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:

• someone who regularly assists the company owner, a exempt executive or other administrator and is entrusted with the same discretionary authority as the senior when that senior is absent (classically, the “executive assistant”);
• an individual who performs his or her coordinating functions in highly specialized or technical areas that require special training, experience or knowledge (for example, the internal IT manager, entrusted with planning and enabling a state-of-the-art computing and communications system for the employer); and
• a person who executes special assignments or tasks under only general supervision (for example, a marketing specialist responsible for assigned projects to find and create new markets and to develop and define new products to service those pioneer markets).

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 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:

• total compensation exceeds 1.5 times the minimum wage for each hour worked during the pay period (As of January 1, 2008, 1.5 x $8.00 = $12.00/hour); and
• at least 50% of total compensation comes from commissions.

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:

• A symbol, letter or other notation placed on the payroll records identifying each employee who is paid under this inside sales exemption; and
• A copy of the policy or the specific written agreements with particular employees that lay out the terms of the sales commission structure, including the chosen representative period, the date the agreement was entered and how long it remains in effect.

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 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

Dalit girl, Andhra Pradesh, India, May 12, 2005

Photo from Wikimedia Commons

Published without changes under the

Creative Commons Attribution-Share Alike 2.0 Generic license.

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,

• Abolishing Workplace Bigotry: A Work in Progress (March 5, 2020)
• Cautionary Tale Episode 35 – Over the Borderline – State Agency Settles Sex and National Origin Discrimination Case for $450, 000. (September 13, 2019)
• Cautionary Tale Episode 33 – Choke the Jokes – EEOC Settles Tex-Mex Restaurant Servers’ Sexual Harassment Case for $40,000 (August 15, 2019)

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

“Reverse discrimination” is a variant of religious discrimination. Reverse discrimination means a plaintiff asserts the employer wrongfully discriminated against him/her because plaintiff did not adhere to the employer’s religious beliefs. In reverse discrimination cases, the plaintiff claims religious discrimination based on the religious beliefs of the employer, and the fact that the employee does not share those beliefs. The plaintiff claims his/her lack of adherence to the religious beliefs promoted by company management was what led to the unlawful discrimination the plaintiff later faced. To establish this claim, plaintiff has the burden of proving all of the following: (1) plaintiff was subjected to some adverse employment action; (2) at the time the adverse employment action was taken, plaintiff’s job performance was satisfactory; and (3) plaintiff can show some additional evidence to support the inference that the employment action was taken because of a discriminatory motive based upon plaintiff’s failure to hold or follow his/her employer’s religious beliefs.

In Venters v. City of Delphi, the plaintiff was able to prove she was wrongfully discriminated against based on this theory of “reverse discrimination.” Plaintiff’s supervisor gave plaintiff a bible and other religious materials and then told her she would no longer work at that company unless she started going to church and following God’s way. The supervisor asserted plaintiff practiced incest and bestiality and she should commit suicide. Plaintiff asked supervisor to stop but he continued making similar statements. After her termination, plaintiff sued for religiously motivated discharge.

The court noted that her claim was not that her employer refused to accommodate her religious practices, but that her employer discharged her because she did not measure up to her supervisor’s religious expectations. Plaintiff’s supervisor didn’t simply share his religious beliefs with her; instead he made it clear if she did not conform to those views she would be discharged. The court determined under these circumstances of religion in the workplace, the plaintiff need only show that her perceived religious shortcomings played a motivating role in her discharge. The court concluded plaintiff had a right to work without being compelled to submit herself to her supervisor’s religious scrutiny.

We all agree disruptive workplace incidents distract from harmony and productivity. One of the more prevalent and sometimes inadequately addressed workplace disruptions concerns rude, boorish employees. Their bullying can include personal insults, verbal attacks, inappropriate teasing and sarcasm, belittling another’s intelligence or capabilities, and maligning someone’s reputation through gossip and rumor-mongering.

Is Rude Workplace Behavior Unlawful? Although California has adopted anti-harassment laws, it has yet to enact “civility” laws. Several states have attempted such regulation, including California’s unsuccessful Healthy Workplace Bill of 2003. By declaring all abusive workplace conduct unlawful, such bills seek broader protection for employees facing workplace harassment, regardless of whether the abuse was directed to an employee belonging to a protected classification (race, gender, national origin, religion, etc.). Even without such formal prohibitions, employers may be at risk for ignoring bullying behavior.

Potential Legal Theories Targeting Workplace Bullying: Although there is no anti-bullying law in California per se, affected co-workers have filed claims under the protection of the Americans with Disabilities Act (ADA) and/or workers’ compensation laws claiming such bullying created stress and anxiety. Employees targeted by bullies have also sued employers for damages for the intentional infliction of emotional distress allegedly caused by such bullying incidents. Employee suits alleging such harassment was linked to a protected classification are also common. In EEOC v. Nat’l Educ. Ass’n, a male allegedly acted in a particularly obnoxious fashion towards his female subordinates, often screaming profanities and physically intimidating them, while reportedly treating his male subordinates in a more playful, bantering fashion. The court found harassing conduct need not be motivated by sexual desire to support an inference of sexual discrimination. Even if the bully’s target is of the same gender, the victim might successfully sue for unlawful sex harassment. In Singleton v. United States Gypsum Co., John Singleton’s male co-workers allegedly engaged in workplace bullying by insults and sexually explicit gestures and comments. The appellate court found Singleton could have been harassed because of gender, even though the alleged workplace bullies were also male.

How to Resolve Co-Workers’ Complaints: The wrong thing to do is ignore such a situation. Granted, it’s logical to presume all workers are mature, responsible adults. However, even where the bullying in the workplace does not seem based on some protected classification (age, religion, national origin, etc.), don’t just assume people can and should work these matters out by themselves. Treat these bullies in the workplace complaints just as seriously as a claim for sexual harassment or other harassment on a protected classification. Investigate in a thorough and neutral manner with the intention of truly addressing and handling the problem.

How to Confront the Bully: Of course, do not overreach to unnecessarily documenting the accused wrongdoer’s every shortcoming, big, small, or microscopic. The person in question could later attempt to characterize over-documenting as attempts to create false grounds for terminating him or her. The best approach is to ensure workplace policies clearly state what code of conduct is expected at the workplace, including how workers are to behave with one another. If an employer finds an individual has crossed the line and is potentially engaging in office bullying, show him or her the appropriate workplace policy, discuss the resolution, and discipline and document accordingly. Any resolution should include the appropriate corrective training. Always apply company policies consistently and fairly: don’t single out certain individuals for bullying behavior while ignoring others.

Under California law, whenever the employment relationship ends, for any reason whatsoever, and the employee has not used all of the employee’s earned and accrued vacation hours, the employer must pay the employee these hours. As paid vacation benefits are considered wages, such pay must be included in the employee’s final paycheck with the appropriate deductions. The employer must pay out accrued but unused vacation at the employee’s final rate of pay, regardless of the rate of pay at which it was earned. For example, if the employee earned ten hours of vacation while making $15 per hour and who later is terminated or quits while making $20 per hour must receive $200 in vacation wages with the employee’s final paycheck. See California Labor Code Section 227.3.

No “Use it or Lose It”: In California, vacation pay is another form of wages which vests as the employee earns it. Vests means the employee has lawfully earned the wages. Accordingly, it is illegal to deny an employee earned vacation pay not used by a specified date (“use it or lose it”) under California law.

California’s Division of Labor Standards Enforcement (DLSE) has repeatedly found policies requiring all vacation taken in the year it is earned (or in a very limited period following the accrual period) are unfair and unenforceable.

However, the DLSE does recognize vacation accrual policies which cap how much vacation time may continue to accrue. Thus, a sample vacation policy in an employee handbook might state, “The maximum vacation benefit for which an employee is eligible at any point is one and one-half year’s vacation pay at the employee’s current yearly accrual rate. Once that maximum has accrued, no further vacation time or benefit will accrue until the employee has used some of the time, reducing the total time available below the current maximum. At such time, the employee resumes accrual of vacation time up to a point where the maximum is again reached.”

Employers may also refuse to pay employees with money in lieu of vacation time, except upon termination of employment.

Under California law, if an employer requires an hourly California employee to attend an out-of-town business meeting, training session, or any other event, the employer is obligated to pay for the employee’s time getting to and from the location of that event. Time spent driving, or as a passenger on an airplane, train, bus, taxi cab or car, or other mode of transport, in traveling to and from the out-of-town event, and time spent waiting to purchase a ticket, check baggage, or get on board, is, under such circumstances, time spent carrying out the employer’s directives, and thus, is characterized as time in which the employee is subject to the employer’s control. Such compelled travel time therefore constitutes compensable “hours worked.”

On the other hand, time spent taking a break from travel in order to eat a meal, sleep, or engage in purely personal pursuits not connected with the traveling or making necessary travel connections, is not compensable.

For local work assignments, when an employee is intermittently required to report directly from home to a work site other than the company’s office, the employer must pay the employee travel time for any time in excess of the employee’s normal commute time to and from the regular site. If an employee is routinely directed to report to one outside work site or a succession of them (or to return straight from such site(s) to home at the end of the work period), then that employee’s normal commute time is the duration of each such trip [regardless if the time varies to/from home and various sites] and no such time is considered compensable work time.

The employer may establish a different pay scale for travel time (not less than minimum wage) as opposed to the regular work time rate. The employee must be informed of the different pay rate for travel before the travel begins.

With the exception of specific vehicle operating expenses (including gas, maintenance, insurance) if the company’s travel expense policy authorizes an adequate “per mile” rate for such operations (as set by the IRS), the company’s travel policy must also reimburse for all out-of-pocket business-related travel expenses incurred in the course of an employee’s work time.

Bill, a hospital supervisor, learned that one of his subordinates, Harvinder, has been wearing a miniature sword strapped to and hidden underneath her clothing. Harvinder is a baptized Sikh who wears the 4-inch dull and sheathed sword (called a kirpan) as a symbol of her religious commitment to defend truth and moral values. Bill instructed Harvinder not to wear the kirpan at work because it violated hospital policy against bringing weapons in the workplace. Harvinder explained to Bill that her faith requires her to wear a kirpan in order to comply with the Sikh Code of Conduct, and gave him literature explaining the kirpan is not a weapon. Harvinder also allowed Bill to examine the kirpan so he could see it was no sharper than a butter knife.

It may be surprising to learn that if Bill were then to inform Harvinder she would be terminated if she continued to wear the kirpan at work, the U.S. Equal Employment Opportunity Commission (EEOC) would consider the hospital liable for religious discrimination in the workplace. In the face of a potential conflict between a religious practice such as Harvinder’s and an employer’s policy, in this case the company’s obligation to maintain a safe and secure workplace, that employer must almost always take the initiative to see if a reasonable accommodation for that religious practice can be reached.

Only where an employer can show that any accommodation for religious practice would impose an undue economic hardship is that company excused from permitting that practice to continue. Employment laws establish that resolution of religion in the workplace issues is a case-by-case proposition. An undue hardship is found where the proposed accommodation imposed more than a de minimus (trifling or minimal) cost to the employer. Examples where courts have found accommodations imposed undue hardship include “additional costs in the form of lost efficiency or higher wages.” Balint v. Carson City, Nevada (Ninth Circuit Court of Appeals [9th Cir] 1998) 180 Federal Reporter, Third Series (F.3rd) 1047, 1051, note 4.

Thus, faced with Harvinder’s request to continue wearing her kirpan in the workplace, Bill would have to explore whether the company could accommodate the request without a disruption in operations that would amount to more than a minimal or trivial distraction. If Harvinder’s request was to carry a loaded gun based on her religion’s principles, Bill would obviously have a much easier decision since such a weapon creates a hostile work environment to say the least, nearly certain to significantly divert fellow hospital workers from full attention to their duties. However, a ceremonial object no sharper than a butter knife – and kept out of sight of other workers in any event — can probably be accommodated since it would be difficult at best to distinguish between that object and the eating utensils brought by other workers and utilized daily on the premises.

If you have any questions, please contact me or any of our other employment law attorneys.