Crazy Californians: Employment Laws Like You’ve Never Seen · • California overtime laws apply to non-resident employees when they perform work for California-based employers

© 2014 Winston & Strawn LLP

Crazy Californians: Employment Laws Like You’ve Never Seen

June 12, 2014

Brought to you by Winston & Strawn’s Labor and Employment Practice Group


Today's eLunch Presenters

Julie Capell Partner

Los Angeles

[email protected]

Jason Campbell Associate

Los Angeles

[email protected]


Roadmap for Today’s Presentation

• Daily overtime

• Meal periods, rest breaks, and recovery periods

• Exempt employee criteria

• Wage statements

• Paychecks

• Wage Theft Protection Act

• Vacation pay – no “use it or lose it”

• Seating claims

• Commission agreements


Who is Covered by CA Law?

• California overtime laws apply to non-resident employees when they perform work for California-based employers. Sullivan v. Oracle Corp., 51 Cal. 4th 1191

• Unclear following Oracle whether protections other than overtime apply to non-residents, and whether California law applies if the employer is not based in California

• Risk to not complying with California laws if you have employees based in or working in California


Sources of California Wage and Hour Laws

• California Labor Code

• California Code of Regulations/Wage Orders

• Case law

• Non-binding guidance • DLSE Manual

• Labor Commissioner Opinion Letters


Warm-up: Real or Fake?


• In California, an employer must pay an employee an extra hour of pay for each day the employee is not provided a 30-minute lunch?

Real or Fake?

7

REAL!


• In California, an employer can be sued for not providing seats to cashiers in a retail store?

Real or Fake?

8

REAL!


• In California, a live paycheck must list the name and address of a place in the state where paychecks can be cashed for free?

Real or Fake?

9

REAL!


• In California, an employer must pay an employee an extra hour of pay for each day the employee works outside and is not allowed 5 minutes to “cool down”?

Real or Fake?

10

REAL!


• In California, an employer must provide free massages and yoga classes to its employees?

Real or Fake?

11

FAKE (but stand by)


The Basics: Overtime and Breaks


Overtime

• Wage Order section 3

• Overtime at 1.5 times the regular rate of pay for: • More than 8 and up to 12 hours in any workday

• More than 40 hours in any workweek

• First 8 hours worked on the 7th consecutive day of work in a workweek

• Overtime at 2.0 times the regular rate for rate of pay for: • Hours in excess of 12 in any workday

• Hours in excess of 8 on the 7th consecutive day of work in a workweek

• Anything else generally requires an Alternative Workweek Schedule voted on by the employees after notice


Meal Periods

• Labor Code section 226.7 • “If an employer fails to provide an employee a meal or rest or recovery period in

accordance with a state law… the employer shall pay the employee one additional hour of pay at the employee’s regular rate of compensation for each workday that the meal or rest or recovery period is not provided”


Meal Periods

• Wage Order section 11 • “No employer shall employ any person for a work period of more than five (5) hours

without a meal period of not less than 30 minutes…”

• “… except that when a work period of not more than six (6) hours will complete the day’s work the meal period may be waived by mutual consent of the employer and the employee…”

• “An employer may not employ an employee for a work period of more than ten (10) hours per day without providing the employee with a second meal period of not less than 30 minutes…”

• “… except that if the total hours worked is no more than 12 hours, the second meal period may be waived by mutual consent of the employer and the employee only if the first meal period was not waived”


Meal Periods

• Brinker says: • Employees must be provided with an uninterrupted 30-minute period during which

they are relieved of all duty • No duty to ensure employees do no work

• But if they do any work, they are entitled to straight time

• First meal period must start before the completion of the fifth hour of work

• Second meal period if the employee works more than 10 hours

• No rolling 5-hour rule – i.e., so long as the employee works fewer than 10 hours, no second meal is required, even if the employee works more than 5 hours after the first meal period ends


Rest Periods

• Wage Order section 12 • “Every employer shall authorize and permit all employees to take rest periods, which

insofar as practicable shall be in the middle of each work period. The authorized rest period time shall be based on the total hours worked daily at the rate of ten (10) minutes net rest time per four (4) hours or major fraction thereof”


Rest Periods

• Brinker says: • 10 minutes of rest periods for 3.5 to 6 hours of work

• 20 minutes of rest periods for 6 to 10 hours of work

• 30 minutes of rest periods for 10 to 14 hours of work

• No requirement that rest period be taken before meal period


Recovery Periods

• Effective January 1, 2014

• Employers cannot require any employee who works outside to work during any “recovery period” taken to avoid heat-related illness • “a cool down period afforded an employee to prevent heat illness”


Exemptions

• Wage Order section 1 • Executive

• Administrative

• Professional • Computer professional ($40.38 per hour)

• Outside sales

• [Inside sales – Wage orders 4 and 7]

• Different from FLSA • Quantitative Test

• 2x California minimum wage ($9.00 per hour as of 7/1/14, or at least $37,440 per year)

• No Highly Compensated Exemption

• No express authority for Combination Exemption


Paying Employees


Wage Statements

• Labor Code section 226

• Every employer shall • Semi-monthly or at the time of each payment of wages

• Furnish, either as a detachable part of the check, draft, or voucher, or separately when wages are paid by personal check or cash

• An • Accurate

• Itemized

• Statement

• In writing

• Showing →


Wage Statements

• Gross wages earned

• Total hours worked by the employee (unless the employee is exempt)

• The number of piece-rate units earned and any applicable piece rate (if paid on a piece-rate basis)

• All deductions

• Net wages earned

• The inclusive dates of the period for which the employee is paid

• The name of the employee and the last four digits of the employee’s SSN or an employee identification number

• The name and address of the legal entity that is the employer

• All applicable hourly rates in effect during the pay period and the corresponding number of hours worked at each rate by the employee


Paychecks


• All wages … earned by any person in any employment are due and payable • Twice during each calendar month

• On days designated in advance by the employer as regular paydays

• Labor performed between the 1st and 15th days must be paid for between the 16th and 26th of the month during which the labor was performed

• Labor performed between the 16th and the last day must be paid for between the 1st and the 10th day of the following month

• Overtime must be paid no later than the next regular payroll period

• These requirements can be satisfied by the payment of wages for weekly, biweekly, or semi-monthly payroll if the wages are paid not more than seven calendar days following the close of the payroll period


Paychecks

• Salaries of employees who qualify for the executive, administrative, or professional employees exemptions may be paid once a month on or before the 26th day of the month in which the labor was performed if the entire month’s salary is paid at that time


Paychecks


• Requires that wages must be payable by an order, check draft, note, memorandum, etc. that is negotiable and payable • In cash

• On demand

• Without discount

• At some established place of business in the state

• The name and address of which must appear on the instrument

• At the time of its issuance, and for a reasonable time thereafter (at least 30 days), the maker or drawer has sufficient funds for its payment


Waiting Time Penalties

• Labor Code section 203 • “If an employer willfully fails to pay, without abatement or reduction … any wages of

an employee who is discharged or who quits, the wages of the employee shall continue as a penalty from the due date thereof at the same rate until paid or until an action therefore is commenced; but the wages shall not continue for more than 30 days.”

• If the employee earns $20 per hour and worked 8 hours per day, possible penalty is:

$20 x 8 x 30 = $4,800


Etcetera…


Wage Theft Prevention Act Notice

• California employers are required to provide newly hired non-exempt employees with the following information in writing, and will be required to provide notice in writing within 7 days if any of the information changes (unless the new information is shown on the employee’s wage statement) • The rate or rates of pay and basis thereof, whether paid by the hour, shift, day, week, salary,

piece, commission, or otherwise, including any rates for overtime, as applicable

• Allowances, if any, claimed as part of the minimum wage, including meal or lodging allowances

• The regular payday designated by the employer in accordance with the requirements of this code

• The name of the employer, including any “doing business as” names used by the employer

• The physical address of the employer’s main office or principal place of business, and a mailing address, if different

• The telephone number of the employer

• The name, address, and telephone number of the employer’s workers’ compensation insurance carrier

• Any other information the Labor Commissioner deems material and necessary


Wage Theft Prevention Act Notice


Vacation Pay

• Labor Code section 227.3 • “whenever a contract of employment or employer policy provides for paid vacations,

and an employee is terminated without having taken off his vested vacation time, all vested vacation shall be paid to him as wages at his final rate”

• No “use it or lose it”

• Cap on vacation is permissible

• Vacation accrues daily


California Seating Requirements

• Wage Orders require: • All working employees shall be provided with suitable seats when the nature of the

work reasonably permits the use of seats

• Spate of seating claims against retail stores, retail banking, and other industries where employees traditionally stand

• Courts have confirmed the validity of seating claims


Written Commission Agreements

• Where an employee renders services in California and is compensated by commission, the employer must provide the employee: • A signed, written contract that

• Sets forth the method by which the commissions will be • computed, and

• paid

• Continues until a new contract or termination


Other California-Specific Laws

• California Pregnancy Disability Leave

• California Family Rights Act

• California Paid Family Leave

• Broader non-discrimination provisions • Marital status

• Sexual orientation

• Gender identity


Wage and Hour Exposure

41

Assumptions California Employees 500 Hourly Rate $15.00 Overtime Rate $22.50 Missed Meal/Rest Breaks 1 each per week Unpaid Overtime 1 hour per week

Meal Period Penalties $1,560,000 Rest Period Penalties $1,560,000 Unpaid Overtime $2,340,000 Wage Statement Penalties $2,000,000 Waiting Time Penalties $1,800,000 TOTAL $9,260,000


Thank You!

Julie Capell Partner

Los Angeles

[email protected]

Jason Campbell Associate

Los Angeles

[email protected]

Documents

Crazy Californians: Employment Laws Like You’ve Never Seen · • California overtime laws apply to non-resident employees when they perform work for California-based employers