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FMG Law Blog Line

Posts Tagged ‘#Employment’

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

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.

NLRB Reverses Standard for Multi-Employer Bargaining Units

Posted on: July 19th, 2016

By: Timothy Holdsworth

Once again, the NLRB has overturned precedent in their quest to dramatically expand employer liability.  For over a decade, the NLRB has held that multi-employer bargaining units that include temporary employees from a staffing employer (“supplier employer”) and regular employees of a company that jointly employs temporary workers (“user employer”) require the consent of both employers.  Last week, in Miller & Anderson, the NLRB overturned that precedent by ruling that a union may now organize this type of mixed-employee unit without employer consent.  Instead, the employees need only share a community of interest.  In doing so, the NLRB returned to the union-friendly standard from M.B. Sturgis, Inc., 331 NLRB 1298 (2000).

The standard creates numerous problems.  Most importantly, a user employer will have to bargain with a mixed-employee unit even when the majority of its regular employees vote against unionization.  In addition, the rule would also force supplier employers to bargain with unions that represent full time workers of user employers with which the supplier employer has absolutely no employment relationship.

In a previous blog, we discussed how the NLRB in Browning-Ferris reversed precedent to greatly expand its standard for determining whether an employer is a “joint employer,” finding that employers may now be joint employers if they have even the potential to control working conditions.  In light of that ruling, Miller & Anderson takes on greater meaning as companies will more likely be found to be joint employers, thereby creating the types of multi-employer bargaining unit problems discussed above.

Employers should examine business relationships where they have authority to exercise control over employees, and therefore could be found to be joint employers of some of their workforce.  As Board Member Miscimarra has noted regarding joint employment, Browning-Ferris “has already created an analytical grab bag from which any scrap of evidence regarding indirect control or incidental collaboration may result in joint employer status.”

Supreme Court Slams the Door on Homecare Employers

Posted on: July 15th, 2016

By:  Agne Krutules

Much to the dismay of employers who employ home healthcare workers, on June 27, 2016, the Supreme Court declined to hear Home Care Association of America v. Weil, a case challenging the Department of Labor (DOL) regulations that entitle home care workers employed by third party employers to overtime for all hours worked over forty in a workweek.  In short, this means that the Department of Labor’s final regulations extending overtime protections to nearly all home healthcare workers who are not self-employed is final, unless Congress steps in with intervening legislation.

The legal saga began on October 23, 2013, when the DOL published a new rule, extending the Fair Labor Standards Act (FLSA) protections to home care workers who are employed by companies (rather than employed directly with the individual needing care).  This was a distinct change to the previous interpretation of the Fair Labor Standards Act home care exemption, which provided that all home care workers were exempt from overtime laws.

Home care industry associations challenged the new rule and won in a federal district court.  However, on October 13, 2015, U.S. Court of Appeals for the District of Columbia Circuit reversed the district court’s ruling, and reinstated the DOL’s expansion of coverage.  The Supreme Court’s refusal to grant certiorari in this case means that the Court of Appeals decision in this case is, at least for now, the final word.

EEOC Continues to Push For Protection on the Basis of Sexual Orientation

Posted on: July 14th, 2016

By:  Amanda Hall

We’ve written on the EEOC’s push to include sexual orientation discrimination within the ambit of Title VII before (July 24, 2015).  Last summer, the EEOC determined that sexual orientation is a concept that “cannot be defined or understood without reference to sex” and that it is covered by Title VII because “it necessarily involves discrimination based on gender stereotypes,” which the Supreme Court held to be unlawful in Price Waterhouse v. Hopkins, 490 U.S. 228 (1989).  See Baldwin v. Foxx, Appeal No. 0120133080 (July 15, 2015).

Since then, the EEOC has continued to advance this position, most recently entering into a consent decree to resolve one of the first two cases it filed alleging that sexual orientation discrimination violates Title VII.  As part of the June 23, 2016, consent decree, the EEOC is requiring the employer at issue, Pallet Cos. d/b/a IFCO Systems, to institute company-wide LGBT training to its managers.  The underlying case involved the EEOC suing on behalf of a Lesbian forklift operator at IFCO’s Baltimore facility.  The allegations in the case included claims of daily harassment as a result of the employee’s sexual orientation, including comments such as “I want you to turn back into a woman,” “I want you to like men again,” and “[a]re you a girl or a man?”

At present, the federal courts (in contrast to the EEOC) that have addressed this issue have differentiated between sexual orientation discrimination (which they have found is not covered under Title VII) and discrimination based upon sex stereotyping (which is covered under Title VII).  It remains to be seen, however, whether the EEOC’s continued determination to place sexual orientation discrimination within the realm of Title VII will ultimately erase this line and eliminate this distinction.

Seventh Circuit Declares Class Action Waivers Unenforceable, Creates Circuit Split

Posted on: June 2nd, 2016

By:  Tim Holdsworth

Last week, the U.S. Court of Appeals for the Seventh Circuit bucked the appellate trend and held that arbitration agreements containing class and collective action waivers violate the National Labor Relations Act and are unenforceable under the Federal Arbitration Act. Every other circuit court to consider this question, including the Fifth, Second, Eighth, Ninth, and Eleventh Circuits, has held otherwise.

In Lewis v. Epic Sys. Corp., a health care software company required some employees to agree to waive their right to participate in a class or collective action for wage and hour claims. Instead, the employees had to bring these claims through individual arbitration. An employee subject to this agreement later sued the company in federal court for overtime violations under the Fair Labor Standards Act in a collective action. The company moved to dismiss the claim and compel individual arbitration. The district court denied the company’s motion, and the company appealed.

On appeal, the company argued that the arbitration agreements are enforceable because the Federal Arbitration Act creates a preference for arbitration, and that this preference overrides any rejection of the agreements by the National Labor Relations Act. Rejecting the other circuit courts and the U.S. Supreme Court’s approval of such waivers in AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011), the Seventh Circuit held that there was no conflict between the FAA and the NLRA.

This newly-created split among circuits could lead to a Supreme Court review. However, at the moment, class action waivers appear to be unenforceable in the states of Illinois, Indiana, and Wisconsin (states within the Seventh Circuit). Given this result, employers operating in these states should re-examine their arbitration agreements.