Do you remember all of the hoopla back in 2016 when the Department of Labor published new overtime rules, and then at the last minute, after everyone did audits (and many reclassified), the rule was halted?  We wrote about it here.

Now the Department of Labor has proposed a new set of rules, setting the minimum salary threshold for white-collar exemptions at $35,308 (up from $23,660).  The new rules do not include many of the more controversial elements, including automatic increases, regional salary levels, or changes to the duties tests.  Here is a helpful alert that summarizes the new rules.

Despite what will like be a lot of press, these federal changes won’t have any effect on employers in California employers who already need to pay twice the state’s minimum wage to satisfy the requirements for exempt status.  With a minimum wage of $12 an hour (for employer’s with 26 or more employees), that is $49,920 in 2019.  And that amount goes up as the minimum wage increases a dollar a year until it hits $15 for all employers in January 1, 2023; at that time the minimum salary level for exempt status in California will be $62,400.

Even though many cities have their own minimum wages, it is still the state’s minimum wage that triggers the minimum salary threshold.

The highly compensated exemption threshold also went up from $100,000 to $147,414, but that doesn’t apply in California either.

Bottomline, since California’s minimum wage is already so much higher than the federal minimum wage, these proposed DOL changes won’t impact the golden state.

What is considered “work time” that requires pay?  Well, that definition keeps on getting broader for California employers.

  • Can you let individuals “volunteer” and provide comps/trade for their time?  No.
  • Can you let non-exempt employees check emails at night or on weekends and assume that the time is so small it is not compensable?  No.
  • Can you require a non-exempt employee to wait around at home and check in throughout the day to determine when/if needed at work (i.e. be engaged to wait)?  No.

And now per a new California Supreme Court case (Ward v. Tilly’s), can a California employer require an employee to call-in two hours before a shift, yet only pay that employee if actually required to come into work?  Also, no.

If you are a California based retailer, spa, salon, or restaurant that relies on an on-call system to adjust your California workforce based on last minute fluctuating operational needs, then think again.  Based on this ruling, your on-call policy is likely creating unnecessary risk.

The Court found that an on-call employee really isn’t free from work if required to call-in and then report in as needed.  In fact, such a call-in responsibility really requires that employee to keep the day free.  The employee can’t make plans, go to the beach or a movie, commit to another job, or secure child care.  And in the opinion of the Court, that isn’t particularly fair.

So what can you do if you are a California business that relies on an on-call workforce?

  • You can still have on-call employees, you just can’t discipline them for not calling or not showing up when needed (not very helpful, I know); or
  • You can still have on-call employees, but make the call-in time more than 2 hours before the shift (but note, with predictive scheduling laws in some cities, and more pending in the state legislature, how much on-call time is okay is still an open question); or
  • Ask for volunteers for any last minute extra shifts; or
  • Keep a list of employees who want extra shifts, and notify them when you need people last minute; or
  • Post open shifts and invite employees to sign up for them (and you can even put limits on taking extra shifts if it triggers overtime); or
  • Have employees show up, and if you don’t need them, send them home after 2-4 hours (but beware of strict reporting time pay requirements).

Was this case over-reaching by California courts?  According to the dissenting judge, this was an issue for the legislature, not the courts.  Maybe the legislature will take this issue up, or impose even more restrictions for on-call shifts with more predictive scheduling laws.  In the meantime, the lesson:  If you schedule on-call (especially in retail in California), beware.

I’ve been doing a lot of harassment prevention training lately.

One reason is because it is an odd year (2019), and the requirement to train managers & supervisors started in 2005, so many California businesses are on an odd year cycle for in-person training (with online options in between).

Another reason is that such training is top of mind for many employers given the new #MeToo inspired laws (summarized succinctly here), including a need to train all employees, not just managers and supervisors, by January 1, 2020.

One theme in these trainings is that things that used to be okay just aren’t anymore.  There is a spotlight on these issues right now.  And as the news shows us, behaviors from many years ago are coming back to haunt people today.

One of those behaviors involves dating (or hooking up) with work colleagues.  Lots of people have done it.  Many still do.  But in today’s world, that is pretty darn risky behavior.

A question I often pose in training is “can you have a consensual relationship with your boss?”  Of course it feels consensual to the supervisor, and may feel consensual to the subordinate at the time…. but what about later?  How can the supervisor prove it was consensual if the subordinate later changes their mind?

For Valentine’s Day, we lawyers can consider a love contract, a document that both parties sign to indicate the relationship is voluntary, consensual, and if it ever is not, the subordinate has avenues for raising any concerns.  This may serve as a deterrent, but it is not a perfect solution.

What is?  Well, here is where we get to the maxims:

  • Don’t get your meat where you get your bread
  • Don’t fish off the company pier
  • Don’t dip your pen in company ink
  • And don’t [expletive] where you eat

Happy harassment-free Valentine’s Day!

Every year in December I get the same wave of client calls.  What can we do to prevent everyone from calling in sick during the holidays?

Why is this such a problem?  It’s not just flu season or hangovers from too many holiday cocktails.  California has mandatory sick leave, many cities have additional requirements, and employees realize that sick days not used will be lost.  So what do they do?  No surprise — they use them!

And employers can’t really prevent them from doing so.  If the employee says s/he is sick (or a family member is sick), you can’t discipline the employee for calling out at the last minute or using the time.  It is essentially statutorily protected; there is certainly risk if you require a doctor’s note for time used within the statutory period.

What can you do?  Here are some suggestions:

  • Make sure employees use up their allotted sick time and aren’t allowed to take unpaid time off in lieu of sick time.  Once statutory sick time is used, you can discipline for taking additional time off (i.e. caveat, beware of ADA and intermittent FMLA/CFRA issues).
  • Take good notes of why someone is calling off. If the time off is for a flat tire, or the DMV, or a sick pet (not an assistance animal), then it isn’t a sick day.
  • If someone has a doctor’s appointment that was pre-scheduled, and just forgot to tell you, you can discipline for not giving proper notice (although be consistent).
  • Consider rewarding employees who don’t use sick leave by paying it out at year-end (although if you are making an exception to your policy, clearly explain it as a one-time issue due to year-end staffing that is not intended to be precedent setting).  Or change your policy to allow unused sick time to roll-over to discourage year-end use.
  • Or, the practical solution, which is ask your employees to tell you when they plan to be sick (if they can), to avoid putting too much pressure on co-workers with last minute call-outs.

Just one more California law issue without a terrific solution.

The trend is to move away from holiday parties.  Some companies are opting for a family picnic in the summer instead, or a party in January after the holiday season is over.  If your company is still planning a holiday party this season, given the heightened attention to harassment issues, here are some tips to consider:

Misletoe

Explain to management that they are “on duty”:

  • They must watch drinking and related behavior
  • Remember professional boundaries
  • No touching (preferably even when dancing)
  • Do not drive employees home after the party
  • Do not “after-party” with staff
  • Use the “mom test” (i.e. if you wouldn’t do/say it to your mom or
    in front of your mom, then don’t do/say it)

Remind employees that you want them to have fun, but:

  • Normal standards of conduct still apply
  • Misconduct at or after the party will lead to disciplinary action
  • Drink responsibly
  • No marijuana (even if legal)
  • Encourage designated drivers (provide a gift) or ride sharing

For everyone:

  • Follow my “one wine, one water” rule (it is hard to get drunk if you drink a full glass or two of water between every alcoholic drink)
  • No dirty dancing
  • No sleep-overs after the party (or couch surfing)
  • And for goodness sake, please don’t hang mistletoe!

It is that time of year.  We continue to wait for the Governor to sign or veto some controversial bills such as:

  • The Stand Act (prohibiting confidentiality in harassment and sexual assault settlements); and
  • AB 3080 (prohibiting mandatory arbitration for new and current employees, but presumably allowing arbitration with an opt out, and prohibiting nondisclosure of harassment issues to protect future employees going forward).

As we wait, there was one bill recently passed that clarifies a few things about California’s salary history ban that is worthy of a quick mention.

As you may recall, effective this year, employers were prohibited from asking an applicant about his/her salary history.  Employers are also required to provide pay scale information to an applicant on the position applied for upon reasonable request.  Recently, some of those terms have been clarified, as follows:

  1. First, an applicant is now defined as an individual seeking employment who is not currently employed with that employer in any capacity or position.  So current employees are not entitled to pay scale information.
  2. Second, a reasonable request, is now defined as a request made after an applicant has completed an initial interview with the employer.  This would prevent someone not qualified for a position from obtaining salary range information about it.
  3. Third, pay scale is defined as a salary or hourly wage range for the position.  Not quite sure what the confusion was there.
  4. Fourth, as most of us already surmised, it is perfectly acceptable to ask an applicant about his/her salary expectations.
  5. And finally, while prior salary cannot justify any disparity in compensation, an employer can consider current salary as a factor to justify a wage differential as long as it is based on:
    • A seniority system;
    • A merit system;
    • A system that measures quality or quantity of production; or
    • A bona fide factor other than sex, race or ethnicity (such as education, training, or experience).

Now if only the legislature would take up some very serious issues facing employers, especially after Dyanmex (and the resulting war against contractor status), such as my personal favorite idea, to create a new category of workers called “dependent contractors”.  Maybe next term.  One can always hope.

ICE workplace audits are on the rise.  And if you didn’t know, the federal government and California are not harmonious in their views on immigration issues.  That means that ICE raids on California employers are likely to continue, especially in target industries such as hospitality, construction, agriculture, tech, and manufacturing.  And if you want to minimize your company’s exposure to massive fines and possible criminal prosecution, this issue should be on your radar.

One of the biggest recent traps of late seems to be the I-9 form.  Under federal law, all employers in the US are required to complete the I-9 in order to verify the identity and employment eligibility of new hires.  Employers are required to have a completed I-9 on file for every employee.  The employee must complete Section 1 of the I-9 at the time of hire (and absolutely not before acceptance of a job offer).  The employer must complete Section 2 of the I-9 within three business days of the hire date.  I-9s must be retained for three years after the date of hire, or one year after the date employment ends, whichever is later.  Failure to abide by these rules can lead to very severe penalties and fines.

When ICE wants to examine your workforce, it provides a Notice of Inspection that gives you just three days to get your I-9s and payroll records ready for review.  Once that happens, it is very hard to fix any problems you may have.  There just isn’t time and ICE has discretion to disregard any remediation efforts after the service of the NOI.

What can be wrong with an I-9 you ask?  Well if our audits of I-9s are indicative, close to 50% if not more, usually have problems, including:

88144554 – hand with pen fills in a paper form us immigration visa
  • Incomplete, with information, signatures, and dates missing.
  • Incorrect information, such as a document for List B or C in the List A column.
  • Signatures that don’t match the names on the documents.
  • Blank Section 2 with the List A or B and C documents simply attached.
  • Documents that don’t match the names on the form.
  • Older or incorrect versions of the I-9 used.
  • And on and on and on….

The I-9 may look like a simple form, but it is not and can cost the employer significant cash in fines … and possible criminal prosecution!  So if the person completing your new hire paperwork isn’t skilled or trained on how to complete this form, chances are your I-9s are imperfect.  It is not uncommon when we perform I-9 audits to see the same mistake(s) repeated over the course of thousands of I-9s!  That means risk, and these days, big risk.

The other problem is that you can’t just ask specific employees to re-verify their status, for example if there is a rumor that the employee may be undocumented, because that can lead to claims of discrimination.  Remember national origin and citizenship status are protected categories.  So the only way to fix the I-9s is to audit all of them, fix all of the mistakes that you can, and do it before any audit or notice of inspection from a government agency.

Oh, and please do not audit without the attorney-client privilege protection.  The last thing you want are emails indicating that your I-9s are wrong, or your employees are illegal, and you knew about it and didn’t fix it.  Knowingly employing, hiring, or continuing to employ undocumented workers is a crime.  Employers are subject to criminal prosecution—yes, that means possible jail time.

This is budget planning season for many employers.  Our advice is to add an 1-9 audit to your budget for 2019.

Many thanks to Ali Brodie for her assistance with this post!

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….

Do you want to know the secret of achieving pay equity in the workplace (at least in the long term)?  Well, it is really about the dads. Yes, that’s right.  The more paid time off given to fathers, the more likely it is the a company will achieve long term pay equity.  Why you ask?

Because when time off for babies and kids becomes a parental issue, and not a women’s issue, then women stop being punished (whether directly or indirectly) for taking time off to give birth and raise kids.  And if you are wondering if women really are set back by being pregnant or active parents, then read this recent article in the New York Times.  Women are set back.  Having kids can be a career killer. There is a documented motherhood penalty.

This is why parental leave policies, as opposed to maternity and paternity leave policies, are the wave of the future.  If your business has not revised its time off policies for all parents (whether female/male, gay/straight, birth parent/non-birth parent), then it is time to consider it.  Otherwise, you just could be the next company in the news (and not in a good way).

Oh, and by the way, having a policy is one thing.  But actually encouraging dads to use it is (instead of punishing them for it, whether overtly or covertly) is another critical step.

Happy father lying on sofa holding baby girl and playingIn honor of Father’s Day (albeit a week late), let’s hear it for the dads! Especially if it ultimately helps the moms get paid the same as those dads!

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.