Emil Davtyan, Todd B. Scherwin and Carney R. Shegerian Share Insights on Labor & Employment Law

The Labor & Employment Law panel is produced by the L.A. Times B2B Publishing team in conjunction with Davtyan Law Firm; Fisher & Phillips LLP; and Shegerian & Associates.

With the many unprecedented operational changes and adjustments that businesses in every sector have had to make over the last three years, a whole new landscape has emerged in terms of labor and employment issues. This has left even the most seasoned human resources and C-suiters struggling to find answers to crucial questions.

Are the changes that have emerged trend-driven or here to stay? What should management be focusing on in terms of new standards and laws pertaining to employee relations?

To address these issues and concerns, as well as many other topics pertaining to labor and employment hot buttons, the Los Angeles Times Brand Publishing team turned to three uniquely knowledgeable experts for their thoughts and insights about the most important “need to know” trends and updates – and to get their assessments regarding the current state of labor legislation, the new rules of hiring and firing and the various trends that they have been observing in general.

Q: What were the most meaningful changes to labor and employment law and policy last year?

Carney R. Shegerian, Founding Partner, Shegerian & Associates: In California, the minimum wage increased to $15 for employers with 26 or more employees and $14 per hour for companies with 25 or fewer employees, addressing the long and deep-rooted social and economic issue where the cost of living expenses have dramatically outpaced wage growth. Employee and consumer protections have had a significant contribution to making California one of the largest economies in the country. If we want our state to continue to thrive and attract top performers, we must ensure that we give everyone a chance to earn a fair wage.

Todd B. Scherwin, Regional Managing Partner, Fisher & Phillips LLP: By far the most meaningful legislative change was SB 1162 which created obligations for employers to post pay scales for positions in any job posting as well as the requirement that employers with 100 or more employees submit pay data on or before the second Wednesday of May 2023. Failure to comply carries with it significant fines so employers need to be ready.

Q: What trends are you seeing with respect to paid time off?

Emil Davtyan, Founder and Managing Attorney, Davtyan Law Firm: The State of California is regularly reviewing legislation regarding paid time off. Just in 2022, the California Family Rights Act (CFRA) expanded the parameters for sick leave to include certain non-family members. However, employers can additionally offer benefits like additional paid time off (PTO), sabbaticals, and unlimited PTO. Paid sabbaticals have become more prevalent over the past few years. It could look like receiving one month of consecutive paid time off or some companies even offer them every quarter; an employee may get two paid weeks off. It depends on the company.

Scherwin: Many businesses seem to be offering or at least exploring the idea of unlimited or not tracked time off. While this may be a good perk and may attract talent, employers should be mindful of a couple of pitfalls regarding unlimited time off. The biggest pitfall in my opinion is how unlimited paid time off interacts with paid sick leave under California and various local ordinances. If unlimited time off is combined with state-mandated sick leave, there will be issues when an employee is out or requests to be out for a significant amount of time since employers have very little follow-up they are permitted to do when an employee requests time off for covered sick leave.

Q: What types of incentives are employers offering to potential new hires?

Davtyan: The workforce is becoming increasingly competitive, and employers understand that they must offer attractive incentives to attract hardworking, loyal team members. There is a wide range that varies depending on the company setup and the job position. Options like flexible work schedules, onsite childcare, stipends for gym memberships and public transit, sign-on bonuses, paid vacation, and unlimited vacation are some common perks that employers may offer to potential new hires. Hiring and training a new employee takes extensive resources, and it is worth investing in your team to increase retention.

Q: How would you describe the current climate for employee whistleblowers in 2023?

Shegerian: 2023 is a continually improving and favorable climate for employee whistleblowers in California. In 2022, the California Supreme Court and Appellate Courts broadly construed whistleblower provisions and retaliation protections in a number of cases. Coupled with a more just and protected legal environment, juries also have weighed in on whistleblowers’ societal value, as a bulwark against illicit and or dangerous conduct. In Rudnicki v. Farmers, a Los Angeles jury awarded a whistleblower $155.4 million after showing that his role as a potential witness in a sex bias class action resulted in retaliation against him and ultimately his firing. The best protection for employers against these types of awards is to avoid illegal conduct altogether and encourage a system where such instances are not covered up but instead brought to light as lessons of prevention. In the long run, both companies and societies will benefit.

Q: As we move deeper into 2023, what is the top thing that California employers should be focusing on now from a compliance perspective?

Scherwin: In terms of compliance, it continues to be following the labor code when it comes to overtime, meal periods, rest periods, and pay stubs. These claims continue to be devastating to employers who are not strict in enforcement. Employers must ensure that not only their employees understand these rules but also that management appreciates the nuances and potential pitfalls that non-compliance creates.

Q: How do you advise employers wanting to do a better job with diversity, equity and inclusion policies?

Shegerian: More than ever, both consumers and potential employees are scrutinizing business diversity practices and programs. Diversity and inclusion programs have become the baseline for organization employment practices, and virtue signaling is quickly recognized. Employers seeking to attract top talent and customers must prioritize diversity, equity and inclusion policies through unique programs fit to match their industry. A one-size-fits-all program reveals a program’s inferiority to the bottom line. Employers must also recognize that the bottom line can be fundamentally improved through novel diversity programs through diverse thought and a widened, loyal customer base.

Q: What should employers consider when deciding whether to have a remote, hybrid or in-person workplace?

Scherwin: First and foremost, employers with remote or hybrid employees need to make sure they have policies in place for technology, reimbursements, and confidentiality. The biggest of these three issues in my opinion is reimbursements. Specifically, employers need to determine whether or not an employee is entitled to reimbursement for use of equipment or utilities while not working in the office. From a labor and employment perspective, these claims are the most prevalent in the new world of remote or hybrid work.

Q: Which pay practices are most likely to result in a company being sued in a wage-hour class action?

Davtyan: Not compensating employees properly or not allowing them proper break times can certainly lead to a lawsuit. If an employee isn’t receiving proper lunch and rest breaks, the employer is abusing the break laws in California. If an employer doesn’t pay appropriate overtime wages, that can also result in legal action against the company. Off-the-clock work is a common problem in workplaces and can certainly cause employers to be sued in a class-action case. It’s important that employees keep track of and document their time worked so that they can be adequately paid. Another important practice is ensuring that employees are fully reimbursed for all work-related expenses. It’s critical to have a system in place for employees to record and report any work-related expenses to ensure that they are properly reimbursed, no matter how small the amount is.

Q: What trends are you seeing related to arbitration agreements in the employment context?

Scherwin: For California employers, especially with the recent decision from the 9th circuit striking down AB 51, there is certainly a trend of increasingly requiring arbitration agreements for employees. I expect that in the coming months/years, because arbitration agreements can be required (not voluntary), more and more employers in California will mandate employees to sign arbitration agreements.

Shegerian: A 9th Circuit Court of Appeals panel recently ruled that California’s bill prohibiting employers from requiring job applicants and workers to sign arbitration policies was preempted by the Federal Arbitration Act. While this ruling was a blow to both employee rights and the fundamental American right to a jury trial, Congress, in 2022, notably carved out in an exception for sexual harassment and sexual assault cases by passing a bill guaranteeing victims of such workplace harassment the right to pursue lawsuits in court. While arbitration can be helpful for disputes where both parties are entities with comparable resources, mandatory arbitration, particularly in the employment and consumer context, serves to exacerbate inequity, weaken constitutional rights, inhibit access to justice, and punish the wronged.

Q: From an employee perspective, what is the first step an employee should take if they feel they are being discriminated against?

Davtyan: California takes discrimination very seriously and there are many laws in place to protect employees. Employees have rights against workplace discrimination based on their national origin, age, sex, or any other protected characteristics. If an employee is experiencing discrimination in the workplace, a good first step may be to send an email to their Human Resources department and let them know about the details of the situation. It will also be beneficial to collect supporting evidence of discrimination in the workplace. This can be a text message, voicemail, email, and/or the company’s policies. Proving discrimination in the workplace can be difficult, so we highly recommend consulting with an employment lawyer to discuss the best next steps.

Q: How does the California WARN Act help employees that have been terminated?

Shegerian: The California WARN Act is a state law that requires covered employers to provide employees with at least 60 days’ notice before implementing a mass layoff. Its purpose is to protect employees who have been laid off or terminated, due to a covered event, by providing advance notices for employees to prepare for their job loss and to seek new employment. If an employer violates the California WARN Act by failing to provide the required notice, affected employees may be entitled to receive back pay and benefits for up to 60 days. Employees who have been terminated in violation of the California WARN Act may also have other legal claims, such as claims for wrongful termination, discrimination, or retaliation. These claims can provide additional remedies for damages for lost wages, emotional distress, or other harm caused by the termination.

Q: How do you advise your corporate clients when it comes to dealing with accommodation requests (disability, religious, etc.)?

Scherwin: Accommodation requests are tricky because the law is gray when it comes to what constitutes a reasonable accommodation or undue hardship. Businesses must ensure to document the process of reasonable accommodation every step of the way and be prepared to offer alternatives and suggestions to employees who need a religious or medical accommodation. Employers should remember not to give up on the process too early and give employees the opportunity to participate/respond.

Q: What impact does California Labor Code 201 have on employees and employers?

Davtyan: California Labor Code 201 states that an employer must pay all wages to an employee upon the separation of employment. This includes both regular pay and any accrued vacation time. Payment is generally due immediately upon termination or within 72 hours of quitting. This means it takes some planning on the employer’s part to make sure that they have payment ready to go when the termination happens. They can pay an employee via direct deposit. However, the majority of the time, it is recommended to have a manual check ready at the time of separation to be given to the employee. Employers are subject to a waiting time penalty (worth up to 30 days) if they do not pay the employee timely at the time of separation. This is a penalty payment in addition to all final wages owed.