The California Supreme Court has held that, under state law, when an employee earns a flat sum bonus during a pay period, the overtime pay rate will be calculated using the actual number of non-overtime hours worked by the employee during the pay period. Alvarado v. Dart Container Corp., 2018 Cal. LEXIS 1123 (Cal. Mar. 5, 2018).
Articles Discussing California Wage & Hour Laws.
California Supreme Court’s Recent Overtime Ruling Likely to Cause Payroll Problems
Executive Summary: On March 5, 2018, the California Supreme Court issued a ruling clarifying how employers must handle flat-sum bonuses (i.e., additional compensation that does not change depending on the number of hours worked by an employee) in the calculation of overtime. Under this ruling, an employer must calculate a non-exempt employee’s additional overtime by dividing the amount of the flat-sum bonus by the actual number of non-overtime hours worked by the employee; then multiplying that per-hour value by 1.5 (or 2, depending on the applicable multiplier to use) and by the number of overtime hours worked. The ruling clarifies an important technical aspect of overtime calculations and upends many employers’ previous understanding of what the law requires. Although this decision is limited to flat-sum bonuses and does not apply to other forms of non-hourly compensation, employers should promptly have their incentive/bonus compensation plans reviewed for compliance.
Dear Littler: Does Equity Compensation Count as Wages under Federal and California Law?
Dear Littler: We need to hire some key personnel for our new tech company. We intend to offer them equity in the enterprise as compensation. The equity should be very valuable in the long run, and the deal we have in mind is reasonable for our industry. But we figured we should double-check with a lawyer first: this plan is legal, right?
DLSE Reverses Its Position on California Rest Breaks
In November 2017, the California Labor Commissioner’s office, Division of Labor Standards Enforcement (“DLSE”), published updated guidance on employer provided paid 10-minute rest breaks.
California to Hold Direct Contractors Jointly Liable for Subcontractor’s Unpaid Wages and Fringe Benefits
Beginning with contracts entered into on or after January 1, 2018, direct (general) contractors in California will be held jointly liable for their subcontractors’ unpaid employee wages, fringe benefit or other benefit payments or contributions under Assembly Bill 1701, signed into law by Governor Jerry Brown on October 14th. This joint liability requirement is codified in Labor Code Section 218.7.
California on Brink of Further Expansion of Fair Pay Protections
California’s legislature is close to passing three bills to expand the state’s fair pay laws. The bills, introduced in early 2017, were designed to expand upon, or clarify, the amended California Fair Pay Act (CFPA).
San Francisco Joins the Salary History Inquiry “Ban” Wagon
The City of San Francisco (SF) is the latest governmental entity to join the trend towards prohibiting employers from asking job seekers about current or prior salary or wage rate or pegging starting pay to prior pay. The SF Ordinance is based on the following premise:
Pay Equity at the Local Level: San Francisco Bans Salary History Inquiries
Under current California law, employers may ask job applicants about their wages in current or former jobs. A new ordinance in San Francisco, however, will make such inquiries illegal.
Another San Francisco Treat: Mayor Lee Signs Salary History Ban
On July 19, 2017, Mayor Ed Lee signed an ordinance that will significantly affect the hiring practices of San Francisco employers. When Ordinance No. 170350 becomes operative on July 1, 2018, it will be illegal for employers to inquire about a job applicant’s salary history or to provide such information about current or former employees.1
San Francisco Passes “Lactation in the Workplace Ordinance”
On June 30, 2017, San Francisco Mayor Ed Lee signed the “Lactation in the Workplace Ordinance” (“Ordinance”), increasing protections for nursing mothers working in San Francisco. The Ordinance becomes effective January 1, 2018, and applies to anyone employed within the “geographic boundaries” of San Francisco.
Court May Make Reasonable Inferences about Employee’s Exempt, Non-Exempt Activities
A trier of fact can make reasonable inferences about employees’ duties to determine status for overtime pay under California labor law, the California Court of Appeal has ruled, affirming the trial court’s holding. Batze v. Safeway, Inc., No. B258732 (Cal. Ct. App. Apr. 4, 2017).
The City of Los Angeles Quietly Updates Its Rules and FAQs Regarding the Minimum Wage and Paid Sick Leave Ordinance
The sick leave landscape is constantly evolving, and the City of Angeles is no exception to that rule. This past month the City of Los Angeles Office of Wage Standards (“OWS”) revised its rules and regulations (“Revised Rules”) as well the FAQs regarding its Minimum Wage and Paid Sick Leave Ordinance (the “Ordinance”).
California Seeks to Raise Minimum Salary for White Collar Exemptions
The minimum salary to qualify for a "white collar" overtime exemption in California has been higher than that required under federal law for many years. Because California’s exempt salary threshold is tied to the state minimum wage (an exempt employee generally must earn a salary of at least two times the state minimum wage), it goes up as California’s minimum wage goes up. The current minimum salary for exempt executive, administrative, or professional status in California is $43,680 per year. However, as employers know, last year the federal Department of Labor enacted regulations increasing the minimum salary to qualify for exempt status under the federal Fair Labor Standards Act ("FLSA") to $47,476 per year. California employers would have had to comply with the higher salary threshold under the FLSA, except that the regulations were blocked by a Texas court late last year. The Texas court’s ruling is now on appeal, but most believe that the overtime regulations will not be reinstated — at least in current form — under the Trump administration.
California is now seeking to accomplish what the Obama administration could not accomplish at the federal level, by proposing to raise the minimum annual salary to qualify for exempt status in California to $47,472. AB 1565 (Thurmond) is a spot bill that was amended on Tuesday to propose the salary hike. Under the bill, the minimum salary for exempt executive, administrative, or professional workers would be $47,472 or twice the state minimum wage, whichever is greater. As California’s minimum wage continues to rise, a salary of twice the state minimum wage eventually will be a number greater than $47,472. Until that time, $47,472 would be the minimum salary for exempt status in California.
California Court Approves $700,000 Settlement for Seating Claim Brought By Retail Employees
Executive Summary: The effects of the California Supreme Court’s latest interpretation to provide seating to workers are beginning to show, as the United States District Court for the Central District of California recently approved a $700,000 settlement against a major retail clothing company for failure to provide seating in a representative action involving the Private Attorneys General Act of 2004, California Labor Code Section 2698, et seq., (PAGA).
California Court of Appeal Clarifies Wage Statement Requirements for Use of Unique Employee Numbers, Hourly Rates for PTO or Vacation
The California Court of Appeal has held that: (1) the use of payroll service provider generated unique employee file numbers on employee wage statements, in lieu of the employer’s internal employee identification number or last four digits of employee social security numbers, is legally permissible under California law; and (2) employers are not required to state applicable hourly rates for payments of accrued paid time off or vacation on exempt employee wage statements. Blaire v. Dole Food Co., No. B263695, 2017 Wage & Hour Cas.2d (BNA) 46,633 (Cal. Ct. App. Feb. 15, 2017) (unpublished).