For thousands of California employers who have compensated workers on a piece rate basis over the years, December 15, 2016 is a critical deadline for delivering the required back payments and accompanying accurate statements under the “safe harbor” provisions of new Labor Code 226.2. The state has made it very clear there are no extensions available under that law. See also, No Chance of Rescue from Safe Harbor; California’s Piece Work Employers Urgently Face Multiple Actions to Comply Fully with New Law.

By their submitting written notice to the Department of Industrial Relations (DIR) by July of this year, some 2,500 California businesses have signaled their intent to fulfill any pre-2016 piece work back pay liability by calculating and paying each affected worker up to 4% of his or her gross earnings for “piece work” pay periods between July 1, 2012 and December 31, 2015 (Safe Harbor Period).

However, waiting until the last minute to issue checks on or near that December 15, 2016 cut-off date will likely not afford the protection the law provides. As full safe harbor compliance includes three critical steps that may take weeks to complete, best practice was to have started as soon as a company gave that safe harbor notice to the DIR. If a business has not yet begun the following actions, best practice is to start immediately.

1. Calculate: The employer must pay each employee an amount equal to 4% of that employee’s gross earnings “in pay periods [within the Safe Harbor Period] in which any work was performed on a piece-rate basis.” An employer may deduct up to 1% of that gross from the calculation for amounts already separately paid for rest and recovery periods and for “other nonproductive time” (as defined in section 226.2);

2. Compensate: Section 226(b)(4) requires the employer to begin payments of that back pay “as soon as reasonably feasible,” with completion no later than December 15, 2016. It is not just the statute’s “ASAP” language that dictates starting payments right away if a business has not already begun. The law requires employers to use “due diligence, including the use of people locator, to locate and pay former employees” in the event those individuals have relocated. For all those the employer cannot find despite such efforts, that employer must submit a lump sum payment to Labor Commissioner by December 15, along with detailed description of the ex-workers included, in both hard copy and electronic form. Section 226.2(b)(4),(d)(1),(d)(2). Obviously, an employer is unlikely to be able to start and complete these tasks in the closing hours before midnight, December 15.

3. Document: The employer must accompany each such payment with an accurate safe harbor statement with four distinct disclosures: (i) a statement that the payment has been made under section 226.2; (ii) statement on the calculation method for the payment, e.g., the 3%-4% method above; (iii) “a statement, spreadsheet, listing or similar document that shows for each pay period” during which the employee had piece work earnings the gross wages earned and any separate amounts paid for rest, recovery and other nonproductive time; and (iv) the calculations made to determine the total payment. Section 226.2(b)(5). Itemizing “each pay period” on this statement as required may not be a few hours’ work, particularly when a large number workers are involved. The check issued should be for the ensuing net amount, following standard withholding and employment tax deductions, as further shown on a compliant paystub.

For those companies affected that have not begun this process, there is no time like the present. Please contact any of our lawyers Tim Bowles, Cindy Bamforth, and Helena Kobrin should you need further information.

See also:
:

• Piece Work Compensation is a Wreck Waiting to Happen; The Perils of New Labor Code Section 226.2 for Trucking, Auto Repair and Other Industries (December, 2015)
  
• California’s Itemized Pay Stub Requirements (March, 2016);
  
• Safe Harbor in Sight, Piece Work Compensation in California (May, 2016); and
  
• Navigating Piece Work in California (August, 2016)
  
• California Piece Rate Law: No Time to Relax on Rest-Recovery Premium Pay (September, 2016)

Tim Bowles
October 31, 2016

With Election Day rapidly approaching on November 8, 2016, employers should review “time off to vote” regulations and applicable workplace policy. California Elections Code sections 14000-14003 allow employees to take as much time as needed to vote in a statewide election if they have insufficient time to do so outside of their working hours. However, the employer need only compensate maximum of two hours of that time.

Employers may require employees to schedule time off to vote only at the beginning or end of their shift and to submit two working days’ advance notice of the need for such time off.

Employers are also required to conspicuously post a “time off to vote” notice no less than 10 days before every statewide election. This will be Saturday, October 29 this year. This government-issued poster can be downloaded, printed and displayed in the workplace (for other languages, click here).

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

Cindy Bamforth
October 27, 2016

California Labor Code section 515.5 exempts certain computer software professionals from overtime compensation if they receive specified minimum compensation. California’s Department of Industrial Relations (DIR) has announced its next rate increase for this minimum, effective January 1, 2017.

California employers will then have to pay otherwise qualified computer software employees a minimum hourly rate of $42.39, up from $41.85. Alternatively, an otherwise qualified employee paid by salary is eligible on minimum annual compensation of $88,318.55, payable at least once monthly at no less than $7,359.88.

An exempt computer professional must also meet each of the high-level skills and duties criteria for that exemption specified 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
October 27, 2016

Effective December 1, 2016, the Federal Overtime Exemption Rule, “the "Final Rule,” will raise the minimum salary amounts for certain workers to qualify for overtime exemption under the Fair Labor Standards Act (FLSA). See New Stricter Federal Requirements on Exemptions from Overtime, Employers Must Comply No Later than December 1, 2016 (May, 2016).

There are pending attempts to slow down or stop implementation of the Final Rule. In July, 2016, a member of Congress introduced H.R. 5813, the Overtime Reform and Enhancement Act (OREA), in July 2016 to phase in the higher minimum salary required for exemption over the next three years. See Not So Fast – Congressmember Seeks to Slow New Overtime Exemption Rule (August 2016). Congress has not passed the bill and it remains pending in Committee.

On September 20, 2016, 21 states and a business-interest group filed two federal lawsuits in the Eastern District of Texas challenging the Final Rule. They chose that district as it is known as a “rocket docket court,” normally moving cases along at relative lightning speed.

While a lame duck Congress could still pass H.R. 5813 after the November election, or the Texas court could issue an order these weeks preceding the December 1 deadline, companies cannot and should not wait to prepare.

The table below compares the current federal minimum salary requirements for otherwise qualified exempt employees with the new levels under the Final Rule. Depending on the state in which you operate, your current minimums may be higher, as shown in the column for California. If so, the new law would of course have a lesser impact than in other states.

To adopt and implement a workable plan for your company, it is good practice to list out all your exempt employees, comparing current salaries to Final Rule requirements. If the latter amount is drastically higher for any such worker, it would be a good idea to calculate what you would pay that person on an hourly rate plus overtime. Of course, no matter the decision, the company must ensure compliance with all legal requirements for the selected status.

For further information on the issues raised by these new regulations, please contact our attorneys, Tim Bowles, Cindy Bamforth or Helena Kobrin.

Helena Kobrin
October 20, 2016

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, 2017.

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 $77.23 per hour, up from the current $76.24 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
October 18, 2016

California’s Home Care Organization Consumer Protection Act (the Act) required all home care agencies to be licensed before July 1, 2016. See Home Health Care Organizations Last Chance to Continue Operations After June 30, 2016 (June, 2016). If as a home care organization (HCO) you did not obtain a license by June 30, 2016 -- or at least a conditional license -- and are continuing to operate without one, you are in jeopardy of being investigated by the Home Care Services Bureau (HCSB).

The HCSB is receiving a large volume of inquiries about unlicensed HCOs. Such an inquiry puts the HCSB on notice to start an investigation, which it does within 10 days of the inquiry, first checking if the company in question is exempt from the requirements of the Act. Some examples of exempt businesses are hospices, home health agencies, and domestic referral agencies. Health and Safety Code 1796.17(b).

If no exemption applies, then the unlicensed HCO will be required to shut down or apply for a license immediately. An unlicensed HCO is subject to a potential fine of $900 for every day it continues in operation without at least a conditional license. Written Directives Version III (WD) 90.006 (p. 10); WD 90.026 (pp. 22-23); and Health and Safety Code 1796.55.

Since the HCSB began implementing the Act, its approach has been one of help and not punishment. With the HCSB still in its early stage of operations, its staff realize that some companies remain unaware of the Act and the requirement to register. In dealing with unlicensed HCOs, HCSB staff will consider the situation of each one that comes to its attention in determining if fines are required.

If the HCSB issues a conditional license, it is good for four months or until a license is issued, whichever is sooner, and can be extended up to three additional months. When an HCO applies for a conditional license, it is no longer considered unlicensed and no longer subject to the $900/day penalty.

On the other hand, if an unlicensed HCO refuses to apply for licensure, it is subject to the $900/day fine for as long as it continues to operate, and may also be referred for criminal prosecution if the HCSB determines that would be a more effective remedy. Health and Safety Code 1796.55. The Act also makes the operation of an unlicensed HCO a misdemeanor, subject to a $1,000 fine and imprisonment for up to 180 days. Health and Safety Code 1796.58.

If you are operating an unlicensed HCO, you are in jeopardy. It is predictable that HCOs that have complied with the Act or even consumers who do not find you listed on the HCSB website will report you to the HCSB. We urge you to confront the situation now before you run into problems.

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

Helena Kobrin
October 14, 2016

On Monday morning, one of your two salespeople requests three days off to attend his grandmother’s funeral in Minnesota. On Thursday, the other salesperson requests five days off to attend the funeral of a loved one in Hawaii. Are you legally obligated to grant either or both requests? If so, must you pay for the time off? Can you require employees to use accrued vacation or paid time off (PTO) time?

Currently there are no California or federal laws granting private-sector employees the right to bereavement leave. Since 2007, California governors have vetoed all such leave bills.
In his 2010 veto, Governor Schwarzenegger stated, “While well-intended, the choice of whether or not to offer unpaid bereavement leave should be left to the employer. Further, this bill would impose new and somewhat ambiguous burdens on businesses as well as subjecting them to new threats of litigation over California-specific employment laws. During this challenging economic period, I am unwilling to add new burdens on them and subject them to new grounds for lawsuits.” In Governor Brown’s 2011 veto of a similar bill, he declared: “Granting bereavement leave when a close family member dies is the moral and decent thing to do and I believe that the vast majority of employers voluntarily make such an accommodation for the loss of a loved one.”

Although a California employer is under no obligation to do so, it is good practice to implement policy confirming whether and under what circumstances the company will grant bereavement leave. It should be clear, consistent, and yet flexible enough to tactfully address each unique situation. A bereavement policy should address:

• The amount of bereavement time the employee may take off, if any;
• Whether part-time or temporary employees are eligible;
• The definition of a “family member” for whom the bereavement leave may be taken;
• If the employee’s time off will be paid or unpaid;
• Whether the employee is required to use accrued vacation or PTO time;
• Company discretion to consider all relevant factors and to impose conditions in granting such leaves, including reconciling simultaneous requests; and
• The required elements for a leave request, including whether the employee should submit documentation such as an obituary or funeral notice.

Cindy Bamforth
October 12, 2016

Beginning July 1, 2016, the City of Los Angeles’ (City’s) Minimum Wage Ordinance (MWO) imposes higher paid employee sick time benefits than the statewide level. For definitions of covered “Employers” and “Employees” and other details, see: City of Los Angeles New Paid Sick Leave Requirements Effective July 1, 2016, Ordinance Requires Double the Benefits California Law Currently Specifies (June, 2016) as well as the City’s Minimum Wage and Sick Time Benefits: Frequently Asked Questions (FAQ) (July, 2016). As detailed below, Employers with 25 or fewer Employees may delay providing the MWO’s sick leave benefits until July 1, 2017.

The City will enforce the MWO’s paid sick time benefits through the Office of Wage Standards (OWS) via Rules and Regulations (specifically, Regulation No. 4, pp. 9-11) published July 22, 2016. Regulation No. 4 covers many key points on the City’s paid sick leave mandate, including:

Methods of providing paid sick time benefits. Regulation No. 4 restates that Employers subject to the MWO must provide paid sick time benefits either by: i) providing 48 hours of paid sick leave to the Employee at the beginning of each employment year, calendar year, or 12-month period; or ii) providing one hour of paid sick leave for every 30 hours worked. See Rules and Regulations (p. 9).

Carry-over of paid sick time. The OWS now clarifies that unused paid sick time accrued by an Employee under either of the above two methods shall carry over to the following year of employment and may be capped at a minimum of 72 hours. Employers may also set a higher cap or no cap at all. See Rules and Regulations (p. 10).

Re-hired employees. Under MWO section 187.04 (I) if an Employee is rehired within one year of the date of separation from employment, accrued and unused paid sick time must be reinstated. However, the Rules and Regulations state that if an Employer previously compensated an Employee for all accrued and unused sick time benefits upon separation from employment, the Employer is not required to reinstate the Employee’s paid out sick time benefits upon such a rehiring.

Providing a more generous compensated time off policy. The OWS may determine that an Employer’s established policy is more generous than what the MWO requires and, after considering the “totality of the circumstances,” allow an Employer’s established compensated time off policy to remain in place even if it does not meet the MWO’s accrual rate and eligibility requirements. See Rules and Regulation (p.11).

Small business deferral form. Employers with 25 or fewer Employees may defer providing the MWO’s paid sick time by one year, i.e., until July 1, 2017. However, OWS requires all such Employers interested in the deferral to complete and retain Form MW-2. See City’s FAQs Nos. 39-45 and Rules and Regulations (pp. 16-18) for more information. Also see, Los Angeles Moves to Enforce City Minimum Wage Ordinance Required Forms Now Available (September, 2016).

Exempt-from-overtime employees. The City’s FAQ No. 9 ambiguously states that the MWO does not apply to exempt-from-overtime “white collar” employees because such workers would not qualify for the California minimum wage. This of course is clear regarding the MWO’s higher minimum wage levels. Overtime exempt workers are paid salary, not by the hour. However, read literally, FAQ No. 9 also exempts overtime exempt workers from the MWO’s higher level paid sick leave provisions. This makes no sense. After all, such workers are eligible for the statewide sick pay benefits. Unless and until OWS provides further guidance on this issue, the better practice is to provide paid sick time benefits at the MWO level to overtime exempt Employees as well as hourly non-exempt Employees.

If you would like further, more detailed information, please contact Tim Bowles, Cindy Bamforth or Helena Kobrin.

Cindy Bamforth
October 6, 2016

Businesses nationwide will soon have an updated I-9 form to verify a new hire’s eligibility for employment. See: New Changes on Employment Eligibility Verification Form I-9.

The new form is in the final review stage. The U.S. Office of Management and Budget approved it in August, 2016. It is now over to the U.S. Citizenship and Immigration Service (USCIS) for any technical updates, with issuance no later than January 21, 2017. Once available, it will be valid until August 31, 2019.

In the meantime, employers are to continue to use the I-9 form with revision date “03/08/2013.” That existing form is available online. Additional information on the forms is available at I-9 Central on the USCIS website.

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

Helena Kobrin
October 5, 2016