The City of Los Angeles recently assessed Carl’s Jr. Restaurants $1.45 million in fines for violation of the City’s minimum wage law ordinance.  The City sought these penalties against Carl’s Jr. for allegedly failing to pay 37 employees the applicable Los Angeles minimum wage rate of $10.50 per hour from July 1, 2016 to December 31, 2016.  The city also claimed that the company failed to post the required notices required by the ordinance and did not allow investigators access to two locations.  This astronomical fine imposed by the city seems out of proportion for the size of the number of employees affected, but it is a stark reminder for employers about how serious any violations of the local ordinances could be.  Here are five lessons for Southern California employers from this incident:

1. Enforcement of local ordinances is taking place.

The cities that have passed local ordinances are enforcing the laws strenuously.  The City of Los Angeles has especially been active in investigating potential violations.  First hand I have had a number of clients who have been contact by the city seeking information about compliance with the ordinance.  The investigators have appeared at workplaces in person and also contacted the employers over the phone. As discussed in item number five below, it is important for employers to train staff about how to appropriately respond to questions with people entering the workplace asking for information about the employer’s employment practices.

2. Review pay rates to ensure compliance with local ordinances.

Employers need to remember that even if their business is not located in a city or county that does not have a minimum wage or paid sick leave requirement, this does not mean your company can ignore the new laws.  Most of the ordinances require compliance with their local laws if any employee works two hours within the city or county even if the employer is not based within that city or county.  For example:

  • Santa Monica:  Law applies to any employee working a minimum of two hours within Santa Monica in a given week (even if employer is located outside of Santa Monica).
  • City of Los Angeles: Ordinance applies to “[a]n employee … who performs at least two hours of work in a particular week within the City of Los Angeles….”
  • County of Los Angeles: Ordinance applies to “[a]nyone who works at least two hours in a one-week period within the unincorporated areas of Los Angeles County is entitled to the County minimum wage for the hours worked in the unincorporated area of the County.”
  • Pasadena: Applies to employees who perform at least two hours of work in Pasadena.
  • Malibu: “This ordinance applies to employees who perform at least two hours of work in a particular week within the Malibu city limits.”

3. Penalties for non-compliance are substantial.

An employer who violates the City of Los Angeles’ minimum wage requirements is liable to the employee for payment of back wages and an additional penalty of $100 for each day that the violation occurred or continued.  Where retaliation has occurred, the employee is entitled to reinstatement and a trebling of all back wages and penalties.

In addition, employers are subject to administrative fines as set forth below:

Failure to post notice of the Los Angeles Minimum Wage rate

$500 per day per employee
Failure to allow access to payroll records $500 per day per employee
Failure to maintain payroll records or to retain payroll records for your years $500 per day per employee
Failure to allow access for inspection of books and records or to interview employees $500 per day per employee
Retaliation for exercising rights under the ordinance $1,000 per day per employee
Failure to provide employer’s name, address, and telephone in writing $500 per day per employee
Failure to cooperate with the Division’s investigation $500 per day per employee
Failure to post Notice of Determination to employee $500 per day per employee

4. Ensure all poster and notice requirements are complied with.

The cities and counties that have local minimum wage and paid sick leave ordinances are making the notices relatively easy to obtain from their websites.  For example, here are a few links published by various cities in the Los Angeles area:

Santa Monica notices:  https://cityofsantamonica.app.box.com/s/nuccal4on935m43p0nhmuzgy65f5mbwl

City of Los Angeles notice: http://wagesla.lacity.org/#information

County of Los Angeles notice: http://file.lacounty.gov/dca/cms1_245570.pdf

Pasadena notice:  http://www.cityofpasadena.net/minimumwage/

Malibu: http://www.malibucity.org/minimumwage

5. Implement policy and train staff and managers about how to respond to investigators.

All staff should receive training about how to respond if contacted by anyone who indicates that they are from a government office and are seeking information about the workplace.  It is important for the employer to be able to identify and confirm that the investigators are who they are reporting to be and that they are actually working for the federal, state or local government.  Once their identify has been confirmed, employers need to designate who from the company will gather and communicate the relevant information to the investigators in a timely manner.  The person designated by the employer should have experience in dealing with investigations, an understanding of the company’s policies and the local legal requirements.  Finally, the employer should address whether they need the assistance of legal counsel to assist in the investigation.

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 (applies to unincorporated cities in LA 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!

Many cities and counties across California are set to increase their minimum wages in July 2017, and employers need to start preparing now.  For example, Los Angeles City and County are increasing the minimum wage for employers with 26 or more employees to $12 per hour on July 1, 2017 (currently at $10.50 per hour). This Friday’s Five video covers five issues that employers should start to review in order to comply with these increases in the minimum wage.

For more information about the local minimum wages in place throughout California:

San Diego: http://www.californiaemploymentlawrep…

Los Angeles: http://www.californiaemploymentlawrep… and http://www.californiaemploymentlawrep…

Southern California overview of various minimum wage requirements: http://www.californiaemploymentlawrep…

Sample model pay stub: https://www.dir.ca.gov/dlse/PayStub.pdf

 

I’m starting 2017 off with videos taken from my recent webinar discussing local minimum wage issues, California’s new employment laws, Los Angeles’ ban the box ordinance, the new Form I-9 required in 2017, and potential impacts President-elect Trump may have on employment laws.  Happy New Year!

California state and local minimum wage and paid sick leave laws in 2017

California’s new wage discrimination laws in 2017

Los Angeles bans employers from asking about criminal background information

New Form I-9 required in 2017

President-elect Trump’s impact on California’s employment landscape

What a week – and here we are at Friday already.  This Friday’s Five focuses on how President Trump could change the employment landscape on the federal and California levels.

1.      Department of Labor’s overtime regulations effective December 1, 2016 are still on course to take effect, but could be changed in 2017.

As I’ve written about previously, the DOL has issued changes to the federal rules raising the salary required for employees to qualify as exempt employees.  The DOL raised the salary required to $47,476 annually for a full time worker, and this change is effective December 1, 2016.  Mr. Trump will obviously be unable to roll back this increase until he is inaugurated as president.  However, there have been discussions that congress and some legal actions could prevent this requirement from taking effect, but prudent employers should continue to proceed to comply with the new requirement on December 1, 2016.  It is likely that this regulation will be carefully reviewed by President Trump, but any changes he potentially could make would likely not be effective until mid or late 2017.

2.      Immigration and E-verify issues.

During the campaign, Trump stated that he would mandate employers use the E-verify program to check on applicants’ right to work within the United States.  The system is available for employers to use currently, but Federal law does not require employers to use the system, and some states require its use.  However, employers in California are not currently required to use E-verify.

3.      Minimum wage.

During the campaign, Mr. Trump supported the idea of raising the federal minimum wage from $7.25 per hour to $10 per hour.  In July of 2016, Mr. Trump made statements that he supported this increase, and also supported the idea that states could set a higher minimum wage.  Of course, given California’s current minimum wage is set at $10 per hour, an increase on the federal level will probably not impact California employers, as California’s minimum wage is increasing to $10.50 per hour on January 1, 2017, $11 per hour on January 1, 2018, and then $1 per year thereafter until it reaches $15 per hour in January 2022.  These increased are delayed by one year for employers with 25 or fewer employees.

4.      Paid maternity leave.

Mr. Trump’s website proposes that he would support a law providing 6 weeks of paid leave to new mothers before returning to work.  Currently, under the FMLA, employers with 50 or more employees are required to provide up to 12 workweeks of unpaid, job-protected leave for the birth of a child and care for a newborn.

5.      Implementation of more local laws expected. 

As we have seen here in California, local cities and counties have taken the minimum wage and paid sick leave issues into their own hands and require employers to comply with more restrictive laws than those passed on the state or federal level.  Just in Southern California for example, there are many different minimum wage and paid sick leave laws that employers need to be aware of and comply with.  This local legislation makes it hard for businesses that have more than one location, as the laws require different policies, notices, pay requirements, and tracking obligations for each location.

Interested in learning more about employment law updates facing California employers?  My firm is hosting a webinar on December 13, 2016, discussing the new laws employers must comply with in 2017 and an update on the litigation front.  Click here to register.

Welcome to Friday’s Five!  Here are five video excepts from a presentation I conducted in September 2016 to a group of restaurateurs:

  • exempt employee overview
  • the DOL’s increase in the salary basis test and what it means for employers
  • California’s minimum wage – state and local considerations

 

Please let me know if you have any questions or suggestions for topics you would like to see discussed.  Have a great weekend.

The City of San Diego’s minimum wage increase and paid sick leave were made effective on July 11, 2016.  Therefore, all employers that have workers who work within the City of San Diego for two hours or more in any week must comply with the minimum wage increase ($10.50/hour) and paid sick leave requirements.  The minimum wage will increase as follows:

Effective Date Minimum Wage Rate
July 11, 2016 $10.50
January 1, 2017 $11.50
January 1, 2019 and each following year Increase tied to Consumer Price Index (CPI)

The City is considering an Implementing Ordinance that would clarify and change some of the provisions of the law, such as:

  • Allowing employers to cap the paid sick leave at 80 hours (currently the ordinance does not permit at cap)
  • Employees may determine how much earned sick leave they need to use, provided that Employers may set a reasonable minimum increment for the use of earned sick leave not to exceed two hours
  • Would allow employers to issue an up-front grant of 40 hours at the beginning of each benefit year as an alternative method of providing employees the paid sick leave (currently the ordinance only permits employers to grant one hour of paid sick leave for every 30 hours worked by the employee)
  • Require employers to provide written notice of the employer’s legal name and any fictitious business names, address, and telephone number.  The notice must also include information on how the employer satisfies the requirements of the law, including the employer’s method of earned sick leave accrual.  This notice must be translated to the employee’s primary language if that language is spoken by at least five percent of the employees at the employer’s workplace.

Employers with employees working within the City of San Diego must take immediate steps to comply with the new requirements, and need to continually monitor what changes to the law that may or may not be made under the Implementing Ordinance.

The City’s Frequently Ask Questions can be viewed here.  Also, employers can review if any of their employees work within the City with reference to the City’s geographical boundaries.

Next week Los Angeles employers need to comply with new minimum wage and paid sick leave requirements.  I have written about the new laws a lot recently, but wanted to provide five items in today’s Friday’s Five to review in ensuring your company is ready for the new laws for next week’s deadlines:

  1. Understand where your employees work and which laws apply to them.

Just because your business is not located in the City or County of Los Angeles, Pasadena, or Santa Monica does not mean your company can ignore the new laws.  The ordinances passed all include similar provisions that state if an employee works two hours within the City or County the employer must comply with the law:

  • Santa Monica:  Law applies to any employee working a minimum of two hours within Santa Monica in a given week (even if employer is located outside of Santa Monica).
  • City of Los Angeles: “An employee is an individual who performs at least two hours of work in a particular week within the City of Los Angeles….”
  • County of Los Angeles: “Anyone who works at least two hours in a one-week period within the unincorporated areas of Los Angeles County is entitled to the County minimum wage for the hours worked in the unincorporated area of the County.”
  • Pasadena: Applies to employees who perform at least two hours of work in Pasadena.
  1. Don’t assume Los Angeles City’s paid sick leave requirements are the same as state law.

As of July 1, 2016, the City of Los Angeles requires employers with 26 or more employees to provide employees with 48 hours of paid sick leave.  Employers within the City of Los Angeles must review the new law carefully to ensure they are following the City’s paid sick leave requirements, and while there are some similarities with California’s paid sick law, there are many differences.  The City of Los Angeles has very specific requirements about the accrual methods and caps on accrual.  For example, California’s state law allows employers to require employee to use paid sick leave in two hour increments, but the City of Los Angeles does not permit this, so if an employee uses less than two hours the employer can only deduct the actual amount of paid sick leave used by the employee from their sick leave bank.  Also, the City’s law allows employees to use paid sick leave to take care of “any individual related by blood or affinity whose close association with the employee is the equivalent of a family relationship.”  Who is someone with the “equivalent” of a family relationship?  Good question.  Employers must review the new requirements carefully to ensure compliance with these new requirements (and update handbooks and policies if necessary).

  1. Don’t forget to post new notices.

Santa Monica notices:  https://cityofsantamonica.app.box.com/s/nuccal4on935m43p0nhmuzgy65f5mbwl

City of Los Angeles notice: http://wagesla.lacity.org/#information

County of Los Angeles notice: http://file.lacounty.gov/dca/cms1_245570.pdf

Pasadena notice:  http://www.cityofpasadena.net/minimumwage/

  1. Need to know if you are in an incorporated or unincorporated city within Los Angeles County.

Employers who have workers working in any unincorporated area in Los Angeles County must comply with the County’s ordinance.  If workers work in an incorporated city within the County, the incorporated city’s laws would apply, and if the city does not address minimum wage or paid sick leave, then the employer must follow California state law.  However, if an incorporated city, such as Santa Monica, implemented a law, employers must comply with the law that provides the employee with the most benefits and protection.

Click here for resource to determine if your workers work in an incorporated or unincorporated city within Los Angeles County.

  1. Review new hire packets to ensure you are providing all required notices to employees.

 The new laws have some intricacies that employers need to be aware of.  For example, the County of Los Angeles’ new law requires that employers provide employees with written notices setting forth the employer’s tip policy, including any tip sharing, pooling, or allocations policies, if applicable.

Likewise, Santa Monica’s law also sets out requirements pertaining to service charges collected by employers.  Santa Monica requires that all service charges must be distributed to workers who generally performed services for which the charge was collected, and it permits employers to share the service charge with back-of-house employees.  Employers must inform employees of the service charge distribution keep records of the distributions.