CLOSE X
RSS Feed LinkedIn Instagram Twitter Facebook
Search:
FMG Law Blog Line

Posts Tagged ‘minimum wage’

California’s New Independent Contractor Test

Posted on: July 11th, 2018

By: Christine Lee

On April 30, 2018, the California Supreme Court issued a landmark decision in Dynamex Operations West, Inc. v. Superior Court, No. S222732, in which the Court adopted an extremely broad view of workers who will be deemed “employees” as opposed to “independent contractors” for purposes of claims alleging violations of California’s Wage Orders.  This decision will undoubtedly lead to increased litigation challenging classification of workers across the state as employers will now have a much higher burden to defeat such claims.

Under the new “ABC” test set forth in Dynamex, a worker will be presumed to be an employee unless the hiring entity proves all of the following:

(A) The worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract and in fact; and

(B) The worker performs work that is outside the usual course of the hiring entity’s business; and

(C) The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work he or she performed for the principal.

An employer’s failure to establish any one of the three factors will result in a determination that the worker is an employee as a matter of law.  The Court’s ruling specifically applies to claims asserted under the IWC Wage Orders, which impose obligations related to minimum wages, overtime, and required meal and rest breaks. It is presently unclear how the case applies to claims arising under other statutes.

We encourage all companies doing business in California to immediately evaluate classification of outside contractors or vendors.  Under Dynamex, the vast majority of persons performing services for a company will be considered employees if they are performing work within the usual course of the company’s business, even if those individuals act autonomously and are free from control or direction of the hiring entity.

Therefore, we strongly encourage employers to consult with counsel to evaluate and consider reclassifying independent contractors or risk finding themselves on the losing end of an expensive and painful misclassification case.

If you have any questions or would like more information, please contact Christine Lee at [email protected].

Congress Steps Into Tip-Pooling Fight

Posted on: March 23rd, 2018

By: Timothy J. Holdsworth

We wrote previously about the background on the tip-pooling regulations and the DOL’s Notice of Proposed Rulemaking (“NPR”) that would allow tip-pooling arrangements that include employees who do not regularly and customarily receive tips under the Fair Labor Standards Act (“FLSA”). The DOL received a considerable number of comments on the NPR, some of which worried that the NPR would allow employers to keep their workers’ tips.

Buried in the spending bill Congress passed (pages 2025-2027 if you are dying to read it) is a rider that will affect the current U.S. Department of Labor (“DOL”) laws on tips. The bill proposes language that prohibits an employer, including managers and supervisors, from keeping tips received by employees. This prohibition would apply regardless of whether the employer takes the tip credit. The rider also would make employers liable to employees for any tips unlawfully kept by the employer.

If the bill is signed by President Trump, these may substantially affect any tip-pooling arrangements employers planned to enact under the NPR. It is also unclear if the DOL may try to revise the NPR in any way.

The provision would also subject employers to new liability under the FLSA. Just last year, the Eleventh Circuit (Alabama, Florida, and Georgia) in Malivuk v. Ameripark, LLC held that the FLSA does not authorize an employee to sue her employer solely for an employer allegedly withholding her tips when the employee does not allege that she received less than the minimum wage or less than what she was entitled to for overtime work. The rider creates a new cause of action solely for withheld tips.

If you have any questions about what these potential changes may mean for your business or would like more information on navigating wage and hour laws, please contact Tim Holdsworth at [email protected].

Florida Appellate Court Invalidates Local Minimum Wage Law

Posted on: February 9th, 2018

By: Melissa A. Santalone

A recent decision by Florida’s Third District Court of Appeal invalidated Miami Beach’s local minimum wage law, holding that a state statute preempted the local ordinance.  In 2016, the City of Miami Beach enacted a local minimum wage hike, which would have gone into effect January 1 of this year and would have raised the local minimum wage to $10.31 per hour.  In City of Miami Beach v. Fla. Retail Federation, Inc., the Third DCA analyzed a the ordinance under both a state statute and an amendment to the Florida Constitution.    The state statute, Fla. Stat. § 218.077, enacted originally in 2003, provided, in relevant part, that “a political subdivision may not establish, mandate, or otherwise require an employer to pay a minimum wage other than a state or federal minimum wage.”  In 2004, Florida voters passed a constitutional amendment, brought by citizens’ initiative, that established a higher minimum wage across the state than that provided by the federal minimum wage law.  It also provided that the amendment “shall not be construed to preempt or otherwise limit the authority of the state legislature or  any other public body to adopt or enforce any other law, regulation, requirement, policy or standard that provides for payment of higher or supplemental wages or benefits.”  The Third DCA found that the constitutional amendment did not specifically nullify or limit § 218.077’s preemption provision, and therefore, Miami Beach’s local minimum wage ordinance was invalid.  The City of Miami Beach plans to appeal the decision to the Florida Supreme Court.

Florida employers should look out for the Supreme Court’s ultimate decision on this case, but for now, they can rest assured that there will be no enforceable local minimum wage laws enacted to adhere to in the interim.  Employers in other states disputing local minimum wage ordinances may want to seek advice on preemption statutes in their home venues in light of the approach taken by employer coalitions in Florida.

If you have any questions or would like more information, please contact Melissa Santalone at [email protected].

Navigating New California Employment Laws

Posted on: February 1st, 2018

By: David Daniels

Are you and your clients doing business in California prepared for the new employment laws that take effect in 2018? If you represent employers in the state of California, these laws may very well affect the daily operations of their business. Unless specified, all new legislation outlined below went into effect on January 1, 2018.  As explained more fully below, I strongly encourage you to review your client’s employee handbooks and job applications to ensure compliance with the new 2018 employment statutes.

 

  • Stop asking about salary history –  AB 168 bars employers from asking job applicants about their previous salary. The legislation’s goal is to narrow the gender gap by preventing employers from basing offers on prior salary and thus, presumably, perpetuating historical discrimination. This will also remove the perceived gap in negotiating power between an employers and employees who must disclose their prior salary. Employers should ensure that their job applications don’t seek prohibited information and that those interviewing applicants know not to ask these questions.  I encourage all employers to review their written and/or on-line employment contracts to determine if the applicant is requested to state their salary history in the “Previous Experience” sections of the applications.  It is common practice to ask the applicant about their salary history in these sections of the application.  This practice must stop before January 1, 2018 in order to be compliant with California law.

 

  • More employers must offer parenting leave – SB 63, officially titled the Parental Leave Act, requires employers with between 20 and 49 employees to offer parenting leave that mirrors the Family Medical Leave Act. The new Act allows employees who work for a covered employer to take 12-weeks of unpaid, job-protected leave if they have worked a minimum of 1,250 hours in the 12-months prior to taking leave.  Employees can take leave only for the purpose of bonding with a newborn child, adopted child or foster child within a year of the birth or placement. Covered employers will also need to maintain health coverage under the same terms as an active employee. The Act also prohibits discrimination and retaliation against an employee for taking parental leave. The Parental Leave Act does not require employers to pay any portion of the leave but requires that employees be able to use accrued sick and vacation time. Employees can apply to have a portion of the parental leave paid for through the state’s Paid Family Leave program.  Please note that, San Francisco requires some employers to pay a remaining portion of parental leave.

 

  • Expanded harassment training – California requires at least biannual harassment training for supervisors in companies with 50 or more employees. Having given a dozen sessions of the  training in the last month, I can assure you that there’s no shortage of material to talk about. But as of January 1, 2018, SB 396 requires that the training include information on gender identity, gender expression, and sexual orientation. If your handbook doesn’t specifically prohibit discrimination and harassment on those bases, you’re overdue for a revision.

 

  • Ban the box – Following the leads of San Francisco and Los Angeles, AB 1008 prohibits employers with five or more employees from:
    • Asking on employment applications about criminal convictions;
    • Asking applicants about criminal convictions before making a conditional offer of employment;
    • When conducting background checks on applicants, considering, distributing, or disseminating information about prior arrests not leading to conviction, participation in diversion programs, or convictions that have been sealed, dismissed, expunged, or otherwise nullified.

 

Employers who wish to rely on criminal conviction information to withdraw a conditional job offer must notify the applicant of their preliminary decision, give them a copy of the report (if any), explain the applicants right to respond, give them at least five business days to do so, and then wait five more business days to decide when an applicant contests the decision. There are exceptions for employers who operate health facilities hiring employees who will have regular access to patients or drugs.

 

  • Minimum Wage Increases – On January 1, 2018, the California state minimum wage goes up to $11.00 per hour for businesses with 26 or more employees and $10.50 per hour for smaller companies.

 

  • Worksite Immigration Enforcement and Protections, AB 450 – The Immigrant Worker Protection Act shields workers from immigration enforcement while on the job. The legislation prohibits employers from providing federal immigration enforcement agents access to a business without a warrant and requires employers to notify employees of Form I-9 inspections performed by federal immigration enforcement officials.

 

  • Gender Identification: Female, Male or Nonbinary, SB 179 – This new law, which goes into effect on September 1, 2018, allows California residents to choose from three equally recognized gender options — female, male or nonbinary — on state-issued identification cards, birth certificates and driver’s licenses.

 

  • Employment Discrimination: Gender Neutral Language, AB 1556 – This law is a revision to California’s Fair Employment and Housing Act which deletes gender-specific personal pronouns in the state’s anti-discrimination, anti-harassment, pregnancy disability and family/ medical leave laws by changing “he” or “she,” for example, to “the person” or “the employee.”

 

  • LGBT Rights for Long-Term Care Facility Residents, SB 219 – Called the Lesbian, Gay, Bisexual, and Transgender (LGBT) Long-Term Care Facility Residents’ Bill of Rights. The new law will strengthen anti-discrimination protections for LGBT individuals living in long-term care facilities, making it unlawful to willfully and repeatedly fail to use a resident’s preferred name or pronoun or to deny admission to a long-term care facility because of gender identity or sexual orientation. You must post a notice about the protections and follow recordkeeping requirements.

 

  • Human Trafficking, AB 260 – This new law extends the list of businesses that must post human trafficking information notices to include hotels, motels and bed and breakfast inns. In addition, SB 225 requires the human trafficking notice include a new number for those who wish to send text messages. Businesses are not required to post the updated notice until on or after January 1, 2019.

 

  • Anti-Discrimination Protections for Veterans, AB 1710 – This law will expand the current protections for members of the armed services. AB 1710 prohibits discrimination in all “terms, conditions, or privileges” of employment.

 

  • Health Facilities: Whistleblower Protections, AB 1102 – increases the maximum fine for a violation of whistleblower protections in healthcare facilities from $20,000 to $75,000.

 

  • Harassment Prevention Training: Farm Labor Contractors, SB 295
    This bill requires sexual harassment prevention training for each agricultural employee provided in the language understood by that employee in order to apply for or renew a license. The bill also requires an employer provide to the commissioner the total number of agricultural employees trained in sexual harassment prevention in the calendar year prior to the month the renewal application is submitted.

 

  • Labor Law Enforcement, Retaliation, SB 306 – This allows the Labor Commissioner to investigate an employer with or without a complaint from an employee as long as the Labor Commissioner suspects retaliation or discrimination against a worker.

 

  • Increased Liability for Construction Contractors, AB 1701 – This law pertains to private construction contracts entered into after January 1, 2018. It imposes liability onto the general contractor for any unpaid wages, benefits or contributions that a subcontractor owes to a laborer who performed work under the contract.

 

Please feel free to contact me at [email protected] should you wish to further discuss any of these new laws and/or how to best change your policies and practices to ensure compliance with California law.

Commission Wages Are Only Attributable to the Pay Period In Which They Are Paid to Satisfy California Compensation Requirements

Posted on: July 17th, 2014

By: Sandra K. McIntyre

This week, in Peabody v. Time Warner Cable, the California Supreme court concluded that an employer satisfies the minimum earnings prong of the commissioned employee exemption only in those pay periods in which it actually pays the required minimum earnings and an employer may not attribute commission wages paid in one pay period to other pay periods in order to satisfy California’s compensation requirements.

In Peabody, a commissioned account executive selling advertising on cable television channels received biweekly paychecks in the amount of $769.23 for hourly wages (the equivalent of $9.61 per hour assuming a 40 hour work week) and the last paycheck of each month also included her commission wages earned during the month.[1]  Peabody regularly worked 45 to 48 hours per week and was paid no overtime, as Time Warner claimed that she fell within California’s “commissioned employee” exemption and was not entitled to overtime compensation.  (Cal. Code Regs., tit.8 §11040, subd. 3(D).)  After Peabody stopped working for Time Warner, she brought suit alleging failure to pay minimum wage,  failure to pay overtime, paystub violations, and waiting time penalties .

Time Warner argued in determining whether the commissioned employee exemption applied, Peabody’s commission wages should be attributed not to just the final biweekly pay period in which they were paid, but instead to the corresponding weeks of the monthly period in which they were earned.  In which case, Peabody’s compensation would have satisfied the exemption’s minimum earnings prong and would also necessarily mean Peabody’s compensation was at all times higher than the applicable minimum wage.

The court held that Labor Code section 204(a) requires that all wages, including commissions, must be paid no less frequently than semimonthly and that commissions are owed only when they have been earned, even if it is on a monthly , quarterly, or less frequent basis.  They further held that in determining whether the commissioned employee exemption is applicable and/or whether the minimum earnings prong is satisfied depends on the amount of wages actually paid in a pay period and that an employer may not attribute wages paid in one pay period to a prior pay period to cure a shortfall.

 


[1] Time Warner’s commission plan which provided that an account executive earned a commission only upon the occurrence of three events (1) procurement of the order; (2) broadcast of the advertising; and (3) collection of the revenue from the client and Peabody’s commission wages had been paid in accordance with the plan.