California employers must accurately list specific wage-related information on each worker’s pay stub per pay period, including but not limited to the company’s name and address, total hours worked, wage rate(s), gross and net wages earned, all deductions, and inclusive dates of the pay period.

Seemingly, the easiest requirement should be listing the employer’s name and address (Labor Code 226 (a)(8)). However, to mangle Shakespeare, that which we call an employer by any other name might not be as lawful.

In Savea v. YRC Inc., the plaintiff, on behalf of himself and all co-workers, sued this employer for failing to provide the correct company name on its wage statements (pay stubs). Instead of listing its corporate name, YRC Inc., the company listed its fictitious business name, YRC Freight. The plaintiff also alleged the employer’s address improperly omitted its mail stop code and its extended four-digit zip code (the ZIP+4 code). Plaintiff sought statutory damages, civil penalties, attorney fees, and costs.

In a rare victory for employers, the court sided with YRC. The court emphasized that the legislature enacted Labor Code 226 to ensure an employer properly documents “the basis of the employee compensation payments” to help the employee ascertain whether he or she has been paid properly. As YRC had a valid, properly recorded fictitious business name statement, the court decided there was no confusion about the employer’s identity. The court also concluded that YRC’s proper mailing address does not need to include either the mail stop code or ZIP+4 Code.

This decision serves as an important reminder for California employers as failure to properly adhere to any pay stub requirements can be costly. For any offense within 12 months of the filing of a claim, each affected worker can recover at least $50 for the first violation and a minimum $100 for each subsequent occurrence up to a maximum of $4,000. If a company’s non-compliance applies to a large number of employees, that total potential liability could be very significant. See Labor Code 226(e).

Best practices:

Preferably list the employer’s name as registered with the California Secretary of State on all pay stubs.

• If the employer operates under a fictitious business name (FBN), ensure the FBN is properly renewed prior to its expiration.
• Correctly and fully state the corporate name and/or FBN on all pay stubs without abbreviating or shortening them.
• Do not print the company logo on the pay stub in lieu of the actual corporate name or FBN name.
• Routinely audit the company’s pay stubs to ensure compliance with all required items, preferably in consultation with experienced legal counsel.

See also:

• Correct Pay Stubs Save Bucks (May, 2018)
• California’s Itemized Pay Stub (March, 2016)

For further information, please contact Tim Bowles, Cindy Bamforth or Helena Kobrin.

Cindy Bamforth
May 15, 2019

In Diaz v. Sohnen Enterprises, California employer Sohnen Enterprises instituted a mandatory dispute resolution policy requiring that all employee claims be arbitrated. “Arbitration” is a private dispute resolution tool, bypassing court trials by jury.

The company informed the employees of the new policy and that, even if they did not sign it, continued employment constituted acceptance of the agreement.

At-will employee Erika Diaz objected to the agreement. “At-will” permits either employer or employee to terminate the relationship at any time, with or without notice and with or without a reason.

Company representatives reiterated to Ms. Diaz that, regardless of her objection, if she continued to work for the company, she would be accepting the policy. While Diaz stayed on the job, she challenged the arbitration policy by filing suit.

Ms. Diaz won at the trial court level. The Court of Appeal reversed, reasoning that Diaz was clearly on notice that continuing employment constituted acceptance of this legally permissible, unilateral change in employment terms for at will employees.

If a company wishes to make such policy changes, an experienced employment lawyer can help position the transition to minimize the prospect of repercussions.

See also:

• The Need for Written Employment Agreements (March, 2018)
• Don’t Kill At Will Employment (June, 2010)

Helena Kobrin
May 10, 2019

There appears a growing trend of employers – nationwide and abroad – implementing unorthodox methods to assess job candidates such as escape rooms, capture the flag, professional “speed dating” sessions, glow-in-the-dark miniature golf, laser tag and cooperative board games.

An escape room involves a small group of people locked in a room and tasked to unravel clues, puzzles and riddles to “escape” within a given timeframe. The University of Nebraska Medical Center already uses escape rooms to assist students in applying their skills to health care emergencies by solving health-related puzzles simulating different patient health scenarios.

Capture the flag is an outdoor game of tag between two teams. The first team to capture the other’s flag from their base area and bring it back to their own base wins. If a player gets tagged by an opponent while trying to capture the flag, he or she typically remains in a cordoned-off “jail” until released back into the game.

Professional speed dating involves candidates talking with a line of management and lower-level employees one after the other, each “interview” for a specified, short amount of time. Hiring managers then determine who to bring back for the next round.

Although such approaches might well bypass the normal stodginess of an interview and potentially help to evaluate a candidate’s team-building, leadership and communication skills, they can also run afoul of the law.

In California, employers must not directly or indirectly inquire about an applicant’s characteristic protected from federal and state employment discrimination laws including race, religious creed, color, national origin, ancestry, physical or mental disability, medical condition, genetic information, marital status, sex, gender, gender identity, gender expression, age, sexual orientation, or military and veteran status.

Requiring candidates to participate in certain physical activity unrelated to the position’s essential functions could indirectly discriminate against the candidate based on medical condition or age.

Professional speed “dating” could lead to inappropriate questions or flirtatious behavior. It’s not a great idea for an employer to rush through an interview in any event.

Job interviews are of course an important step in the hiring process. By using tools such as the Department of Fair Employment and Housing’s Fact Sheet, employers should be able to apply their creative energies to interviewing without inadvertently discriminating.

See also:

• Interviews Gone Wild (October, 2018)
• Job Interview Errors to Avoid (April, 2018)
• Asking for Job Applicant Age is a No-No (August, 2017)

For further information, please contact Tim Bowles, Cindy Bamforth or Helena Kobrin.

Cindy Bamforth
May 9, 2019

On April 17, 2019, the Labor Commissioner’s Office announced a $2.36 million citation -- the largest issued against a car wash business to date -- against Playa Vista Car Wash along with its president and general manager for failing to properly pay or provide required breaks to 64 workers.

The Labor Commissioner launched an investigation after it received a referral from the Community Labor Environmental Action Network (CLEAN), a nonprofit that assists car wash workers.

Investigators charged that workers had to physically report to work 30 minutes before the car wash opened in order to ascertain their daily work schedule. Those not selected were sent home several hours later without pay. The car wash also allegedly required workers to take extended lunch breaks with no split shift premiums and/or to work up to 10 hours with no daily overtime pay. Managers also purportedly altered workers’ time cards to reduce total hours worked.

The citation includes payments and civil penalties for violations of minimum wage and overtime, meal and rest break requirements, split shift payments, itemized statement violations, and waiting time violations. Investigators cited an additional $10,000 for failure to register the car wash with the Labor Commissioner as required by Labor Code sections 2054 and 2060.

In her announcement, California Labor Secretary Julie A. Su stated: “Individuals acting on behalf of an employer to steal workers’ wages cannot hide behind corporate entities to avoid personal liability, all the while profiting at the expense of honest businesses that play by the rules.”

Labor Code section 558.1 exposes owners, directors, officers, and managing agents of California employers to personal liability for violations of minimum wage and hours and days of work. Thus, company and personal assets can be levied if a citation is not paid. This latest “mega-citation” is yet one more incentive for businesses to ensure continuing compliance with this state’s compensation laws.

For further information, please contact Tim Bowles, Cindy Bamforth or Helena Kobrin.

Cindy Bamforth
May 1, 2019

The U.S. Equal Employment Opportunity Commission (EEOC) has announced the number of workplace discrimination charges filed nationwide during fiscal year 2018 (October 1, 2017 to September 30, 2018).

Of the 76,418 discrimination charges filed last year, retaliation topped the list, totaling 39,469 charges, followed by sex, disability, and race-based charges.

During the same period, the EEOC resolved 90,558 discrimination charges and filed 199 lawsuits against employers, securing more than $500 million for claimants.
Sexual harassment charges increased 13.6 percent from 2017 and resulted in $56.6 million in employer damages and settlement payments.

EEOC Acting Chair Victoria A. Lipic stated: “[W]e cannot look back on last year without noting the significant impact of the #MeToo movement in the number of sexual harassment and retaliation charges filed with the agency.”

In addition to sexual harassment prevention training and well-worded anti-discrimination policy, employers should ensure managers and workers alike are educated on other forms of discrimination, such as age, religion, national origin, race, and disability, to better protect and promote workforce morale, trust and productivity.

We provide live on-site anti-harassment seminars for a flat fee.
Contact officemgr@tbowleslaw.com for more information and to schedule your seminar.

See also,

• Harassment Prevention Training Is Mandatory in California 2019 Deadline (February, 2019)
• What’s New for 2019 – California’s Increased Protections Against Workplace Harassment (February, 2019)
• What’s New for 2019 – California’s Increased Protections Against Harassment (January, 2019)
• What’s New in 2019 – #Metoo and The Workplace (December, 2018)
• Are You Doing Everything Possible to Prevent Workplace Sexual Harassment? (March, 2018)
• Ten Top Reasons for Live Sex Harassment Prevention Training (September, 2017)

Cindy Bamforth
April 24, 2019

California employers must provide certain government-issued pamphlets or information sheets to new hires, to employees on certain types of leaves of absence, and to workers upon termination of employment.

The California Employment Development Department (EDD) — overseeing unemployment and disability benefits, payroll tax collection, and other workplace matters — has recently updated two mandatory pamphlets.

The “California Paid Family Leave” pamphlet (DE 2511, revised March 2019) outlines government-issued benefits for workers bonding with a new child or caring for a seriously ill family member.

The “Disability Insurance Provisions” pamphlet (DE 2515, revised March 2019) summarizes state-provided disability insurance plans that enable employee to partially replace lost wages due to a non-work-related disability.

Each revised pamphlet contains a new paragraph offering eligible employees the option to receive benefit payments via an EDD debit card or check by mail.

Employers should begin using these new versions right away, available for download from the EDD’s website or purchased from the California Chamber of Commerce or other organizations.

For additional assistance, please contact one of our attorneys Tim Bowles, Cindy Bamforth or Helena Kobrin.

Cindy Bamforth
April 19, 2019

In 2018, the California Supreme Court’s Dynamex ruling drastically changed the criteria for independent contractor classification to determine entitlement to many employee rights and benefits. See, Independent Contractor Status in California Now Falls Under Radically Different Rules (June, 2018).

Rejecting the long-established balancing test involving some 11 indicators of control vs. independence, Dynamex creates a three-factor “all or nothing” ABC test requiring the hiring entity to show that the claimed contractor:

(A) is free from the hirer’s control and direction in connection with the performance of the work;

(B) performs work that is outside the usual course of the hiring entity’s business; and

(C) is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity.

However, Dynamex does not apply across the boards. Its “ABC” test pertains only to alleged misclassification of contractors to avoid California Wage Order employee protections on minimum wage, overtime, and meal and rest breaks. The traditional “multi-factor” test still applies to all other alleged deprivation of employee rights by misclassification, including expense reimbursement, wrongful termination, and waiting time penalties. See, Independent Contractor Status? It Depends (November, 2018).

To resolve this split, the California Chamber of Commerce (Chamber) formed the anti-Dynamex “I’m Independent Coalition” to urge state lawmakers to restore the 11-point multi-factor test (see, e.g., Assembly Bill 71).

Conversely, Pro-Dynamex supporters are behind Assembly Bill 5, which aims to expand the Dynamex ruling to virtually all workplace situations while exempting limited professions from the ABC test including insurance brokers, risk managers, licensed physicians and surgeons, registered or licensed securities broker-dealers or investment advisors, and direct sales salespersons.

Stay tuned for the outcome of this hotly contested legislative issue.

For further assistance, please contact one of our attorneys Tim Bowles, Cindy Bamforth or Helena Kobrin.

Helena Kobrin
April 19, 2019

Starting April 1, 2019, covered California employers must post the new Family Care and Medical Leave and Pregnancy Disability Leave notice (DFEH-100-21/March 2019).

Previously, the notice was only for employers with 50 or more on payroll. It summarized employee rights and responsibilities when requesting Family Care and Medical Leave and Pregnancy Disability Leave.

The revised notice includes additional information on the New Parent Leave Act (NPLA). The NPLA requires all private California employers with 20 or more on payroll to provide eligible workers with up to 12 weeks of unpaid job-protected parental leave to bond with a new child within one year of birth, adoption, or foster care placement. See also, What’s New For 2018- California “New Parent Leave Act” Impacts Small Business (December, 2017).

Employers with 20 to 49 on payroll must post the new notice. Employers with 50 or more must replace their current notice with the new notice.
Post the notice conspicuously where all employees may view it in each company location. If 10 percent or more of the workforce are non-English speaking, the notice must also be displayed in the applicable language(s).

Employers may purchase and display an all-in-one poster from the California Chamber of Commerce or other organizations.

For additional assistance, please contact one of our attorneys Tim Bowles, Cindy Bamforth or Helena Kobrin.

Cindy Bamforth
April 12, 2019

For California, the Employment Development Department (EDD) is responsible for the administration of unemployment and disability insurance, workforce training services and payroll audits. The agency has the power to impose significant, potentially fatal penalties for non-compliance.

An EDD visit to look over pay practices is perhaps inevitable for any business that survives and thrives long-term. Random selection or anonymous employee or ex-employee complaints to the agency are common triggers. As with earthquake preparedness in this state, it is better practice to presume such scrutiny will arrive sooner, not later.

About the Audit Process

At the outset, the auditor will typically conduct an interview with the company’s representative to explain the audit process and obtain general information on the scope of the business.

An audit commonly proceeds with on-site examination of company records within a test period of the most recent calendar year. The scope of review can sometimes stretch back two or even three years.

The EDD’s California Employer’s Guide advises that review can encompass a wide range employment and business records including payroll, pay stubs, check registers, annual financial statements, cash payments records, ownership verification, forms 1099, any license required, and federal employment tax reports (e.g. W-2 and W-4).

The dramatically altered criteria for proper classification of independent contractors -- issued in the California Supreme Court’s landmark Dynamex decision -- can become a major focus of the inquiry. See, Game Changer (June, 2018).

Some best practices:

• Achieve and maintain an understanding of current and evolving workplace laws and how they affect the business’s operations, policies and documentation
• Match that understanding with regular internal audits of workplace practices and recordkeeping to confirm compliance
• Keep employment-related records for at least the last four calendar years to comply with retention requirements
• Avoid misclassification of independent contractors by properly defining and documenting such relationships. See also, Independent Contractor Status? It Depends (November, 2018)
• If and when the EDD comes calling, to the extent possible, create a cooperative and positive foundation with the auditor for the process, promptly establishing a clear understanding of the audit’s aims, scope and timing. If feasible by the personality dynamics, welcome and regard the auditor as a sort of outside advisor and the audit as an opportunity to confirm compliance and, as appropriate, to improve upon current practices.
• It is not uncommon for a business to engage experienced legal counsel to assist with these interactions. A knowledgeable, proactive attorney can help with communications, preparations and guidance toward correction as needed and lasting compliance and stable operations.
• There are sometimes discussions with auditors over their authority to remove records from a business’s premises. Without an official subpoena or other court order, an agency’s legitimate ability to access is not its blank-check power to seize and take away any record arbitrarily. The employer should take care to avoid agency removal of original records, thus crippling that company’s ability to manage its personnel and its obligation to protect the integrity of accompanying recordkeeping. A business can almost always maintain balance and cooperation with an auditor by working out a timetable for provision of copies of records properly within the scope of the agency’s inquiry. It should be rare that a disagreement over document access and possession pushes the government to resort to subpoena power to get its way.

Tim Bowles
April 5, 2019