Total Articles: 202
Is Rounding of Employee Time Entries Legal in California?--California Supreme Court Orders Appellate Court to Decide
In a matter of significance for California employers, in See’s Candy Shops, Inc. v. Superior Court of San Diego, the California Supreme Court recently ordered the California Court of Appeal, Fourth Appellate District, to review a trial court decision holding that rounding employee time entries violated California law.
California Court of Appeal Finds Employees Are Exempt Under California's Commissioned Sales Exemption
On January 24, 2012, the California Court of Appeal, Fourth Appellate District, issued an important decision providing new and needed guidance on the commissioned sales exemption. In Muldrow v. Surrex Solutions Corporation, the court concluded that a class of “senior consulting service managers” was exempt from overtime pay requirements.
State High Court Orders Review of Case to Clarify Legality of Rounding Timecard Entries - California Chamber of Commerce
The California Supreme Court directed the Fourth District Court of Appeal to review a case involving whether "rounding" time clock entries is lawful under California law. Federal law permits rounding, and the California Division of Labor Standards Enforcement has permitted as a matter of policy, so long as the "rounding" evens out or favors the employee. A trial court recently ruled that a class action involving rounding could proceed against an employer, See's Candies. See's sought a writ in the Court of Appeal, which summarily denied the Petition. The Supreme Court, however, unanimously voted to Order the Court of Appeal to hear See's petition on the merits
Avoiding Liability For “Reporting Time Pay” and “Split Shifts” Verizon Defeats Employee Class Action
California employers are often befuddled by hypertechnical wage and hour rules. The Labor Code and related regulations offer little guidance while at the same time imposing much liability. “Reporting time pay” and “split shift pay” are two commonly misunderstood rules. A California appellate court has clarified the rules in a recent case titled Aleman v. Airtouch Cellular.
California Supreme Court Addresses Administrative Exemption Favors Employers, But Leaves Unanswered Questions
When an employer classifies a group of employees as exempt under state and federal wage and hour law, that decision is subject to challenge by the employees or a government agency. The wrong decision can result in expensive litigation and huge liability to the employer. The administrative exemption is perhaps the hardest to understand and apply. In a recent case titled Harris v. Superior Court, the California Supreme Court made a ruling favorable to employers, but it left a number of unanswered questions regarding the administrative exemption.
BRINKER UPDATE: SUPREME COURT RULING DELAYED
For more than 3 years, California employers have been anxiously awaiting a ruling from the California Supreme Court that is expected to clarify whether employers must guarantee employees take meal breaks or must only make meal breaks available. The answer to this question can mean millions of dollars to employers who are faced with costly class actions.
California Supreme Court Applies Administrative Exemption to Claims Adjusters
In the waning days of 2011, a unanimous California Supreme Court gave California employers a holiday present in its long-awaited opinion that diminishes the importance of the outmoded analytical tool known as "the administrative/production worker dichotomy" for determining whether employees are properly classified as exempt "administrative" employees for the purposes of wage and hour law. In its decision in Harris v. Superior Court (Liberty Mutual), the court re-establishes the necessity of analyzing all aspects of the administrative exemption and emphasizes the relevance of federal law in interpreting the exemption. As a result, the decision could help California employers relying upon the administrative exemption.
California Appellate Court Holds Insurance Agents Not Employees Under California Law
In Arnold v. Mutual of Omaha Insurance Company, a California appellate court issued a published decision holding that insurance agents are not employees under the California Labor Code. This appears to be the first time the court has addressed the status of insurance agents.
California Court Sets Limits for Reporting Time Pay and Clarifies When Split Shift Pay is Due
In a case of first impression, the California Court of Appeal has clarified the scope of an employer’s obligation to pay reporting time and split shift premiums under the California Industrial Welfare Commission’s Wage Order No. 4-2001 (“Wage Order”). The Court ruled that an employee was not entitled to reporting time pay for attending scheduled meetings that ran shorter than expected because he worked at least half the scheduled time, even though the employee worked less than two hours. This is contrary to the long-held enforcement position of the California Division of Labor Standards Enforcement. The Court also held an employee was not entitled to split shift pay because the employee’s total compensation exceeded the minimum wages required under the Wage Order. Aleman v. AirTouch Cellular, No. B231142 (Cal. Ct. App. Dec. 21, 2011). Finally, the Court dismissed a second employee’s claims as barred by a prior release agreement with the employer.
California Division of Labor Standards Enforcement Revises Guidance Regarding Wage Theft Prevention Act Notices for Current Employees
As we reported in our January 4, 2012 Alert, the California Labor Commissioner recently published a template form to comply with the Wage Theft Prevention Act of 2011 ("WTPA") (AB 469). In connection with the publication of the template, the California Division of Labor Standards Enforcement ("DLSE") posted on its website a "Frequently Asked Questions" section on AB 469. As we noted in our initial Alert, the "FAQ" section stated that employers should provide an initial WTPA notice to all current nonexempt California employees as soon as the new law takes effect. AB 469 itself, by contrast, only requires a WTPA notice to be provided at the time of hire and within 7 calendar days of any change to the relevant information.
With Its Decision in Harris, the California Supreme Court Breathes Life into the Administrative Exemption
Executive Summary: In Harris v. Superior Court, California's Supreme Court recently clarified the scope of the administrative exemption under the California Labor Code, potentially opening the door for more employees to be classified as exempt.
Court Finds Meal And Rest Period Rules Preempted For Some Employers
California law mandates that employers provide employees who work more than five hours with a 30-minute meal break prior to the sixth hour of work, and a second 30-minute meal period for employees who work more than 10 hours. Employees are also entitled to a 10-minute rest period for every four hours, or major portion thereof, worked. A recent court ruling held that these regulations are preempted by a federal law which covers motor carriers. Dilts v. Penske Logistics.
California Supreme Court Punts on Whether Claims Adjusters Might be Exempt
Sidestepping its first opportunity to address California’s overtime exemption for administrative employees, the state Supreme Court has ruled that although the court of appeal misapplied the “administrative/production worker dichotomy,” the case should be remanded for analysis under the applicable Industrial Welfare Commission wage order. In Harris v. Superior Court (Liberty Mutual), No. S156555 (Dec. 29, 2011), the unanimous Court reversed a determination that insurance adjusters were non-exempt production workers because “the Court of Appeal misapplied the substantive law.”
California Labor Commissioner Publishes Template to Comply with Wage Theft Prevention Act of 2011 (AB 469)
As we reported in our October 24, 2011 Alert, on October 9, 2011, California Governor Jerry Brown signed into law the Wage Theft Prevention Act of 2011 (AB 469). This law adds a new section to the California Labor Code (Section 2810.5) that requires employers to provide all newly hired non-exempt California employees with a written notice at the time of hire that contains all of the following:
DLSE revises FAQs on Wage Theft Notice...
I posted about the Division of Labor Standards' Enforcement's template Notice here and about the FAQs here. The DLSE apparently has thought better of its requirement that even current employees receive a notice (because that plainly was not in the statute). So, the agency revised its FAQ's, here. Slightly concerned employers I spoke with ... please take note.
California Supreme Court Finds the "Administrative/ Production Worker Dichotomy" Not Dispositive in Determining Insurance Claims Adjusters Exempt
In a long-awaited decision, the California Supreme Court unanimously gave California employers a holiday present in an opinion that follows the majority of federal courts in finding that insurance claims adjusters are exempt administrative employees.
[CA] State High Court Clarifies Administrative Employee Exemption
On December 29, 2011, the California Supreme Court issued its long-awaited decision in a case involving the application of the “administrative/production dichotomy” in determining if an employee meets the requirements for the administrative employee exemption from overtime under the California Wage Orders.
Wage Theft Protection Act - FAQs from the DLSE
Here are some FAQs regarding the new notices that must be provided to employees "at the time of hire."
California Supreme Court Clarifies Administrative Exemption
The Supreme Court issued a unanimous decision rejecting the lower court's interpretation of the "administrative exemption."
Notice Compliant with New California Wage Payment Law Available from Labor Division (DLSE)
The California Division of Labor Standards Enforcement has released a form notice that is compliant with the new California Wage Theft Prevention Act of 2011. Effective January 1, 2012, the Act requires employers to provide many new employees with written notice that details their rates of pay, employer name and address, workers’ compensation carrier, and other information specified in the Act. Since Governor Jerry Brown signed the law in October, California employers have struggled to develop notices that are compliant.
California's New Wage Disclosure Notice and the Wage Theft Prevention Act of 2011
California's Wage Theft Prevention Act of 2011 ("WTPA" or "Act")1 takes effect on the first day of next year – January 1, 2012. The WTPA is one of half a dozen new laws that affect an employer's wage payment obligations. The WTPA amended five existing statutes within the California Labor Code, and created five new statutes in the same code.2 All are discussed below.
Court Finds One Plaintiff Not Owed Reporting Time or Split Shift Pay For Scheduled Meetings and Finds Second Plaintiff Waived Claims - But Employer Denied Award of Fees!
In Aleman v. Airtouch Cellular, a California Court of Appeal ruled on December 21, 2011 that one class representative was not entitled to additional reporting pay or split shift premiums and a second class representative could not pursue such claims because she had signed a release in exchange for enhanced severance compensation. The court did, however, reverse the award of attorneys’ fees to the employer.
Ninth Circuit Unconvinced that Out-of-State Employee Claims Are Invalid
On December 13, 2011, the Ninth Circuit Court of Appeals reconsidered the case, Sullivan v. Oracle Corp., after the California Supreme Court had decided several certified questions of law. The Ninth Circuit had previously delayed ruling, and instead asked the California Supreme Court to decide three questions of California law, including whether a company with its principal place of business in California was required to pay out-of-state employees temporarily working in California according to California’s daily overtime rules.
Court of Appeal Makes Christmas Come Early for Employers re Reporting Time and Split Shifts
The Court of Appeal issued a ruling that may change the way us employment lawyers advise clients. But WARNING, this decision is not yet final and cannot be relied upon just yet.
Landmark Decision Limits "Reporting-Time" Pay and Clarifies "Split-Shift" Premium Requirements
A California appellate court has just handed down a major decision on reporting-time pay in California, limiting situations where such pay would be due, and rejecting an enforcement guideline used by the California Labor Commissioner. The court also clarified the law regarding split-shift premiums. Michael Aleman, et al v. AirTouch Cellular.
San Francisco Update
Employers operating in SF - couple of things to note.
"Wage Theft Prevention Act" Takes Effect January 1, 2012
A recently-passed piece of California legislation that will impact employers is the Wage Theft Prevention Act of 2011 (WTPA), which takes effect January 1, 2012. This law adds a new section to the Labor Code and is similar to a law passed in New York this year.
Nonresident-Employees Working in California Entitled to Overtime under State Law, Ninth Circuit Rules
Nonresidents of California are entitled to overtime pay under California law for work performed in California, the U.S. Court of Appeals for the Ninth Circuit has ruled, following the California Supreme Court’s responses to its questions on state law. Sullivan v. Oracle Corp., 2011 U.S. App. LEXIS 24625 (9th Cir. Dec. 13, 2011). The Ninth Circuit reversed summary judgment in favor of the employer on claims for unpaid overtime under the California Labor Code (“Labor Code”), as well as on claims under the California Unfair Competition Law (“UCL”), which were predicated on the Labor Code violations. However, the Court held that the UCL did not apply to alleged violations of the federal Fair Labor Standards Act occurring outside of California.
The Ninth Circuit Confirms California Overtime Laws Apply To Nonresidents
Executive Summary: On December 13, 2011, the Ninth Circuit issued its second opinion in the Sullivan v. Oracle Corporation case and confirmed that nonresident employees are subject to California's overtime laws when they perform work in California. This is a significant ruling for employers with nationwide operations because employers are required to comply with California labor laws even if those employees only work temporarily in California.
Brinker delayed
The Supreme Court is considering even more briefing in the Brinker case re meal and rest periods. So, they are going to delay the opinion past the normal 90 days from argument. Here is the order...
The 9th Circuit Does Their Part On Oracle Case, Extending California Labor Laws
One of the issues that I think has the potential to cause a lot of trouble for employers is the application of one state's labor and employment laws to employee who travel to work in another state. In today's mobile world that is a lot of folks, especially employees located near state borders.
SAN FRANCISCO MINIMUM WAGE RATE INCREASES TO $10.24
Employers with employees in San Francisco be aware: the San Francisco minimum wage has risen to more than ten dollars! Beginning January 1, 2012, the San Francisco minimum wage will be $10.24.
Minimum Salary Requirement Increases for California Computer Professional Exemption Announced
The required compensation levels for employees exempt from overtime under the California computer professional exemption will increase by 2.5 percent from the current levels beginning January 1, 2012, the California Department of Industrial Relations (DIR) has announced.
Employers Must Comply with Changes to San Francisco Health Care Mandate Beginning January 1, 2012
San Francisco’s Health Care Security Ordinance has been amended to require more of certain employers with workers in the City and County of San Francisco. The amendments will take effect January 1, 2012.
California - New Wage Rates Announced for Computer Exemption
Under Labor Code Section 515.5, some computer software employees are considered exempt if they meet certain duties and compensation criteria. The compensation rate is supposed to vary with the rate of inflation.
Federal District Court Holds Motor Carriers Are Not Subject to California's Meal and Rest Break Laws
A federal district court in California recently issued a decision, in Dilts v. Penske Logistics, LLC, 2011 U.S. Dist. LEXIS 122421 (S.D. Cal. Oct. 19, 2011), holding that motor carriers that transport property are not subject to California's meal and rest break laws because such laws are preempted by the Federal Aviation Administration Authorization Act (FAAA Act).
Brinker (Meal Period Case) Oral Argument
I am told there are lawyers who waited hours to get a seat at the California Supreme Court's hearing on Brinker v. Superior Court. It's called "Youtube." Look into it.
What Is the Duty to "Provide" a Meal Period? Oral Argument Before the California Supreme Court in Brinker Restaurant Corp. v. Superior Court
The long awaited oral argument in the seminal meal and rest break decision involving Brinker Restaurant finally occurred today. Before a packed courtroom, lawyers for a hopeful class of waiters and waitresses and the representatives of California employers battled it out before the seven justices of the California Supreme Court.
California's 2012 Minimum Hourly, Monthly and Yearly Rates for Exempt Computer Software, Physician and Surgeon Employees
Under the California Labor Code, certain computer software employees, as well as licensed physicians and surgeons, are exempt from state overtime requirements if they receive a minimum hourly, monthly or yearly rate. The rate is determined annually based upon changes to the California Consumer Price Index for Urban Wage Earners and Clerical Workers. Because the Index experienced a 2.5% increase over the past year, the California Division of Labor Standards Enforcement (DLSE) adjusted the rates these individuals must be paid to be considered overtime-exempt.
California Mandates Written Contracts For Commissioned Employees
Governor Brown signed a law mandating that all commissioned employees in California be provided with a written contract. Signed into law on October 7, 2011 AB 1396 amends Section 2751 of the California Labor Code.
In Surprising Decision Court Finds That The California Trucking Industry Does Not Have To Comply With California's Rest And Meal Break Laws
A federal judge in the Southern District of California handed down a significant legal victory to the trucking industry by ruling that California's meal and rest break laws are preempted by federal law. See Dilts v. Penske Logistics LLC (Oct. 19, 2011). The Court found that California's laws interfere with the price, route, or service of a motor carrier, which in turn impacts competitive market forces. It remains to be seen whether the Ninth Circuit will affirm or reverse this unique decision.
AB 469: WAGE THEFT PREVENTION ACT OF 2011
One of several employment laws recently signed by Governor Jerry Brown, AB 469 takes effect on January 1, 2012. Titled the “Wage Theft Prevention Act of 2011,” AB 469 modified a number of current laws 10and created several new Labor Code provisions.
AB 469 -California Adopts NY "Wage Theft" Law
When I covered some of Governor Jerry Brown's last minute bill signings, I left out perhaps the most obnoxious new law. That's what I get for hurrying.
New CA Law Requires Written Commission Agreement
Governor Brown has mercifully vetoed many of the loony ill-conceived employment law bills that the legislature passed this term. But he signed AB 1396, which is going to impose a serious burden on employers who pay employees via commission.
Back to Brinker: California's Meal Period Riddle Will Soon Be Answered
On November 8, 2011, the California Supreme Court will hear oral arguments in Brinker Restaurant v. Superior Court (Hohnbaum), 165 Cal.App. 4th 25 (2008), to determine whether, under California law, a company may simply "provide" employees with the opportunity for a meal period, or whether it must affirmatively "ensure" that those meal periods are taken.
Brinker!! Argument is 11/08/11
The California Supreme Court will hear arguments in Brinker v. Superior Court (see a bunch of posts here) regarding employers' obligations to provide meal periods. Argument is November 8 in San Francisco. I'm so excited, I need a rest period. Docket is here.
Appeals Court To Employee: "You're Kidding Us, Right?"
California's Sixth Appellate District recently issued a decision upholding an employer's right to modify the compensation terms of an at-will employment agreement where the employee never made a written protest to the modification and the employee continued to accept the modified compensation offered. Foust v. San Jose Construction Company, Inc.
How Do You Recapture Debt From An Employee's Final Paycheck? Very Carefully
Employers continue to be challenged with claims from terminated employees who received payroll deductions for debts they owed the employer. In a recent case employees brought a collective action in a California federal court seeking remedies for violations of California law and the federal Fair Labor Standards Act (FLSA) for deductions taken from their final pay checks for debt balances. The federal court ruled in favor of the company on all claims.
New California Bill Allows Labor Commissioner to Award Liquidated Damages
In September, Governor Brown signed a bill (A.B. 240) that will equalize the penalties available to employees and the defenses available to employers on certain employee wage claims, brought either in court or in the administrative system.
Pre-Bar Admission Law Grads Can Be Exempt
Matthew Zelasko-Barrett graduated law school and obtained a job with Brayton-Purcell, a large, Marin County firm. Before passing the bar and becoming a licensed lawyer, he was designated a Law Clerk II; after admission he became an associate. After quitting, he decided to sue Brayton-Purcell, claiming he was "mis-classified" as exempt during his time as a Law Clerk II.
California Overtime Laws Extended To Visiting Employees
A unanimous California Supreme Court recently held that California-based employers must pay out-of-state resident employees pursuant to the more restrictive provisions of the California Labor Code even if these employees only visit the state on a limited, temporary basis. The unanimous decision held that the state's overtime laws were intended by the California legislature to apply broadly to "protect" workers visiting California (even temporarily); therefore, California's laws trump the laws of states in which employees actually reside and primarily work.
California Supreme Court: Nonresident-Employees Entitled to State Overtime When Working in State
Nonresidents of California are entitled to overtime pay under state law for work performed in California, the California Supreme Court has held, answering questions about California law at the request of the U.S. Court of Appeals for the Ninth Circuit. Sullivan v. Oracle Corp., 51 Cal. 4th 1191 (Cal. 2011).
VACATION CLARIFICATION: NEW DEFINITION MAY AFFECT EMPLOYEE COMPENSATION
What counts as paid “vacation” that vests as it is earned and cannot be forfeited under California law? The distinction between leave that is and is not deemed vacation is significant. The law generally requires payment of unpaid wages, including unused, earned vacation pay, on the employee’s termination date. Untimely payment of wages can result in significant “waiting time” penalties under Labor Code Section 203.
Take A Break: Meal and Rest Break Court Rulings Demand Caution From Franchise Employers
Almost five years ago, in April 2006, nearly 59,000 employees obtained class certification in a lawsuit claiming that Brinker Restaurant Group violated California labor laws by failing to ensure that its non-exempt employees took meal and rest breaks. In July of 2008, the appeals court vacated the class certification based upon a finding that employers need not ensure that meal and rest breaks are taken. The California Supreme Court then vacated the decision and granted review on October 22, 2008. Much to the chagrin of California employers and employees seeking clarity on the issue, the Supreme Court has yet to issue its ruling in Brinker Restaurant Group v. Superior Court.
California Court Clarifies Scheduled Overnight Shifts Not Entitled to Split Shift Pay
The California Court of Appeal has held that employees who work overnight shifts that begin on one day and conclude on the next, but which are not interrupted by unpaid, non-working periods, do not work “split shifts,” as defined in the applicable Industrial Welfare Commission Wage Order. Securitas Security Services USA, Inc. v. Superior Court (Holland), No. B227950 (Cal. Ct. App. July 7, 2011). As fact questions existed whether the employees, in other circumstances, had performed split shift work, the Court remanded the case to the trial court.
California-Based Employers Required to Pay Nonresident Employees for Overtime Worked in California
On June 30, 2011, the California Supreme Court in Sullivan v. Oracle Corp. decided that California's overtime law covers certain overtime worked in California by nonresident employees of California-based employers.
OUT OF STATE WORKERS MUST BE PAID CALIFORNIA OVERTIME PAY FOR WORK PERFORMED IN CALIFORNIA
The California Supreme Court has expanded the reach of our state's overtime pay laws, which are among the toughest and costliest in the nation. In a case involving software maker Oracle Corporation, the court ruled that these protections extend to any out-of-state resident who works in California even for just one full day.
Out of State Residents Subject To California Labor Law While Working In State
If a company sends its out-of-state employees to work on an assignment in California, do overtime provisions of the California Labor Code apply during the assignment? The answer, according to the California Supreme Court in a case captioned Sullivan v. Oracle Corp., is “yes.”
Unlicensed Professionals Might Qualify For White Collar Exemption?
California’s professional exemption covers certain licensed professionals such as accountants, lawyers and doctors. Does that mean that an unlicensed professional cannot qualify for this white collar exemption? Not necessarily. A federal Ninth Circuit Court of Appeal recently ruled that unlicensed accountants might qualify as exempt employees in a case titled Campbell v. PricewaterhouseCoopers LLC. The same rationale may apply to other unlicensed professionals.
Court of Appeal: That's Not a Split Shift
Under California's Wage Orders -
“Split shift” means a work schedule, which is interrupted by non-paid non-working periods established by the employer, other than bona fide rest or meal periods.
And "when an employee works a split shift, one (1) hour’s pay at the minimum wage shall be paid in addition to the minimum wage for that workday, except when the employee resides at the place of employment."
STAY HOME! Non-Residents Entitled to California Overtime Protection While There, California Supreme Court Rules
While California is mired in a $25 billion budget deficit, and companies are leaving for greener, business-friendlier pastures like Arizona, Texas, Georgia and North Carolina, the California Supreme Court is doing its best to pile on the regulatory burdens that hurt this state’s ability to compete on a national and global scale. In Sullivan v. Oracle Corporation, the California Supreme Court held that non-resident employees who perform work in this state, even for periods as short as a single day, are protected by California’s overtime laws.
California Supreme Court Expands Reach Of State Overtime Laws
On June 30, 2011, the California Supreme Court ruled that work performed in California by nonresident employees for California-based employers is covered by the California Labor Code and its unfair competition laws. That means that employees residing in states outside California but working (even occasionally) in California may bring lawsuits against their California employers for unfair competition based on violations of California's generous overtime requirements. This is not good news for employers.
California Supreme Court: Out of State Employers Bound by California Overtime Law...
Sullivan v. Oracle is a wage hour class action we addressed here. If you don't remember, you're forgiven. This was back in 2008. I had more and darker hair; Lehman Brothers was a functioning company. You could buy a Pontiac. Remember?
Court Clarifies Meaning Of "Commissions"
California Industrial Welfare Commission (IWC) Wage Orders exempt from California's overtime-compensation requirement "any employee whose earnings exceed one and one-half (1 ½ ) times the minimum wage if more than half of that employee's compensation represents commissions." State courts have looked to the Labor Code section that addresses automobile dealers, in defining "commissions," as: "compensation paid to any person for services rendered in the sale of such employer's property or services and based proportionately upon the amount or value thereof." (Italics added.)
Court Rules On Premium Payments For Denied Meal And Rest Periods
California law regulates meal and rest periods, requiring employers to provide their employees an unpaid 30-minute meal period after working for five hours, and a second meal period after 10 hours, with a 10-minute rest period for each four hours of work or major fraction thereof. Employees required to work through their breaks are entitled to a premium payment subject to a limit each day.
New Ruling Makes It More Difficult To Avoid Seventh-Day Premium
A recent California appellate decision precludes California employers from defining workweeks under a recurring work schedule that avoids payment of the "seventh day" premium. Seymore v. Metson Marine.
Do California State Overtime Laws Apply to Visiting Workers?
Do you have employees who visit California for business? If so, now may be a good time to brush up on California wage and hour law. On June 30, 2011, the California Supreme Court ruled that the California Labor Code's overtime provisions applied to three non-resident employees of Oracle Corporation who performed work within the state.
California Supreme Court Extends Reach of State’s Wage and Hour Laws to Out-Of-State Employees Temporarily Working Within the State
On June 30, 2011, a unanimous California Supreme Court ruled that California-based employers must pay out-of-state resident employees pursuant to the more restrictive provisions of the California Labor Code even if these employees visit the state on a limited, temporary basis. The unanimous decision held that the state’s overtime laws were intended by the California legislature to apply broadly to “protect” workers visiting California even temporarily and, therefore, this state’s laws trump the laws from the states in which employees actually reside and primarily work. Sullivan v. Oracle Corp., No. S170577, California Supreme Court (June 30, 2011).
Unlicensed Accountants May be Entitled to Overtime under California Law, Federal Court Rules
Reversing summary judgment for more than 2,000 unlicensed junior accountants in a class action lawsuit, the U.S. Court of Appeals for the Ninth Circuit (San Francisco) has held that the plaintiff-accountants were not “categorically ineligible” to be exempt from overtime under California’s professional and administrative exemptions. Campbell v. PricewaterhouseCoopers, LLP, No. 09-16370 (9th Cir. June 15, 2011). The Court ruled the district court erred in determining the unlicensed accountants, who were required by law to work under the supervision of a licensed accountant, could never meet the requirements for exempt employees. The Court warned against categorically excluding entire classes of employees from overtime exemption analyses.
COURT APPROVES DAILY MEAL/REST PERIOD PENALTY OF TWO HOURS
It has been nearly three years since the California Supreme Court accepted the Brinker case to define the rules employers must follow in providing employees with meal and rest breaks under California law. In the meantime, costly meal and rest break class actions continue to be filed with an alarming frequency, exposing California employers to millions in damages.
COMMISSION ACCOMPLISHED
The definition of "commission" can mean the difference between an employee who is entitled to overtime pay and one who is exempt from overtime and other wage-hour laws. Both federal and California law exempt retail salespersons who earn at least 50% of their wages via commissions (along with other requirements). An incentive payment that does not qualify as a "commission" is not counted towards the 50% threshold.
Car Dealer Defeats Overtime Claim By Commissioned Salesperson.
California’s Labor Code allows for an overtime exemption for commissioned salespersons. One requirement for this exemption is that the employee is paid on a commission basis. Commonly, “commission” means a percentage of the sales price, but is that necessarily so? A California appellate court recently examined the meaning of “commission” in a case titled Areso v. Carmax.
California Mandatory Sick Pay Legislation Returns
For several years now, members of the California legislature have proposed legislation which would mandate paid sick leave for private industry employers in California. The legislation is back in 2011, with a vengeance.
Court of Appeal Reconsiders, but then Re-Affirms Case re Work Week
We previously wrote about Seymore v. Metson Marine here. Then we wrote an article covering it and other new wage-hour cases here. This was the case in which the court held that the employer could not set a workweek to start on a day when the employees did not begin the week.
"Pay Stub" Rulings Continue
Earlier this year, a case reinforced yet again the need for employers to pay close attention to the specific requirements of the California Labor Code – this time, the itemized wage statement requirement in Labor Code section 226(a). Heritage Residential Care, Inc. v. Division of Labor Standards Enforcement.
Labor Commissioner Hearings Cannot Be Waived By Arbitration Agreements
The Labor Code gives aggrieved employees the right to file a claim for unpaid wages and other similar violations with the Division of Labor Standards Enforcement. These claims are decided by a deputy labor commissioner in an administrative hearing, sometimes called a "Berman" hearing. The process is more streamlined than a proceeding in court, and is "designed to provide a speedy, informal, and affordable method of resolving wage claims." If either party does not agree with the deputy labor commissioner's decision, they can appeal to the superior court in a process called a "trial de novo."
Non-Exempt Employees Can Agree To A Salary That Includes Overtime
A California appellate court ruled that Labor Code section 515 does not outlaw clear wage agreements that provide for salaries that include fixed amounts of overtime. Arechiga v. Dolores Press, Inc.
Several Recent Wins for California Employers in Wage and Hour Cases
In the past few weeks, appellate courts in California have issued a number of opinions in wage and hour cases, which have been helpful to employers. As all too many of our clients are aware, we have seen an explosion in the number of such cases filed in our trial courts. And, as these cases make their way through the litigation process, we also are seeing this subject predominate at the appellate level. While it seems we mostly bring you bad news on this topic, in this issue we recap four cases that will be helpful to employers as they mount their defenses to wage and hour claims.
Starbucks Dodges California “Reporting Time” Pay Claim
If you instruct an employee to report to work, only to promptly send him home, does the employee get paid? Yes, if he works in California. California wage and hour law contains a number of requirements not found in federal law or in other jurisdictions. One such requirement is the rule known as “reporting time pay.” California law requires employers to pay a minimum number of hours when an employee is called into work but is not put to work or is furnished fewer hours than scheduled. In a recent unpublished opinion titled Price v. Starbucks, a California appellate court examined this wage law.
Court Determines California Maximum Daily Penalty for Missed Meal/Rest Periods
Labor Code section 226.7 requires an employer who fails to provide an employee with a meal or rest period to pay that employee a penalty of one additional hour of pay (or premium payment) “for each work day that the meal or rest period is not provided.”
Court of Appeal: Meals and Breaks are Penalties for Attorneys Fees Law
Did you know the Labor Code permits employers to recover attorney's fees when the employer wins certain wage claims? It's true.
California Court Rules Employer Not Required to Pay Overtime under Explicit Mutual Wage Agreement
A California employer did not owe overtime to an employee because it had entered into an explicit mutual wage agreement that provided for base compensation and overtime in one lump sum, the California Court of Appeal has ruled. Arechiga v. Dolores Press, Inc., No. B218171 (Cal. Ct. App. Feb. 7, 2011). Affirming the dismissal of the employee’s claim, the Court upheld the validity of explicit mutual wage agreements for non-exempt employees under California law.
Court of Appeal: Reporting Time Pay and Discharge
The Court of Appeal addressed California's "reporting time" pay requirement in the context of discharge.
Court of Appeal: Up to 2 Meal / Rest Period Penalties Per Day
The Court of Appeal in UPS v. Superior Court decided that when an employee claims to have been denied both meal AND rest periods in a single day, s/he may recover two of the one-hour penalties made available under Labor Code Section 227.6.
Court of Appeal Upholds the Denial of Meal Period Class Action
While the world waits for the California Supreme Court to issue the fabled Brinker decision on meal periods, the courts of appeal continue to find that employers need only make available meal periods, and not force them.
Court of Appeal Upholds Wage Statement Penalties
So, several employees of Heritage Residential Care, Inc. lacked social security numbers. Naturally, the employer immediately fired them.
Employers on the Hot Seat
Employers with a California presence already know that they need to monitor their wage and hour practices carefully. Now that many employers have reached compliance in areas such as meal- and rest-period laws, plaintiff attorneys are on the prowl for new battlegrounds for litigation. For example, two recent California appellate decisions added yet another hurdle for California employers to leap and additional fuel for employees (and their lawyers) looking to file class actions.
New Exemption to the Meal-Period Requirement
On September 30, 2010, Gov. Arnold Schwarzenegger signed a bill providing an additional exemption to the current meal-period requirements. Existing law requires that all employees in California, with certain exceptions, receive a meal break of at least 30 minutes beginning before the fifth hour of work. The new exemption will apply to employees in certain occupations or industries who are covered by collective bargaining agreements.
GETTING TO KNOW YOUR WAGE ORDER
In the Golden State, most private employers must grapple with no fewer than six major sources of wage and hour laws when one considers statutory, regulatory, and case law in both the state and federal systems. The state Industrial Welfare Commission Wage Orders are part of this web of wage and hour laws and rules.
San Francisco Minimum Wage Going Up 1/1/2011.
San Francisco has its own minimum wage law. It is indexed to inflation. It did not rise in 2010. However, it's rising as of 1/1/2011.
California Wage/Hour Newsbreak -- Waiting-Time Penalties Not Recoverable Under Unfair Competition Law.
California employers may be subject to substantial "waiting-time" penalties for failing to pay an employee his or her final wages immediately upon separation. In an important opinion on November 18, 2010, the California Supreme Court held in Pineda v. Bank of America, N.A., that a single three-year statute of limitations period applies to all claims for waiting-time penalties under the California Labor Code. In its decision, the Pineda court rejected an employee's attempt to recover waiting-time penalties for the four-year limitations period applicable to California's unfair competition law (UCL).
Reach of Employee's "Waiting-Time Penalties" Cut Off at Three Years.
The California Supreme Court clarified on November 18, 2010, that the statute of limitations period for a former employee's claim of "waiting-time penalties" under California Labor Code section 203 ("Section 203") is exactly three years. No more, no less. This is true regardless of whether the penalty claim is asserted by itself or whether it is asserted in conjunction with California's popular limitations-period enhancer, Business & Professions Code section 17200 ("Section 17200").
California Supreme Court: Waiting Time Penalties are...Penalties!
I know, sounds obvious. But folks were claiming that waiting time penalties, like meal period penalties, are a form of wage. They were making this argument to permit claims for waiting time penalties under California's unfair competition law, because that law has a four year statute of limitations.
Avoiding California Wage & Hour Class Action Suits
Most employers with business operations in states outside of California are generally aware of the employment practices that can lead to collective actions under the federal Fair Labor Standards Act (FLSA). These include:
NO NEED TO FORCE EMPLOYEE BREAKS, SAYS COURT OF APPEAL
What does it mean to provide employees with required meal and rest breaks? That employers must ensure or force employees to take them, or simply make them available to employees? While the law is relatively settled that employees need only be given the opportunity to take rest breaks, it is not clear whether this same standard applies to meal periods. Indeed, California employers eagerly await the California Supreme Courts determination of this question in Brinker Restaurant v. Superior Court (Hohnbaum) and Brinkley v. Public Storage. In the interim, the Court of Appeal recently decided a case addressing the meal period issue, Hernandez v. Chipotle Mexican Grill, Inc.
Legal Alert: Not Brinker, But A California Appellate Court Solves the Riddle - Employers Need Only "Provide" Meal Periods Not "Ensure" They Are Taken
For more than two years, we have been waiting for the California Supreme Court to answer the meal-period question that has clogged our court system with innumerable lawsuits. Must management simply "provide" the opportunity for meal periods or must they affirmatively "ensure" that those meal periods are taken? Well, our local appellate district is tired of waiting. Within the past week, our Court published its own opinion in Hernandez v. Chipotle Mexican Grill, Inc., 2010 Cal. App. LEXIS 1853 (2010), ruling in favor of management.
Court of Appeal: Meal and Rest Breaks Need Not Be Forced
Everyone is waiting for the California Supreme Court to issue its decision in Brinker or Brinkley or both regarding whether meal / rest periods must be ensured or merely provided under California law. Well, nearly everyone.
Employers Who Win Meal and Rest-Period Claims Can Recover Fees and Costs
Employees and their attorneys have good reason to be more cautious in filing certain wage claims against employers. If they lose, they could be ordered to pay an employer's defense costs and attorneys' fees. California Labor Code 218.5 permits prevailing employers to recover their fees and costs for any "action brought for the nonpayment of wages."
Minimum Wage As Class Warfare: A Creeping Activism.
Most of us who know the work history of our ancestors appreciate the gains made over the past 100 years with regard to fewer hours of work, a higher standard of living, and the opportunity to enjoy family time. However, many employees and their advocates, and some judges, are promoting causes calculated to further help workers but which actually are job killers. This creeping activism is destroying business across the country and, if not checked, could lead to greater unemployment, lower wages, and increased homelessness.
Wage and Hour Update: Employer Beats Hypertechnical Wage Statement Class Action
The California Labor Code is very specific about what information must be included on an employees wage statement (paystub). Employee-side attorneys often sue employers over technical violations. For example, an employer is required to list the total hours worked during the pay periodbut is it sufficient to list the total regular hours and the total overtime hours, or must the employer also list the total combined hours? Such issues are grist for the employment law litigation mill. A California court recently addressed this issue in a case titled Morgan v. United Retail.
Court Awards Attorney Fees To Prevailing Employer In Wage Claim Lawsuit.
Litigation can be a losing proposition even for employers with strong defenses, what with legal fees and other costs. Many employment laws entitle the winning employee to recover fees, but do not provide the same remedy for winning employers. But there are a few exceptions. A recent California appellate court case titled Kirby v. Immoos examined one such exception in the context of a Labor Code claim for wages.
No Private Right of Action for Violation of California Law Prohibiting Employers from Taking Tips Left For Employees.
California's Labor Code section 351 prohibits employers from taking any gratuity left by patrons for its employees, and states that such gratuity belongs solely to the employee for whom it was left. In the recent case of Lu v. Hawaiian Gardens Casino, Inc., California's Supreme Court held that employees do not have a private right of action under section 351.
Employer Beats Hypertechnical Wage Statement Class Action.
The California Labor Code is very specific about what information must be included on an employees wage statement (paystub). Employee-side attorneys often sue employers over technical violations. For example, an employer is required to list the total hours worked during the pay periodbut is it sufficient to list the total regular hours and the total overtime hours, or must the employer also list the total combined hours? Such issues are grist for the employment law litigation mill.
Court Awards Attorney Fees To Prevailing Employer In Wage Claim Lawsuit.
Litigation can be a losing proposition even for employers with strong defenses, what with legal fees and other costs. Many employment laws entitle the winning employee to recover fees, but do not provide the same remedy for winning employers. But there are a few exceptions. A recent California appellate court case titled Kirby v. Immoos examined one such exception in the context of a Labor Code claim for wages.
Dealing With The Labor Commissioner.
California wage/hour law is governed by the California Labor Code, the Industrial Welfare Commission's Wage Orders, and appellate or California Supreme Court decisions which interpret these laws. These laws are enforced by the California Labor Commissioner. Any employer doing business in California must be familiar with the Labor Commissioner's enforcement agency, the Division of Labor Standards Enforcement (DLSE). This article takes a closer look at an employer's dealings with the Labor Commissioner.
State Supreme Court Clarifies The Definition Of "Employ"
Recently the California Supreme Court held that third-party merchants were not "employers" as defined by the Industrial Welfare Commission, in part because they did not control the conditions of employment for the subject agricultural employees (strawberry pickers), i.e., did not hire them, fire them, or even have a right to tell them what to do or direct their work. The practical effect in this litigation was that the employees could not obtain unpaid wages from third-party merchants after the uncontested employer became insolvent. Martinez v. Combs.
RECENT DEVELOPMENTS FROM THE CALIFORNIA DIVISION OF LABOR STANDARDS ENFORCEMENT.
Although wage and hour litigation continues to keep California courts busy, employers receive much day-to-day guidance about administration of wage and hour issues not from court decisions, but from the Department of Labor Standards Enforcement (DLSE). This agency, part of the Department of Industrial Relations, enforces wage and hour requirements in the state. As part of this duty, the DLSE occasionally issues opinion letters interpreting provisions of California wage and hour law. These opinions are not binding on the courts, but are very instructive as to how the DLSE will rule on particular issues. In the past several months, the DLSE issued a number of important opinion letters, each of which is summarized below.
Annual Bonuses: Are They Factored Into Overtime?
Many employers question whether annual bonuses must be considered in overtime compensation. Although California law has more protective overtime laws than most states, it sticks with federal law with regard to what is included in the "regular rate" when calculating overtime. Federal law requires "all remuneration" to be included in the regular rate except for seven specified types of payments. Among these excludable payments are discretionary bonuses, gifts and payments in the nature of gifts on special occasions, contributions by the employer to certain welfare plans and payments made by the employer pursuant to certain profit-sharing, thrift and savings plans.
Avoiding "Reporting-Time" Claims.
In California, conditions of employment, including standards governing compensation, are set forth in the Wage Orders promulgated by the Industrial Welfare Commission. These Wage Orders are generally given legal effect to the extent that they are consistent with the California Labor Code. Unfortunately, many of these provisions go unheeded by employers despite the fact that they are published in the California Code of Regulations and have been in effect for many years.
Wage and Hour Update: Staffing Company Misapplies Administrative Exemption To Account Execs.
When an employer classifies a group of employees as exempt under state and federal wage and hour law, that decision is subject to challenge by the employees or a government agency. The wrong decision can result in expensive litigation and huge liability. In a recent California case titled Peligrino v. Robert Half International, a California appellate court ruled that the employer had misclassified its account executives under the administrative exemption. The court also invalidated an employee agreement reducing the statute of limitations (time to sue) to six months.
DLSE Issues Guidance On Deductions.
On November 28, 2009, the Division of Labor Standards Enforcement (DLSE) issued an opinion letter which should help shed some light on an area of the law which has long plagued California employers due to its ambiguity -- namely, under what circumstances may employers make deductions from exempt employees' salaries without running afoul of the law?
CALIFORNIA SUPREME COURT OKS INCENTIVE PLAN FORFEITURE CLAUSES.
The concept behind incentive compensation is to motivate employee behavior, such as employee retention. Employers commonly design the incentive by providing that employees who quit or are fired for misconduct before an established date forfeit the incentive.
SUPREME COURT UPHOLDS INCENTIVE FORFEITURE.
When it comes to properly paying employees, California law presents a minefield for the unwary employer. For example, wages must be paid in cash or in a form negotiable and payable in cash (e.g.., by check), without discount, within a specified time period after they are earned. Employees who quit or are terminated typically must be paid their final wages on their last day of employment or significant penalties may accrue. Once earned, wages cannot be forfeited, and it is illegal for an employer to recoup or collect from employees any part of wages already paid. Private agreements circumventing these rules are strictly prohibited.
WORK AROUND THE CLOCK.
Some people leave their jobs at the end of the day and do not even think about work until the next shift begins. Then, there is the rest of us. California's wage and hour laws are tricky, even as applied to workers on a traditional 9-5 schedule. The rules that apply to commuting, working at home, on-call time, and other incidental work performed during what is otherwise "free" time, vex even the wonkiest of employment lawyers.
EMPLOYERS BY THE BAY.
Employers looking to gain a foothold in San Francisco should carefully survey the terrain. San Francisco businesses are subject to local employment ordinances in addition to the many federal and state requirements. Even small businesses must comply with the host of mandates that do not apply outside the county borders. Here are the principal San Francisco ordinances that generally govern private-sector employers. Employers in specific industries may be subject to additional or different requirements.
Recession Relief: Employers Allowed Salary Flexibility (pdf).
California labor commissioner approves temporary pay reduction for exempt workers.
California DLSE Approves Salary Reduction for Furloughed Exempt Workers.
With the economy in flux, businesses are looking for ways to reduce payroll without losing talent. Some companies have put their hourly workers on a work furlough by reducing the number of hours or days in a weekly schedule. But can the same be done for salaried exempt workers? Normally, salaries cannot be adjusted based on the number of hours worked in a workweek.
Button Up Those Commission Plans.
An employer recently found itself in the unenviable position of defending a lawsuit brought by a former sales employee, who alleged that the employer owed him a commission of 20% on a $12 million deal he brokered with AT&T. After three and a half years of litigation, an appellate court ruled in the employer's favor because the salesperson's employment agreement contained two critical provisions. Would your company's commission plan pass the same test? Nein v. HostPro, Inc.
Documentation Beyond Timekeeping Saves Dollars.
California employers continue to learn the hard lessons resulting from the failure to adequately keep time records or monitor off-the-clock activities. Timekeeping errors that occur systematically and continue unchecked can accumulate hundreds of thousands of dollars in liability, not to mention potential penalties and attorneys' fees in defending class action complaints addressing such deficiencies. The failure to keep accurate time records almost certainly is the direct result of an employer's failure to train, retain, and monitor effective first line supervisors.
New California DLSE Opinion Letter Supports Employers' Temporary Schedule and Salary Reductions for Exempt Employees for Cost Cutting Purposes.
On August 19, 2009, the California Division of Labor Standards Enforcement ("DLSE") issued an important Opinion Letter for California employers (the "8/19/09 OL"), finding that an employer's temporary schedule and salary reductions for exempt employees remains consistent with the salary basis test when implemented to cut costs.
Travel Time Not Compensable; But After Hours Data Upload Should Be Paid.
As a general matter, employees are not compensated for regular commute time. But sometimes the line between commuting and on the clock driving may be hard to define. Moreover, it is not always clear whether an employee must be compensated for performing minor tasks before or after shifts. A recent case titled Rutti v. LoJack provides a good example of just how fuzzy the line can be.
RECESSION RELIEF: CALIFORNIA LABOR COMMISSIONER APPROVES TEMPORARY SALARY REDUCTION WITH CUT IN HOURS FOR EXEMPT EMPLOYEES.
Here is some good news for California employers. The California Labor Commissioner has just published an August 19, 2009 Opinion Letter which provides employers with much needed relief during these difficult economic times.
TAKING MANAGEMENT PERSONALLY.
Managers generally may do their jobs without fear of personal liability for employees' claims under California law. But a recent Ninth Circuit decision is a reminder to managers that they may not be entirely immune to claims for unpaid wages.
California Employers Shrug At Federal Minimum Wage Increase.
The federal minimum wage increased to $7.25 per hour effective July 24, 2009. Amendments to federal law in 2007 increased the minimum wage to $5.85 per hour effective July 24, 2007; $6.55 per hour effective July 24, 2008; and $7.25 per hour effective July 24, 2009.
VACATION AND LITIGATION
With summer in full swing, many employees are taking vacations with their families. Meanwhile, Human Resources managers are checking leave balances. As the Court of Appeal recently reiterated in the case of Owen v. Macys, the law does not require that an employer provide its employees with any paid vacation. Any right to vacation benefits must come from the employers policies, an employment contract, or a collective bargaining agreement.
California Appellate Court Adds New Dimension To Tip Pooling Rules.
In a case titled Chau v. Starbucks, a California appellate court has added a new dimension to rules regarding tip pooling in California. Tip pooling is the practice of sharing customer tips among staff. It is a common practice in restaurants. Californias Labor Code has a specific rule that precludes managers or supervisors from taking part in the tip pool distribution.
Defending Wage Claims Before the California Labor Commissioner.
Most employers doing business in California are familiar with wage claims brought by current or former employees before the Division of Labor Standards Enforcement (DLSE), which is the state agency charged with enforcing the California Labor Code and the state's wage-hour laws and regulations. This article highlights the rules and procedures in defending a wage claim in California.
STARBUCKS ESCAPES $100M TIP POOLING RULING.
Earlier this year, a San Diego trial court issued a $100 million verdict against Starbucks Corporation in a controversial class action involving how Starbucks distributes tip jar monies. About 10 days ago, a California Court of Appeal reversed that ruling. In doing so, the court clarified one of the important rules that hospitality industry employers must follow when devising any tip sharing arrangements.
EVERYONE INTO THE POOL: COURT EXPANDS RESTAURANT TIP POOLING RULES.
A recent California appellate court opinion has substantially expanded the group of restaurant personnel who may participate in a mandatory tip pooling arrangement. Tip pooling is a practice where some of the tips received by tipped employees are shared with other restaurant employees. Under existing law and longstanding industry practice, restaurant servers pool their tips and distribute a portion of that money to bus persons, food runners and others who directly assist in serving the customer. Kitchen personnel and others are typically left out of such an arrangement.
How to Release Liability for Wage Claims in California.
When an employer pays money to an employee asserting a legal claim, it expects to receive a release of liability in exchange. A valid release for wage claims can be tricky in California because the Labor Code places limits on the right to release such claims. A recent case titled Watkins v. Wachovia Corporation illustrates that a valid release is possible only in the context of a bona fide dispute.
Company Sued By Its Temp Workers For Time Spent At Security Checkpoint.
A recent California federal district court ruling in a case titled Cervantes v. Celestica Corporation addresses two wage and hour issues: (1) Must employees be compensated for pre- and post-shift time spent waiting in line at a security checkpoint? (2) Under California and federal wage and hour law, may temporary workers sue their temp agency as well as the company to whom they are assigned?
TIP POOLING: A NEW WAGE AND HOUR ISSUE TO BE EXPLOITED?
Maybe like your morning, the controversy over tip pooling perked up over a cup of coffee. A little over a year ago, a court awarded over $85 million dollars to Starbucks baristas, finding a Starbucks tip pooling policy allowed shift supervisors to unlawfully share in the pooled tips. While many employers may be familiar with other wage and hour issues, such as overtime and meal and rest breaks, tip pooling is one of those issues that has gone undisturbed for many years. Now that the sleeping giant is awake, employers in applicable industries should become fully aware of the current rules in California governing tip pooling.
Some Key Points for Wage/Hour Compliance.
Whether the economy is still declining or on the rebound, one thing is clear: the storm of wage & hour litigation continues to buffet employers, an increasing trend that began long before the current recession and plague of unemployment in California. Two key historical facts have contributed significantly to the rise of such litigation in California beginning this decade.
Federal Court Withdraws Decision Awarding Overtime to Non-Residents Who Work In California.
As we reported in our last issue (California Wage/Hour Update, No. 1, January 2009), the U.S. Court of Appeals for the 9th Circuit recently ruled that the overtime provisions of California's Labor Code apply to work performed in California by non-resident employees. Sullivan v. Oracle Corporation.
STATE BUDGET INCLUDES FAVORABLE CHANGES TO CALIFORNIAS ALTERNATIVE WORKWEEK LAW.
Something good for employers is buried in the text of the recently concluded California budget. The Legislature has given California employers greater flexibility in implementing and administering so-called "alternative workweek schedules." The new law, which goes into effect on May 21, 2009, amends the California Labor Code to add more flexible options to employers and employees alike. Here's a rundown of the key changes.
Tip Pooling Not Limited To Restaurants.
Tip pooling is the practice of taking customer gratuities and dividing the money among employees. In California, the practice is allowed, but particular rules apply, including the prohibition against supervisor participation.
Wage & Hour Update Appellate Court Rules No Punitive Damages For California Wage & Hour Violations.
Violations of Californias wage and hour laws are costly. Aside from liability for unpaid wages, the Labor Code imposes cumulative penalties, interest and attorney fees. But what about punitive damages? Can a jury award Labor Code penalties plus punitive damages on top?
COST-SAVING MEASURES TO PRESERVE BUSINESSES AND JOBS: ALTERNATIVE WORKWEEKS.
Our economic recession has wrought hiring freezes, lay offs, business closures, etc. Both employers and employees are suffering. To keep afloat and perhaps avoid layoffs, employers are seeking creative ways to save money and conduct business more efficiently. One option is to reduce employer liability for payment of overtime. The adoption of an alternative workweek may be a means to accomplish this goal.
San Francisco Mandates New Transportation Benefit.
A new San Francisco Ordinance went into effect January 20. It requires employers with 20 or more employees (regardless of where they are located) to provide incentives for their San Francisco employees to use public transportation. The San Francisco based employees must work at least 10 hours per week to qualify.
STARBUCKS PAYS OUT $3 MILLION TO SETTLE CLASS ACTION CLAIM OVER EMPLOYEE MILEAGE EXPENSES.
California's labor laws require employers to reimburse all employees for any personal expenses they may incur while rendering services for their employer. This includes automobile expenses if the employee is required to use their personal automobile while rendering services for the employer.
Federal Decision Awards Overtime to Non-Residents Performing Work in California.
A federal appeals court recently handed down a significant decision addressing the application of the overtime provisions of California's Labor Code to work performed in California by non-resident employees. The case has important consequences for employers who hire non-residents to perform work in California Sullivan v. Oracle Corporation.
The Explosion of Overtime Claims (Part 2).
In our last issue we looked at some of the most important timekeeping problems that employers should be aware of, in order to keep from being engulfed in the virtual tsunami of overtime claims being filed in recent years.
Big Win for Employers in Wage-Hour Litigation: Punitive Damages Ruled Improper
On December 3, 2008, in a long-awaited decision, the California Court of Appeals for the Fourth Appellate District addressed the issue of punitive damages in the context of a wage-and-hour lawsuit. This case represents a victory for employers in an area where the laws and penalties in California tend to be draconian.
Restaurant Association Challenge to SF Healthcare Ordinance Fails.
In what may become a trend statewide, or even nationwide, the San Francisco City Council passed what is called the Health Care Security Ordinance (HCSO). The purpose of the ordinance is to require employers to pay certain monetary amounts for health care, based on the number of persons employed.
Out of State Residents Subject To California Labor Law While Working In State.
If a company sends its out-of-state employees to work on an assignment in California, does the California Labor Code apply during the assignment? The answer, according to the federal Ninth Circuit in a case captioned Sullivan v. Oracle Corp., is yes.
California Court of Appeal Re-addresses a California Employer's Duty to Provide Meal and Rest Periods for its Employees.
Following on the heels of the California Supreme Court's decision to grant review in Brinker Restaurant Corporation v. Superior Court, which interpreted California's meal and rest period requirements, a California Court of Appeal has re-addressed California's break requirements. In Brinkley v. Public Storage, Inc. (10/28/08), the Court of Appeal determined: (1) employers must provide, but not ensure, meal periods for employees; (2) meal periods need not be provided within the first five hours of the shift (only that they be provided at some point during a shift of 6 hours or more); and (3) employers must provide, but not ensure, rest periods for employees.
Meal And Rest Period Decision to Be Reviewed by High Court.
Last July we reported on Brinker Restaurant Corp. v. Superior Court, an employer-friendly decision by a California Appeals court which addressed the legal standards under California's laws on meals and rest periods for employees.
California Meal and Rest Period Rules In Limbo---Again.
The California Supreme Court has granted review of a pro-employer meal and rest period case, Brinker Restaurant v. Superior Court. The Court may take a year or more to mull over the matter; in the meantime, California employers are left guessing about this baffling aspect of labor law.
California Supreme Court Will Determine a California Employer's Duty to Provide Meal and Rest Periods for its Employees.
The California Supreme Court has granted review of the California Court of Appeal's decision in Brinker Restaurant Corporation v. Superior Court, which interpreted California's meal and rest break requirements. As reported in our July 24, 2008 Legal Alert, the California Court of Appeal previously held that: (1) employers need only provide, not ensure, that rest periods are taken; (2) employers need only authorize and permit rest periods to be taken for every four hours or major fraction thereof worked (and that the rest periods are not required to be taken in the middle of the four hour period); (3) employers are not required to provide a meal period for every five consecutive hours worked; (4) employers need only provide, not ensure, that meal periods are taken; and (5) employers can only be held liable for employees working off-the-clock if the employer knew or should have known employees were doing so.
State Reduces Thresholds for California Computer Professionals' Overtime Exemption: Changes Take Effect Immediately.
Last week Gov. Arnold Schwarzenegger approved an amendment substantially changing the law concerning overtime pay for certain computer software professionals. The law amends the California Labor Code and restores the overtime exemption for qualifying computer programmers, analysts and engineers who are paid a monthly salary equivalent to at least $75,000 per year, or who continue to be paid at least $36 per hour for all hours worked. The bill was passed as urgency legislation and took effect on September 30, 2008.
Amendment to California Law Eliminates Overtime Pay for Certain Computer Software Employees.
California Governor Arnold Schwarzenegger recently signed into law an amendment of California's Labor Code, which provides that employees in the computer software field are not entitled to overtime pay if they meet certain requirements. Under AB 10, employees in the computer software field are not entitled to overtime pay if they earn at least $36.00 per hour or have an annual salary of not less than $75,000 for full-time employment, which is paid at least once a month and in a monthly amount of not less than $6,250.
The Explosion of Overtime Claims (Part 1)
Employers in California are still being pummeled with claims by current and former employees seeking compensation for allegedly unpaid overtime. Employers should tackle this problem by conducting self-audits and improving internal procedures for eliminating overtime complaints. The fact is, many overtime claims have identifiable causes and are completely avoidable.
Pay Stub Payoffs: Check Yours Now to Make Sure You're in Compliance.
There is a California law which costs employers millions of dollars each year, all of which could be avoided with almost no effort on the employer's part no lengthy training, no notices to post, and no changes to employee handbooks.
New Law Modifies Temporary Agency Employee Paydays; Companies Hiring Temps Should Confirm Compliance.
California law requires that all wages be paid twice during each calendar month, that wages be paid immediately upon discharge, and that wages be paid within 72 hours if an employee quits, with certain exceptions.
California - New Wage and Hour Ruling Welcomed by Employers.
The California Court of Appeal recently overturned a class certification order in a lawsuit brought by a group of hourly, non-exempt employees who claimed that they were denied rest and meal periods and were forced to work off the clock. In a key ruling, the court held that employers need not ensure meal breaks are actually taken, but need only make them available. The court also held that the employers practice of providing an early lunch within the first hour of an employees shift did not violate California law, even where the employee might then have to work in excess of five consecutive hours without an additional meal period. The court found such rolling five-hour meal periods to be inconsistent with the plain meaning of the Labor Code. In addition, the court found that employers are liable for off-the-clock work only if they knew or should have known employees were working.
California - New Law Changes Frequency of Payment To Temp Workers.
On July 22, Governor Arnold Schwarzenegger signed into law Senate Bill 940 which will change payroll practices applicable to "temporary service" workers. Under the new law, which will go into effect in January of next year, temporary service agencies must pay temps every week instead of every other week. The law also requires agencies to pay temps daily when they work for a client on a day-to-day basis. The new legislation creates another exception for workers on an assignment for over 90 consecutive calendar days. The weekly payment requirement does not apply to these employees unless their employers pay them weekly.
MEAL AND REST PERIODS: BEST PRACTICES IN LIGHT OF BRINKER.
The California Court of Appeal recently rendered an opinion in Brinker Restaurant Corp. v. Superior Court (Hohnbaum) which addresses several heavily litigated meal/rest period issues. While employers obviously welcomed the clarification provided by the ruling, lively celebration may be a bit premature. First, the case may find its way to the California Supreme Court. If the Supreme Court grants review as many anticipate, the law pre-Brinker will apply until the high Court rules. Additionally, the Legislature could decide to take a stand on Brinker as part of the continued budget stalemate. In that case, we may end up with compromise legislation and an unanticipated new law.
California Appellate Court Fixes Meal and Rest Period Rules But Employers Might Wait To Change HR Practices.
In California, what is the employers obligation with respect to employee meal and rest periods? Must an employer force its employees to take these breaks, or is it enough to make them available for employees who are interested in taking them?
DLSE OKs Payment Of Wages By Debit Cards And Money Checks
Californias labor enforcement agency, the DLSE, has approved the use of debit cards and money checks for payment of wages. The two methods work as follows....
Appeals Court Decision Provides Clarity to Law Governing Meals and Rest Periods.
A California appellate court has handed down a long-awaited decision addressing legal standards for employee claims including meal and rest period violations. The court also overturned legal rulings regarding the employees' "off-the-clock" claims.
MEAL AND BREAK CLASS ACTIONS: ON THE BRINKER OF EXTINCTION?
The Court of Appeal's opinion in Brinker Restaurant Corp. v. Superior Court (Hohnbaum), ___ DJAR ____ (Jul. 22, 2008), addresses several heavily litigated issues regarding meal and rest period claims. If the decision withstands an anticipated petition for review to the Supreme Court, the court's opinion will sharply curtail class action litigation over alleged meal and rest period violations.
California Court of Appeal Clarifies Meal and Rest Period Requirements for California Employees.
In a win-win decision for employers, a California Court of Appeal has dramatically clarified the meal and rest period requirements for California employees, while simultaneously narrowing a plaintiffs ability to certify a putative class action based upon alleged meal and rest period violations.
Wage & Hour Update: Employer Wins Holiday Pay Lawsuit
When you are oo-ing and ah-ing at fireworks this weekend, remember that some people have to miss the show because of a work shift.
Tips on Tip Pooling.
In March a California court awarded more than $105 million to Starbucks baristas due to the company's practice of permitting supervisors to share the tips. The case is significant to all California employers that have tip-sharing arrangements.
Court Affirms: Holiday Pay Premiums May Be Credited Toward Overtime Obligations.
California law sets out basic overtime requirements for non-exempt employees in California. Among other things, the law requires an employer to pay an employee time and one-half of the employee's regular rate of pay for both 1) more than 8 hours of work in one workday, and2) more than 40 hours of work in any workweek. A double time premium is required for hours in excess of 12 in a work day, or in excess of 8 hours on the seventh consecutive day of work in a work week.
The California "Multiplier Effect": How Small Wage and Hour Violations Create Big Class Settlements in California.
Employers sued in California wage and hour class actions are all too familiar with the States multiplier effect. What is the California multiplier effect, you ask? Simply put, it is a small wage payment violation (e.g., for non-payment of overtime hours or off-the-clock work), that can trigger a range of penalties under the California Labor Code far exceeding the value of the original unpaid wage amount. In wage and hour class actions, minor wage violations can cost employers millions.
California and Federal Regulation of Summer Jobs for Teens
Summer is here (almost) and many teenagers will be hitting the workforce to earn a few extra dollars. California companies who hire teenagers should be aware that California and federal law restricts the use of minors or child labor.
Much Ado About Lunching
Effective Jan. 1, 2000, Assembly Bill 60 implemented a number of changes to California's wage and hour laws. Many employers and their lawyers focused on the statutory restoration of daily overtime pay, which the Industrial Welfare Commission previously had abolished in several of its Wage Orders. As it turned out, though, AB 60's sleeper issue was the relatively small section of the law devoted to meal periods. AB 60 codified existing regulations mandating meal periods. However, the Legislature determined that employers were not following the rules because there were no financial consequences. So, AB 60 included a requirement that employers pay one hour's wages to employees who were not given a timely meal period in accordance with the law.
Wage and Hour Update: Are You Personally Liable For Labor Code Violations? Appellate Court Limits Personal Liability.
A violation of the California Labor Code can be costly to a corporate employer. The risk of personal liability for owners, officers and managers of a corporation further raises the stakes.
Benefits Update: Will Sick Leave Become Mandatory In California?
Employers in California are not obligated to offer sick pay to employees. The benefit is entirely optionalfor now. Some politicians in Sacramento aim to make sick pay benefits mandatory.
Court Serves a Bitter Brew to Coffee Chain $105 Million Awarded in Tips Case.
How would you like your class action lawsuit servedtall, grande, or vente? An employee class action lawsuit that recently concluded in San Diego against Starbucks serves as a reminder to all restaurants, hotels, and other hospitality businesses: be careful who shares in the tip pool.
Starbucks in Hot Water Over Tips.
Here is something to ponder as you enjoy your next beverage from Starbucks: How many venti, half-caf-half-soy-no-foam-latte-whips does it take to generate $87 million in tips over a seven-year period? It might take more than one refill for you to do that math. But wait, there's more. Consider that the recent and widely reported $100 million-plus award to about 100,000 Starbucks "baristas" compensates them only for a portion of the total tips customers paid (plus interest). That is, just a fraction of what must have been hundreds of millions in total tips wrongfully distributed to shift supervisors. The award, one of the largest reported employment law verdicts, is striking not only because of its sheer size, but also because it is based on optional "gratuities" that are paid by customers rather than the employer.
Start Me Up: New Case holds Start-Up Company Employee Qualifies for Administrative Exemption.
In California, unless specifically exempted, an employee is presumed to be non-exempt and subject to the provisions of the applicable Wage Order. Perhaps the most frequently mentioned exemptions are the "white collar" exemptions involving executive, professional, and administrative occupations. A white-collar exemption exempts an employee from entitlements under many sections of the Wage Order, including meal & rest periods, recordkeeping, and the minimum wage and overtime provisions.
A Lesson for California Employers to Learn with their Morning Cup of Coffee.
A San Diego, California Judge just ordered Starbucks to pay $100 million in back tips and interest to coffee baristas who were forced to share their tips with their shift supervisors. While Starbucks vows to appeal the ruling, it brings to light certain lessons that California employers of tipped employees should learn.
Commission and Bonus Plans: Is a Deal a Deal?
Commissions and bonuses are forms of "wages" in California. The Labor Code imposes on employers a number of obligations regarding payment of wages. For example, wages must be paid within a specified time period after they are earned. Employees who quit or are terminated typically must be paid their final wages on their last day of employment or penalties may accrue. Wages must be included in the "regular rate" of pay, which is used to calculate overtime. They also must be detailed on the "wage statement" that is furnished employees with every paycheck.
California Legislature Proposes Law That Would Mandate Paid Sick Leave.
Following the lead taken by San Francisco just a year ago, the California Legislature has proposed AB 2716, the Healthy Families, Healthy Workplace Act of 2008. If passed, this Act would mandate that all employers, regardless of size, provide some form of paid sick leave benefits to all employees who work in California for seven or more days in a calendar year.
California Legislature Introduces Bill Allowing Employers More Flexibility In Work Scheduling.
On February 20, 2008, the California Assembly introduced legislation aimed at allowing more flexibility in work scheduling. Assembly Bill 2127 would amend California Labor Code Section 511 to permit what is being called the Small Business Family Scheduling Option. If passed, this section would permit employers with 25 or fewer employees to approve the written request of an employee to work an alternative work schedule for no longer than 10 hours per day within a 40 hour workweek, without overtime compensation being incurred.
California Court of Appeal Expands the Administrative Exemption Under the New Wage Orders.
In a victory for California employers, a California Court of Appeal recently rejected the traditional administrative/production dichotomy test for an administrative exempt employee for certain business models. In Combs v. Skyriver Communications, Inc. (2/7/08), the Court of Appeal affirmed the trial courts decision dismissing the employees claims for overtime, unpaid meal period penalties and unpaid rest period penalties because the employee was properly classified as an administrative exempt employee. Importantly, the Court of Appeal relied heavily upon the recent changes to the Industrial Welfare Commissions Wage Order No. 4-2001 in determining that the employee was an administrative exempt employee and, therefore, not entitled to overtime, meal periods or rest periods.
Should Pay Cards Be Treated The Same As Paychecks?
California's wage and hour laws are more detailed than any other state's. To facilitate education about the myriad requirements, the Legislature has included at least one substantial penalty for each failure to abide. So, employers must be cautious before deviating from the letter of the law.
California Wage & Hour: Understanding The "Tool Rate".
California employers are increasingly being challenged on whether they properly compensate and reimburse employees for usage of the employee's money or property in the course and scope of the employee's employment. Courts continuously acknowledge the California Legislature's intent that employers should not pass the cost of doing business onto employees such that the employees bear losses or incur expenses in conjunction with their employment.
Important Change to California's Pay Statement Requirements, Effective January 1, 2008.
As the New Year approaches, California employers should be mindful of an important change that will take effect on January 1, 2008, relating to information that can be listed on employee pay statements. Under California Labor Code section 226, employers must include certain itemized information on each employees pay statement. (This information must be provided separately for each pay period when the wages are paid by personal check or cash.)
High Court Wage Hour Case Rulings Hurtful to Employers (pdf).
California employers are beset with a confusing array of very technical wage hour obligations which must be followed to the letter. The stakes for non-compliance got even higher in 2007 as the California Supreme Court weighed in on a host of wage hour matters. This article discusses how four of these key rulings affect your business. Alternate Link To Article
California State and City of San Francisco Minimum Wage Increases.
On November 14, 2007, San Francisco City Mayor Gavin Newsom announced that, on January 1, 2008, the minimum wage for employees within San Francisco will increase from $9.14 per hour to $9.36 per hour. This was done in accordance with the San Francisco Minimum Wage Ordinance, which was passed by the voters in November 2003, and calls for annual rate adjustments based on the previous years Consumer Price Index for urban wage earners.
California Supreme Court Holds that Employer May Satisfy Statutory Reimbursement Obligation By Paying Employees Enhanced Compensation.
The California Supreme Court recently held that an employer can meet its obligations to indemnify its employees for expenses by paying employees an enhanced compensation that takes the expenses into account. See Gattuso v. Harte-Hanks Shoppers, Inc. (11/5/07).
New Year Brings Automatic Increases To California Payroll Costs.
Effective January 1, 2008, the California Minimum Wage will increase from $7.50 to $8.00 per hour, a 6.7% increase. This increase will trigger several automatic changes in your minimum-compensation requirements.
California Court of Appeal Provides Some Hope to Employers Battling Meal and Rest Break Claims.
In a well-drafted, yet currently unpublished decision, the California Court of Appeal for the Fourth Appellate District (San Diego County) issued an order that, if published or followed in published decisions, will ease the tremendous burden currently placed on California employers related to meal and rest break claims. In Brinker Restaurant Corporation v. Superior Court of San Diego County (Adam Hohnbaum Real Party in Interest) (October 12, 2007), the appellate court reversed the trial courts order certifying the class action based on the trial courts erroneous interpretation of the law.
Rest Break and Meal Period Claims After Murphy v. Kenneth Cole Productions.
The California Supreme Court decided earlier this year, in Murphy v. Kenneth Cole Productions, that the one-hour premium employees receive for violation of meal break or rest period laws is a wage and not a penalty. Because the statute of limitations for unpaid wages is three years (or four years under an unfair competition theory), and the statute of limitations for penalties is only one year, Murphy means that multi-million class actions against state-wide employers are potentially three times more lucrative for plaintiffs and their lawyers. As a result, the plaintiffs bar continues enthusiastically to file class actions alleging violations of the meal and break laws.
Deduction of Workers Compensation Costs In Calculating Profits for Profit-Based Incentive Plan Does Not Violate California Labor Code (scroll down).
In Prachasaisoradej v. Ralphs Grocery Co., the California Supreme Court ruled by a 4-3 vote that a profit sharing incentive plan based on a net profit calculation, which included deductions for workers compensation costs, cash and merchandise shortages and the costs of third party tort claims, did not violate Labor Code prohibitions against deducting such costs from employee wages.
Wage and Hour Laws Redux.
One thing is clear about California wage and hour laws: The rules governing law firms (and all businesses) in California are too numerous to be summarized in just one column. The first installment on this topic ran on July 27, 2007 and is available online at www.dailyjournal.com. In that piece, I discussed potential pitfalls, such as mis-classification of employees as independent contractors or "exempt" employees, minimum wage and overtime laws, independent contractor status, exemptions from overtime, payroll practices and deductions from paychecks. If those topics are not complex and confusing enough, there are many others applicable to California employees.
Insurance Adjusters Held Not Exempt from California Wage Orders (scroll down).
In Harris v. Superior Court, a divided California Court of Appeal panel held that insurance adjusters are not exempt from employees under the administrative exemption to Californias wage orders because their work does not rise to the level of management policy or general operations despite the majoritys acknowledgment of no less than eight contrary rulings by federal courts applying identical regulatory language to insurance claims adjusters and contrary determinations by the U.S. Department of Labor in interpreting its own regulations.
Avoiding Wage-and-Hour Risks.
When Shakespeare wrote in Henry IV, "Uneasy lies the head that wears a crown," he could have been describing law firm managing partners. Client development and satisfaction, billable hours, expense control, office leases, hiring and retaining associates and staff, fierce competition, oh, and the practice of law, are just a few of the challenges facing the lawyer who accepts the responsibility of running a law firm or office.
Employers Must Comply With State Laws on Meal Breaks, Rest Periods
California employers must furnish employees with both rest periods, which are paid, and meal periods, which are not paid. These requirements first appeared in the Industrial Welfare Commission's Wage Orders in 1916. But in 2000, the Legislature imposed on employers significant financial consequences for failure to comply with rest and meal period laws.
California Supreme Court Ruling Could Quadruple Potential Damages For Meal and Rest Period Violations.
The California Supreme Court has sent a shockwave through the California business community by ruling that premium pay issued to employees under California Labor Code section 226.7, to compensate them for missed meal and rest periods carries a three-year statute of limitations as opposed to a one-year statute of limitations.
California Supreme Court Classifies Pay for Missed Meal/Rest Breaks as Wages.
The California Supreme Court has held that missed-meal pay is wages and claims for failure to provide meal periods are subject to the three-year statute of limitations.
Alternative Workweeks.
California has a narrow exception to the general rules on overtime pay with regard to alternative workweeks.
"Exempt" Status Under California Law: Avoid the Pitfalls.
It's been difficult for California employers to determine who is and who isn't exempt from overtime and minimum wage requirements; this article helps you sort it all out.
San Francisco Becomes First City in the Country Requiring Employers To Provide Paid Sick Leave Benefits.
Resulting from a ballot measure passed by voters in November, San Francisco, California has just become the first city in the country requiring all employers to provide paid sick leave to employees. This is the second of a one-two punch that impacts San Francisco employers this year. The one was when the minimum wage for employees in San Francisco rose to $9.14 per hour starting January 1, 2007.
Employee's Travel Time Claim Fails (pdf).
The California Court of Appeal
recently held that the time employees
spend on an employer-provided shuttle
that transports them from a parking
lot to the work site is not compensable.
According to the court, since the employer
did not require employees to
take the shuttle, the time was not compensable
travel time.
Resolution May Be In Sight On California's Meal and Rest Break Issues.
On February 22, 2006, the California Supreme Court agreed to review one of the most hard-fought issues affecting California employers - are the monies owed to employees for missed meal and rest breaks considered "wages" and governed by a three-year statute of limitations, or are they "penalties" subject to a one-year statute of limitations? The California Supreme Court accepted review of this issue in the case of Murphy v. Kenneth Cole Productions.
Employer Who Loses on Wage Claim Appeal Must Pay Labor Commissioner's Attorneys' Fees.
The California Supreme Court has ruled that an employer who unsuccessfully appeals a Labor Commissioner wage decision must pay attorneys' fees to the Labor Commissioner. Lolley v. Campbell
Managers' Overtime Claim Cannot Proceed As Class Action.
In a very important ruling for all California employers, a state appeals court has held that a case seeking back overtime pay for hundreds of store managers and assistant managers is not suitable for class action treatment because of the variation in the job duties of the claimants.
State's Tougher Overtime Calculation Method Must Be Used Unless Federal Method Produces Even Higher Rates.
Discusses Lujan v. Southern California Gas Company, in which the court held that the State's more employee-friendly standards regarding how overtime pay is calculated are enforceable, and must be used, unless the federal standard under the FLSA produces even higher pay.
