Author Archives: Jeanine DeBacker

I posted the webinar I presented on new California employment laws 2016.  From the energy level of my voice, I think I need to modify my New Years’ resolution to drink more caffeine, not less. In the event you want just a quick summary, and not view the webinar, here you go.

As of January 1, 2016, California’s minimum wage is $10.00 per hour. The overtime rate for an employee paid minimum wage is therefore $15.00 per hour – except, please note, if the employee receives other “variable compensation” – piece rate, commissions, nondiscretionary bonuses. If that is the case, the overtime rate must be calculated based on the regular rate inclusive of these additional payments.

Since the minimum wage for nonexempt employees has been raised to $10.00 per hour, the minimum annual salary requirement for properly classified exempt employees under the administrative and executive exemption is $41,600 per year.

For properly classified employees under the computer software professional exemption, the annual cost of living increase means that such employees must make at least $41.85 per hour or $87,185.13 per year. As before, this is only an exemption from the overtime rules. These employees must still be provided the opportunity to take meal and rest breaks.

Employers that pay employees on a “piece rate” basis must pay such employees separately for (a) rest and recovery periods and (b) “nonproductive time.”
(New Labor Code section 226.2). Employers must pay for rest and recovery periods at an hourly rate no less than the greater of either the applicable minimum wage or the employee’s average hourly wage for all time worked (exclusive of break time) during the workweek. Under this new law, “nonproductive time” is “time under the employer’s control, exclusive of rest and recovery periods, that is not directly related to the activity being compensated on a piece-rate basis.” Nonproductive time must be paid as an hourly rate of at least minimum wage – paid by actual records or the employer’s “reasonable estimate.”

In addition to paying these periods separately – that may previously have been “included” in the piece rate – the paystubs need to be updated to include:
• Total hours of compensable rest and recovery periods
• Rate of compensation for rest and recovery periods
• Total hours of “other nonproductive time”
• Rate of compensation for “other nonproductive time”
• Gross wages paid for both rest/recovery periods and nonproductive time

One way to potentially satisfy the sticky “other nonproductive time” requirement is by paying minimum wage for all hours worked in addition to piece rate.

Finally, the new law provides a “safe harbor” for employers who, by December 15, 2016, fully compensate their affected employees for all under-compensated or uncompensated rest periods, recovery periods, or unproductive time between July 1, 2012 and December 31, 2015.

There is another “safe harbor” rule this year. Employers have a “right to cure” paystub violations that fail to show the inclusive dates of the pay period, and/or the name and address of the legal employer. Employers may correct these very technical violations of the Labor Code by providing each affected employee a “fully compliant, itemized wage statement . . . for each pay period for the three-year period prior the date of the written notice” required for a PAGA claim. An employer may cure such violations once in a 12-month period if the employer takes action within 33 days of notice of a violation. Of note, this “safe harbor” only affects “Private Attorney General Act” (“PAGA”) penalties; it does not provide any protections from an employee’s ability to seek statutory penalties. But any steps an employer can take to reduce potential liability is helpful. I previously wrote a blog post on this, in case you want more information.

The ability of workers who work an “Alternative Workweek Schedule” to waive the second meal period had been in doubt due to a rogue court ruling early last year. The legislature clarified that everyone’s interpretations – including the Labor Commissioner’s – was correct. As before, an employee may voluntarily elect to waive the second meal period if the waiver is in writing and states that the employee understands she may revoke the waiver at any time.

The Labor Commissioner’s powers have expanded (again). The Labor Commissioner can now enforce local minimum wage laws – like those that govern employees in San Jose, San Francisco and Oakland. Before, the employee had to file at claim directly with the municipality. The Labor Commissioner also has specific authority to issue citations against employers who fail to indemnify employees for employment-related expenses. The Labor Commissioner’s enforcement powers have also increased – the DLSE can act as a judgment creditor and file liens on real estate, levy an employer’s property, or impose a stop order on an employer’ business to assist in the collection of unpaid wage judgments. And the hearing officer of a wage claim will hear and rule on whether an employer, or individuals acting on behalf of employers, who violate any provision regulating minimum wages or hours and days of work may be held liable as the employer for such violation.

The Legislature clarified that cheerleaders performing for California-based professional sports teams are employees and not independent contractors. This may not seem as if it is relevant to many employers, but it is a good reminder to review who your company is paying as a contractor and if that classification is correct.

In an earlier blogpost, I talked about the new gender equity pay law. Here’s a quick summary: California employers are subject to a new equal pay law that will create a much stricter standard for gender pay equity.

The new law prohibits an employer from paying employees of one sex lower than employees of the opposite sex for “substantially similar work, when viewed as a composite of skill, effort, and responsibility, and performed under similar working conditions.”

Before the amendment, an employee had to demonstrate that he or she was not being paid at the same rate as someone of the opposite sex at the same establishment for “equal work.” The “same establishment” has been deleted, and the employee need only show he or she is not being paid at the same rate for “substantially similar work.” In other words, the employees need not be in the same exact job or the same geographic location.

If a wage differential exists between employees of the opposite sex, the law will allow employers to demonstrate the purpose of any difference that is based on:
• a seniority system;
• a merit system;
• a system that measures earnings by quality or quantity of production; or
• some other bona fide factor other than sex such as education, training, or experience.

If an employer tries to justify a pay differential under this law as a “bona fide factor other than sex”, it must show that the factor is not based on or derived from a sex-based differential in compensation, is job-related with respect to the position in question, and is consistent with a business necessity.

“Business necessity” is defined as an overriding legitimate business purpose such that the factor relied upon effectively fulfills the business purpose it is supposed to serve. This exception will not apply if the employee can show that an alternative practice exists that would serve the same business purpose without producing the wage differential.

An employee may seek to enforce an unequal pay claim with California’s Labor Commissioner or through a civil lawsuit. An employee who is successful can recover the pay differential plus an additional equal amount as liquidated damages. Employees who file lawsuits can also recover interest, litigation costs, and attorneys’ fees.

The new law also bars employers from prohibiting employees from disclosing their own wages to others, discussing their wages, or inquiring about the wages of another employee.

Discrimination protections were expanded. First, employers cannot retaliate against employees who request a religious or disability accommodation, regardless of whether the accommodation is granted. And, second, employers cannot retaliate against an employee who is a family member of a person who has, or is perceived to have, engaged in protected activities, such as complaints about working conditions, pay, harassment, or whistleblowing.

Lastly (for today’s post, at least), employers may not use E-Verify to check the employment authorization status of an employee or an applicant who has not received an offer of employment, except as required by federal law or as a condition of receiving federal funds.

Source: Wendel Rosen’s Construction Practice Group Receives First Tier Ranking by U.S. News and World Reports

California employers will soon be subject to a new equal pay law that will create a much stricter standard for gender pay equity. Signed into law on October 6, 2015, the new law is considered the most aggressive equal pay law in the nation. Employers will want to begin preparing immediately for its impact – as well as high potential for future laws regarding pay equality based on race, disability, and other protected classes.

What Does the New Law Do?
The new law (SB 358) is actually an amendment to an existing gender pay equity law. There are already state and federal laws that require gender pay equity. The amendment is designed to make it easier to enforce the equal pay rules. The new law prohibits an employer from paying employees of one sex lower than employees of the opposite sex for “substantially similar work, when viewed as a composite of skill, effort, and responsibility, and performed under similar working conditions.”

Before the amendment, an employee had to demonstrate that he or she was not being paid at the same rate as someone of the opposite sex at the same establishment for “equal work.” The “same establishment” has been deleted, and the employee need only show he or she is not being paid at the same rate for “substantially similar work.” In other words, the employees need not be in the same exact job or the same geographic location.

Exceptions Available To Employers
If a wage differential exists between employees of the opposite sex, the law will allow employers to demonstrate the purpose of any difference that is based on:
• a seniority system;
• a merit system;
• a system that measures earnings by quality or quantity of production; or
• some other bona fide factor other than sex such as education, training, or experience.

If an employer tries to justify a pay differential under this law as a “bona fide factor other than sex”, it must show that the factor is not based on or derived from a sex-based differential in compensation, is job-related with respect to the position in question, and is consistent with a business necessity.

“Business necessity” is defined as an overriding legitimate business purpose such that the factor relied upon effectively fulfills the business purpose it is supposed to serve. This exception will not apply if the employee can show that an alternative practice exists that would serve the same business purpose without producing the wage differential.

Remedies and Enforcement
An employee may seek to enforce an unequal pay claim with California’s Labor Commissioner or through a civil lawsuit. An employee who is successful can recover the pay differential plus an additional equal amount as liquidated damages. Employees who file lawsuits can also recover interest, litigation costs, and attorneys’ fees.

An agreement by the employee to work at a lower rate of pay will not bar such a claim or lawsuit.

“Wage Transparency” Required
The new law also bars employers from prohibiting employees from disclosing their own wages to others, discussing their wages, or inquiring about the wages of another employee.

Many employers were already mindful about not limiting employees’ ability to discuss the “terms and conditions of employment,” but this is a good reminder.

The new law does not require that the employer disclose another employee’s wages or that an employee disclose his or her own wages in response to a co-worker’s inquiry.

Action Items
The first step is a salary/pay rate review. Employers should determine if any differences exist for pay rates for the same or similar jobs that are tied to gender. If disparities exist, check to see whether they can be justified within the new law. Whenever an employer is reviewing pay practices (read: potential exposure to wage and hour claims), we recommend that the analysis be conducted with the advice and assistance of an attorney (read:  attorney-client privilege).

Employers should also reassess hiring and compensation practices to ensure sufficient documentation. The reasons why an employee is hired at a different salary than another must be explained. For example, a new-hire’s wage could be dictated by the current job market, the financial status of the company, the outcome of salary negotiations, or competitive offers from other companies. The company’s personnel documents should confirm the reason, and document any / every factor that led to raises down the line.

Final Comment

This may be the issue that finally pushes me to bust out a separate blog for commentary! The aggressive comments I have seen about this law –ignoring the fact it doesn’t even go far enough when it comes to differentials in pay based on race and disability, to name a few—are shocking.For now, we can have coffee and discuss in more detail.

On Friday, October 2, 2015, Governor Brown signed AB 1506 – a “pro-employer” law (!). But . . . well, “meh.”

To slightly paraphrase the official Legislative Counsel Digest, current California law requires an employer to provide employees with certain information regarding wages, such as the inclusive dates of the period for which the employee is paid and the name and address of the legal entity that is the employer, either semimonthly or at the time of each wage payment. The law did not allow an employer a “cure period” when an employer discovered mistakes – an employee could simply bring an action.

AB 1506 – which is effective immediately – changes things a wee bit. The law provides an employer with the right to cure a violation of the rules: the requirement that an employer provide its employees with the inclusive dates of the pay period and the name and address of the legal entity that is the employer before an employee may bring a civil action. The bill provides that a violation is only considered cured upon a showing that the employer has provided a fully compliant, itemized wage statement to each aggrieved employee, as specified. The bill would limit the employer’s right to cure with respect to the specified violations once in a 12-month period, as specified.

So great, right? Well, it is nice to have something in the wage and hour rules that an employer can cure when a mistake is made – but to offer some rare commentary, I view this as one of those rules where the cure opportunity is kind of “meh.” I’d be more excited about the opportunity to cure alleged violations where employers have historically had troubles – and not always because of some nefarious, evil impetus, but rather because the wage and hour rules are confusing! Like how about a cure where the Administrative Exemption was mis-applied, or the Learned Profession Exemption, or any exemption with “factors” that are subject to subjective analysis (in my humble opinion).   I don’t think I’m out on a limb to say many employers would embrace a penalty-free opportunity to cure! – while making the employee “whole” of any lost wages.

Just read a great article on the importance of D&O insurance for nonprofits entitles – including the increasingly valuable Employment Practices Liability Insurance (“EPLI”). Enjoy!

Governor Brown signed AB 304 and it is effective immediately. While it doesn’t fix or clarify everything, it does offer some guidance. Here are the highlights:

Unlimited Time Off programs. If your company provides “unlimited” or “nonaccrual” time off for some workers, you don’t have to also provide separate paid sick leave. The old rule required a bit of a fiction where the amount of paid sick leave had to be listed on the paystub (or other notice document) and tracked, even though the worker could really take “unlimited” time off. Now, unlimited sick time or PTO may show available paid sick leave on employees’ itemized wage statement by indicating that paid sick leave is “unlimited.” (The paid sick leave still requires in all other circumstances that employers communicate the amount of accrued sick leave an employee has on an itemized wage statement (or at the same time as the paystub is given).

Accrual Rates. The law required that employees accrue paid sick leave at the rate of one hour for every 30 hours worked. For some employers, this was confusing and limiting as existing programs were more generous, just providing the benefit pursuant to a different method. Now, employers may use any accrual method that provides at least 24 hours of paid sick leave by the 120th calendar day of employment.

Calculation of Paid Sick Leave. Employers can calculate the paid sick time using any of the following methods:

• Paid sick time for nonexempt employees shall be calculated in the same manner as the regular rate of pay for the workweek in which the employee uses paid sick time, whether or not the employee actually works overtime in that workweek; or
• Paid sick time for nonexempt employees shall be calculated by dividing the employee’s total wages, not including overtime premium pay, by the employee’s total hours worked in the full pay periods of the prior 90 days of employment; or
• Paid sick time for exempt employees shall be calculated in the same manner as the employer calculates wages for other forms of paid leave time.

Reason for Use. Employers are not required to inquire into or record purposes for which an employee uses any type of paid sick leave or PTO.

Yesterday, the New Mexico Court of Appeals ruled that a patient in the state’s medical marijuana program who was injured on the job must be reimbursed by his employer for the expense of marijuana used for treatment.

That’s a pretty narrow ruling (involving a state program and workers compensation for on the job injury), but it sparked discussion on the interweb about medical marijuana in the workplace.

Can a company fire an employee for marijuana use? Should employers fire anyone who fails a drug test that shows marijuana use? As usual with California employment law – the answers are . . . “it depends”!

In California, individuals have a legal right to use medical marijuana and employers have a legal right to prohibit or restrict the use of alcohol and drugs at the workplace.

Use of medical marijuana is generally exempt from certain California criminal laws, but it remains a crime under federal law. This means that a worker’s legal right to use medical marijuana is protected from criminal prosecution, but not from an employer’s policies about the use of alcohol and drugs.

California employers can prohibit workers from possessing, using or being under the influence of marijuana at work, just as they can forbid them from being drunk on the job. But they cannot fire or refuse to hire workers because they have a medical condition they are using marijuana to treat.

An employer does not need to accommodate medical marijuana use. Employers are protected in firing or refusing to hire persons who use marijuana or test positive for marijuana use, even when the use was prescribed by a physician to alleviate a disability. An employer may require pre-employment drug tests and take drug use into consideration in making employment decisions.

As a general rule, employers must accommodate employees with medical conditions or disabilities, but they do not have to let them use marijuana in the workplace, even if medically prescribed. Disability discrimination laws prohibit employers from discriminating against workers or applicants because of a mental or physical disability. Employers must make reasonable accommodations for the disability, unless it would pose an undue hardship, or unless the disability poses a health or safety threat. What qualifies as an undue hardship depends on the size of the employer, the cost of the accommodation and other individual factors.

A California employer can elect not to hire someone who reveals their use of medical marijuana, or fails a pre-employment drug test. But this should not be your automatic, no-analysis-performed policy. Before using any pre-employment drug test program, an employer must analyze if the position is such that a drug test is appropriate. Is this a job for which drug testing is necessary and/or reasonable? For example, for some jobs it is critical to know if the applicant is using drugs or alcohol: a butcher where knives are used, an industrial bakery with a huge mixing apparatus, a transportation company. For these workplaces, everyone’s safety may be compromised by an employee impaired by drugs or alcohol. Other jobs, such as those in an office setting, a pre-employment drug test may not be necessary.

In California, employers can require job applicants to pass a drug test as a condition of employment. But they generally cannot test a current employee unless they have a reasonable suspicion the worker is under the influence.
Random testing of unsuspicious employees is allowed in only a few cases. Federal law requires random testing of certain transportation industry employees. California law allows it for certain safety-sensitive jobs, but there are many rules and safeguards. San Francisco bans random testing in employment, except when required by federal law.

In the end, I usually suggest the following: Make it explicitly against company policy to be under the influence of drugs and/or alcohol at work, no matter when the product was ingested. Then, look at specific jobs to determine if testing is appropriate (and legal). Simple!