Overtime Pay Laws – California Supreme Court Takes on Department of Labor

Overtime Pay LawsOvertime pay laws. Five employees filed a claim against Encino Motorcars, LLC because they were denied overtime pay. According to their claim, they were required to work from 7 AM to 6 PM at least five days a week. They argued that under the Fair Labor Standards Act they were entitled to receive at least one-and-a-half times their regular salary for any time they worked over 40 hours per week.

The plaintiffs worked as service advisors, which means that they encouraged the dealership’s customers to buy services, accessories, and replacement parts for their vehicles. Whether such employees are eligible for overtime has been a matter of contention for quite some time.

Overtime Pay Laws – A Long History of Governmental Indecision

Congress passed overtime pay laws legislation in 1961 that exempted auto dealership employees from overtime pay. Then in 1966, Congress repealed that overtime pay laws exemption, and replaced it with a smaller exemption, which applied to “any salesman, partsman, or mechanic primarily engaged in selling or servicing” vehicles.

The U.S. Department of Labor (DOL) issued an overtime pay laws regulation in 1970 that included a definition of “salesman.” It clarified that service advisors and service salesman are not exempt from the overtime statute. In 1978, the DOL reversed its position and issued a ruling asserting that service advisors could be exempt. In 2008, the DOL proposed a rule stating that service advisors are covered by the exemption.

In 2011 the DOL took the opposite stance and chose not to proceed with the rule. Instead, the DOL issued a rule which stated that the term “salesman” refers only to an employee who sells automobiles, trucks, or farm implements – which would mean that service advisors are entitled to overtime pay.

The Overtime Pay Laws Case

At trial, the U.S. District Court for the Central District of California sided with the employer. It held that under the statute passed by Congress, service advisors are exempt from overtime. On appeal, however, the Ninth Circuit overturned the ruling and agreed with the DOL’s position that the overtime exemption does not include service advisors.

When the case went to the Supreme Court, the Court was presented with the issue of how much deference should be given to the DOL’s interpretation of the overtime exemption statute. In its ruling, Encino Motorcars, LLC v. Navarro, the majority held that the DOL failed to meet its duty to provide a “reasoned explanation” as to why it reversed its stance. The opinion points out that the industry had relied on the prior policy to determine whether employees were exempt, and holds that while the DOL was required to show that it had good reasons for reversing its course, it instead said “almost nothing.”

The case was remanded to the Ninth Circuit. The Court of Appeals was instructed to reconsider the issue without showing deference to the DOL’s interpretation. [Read more…]

Employee Searches and Overtime Law – Employment Law

overtime law, employee searchesEmployee searches and overtime law. Imagine you work in a store that has had problems with employees stealing valuable merchandise. The store now has a policy that when an employee leaves at the end of a workday, any bags that he or she brought into the store will be searched. As such, after you punch out at the conclusion of each shift, you wait while a security guard goes through your bags.

When you were hired, you signed a contract allowing the store to search your bags. But you think it is unfair that you are not being paid for the time you spend waiting while the searches take place. Do you have a valid labor complaint?

According to the U.S. District Court for the Northern District of California, the answer is no. In Frlekin v. Apple, the Court recently dismissed a class-action suit filed by Apple employees who sued Apple for compensation for occasions when Apple searched their bags and verified ownership of their electronic devices. The employees argued that the time during which the searches took place should be considered “hours worked” under the standards of Wage Order 4.

Required Activities vs. Optional Activities

The Court sided with Apple and granted summary judgment, holding that the searches did not constitute hours worked. The court applied the traditional test of the control theory of liability, which takes into account whether the employer restrained the actions of an employee, and whether the employee has no plausible way to avoid the activity. The ruling states that while the plaintiffs demonstrated that Apple restrained their actions during the searches, the second prong of the test was not satisfied because the employees could avoid the searches if they did not bring bags into the stores where they worked, and thus the searches were optional.

The Court cited other cases such as Overton v. Walt Disney Co., in which employers were not required to pay for time spent by employees off the clock. Overton involved a Disney employee who sought compensation for time on a shuttle bus that carried him from an off-site parking lot to Disneyland’s employee entrance. The complaint was rejected because the worker had other options for getting to the employee entrance, such as walking from the parking lot, which was a mile away. The ruling rejected the employee’s argument that the shuttle bus was the only practical method of transportation.

In Frlekin, the Court also pointed out that none of the plaintiffs argued that they brought bags to work based on special needs – even though the class notice invited members with special needs to assert such a claim. The Court held that the plaintiffs were all in a position to freely choose to not bring bags to work.

Overtime Law and Wage and Hour Claims

If you are facing any type of wage and hour claim, or you are considering filing one, the employment and labor law attorneys at Beck Law P.C. in Santa Rosa can help. They serve clients in Santa Rosa, Petaluma, Ukiah, and all of the North Bay Area counties.

Labor Law Overtime Violations and Employee Commute

labor law overtime violations, california labor law overtime violationsLabor law overtime violations and employee commute. Must I pay overtime for my employee’s commute? Your receptionist has clocked out for the day and is driving home; yet, while at a stop light, gets a text from a co-workers regarding a work related question. It requires a simple “yes” or “no” and being a diligent employee he/she pulls over and responds with a text back. A few minutes later, another text is received that requires a very simple response which only takes a minute. In total, your receptionist spent approximately 1 minute and 20 seconds to read and respond to these texts.

No big deal right? Wrong! It is a big deal. The receptionist, being a non-exempt employee, is due overtime for the work performed answering texts while commuting home. For employers, the modern use of devices and smart phones by employees has further complicated the lines between clocking in and out of work and what is considered “working”.

The Fair Labor Standards Act in the United States regulates overtime, and additional state laws are in place that can affect employers, especially in regard to non-exempt employees who communicate on devices prior to and after work hours.

Employers need strict guidelines for non-exempt employees regarding work related texts, emails, face chats and messaging while commuting to and from work or employers may be liable for expensive penalties and fines.

It is important that employers evaluate non-exempt status to determine if their business is following fair labor standards regarding overtime. A general rule of thumb is: if a non-exempt employee is working (doing something for their employer) no matter their location, including being “on-call” they are considered “working” and must be paid appropriately. Additionally, if non-exempt employees are sent off-site during working hours they must be paid for their travel time as well.

Violations to labor laws carry serious penalties and fines, so small business owners should have carefully written policies. Labor law violations can trigger a domino effect for an employer: when one employee files a complaint with the Labor Board, other employees often follow. Even past employees can get in on the action.

A clearly defined policy regarding telecommuting, such as provided below, should be included in your Employee Handbook:

TELECOMMUTING POLICY FOR NON-EXEMPT EMPLOYEES

For non-exempt employees, telecommuting (working from another location, i.e., mobile, smart phone and/or from one’s home computer) is not permitted, unless pre-approved by your immediate supervisor, in writing, via e-mail communication. Without express written permission to telecommute, all non-exempt employees must perform their job duties at their primary central and customary workplace, “on clock” and cannot work or resume work if clocked out. Failure to comply with these requirements will subject the employee to disciplinary action and/or termination of employment.

OFF-SITE REPORTING OF TIME FOR NON-EXEMPTS

 When pre-approved for telecommuting (working off site), it is a requirement that non-exempt employees work “on clock” via e-mail certified time by following this procedure:

  • Before beginning any work, send one (1) e-mail to your immediate supervisor outlining the anticipated duties you will be performing; the time recorded on this e-mail is your certified start time.
  • At the end of work, send one (1) e-mail to your immediate supervisor outlining the work you accomplished; this e-mail will certify your finish time.

Non-exempt employees may not work before the first e-mail is sent, and may not resume work after the second e-mail is sent. For clarification, the time that is marked “sent” on the e-mails will be the certified/official time record for purposes of compensation. It is the employee’s responsibility and word of honor to use this e-mail certified time “clock” system in an accurate manner and to strictly follow all break/rest period labor law requirements when working via telecommunication, no matter their location. [Read more…]

Current California Lunch Break and Rest Period Employee Labor Laws

The Santa Rosa Labor Law Attorneys at Beck Law P.C. work with both employees and employers in regard to all areas governing compliance with California Labor / Wage and Hour Laws.  So as not to violate current California lunch break and rest period employee labor laws, as of April 12, 2012 it is a California requirement that all non-exempt employees get uninterrupted meal breaks and rest periods according to a decision by the Supreme Court (Brinker vs. Superior Court) See Brinker Restaurant Corp. v. Superior Court (2012) 53 Cal.4th 1004.  The Petaluma Employment Law Lawyers at Beck Law P.C. suggest to employers that all Employee Handbooks and Policies are updated by an experienced labor attorney to ensure compliance with these new laws so that overtime violations will be avoided.  In turn, we encourage employees to contact an experienced labor and employment lawyer, such as Beck Law P.C., if they feel their legal rights are being violated.

GENERAL GUIDELINES FOR EMPLOYERS AND EMPLOYEES

The employer must relieve the employee of all duty:  The Wage and Hour Labor Law Attorneys Beck Law P.C. interpret this to mean that literally ALL NON-EXEMPT EMPLOYEE DUTY must be relieved. We encourage employers to have built in contingencies to their policies to ensure that non-exempt employees do not eat at their desks or take any phone calls or instructions while they are “clocked out”.

The employer must relinquish control over all activities of the employee:  The Ukiah Labor Attorneys at Beck Law P.C. suggest all of our business clients provide a break area for employees and to encourage non-exempt employees to take a full break as well as leave the premises whenever necessary.

The employer must permit an uninterrupted 30-minute break:  The Lake County Labor and Employment Lawyers at Beck Law P.C. suggest our business clients provide a break schedule and appoint an Office Supervisor that monitors all non-exempt employees to make sure breaks are taken in a timely manner.  All non-exempt employees must “clock in” and “clock out” and are never permitted to work at home or “off clock.”

The employer must not impede or discourage the employee from taking their 30-minute meal break:  In order to demonstrate compliance with this law as well as avoid meal period violations, the attorneys at Beck Law P.C. suggests employers hire experienced employment law attorneys to prepare the appropriate legal language to be included in all Employer Handbooks and Policies that clearly outlines the break schedule stating that employees have a responsibility to take their breaks in a timely manner.  Additionally, we encourage fellow employees to never discuss work related matters with a non-exempt employee while they are taking a break.

All Non-Exempt Employee Lunch Breaks and Rest Periods Must be Provided and Taken in a Timely MannerCurrent California labor laws for rest breaks and meal periods require that the employer provide non-exempt employees with a 30 minute uninterrupted meal break after 5 hours of work (unless the employee’s workday is completed within 6 hours), and a 10 minute rest break time after each 3 ½ hours of work.

10 Minute Breaks Must Be Paid By Employer.  Not only must an employer require a non-exempt employee to take an un-interrupted lunch or Rest break, but the employer must pay for it, according to current labor laws.  rest break violations and meal break violations can occur if a non-exempt employee is interrupted during a break or meal period and said employee is entitled to additional compensation for working through a meal break.  In addition to the one hour of pay, the extra compensation can increase the amount of overtime that you are due.

Employers May Not Pressure or Coerce the Non-Exempt Employee to Forgo a Lunch or Rest BreakOnly if ALL of the above are met will an employee be deemed to have taken a break. In particular, the California Supreme Court noted that the “wage order and the governing statute do not countenance an employer’s exerting coercion against the taking of, creating incentives to forego, or otherwise encouraging the skipping of legally protected breaks.”

What this means, in simple terms is:  A written company policy stating that you permit meal breaks and rest periods will not be legal if you do not enforce your employees to take timely breaks, that are monitored with accurate time keeping records that demonstrate that non-exempt employees “clocked in” and “clocked out” on time, every work day.  Even on extremely busy days, managers must not pressure non-exempt employees to work through breaks and must ensure rest and meal breaks are taken on time and un-interrupted, or compensate the employee in the amount of one hour’s wage for each interruption or violation.

Missed Meal Breaks and Rest Periods are considered a Wage and Not a PenaltyIn Murphy v. Kenneth Cole Productions, Inc. the courts decided that missed meal breaks are considered a wage and not a penalty. What this means is under California labor law code meal break rule violations can be collected by employees for 3 years and sometimes 4 years under the California unfair competition statute, whereas a penalty is only collectable for 1 year.

What are the Timing Requirements that Comply with First or Second Meal Periods during the Workday?

Train your management to keep in mind the 5-hour mark.  When an employee works more than five hours, a meal period must be provided no later than the end of the employee’s fifth hour of work (simply stated:  no later than the start of the employee’s sixth hour of work).  When an employee works of a period of more than 10 hours, a second meal period must be provided no later than the end of the employee’s tenth hours of work (no later than the start of the employee’s eleventh hour of work).

Disclaimer

The information on this website should not be considered to be legal advice, nor construed to be the formation of any manner of attorney client relationship. Prior to taking any form of legal action, please consult with an attorney experienced in the appropriate area of law germane to your situation. Case results and testimonials presented on www.californialaborandemploymentlaw.net or any of its related websites are germane to the facts present for each individual case and is not a promise of similar outcomes for any other cases. This website is not intended to solicit clients for matters outside of the State of California.