When a worker’s employment ends, the items required in the final paycheck are determined by California’s laws, the employer’s specific policies at the time of termination, and the circumstances of that particular company-employee relationship.

When a business terminates a worker, all wages and all earned but unused paid vacation are due and payable on the last day of work. However, if an employee gives resignation notice less than 72-hours from his departure, the employer has 72 hours from that notice date to provide the final paycheck. If the notice given by either party exceeds 72 hours, all wages must be paid on the last day of work as well as on any paydays that may fall in the interim.

Here are some basics on what employers must include in a final pay check:

Earned Hourly Wages or Salary Must be Included: California requires an employer to fully pay all earned hourly wages, overtime and/or salary compensation through the worker’s final day of labor. A company need only pay the pro-rated portion earned to that final day on a weekly or other pay-period salary for an exempt-from-overtime executive, administrator, etc.

Earned Vacation Pay Must be Included: California does not require an employer to provide paid vacation to any of its workers. However, when a business does offer this benefit, an important rule applies: 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.

Vacation pay is paid out at the rate the employee was earning at the time of separation from the employer.

Sick Pay is Not Included unless Company Policy States Otherwise: Under California law and the ordinances of those municipalities providing their own paid sick leave standards, unused sick pay does not need to be paid out at the end of a worker’s employment. However, if the business has a paid sick leave policy specifying it will pay out unused sick leave upon termination or at the end of the year, then that employer must also pay any unused sick leave amounts in the final pay.

The situation may not be so clean-cut. Some workplace policies combine paid vacation days, personal days and sick days into a single “paid time off” policy. In this instance, all such days are an accruing benefit and the employer must pay the amount equal to the earned but unused days at termination. It requires full review of an employer’s exact policies to know whether this requirement applies in specific circumstances.

Some Commissions May Be Excluded from Final Pay. Whether an employer must pay all commissions according to these final pay laws depends on that employer’s policies and practices. Considerations include when commissions are deemed to be earned. Some businesses specify a commission earned upon an agreement to purchase. Others set a customer’s payment for the goods or services as the “earning event.” If the event has yet to occur on a commissioned employee’s final day, payment of such commission is owing upon the subsequent occurrence of that event. Best practice is for a company to clearly set out the applicable earning event in its written commission rules.

Consequences in the Event of Underpayment: Whether or not intentional, California imposes a daily “penalty wage” to a maximum 30 days on an employer who miscalculates and thus underpays a departing employee all remaining compensation owing on the latter’s final day of work. This rule does not just cover miscalculation of wages, etc. that might be owing the worker from his or her final pay period. It covers math errors and underpayments committed for any work performed up to three years prior to that final work day. While such mistakes on a single worker are relatively survivable for a company, a legitimate claim brought on behalf of a large class of former employees for an across-the boards error of this kind can be a life-threatening challenge to that business.

See also:

• Prepare for Summer (May, 2018)
• Payroll Record-Keeping 101 (May, 2018)
• Correct Pay Stubs Save Bucks (May, 2018)
• Employee Terminations (April, 2018)

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

Helena Kobrin
May 25, 2018

On Tuesday afternoon a customer walks in your restaurant with his giant Deerhound and starts ordering lunch for both of them. The waitress, surprised and unsure about this arrangement, asks her supervisor if the customer needs to leave because of the “no pets allowed” policy.

May the supervisor promptly show the dog and his owner to the door? Not if the dog is a service animal. Any business establishment open to the public must allow its disabled customers’ service animals to be admitted to the same areas as other customers as provided under federal and California law.

A service animal is defined as any dog (and, under federal law, a miniature horse) that is individually trained to do work or performs tasks for the disabled individual’s benefit, such as protection and rescue work, pulling a wheelchair, or fetching dropped items.

If it’s not already evident why the person needs the service animal, then the public entity may ask these two questions: (1) whether the animal is required because of a disability, and (2) what work or task the animal has been trained to do. The business may not ask about the nature or extent of the disability, for any training documentation, or for a demonstration of the animal’s trained tasks.

However, the service animal must be under the handler’s control at all times (e.g. a harness, leash, voice control and/or signals). If not, and the owner does not take effective action, or the animal is not sufficiently housebroken, then the public entity may remove them.

A business accepting a service animal onto the premises is not responsible for its care or supervision. Additionally, if other individuals are normally charged for the damage they incur, then the business may charge the disabled individual for damage caused by the service animal.

All businesses open to the general public should modify their policies and practices to permit the use of a service animal on their premises, which includes modifying any policy that blanketly prohibits animals from entry.

California businesses failing to comply with these provisions may be found guilty of a misdemeanor, punishable by a fine up to $2500.

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

See also:

• Can I Bring My Monkey to Work? (May, 2018)
• Don’t Flunk the Reasonable Accommodation Test (May, 2018)
• Preventing Workplace Discrimination (August, 2017)
• Mind the Stink (June, 2017)
• Employers Duties to Reasonably Accommodate Worker Disabilities (May, 2015)
• Disability and Leave of Absence Policies (June, 2011)

Cindy Bamforth
May 24, 2018

Hourly employees must be paid for all “hours worked.” Where an employee is required to travel for work, near or far, the employer must compensate the worker for that time. Exceptions are normal commute time or road trip downtime. Thus, an hourly worker who watches a movie through a flight for business is still earning pay for his or her hours on the plane except the time spent taking a meal, as traveling employees are still entitled to meal and rest breaks.

Businesses may establish a lower hourly rate of pay for unproductive but compensable travel time. Thus, an employer could pay an hourly employee minimum wage (currently $11.00/hour in California for businesses with 26 or more employees) for the transit time and that worker’s higher, normal rate (say, $20.00/hour) for time spent working at the destination that day. If that worker flew for five hours ($11.00/hour x 5 hours = $55.00) and then attended a conference for another three ($20.00/hr x 3 hours = $60.00), his total pay that day would be $115.00.

Unless there is a clear written agreement setting a special, reduced “travel rate,” the compensation is at the employee’s normal hourly rate, which may be no less than minimum wage. See, California Minimum Wage Rates for 2018 (December, 2017). The state’s daily and weekly overtime laws also apply to work-related travel days. Thus, a worker that spent a ten hour day flying to New York and then preparing for a meeting in the hotel room has earned eight straight time hours and two overtime hours.

California is one of the few states that require overtime premium pay either weekly (“time-and-a-half” after 40 in a week) or daily (“time-and-a-half” after eight hours in a day, “double time” after 12 daily hours). See, The Basics of Overtime (May, 2018).

Things get more complex when a California employee works either daily or weekly overtime while earning separate hourly rates during a pay period. Employers must calculate those 1.5x and 2x premium rates based upon the “regular rate of pay.” To calculate the “regular [hourly] rate” to be used for paying overtime, the employer must add up all non-overtime compensation for a week and divide it by the total number of hours worked.

Thus, if the above worker flying to New York also returned to California that same week, working a total of 50 hours, with ten of those hours at the $11.00/hour travel rate ($11.00/hr x 10 hrs. = $110.00) and the other 40 hours at the $20.00 rate ($20.00/hour x 40 hrs. = $800), his total earned compensation would of course be $910.00 for those 50 hours. The regular rate would be $18.20/hr ($910.00 ÷ 50 hrs = $18.20), making the 1.5x premium rate for each of the ten overtime hours $27.30.

If the worker had any very long work days that week exceeding 12 hours, the employee would earn 1.5x the regular rate for the each of the 9^th – 12^th hours worked in that day and then 2x the regular rate for each daily hour worked over 12. So, if the employee worked five days of 8, 10, 12, 14, and 8 hours respectively, the additional pay for overtime on both a daily or weekly calculation would be for 10 hours at an additional .5 premium rate per hour (or 10 x $13.65 overtime premium) and 2 hours at an additional 2x premium rate per hour (i.e., 2x $27.30 overtime premium). The employer would therefore pay $910 + $136.50 + $54.60 for that week.

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

Helena Kobrin
May 18, 2018

Upon arriving to work on Monday morning your customer service manager asks if she can bring her monkey to the office.

Must management grant her request? It depends. If she needs the monkey to reasonably accommodate her disability, then the employer will most likely have to grant her wish. Only where accommodation choices would legitimately impose undue hardship is the company justified in denying the request.

Under federal law an assistive animal is any dog or miniature horse trained to perform tasks to benefit a disabled individual.

California more broadly defines an assistive animal as any animal “that is necessary as a reasonable accommodation for a person with a disability.”

In addition to trained dogs, California recognizes all trained or untrained support animals that provide “emotional, cognitive, or other similar support to a person with a disability.”

Thus, even an untrained monkey could qualify if it provides emotional support to an applicant or employee with a physical or mental disability.

As part of the interactive process, the employer may ask the customer service manager to provide a letter from the employee’s health care provider confirming that she has a disability and explaining why the assistive animal is required in the workplace (e.g., why the animal is required to enable the employee to perform her essential job functions). The employer may require annual recertification of the continued need for the assistive animal.

Employers may also set minimum standards for assistive animals, such as requiring them to be free from offensive odors, be fully housebroken, and not a danger to anyone’s health or safety. In California, only within the first two weeks of allowing the assistive animal in the workplace may the employer challenge whether the animal meets such standards.

California employers should:

• Update any existing no-animals-in-the-workplace policy
• Consider any animal as a potential assistive animal, not just dogs
• Engage in a good-faith interactive process to determine whether and how to accommodate a disabled worker requesting to bring an assistive animal to work
• After permitting the accommodation, carefully keep track of the initial two-week period and closely observe the animal’s behavior to confirm it meets the minimum workplace standards

Please note different rules apply for businesses open to the public concerning customers’ service animals. We will provide more specific information about these requirements in a future article.

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

See also:

• Don’t Flunk The Reasonable Accommodation Test (May, 2018)
• Preventing Workplace Discrimination (August, 2017)
• Mind the Stink (June, 2017)
• Employers Duties To Reasonably Accommodate Worker Disabilities (May, 2015)
• Disability and Leave of Absence Policies (June, 2011)
• Disability Employment (October, 2010)

Cindy Bamforth
May 15, 2018

No California employer is obligated to provide paid vacation time to its workers. However, such benefit is a common practice, promoting morale and productivity. Once a company grants paid vacation (for example, one week annually), it is considered an accruing benefit, i.e., an employee earns it gradually throughout the working year. See, Vacation Pay in California (March 2011) and Requiring Use of Paid Vacation for Unpaid Leaves (August, 2012).

As vacation benefit “accrues” throughout an annual cycle, a worker who ends employment in the middle of that year will have earned his or her proportionate share of the full annual benefit. On the other hand, under a policy of one week paid vacation each calendar year for full-time workers, an employee who doesn’t take any time off for, say, ten years is going to have ten weeks of pay coming to him or her upon departure. An employer who neglects to pay the accrued amount on the employee’s departure will be subject to a penalty of as much as one month’s wages.

To prevent large vacation pay accruals, an employer’s written paid vacation policy can put a cap on how much vacation a worker can accrue (for example, 18 months of benefits). Such a policy will put vacation accrual on hold after the specified amount of accrual time and direct the worker to utilize at least some paid vacation, after which the benefit can begin accruing again up to the specified limit.

Additionally, business does not necessarily go on vacation during the prime months for taking time off. In order to ensure continued production and service to their publics, employers have the right to manage their workers’ vacation timing, including approval of scheduling and the number of vacation days a given worker may take at any particular time.

Manager thought and care are required. For example, an employer may not deny vacation time to a worker simply because that person recently returned from a medical disability leave. Such grounds – unrelated to business production demands — could constitute unlawful retaliation. In the event management must deny a proposed vacation period or suggest alternative dates, written confirmation of the actual work-related reasons is a very good idea.

Companies should specify the scheduling ground rules in any policy providing such benefits, including a requirement of written requests well in advance of planned vacations and a clear statement that it is ultimately management’s prerogative when and how the company will schedule vacation time.

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

Helena Kobrin
May 10, 2018

The California Fair Employment and Housing Act (FEHA) requires employers with five or more on payroll to engage in an “interactive process” with a worker requesting accommodation of a disability. The employer must have timely, good faith and ongoing discussions to explore if and how to reasonably accommodate the physically or mentally disabled worker’s ability to perform the essential functions of his or her job. Failure to do so can be a costly error.

On April 24, 2018, the California Department of Fair Employment and Housing (DFEH) announced that it settled a reasonable accommodation case with the Compton Unified School District (Compton Unified) for more than $200,000.

Complainant worked as an elementary school teacher for 16 years. She had allegedly asked for accommodation because she could not physically reach above shoulder level. After a brief meeting, Compton Unified concluded “that writing on the board is an essential function of teaching second grade and that the complainant could not be accommodated.” She had to remain on leave until she was eventually terminated.

In response, the teacher filed a DFEH complaint alleging that Compton Unified refused to provide reasonable accommodation for her disability.

DFEH Director Kevin Kish stated in the press release: “When employees have disability-related restrictions, the law requires an interactive process, and that process is more than a short meeting without discussion of possible accommodations.”

Employers should always proceed with caution when responding to an employee’s request for disability accommodation. This includes properly engaging in an ongoing, thorough, fair and well-documented interactive process that identifies various potential accommodations and determines the strengths and weaknesses of each one.

The employer is only justified in refusing to reasonably accommodate the disabled employee where accommodation choices would legitimately impose undue hardship. The undue hardship standard is difficult to satisfy and the employer should consult with competent and experienced legal counsel before making that determination.

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

See also:

• Preventing Workplace Discrimination (August, 2017)
• Mind the Stink (June, 2017)
• Employers Duties To Reasonably Accommodate Worker Disabilities (May, 2015)
• Disability and Leave of Absence Policies (June, 2011)
• Disability Employment (October, 2010)

Cindy Bamforth
May 9, 2018

Attorneys for employees alleging underpayment or other wage irregularities will regularly add a pay stub violation claim to the mix. By definition, if an employer has erred in wage calculations, it has messed up the earnings statements. California law on the specific information that must be included on a stub is detailed and virtually unforgiving of widespread or long-term mistakes.

Up until July 1, 2015, this state required nine possible items that must be listed. Employers now must include as many as 16 points. See California’s Itemized Pay Stub Requirements (March, 2016).

A. The First Nine California Pay Stub Requirements: As we reported in “Pay” By The Rules: California Pay Stub Requirements (July, 2009) these items, listed in Labor Code 226(a), are:

(1) Gross wages earned;

(2) Total hours worked (except salaried exempt employees);

(3) Piece rate units and rate, if applicable;

(4) All deductions, including taxes, disability insurance, and health and welfare payments (deductions ordered by the employee may be aggregated and shown as one item);

(5) Net wages earned;

(6) Inclusive dates of the pay period;

(7) Name of the employee plus last four digits only of social security number or an employee identification number;

(8) Name and address of the legal employing entity; and

(9) All applicable hourly rates the employee earned during the pay period and the number of hours worked at each hourly rate.

B. Required Listing of Employee’s Paid Sick Days Benefit: As in California Paid Sick Leave Law (August, 2015), most employers in this state have also been required since July 2015 to include:

(10) Written notice of the amount of available paid sick leave on the employee’s pay stub or a separate writing provided with the employee’s wage payment.

Under revised Labor Code 246(i), an employer who provides unlimited sick leave to its employees (no maximum cap) may now meet this notice requirement by indicating “unlimited” leave on the employee’s itemized wage statement or in a separate writing provided on each designated pay date.

C. Further Required Paystub Listing of Rest and Recovery Pay for Certain Employers: As in Piece Work Compensation Is a Wreck Waiting to Happen (December, 2015), employers utilizing any form of a so-called piece work (production-based) compensation system have been further obligated since January 1, 2016 to pay affected workers separately for rest and recovery time. New Labor Code 226.2(a)(2)(A) now requires such employers to list three additional items on each pay stub:

(11) Total hours of compensable rest and recovery periods in the applicable pay period;

(12) Rate of compensation for such periods; and

(13) Gross wages paid for those rest and recovery periods during that pay period.

Under Labor Code 226.2(a)(2)(B), unless a piece work-paying employer includes an hourly minimum wage base rate in its compensation system, that employer will also have to list yet three more items on each pay stub for affected workers:

(14) Total hours of other compensable nonproductive time in the applicable pay period;

(15) Rate of compensation for such time; and

(16) Gross wages paid for that time during the pay period.

Employer attention to such detail is important. Labor Code 226(e) provides that an employer’s knowing and intentional failure to comply may entitle each worker affected to recover at least $50 for the first violation and a minimum $100 for each subsequent occurrence up to a maximum of $4,000. In the event a company’s non-compliance applies long-term to a large number of employees, the total potential liability could be very significant.

This state’s Labor Commissioner has for many years listed a template pay stub illustrating the placement of the above nine items. See: http://www.dir.ca.gov/dlse/PayStub.pdf. However, the state has not yet offered what it considers acceptable examples of pay stubs containing additional items (10) through (16) above. This lack of government guidance makes it all the more important that affected employers consult with legal counsel to determine how best to bring their pay stub formats into compliance with the above-described new California pay stub requirements.

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

Helena Kobrin

Updated May 3, 2016

On April 10, 2018, California’s Department of Fair Employment and Housing (DFEH) Task Force on the Prevention of Sexual Harassment in the Workplace (The Task Force) announced that it will telephonically interview randomly-selected California employers on their anti-harassment policies including employer-sponsored training and other anti-harassment complaint procedures.

Formed in May 2016 to study the problem and prevention of workplace sexual harassment, The Task Force hopes to better understand how employers manage the issues. DFEH Director Kevin Kish expects “the results of the survey to provide important insights for policy makers and the public alike.”

The Task Force has issued a workplace harassment guide on how to develop effective anti-harassment workplace practices.

California law requires all employers with one or more employees to take “all reasonable steps necessary to prevent discrimination and harassment from occurring,” which can include:

1. Provide copies of the DFEH’s sexual harassment brochure to all California employees;
2. Conspicuously display the DFEH’s “California Law Prohibits Workplace Discrimination and Harassment” poster in compliance with DFEH’s posting rules;
3. Develop and distribute a California-compliant harassment, discrimination and retaliation prevention policy (Anti-Harassment Policy);
4. Translate the Anti-Harassment Policy into every language spoken by at least ten percent of the workforce; and
5. Provide mandatory sexual harassment training if and as required by law.

Cindy Bamforth
May 3, 2018

California law requires most non-exempt employees to receive overtime pay for time worked beyond forty hours in any one workweek or after eight hours in one workday.

A workweek is any seven consecutive days, starting with the same calendar day each week beginning at any hour, so long as the cycle is a fixed and regularly recurring period of 168 hours. For example, the workweek that begins on Monday at midnight ends on Sunday at 11:59 p.m.

A workday is a consecutive 24-hour period that begins at the same time every day as the workweek beginning time.

The basic five California overtime rules are:

1. Over 40 hours in a workweek = 1.5x regular rate.
2. Over 8 hours in a workday = 1.5x regular rate.
3. Over 12 hours in a workday = 2.0x regular rate.
4. The first 8 hours worked on the seventh consecutive day within the same workweek = 1.5x regular rate.
5. Over 8 hours worked on the seventh consecutive day within the same workweek = 2.0x regular rate.

Employers must also pay the employee whichever total overtime hours are greater -- weekly or daily. Do not pyramid (double-count) the overtime hours but do compare daily versus weekly at the end of the workweek to make the correct calculations. No matter what, pay double-time whenever it occurs.

For example:

• If the employee had 10 daily overtime hours at 1.5x and 7 weekly overtime hours at 1.5x, pay 10 daily overtime hours at 1.5x.
• If the employee had 25 weekly overtime hours at 1.5x and 12 daily overtime hours at 1.5x, pay 25 weekly overtime hours at 1.5x.
• If, however, the employee had 25 weekly overtime hours at 1.5x and 12 daily overtime hours of which 3 hours were at 2.0x, pay the 25 weekly overtime hours as follows:

22 hours at 1.5x and 3 hours at 2.0x = 25 total overtime hours.

Overtime pay must be based on the employee’s “regular rate of pay” which is not always the hourly rate. Employers must factor in not just the straight hourly rate, but also certain non-discretionary bonuses, commissions, value of meals and lodging, and cash payments in lieu of medical benefits.

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

See also:

• California Supreme Court Sets Out New Formula for Overtime When “Flat Sum” Bonus Paid (March, 2018)
• Calculating Overtime With Employee Bonuses in California (March, 2010)
• Working Overtime in California

Cindy Bamforth
April 27, 2018