Category Archives: Wage and Hour

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California Labor Commissioner says an Uber driver is an employee, not a contractor

Shocking News! (Really? Actually, no, not really.) Last night, Uber filed an appeal in San Francisco Superior Court.  The appeal is to challenge a ruling of the California Labor Commissioner that an Uber driver should be classified as an employee, not an independent contractor. Uber claims that its drivers are not employees; instead, Uber facilitates logistics for contractors who sign on to its service.   Drivers and passengers use the app for “private transactions.”   But behind that app is, well, a fleet of drivers: earlier this month, Uber announced it has 26,000 drivers in New York City, 15,000 in London, 22,000 in San Francisco, 10,000 in Paris and 20,000 in Chengdu, China. Uber’s position is that does not exert any control over the hours its drivers worked and does not require drivers to complete a minimum number of trips. The Labor Commissioner reviewed the ways Uber does act more like an employer – providing drivers with phones and deactivating the driver app if the individual is inactive for a period of time.  And when it comes to determining whether a worker is an employee or a contractor, the Labor Commissioner, the IRS, the EDD, etc., see the default to be an employment relationship when work is performed. What does this mean for  you – even if you aren’t a facilitator of private transactions? You should take a close look at any contractors you use. It is critical to review what the contractor is actually doing on behalf of your business and what rights the business has retained in controlling that “contractor.”

On June 18, 2015 I presented a webinar on independent contractors and the Uber case. You can view it at the HR Options webinar archive site here.   You can read more about the webinar here. For more on the Uber matter, the New York Times has a short article here with a link to the underlying ruling.

“But we couldn’t make it without our volunteers!” — A very expensive trap for the unwary business owner (even if you don’t think of it as a “business”)

As you may gather from the very title of this blog, I focus on California employment law (!). This past week, a colleague whose practice has a focus on helping wineries and breweries with legal issues gave me a heads up on a confluence of our practice areas: the use of volunteers at wineries. While you, dear reader, may not operate a winery, you may use volunteers – read on!

For most people, getting to work for a small winery is that rare chance to do something you love. Some even perform the work for free because it is fun, or because volunteering is a great opportunity to get a foot in the door, or because it is a chance to help a friend. Many wineries rely upon volunteers to work in the tasting room, pour at festivals, and help with the bottling line. And while months, or years may go by where this creates a seemingly symbiotic system, with rewards for both the volunteer and the winery, the employment concerns are a ticking time bomb of penalties and unpaid wages.

In general, both California and federal laws that govern how people are to be paid prohibit most private sector, for-profit employers from using volunteers. For the most part, only public sector and non-profit organizations can use volunteers and only when the volunteer is performing civic, charitable, or humanitarian work.

An important thing to remember about California’s employment laws is that, for the most part, they apply to every employer — from every “new economy” tech company with the latest killer app to every small business started 40 years ago. Needless to say, there is no exception for small, medium or large wineries.

In California, an individual is an employee if he or she works in the service of another person (the employer) and that employer has the right to control the details of the employee’s work performance. There are a few, very limited exceptions to the rule that California expects workers to be paid as employees. These exceptions include bona fide independent contractors (bona fide being a key phrase!), educational internship programs and immediate family members of the employer (spouse, parent, child). There are also limited exceptions for certain types of jobs. Except for those limited exemptions to the general rule, California requires that an employee be paid at least minimum wage for all hours worked, be paid overtime for all hours worked over eight in a day (and 40 in a workweek), and to be provided the opportunity to take meal and rest periods of a minimum length. This means that, at a minimum, a winery or any other employer must make the appropriate arrangements to properly hire, pay and employ workers.

Before someone can begin working, the employer must require the individual to show that he or she is legally authorized to work in the United States. The employee must complete a Form W4 to determine withholdings for income tax purposes. The employer must track the hours worked by the employee on a daily basis to ensure overtime is paid. The employer must issue paychecks at least every two weeks, and the paystubs must include specific information such as the hours worked, the overtime earned, and the rate of pay, among many other pieces of information. A written offer letter and/or a letter setting forth certain terms and conditions of employment can be invaluable – and sometimes required. This is just a short summary of the requirements for being an employer, but it is a good starting point.

After my colleague told me about this issue for local wineries, I did the heavy research of looking up the matter on the internet. I found some commentators suggesting that wineries simply pay the (former) volunteers as “1099 workers” or as contractors. This decision could get the winery into different, and expensive trouble with the workers and government agencies. It is the rare winery worker who is properly classified as an independent contractor because a critical factor in assessing that status is the degree of control over the worker. For example, the individuals who work in the tasting room pouring your wine the way you want it poured, talking about your wines, and selling them, is an employee. The workers who come every two weeks to maintain the landscaping are contractors.

In the end, many wineries—and other types of companies! – have used volunteers to supplement their paid work force. They have done this without any evil intent. The law, however, is set up to protect workers from, well, “other” companies – the ones that force workers to volunteer for a period before they may consider being hired, the ones that don’t pay at least minimum wage, etc. In any event, no matter how generous you are with your volunteers in ways other than wages, it could be a very detrimental decision to continue using them in this manner. Volunteers can seek back wages for four years’ time, along with substantial penalties, interest and attorneys fees. It is not uncommon for the penalties and fees to exceed the underlying wages owed. And these situations are ripe for the dreaded, financially crippling class action.

If you think you may need to take a close look at how you pay (or don’t pay) people who work at your company, give any of the attorneys at McPharlin Sprinkles & Thomas LLP a call!

(And for a link to my colleague who can help with your winery, brewery and distillery legal issues, click here.)
Whew. I need a drink!

So, Where Are We? California’s New Employment Laws for 2014 – and an Extra from SF!

While there will be new cases, and maybe some administrative action — like last year’s December 30 issuance of the pregnancy regulations! — I am on pretty firm footing to say that we know what the new employment laws will be in California. Governor Brown’s deadline for signing bills was October 13, 2013. Below I summarize a few of the new rules you’ll need to be ready for in 2014. The minimum wage increase starts on July 1, 2014. The rest of the new laws will kick in on January 1, 2014.

Minimum wage increase over the next two years, beginning with the first increase to $9 per hour on July 1, 2014.

The rate will increase to $10 per hour on January 1, 2016.

Note that the increase in minimum wage increases the minimum amount employers must pay most exempt employees (“no less than two times minimum wage. . . “). If you pay your exempt employees a salary of about $33,280 per year, you’ll need to adjust this next summer to preserve the exempt status.

Fair Employment and Housing Act (“FEHA”) amended to extend protections to military and veterans.

“Military and veteran status” are to be added to the list of protected classes under FEHA in order to increase employment discrimination protections for the 1.8 million California residents who are military members and veterans. This law will not affect other state laws allowing employers to consider military or veteran status for purposes of awarding a veterans’ preference.

FEHA amended to clarify the definition of sexual harassment.

FEHA is now clarified to state that sexual harassment need not be motivated by sexual desire. The new law clarifies the legal standard that had been muddied by the 2011 case Kelley v. The Conco Companies. In that case, the court dismissed claims of same-sex harassment because the plaintiff could not show the harasser was sexually interested in him. This result was absurd, and not particularly helpful to employers trying to make it clear to employees what behaviors are not permitted in the workplace.

With the change, plaintiffs can demonstrate harassing conduct by showing one of the following:
• Sexual intent or desire by harasser to plaintiff.
• General hostility by harasser towards particular sex of which plaintiff is member.
• Through comparative evidence about how harasser treated members of both sexes in workplace.

Overtime compensation for domestic workers.

Employers of domestic employees must pay time and a half for each hour worked over nine hours in one day or 45 hours in one week. The law applies to all employees engaged in “domestic work,” including nannies, housekeepers, and those who provide care for people with disabilities (“personal attendants”).

Paid Family Leave expansion.

Currently, California provides wage replacement of up to six weeks when an eligible worker took permitted time off to care for a seriously ill spouse, domestic partner, child or parent. Under the new law, eligible employees are eligible for wage replacement when taking permitted leave to care for siblings, grandparents, grandchildren, and parents-in-law. As before, the Paid Family Leave is a means for employees to receive wage replacement while on permitted leave. It does not create a protected leave of absence.

And an Extra from San Francisco!

San Francisco’s Family Friendly Workplace Ordinance

Last week, San Francisco passed the Family Friendly Workplace Ordinance. Mayor Ed Lee announced that San Francisco is the first city in the nation to “adopt policies that protect its talented workforce and keep San Francisco a city for the 100 percent.”

If you have employees in San Francisco, you need to be aware of this new law and comply. And if you don’t have employees in San Francisco, I suggest that you at least read the rest of this post for sheer fun: we have seen with many workplace reforms passed by San Francisco, they tend to spread across the state and then the country.

San Francisco’s Family Friendly Workplace Ordinance will give employees the right to request flexible work arrangements to assist with caregiver responsibilities. San Francisco employers will be required to consider and respond to all such requests in a formal manner.

Effective January 1, 2014, the Ordinance will apply to employers and their agents who regularly employ 20 or more employees. Under the rule, employees who have been employed for six or more months and work as little as eight hours per week have the right to request a flexible work arrangement to assist with caregiver responsibilities for: (1) a child; (2) a parent age 65 or older; or (3) a spouse, domestic partner, parent sibling, grandchild or grandparent with a serious health condition. Employees can request accommodations in terms of their hours, schedule, work location, work assignment and the predictability of their work schedule.

The employee’s request must be in writing and must explain how the change will help them meet their caregiver responsibilities. The employer must then meet with the employee and respond in writing within 21 days. If the employer denies the request, it must explain in writing the reason for the denial and notify the employee of his or her right to request reconsideration.
In any written denial of a request for a flexible work arrangement, the employer must be clear as to why it cannot accommodate the request. The employer is required to provide a “bona fide business reason” for the denial, such as productivity loss, a detrimental effect on meeting customer demands, an inability to organize work among employees or insufficient work during the time the employee proposes to work. An employer denying a request also must provide the employee with the text of the Ordinance granting reconsideration rights.

The Ordinance allows eligible employees to make two requests per year. However, an employee may make additional requests following the birth of a child, the placement of a child through adoption or foster care, or an increase in the employee’s caregiving duties for a family member with a serious health condition.

The San Francisco’s Office of Labor Standards Enforcement (OLSE) will be responsible for enforcement of the Ordinance. The OLSE intends to publish mandatory posters providing employees notice of their rights under the Ordinance. Employers will be required to post notices in English, Spanish, Chinese and any other language spoken by at least 5% of employees at that site. The OLSE also will manage compliance with the Ordinance through employer audits and handle claims of retaliation or interference with employees’ rights under the Ordinance. Accordingly, employers are required to maintain documentation of employee requests for 3 years.

Okay – you got all that? More to come!

Labor Commissioner Cites Restaurant $481,813 for Wage Violations

Sometimes a business is a “bargain” because it isn’t following the rules. . .

An Alameda restaurant was cited $481,813 by the Labor Commissioner last week for civil penalties and wages owed to employees for violation of minimum wage, overtime and rest period laws.

According to an announcement by California’s Department of Industrial Relations, workers at Toomie’s Thai Cuisine “routinely worked at least 10.5 hours each day, up to seven days a week” and the owners did not pay the required minimum wage for overtime hours. Servers were paid $45 in cash per day; kitchen staff got between $75 and $120, according to the Labor Commissioner’s investigation. The citation figure breaks down to $108,200 in civil penalties and $373,613 back pay to the workers.

In an article about the citation, the San Francisco Chronicle noted that the restaurant “was the subject of a Bargain Bite feature last year.” I assume that the restaurant was a bargain because it wasn’t paying its labor costs. The investigation by the Labor Commissioner is part of that entity’s effort to level the playing field for businesses that follow the rules.

Follow the rules!

Gov. Brown to Sign Law Increasing Minimum Wage Today

Governor Brown will sign AB 10 today at official signing ceremonies in Oakland and Los Angeles today. (These are invitation-only ceremonies. I wasn’t invited.)

AB 10 will raise California’s minimum wage in two one-dollar increments, from $8 per hour today to $9 per hour, effective July 1, 2014 and from $9 per hour to $10 per hour, effective January 1, 2016.

When we win, we’ll get our attorneys’ fees, right? Right!??!?

file0001422084804Well, if you are an employer defending a wage and hour claim, probably not. Earlier this week, Governor Jerry Brown signed SB 462. The new law severely restricts the award of attorneys’ fees to employer-defendants in wage claim issues. Effective January 2014, employers that prevail in litigation will have to show that workers sued “in bad faith” over nonpayment of wages, benefits or pension contributions to secure attorney fees and costs. The same restriction will not apply to winning worker-plaintiffs.
The law amends Labor Code section 218.5, which previously permitted either the employee or employer to seek attorney’s fees as the prevailing party. The revised statute authorizes attorney’s fees to employers (or any other party that is not the “employee”) only if the court determines the lawsuit was brought in “bad faith.” That’s a high standard –meaning it is unlikely that employers will be awarded their fees.