Within San Francisco city limits, employers of 20 or more employees are subject to the Health Care Security Ordinance.  The following is a plain-English summary of these provisions, which can be somewhat perplexing for employers and employees alike, and the changes to the law effective in 2012.

San Francisco’s Health Care Security Ordinance (HCSO) requires mid to large-size employers in the City (for-profits with 20 or more employees and non-profits with 50 or more employees) to spend a minimum amount on their employees’ health care.  Employers can choose how to make these health care expenditures, including purchasing health insurance, setting up health spending accounts, or enrolling employees in the City’s Healthy San Francisco Program.  Employers with 1-19 employees are exempt from the HCSO provisions.

Employees covered by the HCSO, “covered employees,” are those employed for at least 90 calendar days and perform at least eight hours of work per week in San Francisco.

The new HCSO regulations, effective January 1, 2012, change the minimum health care expenditure rates and the annual salary figure exempting certain employees from the HCSO.

2012 Health Care Expenditure Rates

Large Employers (100+ employees) – minimum health care expenditure rate increased to $2.20/hour (previously $2.06/hour).

Medium-Sized Employers (20-99 employees) – the minimum health care expenditure rate increased to $1.46/hour (previously $1.37/hour).

The minimum expenditure rates require employers to pay a certain amount for each employee’s health care services, or reimbursing the costs of those services, in addition to wages and compensation.

The expenditure rate is to be paid for each hour worked by a covered employee for that quarter.  Required health care expenditures are calculated by multiplying the total number of “hours paid” to each covered employee by the applicable expenditure rate.  “Hours paid” include both work hours and any paid time off, including vacation and sick leave.

2012 Annual Salary Exemption Figure

Managers, supervisors, or confidential employees who earn an annual salary at or above $84.051 (or $40.41/hour) in 2012 are exempt from coverage under the HCSO (previously $81,450, or $39.16/hour).  In other words, these employees are not “covered employees” and the employer need not pay health care expenditure rates.

San Francisco employers are must comply with several city-wide ordinances regulating labor and employment, such as the HCSO, in addition to state and federal labor laws.

Source: http://sfgsa.org/index.aspx?page=418

- Katie Weeks

Jonathan Allan Klein and Jennifer Kaplan prevailed on a motion for forum non-conveniens on behalf of Penske Truck Leasing in a case arising out of the rental and reported theft of a Penske vehicle.  The Superior Court of California, County of Los Angeles ruled in favor of Penske, holding that the facts of the case (which arose out of a vehicle rental in Nevada) did not have sufficient connection to California to justify litigating the case in California.

2012 brings new legislation that will affect California employers.  Here is a preview of just some of the changes:

Pregnancy Leave:  SB299 prohibits an employer from refusing to maintain and pay coverage under a group health plan for a female employee who takes maternity leave for pregnancy, childbirth, or a related medical condition for up to four months. California’s Pregnancy Disability Leave Laws did not previously require continued health care coverage.

Notice of Pay Information:  AB469 requires employers to provide notice of specific pay information to new hires subject to overtime laws. Employers will now have to provide the following information to new employees all in one notice, and provide notice in writing within seven days if any of this information changes:

• Rate of pay and the basis of pay, e.g. hourly, salary, piece commission, etc., including any overtime rate.
• Allowances, if any, claimed as part of the minimum wage, including meals and lodging.
• The designated “regular payday” as required under the Labor Code.
• Name of the employer, including any “dba” names.
• Employer’s telephone number.
• Physical address of employer’s main office or principal place of business and mailing address, if different.
• Name, address and telephone number of the employer’s workers’ compensation carrier.

Penalties for Misclassification of Employees:  SB459 provides new penalties between $5,000 to $25,000 for “willful misclassification” of an employee as an independent contractor.  “Willful misclassification” means avoiding employee status for an individual by voluntarily and knowingly misclassifying that individual as an independent contractor.

Prohibition on Obtaining Employee Credit Reports:  AB22 prohibits employers (except financial institutions) from obtaining and using consumer credit reports on job applicants and employees, excluding certain positions such as managerial positions exempt from overtime, certain law enforcement jobs and some positions involving financial duties or access to proprietary information. Credit checks, which have become a fairly routine hiring practice, will now be impermissible in many employment contexts.

Have questions about the effect these laws could have on your business?  We are here to help.

by Katie Weeks

Jonathan Allan Klein and Laura Clark successfully defended Rite Aid’s termination decision regarding employee Claudia Sandoval in a binding arbitration before arbitrator Frank Silver.

In this case, UFCW 770, on behalf of the terminated employee, challenged Rite Aid’s termination decision, which was itself based on the presence of employee on Federal Office of Inspector General Exclusion List. The OIG exclusion list prohibits precludes excluded persons from participating in Medicare and Medi-Cal programs, and the employee was convicted of Social Security-related fraud, thus placing her on exclusion list. Arbitrator overruled Union grievance, holding the employer properly terminated employee once it discovered she was on the exclusion list. Read the decision.

By Jessica Madrigal

New Requirements for New Hires

California has passed new legislation (the Wage Theft Protection Act), effective January 1, 2012, that imposes new requirements on employers with respect to new hires.  Specifically, California Labor Code Section 2810.5 will require that employers disclose certain information to employees “at the time of hiring” in the form of a written notification.  The specific requirements are outlined below:

What Information Must be Disclosed to New Hires?

Labor Code Section 2810.5 requires employers to provide written notice to employees “at the time of hiring” of the following information:

1. the employee’s pay rate and basis for pay rate (e.g. salary, commission, hourly, etc.);

2. allowances, if any, claimed as part of the minimum wage, including meal or lodging allowances;

3. the regular payday designated by the employer;

4. the name of the employer, including any “doing business as” names used by the employer;

5. the physical address of the employer’s main office or principal place of business, and a mailing address, if different;

6. the telephone number of the employer;

7. the name, address, and telephone number of the employer’s workers’ compensation insurance carrier;

8. and other information the Labor Commissioner “deems material and necessary” (nothing further has been designated by the Labor Commissioner to be included in the new hire notices at this time)

What if There Are Changes or Modifications to the Information Contained in the Notice?

• If any changes are made to the above information, employers must provide notification to the employee within seven days either by including the updated information on the employee’s next pay statements or in a separate written form.  Thus, for information that typically appears on an employee’s wage statement (i.e. pay rate), an amended notification form does not need to be issued as long as those changes appear on the employee’s next wage statement.  For changes in other information, such as the name and address of the employer’s workers’ compensation carrier, which is generally not included on wage statements, an amended notification form would have to be provided to the employees.
• The Labor Commissioner has indicated that it will be creating a sample notification form as well as a FAQ sheet to assist employers in complying with the law, which will be available on the Division of Labor Standards and Enforcement website in mid-December.

Which Employees do the Notification Requirements Apply To?

• The new law applies to all non-exempt employees hired on or after January 1, 2012 so these notifications do not need to be provided to current employees.
• Section 2810.5 does not apply to employees who are exempt from overtime laws or employees covered by a valid collective bargaining agreement if their regular rate of pay exceeds California’s minimum wage by at least 30%, and if their overtime compensation is paid at the proper premium wage rate.  Despite this exception, it is good practice to provide this notice to all new hires for two reasons:  1) To avoid disputes over whether the notice was due in the event employees classified as exempt later claim they were misclassified; and 2) as for union employees, not all employees are eligible to become union members immediately upon hire and would thus not fall under this exception.  The fact that they may eventually become union members is immaterial, because Labor Code 2810.5 requires that the notice be provided “at the time of hiring.”

• Although not required by the law, a copy of this new hire notice should be kept in each employee’s personnel file in case there is ever a dispute regarding compliance with this requirement.
• Finally, although some information addressed in the written notice is already contained in the workplace posters mandated by other laws, Section 2810.5 does not change any of those posting requirements.

What Are the Disclosure Requirements Each Pay Period?

California Labor Code Section 226 requires that employers provide accurate itemized wage statements to each employee semimonthly or at the time of each payment of wages.  This is not a new requirement, but ensuring that accurate wage statements are provided to employees will also help employers meet the notification requirements set forth under the new legislation described above.  Section 226 requires that the following information be included on employee wage statements:

1. gross wages earned;

2. total hours worked by the employee (this requirement does not apply to employees who are salaried and exempt from payment of overtime);

3. the number of piece-rate units earned and any applicable piece rate if the employee is paid on a piece-rate basis;

4. all deductions (i.e. taxes, medical insurance, etc.), provided that all deductions may be aggregated and shown as one item;

5. net wages earned;

6. the inclusive dates of the period for which the employee is paid;

7. the name of the employee and the last four-digits of his or her social security number or an employee identification number other than a social security number;

8. the name and address of the legal entity that is the employer; and

9) all applicable hourly rates in effect during the pay period and the corresponding number of hours worked at each hourly rate by the employee

• A copy of the wage statement and record of the deductions must be kept by the employer for three years at the place of employment or at a central location within the State of California

What Should Employers do to Ensure Compliance with the New Notification Requirements?

Employers should be working diligently to prepare notification forms so that they are ready to be distributed to any new hires as of January 1, 2012.  It is also a good idea to take this opportunity to review itemized wage statements to ensure they are in compliance with California law.

Dismissal Obtained For Pharmacy In Wrongful Death Case Prior to Service of Complaint

Jonathan Allan Klein and Anne F. Marchant successfully obtained dismissal of a pharmacy in a wrongful death action filed in Sacramento County Superior Court.  The father of the decedent sued the decedent’s pharmacy and medical providers alleging that the Methadone prescribed and dispensed by the defendants had led to the death of his 29-year old daughter.  On behalf our pharmacy client, we filed a demurrer to the complaint prior to it even being served, based on the lack of any alleged breach of duty.

Plaintiff’s counsel agreed to dismissal, prior to a hearing on the demurrer, after discovery completed on behalf of the pharmacy revealed that the decedent had a prior history of using Methadone and the cause of death was not related to toxic levels of Methadone (as alleged in the Complaint.)

Anne F. Marchant successfully defeated a challenge to Rite Aid’s termination of a pharmacy technician for her failure to follow pharmacy procedures in obtaining patient signatures for prescription purchased in a Temecula pharmacy.  Rite Aid presented evidence that the pharmacy technician, who had been with Rite Aid for 19 years, was aware of the applicable pharmacy guidelines and knowingly and repeatedly violated those policies.  The arbitrator, Walter F. Daugherty, confirmed that the evidence presented on the part of the employer was sufficient to manifest the pharmacy technician’s intent to falsify Company records and found that given the technician’s cavalier and wholesale disregard for the relevant Company policy, the Company was not required to provide her with written warnings or to wait until it had experienced harm before it could discipline the technician for her serious and repeated policy violations.  A copy of the Arbitration Award is attached.

On behalf of our client, Jonathan Allan Klein and Laura Clark successfully defeated a challenge to Rite Aid’s termination of a 29-year retail clerk who was cited following her sale of beer to an Alcohol Beverage Control decoy.   In arbitration before Frederic R. Horowitz, UFCW 770 argued that the clerk’s 29-year history, without discipline, should have precluded termination.

However, the arbitrator disagreed, based on (i) the undisputed sale of alcohol to a minor; (ii) the employee’s admission that she did not request identification because she thought the purchaser “looked” over 30; and (iii) the retailer had taken extensive measures to communicate the seriousness of the policy to its employees.  Indeed, the retailer here changed their cash registers to require entry of a birthdate into the system, and had twice yearly electronic training sessions where employees were warned that even one instance of sale of alcohol to a minor would lead to immediate termination.  Read the Arbitrator’s Opinion.

Jonathan Allan Klein and Jennifer Kaplan obtained summary judgment in a disability discrimination lawsuit filed in federal court.  In the case, Fenn v. Penske, Plaintiff claimed that he had a hernia, which constituted a disability under California law; that his employer failed to interact with Plaintiff regarding reasonable accommodations for his hernia; and that his employer then terminated Plaintiff due to his hernia.  In a 27-page ruling, Judge Lawrence J. O’Neill of the Eastern District of California ruled in favor of Penske on all of Plaintiff’s claims.  Judge O’Neill held that Plaintiff was not disabled under California law; that Plaintiff failed to satisfy his burden to trigger the interactive process and reasonable accommodation duties; that the evidence could not support a finding that the stated reason for terminating the Plaintiff was really a pretext for discrimination; and that there was no basis for an award of punitive damages. Read the Order Fenn – Order Granting SJ

Kelly, Hockel & Klein was named a “Go-To Law Firm” by Corporate Counsel Magazine, published by LM.  LM gathers data on each company’s primary law firms — first by surveys sent to General Counsel at each of the top 500 companies and second through research in various key databases such as ALM Legal Intelligence Litigation Monitor.  See http://top500.law.com for more information.  Read the American Lawyer information HERE Go To.

For a firm to qualify as a “Go-To Law Firm,” firms had to be named as “a primary law firm” by General Counsel at a top 500 company in response to ALM’s survey as “the firms that are on the company’s preferred list, the ‘go-to law firms’ for a specific practice area, firms that handled the most important cases in the previous year, firms used most often, and/or firms with the most billings.

We thank our clients for our long-term relationships, and ALM for naming us a “Go-To Law Firm!”  We believe this recommendation is further proof that small firms can be efficient and effective.