordinances. Dallas’s ordinance, the only one of the three that has gone into effect, is currently facing a challenge in federal court in the Eastern District of Texas. The judge in that case has not yet ruled on the Dallas companies’ request for injunction or the city’s motion to dismiss. It is important to note that while Dallas’s paid sick leave ordinance became effective on August 1, 2019, the city of Dallas has deferred enforcement of the ordinance, other than for claims of retaliation, until April 1, 2020.

Austin’s paid sick leave ordinance, like San Antonio’s, has been prevented from taking effect by Texas state courts. In November 2018, the Austin ordinance was enjoined by Texas’s Third Court of Appeals, which declared the ordinance unconstitutional. The city of Austin has appealed that decision, and the parties are expected to complete briefing to the Texas Supreme Court on January 7, 2020. The court will likely not issue its ruling until the spring of 2020. While only the Austin ordinance is at issue in the case pending before the Texas Supreme Court, the court’s decision will almost certainly have legal implications for the Dallas and San Antonio ordinances as well.

Due to the uncertainty caused by these legal challenges, employers operating in San Antonio, Dallas or Austin should continue to closely monitor the events relating to all three ordinances. Our Texas Labor and Employment Group would be happy to answer any specific questions you may have regarding the paid sick leave ordinances and how you or your business may be affected.

Not Dead Yet: The States’ New Strategy for Attacking Independent Contractor Misclassification Can Be Relentless — and Costly.

For years, state governments have claimed they were losing hundreds of millions of dollars in unpaid withholdings as a result of independent contractor misclassification. Now, one state is making a grab for a massive piece of that pie — all at once.

On November 12, the state of New Jersey sent a bill to Uber Technologies for $459 million and a bill to its subsidiary Rasier LLC for $642 million seeking unpaid contributions, penalties, and interest. The bills cover 2014 through 2018 and allege a failure to make required payments under the New Jersey Unemployment and Temporary Disability Insurance Laws.

Contributions, of course, are due only for employees, not independent contractors. And there’s the rub. Like many states, New Jersey uses an ABC Test to determine whether a worker is an employee or an independent contractor for unemployment insurance purposes, and the state is claiming that Uber and Rasier misclassified drivers.

Uber and Rasier will appeal, and there are defenses available. They have good arguments, and they will assert them vigorously. But the stakes are high, and the outcome is uncertain. When a state brings a claim like this one, a company’s arbitration agreements and class action waivers don’t help. These are not arbitrable claims. Continue Reading

New York City Extends NYCHRL Employment Protections to Freelancers and Independent Contractors

On Oct. 13, 2019, New York City enacted Int. 136-A (the Law), expanding the employment protections of the New York City Human Rights Law (NYCHRL) to freelancers and independent contractors. The Law will take effect on Jan. 11, 2020.

The NYCHRL applies to employers with four or more employees. The Law changes the counting rule so that, when determining whether there are four employees, the headcount will now include (i) interns, freelancers and independent contractors and (ii) the employer’s parent, spouse, domestic partner or child, if employed by the employer.

The Law has a 12-month look-back period for counting purposes. This means that to have fewer than four employees, the employer must have fewer than four “at all times during the period beginning twelve months before the start of an unlawful discriminatory practice and continuing through the end of such unlawful discriminatory practice.” The four-employee threshold does not apply to gender-based harassment claims, as the NYCHRL’s prohibition on sexual harassment covers all New York City employers, regardless of size. Continue Reading

California Court of Appeal Determines Customer of Staffing Agency Is Employer Because of Direction and Control

In Jimenez v. U.S. Continental Marketing, Inc., the California Court of Appeal addressed whether the plaintiff and appellant, Elvia Velasco Jimenez, was an “employee” of a contracting employer under the California Fair Employment and Housing Act (FEHA). In answering this question, the court also provided useful guidance to California businesses on the standard for whether an employment relationship exists under the FEHA. This guidance is particularly relevant for staffing companies and their clients because there can be ambiguity as to which company employs these workers. This question was highly consequential to the parties because, unless Jimenez could establish that she was an employee of the contracting employer under the FEHA, she could not prevail on her claims against that company for harassment, retaliation, failure to prevent harassment or retaliation, and wrongful termination.

Jimenez was a “direct employee” of a staffing agency named Ameritemps, Inc., which assigned her to U.S. Continental Marketing, Inc. (USCM), a manufacturer of shoe care products. At the time USCM terminated her engagement, Jimenez oversaw the production work of up to 30 workers. Ameritemps was responsible for tracking work time, providing benefits and paying Jimenez. With respect to her day-to-day experience at USCM, however, there was virtually no difference between Jimenez and direct employees of USCM.  Jimenez used USCM’s equipment, she was expected to comply with USCM’s policies, she supervised and in turn was supervised by USCM’s direct employees, and USCM sent her to its clinic for any on-the-job injuries. Continue Reading

Ahead of 2020 Election, New York City Issues Enforcement Guidance on National Origin and Immigration Status Discrimination

The Dictionary definition of the word “discrimination” photo taken through magnifying glass from a page of a dictionary with selective focus.Immigration has been at the forefront of news reports and court cases recently, and has already proven to be a hot button issue for the 2020 election candidates to debate. As we move closer to the election, such political conversation may find its way into the office. If it does, employers should ensure that they know what is and is not permitted commentary and actions with respect to individuals who are not U.S. citizens or are of a different national origin.

As you are likely aware, the New York City Human Rights Law (NYCHRL) prohibits discrimination, harassment and retaliation on the basis of, among other protected categories, actual or perceived “alienage and citizenship status” and “national origin.” Citing various statistics to support that New York City is one of the most diverse cities in the world, the NYC Commission on Human Rights (the Commission) released enforcement guidance and a fact sheet, emphasizing that fighting national origin and immigration status discrimination is a priority of the Commission. Continue Reading

California Employers Receive Favorable Interpretation of “Regular Rate of Compensation” in Labor Code Provision Concerning Meal and Rest Period Premium Pay and Guidance Regarding Lawful Rounding Practices

Close-up picture of a personal check and American Dollars with selective focus. Great use for financial concepts.Earlier this month, a California Court of Appeal issued an opinion that is good news for California employers. The opinion addressed the meaning of “regular rate of compensation” in California Labor Code section 226.7, which requires employers to pay employees a premium wage when employees do not receive meal or rest periods, and also addressed under what circumstances an employer’s rounding policy is lawful. The court’s opinion is favorable on both points for employers.

In Jessica Ferra v. Loews Hollywood Hotel, LLC, the Court of Appeal addressed whether the term “regular rate of compensation” within Labor Code section 226.7 has the same meaning as the term “regular rate of pay” within Labor Code section 510. Labor Code section 226.7 requires an employer that fails to provide its employee with a required meal, rest or recovery period to pay the employee an additional hour of pay “at the employee’s regular rate of compensation for each workday that the meal or rest or recovery period is not provided.” Labor Code section 510 requires an employer to pay overtime at either one and one-half or twice the employee’s regular rate of pay when the employee works more than a specified number of hours within a workday or within a workweek. Continue Reading

California Court of Appeal Concludes That Claims Under Labor Code 2800 and 2802 Not Excluded From Coverage by “Wage and Hour” Exclusion in Lloyd’s of London Insurance Policy

In a win for California employers, the California Court of Appeal for the Fourth District held in Southern California Pizza Co., LLC v. Certain Underwriters at Lloyd’s, London Subscribing to Policy Number 11EPL-20208, 2019 WL 4572859, that claims against the insured employer brought under California Labor Code §§ 2800 and 2802 were potentially covered by the applicable Lloyd’s of London policy. In doing so, the Court narrowly interpreted the policy’s “wage and hour” exclusion and overruled the trial court’s order sustaining the carrier’s demurrer to the insured’s coverage and bad faith complaint.

The applicable policy language reads, “[t]his Policy does not cover any Loss resulting from any Claim based upon, arising out of, directly or indirectly connected or related to, or in any way alleging violation(s) of any foreign, federal, state, or local, wage and hour or overtime law(s), including, without limitation, the Fair Labor Standards Act; however, we will pay Defense Costs up to, but in no event greater than $250,000 for any such Claim(s)…” Continue Reading

NLRB Adopts Standard Making it Easier for Employers to Make Unilateral Changes to Working Conditions

Labor Board Ditches the “Clear and Unmistakable Waiver” Standard in Favor of the Employer-Friendly “Contract Coverage” Test

2019 has been the “Summer of Love” for employers at the Trump-administration National Labor Relations Board (“Board” or “NLRB”). Over the past several weeks, the Board has issued a handful of employer-friendly decisions covering issues such as worker misclassification, the rights of union organizers and the appropriate scope of a proposed bargaining unit. Perhaps the most far-reaching of these decisions came down on September 10, when the Board eased a unionized employer’s ability to make unilateral changes to terms and conditions of employment. In M.V. Transportation, Inc. (368 NLRB No. 66), the Board overturned decades of precedent when it abandoned the “clear and unmistakable waiver” standard in favor of the “contract coverage” test for evaluating unilateral changes.

As background, under the National Labor Relations Act (“NLRA” or “Act”), an employer with a unionized workforce has a duty to bargain with the union over wages, hours, and terms and condition of employment. An employer that fails to meet its bargaining obligation and institutes “unilateral changes” to terms and conditions of employment violates the Act. The Board’s decision in M.V. Transportation changed the standard that the Board uses to evaluate unilateral changes. Continue Reading

New Job Protections for Medical Marijuana Users in New Jersey

Last month, New Jersey Governor Phil Murphy signed into law the Jake Honig Compassionate Use Medical Cannabis Act (the Act), amending the New Jersey Compassionate Use Medical Marijuana Act (NJCUMMA). The Act expands job protections for employees and applicants who use medical marijuana. With this new law, New Jersey joins a growing list of states (including Massachusetts and New York) offering employment protections for authorized users of medical marijuana.

The NJCUMMA had expressly excluded employment accommodations for medical marijuana users.[1] However, in Wild v. Carriage Funeral Holdings, Inc., Docket No. A-3072-17T3 (N.J. App. Div. March 27, 2019), the New Jersey appeals court held that an employee who was fired after testing positive for medical marijuana could sue his former employer for disability discrimination and failure to accommodate.

The Act now prohibits employers from taking an adverse employment action against an employee or applicant who is a registered qualifying patient based solely on the individual’s status as a registrant. Under the Act, an “adverse employment action” is defined as “refusing to hire or employ an individual, barring or discharging an individual from employment, requiring an individual to retire from employment, or discriminating against an individual in compensation or in any terms, conditions, or privileges of employment.”

The Act also amends how employers should react to a positive test result. Specifically, employers must (i) provide employees and applicants with a written notice of the right to offer an explanation and (ii) give employees and applicants three working days after receiving the notice to submit an explanation or request a second test of the original sample at the employee’s or job applicant’s own expense. Despite the new amendments, the Act does not “restrict an employer’s ability to prohibit or take adverse employment action for the possession or use of intoxicating substances during work hours or on workplace premises outside of work hours.” Additionally, the Act expressly authorizes employers to take an adverse employment action against a medical marijuana patient if accommodating the employee’s medical marijuana use would “violate federal law or result in the loss of a federal contract or federal funding.”

With the Act having taken effect last month, employers must amend their drug screening programs and hiring processes to ensure that they are in compliance with the Act. If you have any questions about or need help with this new law, or with any of the rapidly expanding laws on marijuana, our team would be happy to assist you.

[1] “Nothing in the law requires an employer to accommodate an employee’s use of medical marijuana.” N.J.S.A. 24:6I-14

New Jersey and Illinois Join the Salary History Ban Train

On July 25, 2019, Acting Gov. Sheila Oliver signed NJ A1094 (“the Law”) banning salary history requests in New Jersey. The Law will take effect on Jan. 1, 2020.

The Law makes it unlawful for an employer to (1) screen a job applicant based on the applicant’s salary history, (2) require that the applicant’s salary history satisfy any minimum or maximum criteria or (3) use an applicant’s refusal to volunteer compensation information as a factor in any employment decision.

However, the Law also defines several situations in which an employer may consider salary history. First, employers may consider an applicant’s salary history in determining compensation if the applicant voluntarily, “without prompting or coercion,” provides the information. Additionally, after the employer has made an offer of employment, the employer may ask an applicant to provide him with a written authorization to confirm salary history.

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