Wage Theft a Rampant Problem in California

wage theftStarbucks is the latest big-name business that has been vilified for widespread wage policies that rob employees of earned wages. The court case has been brewing for six years and has undergone numerous twists and turns. Initially, the case, which was filed by former employer Douglas Troester, was deemed by the courts to be too trivial to even consider. Ultimately, though, California’s Supreme Court overturned that ruling, and found in favor of Troester. If you find yourself suffering from unethical wage theft practices at your place of employment, consider seeking the assistance of a local employment attorney to resolve the problem.

What Constitutes Wage Theft?

Wage theft can rear its ugly head in many forms. At Starbucks, the issue involved superiors asking workers to complete additional tasks after clocking out. Additional forms of wage theft include:

  • Failing to pay overtime;
  • Refusing to provide an employee’s final check after said employee leaves the job;
  • Paying for fewer hours than actually worked, or not at all;
  • Failing to pay minimum hourly wages or higher.

Employers Break Several Laws with Wage Theft Practices

Wage laws are outlined in a number of places, including:

  • The Fair Labor Standards Act (FLSA): Outlines federal minimum wage requirements and time-and-a-half pay for any hours over 40 in a week;
  • Bacon-Davis Act: Provides that workers who are employed by federal contractors are entitled to the prevailing wage in the vicinity in which their work occurs;
  • Tax Laws: Guidelines outline when employers may classify workers as independent contractors (saving employers money) and when workers must be classified as employees.

Common Fields for Wage Theft

Although it can happen in any field, certain industries tend to exploit wage theft practices more often than others. In particular, wage theft is prominent in restaurant work, the agricultural field, janitorial work, retail employment, and home health care services.

California Tops States for Wage Theft

Surprisingly, of the nearly $9 billion wage theft claims in the country in the last couple of decades, more than 50% have come from right here in California. One report states that wage theft is actually “built into the business model” of many American corporations. In California, a good chunk of the infractions are related to strict state codes for the rest and meal breaks to which employees are entitled. Another common issue relates to whether employees should be paid for the time it takes to put on and remove protective equipment and clothing. Disturbingly, the lion’s share of these cases are not against small operations that may be struggling to survive. Most labor probes involve large, profitable businesses that know better but choose to cut corners when it comes to fair pay to their employees. [Read more…]

Subcontractors Cheating Employees. Who is Responsible?

subcontractorsIf you are an employee of a company that subcontracts services for another business, you may be interested to know that if your company fails to adhere to California laws regarding wages, breaks, and so forth, you may be entitled to damages from multiple sources. A case in point involves the Cheesecake Factory, which contracted with Americlean Janitorial Services Corporation for cleaning services. Americlean then hired subcontractors Magic Touch Commercial Cleaning. Magic Touch failed to pay minimum wages, denied workers rest breaks, and ignored overtime rules. When the California Labor Commissioner’s Office got wind of the problem, they wound up assessing the three companies for a combined total for $4.57 million in fines.

California Law Butts up Against Specifics of This Subcontractors Case

According to California law workers are entitled to specific rest and meal breaks, including:

  • A 10-minute break for every four hours on shift;
  • These rest breaks should be as close to the middle of the work period as possible;
  • They must be in addition to toilet breaks;
  • Meal periods must be provided for every five hours worked, and must be a minimum of 30 minutes long;

At three different California Cheesecake Factory franchises, cleaning personnel were required to work daily shifts without appropriate rest and meal breaks. They typically worked roughly 10 hours of overtime weekly, but were paid only a flat rate for eight hours of work each day.

Businesses are responsible for workplace violations committed by their subcontractors according to California law SB 588,  putting Cheesecake Factory, Americlean, and Magic Touch all in a precarious position. Workers received almost $4 million. Liquidated damages were calculated based on the money underpaid in wages plus interest, in addition to a full hour of pay for each day workers were denied their 10-minute rest breaks. Furthermore, the companies shared over $500,000 in civil fines.  

Thanks to SB588, big corporations can no longer hide behind contracts with smaller companies. When violations occur under their umbrella, they share in culpability with their subcontractors. The Labor Commission is streamlining procedures to speed up collections on unpaid wages. Employers are now required to post bond for and judgments related to these liabilities, and get the employees paid. [Read more…]

Wage Disputes in California

wage disputesWage disputes are avoidable. Employers are required to pay employees their due on time. It just makes sense, and the principle is supported in both state and federal law. Nonetheless, wage disputes are not uncommon in California. If you find yourself fighting for earnings to which you are legally entitled, a local employment attorney may be worth visiting.

Wage Disputes – When is Pay Due?

Every employer has their own systematic pay schedule for salaried, hourly, and commissioned employees. Whatever schedule has been agreed to should be adhered to, including agreements regarding bonuses, vacation pay, and/or benefits.

As a general rule, hourly employees are paid twice monthly, or, in particular situations, once monthly.

Work periods should be paid for on paydays immediately following the work period.  For example, work done from the first to the 15th of a month should be paid for within the following ten days.  If a particular payday happens to fall on a holiday or a Sunday, paychecks should be available on the following business day. Any payments that are later than this could evoke stiff penalties.

Administrative Pay

For administrators, executives, and other professionals who are paid on a monthly basis, paychecks for a given month of work must be available no later than the 26th day of the month.

Agricultural Workers

Agricultural workers must be paid within one week following work. For work performed between the 1st and 15th of the month, payment must be made no later than the 22nd of the month.

Garment Workers

When garment workers (those employees participating in any aspect of garment or accessory production) are not paid earned wages, they may pursue payment from either the employer or the contracting company as per California Labor Code 2673.1.

Subcontractors

Similar to garment workers, subcontractors’ employees may be able to receive payment from a general contractor if the subcontractor is unlicensed.

Temporary Agencies

Employees put to work by a temporary service are to be paid on a weekly basis, unless the job assignment is merely day-to-day work. In that case, wages should be paid at the day’s end.

Wage Disputes Over Wages After Being Discharged

Unless an employee resigns while under a contract for a defined time period, an employee who quits without notice is entitled to owed wages within 72 hours. For workers who provide 72 or more hours’ notice, payment may be expected at the close of the final workday.

Penalties for Employer Who do Not Pay on Time

Employers could get stuck with much more than the original wage due if they lose a wage dispute.  

  • They could pay an additional 30 days of wages;
  • They could be responsible for interest on late wages;
  • The court could assign them all attorney’s fees and court costs;
  • The manager or an agent of the company could be fined $1,000;
  • That manager or agent could face six months of imprisonment.

[Read more…]

Part-Time Workers Eligible for More Hours

part-timeAre you a part-time employee in San Jose who would love a few more hours, but who has not been able to convince your employer to give you more time on the job? If so, Measure E might just make you smile.

Measure E Voted in

This measure, approved by voters in November, came into effect in March 2017. It requires that employers with 36 or more employees must give current part-time employees more working hours if more work is available. That is in direct contrast with some employers’ previous decisions to simply hire additional part-time workers.

The law impacts all part-time workers, including temporary workers and subcontractors. The limit to the law is that the additional work may not be at overtime or premium rates; nor does the law override collective bargaining agreements.

For franchises and chains owned by the same employer, the number of employees is determined by adding the combined number of employees at each location of the business, including those businesses located outside of San Jose.

Workplace Definitions

Anyone who has completed a minimum of two hours of work is considered an employee and is entitled to minimum wage in California.

An employer is one who exercises control over the schedule, wages, or working conditions of workers, and either pays San Jose business taxes or is legally exempt from those taxes, including insurance companies, banks and nonprofit organizations.

Enforcement Provisions

You must post in your workplace a bulletin in multiple languages outlining the new work hour requirements and provisions. Non-compliance could result in fines and penalties to the employer, or potentially even a civil action.

Exemptions to the Part-Time Law

For employers with 35 or fewer employees, the ordinance does not apply.

An additional exemption is allowed for hardship. An employer may be granted a hardship exemption for as much as 12 months at a time, if said employer can establish that they have attempted to comply with the law but that compliance would be either impractical, futile, or impossible.

Impacts Outside of San Jose

This initiative led to the introduction of the Opportunity to Work Act. This legislation contains language similar to that of the San Jose measure, but would apply to employers with 10 or more employees. The proposed law is quite a bit more restrictive, in that this measure contains language addressing retaliation, and does not provide hardship exemptions. Employers and employees alike are keeping an eye on this legislation to see how it falls out. [Read more…]

Overtime Pay Rules Get a Bump: California Workers Expect to See More in their Pockets

Overtime Pay RulesChanges to federal overtime pay rules implemented by the US Department of Labor (DOL) take effect December 1st of this year. It is anticipated to impact over four million white-collar workers who previously earned salaries that exceeded overpay rule thresholds, with nearly 400,000 of those workers residing in California.

Just what, exactly, do the new overtime pay rules mean for California workers?

The most critical change to the overtime pay rule involves the annual salary threshold: Although the previous federal threshold was only $23,660, the new minimum is significantly higher, topping out at over $47,000. That amount also exceeds the California state maximum annual earning cap of $41,600.

What are Basic Overtime Pay Requirements?

Employers are expected to pay minimum wage or more for the first 40 hours worked in a week, and overtime pay at one and one-half times the regular rate for all hours beyond 40. In California, the number of hours worked in a day is considered in addition to the number of hours worked in a week.

Are There Exceptions to the Overtime Pay Rules?

Doctors, teachers, and lawyers are all exempted from the overtime rules laid out by the Fair Labor Standards Act (FLSA). Executives who supervise at least two employees and have hiring/firing authority are exempted, as well as individuals involved in outside sales and certain persons who work with computers. Finally, salaried employees whose pay is not flexible or based on quantity or quality of work may be exempted from the overtime pay rules. Each classification of employee has several qualifying points, making the exemption determination somewhat complex.

Can Salaried Employees Expect Overtime Pay?

Assuming one meets the qualifications, the short answer is yes. Consider too that overtime pay for one earning a salary would necessarily include all aspects of the salary package—not simply a sum based on a calculation of hourly wages. While record keeping obviously facilitates an understanding of overtime hours, time clocks are not required.

Are Government Workers Entitled to Overtime Pay Remuneration?

Government workers do not have a blanket exemption with regard to overtime pay, and, in fact, FLSA provides specific guidance with regard to compensatory time (comp time) for government workers.  Essentially, comp time may be earned at the same rate as overtime pay, meaning that an employee who worked 50 hours in one week earned 10 hours of overtime, or the equivalent of 15 hours of comp time.

Do Negotiated Agreements Supersede these Overtime Pay Rules?

It is possible for employees to engage in collective bargaining and determine other frameworks for overtime pay. [Read more…]

New California Law Will Change Pay Stub Requirements

Pay StubOn July 22, 2016, Governor Jerry Brown signed a bill that will change pay stub requirements, allowing California employers to include less information on some of your employee wage statements. Assembly Bill No. 2535 amends Section 226 of the California Labor Code, which lays out what information must be listed on your pay stub, and which employees must receive them. The bill creates an additional exemption, regarding which employees must be provided with a list of how many hours they worked – meaning that fewer workers will be entitled to receive such a list.

Under existing law, all employees must be provided with a pay stub either at the time they are paid, or semimonthly. The wage statement must include certain types of information, including:

  • Gross wages earned
  • Net wages earned
  • The number of piece-rate units earned
  • Deductions
  • The dates of the pay period in question
  • The employee’s name, and the last four digits of the employee’s social security number or employee identification number, and
  • The employer’s name and address.

An employer is also required to list the hours that the employee in question worked during the pay period, unless the employee is a) a salaried employee, and b) is exempt from overtime.

What Pay Stub Requirements the New Law Changes

Under AB 2535, which takes effect on January 1, 2017, another group of employees will added to the hours exemption. Employers will not be required to list an employee’s total hours worked if the employee is exempt from the payment of minimum wage and the employee is exempt from overtime.

Some examples of employees who may fit this exemption are:

  • Outside salespersons
  • Employees working in an executive, administrative or professional capacity
  • Workers who are in their employers’ immediate families (such as someone who works for their spouse, their parent, or their child)
  • Computer software workers who are salaried employees in accordance with Section 515.5 of the California Labor Code (which makes certain software professionals exempt from overtime if they meet certain requirements)
  • People participating in (or working as staff members for) certain live-in rehabilitation programs focused on preventing substance abuse, and
  • Employees working in participation with certain national service programs.

Complying With Pay Stub Requirements

There are penalties for failing to comply with Section 226. An employer can face a fine of $50 for the first pay period in which it fails to provide an employee with the proper information – and $100 per employee per pay period for each violation in subsequent pay periods, up to $4,000. An employee who takes action against an employer regarding a Section 226 violation may be awarded costs and attorney’s fees. If an employer fails to allow an employee to inspect or copy records, the employer may be liable for a $750 penalty to the Labor Commissioner. [Read more…]

Unused Vacation Time Lawsuit – Reznik v. IBM

Unused Vacation TimeReznik v. International Business Machines Corporation lawsuit. How much money is owed to an exiting employee for unused vacation time? Lots of us are familiar with “use it or lose it” vacation time policies – in which an employee forfeits any unused vacation time that he or she still has by the end of a year. In California, these types of policies are generally considered illegal. The California Supreme Court stated in the case of Suastez v. Plastic Dress-Up Co. that when an employer offers vacation time, that time vests, and is protected from forfeiture of unused vacation time.

This means that when an employee’s position is terminated, the employee is most likely entitled to compensation for any unused vacation time that the employee has accumulated. Section 223.7 of the California Labor Code states that an employee in this situation must be paid for all vested vacation time at his or her final salary rate. (There is an exception, however, if a collective bargaining agreement is in place, and the agreement allows vested vacation time to be forfeited.)

IBM was recently accused of violating this statute by a former employee named Yakov Reznik.

Reznik began working for IBM in 2012, and went on long term disability in 2014. During his time at IBM, he did not take any vacation days. He maintained that IBM failed to fully compensate him for his unused vacation days at the conclusion of his employment – and alleged that IBM’s real vacation policy is significantly different than its stated policy.

Does IBM’s Unused Vacation Time Policy Violate the Labor Code?

IBM’s stated policy for employees working in California is often referred to as the “California Plan.” According to the plan, employees with less than 10 years of experience at IBM, such as Reznik, may accrue up to 15 vacation days per year. In addition, employees are given “personal choice holidays,” and are allowed to carry over up to six unused personal choice holidays per year.

Under the California Plan, Reznik had accumulated six unused personal choice holidays, and had accrued 15 vacation days. When Reznik left IBM, he was paid $12,502.75, which amounted to 25 days of work at the salary he had been receiving.

Reznik alleged that IBM’s practices did not adhere to the California Plan. He claimed that he had been shown a PowerPoint presentation which stated that unused days cannot be carried over from one year to another, and that they cannot be “cashed out.” He alleged that this represented IBM’s true policy on the accrual of vacation time. He also argued that personal choice holidays should be regarded as vacation days, and thus should be subject to Section 227.3.

At trial, Reznik’s complaint was dismissed. The U.S. District Court for the Northern District of California granted IBM’s motion for summary judgment, holding that Reznik received proper compensation for his vacation time.

The ruling pointed out that, regardless of the language of the PowerPoint presentation, IBM had allowed Reznik to accrue 15 days worth of vacation time from a previous year and had paid him for his six unused personal choice holidays as though they were vacation days. According to the ruling, Reznik was only entitled to payment for 21 days of work, and thus he had actually been overpaid by four days. [Read more…]

New Fed Regulations Make Workers Eligible for Overtime Pay

Overtime PayUnder California law, pay to employees whose positions are considered to be executive, administrative, or professional are exempt from overtime pay if their salaries are at least twice the full-time minimum wage. With the current minimum wage in California being $10 per hour, the necessary overtime pay salary level is $41,600 a year. This is a significantly higher level than the overtime pay exemption level under federal law, which is currently $23,660 a year.

However, new federal regulations recently announced by the U.S. Department of Labor will greatly decrease the number of workers who are exempt from overtime pay. Beginning December 1, 2016, the Fair Labor Standards Act will stipulate that full-time workers are not eligible for this exemption unless they make $47,476 per year or more. Thus, many California executive, administrative and professional workers will become eligible for overtime under federal law, even though California law does not currently require it. (As the California minimum wage increases to $15 an hour, however, California’s exemption level will once again become higher than the federal level.)

The regulations also make several other significant changes, including the following:

A New Definition of “Highly Compensated” Employees

The FLSA establishes a salary level at which an employee is considered “highly compensated.” If an employee has a salary that is at this level or higher, and the employee performs at least one duty of “an executive, administrative or professional employee,” then he or she will be considered a highly compensated employee who is exempt from the overtime requirements. (The FLSA clarifies that an employee’s primary duty must include office or non-manual work in order to be exempt as a highly compensated employee.)

This salary level is currently specified as $100,000 per year. However, starting on December 1, that number will increase to $134,004. According to the White House, this change is being made because employees at this salary level are more likely to perform the kinds of job duties that would make them exempt.

Inclusion of Bonuses

One change that will likely please employers is that non-discretionary bonuses, incentive payments, and commissions can now be included when determining whether an employee meets the salary level requirement. If an employer is tabulating an employer’s salary to determine his or her exemption status, these types of income can account for up to 10 percent of the total salary.

For example, if an employee has a salary of $45,000, and also earns $6,000 in bonuses, then the employee’s salary would be tabulated as $50,000. (The full $6,000 would not be counted, because only 10%  of the employee’s income can consist of bonuses, incentive payments, or commissions.) The employee would thus be exempt, so long as he or she meets the other requirements. [Read more…]

California Minimum Wage Hike: Is it Set in Stone?

California Minimum WageCalifornia minimum wage changes. By the year 2022, some California employers will be required to pay their workers a minimum wage of $15 per hour. Governor Jerry Brown announced on March 28, 2016 that he had reached a deal with the state legislature that will gradually increase the state’s minimum wage.

California Minimum Wage – The Specifics

Pursuant to the deal, California’s minimum wage will rise from its current rate of $10 per hour to $10.50 per hour on January 1, 2017, but only for companies with 26 or more employees. It will then climb to $11 per hour for the year of 2018, then to $12 per hour for 2019, then to $13 per hour for 2020, $14 per hour for 2021, and $15 per hour for 2022.

The minimum wage will remain at $10 per hour for companies with 25 or fewer employees until January 1, 2018. The minimum wage for those companies will climb to $11 per hour for the year of 2019, then to $12 per hour for 2020, $13 per hour for 2021, $14 per hour for 2022, and $15 per hour for 2023.

Is This California Minimum Wage Schedule Certain?

The increases are not guaranteed to take place at these times. As part of the deal, there will be two ways that the increases can be delayed.

The first way is related to the economy. At any point, the governor can “pause” an increase if the state’s economy is bad enough. This can occur if seasonally adjusted statewide job growth has been negative over the past three months, or over the past six months – and if retail sales receipts for the prior 12 months have been negative.

The second way is related to the state’s budget. The governor will be able to pause the increase if at any point in time, the current budget year, or the year after that, or the year after that, is forecasted to be in deficit when the next scheduled increase is taken into account. This is referred to as a “budget off-ramp,” and there is a specification that it may only be used twice.

The deal will also introduce sick leave for in-home supportive services workers. In July 2018, in-home supportive services workers will be guaranteed one sick day. A second sick day will be added in the first July following the implementation of a $13 per hour minimum wage for businesses with 26 or more employees. A third sick day will be added after the minimum wage rises to $15 per hour. [Read more…]

SB 358: Equal Pay for Substantially Similar Work

equal payThe concept of paying men and women equal pay for equal work should be familiar to California employers but under new legislation, wage equality requirements no longer apply only to employees with identical job descriptions. Employers are now required to pay male and female employees equal wages for doing “substantially similar” work.

The legislation in question, California Senate Bill 358, was signed into law on October 6, 2015 by Governor Jerry Brown at the Rosie the Riveter National Historical Park in Richmond. The new legislation amends Section 1197.5 of the California Labor Code.

What Does the equal pay Bill Say?

SB 358 states that an employer may not pay any of its employees at lower wage rates than employees of the opposite sex for work that is substantially similar, when viewed “as a composite of skill, effort, and responsibility and performed under similar working conditions,” unless the employer can demonstrate that:

  • The wage differential is based upon one or more of the following factors: a seniority system, a merit system, a system that measures earnings by quantity or quality of production, and/or a bona fide factor other than sex (such as education, training or experience.)
  • Each factor is relied upon reasonably, and
  • The factor or factors relied upon account for the entire wage differential.

The legislation clarifies that if an employer cites a “bona fide factor other than sex,” it must not be based on, or derived from, a sex-based differential in compensation. In addition, the factor must be related to the job in question, and it must be consistent with a business necessity.

Other aspects of the legislation include:

  • The Division of Labor Standards Enforcement, which is in charge of administering and enforcing the legislation, may supervise the wages that are due to employees when a violation takes place.
  • Employers must maintain records of the wages and wage rates, job classifications, and other terms of employment of their employees. The records must be maintained for at least three years.
  • When an employee files a complaint with the Division of Labor Standards Enforcement, the name of the employee will be kept confidential until the Division establishes the validity of the complaint. (There is an exception to this, however, if abridging the employee’s confidentiality prevents the Division from investigating the complaint.) If the employee withdraws the complaint before his or her confidentiality is abridged, then the Division will maintain the employee’s confidentiality.

Your Equal Pay Responsibilities Under the New Law

If you run a business in Sonoma County, Mendocino County or Lake County California, and you have not monitored whether there is a gender gap in your employee’s wages, it is time to start. Consulting an attorney to ensure your wages meet the standards of this legislation may be far less expensive than dealing with a gender discrimination lawsuit. [Read more…]

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.