California and the federal government require employers to provide their workers with a range of printed statements and information on workplace laws and required procedures. 2018 brings more changes to the pamphlets to be distributed in California workplaces. Some of these are:

• Disability Insurance Pamphlet (DE 2515): Disability Insurance is part of a State Disability Insurance Program (SDI) which partially replaces wages lost due to non- work-related illnesses. In May of 2017, the California Employment Development Department (EDD) issued a revised DE 2515 removing the Riverside office. Employers should distribute this updated version to all new hires as well as to employees going out on disability leave.

• Paid Family Leave Pamphlet (DE 2511): Employees eligible for California’s Paid Family Leave benefits may receive up to six weeks of state-funded partial wage replacement for leaves of absence to care for a seriously ill family member or to bond with a newborn child. In July of 2017, the California Employment Development Department (EDD) issued a revised version of DE 2511 specifying an increased 60%-70% wage replacement rate of a covered employee’s compensation, effective January 1, 2018. Employers must distribute this new version to all new hires and to covered employees taking such leaves.

• Sexual Harassment Information Pamphlet (DFEH-185): Sexual harassment, singling out individuals due to gender, is a form of unlawful workplace discrimination,. In April, 2017, the California Employment Development Department (EDD) issued a revised DFEH-185. Employer best practice is to distribute this recommended, updated version to all new hires. See also, Sexual Harassment in the Workplace.

• For Your Benefit – Programs for the Unemployed (DE 2320): Among other things, the EDD’s most recent edition of DE 2320 includes a revised list on the information required before filing a claim; a new schedule for any filing consultation (such as customer services support, the unemployment insurance phone services and the interactive voice response); a description of a new type of claim (“interstate claim”); and a new certification for eligibility requirements for continuing to receive benefits. Effective January 1, 2018, employers must distribute this revised DE 2320 to terminated employees and to those going out on a leave of absence.

Employers may download the above pamphlets or purchase them from the California Chamber of Commerce. As these URL links are subject to legislative or regulatory modifications, you should confirm you are using the most recent versions at all times.

As part of our hire-to-fire employment forms package, we also provide a more comprehensive list of California and federal forms, pamphlets and notices that HR should distribute to new hires.

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

Cindy Bamforth
December 1, 2017

Continuing her public campaign for employers to adhere to California wage and hour laws, Labor Commissioner Julie Su has announced a judgment in favor of two live-in workers for wages, overtime, and meal breaks against Alexen Corporation, which runs facilities in San Lorenzo and Antioch for developmentally disabled adults.

For years, Alexen had paid the two employees a daily rate while requiring them to remain on duty through meals and to be available through the night. After investigating the workers’ complaints, the state Division of Labor Standards Enforcement (Division) awarded them:

• $180,076 in underpaid regular wages and overtime;
• $86,009 in ‘liquidated damages” (automatic doubling of underpaid minimum wage);
• $34,832 interest; and
• $13,177 in additional wages

This 2015 $314,124 award grew to $360,000 with two years of additional post-judgment interest.

As Labor Code 96.8 permits, the Division enforced this award through the state court, seizing monies deposited in Alexen’s bank accounts.

Commissioner Su’s press release asserted: “California is at the forefront of the fight
against wage theft, giving the Labor Commissioner tools to punish recalcitrant employers who steal their workers' wages and refuse to pay even after the workers file a claim and win.”

Employers in all industries that pay hourly workers a daily flat rate without regard to the number of hours worked and to the applicable minimum wage, overtime, and break laws should consider this ruling a wake-up call. It is good sense for any business to regularly review its pay practices, thus taking care to comply with all applicable state and federal laws. See also:

• Location, Location, Location…Location, California Municipal Minimum Wage Rates Continue to Grow (July, 2017)
• Working Overtime in California

Helena Kobrin
November 24, 2017

With sexual harassment scandals currently crowding the daily news cycle, the potential for a holiday office party to become a morale-crushing, litigation nightmare is greater today than ever. There is nothing wrong with annually celebrating company accomplishments and work well done. Yet, management must ensure such parties serve to acknowledge teamwork and build morale, not to spin out-of-control into a regrettable “harassment fest” or worse.

Some DO’s and DON’Ts:

DO: Evaluate your company’s culture and the kind of events that will best fit. But even if you have staff who supposedly go for crude jokes or conduct, you must not promote or permit harassing behavior.

DO: Design a celebration that includes workplace-appropriate acknowledgment and team building. A luncheon rather than an evening party may minimize opportunity for unwanted romantic advances and other improper conduct.

DO: Provide advance guidelines for appropriate dress, including examples of inappropriate clothing such as skimpy outfits and those likely to be insulting or offensive to other races, cultures, religions, etc.

DO: Respect employees who do not wish to take part. Participation in your party needs to be voluntary.

DO: If needed, apply discipline, such as asking an employee who is behaving offensively to leave or sending an employee home to change if dressed inappropriately for the workplace.

DON’T: Permit supervisors, managers, or any executives, even if they own the company, to behave inappropriately. Those are the very people who must be good role models and set the example for appropriate behavior.

DON’T: Look the other way if an employee is being harassed in some way. Such activities can demoralize not only the person targeted but the all or most of the group. Manager inaction will significantly increase the chances of a harassment claim.

DON’T: Allow alcohol consumption. Your company can be liable for physical injuries incurred or sexual harassment committed by a person served alcohol at a company-sponsored party, regardless of location or whether it is during or off working hours. If you still decide to serve alcohol or have a bar available, provide advance guidelines for what is appropriate.

See also:

Office Holiday Survival Guide (November, 2010)
Office Holiday Survival Guide II: Respecting Employee Religious Practices (December, 2010)
Office Holiday Survival Guide III: Harassment Hotbed (December, 2010)

For further information this holiday season, please contact one of our attorneys Tim Bowles, Cindy Bamforth, and Helena Kobrin.

Helena Kobrin
November 22, 2017

The California Labor Commissioner cited Oakland construction contractor, Attic Pros, and its owner for misclassifying 119 workers as independent contractors. The Commissioner ordered the company to pay more than $3.5 million, including unpaid minimum wages and overtime, liquidated damages, waiting time penalties, and civil penalties for violations during a 32-month period.

The Commissioner awarded $3.5 million based on 10–14 hour workdays up to six days a week, but the company paid them a daily rate amounting to less than minimum wage.

The award consisted of:

• $191,400 for minimum wage;
• $321,300 for overtime;
• $191,400 in liquidated damages (a type of fine that doubles the minimum wage payment);
• $1,405,350 in waiting time penalties (up to 30 days of extra pay for not paying all wages due when an employee leaves the company); and
• $1,481,600 in civil penalties.

Commissioner Julie Su stated: “This is an egregious case of wage theft, with workers misclassified and denied a just day’s pay. My office enforces California’s labor laws to stop employers willing to cheat employees of their pay as a means to gain an unfair advantage over their law-abiding competitors.”

Misclassification of employees as independent contractors can become a costly proposition. Whether someone is an independent contractor or should be classified as an employee is a legal question based upon multiple factors in the relationship, and is not merely a matter of choice by the parties. Various government agencies have posted guidance online for making a correct classification determination. See Independent Contractor (Self – Employed) or Employee? and EDD Employment Determination Guide. The Division of Labor Standards Enforcement (DSLE) has posted on its website frequently asked questions for proper classification of workers.

See also:

• A Super-Sized MacDonald’s Overtime Class Action Ruling (April, 2017)
• Contractor Misclassification … Class Action? (October, 2014)
• Classifying Workers, Employees or Independent Contractors? (June, 2014)
• Independent or Employed (April, 2014)
• California’s Exemptions from Overtime Pay (January, 2012)
• Working Overtime in California

If you need assistance to determine how to classify employees correctly, please contact one of our attorneys, Tim Bowles, Cindy Bamforth or Helena Kobrin.

November 20, 2017

Helena Kobrin

Helena Kobrin
November 20, 2017

California Labor Code section 515.6 exempts certain licensed physicians and surgeons from overtime compensation as long as they receive set minimum hourly rates of pay. The California Department of Industrial Relations (DIR) is increasing this minimum, effective January 1, 2018.

To avoid California’s requirements to pay overtime premium rates after eight hours worked in a day or 40 in a week, employers will have to pay eligible physicians and surgeons the minimum equivalent of $79.39 per hour, up from the current $77.15 rate.

To document qualification for this exemption, employers will need to pay the physician or surgeon the minimum hourly rate, keeping accurate track of hours worked. Physicians and surgeons paid on a lump sum salary (whether weekly or otherwise) will not qualify for this exemption.

Under Labor Code section 515.6 a doctor is exempt-from-overtime only if he or she is a licensed physician or surgeon “primarily engaged” (more than 50% of the time) in duties that require that licensure. California Business & Professions Code section 2052 specifies such duties, requiring a medical license for anyone who “diagnoses, treats, operates for, or prescribes for any ailment, blemish, deformity, disease, disfigurement, disorder, injury, or other physical or mental condition of any person.”

Employers relying on this exemption will of course need to implement this rate change by the January 1 deadline.

Licensed medical doctors may also qualify for other overtime exemptions, including the administrative, executive, or professional exemptions. Each such category carries its own distinct criteria.

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

Cindy Bamforth
November 9, 2017

California Labor Code section 515.5 exempts certain computer software professionals from overtime compensation who receive specified minimum compensation. California’s Department of Industrial Relations (DIR) has announced its rate increase for this minimum, effective January 1, 2018.

To comply with the section 515.5 exemptions, California employers must pay otherwise qualified computer software employees a minimum hourly rate of $43.58, up from $42.35. Alternatively, an otherwise qualified employee paid by salary is eligible on minimum annual compensation of $90,790.07, payable at least once monthly at no less than $7,565.85.

An exempt computer professional must also meet each of the high-level skills and duties criteria for that exemption as laid out in Labor Code section 515.5. Among these, the employee must be “primarily engaged” (more than 50% of the time) in intellectual or creative work which requires “the exercise of discretion and independent judgment” applying systems analysis to determine “functional specifications” of hardware, software or systems; designing computer systems or programs; and/or documenting, testing, creating or modifying computer programs related to computer systems software or hardware design.

Although such qualified employees need not be paid overtime premium under California law, employers should further ensure such workers meet the overtime exemption for computer professionals under federal law.

It is also possible for computer professionals to qualify for the administrative, executive or “learned profession” exemptions from overtime. Each category possesses its own distinct qualification rules.

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

Cindy Bamforth
November 3, 2017

Following San Francisco, Los Angeles, and other cities and states across the country, California has added a provision to the Fair Employment and Housing Act (FEHA) banning employers from asking applicants for criminal convictions before a conditional offer of employment has been made. See, San Francisco Employers Must Give Former Convicts a Fighting Chance (August, 2014); Ban the Box in the City of Los Angeles (January 2017).

Effective January 1, 2018, Government Code 12952 will prohibit California employers with five or more employees from making pre-offer inquiries concerning criminal background.

Initial Applicant Screening. An employer may not include questions on an employment application form, or otherwise inquire into or consider criminal conviction history before the employer makes a conditional offer of employment to the applicant.

Conditional Offer and Fair Chance Process. Once an employer makes a conditional offer, it may require the candidate to disclose criminal conviction information. Before reversing that offer to hire, the employer must assess the nature, gravity and timing of the applicant’s convictions, completion of any sentence, and how the convictions relate to the job being sought.

If on that review an employer decides to rescind the offer, it must notify the applicant in writing of that preliminary decision, the conviction(s) upon which that decision is based, and the applicant’s right to respond within five business days, along with a copy of any conviction history report. If within that time the applicant notifies the employer in writing that he/she disputes the conviction history, he/she may have an additional five days to obtain evidence before fully responding.

The employer must consider any information an applicant submits before making its final decision. Should the denial of employment stand, the employer must notify the applicant in writing of: (1) its final decision; (2) any procedure the employer has for the applicant to dispute the decision; and (3) the applicant’s right to file a complaint with the Department of Fair Employment and Housing (DFEH).

Banned Considerations. This new law prohibits an employer from considering most arrests that were not followed by a conviction, referral to a diversion program, and sealed, dismissed, or expunged convictions.

Exemptions from the Law. New section 12952 does not apply to certain government positions, hiring of farm labor contractors, and positions for which the law requires a criminal background check.

Repeal/Retention of Existing Law. The new law repeals Labor Code 432.9, which banned state and local agencies from making criminal history inquiries while leaving in place Labor Code 432.7 which bans employer inquiries into arrests or detentions not resulting in conviction.

Affected California employers should review new section 12952 and what they must do to comply, including modifying employee applications and adjusting assessment and interviewing protocol, to ensure lawful inquiry into an applicant’s criminal history.

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

Helena Kobrin
October 27, 2017

Effective January 1, 2018, new Labor Code section 432.3 will prohibit all California employers from relying on salary history information as a factor in offering an applicant employment or in what salary to offer.

Section 432.3 will also bar employers “orally or in writing, personally or through an agent,” from seeking “salary history information, including compensation and benefits, about an applicant for employment.”

The new provision requires an employer to disclose its pay scale on request of an applicant.

While the first portion of the law clearly states that salary history cannot be a factor in what salary level an employer may offer an applicant, a later section appears to provide an exception. If a prospective employee, “voluntarily and without being prompted,” provides salary information, then the employer may consider or rely upon that information in determining that person’s pay level. Section 432.3(h).

If and when an applicant discloses such information, it creates at least three potential pitfalls for employers, all of which should be addressed with adequate and accurate documentation.

First, an employer should document that any such applicant disclosure of past compensation was made “voluntarily and without prompting.”

Second, if employer is to consider or rely on that prior salary information to determine the person’s pay level, the company must take care to document that it is not violating the prohibition of Labor Code 1197.5 against wage disparity between men and women for substantially similar work under similar working conditions. See also, Understanding California’s Equal Pay Act, (June, 2011).

Third, since an employer may not use salary history in determining whether to hire a person, a company should be particularly careful in documenting why it legitimately declined to employ someone (e.g., not the most qualified candidate) after that applicant has voluntary disclosed past compensation levels.

Before this law goes into effect in January, California employers should eliminate any application form, policy or procedure that would run afoul of these new rules as well as train personnel management staff how to comply, including the sorts of adequate documentation a company should maintain to confirm such compliance. Employers should also create a “pay scale” for each position for which they are interviewing in case someone asks for it.

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

Helena Kobrin
October 20, 2017

Nor-Cal Venture Group, Inc., the owner of 26 Jack in the Box franchises in California, is one of the recent targets of the Labor Commissioner’s public campaign for employers to heed this state’s wage and hour laws. The commissioner’s Division of Labor Standards Enforcement (DLSE) has directed Nor-Cal to pay $903,084 for failing to pay 40 restaurant managers daily and weekly overtime, rejecting the employer’s claim that these workers met the tests as exempt executives or administrators.

California is one of five states or territories that requires businesses to pay their employees premiums for hours worked over a weekly or daily maximum. For this state, overtime kicks in after 40 hours in a week or eight in a day.

Executives or administrators that meet several specific requirements – including minimum salary levels and spending more than half their time on higher-skilled operational “oversight” responsibilities -- can be legitimately exempt from such overtime premium rules. An employer is entitled to pay a validly classified exempt-from-overtime worker his/her salary no matter how many weekly or daily hours that person works.

While the managers in question may have theoretically possessed qualifying duties for exemption, the DLSE found that these workers were actually performing the same duties as other, hourly employees.

The state thus assessed Nor-Cal $416,783 in unpaid overtime and penalties, $218,277 in minimum wage violations and penalties, another $169,427 in automatic (“liquidated”) damages for minimum wage underpayments, and $98.647 in other underpayments.

Commissioner Julie Su warned: “For these employees, being misclassified as managers resulted in being paid less than minimum wage. That’s not an acceptable way of doing business in California, and my office will continue to enforce labor laws that uphold that wage floor.” She asserted that worker misclassification results in an estimated $7 billion annually in uncollected payroll tax revenue.

Employers should of course ensure that their exempt managers consistently satisfy all requirements for such classifications. See also:

• Working Overtime in California
• California’s Exemptions from Overtime Pay (January, 2012)
• The California Executive Exemption (November, 2009)
• The California Administrative Exemption (November, 2009)
• Location, Location, Location…Location, California Municipal Minimum Wage Rates Continue to Grow (July, 2017)
• Larger California Employers Must Pay Higher Minimum Wages and Salaries (November, 2016)

Tim Bowles
October 17, 2017