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Archive for the ‘Wage & Hour’ Category

A “Day of Rest” Clarified in California

Posted on: May 25th, 2017

By: Matthew Jones

Over the years there has been uncertainty regarding California Labor Code’s regulations regarding a day of rest. The applicable Labor Code sections are 552, which prohibits an employer from “caus[ing] [its] employees to work more than six days in seven”, and 556, which states that section 552 does not apply “when the total hours of employment do not exceed 30 hours in any week or six hours in any one day thereof.”

In the case of Mendoza v. Nordstrom, Inc., the Ninth Circuit asked the California Supreme Court to resolve three outstanding issues regarding the interpretation of those two Labor Code sections.  Mr. Mendoza sued Nordstrom, alleging it failed to provide him statutorily guaranteed days of rest.

The Supreme Court first addressed whether the day of rest protection applies on a rolling basis or a week-by-week basis. Under the weekly interpretation, the calendar is divided into seven-day blocks and there is guaranteed at least one day of rest in each block. Under the rolling interpretation, the day of rest is provided if the employee worked the preceding six days. During its analysis, the Court evaluated the text of the statutes and its history, as well as the Industrial Welfare Commission Wage Orders. Most importantly, the Court pointed out that the Legislature defined a “workweek” as any seven consecutive days, starting with the same calendar day each week. The workweek is determined by each individual employer.  Through its analysis, the Court ruled the day of rest provision should be interpreted on a weekly basis, thereby providing an employee at least one day of rest during each workweek.

The Court then addressed the exception to the day of rest issue regarding the instance an employee works six hours or less in any one day during the week. The Court analyzed the Legislature’s related provisions, as well as the applicability of the competing interpretations of Labor Code section 556. In response, the Court concluded this exception only applies if every daily shift that workweek involves six hours or less of work.

The final issue the Court evaluated is the meaning of “cause”. This term comes into effect as part of Labor Code section 552, which states an employer cannot “cause [its] employees to work more than six days in seven.” After evaluating the proposed definitions from both parties, the Court ruled that an employer has an obligation to apprise employees of their entitlement to a day of rest and must remain neutral regarding the employee’s exercise of that right. Simply put, the employer cannot encourage employees to forgo the day of rest or conceal the employee’s right to rest. However, the employer is not liable if the employee chooses to work a seventh day.

For any questions, please contact Matthew Jones at [email protected].

Comp Time: Coming Soon to a Workplace Near You?

Posted on: May 12th, 2017

By: Paul H. Derrick

For the first time in many decades, private sector employers are a step closer to being able to provide compensatory time off (“comp time”) to their employees instead of paying monetary wages for overtime. Under current law, only government workers in the public sector can substitute comp time for overtime pay.

The Working Families Flexibility Act of 2017 has now passed the House, although no Democrats voted in favor of it. The bill next moves to the Senate, where some Democrats have threatened a filibuster.  Supporters point to the flexibility that comp time provides, particularly for working families. Most of the opposition to the measure appears to focus on the claim that allowing overtime work to be compensated with time off, rather than dollars, will unfairly reduce employees’ wages.

Here are some key points of the bill, as it now stands:

  1. If the worker and employer both voluntarily agree, in writing, or if it is contained in a collective bargaining agreement, the employer can provide comp time at the rate of one and a half hours for every hour of overtime that the employee works. The agreement must be entered into before the overtime work is performed.
  2. Employers may not try to coerce workers into choosing comp time and may not retaliate against workers based on their decision to elect comp time. A comp time arrangement must be entered into “knowingly and voluntarily” by the employee and cannot be imposed as a take-it-or-leave-it “condition of employment.”
  3. Employees are not eligible for comp time until they have worked at least 1,000 hours of continuous employment in the preceding 12 months.
  4. When an employee asks to use accrued comp time, the employer must grant the request “within a reasonable period,” unless doing so would “unduly disrupt the operations of the employer.”
  5. Comp time is limited to a maximum of 160 hours each year for each employee who elects it. All overtime hours in excess of that amount must be paid as monetary wages at regular overtime rates. Also, any comp time not taken by the end of the year would be paid out by the employer at the higher of the employee’s regular rate when the comp time was accrued or the employee’s current regular rate. The payout would have to be made no later than 31 days after the end of the “comp time year.” If employment terminates voluntarily or involuntarily, the employer is required to pay out all accrued comp time to the employee.
  6. The worker can always choose to take overtime pay instead of comp time by giving the employer 30 days’ written notice that the comp time arrangement is being revoked. Likewise, the employer can discontinue the comp time arrangement by providing 30 days’ written notice to the worker, and it can go ahead and pay out any accrued comp time in excess of 80 hours at any time after giving 30 days’ written notice.
  7. Employers who violate the comp time provisions of the law would be liable for up to the amount of accrued comp time plus an equal amount as liquidated damages.

We will continue to keep you apprised of developments in this area as they occur. In the meantime, if you have any questions or would like more information, please contact Paul Derrick at [email protected].

Be on the Lookout for Minimum Wage Increases in 2017

Posted on: December 20th, 2016

 By: Brad Adler and Agne Krutules

As we enter into 2017, employers should remember that, while the federal minimum wage remains at $7.25, many state and local jurisdictions have passed legislation that will increase their respective minimum wage in 2017.

Below is a list of the states and some of the major local governments that will be increasing their minimum wage in 2017. Of course, if you have employees working within any of these jurisdictions, it is important that you pay them in accordance with the state or local law.

Jurisdiction Current Min. Wage Planned Min. Wage Effective Date
Alaska $9.75 $9.80 January 1, 2017
Arizona $8.05 $10.00 January 1, 2017
City of Flagstaff, AZ $8.05 $12.00 January 1, 2017
Arkansas $8.00 $8.50 January 1, 2017
California* $10.00 $10.50 January 1, 2017*
Berkeley, CA $12.53 $13.75 October 1, 2017
Cupertino, CA $10.00 $12.00 January 1, 2017
Emeryville, CA $13.00 $14.00 July 1, 2017
Los Altos, CA $10.00 $10.50 January 1, 2017
Los Angeles, CA $10.50 $12.00 July 1, 2017
Los Angeles County, CA $10.50 $12.00 July 1, 2017
Mountain View, CA $11.00 $13.00 January 1, 2017
Oakland, CA $12.55 $12.86 January 1, 2017
Palo Alto, CA $11.00 $12.00 January 1, 2017
Pasadena, CA** $10.00 $10.50 July 1, 2017
Richmond, CA $11.52 $12.30 January 1, 2017
San Diego, CA $10.50 $11.50 January 1, 2017
San Francisco, CA $13.00 $14.00 July 1, 2017
San Jose, CA $10.30 $10.50 January 1, 2017
San Mateo, CA $10.00 $12.00 January 1, 2017
Santa Clara, CA $11.00 $11.10 January 1, 2017
Santa Monica, CA $10.50 $12.00 July 1, 2017
Sunnyvale, CA $11.00 $13.00 January 1, 2017
Colorado $8.31 $9.30 January 1, 2017
Connecticut $9.60 $10.10 January 1, 2017
District of Columbia $11.50 $12.50 July 1, 2017
 Florida $8.05 $8.10 January 1, 2017
Hawaii $8.50 $9.25 January 1, 2017
Chicago, IL $10.50 $11.00 July 1, 2017
Cook County, IL $8.25 $10.00 July 1, 2017
Johnson County, IA $9.15 $10.10 January 1, 2017
Polk County, IA $7.25 $8.75 April 1, 2017
Wapello County, IA $7.25 $8.20 January 1, 2017
Maine $7.50 $9.00 January 1, 2017
Portland, ME $10.10 $10.68 January 1, 2017
Maryland $8.75 $9.25 July 1, 2017
Montgomery County, MD $10.75 $11.50 July 1, 2017
Prince George County, MD $10.75 $11.50 October 1, 2017
Massachusetts $10.00 $11.00 January 1, 2017
Michigan $8.50 $8.90 January 1, 2017
Missouri $7.65 $7.70 January 1, 2017
Kansas City, MO*** $7.65 $9.82 January 1, 2017
Montana $8.05 $8.15 January 1, 2017
New Jersey $8.38 $8.44 January 1, 2017
Albuquerque, NM**** $8.75 $8.80 January 1, 2017
Bernalillo County, NM $8.65 $8.70 January 1, 2017
Las Cruces, NM $8.40 $9.20 January 1, 2017
New York***** $9.00 $9.70 December 31, 2016
New York City, NY****** $9.00 $11.00 December 31, 2016
Nassau, Suffolk, and Westchester Counties, NY $9.00 $10.00 December 31, 2016
Ohio $8.10 $8.15 January 1, 2017
Oregon******* $9.75 $10.25 July 1, 2017
South Dakota $8.55 $8.65 January 1, 2017
Vermont $9.60 $10.00 January 1, 2017
Washington******** $9.47 $11.00 January 1, 2017

 

* Although the statewide minimum wage will increase from $10.00 to $10.50 as of January 1, 2017, employers with 25 or fewer employees will receive a one-year reprieve and will not face the statewide increase in 2017.

** In Pasadena, employers with 25 or fewer employees will face a minimum wage increase to $10.50 as of July 1, 2017, while larger employers will face an increase from $10.50 to $12.00 as of the same date.

*** The Kansas City minimum wage was slated to increase to $9.82 on January 1, 2017, but is stalled due to pending court challenges. The Missouri Supreme Court is expected to soon rule on the issue. The same holds true for the St. Louis minimum wage, which was scheduled to increase to $10.00 as of January 1, 2017.

**** However, if the employer provides healthcare and/or childcare benefits to the employee during any pay period and pays an amount for these benefits equal to or in excess of an annualized cost of $2,500, the minimum wage will increase from $7.75 to $7.80.

***** For fast-food employers outside of New York City, the minimum wage will increase from $9.75 to $10.75 on December 31, 2016.

****** For businesses with less than 11 employees, the minimum wage will increase from $9.00 to $10.50. For fast-food establishments in New York City, the minimum wage will increase from $10.50 to $12.00 on December 31, 2016.

******* For employers within the state’s Urban Growth Boundary, the minimum wage increase on July 1, 2017 will be from $9.75 to $11.25. For employers in frontier counties, the minimum wage increase on July 1, 2017 will be from $9.50 to $10.00 per hour.

******** Seattle employers with 500 or more employees will see an increase in their minimum wage from $13.00 to $15.00 on January 1, 2017. The SeaTac minimum wage applicable for hospitality and transportation workers will increase from $15.24 to $15.35 as of January 1, 2017. In Tacoma, the minimum wage will increase from $10.35 to $11.15.

The minimum wage for federal contractors covered by those regulations and Executive Order 13658 (primarily those with Davis-Bacon Act and Service Contract Act contracts) will increase from $10.15 to $10.20 effective January 1, 2017.

States File Lawsuit to Block New Department of Labor Overtime Rules

Posted on: September 22nd, 2016

The word "overtime" seen through a magnifying glass

By: Timothy Holdsworth

On September 20, twenty-one (21) states filed a challenge to the Department of Labor’s (“DOL”) increases to the minimum salary included in the final rules amending the Fair Labor Standard Act’s (“FLSA”) White Collar Exemptions, released in May.

As you may recall, these changes increase the minimum salary for individuals paid under the FLSA’s “white collar” exemptions to $47,474 per year, with an effective date of December 1, 2016.

In the complaint, the states argue that the new overtime rules unconstitutionally infringe on their sovereign power to dictate the pay, hours, and compensation of state employees, and, therefore, how the states allocate their budgets.

The states also argue that the DOL exceeded its Congressional authority under the FLSA by enacting changes to the white collar exemption’s salary level, highly compensated employee minimum salary level, and automatically updating these salary levels without going through notice-and-comment rulemaking.

As we have previously discussed, challenges to the DOL’s final rule were expected. However, it is unclear whether this challenge will substantially change or delay the enforcement date of December 1, 2016. As a result, we strongly encourage our clients to continue reviewing all of their salaried exempt positions to determine what changes may need to be made to be compliant with the final rule. In the meantime, we will keep you updated on any major developments in this case.

Amendment to Labor Code Section 226 Itemized Wage Statement Requirements Provides Welcome Relief – and some hope – to California’s High Tech Industry

Posted on: August 22nd, 2016

Low angle view of male hand signing contract or subscription form with a pen on a rustic wooden desk.

By: Dennis Strazulo

On July 22, 2016, Governor Brown approved Assembly Bill 2535 (AB 2535) to amend California Labor Code section 226. The amendment provides much-needed narrowing of the statute’s current requirement that an employer include hours worked on itemized wage statements for all employees except those whose compensation is solely based on salary and who are exempt from payment of overtime.

A strict reading of LC section 226, as currently written, requires all exempt California employees earning a commission or a bonus to keep track of their time. Unfortunately – nothing new in the clash between employers and the many overbroad employment laws they endure in California – this requirement does not track with the common and fair practices of most California employers. The long-standing practice of California employers has been to track hours of only non-exempt, hourly employees – not exempt employees paid by salary. However, prior to AB2535, the wording of Labor Code section 226 left employers exposed to liability for penalties if a salaried-exempt employee received so much as a holiday bonus and the employee’s itemized wage statement did not reflect hours worked.

Under the amendment, only nonexempt employees and others who are paid according to hours worked are required to have their hours logged on their wage statements. AB 2535 amends Labor Code section 226 by adding section (j) which reads, in part:

“(j) An itemized wage statement furnished by an employer pursuant to subdivision (a) shall not be required to show total hours worked by the employee if any of the following apply:
(1) The employee’s compensation is solely based on salary and the employee is exempt from payment of overtime under subdivision (a) of Section 515 or any applicable order of the Industrial Welfare Commission.
(2) The employee is exempt from the payment of minimum wage and overtime under any of the following:
(A) The exemption for persons employed in an executive, administrative, or professional capacity provided in any applicable order of the Industrial Welfare Commission.
(B) The exemption for outside salespersons provided in any applicable order of the Industrial Welfare Commission.
(C) The overtime exemption for computer software professionals paid on a salaried basis provided in Section 515.5…”

AB 2535 casts a wide net to adequately protect the already equitable practices of most business in California by confirming exempt employees do not have to track their time. Despite this amendment, however, thousands of high tech employees in California remain technically misclassified as exempt from overtime under state and federal law, notwithstanding their six-figure salaries. These individuals are required to clock in and out, and take timely meal and rest breaks, pursuant to antiquated laws. Silicon Valley employers, in particular, can be hopeful Assembly Bill 2525 is a step in the right direction toward modifying wage and hour exemption laws to bring them in line with current business models. At the very least, however, this amendment to Labor Code section 226 should prevent bogging down the already impacted California labor board by aligning the law with otherwise just business practices of California employers.