KEEP YOUR CREATIONS

Register Your Valuable Promotional Material with the Copyright Office

Promotion and advertising are important parts of the budget of any business, whether for-profit or non-profit. In order to bring in customers, clients, and donors, it is imperative to create and hone your promotional efforts for your target public.

Most large companies with important promotional materials have in-house or outside counsel who advise them to register copyrights for important company properties, including promotional material. It is likely, however, that many small and medium-size businesses are missing out on this legal protection.

As we explained in The Annals of Copyright Number 6, Should You Register Your Copyright?, when you create any work, it is copyrighted from that moment. However, an owner must register that work with the U.S. Copyright Office before it can enforce that copyright in federal court. 17 U.S. Code 411(a).

Two major benefits that may be available to a copyright owner that registered its work either before it was infringed or within three months after it was first published are attorney fees and statutory damages – i.e., damages that the owner does not have to prove, but are set in a range provided by the statute. 17 U.S. Code 412 A copyright owner whose registration does not meet those requirements can still file suit but would only be able to obtain damages that it can prove, as well as an injunction. It also could not recoup its attorney fees.

Legal fees for copyright cases can be high. If you win your infringement suit and you qualify under section 412, you can ask that the court order the losing infringer to reimburse your attorney fees. While an award is discretionary, many copyright holders have persuaded judges to direct such attorney fee payments, sometimes even in excess of the damages awarded for the infringement.

It can also be difficult to prove damages in a copyright case. You may not be able to show what actual damages there were. But if your registration meets the registration requirements, in addition to attorney fees, you also can seek statutory damages. These range from $200 per work for innocent infringement up to $150,000 per work if the infringement was willful.

To determine whether you should register your promotional materials, you need to ask yourself what will happen if someone rips off your successful promo. You should consider how much staff effort and budget went into its creation and how much you have paid independent contractors, whether marketing experts, digital designers, printers or others. If the budget that you invested into developing your promotional material is extensive, and if that material brings considerable business or donations into your company, you should preserve your ability to prevent others from profiting off your investment. In contrast to the large amount you could lose because of infringers, the cost of applying for a standard copyright registration is $35.00.

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

Helena Kobrin

September 2, 2016

California Expands the Exception to Listing “Hours Worked” on Pay Stubs

California Labor Code Section 226 requires employers to provide workers with strictly defined statements (i.e. pay stubs) either semimonthly or with each paycheck. See, California’s Itemized Pay Stub Requirements, Ignoring the Needed Details Poses Trap for Unwary Employers (March, 2016).

While section 226 generally requires each pay stub to include the employee’s total hours worked during that pay period, employers have been permitted to omit this information for certain salaried exempt-from-overtime workers under various statutes and Industrial Welfare Commission Wage Orders.

However, employers have long understood this ability to omit “total hours worked” from the pay stubs of any type of lawfully exempt-from-overtime employee whether or not paid by salary. In a rare development in favor of employers, the California Legislature has now ratified this widespread practice through new Labor Code 226(j). Effective July 22, 2016, this subsection comprehensively lists specific categories of overtime exemption which do not require listing total hours worked on the pay stubs.

They include:

• Salaried persons employed in an executive, administrative, or professional capacity;
• Outside salespersons;
• Computer software professionals paid on a salaried basis under Labor Code section 515.5; and
• Individuals who are the parent, spouse, child, or legally adopted child of the employer.

Although amended Labor Code 226 removes any uncertainty on the pay stub requirements for such workers, California employers are of course responsible for accurately classifying as exempt only those employees who are eligible. See, for example:

• California’s Exemptions from Overtime Pay (January 2012)
• The California Administrative Exemption (November, 2009)
• The California Executive Exemption (November, 2009)
• Commissioned Sales Personnel and Overtime Pay. Must Employers Pay Premiums for Extra Hours Worked? (October, 2012)
• Wake-Up Call on Inside Salespersons. California Supreme Court Narrows Eligibility for the Commissioned Sales Person (July, 2014)
• California Labor Laws 2015: New Requirement for Computer Professional Overtime Exemption. (January, 2015)

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

Cindy Bamforth

August 31, 2016

When California Employers May Subtract from Earned Compensation

Employers sometimes wish to make deductions from an employee’s wages for a variety of reasons. Doing so without knowing what the law permits can be a mistake, as California has stringent laws on what deductions are allowed.

As a general principle, employers may make deductions from wages if: (1) state or federal law requires or permits the deduction; (2) an employee authorizes the deduction in writing for such things as hospital or medical dues, insurance premiums, or other deductions that do not reduce a standard wage resulting from collective bargaining, a wage agreement, or a statute; or (3) a collective bargaining agreement expressly authorizes health, welfare, or pension plan contributions. CA Labor Code 224.

Unlawful Deductions

An employer may not:

• Collect back any part of a wage that it has previously paid to an employee. For example, if you advance commissions to employees, you may not take them back if the customer never pays unless you have a policy that correctly and legally characterizes the commissions and advances and provides when and how you may recoup them. See, Drafting Sound Commissions Agreements; and Defining Employee Commissions.

• Collect a debt the employee owes the company against wages without written agreement from the employee. Labor Code 224. A company also may never offset the balance of a debt owed against final wages. Barnhill v. Robert Saunders & Co. So if you loan money to an employee who later quits, you cannot subtract the remaining debt from the person’s last wages. You could work out an agreement with the person on how (s)he will pay off the debt and you can use normal collection and litigation remedies if needed.

• Make payroll deductions or require an employee to pay for any “necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties, or of his or her obedience to the directions of the employer.” Labor Code 2802. These expenditures include such things as uniforms, required medical examinations, travel, meals, and purchases of equipment.

• Subtract from wages the amount of tips an employee has earned. Labor Code 351.

• Deduct the amount of a bond that the employer paid for an employee or a photograph the employer required. Labor Code 401

• Subtract from wages expenses resulting from the employee’s negligence, such as cash shortages, loss of equipment, or breakage. See, Industrial Welfare Commission (IWC) Wage Orders, including, for example, section 8 of Wage Order 4. This rule does permit an employer to make deductions for gross negligence or dishonest or willful acts. See below.

Lawful Deductions

An employer may:

• Deduct legally required amounts for such things as federal and state income tax, unemployment, state disability insurance and paid family leave tax, Medicare, and Social Security.

• Subtract amounts under court orders for garnishment or child support up to certain statutory maximum amounts.

• In industries where an employer may need to furnish meals or lodging, deduct up to the value of those items specified in applicable IWC Wage Orders. See, for example, section 10 of Wage Order 15.

• Make deductions authorized by an employee in writing for such things as a 401(k) account, life insurance, health insurance, or union dues. Labor Code 224.

• Deduct other amounts that the employee agrees to in writing, such as payments on a loan the employer gave to the employee so long as it is not the last pay check, does not reduce the wages to below the amount required by a wage agreement, collective bargaining agreement, or statute, and is not more than agreed upon by the employee.

• Subtract amounts attributable to an employee’s gross negligence or dishonest or willful acts. See, for example, section 8 of Wage Order 4.

Before you make deductions from wages other than required withholding, it is advisable to verify that the intended deduction is legally permissible.

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

Helena Kobrin

August 26, 2016

BUSINESSES MUST COMPLY STARTING JANUARY 1, 2017

The City of Santa Monica (City) has enacted a city-wide paid sick leave and minimum wage ordinance (Ordinance No. 2515). See, our blog “City of Santa Monica Increasing Minimum Wage Annually from 2016 to 2020” (May, 2016)

Effective January 1, 2017, Ordinance No. 2515 requires all employers, no matter where located, to provide paid sick time to every employee who works for at least two hours “in a particular week” within the geographic boundaries of the City and who is legally “entitled to a payment of a minimum wage” (Employees). Click here to find out if a particular address is located within those city limits.

Employers with 26 or more Employees shall provide:

• On January 1, 2017 at least 40 hours of accrued paid sick leave.
• On January 1, 2018 at least 72 hours of accrued paid sick leave.

Employers with 25 or fewer Employees shall provide:

• On January 1, 2017 at least 32 hours of accrued paid sick leave.
• On January 1, 2018 at least 40 hours of accrued paid sick leave.

Employers must provide either:

• One hour paid sick leave for every 30 hours worked (“accrual method”). Under this method, any unused sick leave will carry over from year to year (fiscal year, calendar year, or anniversary date) up to the accrual limit shown above; or
• The full amount of required paid sick leave at the start of each calendar year, fiscal year or anniversary date (“front load method”), in which case unused sick leave need not carry over from year to year.

Although paid sick leave will begin to accrue at the commencement of employment, an employee may not use accrued paid sick leave until after the first 90 days of employment or consistent with the employer’s policies, whichever is sooner.

Employees may use some or all of their accrued paid sick leave benefit amount at any time (following the first 90 days of employment).

Employers must conspicuously post the City’s current official Notice in English, Spanish or any other language spoken by at least five percent of the workforce. Employers must also provide new hires the employer’s name, address, and telephone number in writing.

As always, if there is a conflict between California state and city paid sick leave laws, the employer must abide by the more employee-favorable provision(s).

Affected employers should ensure their sick leave policies and practices comply with these new standards. Santa Monica’s online frequently asked questions page provides more information.

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

Cindy Bamforth

August 25, 2016

A Guideline for Proper Time Rounding Policies under California and Federal Law

Employees often clock in and out a few minutes early or late at beginning and end of day or for meal breaks. Is an employer required to calculate all those extra or short minutes in determining an employee’s wages? Fortunately, the answer is “No.”

The Fair Labor Standards Act of 1938 (“FLSA”) 29 U.S.C. § 785.48 and the California DLSE Manual §§ 47.1 and 47.2 permit employers to round such minutes up and down to simplify administration of wage payments if done in an appropriate fashion.

The federal regulation recognizes that certain industries that use time clocks have had a “practice for many years of recording the employees’ starting time and stopping time to the nearest 5 minutes, or to the nearest one-tenth or quarter of an hour.” The regulation accepts this practice, “provided that it is used in such a manner that it will not result, over a period of time, in failure to compensate the employees properly for all the time they have actually worked.” California adopts the federal language in the Division of Labor Standards Enforcement (DLSE) Manual.

For example, consider an employee scheduled to work from 8: 00 am to 4:00 pm and paid $20 per hour (equivalent to $0.33 per minute). If the employee leaves at 3:58 p.m., the employer could round his departure time to 4:00 p.m. and he would be paid for two minutes that he did not work. If the same employee leaves work at 4:05 p.m. on another day, his work time could be rounded to 4 p.m. He would gain $.66 on the first day and lose $1.65 on the second. As this happens over time, the employee would gain and lose minutes of pay, but these rounded amounts would tend to result in compensating the employee about the same amount as if every minute were counted in both directions.

In Corbin v. Time Warner Entertainment-Advance/Newhouse Partnership (May, 2016), the federal Ninth Circuit Court of Appeals — over California and several other western states – rejected Mr. Corbin’s challenge to Time Warner’s time rounding policies under the FLSA and California law, observing that focusing on small resulting personal imbalances was misguided: “This case turns on $15.02 and one minute. $15.02 represents the total amount of compensation that Plaintiff . . . alleges he has lost due to his employer’s . . . compensation policy that rounds all employee time stamps to the nearest quarter-hour.”

The court confirmed the purpose of a time rounding policy is to enable employers “to calculate wages efficiently.” As a result, “in any given pay period, employees come out ahead and sometimes they come out behind, but the policy is meant to average out in the long-term.” It also ruled that a time rounding policy does not mean that every employee must be paid every cent of wages that employee would have earned without time rounding. Rather, the time rounding regulation applies to “employees” in the aggregate.

If you are engaging in time rounding or would like to do so, you should have a written, neutral rounding policy that explains how your company will evenhandedly apply rounding up and down to a specific time increment, such as five, ten, or 15 minutes. This policy should be in your employment handbook or issued separately, and your employees should acknowledge its receipt in writing. To reduce the chances of possible expensive challenges such as the Corbin case, it is good practice to have an experienced attorney draft or review such policy.

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

Helena Kobrin
August 19, 2016

Employers Must Cough Up at Least Five Days of Benefits

As previously announced in Sick Pay Ordinance Epidemic Spreads to San Diego, New Measure Adds Yet More Uncertainty to Employer Obligations (June, 2016), San Diego voters recently enacted city-wide paid sick leave and minimum wage ordinance (Ordinance No. 20390). See our blog Rising Minimum Wages, the California Trend Continues, San Diego Approves its first gradual Increases Effective, July 11, 2016 (August, 2016) for more information on this ordinance’s minimum wage mandate.

As of July 11, 2016, Ordinance No. 20390 requires that employers must provide paid sick time to all employees who work in San Diego for at least two hours in one or more calendar weeks of a year (Employees). Click here to find out if a particular address is located within those city limits.

Also starting July 11, employers must provide employees with one hour of earned sick leave for every 30 hours worked within the city (“accrual method”). Employers may limit actual use of earned sick leave to 40 hours per year, but unused, accrued sick leave must be carried over to the following year.

Starting September 2, 2016, San Diego’s follow-up ordinance (Implementing Ordinance No. 20706) allows employers to cap an employee’s total accrual at 80 hours. It also authorizes employers to “front load” 40 hours of sick leave at the beginning of each benefit year (“front loading method”) thus relieving the employer of any accrual and carryover requirements. Under the front loading method, the employer must reserve at least 40 new hours at the beginning of each benefit year. Ordinance No. 20390 defines benefit year as a “regular and consecutive twelve – month period, as determined by an Employer”.

New hires will be allowed to use accrued paid sick leave beginning on the 91st day of employment or after July 11, 2016, whichever is later.

In addition to the reasons specified under state law, San Diego allows employees to use paid sick leave when the employee’s place of business or child’s school/child care provider closes by order of a public official due to a public health emergency.

Employers must conspicuously post the city’s current official Notice in English, Spanish or any other language spoken by at least five percent of the workforce. Once the Implementing Ordinance takes effect in September, the city will update this notice.

Employers must also give each current employee and new hires written notification of their rights using San Diego’s Earned Sick Leave and Minimum Wage Employee Notification Form.

Affected employers should ensure their sick leave policies and practices comply with these new standards. San Diego’s online frequently asked questions page provides more information.

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

Cindy Bamforth

August 18, 2016

Employers Urgently Must Revise Wage Systems in 2016, Including Possible Hourly-Plus-Piece Hybrid Plan

The one constant feature of California employment law is change. There is perhaps no better recent example than this state’s “piece work” compensation rules. Starting January, 2016, employers must fundamentally re-structure such pay systems or face increasing risk of legal claims, including potential business-busting class action lawsuits.

The Core Change in the Law:

Trucking, agriculture, and many other California industries have utilized “by the piece” pay for many years. Haulers have paid drivers by the mile traveled, growers have paid field workers by the bushel or basket, and vehicle repair shops have paid mechanics by the repair job completed. At its best, a wage “by the piece” acts as a win-win for labor and management, when pay rates are fairly set proportional to the enterprise’s overall income generated and workers, now encouraged to produce more to earn more, can be fairly rewarded for their efforts well above “by the hour” norms.

However, starting with two court decisions in 2013, it has not been that simple in this state. Effective January 1, 2016, the California Legislature added more complexity. See, Piece Work Compensation is a Wreck Waiting to Happen, The Perils of New Labor Code Section 226.2 (December, 2015).

California now takes the unique view that an employer must compensate a piece work employee at least at the applicable minimum wage level for “every hour worked,” meaning, unlike the federal system, a company can no longer average all piece pay over the hours worked in a payroll period to confirm an average of minimum wage per hour. Instead, California businesses must pay its piece workers separately for state-directed rest periods and for payable “non-production” time.

A Solution for Compliance with New Standards:

This unique reading of piece work requirements is a potential formula for confusion and conflict. How does one define payable “non-production time” exactly? It is only labeled in Labor Code 226.2 as “time under the employer’s control, exclusive of rest and recovery periods, that is not directly related to the activity being compensated on a piece-rate basis.” What “not directly related” means here is anyone’s guess at this point. Is a trucker’s time spent fueling not directly related to his or her driving? Is a mechanic’s time in a coordination meeting not directly related to the repair jobs thus assigned to him or her that day?

However, section 226.2(a)(4) and 226.2(a)(7) provide a possible simple solution. As long as the employer pays an hourly rate of at least the applicable minimum wage for every hour worked in addition to any piece work compensation, the worker will be considered fully paid for his or her payable “non-productive” time.

This solution would thus require the employer to re-define its pay system and modify accompanying practices as needed. Instead of a “pure” or “exclusive” piece work wage (for example, only paying drivers by the mile), a company could change to a hybrid plan that includes: (1) an applicable minimum wage payment for each hour worked in a day; plus (2) a “net” piece work pay calculated by subtracting whatever hourly minimum wage the employee has earned in (1) from the total piece pay he or she previously earned on the “pure” piece work system.

This would not be the only change required to comply with new Labor Code 226.2. If a company has not been doing so for its piece workers, it will now have to require each such employee to accurately record and report his or her daily and weekly hours worked. As we will explain in future articles, that employer must also separately calculate and pay “rest and recovery periods” compensation and may also be obligated to calculate and pay premiums for daily or weekly overtime depending on the industry the business is in. That employer must also accurately document the new system with a revised and expanded paystub in compliance with all California standards.

Yet, this “hourly-plus-net-piece-pay” arrangement has the advantage of complying with the new section 226.2 while retaining the production incentives created by a piece work arrangement. In essence, a piece worker will not earn any less than he or she was earning before the change. With the additional “rest and recovery periods” compensation as above, that employee will actually be earning a little more each week than previously.

The Way Forward:

The new requirements began on January 1, 2016. If a piece work-paying company has yet to implement such a system, it is not too late. However, sooner is better by far. Each week that passes without these improvements is another week where that employer is potentially in violation of California standards and thus at risk of ever-increasing liability.

Our lawyers Tim Bowles, Cindy Bamforth, and Helena Kobrin are assisting many businesses with such urgently needed transitions. Our help also includes addressing any back pay issues arising for periods between January, 2016 and the new system’s implementation. Please contact our office should you need further information.

See also:

• California’s Itemized Pay Stub Requirements (March, 2016);
• Safe Harbor in Sight, Piece Work Compensation in California (May, 2016); and
• No Chance of Rescue from Safe Harbor; California’s Piece Work Employers Urgently Face Multiple Actions to Comply Fully with New Law (July, 2016)

Tim Bowles

August 12, 2016

San Diego Approves Its First Gradual Increase, Effective July 11, 2016

Effective July 11, 2016, San Diego became the next California city to set a minimum wage level above the state’s standard.

Under San Diego’s Ordinance No. 20390, all employers, regardless of size or location, must pay at least $10.50 per hour to any employee who works two or more hours in one work week within the geographic boundaries of the city. The state of California’s minimum wage is currently $10.00 per hour. Click here to find out if a particular address is located within those city limits.

Employers shall pay:

• From July 11, 2016, a $10.50 hourly minimum wage.
• From July 1, 2017, a $11.50 hourly minimum wage.
• From July 1, 2019 and each year thereafter, the minimum wage increases by an amount corresponding to the prior year’s increase, if any, in the cost of living based on the Consumer Price Index.

San Diego shall publish annual notices announcing the adjusted minimum wage rate for the upcoming year and its effective date. Employers must conspicuously post the city’s current Notice in English, Spanish or in any other languages spoken by at least five percent of the workforce.

Employers must also give each current employee and new hire written notification of San Diego’s special paid sick leave and minimum wage rights using the city’s Earned Sick Leave and Minimum Wage Employee Notification Form.

San Diego’s online frequently asked questions page regarding these rights provides more information.

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

Cindy Bamforth

August 10, 2016

New Federal Workplace Poster Requirements For Minimum Wage and Polygraph Protections, Effective August 1, 2016

The U.S. Department of Labor (DOL) has revised the federal Fair Labor Standards Act (FLSA) Minimum Wage poster and the Employee Polygraph Protections Act (EPPA) poster.

Starting August 1, 2016, U.S. employers must post these revised versions:

1. FLSA Minimum Wage Poster (FMW): In addition to simpler language throughout, this version includes:

• Nursing Mothers Section: This passage describes the FLSA’s requirement to provide reasonable break times and locations for nursing mothers to express breast milk;

• Enforcement Language Expanded: This poster no longer carries previous mention of limits to civil penalties for federal wage and hour violations and;

• Independent Contractors Section: This portion directs employers to correctly classify independent contractors and employees.

2. Employee Polygraph Protection Act Poster: This version deletes the $100,000 civil penalty limit for an EPPA violation and updates the DOL’s contact information.

Employers may purchase these posters and other required state and federal notices from the California Chamber of Commerce or another qualified vendor.

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

Cindy Bamforth
August 5, 2016