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Under California labor laws, certain provisions of the Industrial Welfare Commission (IWC) Wage Orders – including California overtime law and meal and rest period premiums – do not apply to persons employed in an exempt administrative capacity. An exempt administrator is primarily engaged (51%-plus) in high level “desk-bound” planning, organizing, and enabling of production as opposed to the actual production of the company itself. An administrator makes sure the “production line” is created,
Under California labor laws, certain provisions of the Industrial Welfare Commission (IWC) Wage Orders – including California overtime law and meal and rest period premiums – do not apply to persons employed in an exempt administrative capacity. An exempt administrator is primarily engaged (51%-plus) in high level “desk-bound” planning, organizing, and enabling of production as opposed to the actual production of the company itself. An administrator makes sure the “production line” is created, established, coordinated, serviced and maintained as opposed to participating directly in that production line. In other words, an administrator is concerned with how a business is programmed and organized to turn out its products or services, not with actually assembling that product or delivering that service. Since an exempt administrator may also perform such organizational duties for his employer’s clients or customers to enable them to produce in turn, it is possible in special cases for an employer’s service providers to be exempt administrators (for example, a consulting company that employs specialists to provide custom management or financial investment consulting and advice to its clients).
An exempt administrator needs no actual juniors to direct on the chain of command. It is possible for such administrator to occupy a “one person” subdivision of a company. However, he or she must regularly and customarily exercise independent judgment and discretion in the programming and coordination of personnel and/or resources that enables the production of the employer or the employer’s clients.
While every employee is expected to use judgment as an element of any job, a worker will qualify for the administrative exemption only where he or she has and exercises the authority to make independent choices on the highest or higher levels of business policy, planning and coordination of operations, so-called “matters of significance.” A truck driver who makes “discretionary” decisions on the route he or she takes to a destination is not exempt from overtime. A programs director for a trucking business – responsible for the planning, programming, financing, acquisition of resources, allocations of personnel, etc. to ensure the company’s viability – is probably exempt from overtime compensation.
Last, the required regular and customary exercise of discretion and independent judgment is not limited to powers to make final decisions on significant matters. An administrator is legitimately exempt from overtime even if he or she only makes recommendations on policy, planning and coordination subject to review and approval, as long as the company’s seniors give weight to those recommendations.
If an administrator must perform a rote or routine duty that is “directly and closely related” to his or her planning and coordination functions such as typing up a program or counting and reporting on the statistical production of an area, the law considers this incidental work as part of exempt duties.
California recognizes three main settings for exempt administrators:
Job titles are not determinative. As with exempt executives, an exempt administrator’s purposes, duties and products contained in his or her written job description should accurately emphasize all of the above concepts as requirements, including the expectation that he or she will devote the majority of work time to the job’s administrative functions.
As with exempt executives, the employer must pay an exempt administrator a salary in each pay period that is at least two times the state minimum wage. As of January 1, 2008, the minimum is $640 weekly and $2,773.33 monthly. These amounts are unchanged for 2009 and thus far for 2010.
The California Industrial Welfare Commission (IWC) Wage Orders are available online at http://www.dir.ca.gov/iwc/wageorderindustries.htm.
If you have any questions, please contact me or any of our other employment law attorneys. Best, Bob Edwards
“Commission wages” are compensation based proportionately on the value or amount of the item or service sold. An “inside sales representative” sells merchandise in a store or sales lot or sells products or services via a company telephone. In contrast, “outside sales representative” means any person, 18 years of age or over, who customarily and regularly works more than half the working time away from the employer’s place of business selling or obtaining orders for a product or service. The p
“Commission wages” are compensation based proportionately on the value or amount of the item or service sold. An “inside sales representative” sells merchandise in a store or sales lot or sells products or services via a company telephone. In contrast, “outside sales representative” means any person, 18 years of age or over, who customarily and regularly works more than half the working time away from the employer’s place of business selling or obtaining orders for a product or service. The provisions of the California Industrial Welfare Commission Wage Orders (see blog article, “DO YOU KNOW YOUR CALIFORNIA WAGE ORDER?”) do not apply to outside salespersons.
Under California law, a commissioned inside sales representative covered either by Wage Order 4 or Wage Order 7 is exempt from overtime compensation if:
Since the 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 also requires that each weekly paycheck exceeds $12.00 times the number of hours worked to qualify.
The exemption applies in the case of an employee paid a fixed salary plus an additional amount of earned commissions if the amount of sales commission payments exceeds the total amount of salary payments for a chosen representative period. If a worker is compensated by pure sales commission, this “51% – 49%” calculation is of course irrelevant.
The representative period a company chooses to establish the plus-50% commissions and minus-50% salary ratio must be at least one month and not longer than one year. The employer should pick reasonable duration at or between those extremes which yields a fair reflection of the sales person’s true weekly average of earned commissions. For example, in a company where 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 company that has 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. Whatever representative period(s) the employer chooses, the employer must document the average ratio for each employee for each such period.
The employer thus must maintain adequate records that clearly indicate: i) the amount paid to employees exempt under this category; ii) the breakdown of base salary and commission payment for each week; and iii) the number of hours worked each week. In order to implement the exemption, the employer must also maintain:
Note: The California and federal exemptions and wage and hour laws are not identical. The comparable federal exemption only applies to retail or service establishments. Therefore, California employers are cautioned not to rely on the commissioned insides sales employee exemption from overtime without first consulting with an attorney.
If you have any questions, please contact me or any of our other employment law attorneys. Best, Bob Edwards
Under California law, provisions of theIndustrial Welfare Commission (IWC) Wage Orders– including overtime compensation and meal and rest period premiums – do not apply to persons employed in an executive capacity. This exemption is for executives primarily engaged (51%-plus) in managing at least two personnel below them in the chain of command. Exempt executives do not have to oversee – or have the authority to oversee – every worker in the organization. They can be senior to a distinct divis
Under California law, provisions of the Industrial Welfare Commission (IWC) Wage Orders – including overtime compensation and meal and rest period premiums – do not apply to persons employed in an executive capacity. This exemption is for executives primarily engaged (51%-plus) in managing at least two personnel below them in the chain of command. Exempt executives do not have to oversee – or have the authority to oversee – every worker in the organization. They can be senior to a distinct division or, conceivably, a department or even a unit. However, as one moves further down the organizational chart, qualification for exemption becomes less-and-less likely as the chances diminish that the subject employee is going to be involved in actually managing employees more than half of his or her time.
The sort of “managing” that will qualify for executive exemption is not just supervising two or more subordinates, i.e. spending over half of one’s day telling them what to do or supervising them to complete their job assignments or other set lists of tasks.
“Managing personnel” means having and exercising the authority for full responsibility over the planning, recruiting, work priorities and allocation, coordination, documentation (e.g., statistics, evaluations of personnel performance) and production results of a company or a distinct area of a company. This must include the ability to hire, advance, demote, discipline or fire other employees (or, at least, to make recommendations that are “given particular weight” by senior managers on these matters). Production, sales or routine clerical or maintenance work, whether or not the same as the work of subordinates, is not management work. However, if a manager must perform a rote or routine duty that is “directly and closely related” to managing personnel – e.g., writing a daily or weekly report of the area’s production, photocopying materials to pass out to subordinates – the law considers these labors as part of exempt duties.
In order to qualify for the executive exemption, a manager must “customarily and regularly exercise discretion and independent judgment.” This means a manager must have and exercise throughout the workday the power of making independent decisions on important aspects of planning and operations in his or her area. In contrast, actions that merely follow specified procedures are “paint by numbers” tasks that do not qualify for the exemption. While every employee must use discretion to make decisions no matter the position, a manager is entrusted to make decisions on matters that have a relatively substantial impact on the success or failure of the business or some major portion of the enterprise. For example, a janitor may have discretion on which room he or she vacuums first but this does not make him a manager. On the other hand, a division head deciding to allocate all of the personnel of his or her area to work on an “all hands” promotional blitz for an entire work day is clearly exercising discretion on a sufficiently important matter to qualify for the exemption.
An exempt executive’s purposes, duties and products contained in his or her written job description should accurately emphasize all of the above concepts as requirements, including the expectation that he or she will devote the majority of work time to the task of managing his or her subordinates. California is a stickler for requiring an executive to manage 51% or more on post hours, week-in and week-out. Working foremen, for example, are not exempt. The only exceptions include a manager who must pitch-in on rote tasks occasionally or one who must overcome an emergency so demanding in a given week that he or she is unable to actually manage for the majority of work hours.
To qualify an executive for exemption, the employer must pay him or her a salary in each pay period that is at least two times the state minimum wage. As of January 1, 2008, the minimum is $640 weekly and $2,773.33 monthly. “Salary” means a predetermined amount that is some or all of the employee’s compensation. “Predetermined” means the employer cannot reduce it due to changes in that worker’s amount or quality of work. With some exceptions, if an exempt executive works even a single hour in a given workweek, the employer must pay that person his or her salary for the entire week.
If you have any questions, please contact me or any of our other employment law attorneys. Best, Bob Edwards
The California Supreme Court, for the second time in the past four years, has affirmed that sexually harassing conduct must be either “severe” or “pervasive” to be actionable sexual harassment. The decision stems from a high profile suit by Suzan Hughes, Herbalife’s deceased founder Mark Hughes’ ex-wife and mother to his only son, Alex, against Hughes estate trustee Christopher Pair. This was not the first legal battle between Ms. Hughes and Mr. Pair. Upon his sudden death at age 44, Mark Hugh
The California Supreme Court, for the second time in the past four years, has affirmed that sexually harassing conduct must be either “severe” or “pervasive” to be actionable sexual harassment. The decision stems from a high profile suit by Suzan Hughes, Herbalife’s deceased founder Mark Hughes’ ex-wife and mother to his only son, Alex, against Hughes estate trustee Christopher Pair. This was not the first legal battle between Ms. Hughes and Mr. Pair. Upon his sudden death at age 44, Mark Hughes left an estate valued at approximately 400 million to Alex as sole beneficiary. Thereafter, Suzan Hughes had an acrimonious relationship with the three trustees of that estate, including Mr. Pair, an Herbalife executive, prompting her to file seven prior lawsuits against the trust or the trustees.
Battle of the Beach House: In this eighth lawsuit, Suzan Hughes sued trustee Christopher Pair for sexual harassment and intentional infliction of emotional distress. According to Ms. Hughes’s harassment complaint, on June 13, 2005, she requested the trust reimburse her for a two-month Malibu beach home rental for her and Alex, at a cost of $80,000 per month. Three days later, the trustees unanimously approved a one-month rental, but not two. The trustees declined reimbursement of the second month because (a) they did not have sufficient information from Suzan Hughes to justify the expense; (b) vacation expenses were Suzan Hughes’s responsibility under her marital settlement agreement; (c) a portion of the vacation home expense should be allocated to Ms. Hughes; and (d) the two-month rental was for Ms. Hughes’s benefit rather than Alex’s. The trustees sent Ms. Hughes’s attorney written notice of their decision.
The King Tut “Exhibitionism”: After not speaking with each other directly for three years, Christopher Pair called Ms. Hughes shortly afterwards to invite her and Alex to join him and his son that evening at a King Tut exhibit. During the call, Ms. Hughes complained about the trustees’ beach rental decision, to which Pair reportedly replied, “you know how much I love Alex and you in that special way” and Pair could be persuaded to give Ms. Hughes more rental time if she would “be nice” to him. When Ms. Hughes replied that it was crazy for Pair to talk to her this way, he replied, “how crazy do you want to get?” Pair gave Ms. Hughes his home phone number and told her to call him if she wanted to go to the exhibit that night. Although she wrote down his home number, she declined his invitation.
Ms. Hughes brought Alex to the King Tut exhibit on her own, where she encountered Pair and his nine-year-old son in a hallway. Ms. Hughes alleged that in her only direct encounter with Pair that evening, Pair crudely predicted she would yield to his sexual proposition, stating he would get her “on your knees eventually.” He made this statement while the boys were standing nearby. He then said hello to Alex and walked off.
Ms. Hughes filed for sexual harassment under California Civil Code section 51.9, which prohibits sexual harassment by a person engaged in a designated “business, service, or professional relationship.” As a trustee, Christopher Pair was in such a qualifying relationship.
Pair Prevails: The trial court granted Pair’s motion for summary judgment, ruling that Ms. Hughes could not establish sexual harassment as the alleged harassment was neither “pervasive” nor “severe.” The appellate court and Supreme Court affirmed. Looking to hostile work environment workplace harassment cases for guidance, the Supreme Court ruled the harassment was not pervasive because “pervasive” requires a level of egregiousness that would alter their relationship and the harassment must be more than a few isolated incidents. Here, the underlying professional relationship was not altered in any way (the trustees had already voted in favor of a shorter house rental) and the comments were made during one telephone conversation and one brief in-person encounter.
The Supreme Court also found that to constitute “severe” harassing behavior, a single harassing incident generally must include physical violence or the threat of physical violence to constitute sexual harassment. In this case, Pair’s comment at the King Tut exhibit, although course, vulgar and grossly inappropriate was made during an isolated incident which did not reach the level of violent sexual assault or unwanted physical conduct. The Court also believed his telephone conversation was “ambiguous” and did not support Ms. Hughes’ sexual harassment claim.
Lessons for the Work Place: Although this case did not involve an employer-employee relationship, Pair’s alleged behavior, if true, was unprofessional and out of line. Clearly, such behavior should not be tolerated or condoned in the workplace, regardless of whether or not it is sufficiently “severe or pervasive” under state or federal employment law. Employers should enact and enforce company harassment policy that prohibits such unprofessional conduct, and management should discipline violators, up to and including termination. We are available to assist you in preventing workplace harassment. To view our available dates for anti-harassment training seminars, please go to Bowles Law or contact us to schedule a seminar at your location.l
If you have any questions, please contact me or any of our other employment law attorneys. Best, Cindy Bamforth
CALIFORNIA CHALLENGES CISCO SYSTEMSFOR COLOR (“CASTE-BASED”) DISCRIMINATION
CALIFORNIA CHALLENGES CISCO SYSTEMS FOR COLOR (“CASTE-BASED”) DISCRIMINATION
On June 30, 2020, the California Department of Fair Employment and Housing (DFEH) filed suit against Cisco Systems, Inc. (Cisco) and two managers for caste-based discrimination, harassment, and retaliation.
The complaint alleges that an all-Indian immigrant Cisco team expected an engineer co-worker to accept a cultural caste hierarchy because he is Dalit (“Untouchable”) Indian. The DFEH asserts Dalits are “typically the darkest complexion caste,” enduring “severe inequality and unfair treatment” and “often targets of hate violence and torture.”
The state charges these Indian team members, all from higher castes, have imposed their traditionally discriminatory practices into the workplace, subjecting the engineer to disparate treatment (less pay, fewer opportunities, and other substandard terms and conditions of employment) because of his “religion, ancestry, national origin/ethnicity, and race/color.”
DFEH Director Kevin Kish commented, “It is unacceptable for workplace conditions and opportunities to be determined by a hereditary social status determined by birth. Employers must be prepared to prevent, remedy, and deter unlawful conduct against workers because of caste.”
The government also noted in a 2018 U.S. survey of South Asians, 67% of Dalits claimed unfair workplace treatment.
This lawsuit highlights why employers should ● correctly train managers and workers on preventing, detecting and resolving all forms of unlawful or inappropriate harassment, discrimination and retaliation; and ● ensure equal promotion opportunity to all qualified workers.
See also,
For more information, please contact Tim Bowles, Cindy Bamforth or Helena Kobrin.
Cindy Bamforth
September 4, 2020
CALIFORNIA CHALLENGES CISCO SYSTEMS FOR COLOR (“CASTE-BASED”) DISCRIMINATION
Includes COVID-19 GuidelinesIncluding Vaccination
Includes COVID-19 Guidelines Including Vaccination
Clear, written workplace policies are critical components for workplace legal compliance and productivity. The volatile combination of COVID’s impact on workplace management and California’s lawsuit-prone reputation underscore the preventative importance of such written rules and protocols.
Updated for 2021, our comprehensive model employee handbook includes (but is not limited to):
Also updated for 2021, our model “Hire-to-Fire” forms include:
CONTACT US TO ORDER NOW
To order or for more information, contact Office Manager Aimee Rosales at 626.583.6600 or email her at officemgr@tbowleslaw.com.
May 28, 2001
A November, 2009 California Supreme Court ruling affirmed that an incentive stock option plan which had not fully vested upon plaintiff employee’s resignation did not constitute earned but unpaid wages and the employer could lawfully require the employee to forfeit the stock and the salary used to purchase the stock.Schachter v. Citigroup, Inc.(2009) 47 California Reports 4th610.
A November, 2009 California Supreme Court ruling affirmed that an incentive stock option plan which had not fully vested upon plaintiff employee’s resignation did not constitute earned but unpaid wages and the employer could lawfully require the employee to forfeit the stock and the salary used to purchase the stock. Schachter v. Citigroup, Inc. (2009) 47 California Reports 4th 610.
Plaintiff David Schachter worked as a stockbroker for Citigroup from April 28, 1992 to March 29, 1996. He voluntarily chose to participate in a company-offered incentive compensation plan which provided employees with shares of restricted stock options at a reduced price in lieu of a portion of that employee’s annual cash compensation. Per this compensation policy, employees could elect to receive anywhere from 5% up to 25% of their total compensation in the form of restricted stock.
Restricted stock could not be sold, transferred, pledged or assigned for a two-year period; however, participating employees had the right to vote and receive regular dividends on such shares during the restricted period.
If an employee remained with the company for the two years following the purchase of the restricted stock, the title to the shares vested fully without restriction. However, if an employee quit or was terminated for cause before the end of the two-year period, the employee was forced to forfeit his or her restricted stock as well as the percentage of annual income allocated for purchase of the restricted stock. If an employee was involuntarily terminated without cause, the employee forfeited his or her restricted stock, but received a cash payment equivalent to the portion of annual compensation which had been paid in the form of such forfeited restricted stock.
Schachter elected to receive 5% of his total compensation in restricted stock during 1995 and early 1996. He then resigned from Citigroup in March, 1996. Because his resignation occurred within the two-year vesting period, he forfeited all his shares of stock and did not receive a cash payment equal to the 5% compensation used to purchase those shares.
In May, 1998, Schachter filed a class action lawsuit against Citigroup alleging that the restricted stock purchase plan (the Plan) violated California Labor Code sections 201 and 202 which require the employer to promptly pay all earned wages upon termination or resignation. He also alleged the Plan’s forfeiture provision violated Labor Code section 221, which prohibits an employee from returning wages to an employer.
After eleven years of protracted litigation, the California Supreme Court (the Court) ruled that the Plan’s forfeiture provision did not violate California labor law.
First, the Court discussed the term “wages,” which it broadly construed to include not only monetary compensation but also other benefits to which an employee is entitled as part of his or her overall compensation. This can include accrued vacation pay which “vests” throughout a given year as well as bonuses and profit-sharing plans.
The Court then concluded the restricted stock constituted a “wage” under California law. However, when Schachter voluntarily signed the Plan election forms he understood that the restricted stock would not fully vest for two years. He chose not to remain with the company for the two year period and thus the Court ruled he did not earn and had no right to receive either the restricted stock or the compensation used to acquire it. According to the terms of the Plan, no earned, unpaid wages remain outstanding upon voluntary resignation. In other words, the only thing the company hadn’t paid to Schacter was something he never earned, i.e. fully vested company stock.
The Court quoted the colorful truism, “He who shakes the tree is the one to gather the fruit” and concluded Schachter was not entitled to “gather the fruit” since he failed to perform the condition necessary to do so – i.e. remain employed with the company for two years after the stock purchase.
Further recommendations: Companies that offer their employees incentives such as incentive stock options, commissions and bonuses should consult legal counsel to ensure these plans are properly structured and documented.
If you have any questions on these or any other employment laws, please contact me or any of our other employment law attorneys. Best, Cindy Bamforth
As in any other sort of civil lawsuit, the alleged wrongdoer can prevail in a copyright infringement claim by asserting a valid defense. Common defenses include:
As in any other sort of civil lawsuit, the alleged wrongdoer can prevail in a copyright infringement claim by asserting a valid defense. Common defenses include:
Under U.S. law before March 1, 1989, copyright owners were required to put a copyright notice on their works. The challenged party could assert failure to do so to nullify the ownership requirement of an infringement claim, as the work so published would have gone into the public domain. While the U.S.’s adoption of the Berne Convention Implementation Act on that date removed this strict requirement, it still applies to older copyrights, and prudent copyright owners still put copyright notices on their published works.
2. Lack of Originality:
Copyright only applies to original works of authorship. If you depict something in a mundane way without any creativity, you may not have sufficient originality to claim copyright in what you have produced. For example, seeing a red car parked outside and then writing “There is a red car in front of the house” uses virtually no creativity or originality. Nor would simply taking a snapshot of the car without staging the lighting and other aspects of the photo.
A graphic design that lacks originality cannot be copyrighted such as “©”. A prominent example was Best Western’s failed application to copyright its logo. (The hotel chain was able to register its “Best Western” design as a trademark however.)
The Supreme Court has held that mundane information, such as the names, addresses, phone numbers in telephone directories cannot be copyrighted. However, the selection and arrangement of such information may be sufficiently original to deserve copyright protection. While the threshold for originality is low, the more originality and creativity involved in the work, the more likely copyright protection will apply.
3. Nothing was Copied:
A news photographer and a fan who simultaneously take virtually identical shots at a concert would probably not have copyright claims against each other. Thus, if the professional sought to sue to protect his photograph, the fan could likely defend himself against that claim because he did not copy from the photographer’s photo.
4. Fair use.
This defense acknowledges the copyright owner has the right to protect his or her original work but asserts that the use was “fair,” for example a minimal quotation of the work in the context of a scholarly discussion. Fair use is a major topic in itself deserving of a separate and upcoming blog in this series.
If you have copyright issues on which you need assistance, please contact attorney Helena Kobrin.
As in any other sort of civil lawsuit, the alleged wrongdoer can prevail in a copyright infringement claim by asserting a valid defense. Common defenses include:
As in any other sort of civil lawsuit, the alleged wrongdoer can prevail in a copyright infringement claim by asserting a valid defense. Common defenses include:
Under U.S. law before March 1, 1989, copyright owners were required to put a copyright notice on their works. The challenged party could assert failure to do so to nullify the ownership requirement of an infringement claim, as the work so published would have gone into the public domain. While the U.S.’s adoption of the Berne Convention Implementation Act on that date removed this strict requirement, it still applies to older copyrights, and prudent copyright owners still put copyright notices on their published works.
2. Lack of Originality:
Copyright only applies to original works of authorship. If you depict something in a mundane way without any creativity, you may not have sufficient originality to claim copyright in what you have produced. For example, seeing a red car parked outside and then writing “There is a red car in front of the house” uses virtually no creativity or originality. Nor would simply taking a snapshot of the car without staging the lighting and other aspects of the photo.
A graphic design that lacks originality cannot be copyrighted such as “©”. A prominent example was Best Western’s failed application to copyright its logo. (The hotel chain was able to register its “Best Western” design as a trademark however.)
The Supreme Court has held that mundane information, such as the names, addresses, phone numbers in telephone directories cannot be copyrighted. However, the selection and arrangement of such information may be sufficiently original to deserve copyright protection. While the threshold for originality is low, the more originality and creativity involved in the work, the more likely copyright protection will apply.
3. Nothing was Copied:
A news photographer and a fan who simultaneously take virtually identical shots at a concert would probably not have copyright claims against each other. Thus, if the professional sought to sue to protect his photograph, the fan could likely defend himself against that claim because he did not copy from the photographer’s photo.
4. Fair use.
This defense acknowledges the copyright owner has the right to protect his or her original work but asserts that the use was “fair,” for example a minimal quotation of the work in the context of a scholarly discussion. Fair use is a major topic in itself deserving of a separate and upcoming blog in this series.
If you have copyright issues on which you need assistance, please contact attorney Helena Kobrin.