Overtime—Effective Jan. 1, 2014, computer software employees are exempt from overtime requirements if they are paid at least $40.38 an hour and their annual salary is at least $84,130.53. In addition, licensed physicians and surgeons are exempt from overtime requirements if they are paid at least $73.57 an hour.
As part of the significant changes going on at the DFEH, they have renumbered the California Regulations as per this doc. This does not create and substantive changes. A source you should keep handy is this link www.dir.ca.gov/dlse/dlseLaws.html, which contains those regulations and much more. The email from the DFEH follows:
The DFEH Fair Employment and Housing Council’s (Council) Changes without Regulatory Effect have been approved by the Office of Administrative Law (OAL) and published in the California Code of Regulations, title 2, section 11001 et seq. These changes conform the regulations of the former Fair Employment and Housing Commission (Commission) to the statutory changes made by Senate Bill 1038 (Stat. 2012, ch. 46, §§ 18, 27-66, 68, 70, 101 &115.) The action repeals certain of the former Commission’s regulations for which there is no longer statutory authority. The action renumbers and relocates the regulations within Division 4.1 of title 2 as the regulations of the newly established Council. The action also makes non-substantive grammatical and style changes to the regulations as well as changes to Authority and Reference citations. OAL approved this change without regulatory effect as meeting the requirements of the California Code of Regulations, title 1, section 100.
Please see the attached “Notice of Approval” and the below excerpted table of contents from Barclays Official California Code of Regulations. You can read all the Council’s current regulations here by clicking on “TITLE 2,” “DIVISION 4.1,” “CHAPTER 5,” and the within subchapters and articles.
BARCLAYS OFFICIAL CALIFORNIA CODE OF REGULATIONS
TITLE 2. ADMINISTRATION
DIVISION 4.1. DEPARTMENT OF FAIR EMPLOYMENT AND HOUSING
CHAPTER 1. PROCEDURES OF THE DEPARTMENT OF FAIR EMPLOYMENT AND HOUSING
CHAPTER 5. FAIR EMPLOYMENT AND HOUSING COUNCIL
SUBCHAPTER 2. DISCRIMINATION IN EMPLOYMENT
ARTICLE 1. GENERAL MATTERS
ARTICLE 2. PARTICULAR EMPLOYMENT PRACTICES
ARTICLE 3. RACE AND COLOR DISCRIMINATION (RESERVED)
ARTICLE 4. NATIONAL ORIGIN AND ANCESTRY DISCRIMINATION
ARTICLE 5. ANCESTRY DISCRIMINATION (RESERVED)
ARTICLE 6. SEX DISCRIMINATION
ARTICLE 6A. SEX DISCRIMINATION: PREGNANCY, CHILDBIRTH OR RELATED MEDICAL CONDITIONS
ARTICLE 7. MARITAL STATUS DISCRIMINATION
ARTICLE 8. RELIGIOUS CREED DISCRIMINATION
ARTICLE 9. DISABILITY DISCRIMINATION
ARTICLE 10. AGE DISCRIMINATION
ARTICLE 11. FAMILY CARE AND MEDICAL LEAVE
SUBCHAPTER 3. DISCRIMINATION IN HOUSING (RESERVED)
2 CA ADC T. 2, Div. 4.1, Chap. 5, Refs & Annos
SUBCHAPTER 4. PROCEDURES OF THE COUNCIL (RESERVED)
2 CA ADC T. 2, Div. 4.1, Chap. 5, Refs & Annos
SUBCHAPTER 5. CONTRACTOR NONDISCRIMINATION AND COMPLIANCE
ARTICLE 1. GENERAL MATTERS
ARTICLE 2. REGULATIONS APPLICABLE TO CONSTRUCTION CONTRACTS
ARTICLE 3. REGULATIONS APPLICABLE TO SERVICE AND SUPPLY CONTRACTS
SUBARTICLE 1. SMALL CONTRACTS
SUBARTICLE 2. REGULATED CONTRACTS
ARTICLE 4. OCP REVIEW PROCEDURES
ARTICLE 5. OCP ENFORCEMENT PROCEEDINGS
For your reference, please see the attached FEHA Regulations Conversion Chart. Please refer to the renumbered regulations effective immediately.
California passed AB241, known as Domestic Worker Bill of Rights. The bill essentially provides wage and overtime protection to these workers. Domestic work means services related to the care of persons in private households or maintenance of private households or their premises. Domestic work occupations include childcare providers, caregivers of people with disabilities, sick, convalescing, or elderly persons, house cleaners, housekeepers, maids, and other household occupations.
A domestic work employee who is a personal attendant shall not be employed more than nine hours in any workday or more than 45 hours in any workweek unless the employee receives one and one-half times the employee’s regular rate of pay for all hours worked over nine hours in any workday and for all hours worked more than 45 hours in the workweek.
Here’s an interesting article on the bill. While the intentions behind this bill seem well intended it will be interesting to see the impact affects the ability to now afford this care in the first place.
Worklaw® Network firm Swerdlow Sanchez wrote the following about AB241:
Starting January 1, 2014, nannies, caregivers, and other “personal attendants” working in private homes in California will be entitled to overtime pay. The Domestic Worker Bill of Rights was signed into law by Governor Jerry Brown on September 26, 2013, and requires domestic employees who are “personal attendants” to receive one and one-half times their regular rate of pay for all hours worked over nine hours in any workday and over 45 hours in any workweek. “Personal attendants” are employees who: (1) supervise, feed, or dress a child or person who by reason of advanced age, physical disability, or mental deficiency needs supervision, and (2) spend at least 80% of their time in those activities.
Personal attendants have historically been excluded from many of California’s wage and hour laws, which allowed flexibility for households and families who rely on domestic workers for personal care. Prior to the Domestic Worker Bill of Rights, personal attendants were exempt from California’s overtime-pay requirements. The new bill specifically provides overtime premium pay for personal attendants, including live-ins, for hours worked over nine in a day or 45 in a week. The bill does not, however, require domestic employers to provide personal attendants with meal or rest periods.
The bill provides several exclusions to the overtime requirement for personal attendants. Most notably, the bill does not provide overtime pay for casual babysitters. A casual babysitter is defined as a person who babysits on an irregular or intermittent basis and whose vocation is not babysitting. If a babysitter does a significant amount of work other than supervising, feeding and dressing a child, the babysitter will be considered a domestic work employee and will be entitled to overtime pursuant to the bill.
Also exempt from the overtime requirement is any person under 18 years of age who is employed as a babysitter for a minor child in the employer’s home, as well as any parent, grandparent, spouse, sibling, child, or legally adopted child of the domestic work employer.
Domestic employers in California should be aware that in addition to complying with California’s Domestic Worker Bill of Rights, they must also comply with existing federal law regulating domestic caregivers. Under the Federal Labor Standards Act (FLSA), employers with non-live-in nannies (i.e., personal attendants to care for a child) remain responsible for complying with federal overtime rules which require overtime pay of one and one-half times the nanny’s regular rate of pay for all hours worked over 40 in a workweek. Further, an employee who provides at-home companionship for adults who cannot care for themselves due to advanced age or physical or mental infirmity remains exempt from the FLSA’s minimum wage and overtime requirements.
The new bill does not affect the wage and hour requirements of other domestic work employees, such as housekeepers, maids and other workers engaged in the maintenance of private households and their premises. Those employees generally remain entitled to overtime pay at one and one-half times their regular rate of pay for all hours worked in excess of eight hours and up to 12 hours in any workday, in excess of 40 hours in any workweek, and for the first eight hours worked on the seventh consecutive day of work in a workweek. Those employees also remain entitled to double-time for all hours worked in excess of 12 hours in any workday and for all hours worked in excess of eight on the seventh consecutive day of work in a workweek. Such housekeepers, maids, and other domestic work employees who are not personal attendants remain entitled to meal and rest periods.
The bill is set to expire on January 1, 2017, unless it is extended. In the meantime, the bill requires the Governor to convene a committee to study and report the impact of this overtime requirement on domestic workers and their employers.
SB 770 broadens the definition of family within the Paid Family Leave (PFL) program to allow workers to receive the partial wage replacement benefits while taking care of seriously ill siblings, grandparents, grandchildren, and parents-in-law. The law takes effect July 1, 2014. To learn more about PFL, click here.
Governor Edmund G. Brown Jr. will join business owners, legislators and dozens of working Californians tomorrow in Los Angeles and Oakland to sign AB 10 which will raise the minimum wage in California from $8.00 per hour to $10.00 per hour. AB 10 will raise California’s minimum wage in two one-dollar increments, from $8 per hour today to $9 per hour, effective July 1, 2014 and from $9 per hour to $10 per hour, effective January 1, 2016. Click here to see the new law.
In the most recent newsletter we discussed the challenges of working with alcoholics. A case out of California brings home why this is such a risky liability exposure. In the case of Purton v. Marriott a bartender, who was drinking at a company holiday party, drove home drunk and then decided to come back to the party to drive another drunk employee home. It was on that trip that he rear-ended Dr. Purton at approximately 100 MPH, killing him. He pleaded guilty to gross vehicular manslaughter while under the influence of alcohol and received a six-year prison sentence. To keep the story short, the court ruled that the bartender’s actions where attributable to the employer as a foreseeable cause of allowing him to be intoxicated and drive. There are some courts that rule the harm itself had to take place while acting in the course and scope of employment. In California, Washington and other more “liberal” states the rule is that only the alcohol consumption had to occur during work hours.
Bottom line: Don’t let your employees drink and drive in any jurisdiction.
California law provides that, absent an exemption, an employee must be paid time-and-a-half for work in excess of 40 hours per week. To be exempt from that requirement the employee must perform specified duties in a particular manner and be paid “a monthly salary equivalent to no less than two times the state minimum wage for full-time employment.” (Lab. Code, § 515, subd. (a).)
The question presented in this case is whether a compensation scheme based solely upon the number of hours worked, with no guaranteed minimum, can be considered a “salary” within the meaning of the pertinent wage and hour laws. We conclude that such a payment schedule is not a salary and, therefore, does not qualify the employee as exempt. Since the trial court found the employee was exempt, we shall reverse.
In the May 2013 case of Heyen v. Safeway decided out of Los Angeles, the appellate court affirmed a ruling that poses a large risk exposure for retailers of all kinds. Bottom line is that if a manager spends more than 50% of their time doing non-exempt work, they are non-exempt….even if they have significant managerial responsibilities. Safeway pointed out the reality of multi-tasking at these jobs but the court wasn’t buying it. “In order to count as exempt work, the employee must ‘clearly’ disengage from the non-exempt activity and engage in the exempt activity.” At issue were the jury instructions which the court upheld. The instructions told the jurors the following:
“Exempt” tasks include:
- Forecasting of store sales.
- Scheduling the work of store employees.
- Monitoring store sales and adjusting schedules to ensure compliance with payroll budgeting
- Directing the work of store employees.
- Inspecting store conditions.
- Inspecting and reviewing the work of store employees.
- Activities, such as audits and pulls, authorizing overrides, and providing for the safety of the employees and property.
- Training employees.
- Coaching store employees.
- Counseling, disciplining and firing store employees.
- Interviewing and hiring employees, including time spent instructing and supervising others in the process of selecting job candidates.
- Preparation and review of management paperwork such as: 259 reports, and profit and loss reports.
- Review and sort email and conventional mail and determine follow up action needed.
- Review of store employees‟ time and attendance records, including identification and completion of paperwork for edits needed to ensure accuracy of such records.
- Monitoring store conditions and delegating tasks to employees to meet federal, state and local laws and regulations regarding licensing, food safety, worker and customer safety, and consumer protection law (for example, food recall, weights and measures requirements).
- Handling employee complaints and grievances.
“Non-Exempt” Tasks include:
- Ringing up sales for customers.
- Bagging groceries and/or assistance to customers with carry out.
- Assisting customers with routine matters (for example, finding an item in the store).
- Stocking or facing merchandise, including items in the general merchandise, health and beauty aids aisle(s).
- Mopping and sweeping floors.
- Retrieving shopping carts from parking lot.
- Constructing merchandise displays.
- Selling money orders and lottery tickets.
- Stocking and replenishing stock on shelves, including out-of-stocks.
- Fetching items for customers.
- Unloading trucks and unpacking merchandise.
- Stocking beverage and other coolers.
- Labeling shelves, completing signage including shelf and price tags.
- Driving motorized pallet movers.
- Gathering shopping carts.
- Maintaining the back room.
- Putting up and taking down product displays and decorations.
- Preparing payroll.
They then had the jury determine the apportionment of time. In its opinion the court reminded employers in a footnote as follows:
California’s distinct approach to defining overtime exemptions “can also be illustrated in its treatment of the exemption for administrative, executive, and professional employees. … With regard to such employees, “[t]he federal exemption for this category of employees adopts a core test which focuses on the employee’s “primary duty”; if the “primary duty” test is met, then he or she is deemed exempt regardless of how much time the individual actually spends performing the primary duty. ….By contrast, the state law exemption, as in the case of “outside salespersons,” adopts the requirement that the employee must be “engaged primarily” in exempt work … the term “primarily‟ is defined as “more than one – half the employee’s work time.”
Conclusion: Employers won’t be able to get around the broad, pro-employee ruling in this case. I expect it will generate a flood of new claims along these same lines. It’s getting to the point where I advise California employers to simply treat these employees as non-exempt and figure out what you would need to pay them straight time to keep their total compensation, including overtime, the same as their salary.
In a recent Webinar I did with DFEH head Phyllis Cheng she shared this graph of claims filed in California in 2011. And it got me to thinking. It made me want to ask… just how bad is that?
There are roughly 16 million workers in California. In 2011 roughly 18,000 cases were filed with the DFEH (the new 2012 numbers will be closer to 21,000 but as of this writing were not published yet). Let’s assume that is one half the claims universe since claims like overtime, wrongful termination and the like don’t need to involve the DFEH. So… 16,000,000 divided by 42,000 gets you one claim per year, of some kind, per 380 employees. Many of the DFEH and other claims are dismissed as without merit. The really good cases get pulled out of the DFEH system and dragged into court. Employees win more than half the cases that go to trial with the average jury verdict hovering around $250,000, the average settlement around $75,000. And that doesn’t include attorney’s fees. Of course you can–and should–insure against these claims so that your exposure does not exceed your deductible limit of, say, $25,000. The cost of that insurance is approximately $150 per year per employee, which comes out to a $57,000 annual premium. Keeping on one poor manager you are afraid to fire due to a potential lawsuit will more than eat up that premium cost.
Note: The EEOC claims some 100,000 discrimination claims were filed with it in 2012.
While getting the stats for work comp claims was more difficult, what I could find indicated there roughly 780,000 workers’ compensation claims filed each year in California. Most claims (around two-thirds) are for medical care only, with no cash indemnity payments. Approximately 20 percent of claims are for temporary disabilities. Permanent partial disability claims account for about 14 percent of total claims – 10 percent are minor disabilities and four percent are major disabilities. Death benefits and permanent total disability benefits each account for about one-half of one percent of total workers’ compensation claims. According to the rating bureau, the average lost work claim cost roughly $68,000 (and there were roughly 260,000 of them.) Of course these claims are always insured and in 2010, employers paid an average of $2.37 per $100 of payroll for policies.
Bottom line with risk management is to analyze, mitigate, and insure against it where possible.
In the recent case of Leyva v. Medlin Industries, Inc. (9th Cir. 11-56849 5/28/13) the court allowed a class action case to continue. What I want to focus on however is the type of claims being prosecuted because I am seeing them as a common trend. Here are the allegations taken out of the ruling which can be read in full here.
Medline manufactures and delivers medical products. The putative class members are current and former hourly employees in Medline’s three California distribution warehouses. Because Medline’s warehouse employees earn low wages, the amount each could claim for unpaid wages is relatively low—for example, Plaintiff’s individual claim is for less than $10,000.
Plaintiff alleges that Medline violated the California Labor Code, California Industrial Commission Wage Order 1-2001, and California’s Unfair Business Practices Law.
Plaintiff seeks to certify separate sub-classes to pursue the following four claims:
1. Rounding violation: Medline rounded its hourly employees’ start times in twenty-nine minute increments. For example, workers who clocked-in between 7:31 a.m. and 8:00 a.m. would be paid only from 8:00 a.m. onward even though they began work beforehand. Putative class members would clock-in before their scheduled start times because they had to complete tasks such as inspecting their machines and picking up scanners before they could begin their duties.
Plaintiff alleges that the rounding practices resulted in employees performing unpaid work before their scheduled start times, in violation of California Labor Code §§ 510 and 1197, and that they are entitled to compensation pursuant to California Labor Code §§ 1194, 1194.2, and 1197.1.
2. Bonus violation: Medline allegedly excluded non-discretionary bonuses from employees’ overtime rates, thus lowering overtime pay. Plaintiff claims that this practice violated California law, citing to Marin et al. v. Costco Wholesale Corp., 169 Cal. App. 4th 804, 807 (2008).
3. Waiting time penalties: Plaintiff alleges that because of the time rounding and bonus violations, Medline owes its employees penalties under California Labor Code § 203,which provides that an employer who willfully fails to pay any wages due to a terminated employee owes waiting time penalties.
4. Wage statement penalties: Plaintiff alleges that because of the rounding and bonus violations, Medline’s payroll records did not accurately record the hours employees worked and the wages they earned. California Labor Code § 226(e)(1) provides that an employee can recover up to four thousand dollars in damages, and additional civil penalties, for such violations.
My point is this: Know the law in each one of these areas. While the particular laws may vary within your jurisdiction, the principles remain similar. 1) Make sure employees get paid for every minute of work they do and be clear about when that work begins and ends. 2) Make sure you know how overtime is calculated. For example, the California standard may not be the same as the Federal one or one that applies in your state. 3) Understand that the non-payment of wages comes with stiff penalties and very often attorneys’ fees too. If ever a conflict, pay any amount not in controversy. 4) Lastly, make sure your paychecks comply with your state laws too. Don’t blindly rely on vendor or software programs.
HR That Works Members are invited to look at the Wage and Hour Training Module, Webinars, reports and BNA State Law Summaries. You can also get info at www.dol.gov/whd/flsa/, www.dir.ca.gov and your state labor commission: www.dol.gov/whd/contacts/state_of.htm.