Two New CA Laws Impacting Hiring, Compensating Short Breaks, Suit Over "Draw" Pay System, Waiving ERISA Time Limits

We invite you to view Employment Law This Week® - a weekly rundown of the latest news in the field, brought to you by Epstein Becker Green. We look at the latest trends, important court decisions, and new developments that could impact your work. Join us every Monday for a new five-minute episode!  Read the firm's press release here and subscribe for updates.

This week’s stories include ...

(1) Two Questions CA Employers Can No Longer Ask Potential Hires

Our top story: California Governor Jerry Brown has signed two new laws that impact the hiring process: (i) a “ban the box” law that restricts when employers can ask job applicants about criminal history, and (ii) a “salary history ban” that bars employers from asking job applicants about their salary history or using that information in setting compensation. Both laws align with nationwide trends, with states, cities, and counties all taking action.

California’s salary history ban comes on the heels of New York City’s similar law, which takes effect on October 31. We asked Ann Knuckles Mahoney, from Epstein Becker Green, to compare California’s new law to New York City’s salary history inquiry law:

“In California, employers will be required to provide, upon reasonable request, a pay scale to applicants for the position. While the New York City law certainly contemplates having discussions about salary expectations, this requirement to affirmatively provide a pay scale is certainly something different from the other salary history inquiry laws. Another key difference is that this California Salary History Law reaffirms part of the California Equal Pay Law which prohibits employers from justifying salary discrepancies based on prior salary histories alone. Additionally, the New York City law allows employers to ask applicants about their deferred compensation.”

Watch the extended interview here.  See also our recent Act Now Advisory.

(2) Third Circuit Rules Employees Must Be Compensated for Short Breaks

The Fair Labor Standards Act (FLSA) requires employers to pay workers for breaks of up to 20 minutes, the U.S. Court of Appeals for the Third Circuit rules. Employer Progressive Business Publications allowed sales representatives to log off of their computers and take breaks whenever they chose and for any length of time. But if the workers were logged off for more than a minute and a half, they were not paid for the time. The panel gave deference to the interpretation of compensable breaks by the Wage and Hour Division of the Department of Labor (DOL) and concluded that treating breaks longer than 90 seconds as unpaid “flexible time” flouted the spirit of the FLSA. 

(3) Sixth Circuit Revives FLSA Suit Over Retailer’s "Draw" Pay System

A “draw” pay system for commission paid employees may be legal but not if terminated workers are required to repay advances. The Sixth Circuit will let a proposed class of sales employees move forward with their wage and hour suit against appliance retailer H.H. Gregg. The company advances sales employees a “draw” to cover any difference between their commissions and the minimum wage for their hours worked. The employees are required to repay the draw from their future commission earnings. The court found that this draw and commission system is permitted under the FLSA but allowed the workers to move forward with their claim that requiring the repayment of draws following termination violates the FLSA.

(4)Eleventh Circuit Says ERISA Time Limits Can Be Waived

The Eleventh Circuit says that a limitations period for bringing claims under the Employee Retirement Income Security Act (ERISA) can be waived by the employer. The question arose from a DOL action against TPP Holdings for breach of fiduciary duty. During settlement negotiations, TPP agreed to waive a timeliness argument in exchange for a delay in filing the action. After settlement discussions broke down, the DOL filed suit and TPP raised the timeliness defense anyway, arguing that ERISA did not allow the parties to waive the statute of limitations. The Eleventh Circuit disagreed, stating that “rights of all kinds — even constitutional ones — can be waived.”

(5) Tip of the Week

Keith Earley, Principal at Early Interventions LLC, shares his thoughts on avoiding diversity stagnation:

“There are five things that we can do. First, focus on the business case which is often articulated but not well executed. Second, the hiring process versus the retention process. If we focus more on the culture, on leadership commitment and accountability, then we have a better shot at reducing turnover and improving our hiring practices and strategies. Third, white men are diverse; excluding white men from the definition of ‘diversity’ sends a message that diversity is not about them. It is, but from a different vantage point. Fourth, strengthening accountability, if we can enhance the financial incentives that are tied to diversity, then we have a better shot at impacting the success of diversity efforts. We should not confuse activities with strategy. Strategy promotes measurable progress and accountability and ensures that key committees or departments all have a role in diversity outcomes, and therefore it is systemic.”