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Issue 3 - 2016 Newsletter

In This Issue:

  • San Francisco's Paid Parental Leave Ordinance
  • Employers: Is Your Payroll Provider Keeping Compliant, Required Payroll Records For You?
  • Ninth Circuit Strikes Down Mandatory Class Action Waivers

Taking up the Slack…San Francisco’s Paid Parental Leave Ordinance

Effective January 1, 2017, San Francisco will become the first city in the United States to require its employers to “take up the slack” for employees taking parental leave to bond with a new child.  Currently, California’s Paid Family Leave program replaces 55% of an employee’s wages during a six-week “baby bonding” leave.  This new San Francisco ordinance requires employers to fill-in the remaining 45% (Supplemental Compensation) so that new SF parents are paid 100% of their normal wage for the six weeks leave.  Here are the highlights:

Gradual Roll Out – The ordinance will be rolled out based on employee count: 


Who is a Covered Employee?  SF employees who (i) began employment with the covered employer at least 180 days prior to the start of the leave period; (ii) perform at least eight hours of work per week for the employer in San Francisco; (iii) work at least 40% of their total weekly hours in San Francisco; and (iv) are eligible to receive Paid Family Leave Compensation under the California Paid Family Leave program.  The ordinance applies to full time, part time and temporary employees of a covered employer.

Poster.  The San Francisco Office of Labor Standards Enforcement will publish the required poster in advance of the ordinance effective date.  Look for it on its website page located at: in the coming months.  

Records Retention Requirement.  Employers must retain records of Supplemental Compensation for three (3) years. 

To find out more, visit the Paid Parental Leave page of the San Francisco Office of Labor Standards Enforcement website found at:; or contact Simpson, Garrity, Innes & Jacuzzi, P.C.  We have extensive experience in helping our clients with legislative interpretations and policy updates.  


Employers: Is Your Payroll Provider Keeping Compliant, Required Payroll Records for You?

Many California employers use outside service providers to fulfill the employee payroll function.  In principle, using a dedicated provider should provide the peace of mind that employees are paid correctly, that payroll taxes are forwarded to the appropriate taxing authorities, and that all legally-required records are kept.  Think again.  Many payroll companies aren’t keeping compliant records for their customers!

California Labor Code section 226(a) requires employers to provide employees with an accurate itemized statement in writing (pay stub) showing nine specific items of information each pay period.  This law also requires that employers keep a copy of the itemized wage statement on file for at least three years at the place of employment or at a central location within the State of California.  A copy includes “a duplicate of the itemized wage statement provided to an employee or a computer-generated record that accurately shows all of the information required” by section 226(a).

Labor Code section 226(c) requires employers who receive a written or oral request from a current or former employee to inspect or copy payroll records, comply within 21 days, or face penalties.

Attorneys representing employees commonly make requests for production of payroll and personnel records, frequently as the first step to threatening a wage-and-hour class action lawsuit.

In our firm’s experience, all too often, when employers ask their payroll providers for copies of employees’ itemized wage statements or computer-generated records to comply with employee payroll requests, the payroll providers are unable to produce copies that comply with Labor Code section 226(a).  Payroll companies have told us that copies of itemized wage statements are only available if the employer signs up for an additional service; that itemized wage statements are purged as soon as five, six or eight weeks after being issued instead of being kept for three full years; and that “canned” earnings reports have all the required information when they plainly do not.

Protect your business from a significant risk by finding out ahead of time whether your itemized wage statements comply with all of the requirements of the Labor Code, and whether your payroll provider can provide California-compliant records on demand.  Consider signing up for online access to itemized wage statements and downloading copies periodically for all employees.

Simpson, Garrity, Innes & Jacuzzi, P.C. has extensive experience advising employers how to comply with California’s complex labor and employment laws.  Please contact any of our attorneys for an assessment of whether your itemized wage statement complies with all of the requirements of the California Labor Code.


Ninth Circuit Strikes Down Mandatory Class Action Waivers

In the ongoing battle over the enforceability of agreements to arbitrate employment disputes, the Ninth Circuit Court of Appeals has struck another blow to employers.  In Morris v. Ernst & Young, the court ruled that a mandatory arbitration agreement that required employees to bring their claims individually in “separate proceedings” violated the National Labor Relations Act.

The “separate proceedings” requirement made employees waive the right to bring a class action in an arbitration proceeding.  The Ninth Circuit decided that this provision interfered with employees’ rights under the National Labor Relations Act (NLRA) to engage in “concerted activities” by litigating collectively.  Therefore, employers cannot require employees to sign an arbitration agreement with a class-action waiver as a condition of employment.  The court noted, however, that the NLRA does not prohibit a class action waiver if the employee has the right to opt out of the arbitration agreement.

The Ninth Circuit covers Western states, including California and Nevada.  Other Circuit Courts had previously ruled the opposite—that the NLRA does not prohibit class action waivers.  The U.S. Supreme Court will likely have to resolve this split.

This new Ninth Circuit decision applies to federal courts, but not to California state courts.  In 2014, in Iskanian v. CLS Transportation, the California Supreme Court ruled that class action waivers were permissible, and did not violate the NLRA.  However, Iskanian also held that employers could not compel employees to waive their right to pursue a representative action under the California Private Attorneys General Act (PAGA).

It remains to be seen whether attorneys representing employees will file more lawsuits in federal court rather than state court to take advantage of the Morris decision.

If your company has not reviewed its arbitration agreement recently, we recommend consulting experienced employment counsel to be sure it is up to date.  Opt out language should be considered.  Also, terminating or refusing to hire an employee who declines to sign an arbitration agreement containing a class action waiver could lead to a legal claim.

Simpson, Garrity, Innes & Jacuzzi, P.C. has extensive experience advising employers on the legalities and formation of arbitration agreements.

Issue 1 - 2017 Newsletter
Issue 2 - 2016 Newsletter

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