coffee breakCalifornia Labor Code section 226.7 provides that employees are entitled to receive premium wages in the form of one additional hour of pay at the employee’s regular rate of pay for a missed meal or rest break.

An employee who works more than three and one-half hours per day must be permitted to take a paid 10-minute rest period — during which the employee shall not be required “to work” — per every four hours of work or major fraction thereof.  An employee who works at least five hours must also be given a 30-minute unpaid meal break, during which the employee must be “relieved of all duty” if the meal period is not to be counted as time worked.

As the California Supreme Court recognized in Augustus v. ABM Security Services (2016), employers how cannot provide the required meal or rest breaks to employees have various options to comply with the law.  The Court stated:

Several options nonetheless remain available to employers who find it especially burdensome to relieve their employees of all duties during rest periods — including the duty to remain on call. Employers may (a) provide employees with another rest period to replace one that was interrupted, or (b) pay the premium pay set forth in Wage Order 4, subdivision 12(B) and section 226.7. (See Brinker, supra, 53 Cal.4th at p. 1039.)

As recognized by the Supreme Court, employers may consider voluntarily paying premium wages when it is questionable if an employee did not receive a compliant break or if they in fact missed the break.  Here are five issues employers should understand about the option of paying premium pay voluntarily1.

1. Employers potentially only owe two premium pay hours for each day worked.

The court in United Parcel Service, Inc. v. Superior Court (2011) concluded that the employer is liable up to two hours of premium wages – one hour for a missed meal break and one hour for a missed rest break – per day.  Even if the employee missed two rest breaks and one meal break in one day of work, the employee would only be entitled to one hour of premium pay for the missed rest breaks, and one hour of pay for the missed meal break, for a total of two hours of premium pay for that day.

2. Voluntarily making premium payments establishes that employer has effective open door policy.

By paying premium pay to employees who are not able to take breaks or complain that they have not been able to take breaks establishes that the company has an effective complaint procedure employees should utilize when any problems arise.  This presents an effective argument against any claims by employees after-the-fact that they were unable to take their breaks, and assert claims against the employer well after their employment ended.

3. Voluntary payment reduces potential liability.

The premium pay mentioned above is the penalty that is provided to the employee if they miss any of their required breaks.  Therefore, if the employer voluntarily pays the premium when the employee did not receive proper breaks, this will reduce the total potential liability owed to employees if sued.

4. Establishes that employer understands its legal obligations.

In making premium payments to employees who are arguably not able to take meal and or a rest break, establishes to any governmental agency or a plaintiff’s counsel that the company understands it obligations under the law and treats the obligations seriously.

5. If paid, it should be listed separately on employees’ paystubs to record payments.

It goes without saying that if the employer is taking this affirmative step, it needs to record the payments in a manner that makes it clear to the employee that the premium pay is being paid when breaks are missed.  In addition, the employer needs to have a record to establish all premium paid that could possibly be asserted by an employee has been paid out.

In speaking to a few groups of California employers this week, a common question kept coming up about what are the essential Booksemployment policies California employers must have?  While there are more than five, this week’s Friday’s Five starts with what I consider to be critical policies that every California must have in place.

1. At-will policy

Under California law, it is presumed that all employment is terminable at-will. California Labor Code section 2922 provides: “An employment, having no specified term, may be terminated at the will of either party on notice to the other.” The at-will doctrine means that the employment relationship can be terminated by either party at any time, with or without cause, and with or without advanced notice. There are some major exceptions to this rule, but generally California law recognizes that employers and employees may, at any time, and for any legal reason, terminate the employment relationship.

2. Anti-harassment, discrimination and retaliation policy

California’s Fair Employment and Housing Council published new regulations pertaining to anti-discrimination and anti-harassment requirements effective April 1, 2016.  Employers need to review and potentially update their policies in order to meet the new requirements.  The full text of the regulations can be obtained here.

3. Timekeeping policy

California law requires employers to track start and stop times for hourly, non-exempt employees. The law also requires employer to track the start and stop times for the employee’s thirty minute meal periods. The time system needs to be accurate, and the employer needs to be involved in the installation and setup of the system. Do not simply use the default settings for the hardware and software. Understand what the system is tracking and how it is recording the data. Since the statute of limitations for California wage and hour violations can extent back four years, it is recommended that employers take steps to keep these records at least four years.  Employers should also have a complaint procedure in place and regularly communicate the policy to employees in order to establish an effective way to remedy any issues.

4. Meal and rest break policy

As I’ve written about many times previously, employers must have a compliant meal and rest break policy.  Indeed, given the California Supreme Court’s ruling in Augustus v. ABM Security Services in December 2016, employers should review their rest beak policy to ensure it complies with this ruling.

5. Paid sick leave policy

Many local governments in Southern California have passed laws increasing the minimum wage and amount of paid sick leave that must be provided to employees.  Employers must ensure they are complying with the law that provides the most benefits to employees.  Here is a brief summary of some of the local laws in Southern California:

State/City Minimum Wage Paid Sick Leave
1) California $10/hr January 1, 2016; $10.50 January 1, 2017; $11/hr January 1, 2018; $12/hr January 1, 2019; $13/hr January 1, 2020; $14/hr January 1, 2021; $15/hr January 2022* Current: 3 days or 24 hours
2) Los Angeles – City (click here for more information about Los Angeles City’s minimum wage and paid sick leave laws) July 1, 2016: $10.50/hr; July 1, 2017 $12; July 1, 2018 $13.25; July 1, 2019 $14.25; July 1, 2020 $15.00 * (click here for more information about Los Angeles’s minimum wage ordinance) July 1, 2016: 48 hours*
3) Los Angeles – County Same as LA City (see above) No specific requirement – state law applies
4) San Diego City July 2016: $10.50 (date not set yet – likely effective in first half of July 2016); January 1, 2017 $11.50; January 1, 2019 $11.82; January 1, 2020 $12.15; January 1, 2021 $12.49; January 1, 2022 $12.84 5 paid sick days
5) Santa Monica (click here for Santa Monica’s website for details of the law) $10.50 July 1, 2016; July 1, 2017 $12.00; July 1, 2018 $13.25; July 1, 2019 $14.25; July 1, 2020 $15.00* January 1, 2017: 32 hours for small businesses, 40 hours for large businesses; January 1, 2018: 40 hours for small business, 72 hours for large businesses*
*Employers with 25 or fewer employees the implementation is delayed one year.

Happy Memorial day weekend!

Happy Friday!  This Friday’s Five covers five areas that employers can start with in conducting an employment practices Checklistsaudit.  Coming up on the mid-point of the year, it is a good time to conduct an employment law practices audit to ensure that policies are compliant, managers are properly trained, and the company is maintaining the required records for the necessary length of time.  Here are five areas to start with in conducting an audit and a few recommended questions for each topic:

1. Hiring Practices

  • Are applications seeking appropriate information?
    • For example: Be careful about local ban the box regulations.
  • Are new hires provided with required policies and notices?
  • Are new hires provided and acknowledge recommended policies?
    • For example: meal period waivers for shifts less than six hours
  • Are hiring managers trained about the correct questions to ask during the interview?
  • Does the company provide new hires (and existing employees) with arbitration agreements with class action waivers?

 2. Records

  • Are employee files maintained confidentially and for at least four years?
  • Are employee time records maintained for at least four years?
  • Are employee schedules maintained for at least four years?
  • Do the managers have set forms for the following:
    • Employee discipline and write-ups
    • Documenting employee tardiness
  • How is the employee documentation provided to Human Resources or the appropriate manager?
  • Who is involved in reviewing disability accommodation requests?
  • How are employee absences documented?

3. Wage and Hour Issues

  • Does the company have its workweeks and paydays established?
  • Are paydays within the applicable time limits after the pay period as required under the law?
  • Are employees provided with compliant itemized wage statements?
  • Are employees provided a writing setting out their accrued paid sick leave each pay period?
  • Are employees properly classified as exempt or nonexempt?
    • For exempt employees, review their duties and salary to ensure they meet the legal requirements to be an exempt employee.
  • Any workers classified as independent contractors, and if so, could they be considered employees?
  • Are nonexempt employees properly compensated for all overtime worked?
  • Is off-the-clock work prohibited?
    • Policy in place?
    • Are managers trained about how to recognize it and what disciplinary actions to take if find employees working off-the-clock?
  • Does the company’s time keeping system round employee’s time?
    • If so, is the rounding policy compliant with the law?
  • Are meal and rest period polices set out in handbook and employees routinely reminded of policies?
    • Does the company pay “premium pay” for missed meal and rest breaks? If so, how is this documented on the employee pay stub?
    • Do employees record meal breaks?
    • Are managers trained on how to administer breaks and what actions to take if employees miss meal or rest breaks?
  • Is vacation properly documented and tracked?
  • Are all deductions from the employee’s pay check legally permitted? (use caution, very few deductions are permitted under CA law)
  • Are employees reimbursed for all business expenses, such as uniforms, work equipment and miles driven for work?

 4.End of Employment Issues

  • Are employees leaving the company provided their final wages, including payment for all accrued and unused vacation time?
  • Does the employer deduct any items from an employee’s final paycheck?
    • If so, are the deductions legally permitted?

5. Anti-harassment, discrimination and retaliation

  • Are supervisors provided with sexual harassment training every two years? (If employer has 50 or more employees, supervisors are legally required to have a two-hour harassment prevention training that complies with AB 1825 and amendments to this law).
  • Are supervisors and managers mentioning the open-door policy of the company to employees at routine meetings with employees? Is this being documented?

Please let me know if you have any other items your company considers during review of employment policies – it would be great to update this list to share with readers.  Have a great weekend.

Welcome to another Friday’s Five video.  In this video I discuss five things every California employer needs to know about meal and rest breaks.  The items consists of a some reminders, but also new court decisions issued in December 2016 and the first quarter of 2017.  This is always a topic employers need to continually pay attention to in California.

Here are links to articles I’ve published as referenced in the video:
Timing requirements for meal and rest breaks

Rest break requirements when employees still subject to recall by employer

Commissioned and piece rate employees must be compensated separately for rest breaks

Happy Friday.  As always, please let me know if you have any suggestions for topics for future posts.

In Augustus v. ABM Security Services, Inc., the California Supreme Court issued a ruling on employer’s obligations to permit employees to take “off-duty” rest periods.  The Court’s ruling ends 2016 with a major ruling on issues surrounding rest periods under California law.

The plaintiffs worked as security guards for defendant ABM.  The employer required to the guards to keep their pagers and radio phones on at all times, even during rest periods, and to potentially respond to calls when needed.   The guards’ duties included when a building tenant wished to be escorted to the parking lot, a building manager had to be notified of a mechanical problem, or the occurrence of emergency situations.

The trial court “reasoned that a rest period subject to such control was indistinguishable from the rest of a workday; in other words, an on-duty or on-call break is no break at all,” and granted Plaintiff’s motion for summary judgment.  The trial court awarded approximately $90 million in statutory damages, interest, and penalties.    ABM appealed the trial court’s ruling, and was successful in having the trial court overturned, but the California Supreme Court granted review of the case.

The company argued that it provided the required rest breaks under California law because it only required that the guards keep their radios and pagers on in case they were needed to respond to a call.  For the last Friday’s Five article of 2016, here are five key lessons for California employers from the Supreme Court’s decision:

1. Generally, what are employer’s obligations to provide rest breaks under California law?

Employer’s obligations to provide rest breaks is found in Labor Code section 226.7, enacted in 2000.  As enacted, subdivision (a) provided:  “No employer shall require any employee to work during any meal or rest period mandated by an applicable order of the Industrial Welfare Commission.”  The Wage Orders generally require that employers must provide a 10-minute rest period per every four hours worked and the break should, whenever practicable, fall in the middle of the work period. (See Wage Order 4, subd. 12(A).  The rest period must also be paid, and the law does not require that employers record when the employee takes the rest period (unlike an employer’s obligation to record when 30-minute meal breaks are taken).

2. Does California law require employers to authorize off-duty rest periods? 

Yes.  The Supreme Court held that employers must provide employees with a paid rest break in which the employee is relieved from all work-related duties and free from employer control.  The Court examined the wage order at issue in the case, Wage Order 4, which provides, “Every employer shall authorize and permit all employees to take rest periods…. Authorized rest period time shall be counted, as hours worked for which there shall be no deduction from wages.”

The Court ruled that:

The most reasonable inference we can draw from the wage order and its context is instead that we should give the term its most common understanding – a reading consistent with requiring that employers authorize off-duty rest periods…. So, ordinarily, a reasonable reader would understand ‘rest period’ to mean an interval of time free from labor, work, or any other employment-related duties.

We accordingly conclude that the construction of Wage Order 4, subdivision 12(A) that best effectuates the order’s purpose and remains true to its provisions is one that obligates employers to permit –– and authorizes employees to take –– off-duty rest periods.  That is, during rest periods employers must relieve employees of all duties and relinquish control over how employees spend their time.

3. Can employers satisfy the obligation to relieve employees from duties and control during rest periods if the employer requires the employee to remain on call? 

No.  The Court ruled that “one cannot square the practice of compelling employees to remain at the ready, tethered by time and policy to particular locations or communications devices, with the requirement to relieve employees of all work duties and employer control during 10-minute rest periods.”  The Court made clear that the employee must be “free from labor, work, or any other employment-related duties.  And employees must not only be relieved of work duties, but also freed from employer control over how they spend their time.”

4. If employees are required to carry a pager or phone during a rest break and must monitor the device during the rest break, is the employee provided a compliant rest break? 

No.  If an employee “must fulfill certain duties [such as] carrying a device or otherwise making arrangements so the employer can reach the employee during a break, responding when the employer seeks contact with the employee, and performing other work if the employer so requests,” the employee does not have the freedom to use the rest period for their own purpose.  The court used examples that employees should be permitted to take “a brief walk – five minutes out, five minutes back,” take care of personal matters like “pumping breast milk… or completing a phone call to arrange child care.”

5. Is there some flexibility for employers to reschedule rest breaks when needed?

Yes.  The Court provided, “[n]othing in our holding circumscribes an employer’s ability to reasonably reschedule a rest period when the need arises.”  However, the Court failed to provide any other clarification of what is reasonable in rescheduling a rest period.  The Court did explain, however, that employers have “several options” when employers find it burdensome to relieve their employees of all duties during rest periods.  As examples of these options, the Court stated that employers can provide employees with another rest period to replace the one that was interrupted, or pay the premium pay of one hour at the employee’s regular rate of pay for missing the rest period.

Looking for more information about California employers obligations to provide rest and meal periods?  See my prior post on five reminders about rest breaks here, and the timing of meal and rest breaks under California law here.

The DOL’s change in the federal overtime rules requiring a higher salary threshold ($47,476 paid annually) for employees to qualify as an exempt employee takes effect December 1, 2016.  This Friday’s Five discusses five final checklist items California employers should consider when reclassifying from exempt employees to nonexempt employees.

1. The DOL rule changes are still going into effect December 1, 2016.

This week, a few people asked me if the DOL changes are still going into effect since Donald Trump was elected as president.  Mr. Trump is unable to change the DOL’s rule that requires exempt employees be paid $47,476 in an annual salary until he is inaugurated as president.  Therefore, employers still must comply with this deadline.

2. Notice to Employee may be required.

Section 2810.5 of the California Labor Code requires employers provide notice to employees of their rate(s) of pay, designated pay day, the employer’s intent to claim allowances (meal or lodging allowances) as part of the minimum wage, and the basis of wage payment (whether paying by hour, shift, day, week, piece, etc.), including any applicable rates for overtime.

The law requires that the notice is provided to employees at the time of hiring or within 7 days of a change if the change is not listed on the employee’s pay stub for the following pay period. The notice must be provided in the language the employer normally uses to communicate.

Employers should carefully review the need to provide the notice to employee given any reclassification of employees from exempt to a nonexempt employee.  A template Notice to Employee can be downloaded from the DIR’s website here.

3. Consider how the change will be communicated and documented with employees.

Employers should explain to employees who are being reclassified from exempt to nonexempt about how they will be paid.  The notice should inform workers they will be paid overtime for work over 8 hours in a day and over 40 hours in a week.  The communication should also explain any changes in bonuses (don’t forget that nondiscretionary bonuses must be figured into the employee’s regular rate of pay for overtime purposes) and benefits.  Finally, the communications should set out the different duties the employee may be required to perform given the change in classification.

4. Meal and rest breaks.

In addition to communicating the change in pay to employees, the company should also distribute its meal and rest break policy.  The company should distribute any meal and rest break forms to the employees who are being converted to nonexempt that are normally given to new hires.

5. Off the clock and timekeeping policies.

Finally, employers need to implement compliant timekeeping policies to ensure that all nonexempt employees clock in and out for all work time.  In addition, California requires that employers record when nonexempt take their meal breaks, and any reclassified employees must understand this requirement.  Employers need to be careful about allowing employees who are reclassified as nonexempt to continue to use a company cell phone or laptop, as now any work performed once they leave the office must be compensated.  Employers should consider limiting nonexempt employees’ access to company cell phones, e-mail, and computers to avoid off the clock claims.

Any reclassification and audit regarding the proper classification of employees should be done with caution, as there are many different issues to consider that are outside of the scope of this article.

I wanted to share an opportunity for readers to attend my seminar conducted by the Restaurant Advisory Group on September 13, 2016.  The topics I’ll cover include the top five pitfalls facing California employers and how to comply with the new minimum wage increases taking effect at the local levels throughout Southern California.  The cost is waived for any of my readers of the blog (plus my clients/contacts) to attend the event.  Click here to register.

Robert Sea, a 30 year restaurant veteran as an owner/operator and who is currently with the Press Telegram will also be speaking about new digital marketing trends for restaurants.

While the event is focused on restaurants, any California employer will learn a lot from the presentations and are welcome to join.

Date: September 13, 2016gla-logo-o_swurh3_16053
8:45 a.m. to 11:00 a.m.

Location: Gladstone’s – Long Beach
330 S. Pine Ave.
Long Beach, CA 90802

Cost: Free for any of my contacts and restaurant owners – click here to register.

Light pastries will be served.

Hope you can join us at the event!

This week’s Friday’s Five covers five misconceptions about California employment law that can land employers in a lot of hot water:

  1. Meal and rest breaks seem so trivial.

The topic for the uneducated (or out of state) employer does seem trivial.  However, with the penalty owed to employees of one hour of pay for each missed meal or rest break (i.e., up to two hours of penalty pay per day) these violations add up to significant amounts of liability very quickly.  Wal-Mart’s 2005 verdict in California for meal and rest break violations for $172 million is a good example.

  1. My payroll company understands the laws about wages and itemized pay statements.

Payroll companies are not law firms and they will not notify you if you are not paying your employees properly, calculating overtime correctly, or even ensure that the paystubs they generate for your employees comply with the law.  It is the employer’s responsibility to ensure the employment laws are being complied with, and it is wise to have an experienced employment lawyer review these practices and audit the practices of the payroll company.

  1. The employee’s title determines if they are owed overtime.

An employee’s title is not determinative of whether they qualify as an exempt employee.  See my previous article on the various exemptions that employees may qualify for, and the requirements necessary for employees to meet those exemptions.

  1. Employees can be provided “comp time” instead of paid overtime.

While it is true employers may provide employee’s comp time in lieu of overtime, there are many technical restrictions that must be met in order for comp time plans to be legal under California law.  Labor Code section 204.3 only authorizes employers to provide nonexempt employees with compensated time off instead of pay for overtime if the following requirements are met:

  • Payment for comp time must be at the overtime rate of pay (i.e., not less than one and one-half hours for each hour of employment, or double time if applicable)
  • Must be in writing before work begins
  • Employees cannot accrue more than 240 hours of compensation time off
  • Employee has to make a written request for comp time in lieu of overtime
  • Employee must be scheduled to work at least 40 hours a week
  • Employee must be paid at rate of pay in effect at time of payment
  • Payment at termination must be at high of current or three-year average rate of pay
  • Employee must be permitted to use comp time within reasonable period
  • Employer must keep records of comp time accrued and used
  1. My company is too small to be a target for employment litigation.

If you have been a reader of this blog for any time period, you understand that every employer in California needs to understand their legal duties when it comes to employing workers.  And with competent employment law counsel [:)] it is not hard to comply with the law, but it is difficult to keep current with the law and ensure all legal obligations are being met.

Friday is here already?  Today’s post is a review for many experienced operators in California, but surprisingly I’ve been getting a lot of questions about 10-minute rest breaks recently by a lot of employers.  So I thought I would have a refresher post for today’s Friday’s Five about some requirements about 10-minute rest breaks under California law:

1. Timing of rest breaks

The 10-minute rest break must be provided to employees who work over three and a half hours.  Employers must authorize and permit employees to take 10-minute rest breaks for every four hours worked, or “major fraction” thereof.  A “major fraction” of four hours is anytime more than two hours.  Insofar as practicable, the rest breaks should be in the middle of each four-hour work period.

2. Rest breaks must be paid

The rest period is considered time worked and must be paid.  But since employees are paid for their rest breaks, they can be required to remain on the employer’s premises.

3. Rest breaks need to be “authorized and permitted”

Employers are required to “authorize and permit” rest breaks, and there is no affirmative duty for employers to require that employees take rest breaks.  Employers need to ensure that they do not interfere with an employee’s ability to take the rest break, and if the demands of work are such that employees cannot take the rest break, employers should have a system in place to compensate the employee the applicable “wage premium” of one hour of pay at the employee’s regular rate of pay for any violations.

4. Rest breaks do not need to be recorded

Unlike the 30-minute meal breaks, the 10-minute rest break does not have to be recorded in the timekeeping system.

5. Piece rate employees must be paid separately for rest breaks

Employers who paid employees on a piece rate basis need to ensure they comply with Labor Code section 226.2, which took effect in January 2016.  Under Labor Code section 226.2, employers who paid employees on a piece rate basis must pay employees for “rest and recovery periods and other nonproductive time separate from any piece-rate compensation.”  The law requires employers to calculate the regular rate of pay for each workweek, and then pay the piece-rate employees the higher of this regular rate of pay or the applicable minimum wage for rest break time.  The law also requires employers to pay piece-rate employees for “nonproductive time” which is defined as “time under the employer’s control, exclusive of rest and recovery periods, that is not directly related to the activity being compensated on a piece-rate basis.”  The nonproductive time is required to be paid at a rate no less than the applicable minimum wage rate.  In addition, employers who pay employees on a piece-rate basis need to report the pay for rest breaks, recovery periods, and nonproductive time separately on the employees’ pay stubs.  Employers with piece rate employees should consult with experienced counsel to ensure the correct amounts of time are being calculated and paid for under this law.

Employment Law - Mid Year Update - LinkedinJoin me for a seminar for a mid-year update on California employment law issues.  Learn how to keep your company compliant with new developments in California.  Topics will include:

  • Top five pitfalls facing California employers in 2016
  • How to prepare for the Department of Labor’s changes to the overtime rules going into effect on December 1, 2016
  • Local city minimum wage and paid sick leave developments
  • Revisions to anti-harassment and discrimination regulations potentially requiring revisions to handbooks and policies
  • Q & A – bring your questions to discuss with the attorneys from my firm
  • Mixer – network with other business owners, human resource professionals, and other professionals

The event is from 4 p.m. to 7 p.m. on June 22, 2016  (seminar from 4 to 5 p.m., mixer from 5 to 7 p.m.).

Location: Westside Tavern, 10850 W Pico Blvd, Los Angeles, CA 90064 (click here for map)

1.0 SHRM and HCRI credit for HR Professionals.

$150 Regular Price/$40 for clients of VTZ and California Restaurant Association Members. If you are a client, or a CRA member, email cpeck@vtzlaw.com for promo code.

Space is limited.

For more information and registration, click here

Hope you can join us.