Monday, December 19, 2011

Time clocks - friend or foe?

With very few exceptions, under California employment law nonexempt employees must have a 30 minute meal break within five hours of starting work if they work more than six hours a day, and a ten minute rest period for each four hours worked.

The rest periods must be paid, the meal break can be unpaid, and you should have employees record their "out" and "in" times for each meal break so you can be sure they are really taking the time off. How to record the time? Many larger employees use time clocks, either a punch-in-punch-out analog version, or a more modern electronic timekeeper system that tracks employee hours. Easy, right? Well, like everything about being an employer in California, the answer isn't simple.

First, meal breaks must be 30 minutes long. Time card show a 25-minute meal break? Under the law, that does not count because it is not the statutory 30 minutes of "being relieved of all duty" and you may well be subject to a labor code penalty (one hours pay for each missed 30 minute break). While a time clock can be a good way to make sure employees don't arrive late and leave early, the real cost can be much higher. An employee who regularly takes 20 minute breaks, grabs a sandwich and then comes back in and gets on with their job could cost you hundreds if not thousands of dollars extra.

Second, those rest periods. If an employee clocks out for a rest period, goes for a cigarette (yes, some employees in California do still go out for a cigarette) and then clocks back in, they have probably been out for around eight minutes, and on paper, have not taken their statutory rest period.

As a business owner, you probably have better things to do than police the parking lot, making sure smokers linger over their cigarettes. Forcing employees to take 30 minutes of unpaid lunch every day can be just as onerous. There are answers, however, and like many things about California employment law, a few steps taken now can save you money down the line.

If you use a computerized time clock system, find out if you can set it up not only to record the time an employee leaves and returns for lunch, but to prevent them clocking back in before 30 minutes has passed. Do the same for rest periods - include a clock out and a clock in time, and if you can, bar them from clocking back in before the ten minutes is up.

If you use an older analog time clock, consider upgrading it. New technology could help save you money (figure one short lunch or one missed lunch per employee per week = one extra hour of statutory labor code violation pay per employee, if you want to look at return on investment).

If you use old fashioned, fill 'em in time cards, take a moment to adjust the format. Make sure you add "out" and "in" times for meal breaks and rest periods, and consider adding language so that when the employee signs the time card, they are certifying that they took all statutory rest periods and meal breaks. Like everything we do as employers, it creates more work up front, but the savings on this could be considerable.

Every case is different, and this is intended as a service to clients and the community, not as legal advice or advertising. You should consult an attorney if you have a question about labor or employment law in California.

Friday, December 9, 2011

Supreme Court to rule on whether pharmaceutical sales reps are entitled to overtime

The US Supreme Court is entering the debate on whether pharmaceutical sales representatives, also known as PSRs, are "outside salesman" entitled to overtime pay under the Fair Labor Standards Act.

The Supreme Court will be reviewing Christopher v. SmithKline Beecham Corp. and a Ninth Circuit ruling that found PSRs who promote pharmaceutical products to physicians fall within the scope of the outside sales exemption to the FLSA's overtime-pay requirement. The outside sales exemption means that you do not have to pay overtime to "any employee employed in a bona fide executive, administrative, or professional capacity ... or in the capacity of outside salesman (as such terms are defined and delimited from time to time by regulations of the Secretary of Labor).... " An "outside salesman" is defined as "any employee: (1) Whose primary duty is: (i) making sales within the meaning of section 3(k) of the Act; or (ii) obtaining orders or contracts for services or for the use of facilities for which a consideration will be paid by the client or customer; and (2) Who is primarily and regularly engaged away from the employer's place or places of business in performing such primary duty."

In Christopher v. SmithKline Beecham Corp., the Ninth Circuit rejected Plaintiff salesmens' contention that they did not "sell" to doctors, based on a federal law that prohibits direct selling to patients. The Court disagreed, noting that the PSRs were clearly selling to doctors, not patients. "Plaintiffs suggest that despite being hired for their sales experience, being trained in sales methods, encouraging physicians to prescribe their products, and receiving commission-based compensation tied to sales, their job cannot 'in some sense' be called selling." Interestingly, and at issue before the Supreme Court, is the fact that the Department of Labor classifies PSRs as promoters, not salesmen.

The conflict between Department of Labor laws and the FLSA definition is at the heart of this dispute. The confusion, unfortunately, is not uncommon, and unraveling the tangled web of labor and employment laws leaves many employers scratching their heads. If you are unsure whether your employees are exempt or nonexempt, consulting an attorney can save you thousands of dollars in unplanned wage and hour penalties.

As a disclaimer, this information is offered as a service to clients and the community, and is not intended as legal advice or advertisement. No attorney client relationship is inferred or intended. Every case is different, and you should seek legal advice from a licensed attorney.

Monday, December 5, 2011

Proposed changes to Fair Labor Standards Act could end overtime for "computer professionals"

The Fair Labor Standards Act (FLSA) governs how we define employees as exempt (not covered by overtime and meal break laws) and nonexempt (covered by overtime and meal break laws, among other things). The FLSA mandates that certain employees get time-and-a-half overtime pay when they work more than 40 hours a week, and others do not. For a helpful primer on this, see the Department of Labor Fair Labor Standards Act Advisor website.

Expanding the types of employee classified as "exempt" is a new bill introduced in Congress by Sen. Kay Hagan (D-NC), titled the Computer Professionals Update Act. Not yet law, the CPU (yes, CPU - I guess that's computer nerd humor) focuses on IT workers including network engineers, database and security specialists. Specifically, if the CPU is passed, the FLSA will be expanded to give exempt status to "any employee working in a computer or information technology occupation (including, but not limited to, work related to computers, information systems, components, networks, software, hardware, databases, security, internet, intranet, or websites) as an analyst, programmer, engineer, designer, developer, administrator, or other similarly skilled worker," working in or on "the application of systems, network or database analysis techniques and procedures, including consulting with users, to determine or modify hardware, software, network, database, or system functional specifications."

If you have employees that fall into this category, are paid through salary or make at least $27.63 an hour, they will be covered by the new law (if, of course, it passes through Congress). That's great news if you have to call your tech support out to fix a server at 2 a.m.!

As always, this is intended as general information about employment law for clients and the community, and is not legal advice. Similarly, nothing in here is intended as an advertisement and no attorney client relationship is intended between the author and the reader. Every situation is different, and for tailored legal advice, you should consult an attorney. I offer free consultations to employers in Santa Barbara, San Luis Obispo and Ventura counties, and if I can't help you, I am always happy to give you a referral to someone who can.

Monday, November 28, 2011

Prevailing wage applies to tree pruning, removal on state highways

In Reliable Tree Experts v. Baker (Cal.App. 1 Dist.), the Court has ruled that a private contractor providing tree pruning and removal for California Department of Transportation must follow California's Prevailing Wage Law.

California's Prevailing Wage Law can be found at Labor Code §§ 1720-18611.

Here, the contractor, working under contract with Caltrans for the first time, argued that it was not involved in "public works," for purposes of Labor Code § 1720, which defines public works as including construction, alteration, demolition, installation, or repair work done under contract and paid for in whole or in part out of public funds. The Court disagreed.

The Court also found that the contract involved "maintenance work" under Labor Code § 1771, though the contract was the contractor's first contract with Caltrans, it was a one-time contract between the contractor and Caltrans, and a great majority of the work under the contract involved tree removal. Tree work on Caltrans rights-of- way was routine, recurring, and usual work on those rights-of-way.

Interestingly, this case arose out of a $949,600 contract, but the appeal was from a judgment ordering Reliable Tree Experts to pay just $6,767.22. There is no doubt in my mind that the appeal cost the contractor way, way more than $6,767.22: a double loss for the employer in this case.

As always, a disclaimer - every situation is different, and you are advised to consult an attorney for advice specific to your situation. The information in this blog is intended as a service to clients and the community, and nothing in here is intended to create an attorney-client relationship or provide legal advice, nor is it advertising. Now, I'm off to prune some trees!

Thursday, November 10, 2011

Employee moving his truck on jobsite found to be in "course and scope" of employment

When is an employee acting in course and scope of employment, making an employer liable for his acts, omissions and personal safety? The answer varies depending on job description, employment terms and a number of factors. In Vogt v. Herron Const., Inc. (Cal.App. 4 Dist.) the Court of Appeal found a framing contractor's employee was acting within the course and scope of his employment when he moved his truck on a job site. The facts of this case show just how harsh this ruling might be for contractor employers:

Herron was the framing subcontractor on a construction project in Riverside. Jesus Cruz was an employee of Herron. His job duties did not include driving.

On October 31, 2007, Cruz parked his own personal pickup truck at the worksite. No one had told him where to park. There was no designated parking area for subcontractors' employees. Employees typically parked near wherever they were assigned to work that day.

Performance Concrete (Performance) was the concrete subcontractor on the project. Vogt was an employee of Performance. When he noticed Cruz's truck, he thought, "Hey, we got to move th[at] because we can't get the cement truck in." He then asked Cruz to move his truck; he explained that Performance was about to start pouring cement nearby.

It was "normal" for construction workers to be asked to move their cars and other vehicles at a jobsite. As Vogt later explained, "It . . . happens all the time on a job site . . . . We're not going to pour if a car's there because we don't want the liability of splashing the paint."

When Cruz moved his truck, he ran over Vogt, injuring him.

Originally, Cruz and the general contractor, Lyle Parks, Jr., Inc. (Parks), were also defendants. The trial court granted summary judgment to the general contractor, dismissing the case in favor of Parks. Vogt settled with Cruz, leaving only the action between Vogt and his employer, Herron.

Herron argued that Cruz was not acting in the course and scope of his employment. However, the Court considered evidence that the need to move one's personal vehicle when it got in the way of another subcontractor was an "outgrowth" of the employment, "inherent in the working environment," and "typical of or broadly incidental to the [employer's] enterprise." Here, employees were allowed to park their personal vehicles at the worksite during working hours, and it was foreseeable that they would have to move them when they got in the way of construction.

Sending the case back to the trial court, the Appellate Court found that Cruz was acting in the course and scope of his employment, because moving the truck served the employer's overall enterprise, and was necessary to the employee's comfort, convenience, and welfare while on the job.

This case raises a number of issues for employers in the construction industry. Often, parking on the job site is the only parking available for employees, especially in remote sites. Job sites can become crowded, and by their very nature, there is a lot going on (including, as in this case, the arrival of a concrete pour truck). It's a good idea to make sure employees know that safety rules cover the entire site, but you might also want to consider some precautionary measures to prevent liability for employee v. employee accidents like the one in this case.

As always, this information is offered as a service to clients and the community, and is not intended as legal advice or as an advertisement for legal services. Nothing in here is intended to create an attorney client relationship, and every case is different. I offer free thirty minute consultations to employers with employment law questions, and my firm is a proud member of the Santa Barbara and Ventura Contractors' Associations.

Friday, November 4, 2011

Does someone owe your business money?

It's Friday, always a good day in employment law because unscientific personal observation suggests employees are more eager to get to Happy Hour than they are to sue their employers. As a change from my employment-law focus, here is an excellent column written by Napa attorney Mary Luros on debt collection for small businesses:

Mind Your Business by Mary Luros

Tuesday, November 1, 2011

Characterizing employment settlements for pension purposes

Employees lucky enough to be part of an employer-sponsored retirement plan in California have long been familiar with the calculations that go into establishing retirement income. Commonly, the calculation is based on a combination of years worked and highest annual income: but what happens if that annual income spikes because of an employment settlement?

In Molina v. Board of Admin. of California Public Employees' Retirement System ,(Cal.App. 2 Dist.) the Second District, Division Three Appellate Court (covering Los Angeles)has just ruled that wrongful termination settlement proceeds should not be included in a CalPERS pension calculation. CalPERS, or California Public Employees' Retirement System, provides retirement benefits to more than 1.6 million public employees and 3,000 public employers. In short, if you have any other State of California retirement plan, it is likely that this case will apply.

In Molina, a former employee of a local municipality received a $200,000 settlement on a wrongful termination claim. For tax purposes, the settlement was deemed "back pay" and counted towards the employee's taxable income. However, the $200,000 was not "compensation earnable" and did not count towards the CalPERS pension calculation.

Here, the Appellate Court ruled that under the Public Employees Retirement Law (PERL), a settlement only counts towards pension calculation if it it qualifies as "payrate" or "special compensation." There are some technical elements that also protected CalPERS from rewarding the former employee with a higher pension that he would otherwise have earned. In this case, the settlement payment was not the employee's "payrate" because after the settlement the employee was reinstated for one day rather than a year, and the employee was reinstated at his normal monthly rate rather than at a published monthly payrate that would have generated $200,000 in yearly compensation. The payment also was not "special compensation" absent evidence that it was available to similarly situated employees under a labor policy or federal requirement.

Knowing the tax implications of a potential settlement with an aggrieved employee can give you the upper hand in negotiating a claim, but as with all legal matters, you should consult an attorney before doing so. Nothing in this blog is intended to give legal advice or form an attorney-client relationship, and the information herein is offered as a service to clients and the community, not as advertising. I offer free consultations to employers on employment law matters in Santa Barbara, Ventura and San Luis Obispo Counties, and am happy to take your call.

Thursday, October 27, 2011

Governor signs bill ending mandated use of E-Verify for state and municipal projects

It's not often that California passes pro-employer legislation, but on October 9, 2011, California Governor Jerry Brown signed AB 1236 into law, limiting the application of E-Verify in California by prohibiting municipalities from mandating use of E-Verify.

E-Verify is an online program run by the federal government that compares information from an employee's Employment Eligibility Verification Form I-9 to data from U.S. government records. If the information matches, that employee is eligible to work in the United States. If it does not match, E-Verify alerts the employer and the employee must resolve the mismatch within eight working days from the referral date. As an employer, you must allow the employee to continue working while they resolve the problem - and don't assume that the mismatch automatically means the employee is not eligible to work in the US, because the system is reportedly full of errors (even USCIS agrees - read their own 2010 report on the program here). A story doing the rounds in the news media reports that a U.S. citizen and former captain in the U.S. Navy with 34 years of service and high security clearance was flagged by E-Verify as not eligible for employment, with the error taking him and his wife, an attorney, two months to fix.

AB 1236, known as the Employment Acceleration Act of 2011, prohibits state and local government agencies in California from mandating use of E-Verify. Over 15 municipalities had required companies doing business with them to use E-Verify, including Mission Viejo, Temecula, Murrieta, Riverside, Lake Elsinore, Wildomar (for contractors), Lancaster, Palmdale, San Clemente, Escondido, Menifee, Hemet, San Juan Capistrano, Hesperia, Norco, San Bernardino County, Rancho Santa Margarita, and Simi Valley. Locally, Santa Maria requires the use of E-Verify for City employees and was planning to expand the requirement to all companies doing business with the City, and Simi Valley has pledged that they will keep using the system, despite the new law, through January 1, 2011. Santa Barbara and San Luis Obispo were also considering an E-Verify ordinance.

The move to end E-Verify mandates was widely supported, not as a commentary on illegal immigration but because the program is so inaccurate. Indeed, Assemblymember Paul Fong (D-Cupertino), who authored the legislation, said "This bill will protect California's workers and businesses. The U.S. Government Accountability Office reports that the E-Verify system flags eligible U.S. workers as ineligible to work. In these tough economic times, the mandated use of this system would impose a major financial burden on businesses. We need to help businesses grow and protect American jobs, not impose job killing mandates."

Among the supporters of AB 1236 were the California Chamber of Commerce and California Farm Bureau Federation.

This information is provided as a service to my clients and the community, and it is not an advertisement for legal services. Nothing on this blog is intended to create an attorney client relationship or to provide legal advice, and every case is different - a phone call to me is always free.

Tuesday, October 25, 2011

Sexual language in email not enough to show hostile work environment

In the 4th District California Court of Appeal, the Court has ruled in Brennan v. Townsend & O'Leary Enterprises, Inc. that an advertising agency executive director's e-mail referring to a female vice president in derogatory sexual terms was not part of a sufficiently "severe" pattern of sexual harassment to establish a hostile work environment under the Fair Employment and Housing Act (FEHA).

This case is interesting for a number of reasons - first, the lawsuit went all the way through trial and the jury returned special verdicts in favor of the vice president and against her employers on the sexual harassment claim, expressly finding she was subjected to severe or pervasive harassment because she was a woman. Judgment was entered awarding plaintiff $200,000 against the agency and $50,000 against Montgomery.

The trial court judge, Kazuharu Makino, then ruled that there was insufficient evidence at trial to support the jury's verdict. In doing so, he applied a test set forth in Mokler v. County of Orange (2007) 157 Cal.App.4th 121, which governs the factors considered in evaluating the "totality of circumstances upon which hostile work environment determination is based." The factors used to determine whether sexual harassment creates a hostile work environment are:

- nature,
- frequency,
- timing, and
- context of defendants' conduct

In this case, the Court found that the e-mail was sent to the vice president inadvertently, and the author of the email was not the vice president's supervisor. There was not enough evidence to establish other incidents of sexual harassment, and the Court found that evidence that the business owner's inquiries about the vice president's sex life, incidents at agency holiday parties and a meeting after a bachelorettte party did not rise to "pervasive" sexual harrassment needed to make a case of hostile work environment. Bachelorette props, including a bridal veil with a penis on it, and the frequent use of the word "bitch" around the office, didn't tip the scales in favor of the vice president.

Justice Moore filed a dissent to the Appellate Court's ruling, writing of the vice president that "[o]nce she decided she could no longer suffer the belittling, locker room environment quietly and without complaint, her workplace became increasingly hostile until she eventually resigned. When the overtly sex-based acts are combined with the pattern of retaliation that lasted from Brennan's complaint to her departure, those acts constitute sufficient evidence of a hostile work environment."

So, did the employer "win" the lawsuit? Litigation, jury trial and appeal are expensive, time consuming and can have an destructive impact on the workplace. Here, the employer was awarded costs on appeal, and both employee and employer are likely out of pocket.

The takeaway from this case is clear - there is a thin line between sexual harassment and sexual harassment that rises to a hostile work environment, and no employer wants to be either side of a "thin line." Write policy and procedures for your employees to protect yourself from the type of lawsuit that arises out of forwarded email, sexually-charged humor and conversations that are best left in the locker room. Learn the law as it applies to your business, and remember that prevention is always cheaper than cure! If you are interested in model sexual harassment policies for you organization, call me. A phone call is always free.

Nothing in the above information is intended to create an attorney-client relationship with the reader or to provide legal advice. This blog is provided as a service to clients, and is not intended as an advertisement. Every case is different and I always recommend you contact an attorney who will help you apply the facts of your specific case to the law.

Friday, October 21, 2011

New California law limits credit checks on new employees

Credit checks on prospective or current employees are a hot topic these days, and as of January 1, 2012, California employers are going to see a crack down on the use of credit checks in the hiring process. For small businesses that rely on credit checks as part of a comprehensive background check on prospective employees, this new law means a big change in what you can and can't find out about new staff.

AB 22 prohibits most employer or prospective employers from obtaining a consumer credit report for employment purposes. This law might be new to California, but similar versions of the new laws are already in effect in Connecticut, Hawaii, Illinois, Maryland, Oregon and Washington. For once,

Under AB 22, you cannot obtain a consumer credit report on a new or prospective employee unless the information is substantially job-related, meaning that the position of the person for whom the report is sought has access to money, other assets, or confidential information. However, there are some pretty big carve-outs that apply to prospective employees who will handle money.

While AB 22 bans credit checks on most employees, you can still require them for employees that fall into these categories:

- a managerial position;
- a position in the state Department of Justice;
- a sworn peace officer or other law enforcement position;
- a position for which the information contained in the report is required by law to be disclosed or obtained;
- a position that involves regular access to specified personal information (other than the routine solicitation and processing of credit card applications in a store);
- a position in which the employee would be a named signatory on the employer’s bank or credit card account, or authorized to transfer money or enter into financial contracts on the employer’s behalf;
- a position that involves access to confidential or proprietary information; or
- a position that involves regular access to $10,000 or more of cash.

Note that these categories are defined by the new law, and are simplified here. If you are hiring an employee that falls into one or more of these categories,under AB 22 you must also provide written notice informing the employee or prospective employee of the specific reason for obtaining ta consumer credit report.

As always, this information comes with a disclaimer. Nothing in the above is intended to create an attorney-client relationship with the reader or to provide legal advice. This blog is provided as a service to clients, and is not intended as an advertisement. Every case is different and I always recommend you contact an attorney who will help you apply the facts of your specific case to the law.

Wednesday, October 19, 2011

Ninth Circuit makes it easier to put derogatory information in teacher's files

Teachers do not have a due-process-protected property interest entitling them to a hearing before derogatory information is placed in their personnel file, according to an unpublished ruling from the Ninth Circuit (available here).

This interesting case arose out of the legal theory that under some circumstances, government employees have a constitutionally protected "property right" that triggers due process rights when an employer's action threatens their employment. Here, teacher Brian Dougherty sued two of his supervisors for placing derogatory information in his personnel file, and in the lawsuit, argued that he had a due process right to a hearing before the information was put in his file.

For educators employed by the State of California, the procedures for notice of charges relating to unprofessional conduct or unsatisfactory performance are governed by California Education Code § 44938. The Ninth Circuit ruled that the statute guaranteed written notice and an opportunity to correct conduct before being discharged, but did NOT guarantee a hearing.

Here's the statute in full - if you work in California public education and manage or hire/fire educators, you need to be aware of these procedures:

California Education Code § 44938:

(a) The governing board of any school district shall not act upon any charges of unprofessional conduct unless at least 45 calendar days prior to the date of the filing, the board or its authorized representative has given the employee against whom the charge is filed, written notice of the unprofessional conduct, specifying the nature thereof with such specific instances of behavior and with such particularity as to furnish the employee an opportunity to correct his or her faults and overcome the grounds for the charge. The written notice shall include the evaluation made pursuant to Article 11 (commencing with Section 44660) of Chapter 3, if applicable to the employee.

(b) The governing board of any school district shall not act upon any charges of unsatisfactory performance unless it acts in accordance with the provisions of paragraph (1) or (2):
(1) At least 90 calendar days prior to the date of the filing, the board or its authorized representative has given the employee against whom the charge is filed, written notice of the unsatisfactory performance, specifying the nature thereof with such specific instances of behavior and with such particularity as to furnish the employee an opportunity to correct his or her faults and overcome the grounds for the charge. The written notice shall include the evaluation made pursuant to Article 11 (commencing with Section 44660) of Chapter 3, if applicable to the employee.
(2) The governing board may act during the time period composed of the last one-fourth of the schooldays it has scheduled for purposes of computing apportionments in any fiscal year if, prior to the beginning of that time period, the board or its authorized representative has given the employee against whom the charge is filed, written notice of the unsatisfactory performance, specifying the nature thereof with such specific instances of behavior and with such particularity as to furnish the employee an opportunity to correct his or her faults and overcome the grounds for the charge. The written notice shall include the evaluation made pursuant to Article 11 (commencing with Section 44660) of Chapter 3, if applicable to the employee.

(c) “Unsatisfactory performance” as used in this section means, and refers only to, the unsatisfactory performance particularly specified as a cause for dismissal in Section 44932 and does not include any other cause for dismissal specified in Section 44932.

“Unprofessional conduct” as used in this section means, and refers to, the unprofessional conduct particularly specified as a cause for dismissal or suspension in Sections 44932 and 44933 and does not include any other cause for dismissal specified in Section 44932.

The meanings of "unsatisfactory performance" and "unprofessional conduct" have been discussed at length by the Courts - you are probably familiar with news stories about just how hard it is to fire teachers who aren't doing their jobs, and tenured professors who don't show up for work. For an interesting read about a real world situation where California Education Code § 44938 played out, I recommend this series of stories in the Los Angeles Times (available here).

Finally, a disclaimer. Nothing in the above is intended to create an attorney-client relationship with the reader or to provide legal advice. This blog is provided as a service to clients, and is not intended as an advertisement. Every case is different and I always recommend you contact an attorney who will help you apply the facts of your specific case to the law.

Thursday, September 8, 2011

Workers Compensation premiums are on the rise - but don't stint on coverage

According to coverage in Pacific Coast Business News, including this great editorial column, Workers Compensation insurance premiums in California are creeping higher, and higher, and higher still.

California employers are required by law to have workers' compensation insurance, even if they have only one employee. And, if your employees get hurt or sick because of work, you are required to pay for workers' compensation benefits. Workers' comp insurance provides six basic benefits: medical care, temporary disability benefits, permanent disability benefits, supplemental job displacement benefits or vocational rehabilitation and death benefits.

This holds many employers to ransom: did you know that not having Workers Compensation coverage for your employees is a crime, subject to criminal as well as civil penalties?

For more about Workers Compensation and how it applies to you, visit the DIR for this handy fact sheet, or call me to discuss your organization's specific situation.

Thursday, August 25, 2011

Labor Code on contract pricing has big implications for contractors, subs

This July, the Court in Castillo v. Toll Bros, Inc. (2011) 197 Cal.App.4th 1172 made an interesting ruling on Labor Code § 2810. Haven't heard about that relatively new code section? If you are a contractor, now is the time to find out how it applies to you!

Under Labor Code § 2810, any person or entity entering into a contract or agreement for labor or services with a construction, farm labor, garment, janitorial, or security guard contractor MUST ensure that the contract price includes enough money to comply with all applicable local, state, and federal laws or regulations governing the labor or services to be provided. Basically, the deal you strike to get the job done must include enough money to pay labor costs.

As we all know, “labor cost” means different things on different jobs, whether prevailing wage, union-driven or just plain old unskilled worker wages. In Castillo, Toll Bros., Inc., a home builder, was sued by employees of its subcontractors who used Labor Code § 2810 to hold the builder liable for the subs’ Labor Code violations. The subs argued that Toll Bros.’ subcontracts were actionable under the Labor Code because the subcontracts didn’t include enough money to pay subs prevailing wages for their trade. Toll Bros., Inc. argued that the prime contract was sufficient because it included enough money to pay the subs minimum wage.
Ultimately, however, the Court sided with Toll Bros., and ruled that under Labor Code § 2810, the appropriate wage standard is minimum wage, rather than the appropriate wage under the specifics of the contract or the prevailing wages for any particular trade.

This probably isn’t the end of the debate over “sufficiency” of the contract price to meet payroll. Watch this space for updates, and as always, if you have questions about how the Labor Code applies to your contracts and subcontracts, whether or not you are in the construction industry, give me a call.

Monday, June 20, 2011

Supreme Court rules that Wal-Mart doesn't have "common policy" in discriminating against women

Big news today for anyone watching class action discrimination cases: the Supreme Court has issued a ruling in Dukes v. Wal-Mart, a case that argued Wal-Mart had a company-wide policy of discriminating against women. The Los Angeles Times has a good overview of the case and today's ruling here. Because the case argued that all female employees were affected, some estimates put the number of class members as high as 1.6 million.

Key to this case was the argument that statistics showed a company-wide pattern of male employees being promoted (and paid more) than their female colleagues. The Court found that this was not enough, because store managers played a role in hiring and firing decisions, meaning each employee's experience was not necessarily the same. Without a written policy confirming the discrimination, the Plaintiff class could not proceed with the lawsuit.

What does this mean for you? You probably don't have 1.6 million female employees, but the lawsuit serves as a useful reminder of how complicated and expensive discrimination cases can become. State and Federal law both prevent discrimination based on "protected classes" (race, gender, etc) but under California law, the list is longer and might not be as obvious as you thought. The California Department of Fair Employment and Housing has a primer on California discrimination laws that is worth ten minutes of your time and could save you trouble down the road: read their Equal Rights 101 section here.

If you are concerned about discrimination claims, the time to act is before employment termination or promotion. I am happy to talk to you about protecting your business from employment claims of any kind, and can recommend steps you can take to prevent discrimination claims going forward.

Tuesday, June 14, 2011

Meal breaks and rest periods: nonexempt California employees must get both, or you will pay the price

The most straightforward of California's wage and hour laws is also one of the easiest to fall foul of. Most employers know nonexempt employees have a legal right to take certain breaks during the day. Most employers also know that it can be hard to get employees to break for lunch or stop half way through a deadline project to take a ten minute rest break. This hits small businesses especially hard: if you only have one or two employees, having 30 minute meal periods in the middle of the day can be disruptive and lose you valuable business.

However, enforcing meal breaks and rest periods is one of the smartest business decisions you can make.

In United Parcel Service v. Superior Court (Allen) the Court of Appeal ruled that employees who don't get a meal break and rest period during the work day are entitled to two premium payments: one for a missed meal break AND one for a missed rest period. This means that under the law, you must pay an additional hour of pay for each missed meal break, and an additional hour of pay for each day that a rest period is not provided. Under this latest interpretation of the law, you would have to pay employees for ten hours a day, even if they only worked eight hours. If you don't have a meal break and rest period policy, now is the time to get one.

California Meal Breaks 101: any employee working for more than five hours per day must have a meal break of not less than thirty minutes. If the employee works a total of six hours or less in a day, employee and employer can agree to waive the meal break. If an employee works more than ten hours a day, a second meal break must be provided unless the employee works a total of twelve hours or less, took the first meal break, and the employee and employer agree to waive the second meal break. Meal breaks do not have to be paid.

Note that you have to relieve an employee of all duty during the meal break, or it doesn't count. This means no telephone calls, no errands for work and no quick photocopies - otherwise, the thirty minutes starts over again. Similarly, you can't require an employee to remain on site for lunch unless you agree to pay them for their meal period. There are limited exceptions to this (for example, if you only have one employee, in certain categories of employment such as a lone security guard at a remote location). Don't count on the exception, and if in doubt, consult with an attorney.

California Rest Breaks 101: California nonexempt employees are entitled to a ten minute paid rest period in the middle of each work period. A good rule of thumb is one in the morning, one in the afternoon for a standard eight-hour employee. If the employee doesn't work more than three and a half hours, you don't need to give them a rest period. Unlike meal breaks, you can require employees to remain on site for a rest period - but like meal breaks, if the employee does ANY work during the rest period, it doesn't count. The rest break must be ten consecutive minutes.

If an employee works through their meal break, or doesn't get a rest period, the smart thing to do is to pay them for the penalty hour. Check time cards (it's a good idea to add language having the employee certify that they took all meal breaks and rest periods) and if in doubt, pay the extra hour penalty wage and notify the employee, in writing, that they must take the statutory meal breaks and rest periods in future. It could save you from some costly wage and hour litigation; prevention, in business, is always better than cure.

Read more about Meal Breaks here.

Read more about Rest Periods here.

Contact me to learn more about protecting your business from wage and hour claims.

Thursday, June 2, 2011

School's out for summer: what you need to know if you plan on hiring high-schoolers

Remember those long, hot days of summer when you were in high school? If you were lucky, you had a summer job to fund beach days and road trips (or even save for College). Plenty of business owners got their start working for a friend or relative during vacations, whether it was in construction or filing papers in an office. Like many things in the employment realm, however, things in California have gotten a whole lot more complicated when it comes to hiring teenagers. If you are considering hiring a minor (under the age of 18) you need to follow a few simple rules to help you, and your teenage employee, comply with the law.

1. The law limits the type of work a minor can do.

Federal law designates some occupations as hazardous for minors. These include mining, working with explosives, meatpacking, roofing and excavation. For more information on occupations deemed "hazardous," click here. For potential employees under 16, the list is longer, and includes occupations such as manufacturing, operating motor vehicles, transportation, warehousing, communications, construction or hazardous farm work. As with many labor laws, California rules are tighter than the federal rules. More information on tasks deemed hazardous in California can be found here.

2. The law limits how many hours a minor can work.

During the school year, minors aged 16 to 17 are limited to four hours of work on a school day and eight hours on a weekend or holiday. The working day cannot start before 5 a.m. or end after 10 p.m. on a school day; for weekends, this is extended to 12:30 a.m. but be aware of local curfew rules.

During vacation times, minors may work up to 8 hours a day but no more than 48 hours a week. Special exceptions are available(for example, in some agricultural occupations a work day may extend to ten hours) but these are rare and only apply if the California Labor Commissioner grants an exception.

Minors 14 to 15 may only work three hours on a school day and eight hours on a nonschool day. The working day cannot start before 7 a.m. or end after 7 p.m. on a school day; over the summer vacation this is extended to 9 p.m. During the summer, minors 14-15 can work up to 40 hours per week.

Minors under 12 cannot work at all, and minors aged 12 to 13 can only work during vacations, when they are limited to eight hours each day and 40 hours per week.

Confused? This handy table from the Department of Industrial Relations might help.

3. It is (almost always) illegal to employ a minor without a valid work permit.

Unless the minor employee is your son or daughter and you are employing them to work in your own agricultural business during the vacation (and the task is not hazardous), you cannot employ a minor without a work permit. Work permits are available from the minor's school or school district. For example, Santa Barbara School District issues permits once a week. Find details here. A copy of the work permit application form is available here. If you employed the same minor last year, it is worth remembering that you need a new work permit each year. Work permits can be revoked by the school and you must comply with all applicable labor and child labor laws when employing the minor.

4. Is it worth it?

With high unemployment and an uncertain economy, you might ask whether it is worth the trouble of hiring a high school student for a summer job. As with all hiring, taking a moment to ensure you have followed the rules is important - but the benefits can be significant. If in doubt, think back to your own summer job and the opportunities someone gave you, and play it forward. Every business is different, and the information above is intended as an overview of the law, rather than a detailed primer. If you want to know more about how the laws governing child labor in California apply to you and your business, contact me. I offer free consultations to employers in Santa Barbara, Ventura, San Luis Obispo and Kern Counties, and if appropriate, I will work with your business to draw up a minor hiring policy.

Summer jobs and minor work permit resources:

Statement of Intent to Employ Minor and Request for Work Permit [LINK]

California Department of Education - Work Permit FAQs [LINK]

California Department of Industrial Relations Child Labor Handbook [LINK]

Wednesday, June 1, 2011

Supreme Court upholds Arizona immigration law targeting employers

LA Times: Supreme Court upholds Arizona immigration law targeting employers. (Link)

While Arizona immigration law is different from California law, there are still things you need to do to protect yourself when hiring a new employee. Under the Immigration Reform and Control Act of 1986, an employer is required to verify a new employee's legal right to work in the United States. The law requires that a new employee must complete an Employment Eligibility Verification Form I-9 before starting work. The employer must complete the second part of I-9; there are also requirements for re-verification. The employer is responsible for getting this done and for verifying documents that support the legal right to work. Failure to comply (even if you are not in Arizona) carries penalties of up to $5,500 per worker, with additional fines for failing to keep proper I-9 records and, if you submitted an I-9 knowing or suspecting that the employee's paperwork was not sufficient to show they had a legal right to work in the United States, penalties for document fraud.

To find out more about Employment Eligibility Verification, visit the USCIS website by clicking here.


California employment law offers unique challenges to employers and employees. By drawing together resources and new developments in one easy-to-access location, these updates are designed to help you navigate the maze of wage and hour laws, retaliation claims, ADA and FEHA rights and responsibilities, workers compensation requirements and the world of hiring, firing and employee retention.

As an attorney with a practice dedicated to helping small businesses, government entities and nonprofits, I am committed to helping you access the information you need - but nothing in this blog is intended to replace the informed advice of an attorney. If you need to speak to an employment lawyer on the Central Coast, I offer free thirty minute consultations to clients in San Luis Obispo County, Santa Barbara County, Ventura County and Kern County, and if I can't help you, I will do my best to refer you to someone who can.