In ZB, N.A. v. Superior Court (Lawson) (Sept. 12, 2019), the California Supreme Court held that plaintiffs cannot recover the unpaid wages described in Labor Code section 558 in a Private Attorneys General Act of 2004 (PAGA) claim.  This ruling drastically limits the amount of penalties that plaintiffs can attempt to recover in PAGA actions.  Here are five issues that employers should understand about PAGA and the Supreme Court’s ruling in Lawson:

1. General overview of the Private Attorneys General Act.

PAGA was designed by the California Legislature offer financial incentives to private individuals to enforce state labor laws.  At the time the legislation passed, the state’s labor law enforcement agencies did not have enough resources or staffing necessary to keep up with the rapid growth of California’s workforce. Therefore, PAGA allows aggrieved employees to act like a private attorney general in collecting civil penalties for Labor Code violations previously recoverable only by the Labor Commissioner. The employee must give 75% of the collected penalties to the Labor and Workforce Development Agency, and the remaining 25% is to be distributed among the employees affected by the violations.

2.PAGA cases are representative claims, which are different than class actions.

Because a plaintiff bringing a PAGA claim can only seek penalties, a one year statute of limitations applies to these case.  This varies drastically from the four-year statute of limitations that apply to most wage and hour class actions under Business and Professions Code section 17200.  Also, the California Supreme Court held in Arias v. Superior Court that a plaintiff does not have to have a class certified in order to recover penalties under the PAGA.

3. In a prior case, Iskanian v. CLS Transportation Los Angeles, LLC, the Supreme Court held that PAGA claims cannot be waived in arbitration agreements.

In Lawson, the Supreme Court explained its prior holding in Iskanian:

In Iskanian, we declared unenforceable as a matter of state law an employee’s predispute agreement waiving the right to bring these representative PAGA claims.  Requiring employees to forgo PAGA claims in this way contravenes public policy by “serv[ing] to disable,” through private agreement, one of the state’s “primary mechanisms” for enforcing the Labor Code.  (Iskanian, at p. 383.)  We then concluded the FAA did not preempt this rule or otherwise require enforcement of such a waiver in an arbitration agreement.  (See id. at pp. 384-389.)

4. Difference between civil penalties and statutory penalties.

The Court in Lawson explained that civil penalties were “ ‘previously enforceable only by the state’s labor law enforcement agencies’ ” before the PAGA.  Actions to recover civil penalties are basically a law enforcement action, which the primary goal is to protect the public – not to benefit private parties.  The Court explained that other remedies, such as restitution of unpaid wages, were always recoverable by employees before the PAGA.  The Court set forth that the primary difference between civil penalties and statutory damages as follows:

[Civil penalties] are intended “to punish the employer” for wrongdoing, often “ ‘without reference to the actual damage sustained . . . . ’ ”  (Ibid.)  Statutory damages, on the other hand, primarily seek to compensate employees for actual losses incurred, though like penalties they might also “seek to shape employer conduct” as a secondary objective.  (Id. at p. 1112.)

5. Labor Code section 558 only permits plaintiffs to recover civil penalties, not any recovery of unpaid wages in PAGA actions.

Labor Code section 558 provides the Labor Commissioner  power to issue overtime violation citations for “a civil penalty as follows: [¶] (1) For any initial violation, fifty dollars ($50) for each underpaid employee for each pay period for which the employee was underpaid in addition to an amount sufficient to recover underpaid wages. [¶] (2) For each subsequent violation, one hundred dollars ($100) for each underpaid employee for each pay period for which the employee was underpaid in addition to an amount sufficient to recover underpaid wages.”

The parties in Lawson all agreed that the $50 and $100 citations permitted by section 558 are civil penalties, which could be recovered in a PAGA action.  The issue presented in Lawson was whether the language permitting “an amount sufficient to recover underpaid wages” in Labor Code section 558 is a civil penalty, which means it would be recoverable in PAGA actions.  The Supreme Court found that section 558 does not permit recovery of underpaid wages under PAGA actions, which dramatically limits the range of damages recoverable by plaintiffs.

Last week, on August 30, 2019, Governor Newsom signed SB 778 which delayed the deadline for some employers to train employees about sexual harassment in the workplace.  Here are five items employers must understand about how SB 778 impacts the obligation to provide sexual harassment training to employees:

1. Small employers now have until January 1, 2021 to train all employees.

SB 1343, passed in 2018, requires that an employer with five or more employees must provide two hours of training regarding sexual harassment to all supervisory employees and at least one hour of training to all nonsupervisory employees.  Until SB 778 was signed into law changing the deadline, California employers had until January 1, 2020 to conduct all required sexual harassment prevention training mandated under SB 1343.  SB 778 extends the compliance deadline to train all employees by one year to January 1, 2021.

2. SB 778 does not change the timing requirements for sexual harassment training for supervisors for employers with 50 or more employees.

Employers with 50 or more employees must provide at least two hours of classroom or other effective interactive training and education regarding sexual harassment to all supervisory employees who are employed as of July 1, 2005, and to all new supervisory employees within six months of assuming a supervisory position.  All covered employers must provide sexual harassment training and education to each supervisory employee once every two years.  In 2015, California required that a portion of the training also address “abusive conduct.”  This training requirement is not changed by SB 778 for employers with 50 or more employees.

3. Employees who receive training that complies with the law in 2019 do not need to be retrained for another two years. 

SB 778 clarifies that an employer who has provided sexual harassment training to an employee or supervisor in 2019 is not required to provide refresher training again until two years thereafter.

4. Seasonal and temporary workers must receive training with 30 calendar days or within 100 hours worked, whichever is first.

SB 788 sets forth that beginning January 1, 2020, for seasonal, temporary, or other employees that are hired to work for less than six months, an employer shall provide training within 30 calendar days after the hire date or within 100 hours worked, whichever occurs first. In the case of a temporary employee employed by a temporary services employer, which is defined in Section 201.3 of the Labor Code, to perform services for clients, the training must be provided by the temporary services employer, not the client.

5. The Department of Fair Employment and Housing (DFEH) is required to develop free on-line resources for employers to meet the training requirements.

The DFEH is required by the law to “develop or obtain” two online training courses (a two-hour course for supervisors and a one-hour course for employees) that covers the required material set forth in the law.  The DFEH is required to make the online training courses available on its website. In addition, the online courses will contain an interactive feature that requires the viewer to respond to a question periodically in order for the online training courses to continue to play. Any questions during the course must be directed to the trainee’s employer’s Human Resources Department or to an equally qualified professional, rather than the DFEH.  The DFEH was required under SB 1343 to develop this on-line training by the end of 2019, but the DFEH never stated exactly when this on-line training would be made public, and only stated it would be available by “late 2019.”

 

For employers looking to get a head start on this training, our Firm is offering manager and employee training sessions at our office on September 25, 2019 for managers and on October 2, 2019 for employees (click here for more information), or we can conduct trainings a client’s locations as well.

I was honored to moderate a panel discussion on best practices for employers to manage their workforces.  On the panel was Andrea Borgen, owner of Barcito, Edith Quintero, West Cost People & Development for Soho House & Co., and Jamie Boalbey, Director of Operations for Pitfire Pizza.  While the discussion had a focus on restaurant operations, the lessons are applicable to almost every type of business.  This Friday’s Five review the top five points I took away from our discussion:

1. Restaurant operators of all sizes face similar issues. Large or small, the key issues for a successful company are employees and company culture. 

2. Tipping policies are still a primary concern for restaurants.

3. Company culture is key:

  • To build culture, the company must do what it says it is going to do.
  • Utilize technology to communicate with employees. For example, Workplace on Facebook can be a cost-effective tool.

4. Hiring and recruiting are critical to a company’s success:

  • Connecting with applicants quickly and on a personal level helps recurring efforts. Two to three interviews during the interview process provides good interaction with the applicants.  Contacting references is critical.
  • Don’t let good applicants leave the interview without knowing what the next step is in the interview process.
  • Retention starts with the first interview. The interview process must ensure there is a match, not just from the company’s prospective, but does the applicant agree with the company’s culture?
  • But it does not stop there, and employees need continual training and engagement.

5. There are pros and cons to third party delivery platforms.

  • If your restaurant is not a fast-casual restaurant, the food may not travel well, but the service does open other markets for the restaurants.  This is incremental business that if a restaurant does not capture, it will go somewhere else.

In the coming weeks, we will have the full discussion available on our podcast (iTunes, Spotify, and Stitcher) and our YouTube channel.  Subscribe to avoid missing any content and updates.

California law generally holds that an employer may not pass the ordinary costs of doing business on to employees.  However, this general rule has a multitude of nuances once one examines all the different costs that arise in the employment context and the various Labor Code and Wage Order provisions that apply.  This article addresses five types of costs that arise in the employment context and the various regulations that apply to those scenarios:

1. Physical examinations

Employers are prohibited from requiring an applicant or employee to pay for a physical examination required by the employer.  Likewise, the employer cannot require an employee to pay for a medical or physical examination required by any federal, state or local law or regulation.  However, costs for pre-employment examinations that are required by law do not have to be reimbursed to the applicant.  See Labor Code section 222.5.

If an employer requires as a condition of employment a driver’s license, the employer is responsible to pay the costs for any physical examination that may be required for issuance of the license.  However, the employer is not responsible for costs for physical examinations taken prior to when the employee applied for employment.  See Labor Code section 231.

2. Cost of cashing checks and lost paychecks

California law prohibits employers from deducting the costs of cashing a paycheck from the employee’s wages.  The Division of Labor Standards Enforcement (DLSE) has issued an opinion letter stating that this prohibition also applies to the cost of reissuing a lost or misplaced paycheck. See Opinion Letter 1994.01.27.

3. Tools and equipment

Employers are responsible for paying for and providing the tools and equipment required to perform the job.  One exemption to this rule is for employees who earn at least two times the state minimum wage may be required to provide and maintain hand tools and equipment customarily required by the trade or craft.  See Wage Orders Nos. 1-2001 to 16-2001, section 8. Protective and safety equipment governed by the Occupational Safety and Health Standards Board requires that employers provide all equipment required under those regulations.

4. Mileage

Labor Code section 2802 requires an employer to reimburse employees for expenses they necessarily incur while discharging their duties.  If employees are required to drive their personal car for work, the employer must reimburse the employee for the costs attributed to the use of the employee’s car.  In Gattuso v. Harte-Hanks Shoppers, Inc., the California Supreme Court clarified the parameters of mileage reimbursement under California law, as well as the three different methods available for employers to reimburse employees for their mileage reimbursement. Click here for a detailed examination of the California Supreme Court’s ruling in Gattuso v. Harte-Hanks.

5. Uniforms

California law allows employers to require employees to wear particular types of clothing or uniforms to work. If an employer requires a non-exempt employee to wear a uniform, the employer must pay for and maintain it for the employee. What constitutes a “uniform” is not always clear.  Click here for more information regarding other considerations that arise with uniforms.

Here are five employment law and non-employment law issues that had my attention this week:

1. Will the future workforce be paid daily?

The Wall Street Journal’s article, “The Wait for Payday Doesn’t Have to Be So Long” raises some interesting issues about efforts to lower the time it takes for employees to receive paychecks.  The article noted that there are a variety of fronts that can speed up paycheck processing.  On one front, there is proposed legislation from Sen. Elizabeth Warren, among other representatives, to require a faster banking network for payments to consumers.  On another front, startup companies, such as DailyPay, Inc., work with companies to offer instant pay to their employees.  The article also notes that drivers for Uber can chose to be paid as often as five times a day.  The article raises interesting issues, and with the prevalence of technology making faster payments easier, is this something that employees and employers will move to?

2. California Supreme Court holds that plaintiffs cannot allege conversion claim for recovery of unpaid wages

In Voris v. Lampert, the California Supreme Court held that plaintiffs seeking recovery of unpaid wages cannot assert the tort claim of conversion to recover the unpaid wages.  The plaintiff in this case attempted to plead conversion to recover unpaid wages he was owed from a series of start-up companies he worked for.  The plaintiff attempted to plead a conversion claim against the defendants in order to hold the individual corporate officers personally liable, as the start-up company that plaintiff worked for had no assets.  In addition to the personal liability for corporate officers, a conversion claim would also allow the plaintiff to seek punitive damages.  The California Supreme Court’s refusal to permit the conversion claim provides some additional protection to corporate officers and prohibits punitive damages in standard wage claim cases.

3. NLRB issues first decision on mandatory arbitration case after Epic Systems

The National Labor Relations Board (NLRB) issued a decision on arbitration agreements in the workplace.  This decision was the first decision on arbitration agreements after the Supreme Court’s decision in Epic Systems v. Lewis.  The NLRB’s decision in Cordua Restaurants, Inc. 368 NLRB No. 43 (2019) held:

  • Employers are not prohibited under the National Labor Relations Act (NLRA) from informing employees that failing or refusing to sign a mandatory arbitration agreement will result in their discharge.
  • Employers are not prohibited under the NLRA from promulgating mandatory arbitration agreements in response to employees opting into a collective action under the Fair Labor Standards Act or state wage-and-hour laws.
  • Employers are prohibited from taking adverse action against employees for engaging in concerted activity by filing a class or collective action, consistent with the Board’s long-standing precedent.

4. California Court upholds arbitration of Unfair Competition Law claims

The California Court of Appeal held in Clifford v. Quest Software that claims against an employer brought under Business and Professions Code section 17200 (UCL) are subject to arbitration.  The Court held that UCL claims for private injunctive relief or restitution must be arbitrated, and a prior case, Cruz v. PacificCare Health Systems, Inc. (2003), to the extent it is still good law, only prohibits the arbitration on UCL claims for “public” injunctive relief.

5. The War of Art – a quote I’m pondering

After reading The War of Art by Steven Pressfield a few years ago, I still re-read it every so often.  It has nothing to do with employment law, but it is an excellent road-map to keep leaders, artists, entrepreneurs, writers or any other person trying to accomplish a great task on course and working in their profession.  Here is a quote I particularly like from the book:

Are you paralyzed with fear?  That’s a good sign.  Fear is good.  Like self-doubt, fear is an indicator.  Fear tells us what we have to do.  Remember our rule of thumb: The more scared we are of a work or calling, the more sure we can be that we have to do it.

Hope you are enjoying the summer so far.  As many employees take vacation during August, employers in California must be aware of unique rules that apply to vacation time. This Friday’s Five reviews five issues on vacation policies that can create traps for employers operating in California:

1. No use-it-or-lose-it policies permitted.
Under California law, vacation is treated the same as earned wages and vest as the employee performs work. Because vacation is earned proportionally as the employee works, any type of policy requiring employees to lose vacation that has already been earned is illegal under California law.

2. Reasonable caps are allowed.
While employers cannot implement “use-it-or-lose-it” policies, they can place a reasonable cap, or ceiling, on vacation accrual. The DLSE explains:

Unlike “use it or lose it” policies, a vacation policy that places a “cap” or “ceiling” on vacation pay accruals is permissible. Whereas a “use it or lose it” policy results in a forfeiture of accrued vacation pay, a “cap” simply places a limit on the amount of vacation that can accrue; that is, once a certain level or amount of accrued vacation is earned but not taken, no further vacation or vacation pay accrues until the balance falls below the cap. The time periods involved for taking vacation must, of course, be reasonable. If implementation of a “cap” is a subterfuge to deny employees vacation or vacation benefits, the policy will not be recognized by the Labor Commissioner.

3. Vacation is a form of earn wages that must be paid out on the employee’s last day of work.
An employee who is discharged must be paid all of his or her wages, including accrued vacation, immediately at the time of termination. See Labor Code Sections 201 and 227.3

4. Deductions are not permitted from employee’s final wages for use of vacation that was not accrued.
Vacation is treated as a form of wages under California law, and by permitting an employee to take vacation time before it is earned is similar to providing a loan to the employee.  Employers may not utilize self-help remedies to recover debts from the employee’s final pay check, including deducting wages owed to an employee to cover vacation that time was used but had not yet accrued.

5. “Cliff vesting” policies are problematic.
Employers may set probationary periods or waiting periods during which times employees do not accrue vacation time. However, the DLSE maintains that employers may not maintain a policy granting employees a lump sum of vacation upon reaching certain dates. The DLSE’s view on this type of “cliff vesting” is that the employer is really attempting to provide for accrued vacation, but at the same time is attempting to limit its liability of having to pay out a pro rata share of the accrued vacation if the employee does not work until the date in which the vacation is granted to the employee. It is safer for employers to avoid these lump sum grants of vacation, and simply set a time period (i.e., the employee’s first six months of employment) that the employee does not accrue vacation.

California law is vastly different than Federal law and other states. It can be a trap for employers, but with some understanding of the obligations created under the law it can easily be managed.

Hope you are enjoying the final weeks of the summer.

Mediation is one of the aspects of litigation that can be confusing for parties in a lawsuit, but there are few ground rules to understand about the process that can make it a lot less daunting.  Mediation is a non-binding meeting where the parties in a lawsuit hire an independent third party (a retired judge or lawyer) to try to reach a settlement.  Here are five concepts all parties should understand about the mediation process:

1. The mediator’s role is to make you uncomfortable (but in a good way).

As I wrote in a prior post, a mediator’s only role is to get the case settled.  He or she is not there to be your friend, not to tell you what they feel the case is worth, or to protect your opponent’s position.  Their role is to get a settlement.  Put yourself in the mediator’s shoes, and you have two adversarial parties who hate each other and believe they will win if their case goes to trial.  How, as a mediator, do you get the parties to move off their respective beliefs?  You must attack both sides’ theory of the case by pointing out the weaknesses of each position.

So don’t take the attacks personally, or think that the mediator is only attacking your position.  If the mediator is persuasive about how weak your case is, she is equally persuasive to other side.  Understand that the attacks are not personal and it is not about you as a person, but instead about the facts of the case.

2. Understand when being cooperative will help you get a better deal.

A party involved in a mediation must understand that there are two parts to a mediation: (1) the process and (2) the content.  The process is how you interact with the other party.  Are you cordial?  Do you make small talk?  The content is the subject being negotiated, such as the dollar amounts.  A party that is cooperative about the process and competitive about the content will do better overall in a mediation than compared to a party that is competitive on both the process and content.

Think about how you interact with someone that is simply being a jerk to you on ever little issue, even issues that do not impact the subject being negotiated.  When dealing with the hyper-competitive negotiator, your guard goes up and the negotiation turns more personal.  This is a bad combination for attempting to reach a reasonable settlement.

3. If you make a last, best and final offer, make it your last best and final offer.

Parties’ statements made during a mediation must have credibility.  If you make a “last, best and final offer” during a mediation, and the other side rejects the offer, but you continue to negotiate, you have lost credibility with the other party and the mediator.  As a result, even if you continue to negotiate and truly reach your last, best and final offer, the other side (and the mediator) will not believe that is your final number and will continue to push you beyond this number.  There are occasions to make a last, best and final offer, but if you qualify your offer as such, be ready to walk out of the mediation if the offer is rejected.

4. Bracketing.

Ralph Williams, a mediator with ADR Services, explains bracketing as follows:

Negotiation “bracketing” is the process of making a conditional offer linked to an expected response from the other side.  For example, plaintiff states, “I will demand $500,000 if the defendant offers $200,000.”  Defendant responds by accepting the bracket or proposing a different bracket (Defendant will offer $100,000 if plaintiff demands $400,000) or offering an absolute number.  Plaintiff then replies with one of the same three options.  Using negotiation “bracketing,” the parties send clear signals about their expectations, save time and avoid the stress of the negotiating dance that starts with a $1 million demand and a $10,000 offer.

In addition, brackets are conditional offers.  Therefore, unless the other side accepts the proposed bracket, the party making the offer is not committed to those numbers.  This allows parties to potentially make larger moves without the fear of having those moves held against them later in the mediation or in the case.

The use of bracketing during negotiations can add another layer of complexity to settlement negotiations.  However, with advice from counsel about how to negotiate using brackets, they are an effective tool in resolving cases.  Understanding the concept of bracketing before a mediation – even at a very basic level – will help save time during a mediation and allow you keep your focus on the negotiation.

5. Enter the mediation prepared with a bottom walk-away number, but also a number that represents a goal.

It is important to know what your last best and final number is prior to going into the mediation.  Steve Pearl, a mediator with ADR Services, explains:

Experienced negotiators will set not only the walkaway numbers beyond which they will not move, but also goals that are better than those walkaway numbers. Parties who set “shoot for” numbers as their reference points typically do better than those who only formulate walkaway numbers.

However, just like almost every negotiation “rule” there are drawbacks in setting a walk-away numbers.  Pearl explains that sometimes parties may have to shift their reference points to resolve the case.  So, parties should have clear numbers set going into the mediation, but must also have a mechanism to reevaluate these goals if the case will not settle within these predetermined numbers.

California’s Paid Sick Leave law, the Healthy Workplaces, Healthy Families Act of 2014, became effective on January 1, 2015.  While employer have been subject to the law for over four years, there are still some questions that employers have about their obligations.  Below are five questions that are still routinely asked by employers.

1. Can an employer’s attendance policies violate the law?

Yes.  Employers need to review attendance policies to ensure that the policy does not violate California’s paid sick leave (PSL) requirements.  Many attendance policies discipline employees for an unscheduled absence or if the employee does not provide advanced notice prior to an absence.  Under the terms of the paid sick leave law, if an employee has accrued and available sick leave, and is accrued paid sick leave for a purpose permitted under the law, an employer cannot discipline the employee for the leave.  This is considered a form of discipline against the employee for using his or her paid sick leave as allowed under the paid sick leave law.

However, it is important to note, as California’s Department of Industrial Relations (DIR) states in its frequently asked questions, the paid sick leave law does not “protect” all time off taken by an employee for illness or related purposes.  It “protects” only an employee’s accrued and available paid sick leave as specified in the statute.

2. Can employees take a vacation day and ask for it to be a paid sick leave?

No. An employer is not required to allow an employee to use accrued paid sick days for reasons other than those listed in the statute, which are:

(1) Paid sick time for nonexempt employees shall be calculated in the same manner as the regular rate of pay for the workweek in which the employee uses paid sick time, whether or not the employee actually works overtime in that workweek.

(2) Paid sick time for nonexempt employees shall be calculated by dividing the employee’s total wages, not including overtime premium pay, by the employee’s total hours worked in the full pay periods of the prior 90 days of employment.

(3) Paid sick time for exempt employees shall be calculated in the same manner as the employer calculates wages for other forms of paid leave time.

(Lab. Code § 246, subd. (l).)

3. Can employers require doctor’s notes from employees who take paid sick leave?

California’s Paid Sick Leave law does not address if an employer may require employees to provide a doctor’s note in order to take paid sick leave.  The DIR’s frequently asked questions also do not address this specific question, and only provides the following guidance about the required notice an employee must provide to take PSL:

The employee must notify the employer in advance if the sick leave is planned, as may be the case with scheduled doctors’ visits. If the need is unforeseeable, the employee need only give notice as soon as practical, as may occur in the case of unanticipated illness or a medical emergency.

4. How much will employees be paid for sick leave?

As the DIR sets forth, to determine the rate of pay, the employer may either:

  • Calculate an employee’s regular, non-overtime rate of pay for the workweek in which he or she used paid sick leave, whether or not he or she actually worked overtime in that workweek (in general terms, this is usually done by dividing your total non- overtime compensation by the total non-overtime hours worked), or
  • Divide the employee’s total compensation for the previous 90 days (excluding overtime premium pay) by the total number of non-overtime hours worked in the full pay periods of the prior 90 days of employment.  Employers need to be careful about how to calculate the regular rate of pay for commissioned employees for paid sick leave purposes also.

For exempt employees, paid sick leave is calculated in the same manner the employer calculates wages for other forms of paid leave time, such as for vacation pay, paid-time off, etc….

5. If the employer has employees in a city with a local paid sick leave law, which law applies?

Employers must comply with all leave laws that apply to their business, and must provide the most generous provisions of each leave law.  For example, in Southern California, the following local governments have paid sick leave requirements:

There are a lot of California employment law developments at the mid-point of 2019.  Below are five recent videos from our YouTube Channel discussing these new developments.  Subscribe to our YouTube Channel to keep current.

Also, if you are not already subscribed to my Firm’s newsletter, click here to subscribe to receive updates and invitations for special events we host.

1. Uniforms in the Workplace – New Case Law: Townley v. BJ’s Restaurants

In Townley v. BJ’s Restaurant, the California Court of Appeal recently ruled that employers are not required to reimburse employees for slip-resistant shoes as they do not qualify as a uniform under California law.  This video addresses this new case, as well as other issues related to uniforms, such as:

  • When must an employer pay for a uniform?
  • When does the employer have to pay for the costs of cleaning the uniform?
  • Can an employer require a deposit for a uniform?

2. What Employers Can do to Protect Against Class Action Claims:

Since insurance does not cover class action claims, what can you do as an employer to protect yourself in these situations?  I discuss a few options in this video.

3. 5 Key Issues for Terminations in California:

Terminations. It is not a subject you cover in management class, or any class for that reason. But yet the termination process is one of the more common business decisions that will receive the most scrutiny, and are probably the most legally challenged decisions in the workplace.

4. California Legislature Places Gig Economy in Cross-hairs:

The California legislature is setting its sights on limiting employers’ use of independent contractors in the gig economy.

5. Minimum Wage Increases on the State and Local Levels: What you Need to Know

Here’s a brief overview of what employers need to know about minimum wage increases.

Happy Friday.  Here is a refresher post for today’s Friday’s Five about some requirements about 10-minute rest breaks required for non-exempt employees:

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 and employees must be relieved of all duties

The rest period is considered time worked and must be paid.

Employees must be relieved of all duties during the rest break, and cannot be required to monitor a pager, phone, or other device during the rest break.  The Court in Augustus v. ABM Security Services, Inc., 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.”  Further analysis on the Augustus case can be read here.

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 break, 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.