California Rejects De Minimus Time

California Rejects De Minimus Time

Four minutes a day might seem inconsequential, right? Not to the California Supreme Court. In Troester v.Starbucks Corporation, the Court held that employers are required to compensate employees for short, unrecorded periods of time worked off the clock. Such de minimus time, which can add up to substantial time over weeks, months, or years, must be compensated if it occurs “on a regular basis or as a regular feature of the job.” Tasks such as locking up, shutting down computers, or setting the alarm must be compensated under California law.

Unlike Federal Law, California Does Not Have a De Minimus Exception

California’s stricter, more worker-friendly, employment laws supersede federal statutes like the Federal Labor Standards Act. Federal labor law and Supreme Court precedent carve out exceptions for “de minimus” work by employees. This provides some leeway for businesses to avoid compensation for seemingly inconsequential work. However, California law doesn’t contain a de minimus exception. In fact, California specifically requires compensation “for all hours worked.” That puts a requirement on employers to compensate employees for small fragments of time that easily slip through the cracks in the course of the workday. California employers must comply with California law and the FLSA.

What Does This Case Mean For Employers?

Troester does not require employers to track every fraction of a second. There are many instances of work so minuscule, difficult to track, or irregular that it would be nearly impossible to record and compensate. But wait, isn’t that what de minimus time is? Employers must make every reasonable effort to track and compensate workers’ time. The employer bears the burden of ensuring fair and complete compensation. The Court suggests technological advances, restructuring of time recording practices, or even a time rounding policy to assist employers in meeting their obligation to compensate their workers. The Court reminds employers that the DLSE manual and opinion letters are merely “advisory” opinions, and do not hold the force of law. This case makes it clear, once again, that employers should exercise caution when it comes to paying employee wages.

Original article by JT Keane for the Nuddleman Law Firm, P.C.

Feel free to suggest topics for the blog. We are happy to consider topics pertaining to general points of Labor and Employment Law. We cannot answer questions about specific situations or provide legal advice over the Internet. If you desire legal advice, you should contact an attorney.

Using this blog does not create an attorney-client relationship between you and Nuddleman Law Firm, P.C. Using the Internet or this blog to communicate with the firm does not establish an attorney-client relationship. Do not post confidential or time-sensitive information in this blog. The Nuddleman Law Firm, P.C. cannot guarantee the confidentiality of anything posted on this blog.

The Nuddleman Law Firm, P.C. represents employers and employees in a wide range of employment law matters. Much of his practice focuses on wage and hour issues, such as unpaid overtime, meal and rest break violations, designing or enforcing commission plans, and other wage-related claims. He also advises employers on how to avoid harassment and wrongful termination claims and represents employees who have been victims of unlawful discrimination, retaliation or harassment. The Nuddleman Law Firm, P.C. helps employers develop good employment policies, and helps employers and employees with disability accommodation issues.

The Nuddleman Law Firm, P.C. represents employees and businesses throughout Silicon Valley and the greater San Francisco Bay Area including Pleasanton, Oakland, San Ramon, Hayward, Palo Alto, Menlo Park, Mountain View, Los Altos, San Jose, the South Bay Area, Campbell, Los Gatos, Cupertino, Morgan Hill, Gilroy, Sunnyvale, Santa Cruz, Saratoga, and Alameda, San Mateo, Santa Clara, San Benito, Mendocino, and Calaveras counties.

Waiting Time Penalty Lesson

When an employee quits without notice, there is a myriad of considerations and consequences for an employer. Finding a replacement and keeping the business running smoothly is at the top of many employers’ minds. However, one of the most urgent tasks for an employer when someone unexpectedly quits should be compensating that employee. No matter how abrupt or disruptive an employee’s resignation is, California law requires compensation for all unpaid wages within 72 hours of resignation. That includes accrued vacation time. If an employer fails to comply, they are required by law to pay “waiting time” penalties, equivalent to the worker’s daily wage, for up to 30 days. A new court case, Nishiki v. Danko Meredith P.C., sheds more light on what specific obligations an employer has when an employee quits.

When Does the Clock Start Ticking for Waiting Time Penalties?

In Nishiki, the employee resigned by email on a Friday night, after the close of business. The Court held that it would be unreasonable and unduly burdensome on the employer to start the statutory 72-hour clock at 6:38 on a Friday night. According to the Court, in the pursuit of justice the law must be interpreted in a reasonable, common sense way that does not allow for unjust applications of the law. Employers don’t have to constantly check their email at all hours of the night or over the weekend to ensure compliance. The 72-hour clock starts when it can be reasonably assumed the employer received the resignation. This leaves a reasonable period for the employer to calculate and pay final wages.

Are Waiting Time Penalties Appropriate for Honest Mistakes?

Oh, what a difference a few dollars can make. In Nishiki, the employer made a clerical error, shortchanging the employee by $80. The employee argued this error, and the delay in correcting the error warranted waiting time penalties. The employer argued the error was not “willful,” and therefore did not owe penalties. The Court held the prolonged delay in correcting that error violated the Labor Code and awarded penalties. Employers should make every effort they can to comply with the law and correct any mistakes or errors as quickly as possible.

Attorney’s Fees Can Vastly Outweigh Wage or Waiting Time Penalty Claim

The Nishiki court awarded $2,250 in waiting time penalties. The court also directed the employer to pay $86,160 in attorneys’ fees. This should serve as a warning for employers and employees alike. Appealing Labor Commissioner decisions or lower court rulings in wage claims can be dangerous. The law discourages frivolous appeals. The appealing party must pay the other side’s attorneys’ fees if the appeal is unsuccessful. Fighting over relatively small amount may not be worth the risk of paying the other side’s fees.

Original article by JT Keane. Edited by Robert E. Nuddleman of the Nuddleman Law Firm, P.C.

Feel free to suggest topics for the blog. We are happy to consider topics pertaining to general points of Labor and Employment Law. We cannot answer questions about specific situations or provide legal advice over the Internet. If you desire legal advice, you should contact an attorney.

Using this blog does not create an attorney-client relationship between you and Nuddleman Law Firm, P.C. Using the Internet or this blog to communicate with the firm does not establish an attorney-client relationship. Do not post confidential or time-sensitive information in this blog. The Nuddleman Law Firm, P.C. cannot guarantee the confidentiality of anything posted on this blog.

The Nuddleman Law Firm, P.C. represents employers and employees in a wide range of employment law matters. Much of his practice focuses on wage and hour issues, such as unpaid overtime, meal and rest break violations, designing or enforcing commission plans, and other wage-related claims. He also advises employers on how to avoid harassment and wrongful termination claims, and represents employees who have been victims of unlawful discrimination, retaliation or harassment. The Nuddleman Law Firm, P.C. helps employers develop good employment policies, and helps employers and employees with disability accommodation issues.

The Nuddleman Law Firm, P.C. represents employees and businesses throughout Silicon Valley and the greater San Francisco Bay Area including Pleasanton, Oakland, San Ramon, Hayward, Palo Alto, Menlo Park, Mountain View, Los Altos, San Jose, the South Bay Area, Campbell, Los Gatos, Cupertino, Morgan Hill, Gilroy, Sunnyvale, Santa Cruz, Saratoga, and Alameda, San Mateo, Santa Clara, San Benito, Mendocino, and Calaveras counties.

Dynamex and the Independent Contractor Landscape

A friend and colleague, Alan Foster, asked me to write an article for his newsletter regarding independent contractors under Dynamex. I’ve seen articles, presentations and blog posts about the dramatic shift in the law regarding independent contractor versus employee tests. I have a slightly different take. The following is my take on the independent contractor landscape.

Dynamex and the Independent Contractor

Many legal professionals and business advisors are writing about the California Supreme Court “dealing a blow” to independent contractors. Different articles claim Dymanex Operations West, Inc. v. Superior Courtmakes it more difficult” for employers to classify workers as independent contractors. Many are calling it a “game changer.” But is it really?

Dynamex, a package delivery company, hired delivery drivers to deliver packages. Although Dynamex initially hired the drivers as employees, in 2004 Dynamex changed the drivers to independent contractors. Dynamex believed it provided drivers sufficient freedom it could safely classify the workers as independent contractors. The delivery drivers filed a class action lawsuit seeking unpaid wages and expenses, claiming they were really employees.

The employees claimed that under Martinez v. Combs (2010) 49 Cal.4th 35, Dynamex was the employer. Dynamex argued that Martinez only applied in the joint-employer situation and that the common law test set out in S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341 should apply.

In Martinez, the court adopted a very broad definition of employer based on the IWC orders.

“[t]o employ . . . under the [wage order], has three alternative definitions. It means:

(a) to exercise control over the wages, hours, or working conditions, or

(b) to suffer or permit to work, or

(c) to engage, thereby creating a common law employment relationship.”

Borello and the Independent Contractor

In Borello, decided 21 years before Martinez, the court focused primarily on “whether the person to whom services is rendered has the right to control the manner and means of accomplishing the result desired.” The court also looked at nine other factors:

(1) right to discharge at will, without cause;

(2) whether the one performing the services is engaged in a distinct occupation or business;

(3) the kind of occupation, with reference to whether in the locality the work is usually done under the direction of the principal or by a specialist without supervision;

(4) the skill required in the particular occupation;

(5) whether the principal or the worker supplies the instrumentalities, tools, and the place of work for the person doing the work;

(6) the length of time for which the services are to be performed;

(7) method of payment, whether by the time or by the job;

(8) whether or not the work is part of the regular business of the principal; and

(9) whether or not the parties believe they are creating the relationship of employer-employee.

In a very lengthy (85 pages) opinion, the Dynamex confirmed that Martinez and Borello applied in the independent contractor arena. And the court adopted a new test to determine whether someone was “suffered or permitted” to work. This new test is being called the “ABC test.”

Under the ABC test, a worker is an employee unless the hiring entity establishes:

(A) that the worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of such work and in fact;

(B) that the worker performs work that is outside the usual course of the hiring entity’s business; and

(C) that the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity.

Is This Really a New Test for the Independent Contractor?

Since this is a new test, that means this is a “game changer,” right? Not necessarily. Anyone who has gone through an EDD audit is familiar with the ABC test already. The Employment Development Department has a very useful, although not employer-friendly, test for determining whether someone is an independent contractor. The questions in the DE-38 contain the same factors that make up the ABC test.

Under the DE-38, if the employer answers “yes” to the first three questions, “it is a strong indication that the worker is an employee.” If the employer answers “no” to the next three questions, this “indicates that the individual is not in a business for himself or herself and would, therefore, normally be an employee.” Answering “yes” to the final seven questions on the DE-38 means there is a “greater the likelihood the worker is performing services as an employee.”

So, how does the ABC Test compare to the DE-38? This chart shows the ABC test elements line up directly with the DE-38 test:

ABC Test DE-38
(B) that the worker performs work that is outside the usual course of the hiring entity’s business 3. Is the work being performed part of your regular business?

 

(C) that the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity 4. Does the worker have a separately established business?
(A) that the worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of such work and in fact 5. Is the worker free to make business decisions which affect his or her ability to profit from the work?

One aspect of the ABC test arguably not in the DE-38 is that the hiring entity must establish each of the three factors in the ABC test. The DE-38 uses phrases such as “strong indication” and “normally,” allowing more leeway than the more definitive ABC test.

The ABC test is less a “new” independent contractor test, and more an application of an existing test that many employers ignored. I have been advising my clients against hiring workers as independent contractors unless the workers have their own established business and the workers are performing work not part of the company’s normal business. Dynamex confirms the conservative approach is the right approach, particularly in California.

Original article by Robert E. Nuddleman of Nuddleman Law Firm, P.C.

Feel free to suggest topics for the blog. We are happy to consider topics pertaining to general points of Labor and Employment Law. We cannot answer questions about specific situations or provide legal advice over the Internet. If you desire legal advice, you should contact an attorney.

Using this blog does not create an attorney-client relationship between you and Nuddleman Law Firm, P.C. Using the Internet or this blog to communicate with the firm does not establish an attorney-client relationship. Do not post confidential or time-sensitive information in this blog. The Nuddleman Law Firm, P.C. cannot guarantee the confidentiality of anything posted on this blog.

The Nuddleman Law Firm, P.C. represents employers and employees in a wide range of employment law matters. Much of his practice focuses on wage and hour issues, such as unpaid overtime, meal and rest break violations, designing or enforcing commission plans, and other wage-related claims. He also advises employers on how to avoid harassment and wrongful termination claims, and represents employees who have been victims of unlawful discrimination, retaliation or harassment. The Nuddleman Law Firm, P.C. helps employers develop good employment policies, and helps employers and employees with disability accommodation issues.

Labor Commissioner Audits Can Be Expensive

Labor Commissioner audits can be time consuming and expensive. Just ask Kome Japanese Seafood & Buffet, Burma Ruby Burmese Cuisine, and Rangoon Ruby Burmese Cuisine. The restaurants and their owners are facing a hefty bill after their audits.

Expensive Labor Commissioner Audits

California’s Department of Industrial Relations announced the Labor Commissioner cited seven Bay Area restaurants more than $10 million for “wage theft violations.” The restaurants included Kome Japanese Seafood & Buffet, Burma Ruby Burmese Cuisine, and Rangoon Ruby Burmese Cuisine.

The Labor Commissioner’s Office launched the investigation after receiving complaints from workers who reported wage theft to the Asian Law Caucus. The Asian Law Caucus also represented many of the workers who cooperated in the investigation.

The wage theft violations and civil penalties cited in the Labor Commissioner Audits include:

  • Failure to pay minimum wage,
  • Overtime
  • Split shift premiums,
  • Illegal counting of tips received as part of the minimum hourly wage,
  • Waiting time penalties, and
  • Pay stub violations.

Many of the overtime violations resulted from employees paid a salary who worked 50 or more hours each week.

Labor Commissioner Audits Include Individual Corporate Owners

The citations are against the corporations and LLCs as well as the owners and members of the companies. Being incorporated does not prevent personal liability for wage theft claims. Labor Code section 558.1 provides:

Any employer or other person acting on behalf of an employer, who violates, or causes to be violated, any provision regulating minimum wages or hours and days of work in any order of the Industrial Welfare Commission, or violates, or causes to be violated, Sections 203, 226, 226.7, 1193.6, 1194, or 2802, may be held liable as the employer for such violation.

Other Labor Code sections also allow the Labor Commissioner to cite individual owners.

David Tai Leung, Wendy Lai Ip, Jun Zheng, Gang Zhou, Bai Dong Zhang and Tiffany Leung, owners of the corporations Kome Japanese Seafood Buffet, Inc. and Koshi Food Service, Inc., are ordered to pay the 133 workers at Kome Buffet $4,381,461 in unpaid wages, premiums and liquidated damages, as well as civil penalties of $780,400.

Max Lee and John Lee, owners of Rangoon Ruby Investment LLC and Burma Ruby Investment LLC, have been ordered to pay their 298 workers $4,394,118 for unpaid wages, premiums, liquidated damages and itemized wage statement violations, and civil penalties of $574,150

The press release did not indicate whether the restaurants will appeal the citations, or how much the Labor Commissioner will actually collect.

I represent employers in Labor Commissioner audits. The audits can be time-consuming and result in serious assessments. Seemingly small mistakes can have serious consequences, and the appeal rights are somewhat limited. Employers receiving notice of an audit should speak with counsel as soon as possible. Properly preparing for an audit can reduce the exposure.

The best way to prevent an audit, or at least make it through an audit unscathed, is to review your policies with a knowledgeable attorney before a problem arises. If you have a question about your wages or employment practices, contact the Nuddleman Law Firm, P.C.

Original article by Robert E. Nuddleman of Nuddleman Law Firm, P.C.

Feel free to suggest topics for the blog. We are happy to consider topics pertaining to general points of Labor and Employment Law. We cannot answer questions about specific situations or provide legal advice over the Internet. If you desire legal advice, you should contact an attorney.

Using this blog does not create an attorney-client relationship between you and Nuddleman Law Firm, P.C. Using the Internet or this blog to communicate with the firm does not establish an attorney-client relationship. Do not post confidential or time-sensitive information in this blog. The Nuddleman Law Firm, P.C. cannot guarantee the confidentiality of anything posted on this blog.

The Nuddleman Law Firm, P.C. represents employees and businesses throughout Silicon Valley and the greater San Francisco Bay Area including Pleasanton, Oakland, San Ramon, Hayward, Palo Alto, Menlo Park, Mountain View, Los Altos, San Jose, the South Bay Area, Campbell, Los Gatos, Cupertino, Morgan Hill, Gilroy, Sunnyvale, Santa Cruz, Saratoga, and Alameda, San Mateo, Santa Clara, San Benito, Mendocino, and Calaveras counties.

Rare Pay Stub Victory for Employers

Employers in California know payroll can be particularly troublesome. Attorneys representing employees routinely file lawsuits and PAGA actions based on inaccurate or incomplete pay stubs. I previously discussed the ease with which employees can bring PAGA actions for unintentional pay stub violations that cause no harm. The Second Appellate District came out with a rare win for employers trying to handle pay stubs correctly.

Pay Stub Claims

In Canales v. Wells Fargo Bank, N.A., the company paid non-exempt employees a monthly, quarterly and/or annual bonus. The employees earned the bonus throughout the month/quarter/year. When paying the bonus Wells Fargo recalculated and paid overtime owed on the bonus. Wells Fargo issued pay stubs with the bonus listing the “incremental additional overtime paid to the employee for overtime hours worked during the bonus period.” No hourly rates or hours worked were identified on the pay stubs.

Additionally, in some situations when an employee was terminated, payroll would issue a cashier’s check immediately for all wages earned. Payroll mailed the pay stub the following day.

Former employees sued claiming:

  1. The pay stubs violated Labor Code section 226(a)(9) because it did not list “all applicable hourly rates in effect during the pay period and the corresponding number of hours worked at each hourly rate by the employee” and
  2. The pay stubs mailed the day after termination violated Labor Code section 226(a) which requires pay stubs to be provided “semimonthly or at the time of each payment of wages.”

In the published portion of the decision, the court rejected both claims.

Bonus Pay Stub Did Not Have to List All Hours and Rates When the Bonus was a Supplement to Previously Paid Hours

Wells Fargo argued there were no “applicable hourly rates in effect during the pay period” that corresponded to bonus payments. Therefore, defendant did not have to provide such information on the pay stub.

The court discussed “the nature of nondiscretionary bonuses and how they relate to overtime pay under the Labor Code.”

The court confirmed, “nondiscretionary bonuses are considered part of the ‘regular rate of pay’.” The court also confirmed an employer must “allocate the bonus over the period in which it was earned” in order to calculate overtime pay. Hourly employees earn a quarterly bonus throughout the quarter. If the employee worked some overtime hours to earn the bonus, the employee is entitled to overtime premium pay on the bonus. The employer must divide the bonus by the total hours worked to calculate the “regular rate of pay” on the bonus. The employee is then entitled to an additional 0.5 times the regular rate of pay for the overtime hours.

The court concluded that the overtime on the bonus:

represented additional wages that were earned as overtime pay based on nondiscretionary bonuses being spread over the hours worked during the bonus period. Moreover, based on how OverTimePay-Override was calculated, the overtime hours were worked in previous pay periods for which employees had already received their standard overtime pay. The itemized wage statement issued by an employer need only provide the applicable hourly rates and the corresponding number of hours worked “in effect during the pay period.” In other words, the employer need only identify on the wage statement the hourly rate in effect during the pay period for which the employee was currently being paid, and the corresponding hours worked.

It is important to note that the court’s conclusion is based solely on how the bonus plan worked in this instance. Different bonus plans–such as weekly bonuses–would be treated differently. The case will be useful to employers that pay monthly, quarterly or annual bonuses provided the employees previously received pay stubs showing the hours worked and rates paid during the pay period.

Final Pay Stub Can be Mailed to Employees, as Long as it is Furnished at Least Semi-Monthly

Defendant contended it furnished the pay stub as required under section 226 by mailing it to the terminated employee’s last known address either the same day or the next day. Plaintiffs asked the court to follow the Labor Commissioner’s manual where it said:

“[a] California employer must furnish a statement showing the following information to each employee at the time of payment of wages (or at least semimonthly, whichever occurs first),” and section 14.1.2, which provides, “[s]ection 226 . . . sets out the employer’s responsibilities in connection with the wage statement which must accompany the check or cash payment to the employee.”

The court agreed with the employer. The court noted the Labor Code requires the pay stub to be provided at least semi-monthly or at the time the wages are provided. The legislature did not include the “whichever is first,” language cited by the Labor Commissioner.

This could result in interesting situations. For example, an employer could pay an employee every week but only provide pay stubs twice a month. I have no idea why an employer would do that, but employers do strange things sometimes.

Canales v. Wells Fargo Bank, N.A. represents a rare win in the wage and hour arena. I don’t know that the cases will result in fewer lawsuits. It will hopefully provide guidance to employers and employees regarding some of the pay stub issues employers face.

If you have questions about your pay stubs or your pay practices, Robert Nuddleman has been representing employers and employers in wage and hour matters for over two decades. Contact the Nuddleman Law Firm, P.C. today for a reduced rate consultation.

Original article by Robert E. Nuddleman of Nuddleman Law Firm, P.C.

Feel free to suggest topics for the blog. We are happy to consider topics pertaining to general points of Labor and Employment Law. We cannot answer questions about specific situations or provide legal advice over the Internet. If you desire legal advice, you should contact an attorney.

Using this blog does not create an attorney-client relationship between you and Nuddleman Law Firm, P.C. Using the Internet or this blog to communicate with the firm does not establish an attorney-client relationship. Do not post confidential or time-sensitive information in this blog. The Nuddleman Law Firm, P.C. cannot guarantee the confidentiality of anything posted on this blog.

The Nuddleman Law Firm, P.C. represents employees and businesses throughout Silicon Valley and the greater San Francisco Bay Area including Pleasanton, Oakland, San Ramon, Hayward, Palo Alto, Menlo Park, Mountain View, Los Altos, San Jose, the South Bay Area, Campbell, Los Gatos, Cupertino, Morgan Hill, Gilroy, Sunnyvale, Santa Cruz, Saratoga, and Alameda, San Mateo, Santa Clara, San Benito, Mendocino, and Calaveras counties.

Courts Expand PAGA Again

Two recent court decisions expand the Labor Code Private Attorney General Act (PAGA) … Again. In Raines v. Coastal Pacific Food Distributors (CA3 C083117 5/22/18), the court held employees can bring Labor Code Private Attorney General Act claims for pay stub violations without suffering an injury even if the violations were unintentional. In Huff v. Securitas Security Services USA, Inc. (CA6  H042852 5/23/18) the court held that an employee could bring such an action for violations that never effected the employee.

PAGA Does Not Require an Actual Injury

Labor Code section 226 requires employers to provide pay stubs with specific information on each pay stub. An employee “suffering injury” from a “knowing and intentional” violation of Labor Code section 226 can sue the employer for penalties. According to Raines v. Coastal, the employee can sue the employer under PAGA even if the employee suffered no injury. and does not have to plead or prove the failure was “knowing” or “intentional.” In essence, it makes Labor Code section 226 a strict liability statute.

As we explain, a representative PAGA claim for civil penalties for a violation of section 226(a) does not require proof of injury or a knowing and intentional violation.  This is true even though these two elements are required to be proven when bringing an individual claim for damages or statutory penalties under section 226(e).

PAGA Plaintiffs Can Seek Penalties For Harms They Never Suffered

PAGA allows an aggrieved employee to bring a lawsuit for any violation of the Labor Code. The plaintiff can bring the claim on behalf of other “aggrieved employees.” In Huff v. Securitas Security Services USA, Inc., the plaintiff brought a PAGA action seeking penalties not only for the Labor Code violation that affected him, but also for different violations that affected other employees.

The court concluded:

PAGA allows an “aggrieved employee” ––a person affected by at least one Labor Code violation committed by an employer––to pursue penalties for all the Labor Code violations committed by that employer.

Based on these two cases, an employee who never suffered an injury, can bring a claim against an employer who unknowingly made a mistake, and the employee can include claims for other employees even if the plaintiff never suffered the same harm the other employees suffered.

I used to think Labor Code Private Attorney General lawsuits were a “lighter” version of a class action. Now I think they are more like class actions without the protection of a class action lawsuit. In class actions the plaintiff has to at least suffer the same injury as the rest of the class.

These cases remind employers to review payroll practices to ensure they comply with the law.

If you have questions or concerns about your pay practices, contact the Nuddleman Law Firm, P.C. today.

Original article by Robert E. Nuddleman of Nuddleman Law Firm, P.C.

Feel free to suggest topics for the blog. We are happy to consider topics pertaining to general points of Labor and Employment Law. We cannot answer questions about specific situations or provide legal advice over the Internet. If you desire legal advice, you should contact an attorney.

Using this blog does not create an attorney-client relationship between you and Nuddleman Law Firm, P.C. Using the Internet or this blog to communicate with the firm does not establish an attorney-client relationship. Do not post confidential or time-sensitive information in this blog. The Nuddleman Law Firm, P.C. cannot guarantee the confidentiality of anything posted on this blog.

The Nuddleman Law Firm, P.C. represents employees and businesses throughout Silicon Valley and the greater San Francisco Bay Area including Pleasanton, Oakland, San Ramon, Hayward, Palo Alto, Menlo Park, Mountain View, Los Altos, San Jose, the South Bay Area, Campbell, Los Gatos, Cupertino, Morgan Hill, Gilroy, Sunnyvale, Santa Cruz, Saratoga, and Alameda, San Mateo, Santa Clara, San Benito, Mendocino, and Calaveras counties.

Notice to Employees: The Missing Form

Every employer, at the time of hiring, must provide a notice to most employees regarding certain basic terms of employment. Labor Code 2810.5. The employee must sign the notice, receive a copy of the signed notice, and the original should be maintained in the employee personnel file.

Labor Code 2810.5 Notice to Employees Requirements

The Notice to Employees must contain:

(A) The rate or rates of pay and basis thereof, whether paid by the hour, shift, day, week, salary, piece, commission, or otherwise, including any rates for overtime, as applicable.

(B) Allowances, if any, claimed as part of the minimum wage, including meal or lodging allowances.

(C) The regular payday designated by the employer in accordance with the requirements of this code.

(D) The name of the employer, including any “doing business as” names used by the employer.

(E) The physical address of the employer’s main office or principal place of business, and a mailing address, if different.

(F) The telephone number of the employer.

(G) The name, address, and telephone number of the employer’s workers’ compensation insurance carrier.

(H) That an employee: may accrue and use sick leave; has a right to request and use accrued paid sick leave; may not be terminated or retaliated against for using or requesting the use of accrued paid sick leave, and has the right to file a complaint against an employer who retaliates.

(I) Any other information the Labor Commissioner deems material and necessary.

The Labor Commissioner developed a form employers can use for this purpose. You can download the form here.

For whatever reason, employers are not using the Labor Commissioner’s standard form, and many are neglecting to include the notice to employees in the hiring documents. If any of the items in the notice to employees change (i.e., pay rate, workers’ compensation carrier, etc.), the employer has to provide a new signed notice to the employee.

Even if your offer letter or employment agreement contains all the required information (it likely wouldn’t because no one includes their workers’ compensation carrier information in an offer letter), employers should still use a standard form.

Original article by Robert E. Nuddleman of Nuddleman Law Firm, P.C.

Feel free to suggest topics for the blog. We are happy to consider topics pertaining to general points of Labor and Employment Law. We cannot answer questions about specific situations or provide legal advice over the Internet. If you desire legal advice, you should contact an attorney.

Using this blog does not create an attorney-client relationship between you and Nuddleman Law Firm, P.C. Using the Internet or this blog to communicate with the firm does not establish an attorney-client relationship. Do not post confidential or time-sensitive information in this blog. The Nuddleman Law Firm, P.C. cannot guarantee the confidentiality of anything posted to this blog.

The Nuddleman Law Firm, P.C. represents employees and businesses throughout Silicon Valley and the greater San Francisco Bay Area including Pleasanton, Oakland, San Ramon, Hayward, Palo Alto, Menlo Park, Mountain View, Los Altos, San Jose, the South Bay Area, Campbell, Los Gatos, Cupertino, Morgan Hill, Gilroy, Sunnyvale, Santa Cruz, Saratoga, and Alameda, San Mateo, Santa Clara, San Benito, Mendocino, and Calaveras counties.

Upcoming Presentation: Employment Laws that Impact Your Practice and Your Clients

I’m excited to present Employment Laws that Impact Your Practice and Your Clients at the East Bay chapter of the Professional Fiduciary Association of California on May 10th. The presentation will be at the San Leandro Library from noon to 1:15.

May 10th Presentation Regarding Employment Laws for Fiduciaries

We’ll talk about:

I always enjoy presenting to PFAC members. They are a wonderful group of professionals dedicated to helping others. I look forward to helping them build their practices and identify ways to help their clients. [Full disclosure, in addition to being a frequent presenter, I’m also an affiliate member of PFAC.]

I won’t be able to attend their annual conference in Southern California this year, but I hope to do a presentation at their Education Day in September.

You can register for the May 10th presentation here. The member price is only $10, and the non-member price is $20. I hope to see you there.

Original article by Robert E. Nuddleman of Nuddleman Law Firm, P.C.

Feel free to suggest topics for the blog. We are happy to consider topics pertaining to general points of Labor and Employment Law. We cannot answer questions about specific situations or provide legal advice over the Internet. If you desire legal advice, you should contact an attorney.

Using this blog does not create an attorney-client relationship between you and Nuddleman Law Firm, P.C. Using the Internet or this blog to communicate with the firm does not establish an attorney-client relationship. Do not post confidential or time-sensitive information in this blog. The Nuddleman Law Firm, P.C. cannot guarantee the confidentiality of anything posted to this blog.

The Nuddleman Law Firm, P.C. represents employees and businesses throughout Silicon Valley and the greater San Francisco Bay Area including Pleasanton, Oakland, San Ramon, Hayward, Palo Alto, Menlo Park, Mountain View, Los Altos, San Jose, the South Bay Area, Campbell, Los Gatos, Cupertino, Morgan Hill, Gilroy, Sunnyvale, Santa Cruz, Saratoga, and Alameda, San Mateo, Santa Clara, San Benito, Mendocino, and Calaveras counties.

Overtime Rate for Salaried Nonexempt Employees

How to Calculate the Overtime Rate

Almost 20 years ago the California Legislature adopted Labor Code section 515(d). Section 515(d) instructs how to compute the overtime rate of pay for salaried non-exempt employees:

For the purpose of computing the overtime rate of compensation required to be paid to a nonexempt full-time salaried employee, the employee’s regular hourly rate shall be 1/40th of the employee’s weekly salary

Paying a salary does not necessarily relieve an employer of its overtime obligations. If an employee is not “exempt” from the overtime laws, the employer must still pay overtime. But, how do you compute the overtime rate of compensation for salaried nonexempt employees?

Overtime Rate Calculation: Federal versus State

Under federal law, employers divide the weekly salary by the actual hours worked. This provides the regular hourly rate, and the basis of the overtime rate under the FLSA. California, of course, has to be different.

In 1985, Skyline Homes, Inc. v. Department of Industrial Relations (1985) 165 Cal.App.3d 239, followed the DLSE rule that the regular rate of pay in California is calculated by dividing the weekly salary by 40. This usually results in a higher hourly rate. It presumes the salary only covers the “regular” hours worked (i.e., the first 8 in a day and the first 40 in a week).

In 1999, Labor Code 515(d) codified the difference between federal and state law. The overtime rate for salaried nonexempt employees is calculated by dividing the weekly salary by 40. But, what about an employee who works less than 40 hours a week? Do you use the actual hours worked or the 1/40th rule in Labor Code 515(d)?

The DLSE manual (oftentimes referred to as an “underground regulation”) says you use the actual hours worked or 40, whichever is lower. However, this contradicts the plain language of Labor Code 515(d). Until recently, there was no clear guidance either way.

Supreme Court Decides Overtime Rate Calculation

On March 5, 2018, the California Supreme Court decided Alvarado v. Dart Container Corporation of California, directly addressing the issue:

Moreover, after Skyline Homes was decided, its formula for calculating the regular rate of pay in the case of a fluctuating workweek with a fixed weekly salary was codified as Labor Code section 515, subdivision (d). That subdivision provides: “(1) For the purpose of computing the overtime rate of compensation required to be paid to a nonexempt full-time salaried employee, the employee’s regular hourly rate shall be 1/40th of the employee’s weekly salary.

*Page 24 of slip opinion (emphasis in original).

Skyline Homes is, however, ambiguous in one respect. It is not clear from the opinion whether the divisor for purposes of calculating the per-hour value of a weekly salary should be the number of nonovertime hours actually worked by the employee in the workweek in question, even if that number is less than 40, or whether it should be 40 (i.e., the number of nonovertime hours that exist in a workweek). In codifying the holding of Skyline Homes, the Legislature adopted the latter rule. (Lab. Code, § 515, subd. (d)(1) [“the employee’s regular hourly rate shall be 1/40th of the employee’s weekly salary”].)

*Page 24-25 of slip opinion (emphasis in original).

As noted, the Legislature, in codifying the holding of Skyline Homes, adopted 40 as the divisor for all cases (Lab. Code, § 515, subd. (d)(1))

*Page 25 of slip opinion

Overtime Rate for Flat Sum Bonus

Should this prove too simple, the court set out a different rule for employees receiving a “flat sum bonus.” Alvarado received an “attendance bonus” — a flat amount paid to employees who work weekends. The attendance bonus was earned regardless of whether the employee worked overtime. This led the court to assume “the bonus is properly treated as if it were fully earned by only the nonovertime hours in the pay period.” *Page 19-20 of slip opinion.

The court then concluded: “therefore only nonovertime hours should be considered when calculating the bonus’s per-hour value.” *Page 20 of slip opinion.

I don’t follow the court’s logic because I don’t agree that the bonus is properly treated as if it were fully earned by only the nonovertime hours. I agree Labor Code 515(d) is not applicable to bonuses because it only applies to a “salary.” It seems more logical, to divide the bonus by all hours worked; not just the regular hours worked. The attendance bonus is earned by working on the weekend, whether the employee works overtime or not. That is how other bonuses and incentive compensation is typically factored into the overtime rate of pay. The court’s logic on this point is a bit shaky.

Unfortunately, the Supreme Court did not ask my opinion before issuing its decision, so we are stuck with their holding.

If you are an employer who pays a flat sum bonus, you will need to review your policies and possibly recalculate any overtime payments over the last 4 years.

If you have questions about wage and hour laws in California, feel free to contact me at your convenience. I’ve been representing employees and employers in wage and hour matters for more than 20 years. I had my first overtime trial before I graduated law school. I routinely represent individuals, companies and families in Labor Commissioner hearings and audits. I’d be happy to discuss your minimum wage, overtime or other compensation questions.

Original article by Robert E. Nuddleman of Nuddleman Law Firm, P.C.

Feel free to suggest topics for the blog. We are happy to consider topics pertaining to general points of Labor and Employment Law. We cannot answer questions about specific situations or provide legal advice over the Internet. If you desire legal advice, you should contact an attorney.

Using this blog does not create an attorney-client relationship between you and Nuddleman Law Firm, P.C. Using the Internet or this blog to communicate with the firm does not establish an attorney-client relationship. Do not post confidential or time-sensitive information in this blog. The Nuddleman Law Firm, P.C. cannot guarantee the confidentiality of anything posted to this blog.

The Nuddleman Law Firm, P.C. represents employees and businesses throughout Silicon Valley and the greater San Francisco Bay Area including Pleasanton, Oakland, San Ramon, Hayward, Palo Alto, Menlo Park, Mountain View, Los Altos, San Jose, the South Bay Area, Campbell, Los Gatos, Cupertino, Morgan Hill, Gilroy, Sunnyvale, Santa Cruz, Saratoga, and Alameda, San Mateo, Santa Clara, San Benito, Mendocino, and Calaveras counties.

 

Horror Stories from Hiring Caregivers – Part 2

Horror Stories from Hiring Caregivers – Part 2

This is Part 2 in my series on cautionary tales taken from real caregiver cases I handled. As before, I left out the names to protect the parties, but the facts are real. Read on to learn how innocent mistakes when hiring caregivers can lead to dire consequences. Some have happy endings, others not. All have lessons for families hiring caregivers. You can read the first installment here.

Today’s story:

A Tale of Two Sisters

A year and a half after Mom died, the caregiver that was providing 24/7 care sued the two daughters for unpaid wages. The complaint alleged the two sisters were employers because, as trustees of Mom’s trust, they were responsible for supervising the caregiver and paying the caregiver. The caregiver claimed she was owed over $450,000 in unpaid wages and penalties.

The opposing counsel used the wage order and the FLSA to bolster her argument that the co-trustees “directly or indirectly” controlled the hours, wages or working conditions. Shortly after we resolved the case, the California Supreme Court adopted the same definition of employer.

A potential saving point in our case was the fact that the caregiver waited more than a year to file her claim. While most unpaid wage claims have a three-year statute of limitations (four-years if it constitutes and unfair business practice), we argued the shorter one-year statute of limitations for claims against a decedent applied. We resolved the case before the court heard our demurrer on the issue.

It took some time to convince the other side that the caregiver was a “personal attendant,” and therefore not entitled to overtime. Remember, this was before the Domestic Workers Bill of Rights was adopted in 2014. As a personal attendant, she also could not recover meal and rest break penalties. We resolved the case through private mediation. In exchange for a complete release of claims, my client paid $27,000 in back wages, $10,500 in penalties and $17,500 to the plaintiff’s attorney for costs and fees. This is in addition to over $30,000 my client paid my firm.

Although we were confident in our arguments, the client still had potential liability. If we lost the statute of limitations argument, the caregiver had a valid minimum wage claim. She received a salary that did not cover 24-hour care. Although Mom did not necessarily require 24-hour care, there were no time records to confirm the actual hours worked. Even if we defeated the claims, the client likely would have spent close to the settlement amount defending the case.

What lessons did we learn regarding caregivers?

1.     Make sure the employment agreement is in writing.

2.     Be sure to designate the capacity in which you are acting (e.g., conservator, trustee, etc.) in the employment agreement.

3.     Maintain a record of the hours worked.

4.     Do not hire a single caregiver to provide 24/7 care (we learned this one before, but it’s one that repeatedly comes up).

More stories will follow.

If you, or someone you know, has questions about employing or hiring caregivers, feel free to contact the Nuddleman Law Firm. I represent caregivers, families, fiduciaries, attorneys, care agencies, home health agencies, residential care facilities and others involved in the circle of care.

Original article by Robert E. Nuddleman of Nuddleman Law Firm, P.C.

Feel free to suggest topics for the blog. We are happy to consider topics pertaining to general points of Labor and Employment Law. We cannot answer questions about specific situations or provide legal advice over the Internet. If you desire legal advice, you should contact an attorney.

Using this blog does not create an attorney-client relationship between you and Nuddleman Law Firm, P.C. Using the Internet or this blog to communicate with the firm does not establish an attorney-client relationship. Do not post confidential or time-sensitive information in this blog. The Nuddleman Law Firm, P.C. cannot guarantee the confidentiality of anything posted to this blog.

The Nuddleman Law Firm, P.C. represents employees and businesses throughout Silicon Valley and the greater San Francisco Bay Area including Pleasanton, Oakland, San Ramon, Hayward, Palo Alto, Menlo Park, Mountain View, Los Altos, San Jose, the South Bay Area, Campbell, Los Gatos, Cupertino, Morgan Hill, Gilroy, Sunnyvale, Santa Cruz, Saratoga, and Alameda, San Mateo, Santa Clara, San Benito, Mendocino, and Calaveras counties.