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California employers know to expect that the law sometimes takes some crazy turns. But the changes to the rules for healthcare worker meal waivers have been particularly insane. Try to keep up.

  1. In 2000, the legislature enacted AB 60, which included provisions saying that if you worked more than 12 hours, you could not waive a second meal period. The law also gave the Industrial Welfare Commission authority to issue regulations.
  2. The IWC issued amended Wage Orders that same year. Wage Orders 4 (Professional, Technical, Clerical, Mechanical & Similar Occupations) and 5 (Public Housekeeping Industry – which includes hospitals) specifically allow healthcare employees working 12–15 hours to waive a second meal period.
  3. A group of plaintiffs sued their employer arguing that the IWC exceeded its authority and that the Wage Orders were illegal to the extent that they allowed waiver of the second meal period. The case was Jazmina Gerard v. Orange Coast Memorial Medical Center. In that case, the trial judge granted summary judgment for the employer, the employees appealed, and the appellate court reversed. So as of February 2015, employers who had followed the Wage Orders were suddenly subject to class-wide liability going back at least three years.
  4. In October 2015, the state legislature enacted a statute specifically permitting healthcare workers working over 12 hours to waive the second meal period. Still, the litigation continued because it raised questions about how to interpret the law before that enactment.
  5. In March 2017, after being told by the California Supreme Court to take another look, the appellate court reversed itself. It recognized that it was mistaken on the timing and concluded that the IWC acted appropriately.
  6. The California Supreme Court agreed to hear the case. In a decision issued earlier this week, the California Supreme Court agreed that the IWC acted within its rights in issuing the Wage Orders. So we’re back where we started. Healthcare employees working 12-15 hours are allowed (and have been allowed since 2000) to waive a second meal period.

Throughout this process, healthcare workers and their employers both wanted the same thing. Neither benefited from a rule that said that, after working over 12 hours, you couldn’t go home until you took an unpaid, 30-minute meal break. It didn’t need to be this complicated.

Tyreen Torner has again updated this Chart Summarizing CA State and Local Paid Sick Leave Rules. It summarizes the Paid Sick Leave laws for California, San Francisco, Los Angeles, San Diego, Oakland, Berkeley, Santa Monica, and Emeryville.

Regular readers of this blog may be asking: “Wait. Didn’t she just do an update in June?” Yes, she did! But there have been changes since then in the rules for Santa Monica, San Francisco, and pesky little Emeryville. Keeping this chart current requires constant vigilance, but Tyreen is up to the task.

It’s been nearly six months since the California Supreme Court announced that employers and government agencies were using the wrong test to determine who’s an independent contractor. In Dynamex Operations West, Inc. v. Superior Court, the court declared that employers must meet the three-prong ABC test to overcome the presumption of employment status. But Dynamex left a number of questions unanswered. A decision filed this week,  Garcia v. Border Transportation Group, LLC, takes a tentative initial step to address those open questions.

There, the trial court granted summary judgment for the employer on the basis that Garcia was an independent contractor. Some of those claims (but not all) were based on the IWC Wage Orders, which guarantee employees a minimum wage, maximum hours, overtime compensation, meal and rest breaks, and more. The employee appealed and, while the appeal was pending, the CA Supreme Court issued its opinion in Dynamex.

Since the employer could not show that the plaintiff had an independently established business (part C of the ABC test), the court of appeal reversed the summary judgment on the claims based on the Wage Orders. These included claims for unpaid wages, minimum wage violations, failure to provide meal and rest periods, failure to furnish itemized wage statements, and a claim that the foregoing constituted unfair competition.

The court upheld summary judgment on claims for wrongful termination, waiting time penalties, and an unfair competition claim based on those violations. The court reasoned that, while Dynamex applied to claims based on the Wage Orders, the test for the remaining claims still involved the extent of control the employer exercised over the worker.

In a footnote, the court also questioned whether the Dynamex decision applies retroactively. The parties had not raised the issue and the court therefore said it would not address it. But in declining to address it, the court noted: (1) the general rule that judicial decisions have retroactive effect; (2) that there could be exceptions where the parties reasonably relied on the previously existing law; (3) that the Dynamex court declined a request to apply its ruling only prospectively; and (4) that Dynamex came as no greater surprise than a number of decisions that routinely apply retroactively. That’s quite a bit for an issue the court said it would not address.

While this decision doesn’t hold out much hope for Dynamex not applying retroactively, it at least says that it may be an open question. The greater value for employers comes in the decision’s reinforcement that (at least in this appellate court on this day), Dynamex is limited to claims under the Wage Orders. As to when we’ll have greater clarity on those issues, that remains to be seen.

In July, the California Supreme Court announced that various provisions of the Labor Code and the IWC Wage Orders did not incorporate the de minimis doctrine. According to that doctrine, some alleged wrongs are so trivial or hard to measure that courts will disregard them. The de minimis doctrine applies to the federal Fair Labor Standards Act, so under that law, employers can disregard small amounts of time (a few minutes) in calculating what employees are owed. The California Supreme Court announced, however, that that was not the case under corresponding state laws.

On August 29, 2018, the court slightly modified its earlier opinion, stating that:

“The opinion herein is modified as follows: The final paragraph of the opinion … is modified to read: We hold that the relevant California statutes and wage order have not incorporated the de minimis doctrine found in the FLSA. We further conclude that although California has a de minimis rule that is a background principle of state law, the rule is not applicable to the regularly reoccurring activities that are principally at issue here. The relevant statutes and wage order do not allow employers to require employees to routinely work for minutes off the clock without compensation. We leave open whether there are wage claims involving employee activities that are so irregular or brief in duration that employers may not be reasonably required to compensate employees for the time spent on them. The petition for rehearing is denied.” (emphasis added)

The reference to “reoccurring activities” and employees “routinely” working for minutes off the clock indicates that the court is addressing situations where employees are required to perform some off-the-clock work on a repeated or regular basis, such as closing shop or shutting down systems. So a different rule may apply to activities that are more irregular or isolated. In fact, the court said as much in its earlier version of the opinion by noting that there may be employee activities “where compensable time is so minute or irregular that it is unreasonable to expect the time to be recorded.” The more recent modification simply clarifies that that is still the case. 

Our recommendations for employers remain the same:

  1. Do everything possible to ensure that employees don’t clock out until they’ve completed all work-related tasks. This includes security checks, closing shop, and exiting the work premises.
  2. If you use fixed time clocks, locate them as close as practicable to the exits. Or better yet, look at more advanced systems that employees can operate remotely, The court specifically referred to “advances in technology … shaping our understanding of what fractions of time can be reliably measured.”
  3. Ensure that whatever policy you use to round off workers’ time entries is facially neutral (i.e., you’re just as likely to round up as to round down).
  4. Require non-exempt employees to report any time they work after hours. Seemingly trivial tasks like checking e-mail or an online schedule could be compensable.
  5. Train managers on how and when to communicate with non-exempt staff after hours.
  6. If employees do after-hours work without authorization, discipline them, but pay for the time.

Is this modification good news for employers? No. But it may be slightly less awful than it was before.

I was in court last week for a status conference in a wage-and-hour class action, and was talking to my opposing counsel, an active litigator in this arena.  I asked him if the new California Supreme Court case rejecting the de minimis standard was going to be big business for him.

His candid response surprised me, so I thought I’d share it.  He opined that it really isn’t hard to prevent class action lawsuits in California and the de minimis argument really isn’t necessary.  All an employer has to do is:

  • Pay per actual time punches; don’t round at all.
  • Require a 45 minute or one hour meal break; don’t bother with 30 minutes.
  • Provide meal breaks at the 4th hour (always way before the end of the 5th hour worked).
  • Have a fully compliant rest break policy and a strict policy against working off the clock.

To his list I would add:

  • Don’t schedule 6-hour shifts with a 6-hour or less meal wavier; schedule 5 hour shifts or just schedule the meal break.
  • Don’t rely on-duty meal waivers.
  • Update your handbooks every year, it really is cost effective in the long run.
  • Train your managers not to mess things up (even inadvertently), and keep records of that training.

He said that an employer who consistently does all of these things makes taking a class action case very un-interesting for plaintiff’s attorneys like him.

58097900 – class action, 3d rendering, rough street sign collection

Easy enough, right?  Well, it sounds a little bit expensive to me, and it also might create some employee relations issues.  But then again, it might  be worth a try….

Thermometer and pills on paper marked with Sick Leave labelAs employers know all too well, it is no small task keeping up with California’s State and Local Sick Leave laws. Just as frustrating are California’s many paystub requirements under Labor Code section 226. One paystub requirement that often gets forgotten is the need to include employees’ accrued sick time on paystubs.

Inclusion of sick time on paystubs is not governed by Labor Code section 226.  Instead, it is Labor Code section 246(i) which requires employers to list an employee’s accrued sick time on their wage statements or in a separate writing.  Luckily for employers, violations of this particular subdivision also do not trigger Labor Code section 226’s dreaded penalties.

The enforcement of the provisions from the Healthy Workplaces, Healthy Families Act of 2014 is governed by Labor Code section 248.5.  Section 248.5 makes clear that there is no private right of action to enforce the Act’s provisions.  Only the Labor Commissioner or Attorney General may bring a civil action against the employer for alleged violations.  Further, the section explicitly makes clear that “any person or entity enforcing this article on behalf of the public as provided for under applicable state law shall, upon prevailing, be entitled only to equitable, injunctive, or restitutionary relief, and reasonable attorney’s fees and costs.”  (Labor Code section 248.5(e))  Thus, individual employees cannot collect penalties for themselves, or for others pursuant to a dreaded PAGA claim.

Since employees cannot sue to collect individual penalties and cannot sue to collect PAGA penalties, is there any risk to employers who do not include accrued sick time on paystubs?  The answer is yes.  Even though an individual cannot seek penalties, the California Labor Commissioner can take action to recover penalties in the amount of $50 for “each employee or person whose rights under this article were violated for each day or portion thereof that the violation occurred” with a cap of $4,000.  Further, a claim for injunctive action still allows for recovery of reasonable attorney’s fees and costs.

Businessman handing over paycheck at desk in officeSo California employers, check those paystubs.  In addition to ensuring that they include all of the information required under Labor Code 226, add accrued sick time to the list of necessary information provided to your California employees.

 

An ancient maxim of jurisprudence states that “the law disregards trifles.” Or in Latin: De minimis non curat lex. The underlying principle is that some alleged wrongs are so trivial or hard to measure that courts don’t want to be bothered with them. At least, that’s true of most courts. In an opinion issued today, the California Supreme Court said that the “de minimis” doctrine is not part of California wage and hour Law.

The opinion arose from a federal case in which a class-action plaintiff claimed that nonmanagers were shortchanged for the time between when they clocked out and when they left the store. The evidence showed that, had the plaintiff been paid for this time, he would have earned an additional $102.67 over a 17-month period (or approximately 29¢ per workday). The federal court granted summary judgment for the employer based on the de minimis doctrine and plaintiff appealed to the Ninth Circuit. The Ninth Circuit asked the California Supreme Court to advise it as to whether California applied the de minimis doctrine to wage claims.

In today’s decision, the court answered the question in the negative, stating that there is no convincing evidence that California wage and hour laws incorporate the de minimis standard. That should be a surprise to the Division of Labor Standards Enforcement, whose Enforcement Policies and Interpretations Manual and opinion letters expressly adopted the standard. But the court explained that those aren’t binding. In knee-jerk fashion, the court again trotted out the principle that the Labor Code and wage orders must be construed liberally to protect employees and issued a unanimous opinion that should have plaintiffs’ class action lawyers celebrating all over the state. The court left open the possibility that there may be employee activities that are so brief or irregular that they don’t require compensation, but the four to ten minutes at issue in this case didn’t fit into that category.

What should employers do now?

  1. Do everything possible to ensure that employees don’t clock out until they’ve completed all work-related tasks. This includes security checks, closing shop, and exiting the work premises.
  2. If you use fixed time clocks, ensure that they are as close as possible to the exits. Or better yet, look at more advanced systems that employees can operate remotely, The court specifically referred to “advances in technology … shaping our understanding of what fractions of time can be reliably measured.”
  3. Ensure that whatever policy you use to round off workers’ time entries is facially neutral (i.e., you’re just as likely to round up as to round down).
  4. Require non-exempt employees to report any time they work after hours. Seemingly trivial tasks like checking e-mail or an online schedule could be compensable.
  5. Train managers on how and when to communicate with non-exempt staff after hours.
  6. If employees do after-hours work without authorization, discipline them, but pay for the time.
  7. Stop being surprised when the California Supreme Court rejects seemingly well-established legal principles on the basis that it needs to protect the most thoroughly protected employees on the planet.

Tyreen Torner has again updated this Chart Summarizing CA State and Local Paid Sick Leave Rules. It summarizes the Paid Sick Leave laws for California, San Francisco, Los Angeles, San Diego, Oakland, Berkeley, Santa Monica, and Emeryville.

Man lying with a broken leg in a cast on a sofaAre you curious about how the accrual cap rules in Oakland (where the Golden State Warriors are today celebrating their third NBA title in four years) compare to the accrual cap rules in Los Angeles (where the Lakers weren’t even the champions of LA)? Just look it up. It’s all there. Right at your fingertips. Thank you Tyreen!

To keep employers guessing, not only does the state minimum wage increase every year, but many cities do as well. Currently, California’s minimum wage is $11 per hour (or $10.50 for employers with up to 25 employees).

Red balloons on blue sky spelling "Guess"While state minimum wage goes up in January, some cities like to keep things complicated by increasing their minimum wage as of July 1st.  One such city is Santa Monica, where the minimum wage goes up to $13.25 on July 1st.  The $13.25 rate also applies to Los Angeles as of July 1st for employers with 25 or more employees; those with under 25 employees must pay $12.00.

To keep things really confusing, certain hotel workers in Santa Monica and Los Angeles get even higher rates; on July 1st hotel workers in those cities get an increase to $16.10 per hour.

Yes, California likes to keep employers guessing.  Thankfully you have this blog to keep the guesswork out of your wage and hour compliance.

 

Employers are still reeling from last week’s decision in Dynamex Operations West, Inc. v. Superior Court, in which the California Supreme Court said that employers (and even a state agency that protects workers) were using the wrong standard to distinguish employees and independent contractors under the state’s Wage Orders. A month before that, in Alvarado v. Dart Container Corporation of California, the same court announced a more employee-friendly way of calculating overtime for employees who receive bonuses.

These cases share two things. First, they put big smiles on the faces of lawyers who file wage and hour class actions. Second, both cases premised their decisions in part on California’s goal of protecting workers. In Dynamex, the court relied on the “general principle that wage orders are the type of remedial legislation that must be liberally construed in a manner that serves its remedial purposes.” The court in Alvarado noted that one of the “overarching interpretive principles” to guide its analysis was that “the state’s labor laws are to be liberally construed in favor of worker protection.” No mention was made of the fact that California workers have more far-reaching protections than workers in any other state.

While Dynamex and Alvarado provide examples from the last 45 days, the courts have been interpreting employee protections liberally for many decades. During that time, workers’ rights keep expanding further and further. I am certainly not suggesting that workers should not be protected from unscrupulous employers. But does anyone pay attention to the principle that employers who make every effort to follow the law shouldn’t be subjected to potentially ruinous litigation exposure each time the courts reinterpret the law in a new direction?