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.Chuck-Post-07_web

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:

  1. 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.
  2. 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 Governor Brown Signs Bill to Expand the Amount of Wage Replacement Available under California’s Paid Family Leave Law

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.

 

By:  Darrell P. White

On April 5, 2016, the San Francisco Board of Supervisors unanimously passed an ordinance requiring local businesses to effectively provide their employees with six-weeks of fully-paid parental leave.  Click here to view.  Under existing California law, employees may receive up to 55% of their wages for six weeks through the California’ State Disability Insurance (SDI) program.  San Francisco’s new law would require employers to cover the pre-existing, 45% gap.

Subject to a final board vote next week and signature into law by Mayor Ed Lee, the new legislation will take effect on January 1, 2017, for companies with more than 50 employees.  In a likely response to the concerns of small businesses, the law would not take effect until January 1, 2018, for companies with 20 or more employees.

Stay tuned to hear the final parameters of the law and compliance information for your business.

By:  Labor and Employment Group

Don’t deny it: you scroll through your social media feeds past the mundane photos, click-bait, and “humble brags” in search of explosive drama. Eventually, you might land on a status update from one of the reliable “oversharers” on your friends list (we all have them). She was just terminated from her job and decided to air her grievances about her former employer in her status update. Would you be surprised if you saw the company shoot back at her from its own social media page? While it is pretty standard to hear about individual employees making poor choices with respect to their social media posts (an employee who is friends with his or her boss on social media is usually involved), it is less common to hear about employers oversharing on company social media pages.

The influence of social media is undeniable, and more companies are actively using it to market themselves. Last week, a well-known internet company that publishes crowd-sourced reviews and information on local businesses found itself in the midst of a social media fueled public relations nightmare. An ex-employee called out the company on a blog by alleging that the company was inflexible toward her situation as a single mother and that the company ultimately terminated her because she asked for leave to care for her boyfriend while he was recovering from a brain injury. Continue Reading Social Media Fail: Sometimes Even Employers Memorialize Bad Decisions on the Internet