Wednesday, June 22, 2016

California Employers and How to Defend Wage and Hour Claims before the Division of Labor Standards and Enforcement

In California the Division of Labor Standards Enforcement (DLSE) adjudicates wage claims on behalf of workers who file claims for nonpayment of wages, overtime, or vacation pay, pursuant to California Labor Code sections 96 and 98. DLSE deputies hold informal conferences between employers and employees to resolve wage disputes. If a matter cannot be resolved at the informal conference, an administrative hearing is held to make a final determination on the matter.

An employee (plaintiff) alleging the non-payment of wages or other compensation by his or her employer (defendant), must file a claim (the DLSE Form 1, “Initial Report or Claim” form) with a local office of DLSE to initiate investigation of the claim by the Labor Commissioner.  The employee is asked to provide any time records the plaintiff kept of the hours and dates worked that support the claim, paychecks and pay stubs showing the wages paid during the claim period and dishonored (or “bounced”) paycheck(s) during the claim period.

However, under California law it is the employer’s legal responsibility to keep accurate employee time and payroll records, and to provide employees with itemized wage statements each time they are paid (or at least semimonthly).  In order to file a claim, employees are not required to keep their own time records or to have the documents above.

After the claim is reviewed by a Deputy Labor Commissioner (deputy), he or she will determine, based on the circumstances of the claim, how best to proceed. Within thirty (30) days of the filing of the complaint, the deputy shall notify the parties as to the specific action which will initially be taken regarding the claim. The possible actions include referral to a conference, referral to a hearing or dismissal of the claim.  In Southern California the vast majority of claims are sent to an informal conference first.

If a conference is held, the conference is supposed to be conducted informally and the parties are not supposed to be put under oath.  This is not always the case. In many cases the deputy will conduct the conference as if it is a mini hearing. Many employers make the mistake of believing that the conference is informal and they don’t need an attorney.  The truth is that in most instances if an employer begins to explain “informally” their position the deputy will expect the employer to know the labor laws and be able to explain how the laws do or do not apply to them.

The purpose of the conference is to determine if the claim can be resolved without a hearing.  Plaintiffs (employees) are not required to prove their case at the conference.  The parties should be prepared to talk with the deputy about the claim, including whether there are any witnesses.  However, the parties do not need to bring witnesses to the conference.  It is imperative that the employer bring any documents that support their position to the conference.  If the defendant employer makes payment of the claim, or any part of the claim, directly to the plaintiff, the plaintiff must notify the deputy. If the payment satisfies the claim in full, the case will be closed.

If the conference does not resolve the matter a hearing is set.  The parties will receive, either by mail or by personal service, a Notice of Hearing which will set the date, time and place of the hearing.  Although hearings are conducted in an informal setting, they are formal proceedings, as opposed to the conference. At the hearing the parties and witnesses testify under oath, and the proceedings are recorded.

Each party has the following basic rights at the hearing:
1. To be represented by an attorney or other party of his or her choosing.
2. To present evidence.
3. To testify in his or her own behalf.
4. To have his or her own witnesses testify.
5. To cross-examine the opposing party and witnesses.
6. To explain evidence offered in support of his or her position and to rebut evidence offered in   opposition.
7. To have a translator present, if necessary.

The hearing officer has sole authority and discretion for the conduct of the hearing and may:
1. Explain the issues and the meaning of terms not understood by the parties.
2. Set forth the order in which persons will testify, cross-examine and give rebuttal.
3. Assist parties in the cross-examination of the opposing party and witnesses.
4. Question parties and witnesses to obtain necessary facts.
5. Accept and consider testimony and documents offered by the parties or witnesses.
6. Take official notice of well-established matters of common knowledge and/or public records.
7. Ascertain whether there are stipulations by the parties that may be entered into the record.

An employer who intends to introduce business records into evidence must bring a person to the hearing who can explain how such records were prepared and be prepared to testify that the records are accurate and were prepared in the regular course of business. If available, the originals of all documents should be brought to the hearing plus two sets of copies.

The hearing officer is not bound by formal rules of evidence and therefore, has wide discretion in accepting evidence. He or she also has discretion in deciding whether the assessment of penalties is appropriate in a particular case.  This is important. Most employers who appear without counsel at these hearing are shocked by the amount of the penalties that can be assessed against the employer and don’t understand what the employer needs to establish to avoid certain penalties.

Within fifteen (15) days after the hearing, the Order, Decision or Award (ODA) of the Labor Commissioner will be filed in the DLSE office and served on the parties shortly thereafter. The ODA will set forth the decision and the amount awarded, if any, by the hearing officer.

Either party, or both, pursuant to Labor Code Section 98.2, may appeal the Labor Commissioner's ODA to the superior court. The party appealing may obtain a Notice of Appeal (DLSE 537) from the DLSE office. The appeal must be filed in court within the time period set forth on the ODA, and a copy of the Notice of Appeal must be served on the Labor Commissioner and the opposing party. Whenever the defendant employer files an appeal, a bond in the amount of the ODA must be posted with the reviewing court. The court clerk will then set the matter for de novo hearing, which means that a judge will hear the case again with each party having the opportunity to present evidence and witnesses.

In the case of an appeal by a defendant employer, DLSE may represent a plaintiff who is financially unable to afford counsel in the appeal proceedings. The decision to represent the plaintiff is within the sound discretion of DLSE legal staff. The employer, however, must pay for its own attorney. The hearing in the superior court is actually a trial and the rules of evidence apply. Witnesses can be called to testify.  These trials can be very expensive for the employer.

Saturday, June 18, 2016

The Cities of San Diego, Los Angeles and Santa Monica Have Imposed Sick Leave Ordinances on Employers



So far this year three cities in Southern California have passed ordinances mandating certain sick leave requirements for employers. These ordinances are considerably more liberal then the state sick leave laws mandated by the State of California.  Under California law as long as the ordinances passed by cities have sick leave policies offering at least as much protection for employees as the state laws, the local ordinances will control. If employers in one city have workers travelling to other cities to work, the employer must track each employees hours spent in the other city if the other city has a sick leave ordinance. The employer must comply with the sick leave ordinances in the other cities that have the ordinances based on the hours worked in that city by the employee.

San Diego

Overview:

Thanks to a votes’ initiative that passed in June 2016, San Diego will have its own paid sick leave policy of five days (40 hours). This is in excess of the California Sick Leave law  that allows employers to limit use of accrued paid sick leave to three days (24 hours).

Like the state law, San Diego’s paid sick leave will accrue at one hour for every 30 hours worked and cannot be used until after 90 days of employment.  San Diego’s sick leave initiative allows accrued leave to be front loaded or accrued, and it must be carried over year to year. This provision is the same as state law.

The San Diego law differs from state law in that employees may accrue an unlimited amount of sick leave.  However, employers may limit the amount an employee can use to 40 hours per year.  If a business is not within San Diego city limits, if an employee performs at least two hours of work per week within San Diego, they accrue paid sick leave for the hours they work within the city. In-home supportive services, workers employed under a publicly subsidized summer or short-term youth employment program, or any student employee, camp, or program counselor of an organized camp under State law are exempted.

The Particulars:

Employees begin to accrue sick leave on commencement of employment, or the Ordinances effective date (which looks like it will be July 2016), whichever is later.

Employees are entitled to begin using sick leave 90 days after the commencement of employment, or the Ordinances effective date, whichever is later.

Employers are authorized to limit the use of earned leave to 40 hours in a twelve-month period.
Employers cannot cap the accrual of sick leave and unused time must be carried over.
Upon an employee's separation, employers are not required to pay unused leave, but the employer must maintain it for six months if the employee returns. This is the same as state law.

Leave can be used if an employee is physically or mentally unable to work due to illness, injury, or a medical condition, including pregnancy; for "Safe Time" (time away necessary to handle certain matters of domestic violence, sexual assault, or stalking, when the employee or a designated family member is a victim); for medical appointments; and to care for family members (a child, spouse, parent, grandparent, grandchild, sibling or the child or parent of a spouse) with an illness, injury, or medical condition.

Notification and Record Keeping Requirements

San Diego employers are required to post bulletins and notices regarding the new minimum wage and sick leave laws. Below is a summary of the key requirements.

Employers are required to post bulletins announcing the minimum wage for the upcoming year and its effective date.

Employers are also required to post notices in the workplace informing employees of the current minimum wage, the employee's rights to minimum wage and earned sick leave, information about the accrual and use of earned sick leave, the right to be free from retaliation, and the right to file a complaint with the enforcement office or a court of competent jurisdiction.

The notices and bulletins must be posted in a conspicuous place in the workplace or job site in English, Spanish, Chinese, Vietnamese, and Tagalog, and any language spoken by at least five percent of the employees at the workplace or job site.

Employers are also required to maintain written or electronic records documenting their employees' wages earned and the accrual and use of earned sick leave. Employers are required to retain these records for a period of at least three years.

Remedies and Civil Penalties

An employer who violates the provisions of the Ordinance may be subject to legal action or civil penalties, as follows:

An employee may bring a legal or equitable action for harm caused by violation of the Ordinance. An employee is entitled to relief, including, but not limited to, withheld back wages, liquidated damages equal to double withheld back wages, damages for denial of use of accrued sick leave, reinstatement, and reasonable attorney's fees and costs.

An employer who violates the provisions of the Ordinance is subject to a civil penalty for each violation up to, but not to exceed, $1,000 per violation.

An employer who fails to comply with the notice and posting requirements is subject to a civil penalty of $100 for each employee who was not given appropriate notice, up to a maximum of $2,000.

An employee is not required to submit a complaint to the designated enforcement office in order to bring a private cause of action against his or her employer.


Los Angeles

Beginning July 1, 2016, Los Angeles employers with at least 26 employees – and, on January 1, 2017, employers with fewer than 26 employees – must comply with two new laws.

Los Angeles employers must provide six days (48 hours) of paid sick leave per year. Even if a business is not within city limits, if an employee performs at least two hours of work per week within the city, they accrue paid sick leave for the hours they work within the city limits. Like the state law and the San Diego law, the new Los Angeles law requires that all employees receive this sick leave (or participate in an equally generous PTO plan), including part-time and temporary employees, who must accrue this benefit at the rate of one hour for every 30 hours worked, and they must be able to access it after 90 days of employment. Also like the state law, the benefit may be front loaded or accrued and carried over to the next year.

Santa Monica

Starting January 1, 2017, Santa Monica employers with more than 50 employees must provide nine days (72 hours) of paid sick leave. The application, accrual, and carryover procedures are the same as the San Diego and Los Angeles laws.

California Sick Law Law Explained

The laws regarding sick leave law in California can be confusing and are complex. However the following is a summary of the law as of June 15, 2016. Please note that local city governments can establish their own ordinances regarding sick leave.  These ordinances will control as long as they offer at least the minimum amount of sick leave offered under state law.  The city counsel for the City of Los Angeles has recently passed such an ordinance which will probably take effect in July 2016:

The state’s sick leave law went into effect on January 1, 2015. However, the right to begin accruing and taking sick leave under this law did not go into effect until July 1, 2015.

To qualify for sick leave, an employee must:
• Work for the same employer, on or after January 1, 2015, for at least 30 days
within a year in California, and
• Satisfy a 90-day employment period (similar to a probationary period) before taking any sick leave.

If an employee works less than 30 calendar days within a year for the same employer in California, then you are not entitled to paid sick leave under this law.

The 90 calendar day period works like a probationary period. If an employee works less than 90 days for their employer, the employee are not entitled to take paid sick leave.

A qualifying employee began to accrue paid sick leave beginning on July 1, 2015, or if hired after that date on the first day of employment. An employee is entitled to use (take) paid sick leave beginning on the 90th day of employment.

All employees who work at least 30 days for the same employer within a year in California, including part-time, per diem, and temporary employees, are covered by this new law with some specific exceptions. Employees exempt from the paid sick leave law include:

• Providers of publicly-funded In-Home Supportive Services (IHSS)
• Employees covered by collective bargaining agreements with specified
provisions
• Individuals employed by an air carrier as a flight deck or cabin crew member, if they receive compensated time off at least equivalent to the requirements of the new law
• Retired annuitants working for governmental entities.

Employees of a staffing agency are covered by the law. Therefore, whoever is the employer or joint employer is required to provide paid sick leave to qualifying employees.

The law requires employers to provide and allow employees to use at least 24 hours or three days of paid sick leave per year.  Employers adopting new policies to comply with the law may choose whether to have an “accrual” policy or a “no accrual/up front” policy.  An accrual policy is one where employees earn sick leave over time, with the accrued time carrying over in each year of employment. In general terms (and subject to some exceptions), employees under an accrual plan must earn at least one hour of paid sick leave for each 30 hours of work (the 1:30 schedule).  Although employers may adopt or keep other types of accrual schedules, the schedule must result in an employee having at least 24 hours of accrued sick leave or paid time off by the 120th calendar day of employment.

Although employees may accrue more than three days of paid sick leave under the one hour for every 30 hours worked (or under an alternative accrual standard) under an accrual method, the law allows employers to limit an employee’s use of paid sick leave to 24 hours or three days during a year. The law also allows an employer to limit an employee’s total accrued paid sick leave to no more than 48 hours or six days.

A no accrual/up front policy makes the full amount of sick leave for the year available immediately at the beginning of a year-long period, except for initial hires where it must be available for use by the 120th day of employment. The employer must provide at least 24 hours or three days of paid sick leave per year and the full amount of this leave must be available for the employee’s use from the beginning of each year of employment, calendar year, or 12-month period. Note: the employer determines how the year will be calculated, whether it tracks a typical
calendar year, fiscal year, or other 12-month period).  Lastly, the law allows certain types of existing sick leave policies to be “grandfathered,” if the policy was in existence prior to January 1, 2015. These policies are deemed to comply with the new law if:

• The accrual provides no less than one day or 8 hours of accrued paid sick leave or paid time off within three months of employment per year, and
• The employee was eligible to earn at least three days or 24 hours of paid sick leave or paid time off within 9 months of employment.
Any modification to a grandfathered sick leave or paid time off policy will nullify its qualification as a grandfathered policy and the employer will be required to comply with the requirements under the new law.

Because paid sick leave accrued beginning on July 1, 2015, or the first day of employment if hired after July 1, 2015, the 12 month period will vary by hire date for those employees hired after July 1, 2015. Therefore, the measurement will mostly be tracked by the employee’s anniversary date.

An employer may elect to advance sick leave to an employee before it is
accrued, but there is no requirement for an employer to do so under this law.

If a seasonal employee works only 60 days one year but returns to the same employer within one year and work another 60 days the paid sick leave law requires that your accrued and unused sick leave be restored to you if you return to the same employer within 12 months from the
previous separation.  However, an employer is not required to restore previously accrued and unused paid time off (PTO), if the sick leave was provided pursuant to a PTO policy covering
sick leave which was paid or cashed out to the employee at the end of the previous employment with that employer.

If an employee returns to work for the same employer after more than one year The paid sick leave law does not require that your accrued sick leave be restored to the employee.

An employer may provide sick leave through its own existing sick leave or paid time off plan, or establish different plans for different categories of workers. Each plan must satisfy the accrual, carryover, and use requirements of the new law. In general terms, the minimum requirements under the new law are that an employer must provide at least 24 hours or three days of paid sick leave per year. A paid time off (PTO) plan that employees may use for the same purposes of paid sick leave, and that complies with all applicable minimum requirements of the new law, may continue to be used.  In general terms, the law provides that, employers who adopt an accrual plan for paid sick leave, employees must accrue at least 1 hour of paid sick leave for each 30 hours of work. An employer may use a different accrual method, as long as the accrual is on a regular basis and results in the employee having no less than 24 hours of accrued sick leave or paid time off by the 120th calendar day of employment, or each calendar year, or in each 12-month period.

The law also has a “grandfather” clause, which allows employers with paid sick leave policies or paid time off policies that were in existence prior to January 1, 2015, to maintain those policies and be deemed in compliance as long as they meet the following requirements:

• The accrual provides no less than one day or 8 hours of accrued paid sick leave or paid time off within three months of employment per year, and
• The employee was eligible to earn at least three days or 24 hours of paid sick leave or paid time off within 9 months of employment.
Sick leave or annual leave provided to governmental employees pursuant to either certain Government Code provisions or a memorandum of understanding meet the accrual requirements.

The law states that an employer is not required to have an accrual or carryover policy for paid sick leave if the “full amount of leave” is provided to employees at the beginning of each year of employment, calendar year or 12-month period. The
“full amount of leave” that an employer is required to provide under this provision is at least 24 hours or three days of paid sick leave.  For initial hires, however, the employee must still meet the 90-day employment requirement prior to taking any paid sick leave.

Under the accrual method, an employee can carry over unused sick leave from one year to the next. However, an employer may limit or cap the overall amount of sick leave an employee may accrue to 6 days or 48 hours.

If an employer provides paid time off (PTO) which an employee can use for vacation or illness an employer will not have to provide additional sick leave as long as the employer provides the minimum of at least 24 hours or three days per year of paid leave that can be used for health care and that meets other requirements in the law.

If an employer offers unlimited time off the notice, itemized pay stub or separate written statement provided with the payment of wages meets the necessary requirements by indicating the paid sick leave is “unlimited”.

An employee can take paid sick leave for himself/herself or a family member, for preventive care or diagnosis, care or treatment of an existing health condition, or for specified purposes if you are a victim of domestic violence, sexual assault or stalking.  Family members include the employee’s parent, child, spouse, registered domestic partner, grandparent, grandchild, and sibling. Preventive care would include annual physicals or flu shots.

The employee may decide how much paid sick leave he or she wants to use (for example, whether the employee wants to take an entire day, or only part of a day). The employer can require you to take a minimum of at least two hours of paid sick leave at a time, but otherwise the determination of how much time is needed is left to the employee.

The employee must notify the employer in advance if the sick leave is planned, as may be the case with scheduled doctors’ visits. If the need is unforeseeable, the employee need only give notice as soon as practical, as may occur in the case of unanticipated illness or a medical emergency.

The law requires that an employer provide payment for sick leave taken by an employee no later than the payday for the next regular payroll period after the sick leave was taken. This does not prevent an employer from making the adjustment in the pay for the same payroll period in which the leave was taken, but it permits an employer to delay the adjustment until the next payroll. For example, if an employee did not clock in for a shift and therefore was not paid for it but utilized his/her paid sick leave, the employer would have to pay the employee not later than the following pay period and account for it in the wage stub or separate itemized wage statement for that following regular pay period.  For nonexempt employees, the employee will be paid his/her regular or normal non-overtime hourly rate for the amount of time that the employee took as paid sick leave.

Employers must show how many days of sick leave an employee has available on the employee's pay stub, or on a document issued the same day as your paycheck. If an employer provides unlimited paid sick leave or unlimited paid time off, the employer may indicate "unlimited" on your pay stub or other document provided to you the same day as your wages.  Employers also must keep records showing how many paid sick day you earned and used for three years. This information may be stored on documents available to employees electronically.

The law states that an employer is not obligated to inquire into, or record, the purposes for which an employee uses paid sick leave or paid time off.

If employees are subject to local sick leave ordinances, the employer must comply with both the local and California laws, which may differ in some respects. The employer must provide the provision or benefit that is most generous to the employee.  Please note:  The City of Los Angeles has drafted an ordinance going into effect in July 2016 that doubles the amount of sick leave that the employer must provide to its employees.  This ordinance also enlarges who is covered under compared to state law.

The paid sick leave law allows employees to decide how much paid leave time to take, subject to their employer’s ability to set a two-hour minimum.  For example, if an employee has accrued ten hours, he or she can request to be paid for ten hours. If the employee decides to take less time than that in paid sick leave, then he or she will be paid for the number of hours that they chose to take. Be advised, employees must take a minimum of two hours when they choose to take sick leave if the employer sets a two-hour minimum.  If an employee on an alternative work schedule is sick for three days and has accrued only 24 hours of paid sick leave, the employer will pay for the 24 hours accrued. However, if the employee has accrued 30 hours of paid sick leave they must be paid for the full 30 hours, or three days, of work.

An employee does not have the right to cash out his/her unused sick days unless their employer's policy provides for a payout.

Beginning January 1, 2015, employers were and are required to display a poster in a conspicuous place at the workplace.  The workplace posting must contain the following information:
• That an employee is entitled to accrue, request, and use paid sick days;
• The amount of sick days provided for and the terms of use of paid sick days;
• That retaliation or discrimination against an employee who requests paid sick days or uses paid sick days or both is prohibited; and
• That an employee has the right under this law to file a complaint with the Labor Commissioner against an employer who retaliates or discriminates against an employee.  The Labor Commissioner has a poster on its website that employers can use to comply with the law.

After January 1, 2015, employers were and are required to provide most employees with an individualized Notice to Employee (required under Labor Code section 2810.5) that includes paid sick leave information. A Notice to Employee form revised to reflect the new sick leave law by the Labor Commissioner’s Office must be used for employees hired after January 1, 2015. For employees hired prior to January 1, 2015, the employer is required to provide a revised Notice to Employee or otherwise inform each employee of the information regarding paid sick leave, using any of the alternative methods specified in Labor Code section 2810.5(b).  The Notice to Employee provisions of Labor Code section 2810.5 do not apply to exempt employees, most government employees, or to employees covered by a valid collective bargaining agreement that meets certain specifications.

To avoid misinformation or misunderstanding regarding an employer’s paid time off or paid sick leave policy, employers are encouraged to ensure that employees are made fully aware of the terms and conditions of their policy. Although the notice requirements of Labor Code section 2810.5 do not apply to employees who are exempt from the payment of overtime, employees who are exempt from the payment of overtime are covered by this new paid sick leave law.

Thursday, June 16, 2016

Ninth Circuit Case on Rounding of Employees Time

In the 9th Circuit case of Andrew Corbin v. Time Warner Entertainment- Advance the Court addressed the issue of employers who round off time worked by employees in computing their wages.

In the Corbin case the employer rounded time off to the nearest quarter hour.  As stated by the Court, "This case turns on $15.02 and one minute. $15.02 represents the total amount of compensation that Plaintiff Andre Corbin (“Corbin”) alleges he has lost due to his employer’s, Defendant Time Warner EntertainmentAdvance/Newhouse Partnership (“TWEAN”), compensation policy that rounds all employee time stamps to the nearest quarter-hour. One minute represents the total amount of time
for which Corbin alleges he was not compensated as he once mistakenly opened an auxiliary computer program before clocking into TWEAN’s timekeeping software platform. $15.02 in lost wages and one minute of uncompensated time, Corbin argued before the district court, entitled him to relief under the Fair Labor Standards Act of 1938 (“FLSA”), 29 U.S.C. § 201, et seq., and various California state employment laws.  The district court disagreed and granted summary judgment to TWEAN. The court determined that because the company’s rounding policy was neutral on its face and in practice, TWEAN’s policy complied with the federal rounding regulation, see 29 C.F.R. § 785.48(b), and Corbin’s $15.02 in lost wages did not present an issue of material fact. The court also held that the one minute of uncompensated time Corbin spent logging into an auxiliary computer
program before logginginto TWEAN’s timekeeping software was de minimis as a matter of law."

Time Warner, using a software program know as a "soft phone system", tracked each employee's hours by having the employee essentially log in to their phone system.  The employee had to do this to be allowed to start receiving phone calls at the call center where their job of course required them to respond to customers over the phone.  For example, an employee who clocked in at 8:07 a.m. to begin his workday would see his wage statement reflect a clock-in of 8:00 a.m., rounding his time to the nearest quarter-hour and crediting him with seven minutes of work time for which he was not actually on the clock. Similarly, an employee who clocks out at 5:05 p.m. to end her workday would see her wage statement reflect a clock-out of 5:00 p.m., again rounding her time to the nearest quarter-hour and deducting five minutes of work time for which she was actually on the
clock. At the end of each pay period, TWEAN’s non-exempt employees are paid in accordance with these rounded figures.

The Court noted that for more than fifty years, a federal regulation has endorsed the use of “‘Rounding’ practices.” See Wage and Hour Division, Department of Labor, 26 Fed. Reg. 190, 195
(January 11, 1961). Codified at 29 C.F.R. § 785.48(b), the current regulation reads in full:

“Rounding” practices. It has been found that in some industries, particularly where time
clocks are used, there has been the practice for many years of recording the employees’
starting time and stopping time to the nearest 5 minutes, or to the nearest one-tenth or
quarter of an hour. Presumably, this arrangement averages out so that the employees are fully compensated for all the time they actually work. For enforcement purposes this practice of computing working time will be accepted, provided that it is used in such a manner that it will not result, over a
period of time, in failure to compensate the employees properly for all the time they have actually worked. This regulation permits “employers to efficiently calculate hours worked without imposing any burden onemployees,” offering employers a “practical method for calculating work time” and a “neutral calculation tool for providing full payment to employees.”

Ultimately, on the rounding of time issue the Court held:

"First, Corbin offers no case support for the proposition that California’s law is at odds with the federal rounding regulation and cites to no precedent that endorses his argument. Second, the only case to address Corbin’s argument, See’s Candy, explicitly rejected it. 210 Cal. App. 4th at 905–06. There, the California Court of Appeal explained that the federal rounding regulation had long successfully coexisted with FLSA’s own rule mandating overtime pay after forty hours of
work over the course of a week. Id. at 906. “There is no analytical difference,” the court pointed out, “between rounding in the context of daily overtime and rounding in the context of weekly overtime.” Id. We agree. Over the long term, TWEAN’s rounding system is neutral, favoring neither employer nor employee. Third, TWEAN’s rounding policy allows employees to gain overtime compensation just as easily as it causes them to lose it. For example, an employee who clocks in for eight hours and eight minutes of work in a day, will see those eight minutes rounded up to fifteen minutes—all of which will be compensated at the overtime rate.8 Like the California Court of Appeal, we can discern no reason to analyze overtime minutes any differently than regular-time minutes, and the district court committed no error by treating them the same."

Wednesday, June 15, 2016

California Employment Law - PAGA (Manageable v. Unmanageable Wage Claims)

The case of  Brown v. American Airlines, Inc., No. CV 10-8431-AG (PJWx), 2015 WL 6735217 (C.D. Cal. Oct. 5, 2015) concerns the dismissal of PAGA claims  where the claims are based on  numerous individualized issues that may render the case unmanageable.

PAGA allows “aggrieved employees” to bring representative actions against employers for civil penalties on behalf of themselves and other employees for violations of the Labor Code.   To recover penalties, a PAGA plaintiff must prove an underlying Labor Code violation as to each allegedly aggrieved employee for each pay period for which the plaintiff seeks penalties.  But to determine liability on the underlying Labor Code provisions, the court may need to adjudicate issues specific to each pay period for each allegedly aggrieved employee — which raises potentially significant manageability problems.

A plaintiff may be able to meet the burden of proof where the employee alleges an employer violated Labor Code section 226(a) by providing copies or exemplars of the employer's standard wage statements.  However, if the employee claims that the employer violated Labor Code section 2802 by failing to reimburse business expenses would require individualized proof by each employee. The reason for the expenses and the reasons why an employer might have refused to reimburse the employee could vary greatly from employee to employee.  The result of litigating such specific issues for a large number of employees could result in an unmanageable series of mini-trials.

In Brown the plaintiff brought a putative class action asserting claims for failure to pay overtime wages, failure to provide accurate itemized wage statements, unlawful business practices, and PAGA penalties.  The court denied the plaintiff’s motion for class certification. The employer then brought a motion to strike the PAGA claims.

The court addressed defendant’s argument that the PAGA claims were unmanageable.  The court determined that there would be “too many individualized assessments to determine PAGA violations concerning overtime pay.”  By contrast, the court held that the wage statement claims, which were based on allegations that wage statements improperly reflected two different pay periods, were not unmanageable.  Accordingly, the court granted the motion to strike the PAGA claims except for the inaccurate wage statement claims.


The basic PAGA statute is California Labor Code Section 2699 which states:

"(a) Notwithstanding any other provision of law, any provision of this code that provides for a civil penalty to be assessed and collected by the Labor and Workforce Development Agency or any of its departments, divisions, commissions, boards, agencies, or employees, for a violation of this code, may, as an alternative, be recovered through a civil action brought by an aggrieved employee on behalf of himself or herself and other current or former employees pursuant to the procedures specified in Section 2699.3.
   (b) For purposes of this part, "person" has the same meaning as defined in Section 18.
   (c) For purposes of this part, "aggrieved employee" means any
person who was employed by the alleged violator and against whom one
or more of the alleged violations was committed.
   (d) For purposes of this part, "cure" means that the employer
abates each violation alleged by any aggrieved employee, the employer
is in compliance with the underlying statutes as specified in the
notice required by this part, and any aggrieved employee is made
whole. A violation of paragraph (6) or (8) of subdivision (a) of
Section 226 shall only be considered cured upon a showing that the
employer has provided a fully compliant, itemized wage statement to
each aggrieved employee for each pay period for the three-year period
prior to the date of the written notice sent pursuant to paragraph
(1) of subdivision (c) of Section 2699.3.
   (e) (1) For purposes of this part, whenever the Labor and
Workforce Development Agency, or any of its departments, divisions,
commissions, boards, agencies, or employees, has discretion to assess
a civil penalty, a court is authorized to exercise the same
discretion, subject to the same limitations and conditions, to assess
a civil penalty.
   (2) In any action by an aggrieved employee seeking recovery of a
civil penalty available under subdivision (a) or (f), a court may
award a lesser amount than the maximum civil penalty amount specified
by this part if, based on the facts and circumstances of the
particular case, to do otherwise would result in an award that is
unjust, arbitrary and oppressive, or confiscatory.
   (f) For all provisions of this code except those for which a civil
penalty is specifically provided, there is established a civil
penalty for a violation of these provisions, as follows:
   (1) If, at the time of the alleged violation, the person does not
employ one or more employees, the civil penalty is five hundred
dollars ($500).
   (2) If, at the time of the alleged violation, the person employs
one or more employees, the civil penalty is one hundred dollars
($100) for each aggrieved employee per pay period for the initial
violation and two hundred dollars ($200) for each aggrieved employee
per pay period for each subsequent violation.
   (3) If the alleged violation is a failure to act by the Labor and
Workplace Development Agency, or any of its departments, divisions,
commissions, boards, agencies, or employees, there shall be no civil
penalty.
   (g) (1) Except as provided in paragraph (2), an aggrieved employee
may recover the civil penalty described in subdivision (f) in a
civil action pursuant to the procedures specified in Section 2699.3
filed on behalf of himself or herself and other current or former
employees against whom one or more of the alleged violations was
committed. Any employee who prevails in any action shall be entitled
to an award of reasonable attorney's fees and costs. Nothing in this
part shall operate to limit an employee's right to pursue or recover
other remedies available under state or federal law, either
separately or concurrently with an action taken under this part.
   (2) No action shall be brought under this part for any violation
of a posting, notice, agency reporting, or filing requirement of this
code, except where the filing or reporting requirement involves
mandatory payroll or workplace injury reporting.
   (h) No action may be brought under this section by an aggrieved
employee if the agency or any of its departments, divisions,
commissions, boards, agencies, or employees, on the same facts and
theories, cites a person within the timeframes set forth in Section
2699.3 for a violation of the same section or sections of the Labor
Code under which the aggrieved employee is attempting to recover a
civil penalty on behalf of himself or herself or others or initiates
a proceeding pursuant to Section 98.3.
   (i) Except as provided in subdivision (j), civil penalties
recovered by aggrieved employees shall be distributed as follows: 75
percent to the Labor and Workforce Development Agency for enforcement
of labor laws and education of employers and employees about their
rights and responsibilities under this code, to be continuously
appropriated to supplement and not supplant the funding to the agency
for those purposes; and 25 percent to the aggrieved employees.
   (j) Civil penalties recovered under paragraph (1) of subdivision
(f) shall be distributed to the Labor and Workforce Development
Agency for enforcement of labor laws and education of employers and
employees about their rights and responsibilities under this code, to
be continuously appropriated to supplement and not supplant the
funding to the agency for those purposes.
   (k) Nothing contained in this part is intended to alter or
otherwise affect the exclusive remedy provided by the workers'
compensation provisions of this code for liability against an
employer for the compensation for any injury to or death of an
employee arising out of and in the course of employment.
   (l) The superior court shall review and approve any penalties
sought as part of a proposed settlement agreement pursuant to this
part.
   (m) This section shall not apply to the recovery of administrative
and civil penalties in connection with the workers' compensation law
as contained in Division 1 (commencing with Section 50) and Division
4 (commencing with Section 3200), including, but not limited to,
Sections 129.5 and 132a.
   (n) The agency or any of its departments, divisions, commissions,
boards, or agencies may promulgate regulations to implement the
provisions of this part.

Jacobs & Dodds
2151 Michelson Drive
Ste. 266
Irvine, CA 92612
(949) 645-7300




Sunday, May 22, 2016

California Hourly Wage and Effect on "Exempt Employees"

On January 1, 2016, California’s minimum wage increased to $10.00 per hour.

California’s overtime laws require employers to compensate “non-exempt” employees who work in excess of eight hours in one workday or in excess of 40 hours in one workweek, at a rate of either one and one-half or two times the regular rate of pay, depending on the amount of excess time worked. Exempt status is determined, in substantial part, by whether an employee earns a monthly salary of at least two times the state minimum wage of $10.00 per hour. The minimum wage increase, therefore, now sets a higher compensation threshold that employees must meet to reach exempt status. As of January 1, 2016 an employee must earn at least $20.00/hr. to be considered for exempt status. Of course if an employee meets all the criteria for exempt status the employee is not eligible for over time.

Criteria for exempt status for private sector employees are set forth by California’s Labor Code and by the Industrial Welfare Commission.

Importantly, however, while employees must be paid minimum wage pursuant to local ordinances, exempt status for employees is based on California’s state mandated minimum wage. The requirement of Labor Code section 515.8 requires a monthly salary of “two times the state minimum wage for full-time employment.” In other words, section 515.8 does not look to local minimum wage in determining exempt status. This is important to remember where a business is located in a county where the required minimum wage is in excess of $10.00/hour.  San Francisco and Los Angeles are two such counties.

In light of the raise in the minimum wage, employers should review the compensation schedules of their employees to ensure compliance with state and local minimum wage requirements. Businesses should confirm that all employees are being compensated at a minimum rate of at least $10.00 per hour for all hours worked. Employers should also review the annual compensation for their exempt employees and ensure that the company meets the new requirement of being compensated at an annual rate of at least $41,600 per year. If an employee's compensation does not meet this threshold, then he or she will not be eligible for “exempt” status and must be paid over time.

Jacobs & Dodds
2151 Michelson Drive
Ste. 266
Irvine, CA 92612
(949) 645-7300

Sunday, May 19, 2013

The Importance of Employee Handbooks in California

Although there are many advantages to utilizing an employee handbook, from a purely legal perspective, the employer is usually hoping to establish ground rules of acceptable conduct and prevent the company from being subjected to legal liability. The sources of such liability are many, from wage disputes to wrongful termination, discrimination and harassment claims.

A good employee handbook will not prevent such a claim from arising, but can assist the company in defending its actions.

A poorly drafted handbook can actually be used against the company to prove the claimant's case. For example, some preprinted handbooks contain sections dealing with the progressive discipline of employees, containing a comprehensive scheme from oral warning to termination. Courts have found that a company that does not follow this disciplinary scheme can be held liable for wrongful termination. Other courts have held that such policies may imply that the company can only terminate for good cause. This can be a problem in California where employees are typically "at-will" employees. This means that an employee can be terminated any time, and for any reason (so long as the reason is not based on race, religion, etc....). However, if an employer adopts a progressive discipline system, the company may find that its employees are no longer "at will" employees.

Many prepared handbooks contain so-called "use it or lose it" provisions governing vacation pay. In fact, the California Supreme Court has declared such policies to be illegal. A company that utilizes such a policy to forfeit the accrued but unused vacation pay of a departing employee can find itself liable not only for the monetary value of the accrued vacation time, but interest and penalties equal to 30 days worth of the employee's salary.

The decision to create and enforce company policy in a written document is an excellent idea. However, care must be taken to make sure that the employee handbook complies with all state and federal laws and regulations. Once in place, the employee handbook must be updated at least once, if not twice, a year.

The Orange County lawyers at Jacobs and Dodds can assist you in drafting your company's employee handbook. Call us at (949) 645-7300 or visit us at our web site at www.newportbeachattorneys.org