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The U.S. Department of Labor (DOL) has announced the imminent launch of thePAIDprogram – Payroll Audit Independent Determination. Theprogram’s intentis to permit employers to self-audit and correct as appropriate their minimum wage and overtime practices, thus avoiding federal government investigation, litigation, fines and penalties.
The U.S. Department of Labor (DOL) has announced the imminent launch of the PAID program – Payroll Audit Independent Determination. The program’s intent is to permit employers to self-audit and correct as appropriate their minimum wage and overtime practices, thus avoiding federal government investigation, litigation, fines and penalties.
This is a six month pilot program. The DOL has not yet released full information or announced the starting date, but it has published an FAQ concerning the PAID Program. No employer already under DOL investigation or in litigation over alleged minimum wage and overtime violations is eligible to take part.
In order to participate, a business must:
The program’s biggest plus, provided employees agree to sign waivers of their claims in exchange for the back payments, is avoidance of any potential fines and penalties from any such underpayments.
On the other hand, while an employer would be absolved from abuses of federal minimum wage and overtime standards, the program does not provide protection from employee claims for other payroll or workplace violations, including of course wage claims under California law.
There is also the prospect of one or more workers rejecting the back pay offer, choosing to report these employer-announced improper practices to one or more government agencies, including California’s Division of Labor Standard Enforcement, thus triggering a much wider investigation, assessments, etc.
Similarly, a business’s participation in the program is no guarantee the DOL will not initiate such a wider investigation on its own.
Any company contemplating taking part in PAID should discuss particular circumstances with a qualified employment attorney before making a final decision.
For further information, please contact Tim Bowles, Cindy Bamforth or Helena Kobrin.
Helena Kobrin
March 30, 2018
Most workers are employed “at-will,” meaning either the employer or employee may end the work relationship at any time for any lawful reason without cause or advance notice. California law generally presumes an employee is employed at-will unless the employee can prove otherwise, such as a manager’s contrary verbal or written statement that the worker was guaranteed employment for some definite period, e.g., a year, 18 months, etc.
Most workers are employed “at-will,” meaning either the employer or employee may end the work relationship at any time for any lawful reason without cause or advance notice. California law generally presumes an employee is employed at-will unless the employee can prove otherwise, such as a manager’s contrary verbal or written statement that the worker was guaranteed employment for some definite period, e.g., a year, 18 months, etc.
A properly drafted at-will employment agreement establishes in writing the employment is at-will and confirms management may not verbally change that status. A typical at-will employment agreement may contain additional terms including: confidentiality/nondisclosure obligations to protect the company’s trade secrets and other confidential information; when and how to return company property; and verification of the employer’s ownership rights to certain intellectual property prepared within the scope of employment, i.e. “works made for hire.”
Employees who might collaborate on new inventions, innovations, or similar technology should also sign an invention assignment agreement prior to commencement of employment which would, among other things, define and list exactly which inventions belong to the employee and which ones must be assigned to the employer.
Employers who pay commissions to their California employees must provide them with written and signed commission agreements.
Employers who wish to arbitrate future disputes should also provide employees with a properly written arbitration agreement.
An experienced employment lawyer can help draft workable, legally compliant employment agreements including those described in this article.
For further information, please contact Tim Bowles, Cindy Bamforth or Helena Kobrin.
Cindy Bamforth
March 30, 2018
Often California employers reward employees with bonuses without realizing the proper way to calculate overtime when doing so. This can put an employer at substantial risk if miscalculated over significant time for a large number of workers.
Often California employers reward employees with bonuses without realizing the proper way to calculate overtime when doing so. This can put an employer at substantial risk if miscalculated over significant time for a large number of workers.
Depending on the number of extra hours worked in a day or a week, California’s overtime rate is either 1.5x or 2x an employee’s “regular rate” of pay. A worker’s “regular rate” comes from dividing the total compensation received, including commissions and “non-discretionary” bonuses, by all of his or her hours worked in a week. See, Working Overtime in California.
Bonuses fall into two categories: (1) discretionary bonuses not linked to any incentive, contract, policy or promise, such as a holiday bonus; and (2) non-discretionary bonuses which are either incentives to increase productivity, quality of work or attendance; or are paid under a contract, policy or promise. See, Calculating Overtime With Employee Bonuses in California (March, 2010). Non-discretionary bonuses include “flat sum bonuses” which are usually fixed dollar amounts promised to the employee that are not tied to production or number of hours worked.
In Alvarado v. Dart Container Corporation of California, the California Supreme Court recently determined employers must follow a separate and very specific regular rate calculation when the employee has earned a non-discretionary “flat sum bonus” during a pay period in which he or she has worked overtime.
Plaintiff Mr. Alvarado was an hourly warehouse employee for food service products manufacturer Dart Container. In addition to his normal hourly wages, he received an “attendance bonus,” a flat sum extra $15 per day of weekend work regardless of the number of hours worked in the weekend shift.
Plaintiff’s class action lawsuit disputed Dart’s formula for calculating overtime compensation for the pay periods in which the plaintiff and co-workers earned the attendance bonus.
Following the commonly accepted federal method, Dart calculated the regular rate by dividing the total amount of compensation, including the flat ($15 per day) bonus, by the total number of hours actually worked during the pay period, including overtime hours.
Since that flat bonus component was not geared to any particular number of hours worked during the pay period, the employee asserted, and the Court agreed, that Dart (a) should have computed a special regular rate for that bonus by separately dividing the flat amount by the non-overtime hours actually worked in the given seven-day pay period; and (b) should have multiplied that rate by 1.5x to reach the amount of per-hour overtime pay attributable to that weekend bonus.
For example: an employee worked 44 total hours in a week, including eight hours per day Monday through Friday plus four overtime hours on Saturday. Her hourly (straight) rate is $12. She also received a $15 flat sum bonus for working those four hours on the Saturday shift:
Step 1. Calculate overtime compensation on hourly wages only:
40 total hours x $12 hourly straight time rate = $480
1.5 overtime rate (i.e. $18) x 4 (overtime hours) = $72
Step 2. Calculate overtime compensation attributable to the flat sum bonus only (using non-overtime hours actually worked):
$15 (bonus amount) divided by 40 (non-overtime hours actually worked) = $0.375 (the bonus’ per-hour value)
Multiply $0.375 (the bonus’ per-hour value) x 1.5 (overtime multiplier) = $0.563 (bonus overtime amount)
Then multiply $0.563 (bonus overtime amount) x 4 (overtime hours worked on the weekend) = $2.25
Step 3. Now combine all compensation:
$480 (total hourly pay) + $72 (total overtime pay on the hourly wages) + $15 (flat bonus amount) + $2.25 (total overtime pay on the flat bonus) = $569.25
This is a simple illustration. The calculations would compound if the employee had incurred double-time during the weekend work, received more than one rate of pay during the week, earned the bonus over more than one pay period, and/or earned other non-discretionary bonuses in addition to the $15 flat sum.
While the decision was limited to this specific type of compensation, the Court also observed without elaboration that different calculations may be warranted for other sorts of nondiscretionary bonuses. California management and workforce thus must await possible future refinements.
Please contact Tim Bowles, Cindy Bamforth or Helena Kobrin for any assistance on the potential impact of employee bonuses on calculating compensation plans.
Cindy Bamforth
March 22, 2018
The Labor Commissioner’slatest press releaseannounced citations of $8.3 million against Camp Bootcamp, Inc., dba Camp Transformation Center, which operates 15 fitness and weight loss centers from its Chino headquarters.
The Labor Commissioner’s latest press release announced citations of $8.3 million against Camp Bootcamp, Inc., dba Camp Transformation Center, which operates 15 fitness and weight loss centers from its Chino headquarters.
The citations include a long list of Labor Code violations during a three-year period from 2014 to 2017:
With violations affecting 551 workers, the Commissioner slimmed the company’s bottom line by:
Commissioner Julie Su stated that “Employers should not expect to pass the cost of doing business to their workers – this is wage theft.”
Employers with a by-the-piece compensation system are required to pay for every hour worked, i.e., all hours when an employee is engaged in activities for the benefit of its employer, whether it be driving time, attending meetings, preparing equipment for the day’s work, or other activities. See, Navigating Piece Work Pay in California (August, 2016). They also must provide 10-minute rest breaks in every 4-hour work period and 30- minute meal breaks for each 5 hours worked. See, Employee Meal Periods and Rest Breaks (September, 2016).
For further information, please contact Tim Bowles, Cindy Bamforth or Helena Kobrin.
Helena Kobrin
March 14, 2018
Employers must correctly field and handle an employee’s religiously-based objection to a workplace requirement, even when the employer’s requirement is mandated by law.
Employers must correctly field and handle an employee’s religiously-based objection to a workplace requirement, even when the employer’s requirement is mandated by law.
For example, in Kaite v. Altoona Student Transportation, Inc., plaintiff worked as a Pennsylvania school bus driver for employer Altoona Student Transportation (AST). AST began implementing mandatory background checks, which required fingerprinting as required by a newly-issued state Child Protective Services Law (CPSL).
Plaintiff, a devout Christian, informed AST that the Book of Revelation prohibits the “mark of the devil” which she believed included fingerprinting and that she would not get into Heaven if fingerprinted. She asked AST for an accommodation, such as undergoing a different type of background check that did not require fingerprinting.
AST purportedly informed her that no accommodations were available and terminated her employment for refusing to comply with CPSL’s fingerprinting requirement.
Asserting that AST allowed at least one employee with “unreadable” fingerprints to participate in an alternative background check, plaintiff’s ensuing lawsuit alleged religious discrimination and unlawful retaliation.
In response, AST filed a motion to dismiss plaintiff’s case asserting that none of her claims were legally valid. In support, AST alleged that it could face criminal liability if it failed to comply with the state-imposed fingerprinting requirement.
The federal court refused to dismiss plaintiff’s lawsuit at this early stage, most likely leaving it up to a jury to decide whether AST engaged in a good faith attempt to find a reasonable accommodation for the plaintiff, such as an alternative background check, and whether the employer was ultimately unable to accommodate her without incurring so-called “undue hardship” in risking criminal liability for not enforcing the state’s fingerprinting requirements.
Employers should always proceed with caution when responding to an employee’s religious objection to any workplace requirement. Only where accommodation choices would legitimately impose undue hardship – a legal term with very specific definitions under federal and state law — is the company justified in requiring the worker to forgo the religious practice as an employment condition.
For further information, please contact Tim Bowles, Cindy Bamforth or Helena Kobrin.
See also:
Accommodating Religious Practices (June, 2015)
Employer Duties to Fight Religious Prejudice (May, 2014)
New CA Labor Laws 2013: Religious Dress and Grooming and Employer’s Increased Duties to Accommodate (February, 2013)
Accommodating Religion in the Workplace (March, 2011)
What’s God Got to Do With it? (December, 2010)
Religion in the Workplace, Have Faith in the Law (September, 2009)
Reverse Discrimination (July, 2009)
Cindy Bamforth
March 9, 2018
California’s Immigrant Worker Protection Act, AB 450(the Act), went into effect on January 1, 2018. It creates numerous restrictions to prevent an employer’s voluntary cooperation with worksite immigration inspections.
California’s Immigrant Worker Protection Act, AB 450 (the Act), went into effect on January 1, 2018. It creates numerous restrictions to prevent an employer’s voluntary cooperation with worksite immigration inspections.
Pursuant to the Act, Government Codes 7285.1 and 7285.2 prohibit employers from voluntarily allowing access to non-public areas of the worksite without a search warrant, or consenting to immigration agent review or access, or obtaining of employees’ records without a warrant or subpoena. The ban on voluntary surrender of employee records is not applicable to I-9 forms and other documents where a Notice of Inspection has been provided to the employer.
The Act also creates new requirements for employers under the Labor Code. Section 90.2 requires any employer that receives notice of an I-9 inspection to post notice for its employees within 72 hours, including the name of the agency, the date notice was received, the nature of the inspection (if known), and a copy of the Notice of Inspection itself. The Labor Commissioner has provided a template for the required notice.
If the inspection results list a particular employee as lacking proper documents or work authorization (an “affected employee”), the employer must provide the affected employee with hand delivered notice, if possible, or email/mail notice if not, of the identified deficiencies, time for correction, when any meeting with the employer for such corrections is scheduled, and notice of the employee’s right to representation in that meeting.
All such notices also need to be provided to collective bargaining representatives for the employee.
Violation of these laws carries potential fines from $2,000 to $5,000 for a first offense and $5,000 to $10,000 for subsequent offenses, unless the employer did not consent to access. Only the Labor Commissioner or Attorney General can enforce this law.
Finally, subject to a $10,000 fine, employers may not reverify an employee’s work authorization unless specifically required by federal law.
These laws do not restrict any employer obligations under an E-Verify Memo of Understanding.
The Department of Industrial Relations has provided an FAQ to answer some of the questions that employers may have under this law.
While California provides penalties for violating these laws, violation of federal laws requiring verification of employee eligibility also carries stiff penalties, and it is important to comply with such laws. See, for example, Immigration Law Requirements for Employers (October, 2011) and the federal website.
For further information or assistance, please contact Tim Bowles, Cindy Bamforth or Helena Kobrin.
Helena Kobrin
March 2, 2018
As the corporate world heads towards paperless offices, more employers may wish to remit pay stubs electronically without running afoul of applicable law.
As the corporate world heads towards paperless offices, more employers may wish to remit pay stubs electronically without running afoul of applicable law.
California Labor Code section 226(a) requires employers to furnish wage statements “in writing” and itemized deductions to be recorded “in ink or other indelible form.” Additionally, any electronic wage statement system must ensure confidentiality of the employee’s personal information.
Thus, employers must proceed with caution when deciding to distribute electronic pay stubs, carefully reviewing the California Labor Commissioner’s opinion letter which enumerates certain safeguards, such as:
However, Labor Commissioner opinion letters merely interpret the law and courts need not follow such interpretations. Given there is no express law permitting electronic record-keeping, there’s still some degree of risk in doing so and paper statements (with electronic back-up) continue to remain the safer route.
See also:
For further information, please contact Tim Bowles, Cindy Bamforth or Helena Kobrin.
Cindy Bamforth
February 28, 2018
California lawrequires employers to provide written itemized wage statements containing precise, detailed pay-related information every pay period.
California law requires employers to provide written itemized wage statements containing precise, detailed pay-related information every pay period.
Penalties for failure to comply with these pay stub requirements entitles each worker to recover at least $50 for the first violation and a minimum $100 for each subsequent occurrence up to a maximum of $4000. Multiply those potential liabilities by the number of employees and the frequency of pay periods over a year’s time and a company may be in serious jeopardy for even one seemingly innocuous omission.
Therefore, it’s important to avoid potentially costly errors including but not limited to:
California Employers Beware: At present, the Labor Commissioner office’s online sample check stub format does not fully comply with all itemized wage statement requirements. For additional guidance, please see: California’s Itemized Pay Stub Requirements (March, 2016).
For further information, please contact Tim Bowles, Cindy Bamforth or Helena Kobrin.
Cindy Bamforth
February 23, 2018
State and federal laws provide detailed standards a business must closely examine for who it can rightfully classify as an independent contractor and who needs to be an employee. Yet, it is not uncommon for enterprises and those they hire to just skip all that and – with or without benefit of a written contract – structure their arrangement as an independent based on their arbitrary preferences. For example, a hiree may not want taxes withheld or a business may not want to attend to payroll reco
State and federal laws provide detailed standards a business must closely examine for who it can rightfully classify as an independent contractor and who needs to be an employee. Yet, it is not uncommon for enterprises and those they hire to just skip all that and – with or without benefit of a written contract – structure their arrangement as an independent based on their arbitrary preferences. For example, a hiree may not want taxes withheld or a business may not want to attend to payroll record keeping or to pay employer-side taxes.
Pushed as a priority by state government, the incidence of claims alleging independent contractor misclassification appears to be growing. See, for example, Labor Commissioner’s Office Awards $3.5 Million Against Oakland Contractor (November, 2017).
The California Supreme Court is currently addressing the issue in Dynamex Operations West, Inc. v. Superior Court, a class action alleging an across-the-boards misclassification of delivery drivers as independent contractors. To prevail, the drivers are calling for a far broader definition of “employer” than contained in the Court’s last major decision on the topic, in 1989.
Under current laws, resolution of the classification question is not always simple or assured. The factors are numerous, including for instance whether workers will be subject to the company’s direction and control, are working only and indefinitely for that organization, and using that company’s tools and equipment. Due to the potentially astronomical cost of misclassifying workers as independent (including liabilities for underpayment of wages, deprivation of meal and rest periods, etc.), many attorneys have tended to give conservative, cautious advice on the topic, urging business clients in close cases to treat hirees as employees. See Independent or Employed? (April, 2014) and Independent Contractors and Employees (October, 2011).
We will keep you posted on the outcome of the Dynamex case. If the Court goes the drivers’ way, the ability to legitimately classify as independent those workers providing their regular or exclusive labors to a business may well be significantly diminished.
For further information, please contact Tim Bowles, Cindy Bamforth or Helena Kobrin.
Helena Kobrin
February 23, 2018