In the New Year, two states – New Jersey and Illinois – have proposed legislation requiring restaurants to adopt a sexual harassment training policy and provide anti-sexual harassment training to employees.  While it remains to be seen whether these bills will become law, attempts to target and reform working conditions in the hospitality industry are nonetheless noteworthy, particularly given that unlike New York and California, neither New Jersey nor Illinois have enacted broad legislation requiring private sector employers, regardless of occupation, to provide sexual harassment training to staff.

New Jersey Bill (A4831)

New Jersey Bill A4831 requires restaurants that employ 15 or more employees to provide sexual harassment training to new employees within 90 days of employment and every five years thereafter.  This training requirement would go into effect within 90 days of the law’s effective date.

As to the content of the training, the bill specifies that supervisors and supervisees receive tailored content relevant to their positions/roles that include topics “specific to the restaurant industry” in an “interactive” format, including practical examples and instruction on filing a sexual harassment complaint.  Implicitly recognizing the diverse nature of the hospitality workforce, the bill requires that such training must be offered in English and Spanish.

The bill would also require restaurants to adopt and distribute sexual harassment policies to employees (either as part of an employee handbook or as a standalone policy), though it does not prescribe the contents of such policies.

While the bill cautions that compliance with the act would not “insulate the employer from liability for sexual harassment of any current or former employee,” strict compliance is advisable as the bill creates fines for non-compliance – i.e., up to $500 for the first violation and $1,000 for each subsequent violation.

Illinois Bill 3351

Illinois Bill 3351, the proposed Restaurant Anti-Harassment Act, is broader than the proposed New Jersey legislation in that it applies to all restaurants regardless of the number of employees on staff.  Like its New Jersey analogue, this bill requires restaurants to adopt a sexual harassment policy and provide training to all employees.

The sexual harassment policy must contain the following elements:

(1) a prohibition on sexual harassment;

(2) the definition of sexual harassment under Illinois and federal law;

(3) examples of prohibited conduct that would constitute unlawful sexual harassment;

(4) the internal complaint process of the employer available to the employee;

(5) the legal remedies and complaint process through the Illinois Department of Human Rights;

(6) a prohibition on retaliation for reporting sexual harassment allegations; and

(7) a requirement that all employees participate in sexual harassment training.

Like New Jersey’s bill, the Illinois bill requires separate training for employees and for supervisors/managers, and delineates the topics to be covered in each training.  Specifically, the employee training must include: (i) the definition of sexual harassment and its various forms; (ii) an explanation of the harmful impact sexual harassment can have on victims, businesses, and those who harass; (iii) how to recognize conduct that is appropriate, and that is not appropriate, for work; (iv) when and how to report sexual harassment.   The supervisor training must include the aforementioned topics in addition to: (i) an explanation of employer and manager liability for reporting and addressing sexual harassment, (ii) instruction on how to create a harassment-free culture in the workplace, and an (iii) explanation of how to investigate sexual harassment claims in the workplace.  In addition to these requirements, the training programs must be offered in English and Spanish, be specific to the restaurant or hospitality industry and include restaurant or hospitality related activities, images, or videos, and be “created and guided by an instructional design model and processes that follow generally accepted practices of the training and education industry.”

If enacted, employees would need to receive training within 90 days after the effective date of the act or within 30 days of employment and every 2 years thereafter.

Like New Jersey, the Illinois bill contemplates a $500 fine for the first violation and a $1,000 fine for each subsequent violation.

Recommendation

Restaurants should carefully track the progress of these bills and be on the lookout for similar legislative efforts in other states.  Given that a number of states, including New York and California, already require all private employers (of a particular size) to provide sexual harassment training, restaurants operating in Illinois and New Jersey may want to move towards implementing a sexual harassment policy and training program sooner than later.  In that regard, Epstein Becker Green’s interactive, computer-based training, Halting Harassment, offers an easy solution.

Our colleague Kevin Sullivan at Epstein Becker Green has a post on the Wage and Hour Defense Blog that will be of interest to our readers in the hospitality industry: “California Court of Appeal Concludes That Certain Types of On-Call Scheduling Triggers Requirement to Pay Wages.”

Following is an excerpt:

On February 4, 2019, a divided panel of the California Court of Appeal issued their majority and dissenting opinion in Ward v. Tilly’s, Inc. It appears to be a precedent-setting decision in California, holding that an employee scheduled for an on-call shift may be entitled to certain wages for that shift despite never physically reporting to work.

Each of California’s Industrial Welfare Commission (“IWC”) wage orders requires employers to pay employees “reporting time pay” for each workday “an employee is required to report for work and does report, but is not put to work or is furnished less than half said employee’s usual or scheduled day’s work.” …

Read the full post here.

On July 9, 2018, Governor Edmund Brown, Jr. signed into law Assembly Bill 2770 (“AB 2770”) to protect victims of sexual harassment and employers from defamation claims brought by alleged harassers. AB 2770 was sponsored by the California Chamber of Commerce and passed by the California Legislature to address the chilling effect that the threat of defamation suits can have on harassment victims and employers: deterring victims and witnesses from coming forward; deterring employers from telling prospective employers about a genuine harasser; and allowing repeat sexual harassers to harass future victims at their new place of employment.

Privileged Communications Before AB 2770.

Existing law provides a qualified privilege to employer communications about a former or current employee’s job performance and qualifications. (Cal. Civil Code § 47(c).) Although court interpretations of Civil Code section 47(c) arguably allow for sexual harassment complaints and communications during a sexual harassment investigation to be covered by the privilege, the statutory language does not explicitly mention such communications.

AB 2770 Adds to the List of Privileged Communications.

AB 2770 amends Civil Code section 47(c) expressly to include the following three types of communications related to sexual harassment in the workplace:

  1. A complaint of sexual harassment, based on credible evidence and made without malice, by an employee to an employer;
  2. Communications between an employer and “interested persons,” made without malice, regarding a complaint of sexual harassment; and
  3. An employer’s answer, given without malice, to an inquiry about whether or not it would rehire a current or former employee, and whether the decision not to rehire is based on the employer’s determination that the former employee engaged in sexual harassment.

AB 2770 Does Not Protect Malicious Statements

Only statements made “without malice” are protected. A statement is made with “malice” if (1) it is motivated by hatred or ill will; or (2) the speaker lacked reasonable grounds for believing the truth of the statement. Further, AB 2770 does not impose an outright ban on defamation lawsuits by accused harassers. Accused harassers can still bring such suits, but they must prove malice in order to overcome the qualified privileged in Civil Code section 47(c). Thus, AB 2770 should deter and limit accused harassers from bringing defamation claims with little or no basis.

The federal Equal Pay Act (“EPA”) mandates equal pay for equal work regardless of sex.  Employers that pay men and women different wages for the same work are strictly liable for violations of the EPA unless they can show that one or more of four exceptions apply to explain the wage disparity. The four statutory exceptions are seniority, merit, the quantity or quality of the employee’s work, or “any other factor other than sex.”  The Ninth Circuit recently took up the question of the meaning of the fourth, catchall exception – “any factor other than sex” – in order to consider whether an employer may rely, in whole or in part, on an employee’s prior salary as a basis for explaining a pay differential in Aileen Rizo v. Jim Yovino.

Rizo was a math consultant who worked for the Fresno County Office of Education (“County”). After learning that comparable male employees were earning more for the same work, Rizo filed suit against her employer, alleging that its practice of calculating the salaries for newly hired employees based on their salary history violated the EPA. The County did not dispute that Rizo was paid less than her male counterparts, but it argued that basing her salary on past earnings was a lawful reason for the pay differential as it constituted a “factor other than sex” under the EPA.

On April 9, 2018, the Ninth Circuit sitting en banc rejected the County’s argument. The Court held that “prior salary alone or in combination with other factors cannot justify a wage differential.” Writing for the majority, Judge Reinhart stated that justification of a pay disparity based on “‘any other factor other than sex’ is limited to legitimate, job-related factors such as a prospective employee’s experience, educational background, ability, or prior job performance.” The Court explained that the terms “job-related” and “business-related” are not synonymous and that an employer cannot explain a pay differential based on the benefit to the business as opposed to a legitimate work-motivated consideration.  Some examples of job-related factors identified by the Court included shift differentials, job hazards, physical job requirements, and training.  Unlike each of these things, past salary was not a “job-related” factor but rather, potentially, a business-related factor.

The Court further opined that permitting an employer to rely on historical pay information was inconsistent with the purpose of the EPA, which was to correct past pay discrepancies caused by sex discrimination.  “It is inconceivable,” wrote Reinhart, “that Congress, in an Act the primary purpose of which was to eliminate long-existing ‘endemic’ sex-based wage disparities, would create an exception for basing new hires’ salaries on those very disparities….”  Thus, the majority concluded that relying on past salary in order to explain a wage differential was improper, even if it was only one of the factors ultimately considered.  Confusingly, the Court also noted that there could be instances in which past salary might play a role in individualized negotiations and declined to resolve whether past salary could be taken into account in such circumstances.  However, given the broad pronouncement against factoring past compensation into current salary considerations, it would seem unlikely that the current court would countenance such an exception.

In finding that past salary may never be considered, the Rizo decision overrules the Ninth Circuit’s prior ruling in Kouba v. Allstate Insurance Co. 691 F.2d 873 (9th Cir. 1982).  Kouba held that past salary could be one of the factors considered by employers in evaluating pay, as it was a “factor other than sex” permissible to justify pay gaps between men and women under the EPA.  Notably, four of the eleven judges on the panel concurred with the decision in Rizo, because salary history was the sole reason for the pay disparity, but separated from the majority on the issue of excluding salary history from consideration under any circumstance.  The Rizo decision has also exacerbated a circuit split on whether salary history may be considered, and to what extent.  While certain circuits have taken an approach similar to the concurring judges in Rizo, permitting it as long as it is not the sole basis for a pay disparity, the Seventh Circuit has held that salary history is always a legitimate factor other than sex.

While California employers are no longer entitled to inquire about past salary as part of the job application process as of January 1, 2018, in light of the Rizo decision, employers with operations in California, Oregon, Washington, Idaho, Montana, Nevada, Arizona, Alaska, and Hawaii may wish to take actions to ensure that any pay disparities are not based on salary history, such as not asking about salary history during the hiring process (even in states where this practice is not prohibited by law) and conducting pay equity audits.

Our colleague  at Epstein Becker Green has a post on the Wage and Hour Defense blog that will be of interest to our readers in the hospitality industry: “Federal Court Concludes That 7-Eleven Franchisees Are Not Employees of 7-Eleven.

Following is an excerpt:

In November 2017, four convenience store franchisees brought suit in federal court against 7-Eleven, Inc., alleging that they and all other franchisees were employees of 7-Eleven. The case was filed in the United States District Court for the Central District of California, entitled Haitayan, et al. v. 7-Eleven, Inc., case no. CV 17-7454-JFW (JPRx).

In alleging that they were 7-Eleven’s employees, the franchisees brought claims for violation of the federal Fair Labor Standards Act (“FLSA”) and the California Labor Code, alleging overtime and expense reimbursement violations. The trial court granted judgment in 7-Eleven’s favor, concluding that 7-Eleven was not the four franchisees’ employer under California law or federal law. …

Read the full post here. 

Featured on Employment Law This Week:  A California federal judge has ruled that a former GrubHub delivery driver was an independent contractor, not an employee.

The judge found that the company did not have the required control over its drivers for the plaintiff to establish that he is an employee. This decision comes as companies like Uber and Lyft are also facing lawsuits that accuse them of misclassifying employees as independent contractors. Carlos Becerra, from Epstein Becker Green, has more.

Watch the segment below and read our recent post.

Our colleagues , at Epstein Becker Green, have a post on the Wage and Hour Defense Blog that will be of interest to many of our readers in the hospitality industry: “Labor Issues in the Gig Economy: Federal Court Concludes That GrubHub Delivery Drivers are Independent Contractors under California Law.”

Following is an excerpt:

Recently, a number of proposed class and collective action lawsuits have been filed on behalf of so-called “gig economy” workers, alleging that such workers have been misclassified as independent contractors. How these workers are classified is critical not only for workers seeking wage, injury and discrimination protections only available to employees, but also to employers desiring to avoid legal risks and costs conferred by employee status.  While a number of cases have been tried regarding other types of independent contractor arrangements (e.g., taxi drivers, insurance agents, etc.), few, if any, of these types of cases have made it through a trial on the merits – until now.

In Lawson v. GrubHub, Inc., the plaintiff, Raef Lawson, a GrubHub restaurant delivery driver, alleged that GrubHub misclassified him as an independent contractor in violation of California’s minimum wage, overtime, and expense reimbursement laws.  In September and October 2017, Lawson tried his claims before a federal magistrate judge in San Francisco.  After considering the evidence and the relevant law, on February 8, 2018, the magistrate judge found that, while some factors weighed in favor of concluding that Lawson was an employee of GrubHub, the balance of factors weighed against an employment relationship, concluding that he was an independent contractor. …

Read the full post here.

For the second time in as many years, California Governor Jerry Brown has vetoed “wage shaming” legislation that would have required employers with 500 or more employees to report gender-related pay gap statistics to the California Secretary of State on an annual basis beginning in 2019 for publication on a public website. Assembly Bill 1209 (“AB 1209”), which we discussed at length in last month’s Act Now advisory, passed the Legislature despite widespread criticism from employers and commerce groups.  This criticism included concerns that publication of statistical differences in the mean and median salaries of male and female employees without accounting for legitimate factors such as seniority, education, experience, and productivity could give a misleading impression that an employer had violated the law.  Opponents also decried the burden the bill would place on employers to do data collection and warned that it would lead to additional litigation.  In vetoing the measure, Governor Brown noted the “ambiguous wording” of the bill and stated he was “worried that this ambiguity could be exploited to encourage more litigation than pay equity.”

However, the same pen that vetoed AB 1209 signed another pay-equity law last week: Assembly Bill 168 (“AB 168”).  AB 168 precludes California employers from asking prospective employees about their salary history information.  “Salary history information” includes both compensation and benefits.  Like similar laws passed recently in several other states and cities, the policy underlying the inquiry ban is that reliance upon prior compensation perpetuates historic pay differentials.  Opponents have argued that such a ban will make it more difficult for employers to match job offers to market rates.  Go to our Act Now Advisory on AB 168 for a comprehensive review of this new law.

Our colleague Joshua A. Stein, a Member of the Firm at Epstein Becker Green, has a post on the Retail Labor and Employment Law blog that will be of interest to many of our readers in the hospitality industry: “Latest Website Accessibility Decision Further Marginalizes the Viability of Due Process and Primary Jurisdiction Defenses.”

Following is an excerpt:

In the latest of an increasing number of recent website accessibility decisions, in Gorecki v. Hobby Lobby Stores, Inc. (Case No.: 2:17-cv-01131-JFW-SK), the U.S. District Court for the Central District of California denied Hobby Lobby’s motion to dismiss a website accessibility lawsuit on due process and primary jurisdiction grounds.  In doing so, the Hobby Lobby decision further calls into question the precedential value of the Central District of California’s recent outlier holding in Robles v. Dominos Pizza LLC (Case No.: 2:16-cv-06599-SJO-FFM) which provided businesses with hope that the tide of recent decisions might turn in their favor. …

Read the full post here.

A Full Menu of Potential Legal Issues for Hospitality Owner/OperatorsIn the new issue of Take 5, our colleagues examine important and evolving issues confronting owners, operators, and employers in the hospitality industry:

Read the full Take 5 online or download the PDF.