Posts

State Penalized for Failing to Timely Pay Final Wages

Prompt payment of final wages. It’s not just a good idea. It’s the law. The State of California apparently didn’t get the memo on that one. The California Supreme Court had to tell the state that retiring employees are entitled to their final wages on their last day of employment. Labor Code sections 202 and 203, requires employers to make prompt payment of the final wages owed to employees who quit. Failure to timely pay final wages allows a court to impose statutory penalties. In McLean v. State of California, a retired deputy attorney general, sued the State of California on behalf of herself and a class of former state employees who did not timely receive their final wages when they quit or retired.

The state argued that sections 202 and 203 do not apply when employees retire. It also argued that McClean should have sued the state agency for which she worked instead of the State. The court concluded that:

Labor Code sections 202 and 203 apply when employees retire from their employment. We also conclude that McLean‟s decision to name the State of California as a defendant rather than the Department of Justice is not a basis for dismissing her suit.

When Are Final Wages Due?

For most California employees, final wages are due immediately upon termination (Labor Code section 201). It does not matter whether the employee is fired or laid off. If the employer is the moving party (i.e., the one to end the relationship) then it is a termination.

In contrast, California employees who quit their employment without notice must be paid within 72 hours of his last day of work(Labor Code section 202). There is an exception when an employee provides at least 72-hours notice. In that case, the final wages are due on the last day of employment.

There are some slightly different rules for:

Penalties for Failing to Timely Pay Final Wages

Employers willfully failing to timely pay final wages pay a penalty. (California Labor Code section 203). And don’t forget that “wages” includes accrued vacation or PTO (but not paid sick leave in most cases).

This “waiting time” penalty is calculated by multiplying the employee’s daily wage by the number of days until the employee is paid. There is a 30-day maximum on the waiting time penalties, but the penalty is imposed every day–not just every working day. There are a lot of cases where the penalty exceeds the actual wages owed. The penalties are almost mandatory unless an employer can show a good faith dispute that the wages were owed.

As the State of California just learned, employees must promptly receive their final wages. Employers cannot hold the wages hostage pending return of the employer’s keys or other equipment. If you have questions about California wage and hour issues, call an experienced employment attorney.

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.

Your use of this blog does not create an attorney-client relationship between you and Nuddleman Law Firm, P.C. The use of the Internet or this blog for communication with the firm or any individual member of 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.

Service Advisors Exempt from FLSA

Encino Motorcars, LLC is an automobile dealership. Encino’s service advisors filed a lawsuit alleging that Encino violated the FLSA by failing to pay them overtime compensation when they worked more than 40 hours in a week. At issue in this case is whether the Department of Labor’s interpretation of the service advisor exemption is valid.

History of Service Advisors Exemption under the FLSA

The Fair Labor Standards Act (FLSA) requires employers to pay over­time compensation to covered employees who work more than 40 hours in a given week. In 1966, Congress enacted an exemption from the overtime compensation requirement for “any salesman, parts-man, or mechanic primarily engaged in selling or servicing automo­biles” at a covered dealership. Congress authorized the Department of Labor to promulgate necessary rules, regulations, or orders with respect to this new provision. The Department exercised that authority in 1970 and issued a regulation that defined “salesman” to mean “an employee who is employed for the purpose of and is primarily engaged in making sales or obtaining orders or contracts for sale of the vehicles . . . which the establishment is primarily engaged in selling.” 29 CFR §779.372(c)(1) (1971).

The regulation excluded service advisors, who sell repair and maintenance services but not vehicles, from the ex­emption. Several courts, however, rejected the Department’s conclusion that service advisors are not covered by the statutory exemption. In 1978, the Department issued an opinion letter departing from its previous position and stating that service advisors could be exempt under 29 U. S. C. §213(b)(10)(A). In 1987, the Department confirmed its new interpretation by amending its Field Operations Handbook to clarify that service advisors should be treated as exempt under the statute. In 2011, however, the Department issued a final rule that followed the original 1970 regulation and interpreted the statutory term “salesman” to mean only an employee who sells vehicles. 76 Fed. Reg. 18859. The Department gave little explanation for its deci­sion to abandon its decades-old practice of treating service advisors as exempt under §213(b)(10)(A).

Does the FLSA Apply to Service Advisors?

Encino argued that the FLSA overtime provisions do not apply because service advisors are covered by an exemption in §213(b)(10)(A).The District Court granted the motion, but the Ninth Circuit reversed in relevant part. Deferring under Chevron U. S. A. Inc. v. Natural Resources Defense Council, Inc., 467 U. S. 837, to the interpretation set forth in the 2011 regulation, the court held that service advisors are not covered by the §213(b)(10)(A) exemption.

The Ninth Circuit held that section 213(b)(10)(A) must be construed without placing controlling weight on the Department’s 2011 regulation.

According to the court:

When an agency is authorized by Congress to issue regulations and promulgates a regulation interpreting a statute it enforces, the interpretation receives deference if the statute is ambiguous and the agency’s interpretation is reasonable. See Chevron, supra, at 842–844. When Congress authorizes an agency to proceed through notice-and-comment rulemaking, that procedure is a “very good indicator” that Congress intended the regulation to carry the force of law, so Chevron should apply. United States v. Mead Corp., 533 U. S. 218, 229–230. But Chevron deference is not warranted where the regulation is “procedurally defective”—that is, where the agency errs by failing to follow the correct procedures in issuing the regulation. 533 U. S., at 227.

One basic procedural requirement of administrative rulemaking is that an agency must give adequate reasons for its decisions. Where the agency has failed to provide even a minimal level of analysis, its action is arbitrary and capricious and so cannot carry the force of law. Agencies are free to change their existing policies, but in explaining its changed position, an agency must be cognizant that longstanding policies may have “engendered serious reliance interests that must be taken into account.” FCC v. Fox Television Sta­tions, Inc., 556 U. S. 502, 515. An “[u]nexplained inconsistency” in agency policy is “a reason for holding an interpretation to be an arbitrary and capricious change from agency practice,” National Cable & Telecommunications Assn. v. Brand X Internet Services, 545 U. S. 967, 981, and an arbitrary and capricious regulation of this sort re­ceives no Chevron deference.

Applying those principles, the Ninth Circuit determined that the 2011 regulation was issued without the reasoned explanation that was required in light of the Department’s change in position and the significant reliance interests position that service advisors are exempt from the FLSA’s overtime pay requirements. Employers had negotiated and structured compensation plans against this background understanding. In light of this background, “the Department needed a more reasoned explanation for its decision to depart from its existing enforcement policy.” The Department instead said almost nothing. It did not analyze or explain why the statute should be interpreted to exempt dealership employees who sell vehicles but not dealership employees who sell services. “This lack of reasoned explication for a regulation that is inconsistent with the Department’s longstanding earlier position results in a rule that cannot carry the force of law, and so the regulation does not receive Chevron deference.”

This is not the first time the DOL has changed courses and reinterpreted the law. In this instance, the court found that the DOL’s failure to include a reasoned explanation regarding the change of course was sufficient to render the DOL’s interpretation void.

More Local Paid Sick Leave Ordinances

 

Over the last few years, several cities and counties in California have passed ordinances requiring paid time off or paid sick leave for employees.  California employers are still trying to figure out how to comply with California’s paid sick leave law (aka: Healthy Workplace Healthy Family Act).  Santa Monica, Los Angeles, San Diego, and Long Beach have added their own sick leave ordinances, and San Francisco has amended its sick leave ordinance, making it that much more difficult for employers to comply with the sometimes contradicting requirements.  Below are brief highlights the new/amended local ordinances.

Amended San Francisco Paid Sick Leave

Effective January 1, 2017, San Francisco’s paid sick leave law is amended in an attempt to better align its provisions with California’s paid sick leave law. The amendments provide that San Francisco’s sick leave begins to accrue upon the commencement of employment, but employers may limit usage until after 90 days of employment.  The amendments allow employers to “advance” the sick leave at the beginning of the year instead of permitting employees to accrue the time. This is treated as an advance, temporarily halting accrual until after working the number of hours necessary to have accrued the advanced amount, at which point accrual resumes.  However, unlike the grant method under California’s paid sick leave law, employers  still have to allow employees to carry over unused sick time to the following year.  I suspect this will continue to cause problems for San Francisco employers, and doesn’t really address the accrual versus one-time grant problem.

The amendments also change to the definition of “family members” for whom time may be used, expands the permitted uses to include preventative care and time for purposes related to domestic violence, sexual assault, and stalking suffered by the employee, clarifies how and when sick leave must be paid, requires written notice to employees regarding available balances of paid sick leave, and, like California’s law, requires reinstatement of unused sick leave if an employee is rehired within one year of separation.

San Francisco is usually pretty good about providing FAQ’s about their ordinances, so I suspect the city will publish material to help guide employers in the near future.

Los Angeles Paid Sick Leave

Covered employees: Employees who work two or more hours in a particular week in the City of Los Angeles

Effective date: Businesses must comply with the sick leave requirements starting July 1, 2016

Accrual rate: The ordinance provides that paid sick leave begins to accrue at the commencement of employment, and the employee shall accrue one hour of paid sick leave for every 30 hours worked

Accrual cap: Employers may implement an accrual cap of 72 hours of accrued paid sick leave.  Accrued time must be carried over from year to year

Usage cap: Employees must be permitted to use up to 48 hours of accrued sick leave each year

One-Time Grant: Instead of permitting employees to accrue paid sick leave, employers may grant the full amount of leave at the beginning of each year, and if they do so, the time need not carry over from year to year

Usage: Employers may prohibit employees from using any accrued paid sick leave until after the first 90 days of employment

Leave to care for others: In addition to the persons identified in the California sick leave law for whose care employees can use sick leave, the ordinance permits employees to use sick leave to care “for any individual related by blood or affinity whose close association with the employee is the equivalent of a family relationship”

Santa Monica Paid Sick Leave

Covered employees: Employees who work two or more hours in a particular week in Santa Monica

Effective date: Businesses must comply with the sick leave requirements starting January 1, 2017

Accrual rate: The ordinance provides that paid sick leave begins to accrue at the commencement of employment, and the employee shall accrue one hour of paid sick leave for every 30 hours worked

Accrual cap: Employers with 26 or more employees shall provide at least 40 hours of paid sick leave as of January 1, 2017 (note, however, that the California law requires employees be permitted to accrue up to 48 hours) and at least 72 hours of paid sick leave as of January 1, 2018

Employers with 25 or fewer employees shall provide at least 32 hours of accrued paid sick leave as of January 1, 2017 and at least 40 hours of accrued paid sick leave as of January 1, 2018 (remember: California law requires employees be permitted to accrue up to 48 hours)

Accrued time must be carried over from year to year

Usage cap: Unlike the California sick leave law, the ordinance does not permit a usage cap

One-Time Grant: Instead of permitting employees to accrue paid sick leave, employers may grant the full amount of leave at the beginning of each year, and if they do so, the time need not carry over from year to year

Usage: Employers may prohibit employees from using any accrued paid sick leave until after the first 90 days of employment

San Diego Paid Sick Leave

Covered employees: Employees who, in one or more calendar weeks of the year, performs at least two hours of work in the City of San Diego

Effective date: The voters of San Diego approved the paid sick leave ordinance on June 7, 2016.  Under San Diego election laws, the law will take effect on the date the City Council adopts a resolution declaring the result of the election.  It is assumed this will occur sometime in July

Accrual rate: The ordinance provides that earned sick leave begins to accrue at the commencement of employment, and the employee shall accrue one hour of earned sick leave for every 30 hours worked within the geographic boundaries of the City of San Diego

Accrual cap: Employers may not implement an accrual cap; employees must be permitted to continue to accrue earned sick leave.  Accrued time must be carried over from year to year

Usage cap: Employers may limit usage of earned sick leave to 40 hours per year

One-Time Grant: The law does not expressly provide for a grant of earned sick leave

Usage: Employers may prohibit employees from using any accrued earned sick leave until after the first 90 days of employment

So far, Oakland and Emeryville have not changed their paid sick leave ordinances. None of the local ordinances require employers to pay out unused paid sick leave upon termination. However, if an employer allows employees to use paid sick leave for purposes other than sick leave, the employer could turn the paid sick leave into a paid time off policy which would have to be paid out at the end of the employment.

California employers with employees working in any of the cities above should review their paid sick leave f policies to evaluate whether they comply with both the state and municipal sick leave ordinances.  Businesses with employees in multiple cities should either adopt a different policy for employees in certain cities or create a single policy complies with whichever municipality is the strictest.

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, but we cannot answer questions about specific situations or provide legal advice. If you desire legal advice, you should contact an attorney.

Your use of this blog does not create an attorney-client relationship between you and Nuddleman Law Firm, P.C. The use of the Internet or this blog for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be posted in this blog and 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.

New Labor Law Posters for San Francisco

Every year, federal and state employment laws alter the landscape for employers. More recently, cities and counties have entered the mix with their own rules and regulations. Companies doing business in San Francisco are likely familiar with the ever-changing rules and posters.  Effective July 1, 2016, there are some new labor law posters for San Francisco companies that must be displayed in the workplace.  Which posters you have to display depends on how many employees you have working in San Francisco.

San Francisco Labor Law Posters

You can obtain nice laminated posters from various sources, but you have to be sure the posters are up to date and appropriate for your location and the size of your company. Alternatively, you can hunt around the Internet to find the new labor law posters. In order to make it easy for you, I’m including links to the new labor law posters for San Francisco in this article with a brief description of when you need the poster.  The links and posters are accurate as of July 1, 2016, but as I’ve said before, the laws keep changing so it is always a good idea to check with an employment law specialist.

San Francisco Minimum Wage Notice with New $13.00 per hour Minimum wage

On July 1, 2016, pursuant to Proposition J, which passed in 2014 with more than 76% of the vote, San Francisco’s minimum wage increases to $13.00.  All employers, regardless of where they are located, must pay their employees who perform work in San Francisco the San Francisco minimum wage.

The current SF Minimum Wage Notice can be downloaded here.

San Francisco has a helpful FAQ about the SF Minimum Wage requirements.

San Francisco Health Care Security Ordinance (HCSO) Notice with Rate Increases for 2016

Businesses with 20 or more employees (and nonprofit organizations with 50 or more employees) must spend a minimum amount on health care benefits for each of their “covered employees” – generally, those employees who work 8 or more hours per week in San Francisco and have been employed for more than 90 days. Employers with 20-99 employees must spend at least $1.68 for each hour payable for each covered employee. Employers with 100+ employees must spend at least $2.53 for each hour payable for each covered employee. These expenditures must be made for each employee within 30 days following the end of each calendar quarter.

The current SF HCSO can be downloaded here.

You can find more information regarding the SF HCSO, including reporting requirements, here.

San Francisco Family Friendly Workplace Notice

The San Francisco Board of Supervisors passed the Family Friendly Workplace Ordinance (FFWO) on October 8, 2013 and it became effective on January 1, 2014. This ordinance gives certain employees the right to request a flexible work arrangement and gives the employer the right to refuse for legitimate business reasons.

The FFWO requires that employers with 20 or more employees allow any employee who is employed in San Francisco, has been employed for six months or more by the current employer, and works at least eight hours per week on a regular basis to request a flexible or predictable working arrangement to assist with caregiving responsibilities. The employee may request the flexible or predictable working arrangement to assist with care for:

  1. a child or children under the age of eighteen;
  2. a person or persons with a serious health condition in a family relationship with the employee;  or
  3. a parent (age 65 or older) of the employee.

The official notice can be downloaded here.

The SF Office of Labor Standards Enforcement has a helpful FAQ regarding the FFWO.

San Francisco Paid Sick Leave Notice

The San Francisco Paid Sick Leave Ordinance became effective on February 5, 2007.  All employers must provide paid sick leave to each employee (including temporary and part-time employees) who performs work in San Francisco. Although statewide Paid Sick Leave Requirements went into effect on July 1, 2015, employers with employees performing work in San Francisco are required to comply with both laws. Unfortunately, compliance with the statewide Paid Sick Leave Requirements does not guarantee compliance with San Francisco Paid Sick Leave Ordinance.

The official poster that must be posted in the workplace can be downloaded here.

There is a helpful FAQ regarding the SF Paid Sick Leave Ordinance compared to the California paid sick leave requirements.

Knowing which labor law posters to post and when to get updates is not always easy. Hopefully this article will help companies comply with the posting requirements for the various labor law posters in San Francisco.

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, but we cannot answer questions about specific situations or provide legal advice. If you desire legal advice, you should contact an attorney.

Your use of this blog does not create an attorney-client relationship between you and Nuddleman Law Firm, P.C. The use of the Internet or this blog for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be posted in this blog and 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.

New Law Promises More Liability for Employee Wages

California has been a pioneer in terms of enforcing the state’s wage and hour laws.  No sooner is a problem identified than a new law is passed to resolve the problem. This year, the governor signed SB 588 to help ensure employers pay employees the wages they are owed.  It creates powerful enforcement mechanisms for the Labor Commissioner, but it also expands who can be sued when an employee thinks s/he is owed wages.

New Law Promises More Liability for Employee Wages

The new law promises more liability for employee wages by making employers, directors, officers and managing agents responsible for unpaid wage claims.

SB 588 creates Labor Code section 588.1, which 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.

In other words, directors, officers and managing agents of the employer can be personally liable for the failure to pay wages owed.  This new law may apply to any persons that have control over an employee’s wages, and will make it easier for employees to sue a variety of people to recover allegedly unpaid wages.  The move is seen as a strong tool in the effort to ensure employees are paid properly.  Unfortunately, in the wrong hands, it can also mean more individuals will be sued even when they were “just following orders.”

SB 588 also gives the Labor Commissioner the power to mail a notice of levy to anyone possessing any credits, money, or property belonging to the judgment debtor, or who owe any debt to the judgment debtor at the time they receive the notice of levy.  For example, if a customer owes the employer money, and the employer fails to pay the Labor Commissioner’s award, the customer could receive a notice of levy informing the customer to pay the Labor Commissioner instead of the employer.  If the customer fails or refuses to pay, the customer could be liable to the Labor Commissioner for the amount it should have turned over to the Labor Commissioner

If an employer fails to pay a Labor Commissioner judgment within 30 days, the employer can be prohibited from conducting business in California unless the employer obtains a bond equal to about 10 times the amount of the actual judgment. Failure to obtain a bond can result in a stop notice and, in the instance of a long-term care facility, result in denial of licensure.

SB 588 goes into effect on January 1st. The new law promises more liability for employee wages. In addition to reviewing your policies to ensure compliance with California law, employers should also consider Employer Practices Liability insurance and Directors and Officers Liability insurance to help defray the increasing costs of litigation.

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, but we cannot answer questions about specific situations or provide legal advice. If you desire legal advice, you should contact an attorney.

Your use of this blog does not create an attorney-client relationship between you and Nuddleman Law Firm, P.C. The use of the Internet or this blog for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be posted in this blog and 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.

New Hourly Rates for Software Workers and Physicians

New Hourly Rates for Software Workers and Physicians

Although most exempt employees must receive a set salary, computer software employees and licensed physicians/surgeons can receive an hourly wage and still be exempt from California’s overtime requirements.  The minimum hourly wages are set by the Department of Industrial Relations, and goes up every year.

On October 7, 2015, the DIR announced new hourly rates for software workers and physicians will take effect on January 1, 2016.

Computer Software Engineers

Effective January 1, 2016, the minimum hourly rates for computer software engineers will increase to $41.85 an hour, which is equivalent to $87,185 per year or $7,265.43 per month.

Licensed Physicians and Surgeons

Effective January 1, 2016, licensed physicians and surgeons must receive minimum hourly rate of $76.24 an hour.

Employees must still meet the “duties” test to be exempt from California’s overtime requirements.  The employees may be exempt under one or more of the other exemptions.

I have been representing employees and employers in unpaid wage claims, including unpaid overtime claims resulting from misclassification issues, for almost 20 years.  Failing to pay an employee the correct wage rate significantly reduces an employer’s ability prove an employee is exempt from California’s overtime requirements. Beginning January 1st, employers must pay the new hourly rates for software workers and physicians to meet California’s exempt requirements.

If you have questions about your exempt status or the status of your employees, 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, but we cannot answer questions about specific situations or provide legal advice. If you desire legal advice, you should contact an attorney.

Your use of this blog does not create an attorney-client relationship between you and Nuddleman Law Firm, P.C. The use of the Internet or this blog for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be posted in this blog and 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.

Wage Deductions for Exempt Employee Absences

Wage deductions for exempt employee absences

Most exempt employees must receive a guaranteed salary. The employee is paid for the work performed, not the hours worked.  This means an exempt employee gets paid the same amount regardless of whether s/he works 8 hours a day, or 1 hour a day.  Employers that fail to pay the exempt employee’s salary risk losing the exempt status, and possibly subjecting the employer to significant overtime liabilities.

So, when can you an employer make wage deductions for exempt employee absences?  There is a useful DLSE Opinion Letter on the topic, but weeding through the 13-page opinion letter and the letter that prompted the opinion is not easy.  Hopefully the following provides some clarification for employers and employees regarding when an employer can make wage deductions for exempt employee absences.

Full Week Deductions are OK

If an exempt employee performs no work in a workweek for “personal reasons” and does not have vacation or PTO to cover the time off, the employer does not have to pay the employee’s salary for that week.  If the employee has available accrued PTO or vacation pay, the employer can require the employee to use the available PTO/vacation.  If the employee does not have sufficient PTO/vacation to cover the full week, the employer can just pay the available PTO/vacation and does not have to pay wages for the rest of the week (because the employee has performed no work).

There are a few exceptions: If an employee misses work for a protected reason, such as jury duty, attendance as a witness, or temporary military leave, the absence is not “personal” time off and therefore the employer is obligated to pay the exempt employee for the full workweek

Deductions from Vacation/Paid Time Off/Paid Sick Leave Balances

Employers can require employees to use available vacation, paid time off or paid sick leave balances before taking unpaid time off or to cover partial day, full day or full week absences.  Employers should not, however, require an employee to use Paid Sick Leave under the Health Workplaces Healthy Families Act unless the absence is for one of the reasons specified in the Act.

Full Day Deductions — Personal Reasons

If an exempt employee performs no work in a workday for personal and has no accrued vacation or PTO, then the employer can deduct the equivalent of one day’s pay from the exempt employee’s salary.  Caution: The employee must perform no work—this means no emailing, no phone calls.  If the employee performs any work, the employer must pay the employee’s full salary.

See the exception above about absences that are not for “personal reasons.”

Partial Day Deductions — Personal Reasons

If an exempt employee works any portion of a work day, the employer must pay the employee’s full salary for that day. However, an employer can require the employee to use available vacation or PTO to cover the hours not worked. (Conley v. Pacific Gas & Electric Co., 131 Cal.App.4th 260 (2005) and Rhea v. General Atomics, 227 Cal.App.4th 1560 (2014)).  The employer is not reducing the employee’s salary—it is just requiring the employee to use available PTO/vacation.

For example, if an employee works two-hours, then leaves for the day, the employer can require the employee to use 6 hours of vacation/PTO to cover the absence.  The employee receives his/her full salary and therefore the employer is not making a wage deduction for exempt employee absences.

If the employee does not have available vacation or PTO, the employer cannot make a wage deduction for a partial day absence.

Full Day Deductions – Paid Sick Leave

Every California employer must provide mandatory paid sick leave (PSL) benefits as of July 1, 2015. The PSL law specifies the different reasons for taking PSL, and if an exempt employee takes a full or partial day absence under the mandatory PSL law, the employer can charge the absence against the exempt employee’s accrued mandatory paid sick time.

But what if the exempt employee does not have any more PSL?  Employers can make wage deductions for exempt employee absences of one full day or more caused by sickness, an accident or a disability if the employer has a “bona fide plan, policy or practice of providing compensation salary loss due to sickness, accidents or a disability.” Since every employer is required to provide PSL, presumably every employer has a qualifying plan, policy or practice.  Of course, this assumes the employer actually adopts and complies with the Healthy Workplaces Healthy Families Act.

Partial Day Deductions – Paid Sick Leave

If the exempt employee is only absent part of the day due to sickness or illness, and the employee has exhausted his/her available PSL, the employer may not deduct the remaining time from the employee’s salary.  For example, if the employee works two hours, and then goes home sick, but does not have sufficient available PSL to cover the absence, the employer is still required to pay the employee for the full day.

Other times when an employer can make wage deductions for exempt employee absences

There are a few other odds and ends when an employer can make wage deductions for exempt employee absences without violating the “salary” rules:

  • Employers do not have to pay the full week’s salary for the first and last weeks worked if the employee only works a partial day.
  • Absences under the FMLA are specifically unpaid absences, and therefore an employer can deduct for partial-week, and possibly partial-day absences, covered under FMLA.
  • If an employee is sent home for a safety-infraction, the employer may not be required to pay the full day’s or full week’s salary.

Recap

Any time you deduct money from an employee’s wages, you run the risk of violating the law.  Employees who do not receive the wages they are expecting are more likely to seek outside assistance.

  • Employers do not have to pay the week’s salary if no work is performed during the workweek.
  • Employers may deduct for full day absences caused by “personal reasons” or if the employee takes time off for an illness and the employee has exhausted his/her available PSL.
  • Employers should not dock an exempt employee’s salary for a partial day absence. If the employee does not have sufficient vacation/PTO or PSL to cover the missed partial day, the employer should pay full day’s salary.
  • The employer can require an employee to use available vacation/PTO or PSL for partial day absences (the PSL minimum increment is two hours).
  • Do not deduct from the employee’s PSL balance unless it is for one of the reasons specified in the Health Workplaces Healthy Families Act.

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, but we cannot answer questions about specific situations or provide legal advice. If you desire legal advice, you should contact an attorney.

Your use of this blog does not create an attorney-client relationship between you and Nuddleman Law Firm, P.C. The use of the Internet or this blog for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be posted in this blog and 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.

Employer Must Pay for Commute Time

Joseluis Alcantar sued his employer, Hobart Service, alleging Hobart did not compensate its technicians for the time they spent commuting in Hobart’s service vehicles from their homes to their job sites and from those job sites back home.  The general rule is that employers are not required to compensate employees for their commute to and from work.  So why did Joseluis think his employer must pay for commute time to and from work?  Because Hobart’s policies placed Joseluis under Hobart’s control while commuting.

Employer Must Pay for Commute Time

Employers must compensate an employee for all “hours worked,” which includes any time the employee is under the employer’s control.  Although Hobart did not require employees to bring company vehicles home, Joseluis alleged Hobart did not provide sufficient protected parking at the home office.  Since Joseluis was responsible for the safety of the vehicle and the expensive equipment in the vehicle, and because Hobart’s home office did not have sufficient space for all company vehicles, Joseluis felt he had to take the company vehicle home in order to keep it safe.

Hobart’s policies, among other things, severely restricted Joseluis’ off-work use of the company vehicle:

Personal use of the service vehicle, other than commuting from home to the first work assignment and from the last work assignment to home, is strictly prohibited unless prior written approval is granted by management. (An example of personal use for which prior approval could be granted would be in case of a dental appointment which cannot be scheduled after hours or on a weekend.)

Hobart also prohibited employees from carrying passengers without prior approval, and from transporting alcohol.  Hobart also required Joseluis to respond to telephone calls on his company-issued cell phone while commuting.

According to the court:

An employee’s commute is not typically compensable under California labor law, even “when the employee commutes in a vehicle that is owned, leased, or subsidized by the employer.” Cal. Lab. Code § 510(b). The time may be compensable, however, if the employee can classify it as “hours worked.” The Industrial Welfare Commission has defined “hours worked” as “the time during which an employee is subject to the control of an employer,” including “all the time the employee is suffered or permitted to work, whether or not required to do so.” See Cal. Code Regs. tit. 8, § 11040(2)(K).

Joseluis argued that, as a practical matter, he was required to commute in the company vehicle, and since the employer controlled what he could and could not do during that commute, the employer must pay for commute time.  The court concluded that a reasonable jury could conclude that Joseluis’ commute time was compensable.

Employers who allow employees to use company vehicles to commute to and from work should carefully review their policies and procedures.  Too many restrictions on employee use of the company-vehicles could lead a court to conclude the employer must pay for commute time.

 

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, but we cannot answer questions about specific situations or provide legal advice. If you desire legal advice, you should contact an attorney.

Your use of this blog does not create an attorney-client relationship between you and Nuddleman Law Firm, P.C. The use of the Internet or this blog for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be posted in this blog and 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.

Attorney’s Letter Did Not Comply With PAGA Notice Requirements

The Ninth Circuit Court of Appeals recently held, in Alcantar v. Hobart Service, that an attorney’s letter did not comply with PAGA notice requirements, and therefore dismissed plaintiff’s PAGA claims.  According to the court, “the letter in which plaintiff disclosed his allegations against the employer did not contain sufficient facts to comply with the statute’s notice requirements.”

PAGA allows an employee to bring an action against an employer to recover civil penalties for violations of the California Labor Code. Cal. Lab. Code § 2699(a). This powerful statute allows plaintiffs to bring claims on behalf of other aggrieved employees, without requiring the employee to follow typical class action protocols.

PAGA Requires Written Notice of Facts and Theories

Shortly after PAGA was passed, the legislature amended the statute to cure perceived abuses of the Act. Before filing a lawsuit, the employee must give “written notice by certified mail to the Labor and Workforce Development Agency and the employer of the specific provisions of [the California Labor Code] alleged to have been violated, including the facts and theories to support the alleged violation.” Cal. Lab. Code § 2699.3(a)(1). This provides the LWDA and the employer an opportunity to review the allegations and determine whether a violation has occurred and to assess the seriousness of the allegations.

Attorney’s Letter Did Not Comply With PAGA Notice Requirements

After Alcantar filed suit seeking compensation for his commute time and for missed meal and rest breaks, the employer argued that the attorney’s letter did not comply with PAGA notice requirements. The court agreed.

Alcantar’s letter contained a series of legal conclusions, but no facts or theories:

Our offices have been retained by Joseluis Alcantara [sic] (Plaintiff). Plaintiff is a former employee of ITW Food Equipment Group, LLC aka Hobart Service (Defendant). Plaintiff contends that Defendant (1) failed to pay wages for all time worked; (2) failed to pay overtime wages for overtime worked; (3) failed to include the extra compensation required by California Labor Code section 1194 in the regular rate of pay when computing overtime compensation, thereby failing to pay Plaintiff and those who earned additional compensation for all overtime wages due; (4) failed to provide accurate wage statements to employees as required by California Labor Code section 226; (5) failed to provide reimbursement for work related expenses as required by Labor Code § 2802; and, (6) failed to provide off-duty meal periods and to pay compensation for work without off-duty meal periods to its California employees in violation of California Labor Code sections 226.7 and 512, and applicable Industrial Welfare Commission orders. Said conduct, in addition to the forgoing, violated each Labor Code section as set forth in California Labor Code section 2699.5.

The court held “[t]he only facts or theories that could be read into this letter are those implied by the claimed violations of specific sections of the California Labor Code…” and determined “[t]his is insufficient.”

Plaintiff’s letter—a string of legal conclusions with no factual allegations or theories of liability to support them—is insufficient to allow the Labor and Workforce Development Agency to intelligently assess the seriousness of the alleged violations. Neither does it provide sufficient information to permit the employer to determine what policies or practices are being complained of so as to know whether to fold or fight.

The court specifically referenced an unpublished opinion, Archila v. KFC U.S. Properties, Inc., 420 F. App’x 667, 669 (9th Cir. 2011), in which the court affirmed a district court’s dismissal of a PAGA claim, observing that “none of the materials Archila submitted to KFC or the LWDA contain ‘facts and theories’ to support his allegations” and the demand letter “merely lists several California Labor Code provisions Archila alleges KFC violated and requests that KFC conduct an investigation.”

Because Archila was unpublished, it carried little if any weight, and employers could not cite to Archila.  Alcantar may have revived Achila.

Employees must provide sufficient facts and theories in their PAGA notices to allow the employer and the LWDA to assess the seriousness of the alleged violations and provide sufficient information to permit the employer to determine what policies or practices are being complained of. Employers should carefully review any PAGA notice to ensure it states the facts and theories upon which the claims are based. If the PAGA notice does not contain sufficient facts to comply with the PAGA notice requirements, the employer may be able to dismiss the PAGA claim.  Alcantar is not entirely binding, however, since it is a Ninth Circuit decision interpreting California law.  We’ll have to wait and see if any California courts follow Alcantar’s reasoning.

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, but we cannot answer questions about specific situations or provide legal advice. If you desire legal advice, you should contact an attorney.

Your use of this blog does not create an attorney-client relationship between you and Nuddleman Law Firm, P.C. The use of the Internet or this blog for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be posted in this blog and 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.

Employer Responsible for Attorneys’ Fees After Labor Commissioner Appeal

A California appellate court held an employer responsible for attorneys’ fees after Labor Commissioner appeal.

In Royal Pacific Funding Corporation v. Arneson, the employer appealed a $29,500.00 Labor Commissioner award.  After the employee retained an attorney for the appeal who notified the employer of the employee’s intent to add additional claims to the appeal, the employer dismissed the appeal.

The employee’s attorney filed a motion for attorneys’ fees, which the employer opposed.  The trial court denied all attorneys’ fees “on the theory that there must be a court award under Labor Code section 98.2 before a party can collect its fees.”  The appellate court reversed the decision and ordered the trial court to determine the employee’s reasonable attorneys’ fees.

Attorneys’ Fees After Labor Commissioner Appeal

Attorneys’ fees on appeal from a Labor Commissioner Order, Decision or Award are governed by Labor Code section 98.2, which provides:

If the party seeking review by filing an appeal to the municipal or superior court is unsuccessful in the appeal, the court shall determine the costs and reasonable attorney’s fees incurred by the other parties to the appeal, and assess that amount as a cost upon the party filing the appeal.

In 2003, the legislature amended Labor Code section 98.2 to include the statement, ” An employee is successful if the court awards an amount greater than zero.”

Royal Pacific Funding argued that under Arias v. Kardoulias (2012) 207 Cal.App.4th 1429, the employee cannot recover attorneys’ fees because the court never determined the case on the merits, and therefore the employee was not “successful” on the appeal.  In Arias, the court denied an employer’s attorneys fees when the employer got an appeal dismissed on procedural grounds, because such a procedural dismissal could not be equated with a superior court determination of the merits. According to the appellate court, interpreting 98.2 to require a decision on the merits “turns the basic purpose of the 2003 amendment on its head.”

Employees and employers must think carefully before appealing a California Labor Commissioner decision.  Employees may be allowed to add additional claims on appeal, and the non-successful appellant may be obligated to pay the other side’s attorneys’ fees.  Before you appeal you Labor Commissioner case, contact an experienced attorney familiar with wage and hour claims.

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, but we cannot answer questions about specific situations or provide legal advice. If you desire legal advice, you should contact an attorney.

Your use of this blog does not create an attorney-client relationship between you and Nuddleman Law Firm, P.C. The use of the Internet or this blog for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be posted in this blog and 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.