Are you sure you’re paying your exempt employees enough? Even if you are right now, you might not be come December 1, 2016. The U.S. Department of Labor unveiled today its long-awaited Final Rule updating the definitions of most types of exempt employees under federal law.
While there are several important provisions in the new rule, the most important for California employers is the new minimum salary threshold for exempt employees. Federal law will soon require employees earn at least $47,476 annually ($913 per week) to qualify for the executive, administrative, or professional exemptions. This marks a significant jump from the previous federal minimum of $23,660 ($455 per week).
Under California state law, employers are currently required to pay exempt employees a salary equal to no less than twice the state minimum wage. This translates to $41,600 annually. State laws, however, can only offer employees more protection than federal laws, not less. Because the state minimum salary for exempt employees will now be lower than the federal minimum, California employers will have to pay its exempt employees the federal number to continuing classifying an employee as exempt.
In addition, the DOL’s fact sheet, linked at the bottom of this blog, describes the laws key provisions as follows:
“The Final Rule focuses primarily on updating the salary and compensation levels needed for EAP workers to be exempt. Specifically, the Final Rule:
- Sets the standard salary level at the 40th percentile of earnings of full-time salaried workers in the lowest-wage Census Region, currently the South, which is $913 per week or $47,476 annually for a full-year worker;
- Sets the total annual compensation requirement for highly compensated employees (HCE) subject to a minimal duties test to the annual equivalent of the 90th percentile of full-time salaried workers nationally, which is $134,004; and
- Establishes a mechanism for automatically updating the salary and compensation levels every three years to maintain the levels at the above percentiles and to ensure that they continue to provide useful and effective tests for exemption.
Additionally, the Final Rule amends the salary basis test to allow employers to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the new standard salary level. The Final Rule makes no changes to the duties tests.”
The law is effective December 1. Employers should take the time between now and then to audit all exempt employees’ salaries to ensure they are making the minimum by December 1.
Read the DOL’s fact sheet here: https://www.dol.gov/whd/overtime/final2016/overtime-factsheet.htm
On May 10, 2016 Governor Brown signed Senate Bill 269 (SB 269) which amends certain California statutes dealing with disability access in public accommodations and business establishments. SB 269 is not a new law, but rather, an effort by the Legislature and Governor Brown to amend existing law in order to address the significant financial hardship that “drive-by” and “technical non-compliance” lawsuits are having on small businesses in California. Both federal and state court dockets in California are inundated with lawsuits filed against small businesses by professional plaintiffs and their attorneys who have created a cottage industry by filing lawsuits for technical violations of federal and state disabled access standards.
To read this full article, please click here.
On May 9, 2016 the EEOC issued yet another “guide” – this time to outline its position on when and how leave must be granted for reasons related to an employee’s disability under the Americans
with Disabilities Act (“ADA”). The publication, entitled “Employer-Provided Leave and the Americans with Disabilities Act,” contains information on the EEOC’s position in connection with six subject areas relating to leaves as a form of reasonable accommodation under the ADA, and contains various examples to illustrate those positions. For a summary of the EEOC’s position on each of the six subject areas, please click here.
On May 2, 2016, the Ninth Circuit issued its decision in Corbin v. Time Warner Entertainment – Advance/Newhouse Partnership and affirmed the district court’s summary judgment in favor of employer, Time Warner Entertainment-Advance/Newhouse Partnership (“TWEAN”) in a putative class action brought by a TWEAN employee seeking lost compensation based on TWEAN’s timekeeping policy.
Summary of the Claim.
The case turned on $15.02 and one minute. Seriously – it did! The amount of $15.02 represented the total amount of compensation that plaintiff, Andre Corbin (“Corbin” or “Plaintiff”) alleged he has lost due to TWEAN’s compensation policy that rounds all employee time stamps to the nearest quarter-hour. The one minute claim represented the total amount of time for which Corbin alleges he was not compensated as he once mistakenly opened an auxiliary computer program before clocking into TWEAN’s timekeeping software platform. Corbin argued that $15.02 in lost wages and one minute of uncompensated time entitled him to relief under the Fair Labor Standards Act of 1938 (“FLSA”), 29 U.S.C. § 201, et seq., and various California state employment laws. The trial court and the 9th Circuit Court of Appeal disagreed.
To read the full article, please click here.
To sit or not to sit, that is the question. And now the California Supreme Court has given us an answer. Well, sort of. They have told us how to find the answer. Even that’s a stretch. Pull up a seat and I will explain.
To help it resolve two class actions involving California Wage Order requirements that employers provide employees with suitable seats, the Ninth Circuit recently certified some questions for the California Supreme Court. The Supreme Court responded in Kilby v. CVS Pharmacy, Inc. As stated verbatim in the Supreme Court’s responsive opinion, these were the questions posed by the Ninth Circuit:
- Does the phrase “nature of the work” refer to individual tasks performed throughout the workday, or to the entire range of an employee’s duties performed during a given day or shift?
- When determining whether the nature of the work “reasonably permits” use of a seat, what factors should courts consider? Specifically, are an employer’s business judgment, the physical layout of the workplace, and the characteristics of a specific employee relevant factors?
- If an employer has not provided any seat, must a plaintiff prove a suitable seat is available in order to show the employer has violated the seating provision?”
If you just want the short answers, the opinion was kind enough to give us those right up front as well. Again, verbatim:
- The “nature of the work” refers to an employee’s tasks performed at a given location for which a right to a suitable seat is claimed, rather than a “holistic” consideration of the entire range of an employee’s duties anywhere on the jobsite during a complete shift. If the tasks being performed at a given location reasonably permit sitting, and provision of a seat would not interfere with performance of any other tasks that may require standing, a seat is called for.
- Whether the nature of the work reasonably permits sitting is a question to be determined objectively based on the totality of the circumstances. An employer’s business judgment and the physical layout of the workplace are relevant but not dispositive factors. The inquiry focuses on the nature of the work, not an individual employee’s characteristics.
- The nature of the work aside, if an employer argues there is no suitable seat available, the burden is on the employer to prove unavailability.
So, there you go. If you just wanted the answers, you can stop reading now. But if you want a little elaboration and more background on how the Court arrived at those answers, and my thoughts on what employers should take away from the opinion, remain seated and continue ahead.
Summary of Program
The regulations regarding California’s Mandatory Sexual Harassment Prevention Training for supervisors require that certain employers provide training to their supervisors every two years.
The Labor and Employment Group at Weintraub Tobin Chediak Coleman Grodin is offering a two hour in-person training session that will comply with all the requirements outlined in the regulations including things like:
- An overview of sexual harassment laws
- Examples of conduct that constitute sexual harassment
- Lawful supervisory responses to complaints of harassment in the workplace
- Strategies to prevent harassment in the workplace
- Training on the prevention of “abusive conduct” in the workplace (AB 2054)
- Practical and inter-active hypotheticals and examples to help illustrate what bullying, sexual harassment, discrimination, and retaliation can look like.
- A discussion of the DFEH’s new updated regulations, including what must be contained in an employer’s policy against harassment, discrimination and retaliation.
If you are an employer with 50 or more employees, and have supervisors who have not yet been trained, this training is a must. We look forward to hearing from you and helping you comply with your continuing sexual harassment training obligations.
Date: May 19, 2016
Time: 9:30 a.m. – 11:30 a.m.
Charge: $75 per supervisor.
To register for this training, please email Ramona Carrillo at email@example.com.
Summary of Program
The risks involved in misclassifying a worker as an independent contractor rather than an employee have always been serious. A number of federal and state agencies regulate the proper classification of workers and have the authority to impose significant monetary and non-monetary sanctions against employers who get the classification wrong.
This informative webinar will cover the legal landscape of independent contractor status. Topics will include:
- A summary of the various tests applied by federal and state agencies to determine independent contractor status;
- A summary of the enforcement authority of various federal and state agencies and the sanctions they may impose;
- The due diligence employers must engage in before classifying a worker as an independent contractor; and
- California’s law imposing monetary and non-monetary sanctions against employers (and other individuals) who willfully misclassify workers as independent contractors.
If you or your company is currently using independent contractors, this is a webinar you won’t want to miss. Register today!
Date: May 12, 2016
Time: 12:00 p.m – 1:00 p.m.
To register for this webinar, please RSVP to Ramona Carrillo at firstname.lastname@example.org.
Many – maybe even most – contracts issued by major payroll processing services contain traps for the unwary. Many employers I speak with turn over all payroll processing responsibilities, including issuance of accurate checks and wage statements and record storage, to their payroll processing service.
This may be a big mistake.
When faced with an individual or a class-action wage and hour claim, many employers turn to their payroll processing service to produce records that evidence the Company’s compliance with California law. Yet many of these payroll processing services expressly disclaim any responsibility to maintain records or to ensure wage statements comply with the law. Indeed, some of these contracts actually require employers to indemnify the payroll services company against any claims that wage statements or wages were not in paid compliance with applicable law.
Maybe it’s just me, but I think that this is outrageous. Most employers I talk to believe their payroll processing company is their partner in ensuring that the business complies with California law. Read your payroll processing contract carefully. You may not have a partner in your payroll processing company. In fact, your company may be completely on its own. Employers have statutory duties to ensure that they both pay their employees properly and keep records of those payments. Additionally, the law requires that employers issue detailed wage statements explaining how the wages were calculated and paid. Failure to comply with these wage statement, payment and recordkeeping requirements can result in breathtakingly large liability.
To my mind these common contract provisions in payroll processing contracts require employers to do two things:
- Shop aggressively for a payroll service that will indemnify your business against the payroll service’s errors and that will agree to keep and maintain all records required under California law without additional charge.
- Audit the performance of your payroll service company (to ensure compliance) and regularly download all records the employer is obligated to maintain.
PAGA and class action liability for failure to comply with these laws can be breathtaking. If you have any doubt about your Company’s obligations please contact your employment law advisor immediately.
On April 11, 2016, Governor Brown signed Assembly Bill (AB) 908 which amends certain provisions of California’s Unemployment Insurance Code as it relates to the State’s Paid Family Leave (PFL) program. Before explaining the amendments provided for under AB 908, I think it is important to clarify something that is too often misstated in the press. Despite its name, California’s PFL program is not a statutory leave of absence program that guarantees paid family leave to employees in California. Instead, it is a partial wage replacement benefit for eligible employees who are on some other authorized statutory or discretionary leave of absence from work. As such, employees do not have the right to “take leave” under the PFL program. Continue Reading
California lawmakers, union supporters, and Governor Brown have come together to increase California minimum wage to $15.00 over the next several years. Governor Brown signed the law only one week after he announced that legislators and labor leaders negotiated a deal behind the scenes.
The new law requires California employers with more than 25 employees to pay at least $15.00 per hour by 2022. Employers will 25 or less employees have an additional year to increase their wages to at least $15.00 per hour. The increase will be phased-in beginning next year when the minimum wage increases to $10.50 per hour. Click here for a chart of the new minimum wage rates.
After January 1, 2023, the minimum wage will be increased annually from the adjusted U.S. Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), but no more than 3.5% in a year, with the resulting rate rounded to the nearest $0.10. CPI-W is generally seen as a cost-of-living index for working individuals and families.
The Governor has the authority to suspend the increases based on economic conditions, such as declining state revenues from sales tax, declines here in labor markets, or budget deficits. However, the Governor can only suspend the increase twice and the Governor does not have the authority to suspend the minimum wage increase once the minimum wage reaches $15.00 per hour.
The state minimum wage increases affects more than just those paid minimum wage. Employers should consider these new minimum wage obligations for employees paid commissions and piece-rate compensation, are exempt employees, or those employees that are required to provide and maintain their own tools and equipment.
For example, exempt employees must satisfy both the duties and salary test to be properly classified as an exempt employee. Generally this means that the employee must earn at least two times the state minimum wage. Click here for a chart of the new minimum wage rates (minimum exempt salary).
Employers need to ensure they increase the minimum salaries for those whose status is dependent on minimum wage. Employers who do not increase employee’s wages may risk liability for improperly classifying employees or risk liability for back wages or reimbursements.
Employers will also need to update their written notices provided to minimum wage employees, pursuant to Labor Code § 2810.5, because otherwise the rate of pay and overtime rates listed on the notice will not reflect the new increases. Employers should also ensure that they display workplace posters that include the new minimum wage rates.