Employers with 50 or More Workers

Beginning March 8, 2013, employers with 50 or more employees and subject to the federal Family and Medical Leave Act (FMLA) must display a new poster. The change is prompted by new U.S. Department of Labor (DOL) regulations.

This new “Employee Rights and Responsibilities Under the Family and Medical Leave Act” poster is included as “Notice C” on the more comprehensive California Chamber of Commerce “California and Federal Employment Notices” poster.

Along with a summary of FMLA, the new posting provides instructions for filing a complaint under that law. As always, covered businesses must display the poster in a conspicuous place where employees and job applicants can readily view it.

Employers with 50 or More Workers

Beginning March 8, 2013, employers with 50 or more employees and subject to the federal Family and Medical Leave Act (FMLA) must display a new poster. The change is prompted by new U.S. Department of Labor (DOL) regulations.

This new “Employee Rights and Responsibilities Under the Family and Medical Leave Act” poster is included as “Notice C” on the more comprehensive California Chamber of Commerce “California and Federal Employment Notices” poster.

Along with a summary of FMLA, the new posting provides instructions for filing a complaint under that law. As always, covered businesses must display the poster in a conspicuous place where employees and job applicants can readily view it.

How Long Are Copyrights Protected? Not So “Elementary, My Dear Watson!”

Copyrights, trademarks, trade secrets and patents are “intellectual property,” as compared with “real property” or real estate –land and buildings – or “personal property” – other physical property. A company’s intellectual property is often its most valuable asset. Thus of course, ensuring maximum protection for that property is a critical concern for such business.

A recent court decision from Chicago reaffirms the sometimes not-so-obvious rules on a copyright’s life span. Author Leslie Klinger, who according to his website is one of the foremost authorities on Sherlock Holmes, sued the Conan Doyle Estate, Ltd. in February, 2013. Mr. Klinger asserted that certain elements of two Sherlock Holmes characters – Holmes and Dr. Watson – created by Sir Arthur Conan Doyle were no longer protected by copyright. If correct, Klinger would of course no longer have to obtain the estate’s permission to utilize those elements in his own published writings.

The judge’s ruling was split. Elements based on character development, dialogues, settings, and other story aspects in the pre-1923 books and stories are freely usable because they were published before 1923 and thus are now in the public domain. The judge found that other elements published in 1923 or after were still subject to copyright, thus requiring Klinger or anyone else to obtain a license from the estate (and to pay any required fees) in order to include them in published works.

As long as a creative work is subject to copyright, the author or anyone to whom he/she assigns the copyright – has the exclusive right to reproduce, publish, distribute, publicly display, or create derivative works from that work. Anyone else wishing to do so must receive permission from the author or other owner of the copyright. However, while creative works – writings, songs, music, computer code, screenplays, sculptures, paintings, photographs, and more – are born with copyrighted status from the moment of creation, the legally protected term of that copyright does not always start at that moment.

The length of protection depends on where the work was created, as each country has its own law with one or more international treaties thus affecting protections of that work in other nations, as well as when the work is “published.”

For original works created in the U.S. the law has changed over the years and is somewhat complex. For many works published after January 1, 1978, the copyright lasts for life of the author plus 70 years. However, if an individual created a work for an employer or under a particular contract that qualifies it as a “work made for hire,” copyright extends for 95 years. Further, if any work was published prior to 1978, the rule is 95 years from when the work was first published, not the date of creation. This is the “95 year rule” applied in the Conan Doyle Estate case.

To strengthen the protection for copyrights in the United States over their life span, it is a good idea to register them with the U.S. Copyright Office. For help in understanding these issues and protecting your copyrights, contact the firm’s “of counsel” attorney, Helena Kobrin.

California Requires Written Agreements by End of 2012

California Labor Code 2751 is being revised to require employers to place commission pay arrangements in writing. Businesses have the next 12 months to prepare. Effective January 1, 2013, section 2751(a) will state:

“Whenever an employer enters into a contract of employment with an employee for services to be rendered within this state and the contemplated method of payment of the employee involves commissions, the contract shall be in writing and shall set forth the method by which the commissions shall be computed and paid.”

Employers will be required to “give a signed copy of the contract to every employee who is a party thereto and shall obtain a signed receipt for the contract from each employee.” Labor Code 2751(b). If the contract expires, its terms continue until specifically superseded or the employment terminates.

Covered commissions are “compensation paid to any person for services rendered in the sale of such employer’s property or services and based proportionately upon the amount or value thereof.” (Labor Code 204.1) The new law does not cover short-term productivity bonuses “such as are paid to retail clerks” or other bonus and profit-sharing plans “unless there has been an offer by the employer to pay a fixed percentage of sales or profits as compensation for work to be performed.” Labor Code 2751(c).

The former Labor Code 2751 required such written commission agreements only for employers with no “permanent and fixed place of business” in California. However, in 1999 a federal judge found that limiting the law to such out-of-state companies was unconstitutional. Thus, the revised code section seeks no such discrimination. Now all businesses employing in California will be subject to the requirements.

While employers could find this “put it in writing” requirement an inconvenience, the new law can be regarded as a positive incentive for businesses to nail down important specifics on their commission plans.

For example, it is not uncommon for a company to overlook defining the event or events after which an employee no longer earns a commission. Is a worker entitled to a percentage of certain income the employer receives after his or her departure? If so, what is the formula for confirming and calculating post-termination commissions? Where an oral (or just presumed) agreement can create an expensive fight over how much commission money, if any, a terminated employee has earned after his or her termination, a written agreement can establish the boundaries and cut-off points clearly.

While the revised law specifies no penalty or consequence for failing to place a commission agreement in writing, court could disregard a future employer’s claimed oral commission arrangements with workers as unenforceable, instead siding with an employee’s much more generous recollection of commission terms. The state’s wage enforcement agencies or a court could also consider written commission agreements within the scope of “personnel records” and that an employer’s failure to maintain and provide them for inspection under Labor 1198.5 even subjects that employer to misdemeanor fines and even imprisonment under Labor Code 1199(c).

As there is no time like the present, it is a good idea to address any needed written agreements or revisions before the coming year has suddenly flown by. An experienced labor and employment lawyer can of course help an employer steer clear of the ambiguities and create workable agreements that benefit all concerned.

Must Employers Pay Premiums for Extra Hours Worked?

California Labor Code 2751 requires that all California employee commission compensation agreements must be in writing by January 1, 2013. Whether a business already has written commission arrangements with its sales personnel, this impending deadline is incentive to ensure such arrangements are clearly stated and in compliance with applicable laws, including the rules for any sales commission-related exemptions from overtime compensation.

Except for workers who are “exempt” from the requirements, employers must pay employees at increased per-hour (“premium”) rates for “overtime.” Federal rules define overtime as “after 40 hours worked” in a company’s seven day “workweek.” California also defines overtime as “after eight hours worked” in a company’s 24 hour “workday.” See, Working Overtime in California, Basic Rules and Rates for Daily and Weekly Hours.

Certain sales personnel qualify for exemption from the federal and California overtime rules. In such instances, an employer need only pay the agreed-upon commissions – or other arrangement of set salary/hourly pay and commissions – no matter how many hours the qualified sales person works in a given workday or workweek.

The rules for each of the two sales personnel exemptions (outside sales and inside sales) are very specific and potentially complex, requiring management’s regular management attention to ensure each particular employee qualifies from week to week. There are also key distinctions between the California and federal exemptions, requiring employers to carefully confirm that its exempt sales people comply with each set of rules.

Outside Salesperson Exemption: California exempts from overtime compensation “[a]ny person, 18 year of age or older, who customarily and regularly works more than half the working time away from the employer’s place of business selling tangible or intangible items or obtaining orders or contracts for products, services, or use of facilities.” See, Glossary, Division of Labor Standards Enforcement (DLSE).

Federal law exempts from overtime compensation an individual whose “primary duty” is making sales or “obtaining orders or contracts for services or for the use of facilities for which a consideration will be paid by the client or customer” and who is “customarily and regularly engaged away from the employer’s place or places of business.” See, U.S. Department of Labor, Wage and Hour Division Fact Sheet No. 17F.

To determine whether an employee qualifies for this exemption, federal law thus counts that person’s actual sales actions in the field as well as incidental activities (e.g., deliveries, collections, repairs, maintenance and/or in-office telephone calls or emails for appointments). However, for a California employee to qualify for this state’s outside sales exemption, he or she must be engaged in actual sales activities outside of “the employer’s place of business” for over 50% of the time. Any deliveries, collections, and various in-office activities, whether or not incidental to securing sales, cannot exceed 49% week-to-week under California’s rules.

Personnel who qualify as the outside salespersons are exempt from minimum wage and overtime pay.

Inside Salesperson Exemption: An “inside sales representative” sells products or services in a store, sales lot or while otherwise situated in the employer’s place of business (e.g., telephone solicitation and sales). In California, a commissioned inside sales representative covered either by Industrial Welfare Commission Wage Order 4 (professional, technical, clerical, mechanical and similar occupations) or Wage Order 7 (merchantile industry) is exempt from overtime compensation if:

• total compensation exceeds 1.5 times the minimum wage for each hour worked during the pay period; and
• at least 50% of total compensation comes from commissions.

California’s minimum wage is $8.00 per hour. Since an inside salesperson’s compensation must exceed the $12.00 amount for every hour worked in a week, this exemption has the unique requirement of employee’s accurately tracking work hours each week to ensure he or she qualifies for the exemption. Whether the sales commission structure is comprised of a base salary plus commissions, pure sales commissions, a draw provided against future commissions or some combination of these, the exemption requires that each weekly paycheck (or the per week proration of a bi-monthly paycheck) exceeds $12.00 multiplied by the number of hours worked for that week to qualify.

The exemption applies in the case of an employee paid a fixed salary plus earned commissions if the amount of sales commissions exceeds the total amount of salary payments for a chosen representative period. If a company compensates a worker purely by sales commission, this “51% – 49%” calculation is of course irrelevant.

The employer must chose a representative period to establish the plus-50% commissions and minus-50% salary ratio that is at least one month and but no more than one year in duration. The employer should pick a reasonable duration at or between those extremes that is a fair reflection of the salesperson’s true weekly average of earned commissions. For example, where a company’s sales to the public and commissions paid are relatively constant month-in and month-out, then picking a relatively short representative period is reasonable. In a business with seasonally high or low periods of sales, then calculating the average weekly figure for commissions should reasonably require a period nearer or at a year’s-worth of activity. It is conceivable that a business could have some types of sales that warrant a shorter representative period than for sales of other products or services. Whatever representative period(s) the employer chooses, the employer must document the average ratio for each employee for each such period.

Federal rules limit qualification to those who work in the “retail and service industry.” Employers are engaged in the “retail and service industry” within the meaning of the federal Fair Labor Standards Act if they derive at least 75% of their annual sales revenue from goods or services not for resale and are recognized as a retail or service establishment in their industry.

While an employee qualified for the inside salesperson exemption does not earn overtime compensation, he or she is nevertheless entitled to the meal breaks and rest periods accorded hourly, non-exempt-from-overtime workers. See, e.g., California Wage Order 4 at sections 11 and 12.

There is potentially much more at play under both state and federal rules. For actual legal advice on how any of these rules apply to actual workplace arrangements, management should consult with qualified labor and employment counsel.

California Labor Code section 515.5 exempts certain computer professionals from overtime compensation. The criteria includes set minimum compensation. The California Department of Industrial Relations (DIR) recently increased this minimum, effective January 1, 2013.

Employers will now have to pay otherwise qualified computer software employees, a minimum $39.90 per hour, up from $38.89. The new rate translates to $6,927.75/month or $83,132.93/year.

While persons who qualify for this exemption need not be paid at “time-and-a-half” or “double time” rates for overtime hours, the rules still require employers to accurately document the actual number of hours such qualified persons work. While companies commonly direct employees to track their hours worked, employers are primarily responsible for ensuring those records are truthful and complete.

An employee is an exempt computer professional only if he or she also meets each of the high-level skills and duties criteria for that exemption. An employer should ensure that any such worker meeting the very specific requirements laid out in Labor Code section 515.5, which include but are not limited to “primarily engaged” (more than 50% of the time) in intellectual or creative work which requires “the exercise of discretion and independent judgment” as well as work in applying systems analysis to determine the “functional specifications” of hardware, software or systems; designing computer systems of programs; and/or documenting, testing, creating or modifying computer programs related to computer systems software or hardware design.

If a computer professional meets all of these requirements, he or she need possess no particular academic degree to be eligible for this exemption.

Employers who use this overtime exemption for any portion of their workforces will need to incorporate this rate change into their pay practices by the end of 2012. For assistance, contact a knowledgeable employment law attorney.

Computer professionals also may be qualified for other exemptions from overtime compensation, including the administrative or executive exemption. Each of those categories of course carries its distinct qualification rules.

California Labor Code section 515.6 exempts certain licensed physicians and surgeons from overtime compensation. The criteria includes set minimum compensation. The California Department of Industrial Relations (DIR) recently increased this minimum, effective January 1, 2013.

Employers will now have to pay otherwise qualified physicians and surgeons the equivalent of at least $72.70 per hour, up from the current $70.86 rate. The new rate translates to $12,601.33/month or $151,216/year.

While persons who qualify for this exemptions need not be paid at “time-and-a-half” or “double time” rates for overtime hours, the rules still require employers to accurately document the actual number of hours such qualified persons work. While companies commonly direct employees to track their hours worked, employers are primarily responsible for ensuring those records are truthful and complete.

Under Labor Code section 515.6, an employee is an exempt-from-overtime worker only if he or she is also a licensed physician or surgeon “primarily engaged” (more than 50% of the time) in duties that require that licensure. For instance, California Business & Professions Code section 2052 requires a medical license for anyone who “diagnoses, treats, operates for, or prescribes for any ailment, blemish, deformity, disease, disfigurement, disorder, injury, or other physical or mental condition of any person.”

Employers who use this overtime exemption for their workforce will need to incorporate this rate change into their pay practices by the end of 2012. For assistance, contact a knowledgeable employment law attorney.

Licensed medical doctors also may be qualified for other exemptions from overtime compensation, including the administrative, executive, or professional exemptions. Each of those categories of course carries its distinct qualification rules.

The California Legislature has made an important change, effective January 1, 2013, eliminating some of the ability of businesses to negotiate wage arrangements with hourly workers.

In February, 2011, we summarized the Court of Appeal decision in Arechiga v. Dolores 192 California Appellate Reports, 4^th Series (Cal.App.4^th) 567 (2011). See, “Written Salary Agreements and Overtime.” The case had upheld the use of so-called “explicit mutual agreements” to establish a salary for hourly workers that included overtime compensation within that set weekly amount.

Thus, the court validated an agreement between Carlos Arechiga and his employer Dolores Press for a $880 salary to cover a 66 hour weekly schedule, with $445.60 allocated to cover the 40 hours of regular time (at $11.14/hour) and $434.46 to cover the 26 hours of overtime (at $16.71/hour, 1.5 x the regular rate).

The new law for 2013, Labor Code 515(d)(2), directly reverses the Arechiga decision. Now, any salary agreement for a California hourly employee “shall be deemed to provide compensation only for the employee’s regular, non-overtime hours, notwithstanding any private agreement to the contrary” (emphasis supplied).

On the Arechiga-Dolores Press example above, this means that the $880 salary would now only apply for the worker’s first 40 hours worked in any workweek (and, prorated, to that person’s first eight hours worked in any day). California law would thus now regard that $880 to equal a regular hourly rate of $22.00/hour ($880 ÷ 40 = $22). On the 66 hour schedule in the Arechiga case, the employer would be obligated to pay the worker a rate of at least $33.00/hour for every overtime hour or, at minimum, another $858/week, nearly doubling the total $880 amount approved in the above 2011 decision.

It is of course important that California businesses swiftly reevaluate such “explicit mutual agreements” for salaries to hourly employees who work any overtime hours. Alternatives could include: 1) eliminating the salary arrangement altogether and proceeding with an established straight rate for every hour worked and the premium rate(s) calculated for each overtime hour worked in a given workday or workweek; or 2) setting a new, lower salary amount to cover non-overtime hours only, with overtime hours compensated by the standard formulas. See also, “Working Overtime in California, Basic Rules and Rates for Weekly or Daily Hours,” and “Calculating Overtime with Employee Bonuses in California.”

For help on how these issues might impact your business, please contact our firm’s attorneys Tim Bowles or Cindy Bamforth.

California Labor Code 980, effective January 1, 2013, prohibits employer access to its workers’ personal social media.

The new law defines “social media” as “an electronic service or account, or electronic content, including but not limited to, videos, still photographs, blogs, video blogs, podcasts, instant and text messages, email, online services or accounts, or Internet Web site profiles or locations.”

Thus, to name a few, the new rule covers such social networking, blogging, and other information sharing sites as Facebook, Faceparty, Faces.com, Twitter, Tylted, Tagged, Tumblr, YouTube, Yammer, Yelp, Flickr, Flexster, Friendster, Fotolog, Fotki, Foursquare, Fubar, LinkedIn, Lafango, LAGbook, LaiBhaari, Last.fm, LibraryThing, Lifeknot, LiveJournal, Livemocha, Instagram, Ibibo, italki.com, Itsmy, iWiW, Bebo, BeNaughty, Black Planet, Blogster, BIGADDA, Buzznet, Habbo, Hi5, Hotlist, HR.com, Pinterest, Partyflock, Pingsta, Plaxo, PureVolume, Playfire, Playlist.com, Plurk, Path, PerfSpot, PatientsLikeMe, Redddit, CafeMom, Care2, Classmates.com, Chemistry.com, Christian Mingle, CouchSurfing, deviantART, Elftown, English, baby!, eHarmony, Google+, Grono.net, Goodwizz, Goodreads, GetGlue, Gaia Online, GamerDNA, Gather.com, Orkut, Open Diary, Odnoklassniki, Makeoutclub, Meetup, Multiply, Match.com, Matchmaker, MouthShut.com, MOG, Mubi, Mixi, Myspace, MyHeritage, MyLife, My Opera, myYearbook, Netlog, Ning, Nexopia, NGO Post, Nasza-klasa.pl, Wakoopa, Wattpad, WAYN, WeeWorld, Wellwer, WeOurFamily, Wepolls.com, weRead, Wiser.org, Wooxie, Xanga, XING, Zooppa, Zoosk, Zorpia, Vkontake, and, of course, Vampirefreaks.com.

Intended to protect privacy, a California employer may not require employees or job applicants to:

• Disclose a username or password for the purpose of accessing personal social media;

• Access personal social media in the presence of the employer; or

• with the exceptions below, to divulge any personal social media

New Labor Code 980 does permit an employer to request personal social media information if that information is thought to be relevant to an investigation of an employee’s misconduct or suspected illegal activity and the employee’s social media account is used only for purposes of the investigation.

Employers may also require employees disclose usernames, passwords or other access information to employer-issued electronic devices such as computers, phones, or tablets.

California businesses should thus closely review their workplace personnel management practices and social media policies to ensure they are consistent with the above rules.

Please contact our firm’s attorneys Tim Bowles or Cindy Bamforth for more information or discussion on employee privacy, particularly personal social media in the workplace.

Related articles:

“Social Media Policies in the Workplace”

“Promoting Workplace Productivity with Sound Policy Handbook and Forms”

“Expecting Privacy at Work? Fugeddaboutit!”