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California Wage & Hour Law: feel the pain now, or later?. Jeanine DeBacker McPharlin, Sprinkles & Thomas LLP 408.293.1900 [email protected]. Feel the Pain Later?. overtime pay for past 3, maybe 4 years meal and rest break premiums for 3-4 years waiting time penalties interest - PowerPoint PPT Presentation
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California Wage & Hour Law: feel the pain now, or later?
Jeanine DeBackerMcPharlin, Sprinkles & Thomas LLP
408.293.1900
Feel the Pain Later?• overtime pay for past 3, maybe 4 years• meal and rest break premiums for 3-4 years• waiting time penalties• interest• attorneys’ fees• employee’s attorney’s fees• EDD and IRS payroll taxes and penalties• valuable time away from making $$$• claims by more employees• class actions• Private Attorney General Act (PAGA)
USDOL – “Helping” public awareness campaign to
educate workers under Fair Labor Standards Act (“FLSA”)
“Plan/Prevent/Protect” launched in 2010 to promote a “safe, secure and equitable” workplace for all employees
“DOL-Timesheet” App launched to record hours, breaks, OT
California v. Federal Law
overtime exemptions
- duties- “highly compensated”
CA v. FLSA
where California statutory, regulatory or case law are more employee-favorable than FLSA, California rules apply
out of state employees working in the state are covered by California’s wage and hour rules– Sullivan v. Oracle Corporation
California’s Rules “Wage and Hour Law” is:
– California’s Labor Code– IWC Wage Orders– FLSA
sources of guidance and interpretation for wage and hour law: – California courts – Division of Labor Standards Enforcement
(DLSE)– Federal courts– USDOL Wage and Hour Division
Exempt v. Non-Exempt
Pay for “hours worked” “Hours worked” means “the time
during which an employee is subject to the control of the employer, including all time the employee is suffered or permitted to work, whether or not the employee is required to do so.”
(DLSE Manual, 46.1)
Paycycles
Pay days at least twice a month- by the 26th for work performed from the 1st through the 15th
- by the 10th of the next month for work performed from the 16th through the end of the month
Exempt = at least once a month- by the 26th for work performed the entire month
Overtime Pay
Hours worked in excess of 8 hours in a day, 40 hours in a workweek, or any time worked on a 7th consecutive day in workweek
1 ½ x regular hourly rate = any work over 8 hours, up to 12 hours; and for first 8 hours on 7th workday in workweek
2x regular hourly rate = any work in excess of 12 hours; and for any work in excess of 8 hours on 7th workday in a workweek
OT only available for actual hours worked except for rest breaks
Meal and Rest Breaks
Meal Breaks– Provide 30 minutes or more, duty-free, unpaid, if
employee works more than 5 hours (can be waived if employee works no more than 6 hours)
– Another 30 minutes if work more than 10 hours
Rest Breaks – 10 minutes for every 4 hours worked, paid– Additional time to express breast milk, unpaid
Exempt Employees
Paid for their work, not for their time Full weekly salary must be paid for any
workweek in which any work is performed (with limited exceptions)
The amount of time they put in can be evaluated as a performance issue, but you cannot condition pay on keeping an 8-hour schedule; requiring a set schedule can jeopardize the exemption
Exempt? What does the employee actually do?
duties test: employees may be classified as exempt if they spend more than 50% of their time performing job duties that fall within the exemption
salary test: most exemptions require employees be paid at least a certain amount
Executive Exemption
management of the enterprise or a division; and supervise 2+ employees; and authority to hire and fire, or suggest and be taken
seriously; and customarily and regularly exercise discretion and
independent judgment; and more than 50% of time doing above; and salary at least twice minimum wage for forty hour
workweek, i.e., $2,774 per month or $33,280 per year.
Administrative Exemption
office or non-manual work that relates to management policies or business operations; and
customarily and regularly exercise discretion and independent judgment; and
operates under only general supervision or directly assists proprietor or other exempt employee; and
more than 50% of time doing above; and salary is at least 2 times minimum wage.
Professional Exemption
licensed or certified by California AND primarily engaged in the practice of a Recognized Profession, OR
primarily engaged in an occupation recognized as a “learned or artistic profession;”
customarily and regularly exercise discretion and independent judgment; and
salary is at least 2 times minimum wage.
Who is a Professional?
Licensed by California: law medicine dentistry optometry architecture engineering teaching accounting
But not: paralegals insurance brokers photographers social workers nurses physician assistants teachers (other than
state certified)
Other Exemptions
computer software outside sales inside sales commissioned industry-specific exemptions
Common Mistakes relying upon what others in industry do relying on job titles relying on parties’ intent or agreement allowing exempt employees to perform
primarily production work treating exempt employees as
non-exempt
Avoiding Pitfalls
Perform internal audit of employee classifications
Prepare accurate job descriptions Review employee handbooks Performance appraisals / discipline Watch out for minimum wage increases
Deductions from Exempt Salaries
Use extreme caution in making any deductions!
Partial day deductions from vacation or sick-day bank, BUT not from salary
Full day deductions okay under limited circumstances
Separation Anxiety
Final pay– Resign / Quit: Must pay within 72 hours– Involuntary termination: NOW!– Reporting time pay
Waiting Time Penalty– Failure to pay all wages due– Owe daily wage rate for up to 30 days