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…]

Big Win for California On-site On-call Employees

california on-site on-call employees, santa rosa employment lawyer, petaluma employment lawyer, ukiah employment lawyerBig win for California on-site on-call employees. CPS Security Solutions, Inc., a California employer was delivered a crushing blow when the California Supreme Court ruled that the company’s compliance with a federal employment law that permitted the exclusion of compensation for sleep time was irrelevant in determining CPS compliance with California employment law. In Mendiola v. CPS Security Solutions Inc. the dispute was whether California’s Wage Order 4 was being adhered to by CPS. In determining that CPS’s wage policy violated the Wage Order 4, CPS and other California employer’s will now have to determine what retroactive effect if any the ruling will have on their compensation policy for employees.

The California On-site On-call Employees of CPS

The ruling in Mendiola requires that on-call security guards employed by CPS at different construction worksites are entitled to retroactive pay for 24 hours of work, despite the fact that their same employees only actively worked 8 hours per day. Originally, the on-call security guards employed by CPS had a written agreement with the company to reside in trailers provided by CPS. While residing at these trailers, the on-call/site security guards were allowed to rest and enjoy other leisure activities, though with some limitations. The guards were compensated at an hourly rate for all time spent patrolling their construction worksite. However, no compensation was received for time spent on-call at the worksite trailers unless an alarm went off or other circumstances required the attention outside of the trailer, or during the time spent waiting to be relieved from work by another guard. Ultimately guards were only paid for their time spent patrolling sites, and time spent in the investigation of disturbances occurring at the site.

The difficulty in this case is the fact that CPS did not intend to violate California state law when developing its compensation plan for on-site, on-call employees. In fact throughout the 1990s CPS worked with the California Labor Commissioner in order to ensure that the compensation policy in place, which excluded sleep time at the trailers, was in compliance with relevant federal and state law. The basis for this suit was a request by CPS for a declaratory relief action, requesting assistance from the California courts to review the compensation plan, and to also rule on its viability. Ultimately it was determined that though the federal law provided an express provision allowing the exclusion of sleep time in compensation, this fact was irrelevant in the determination of whether CPS was in compliance with state law because, as the court put it, California “is free to offer greater protection.” As a result, subject to Wage Order 4, CPS will be required to retroactively pay its employees for their rest time while on-site and on-call.

The ruling in the CPS case is interesting in that it does not involve an employer attempting to thwart labor employment law. In fact the unfavorable ruling was the result of CPS attempting to ensure their compliance with California state law. However, the holding means that other employers in California who do not pay compensation for rest time at on-site locations for on-call employees could be required to provide retroactive compensation to these employees. If you have any legal questions regarding California’s wage and compensation laws, and live in Sonoma County, Mendocino County or Lake County California contact the attorneys at Beck Law P.C. in Santa Rosa today.

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

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