How is it Friday already, and summer is coming to a close quickly?  Time for another Friday’s Five, and this week I cover five reminders about meal break waivers in California:

1. Meal break timing obligations.

An employer may not employ an employee for a work period of more than five hours per day without providing the employee with a meal period of not less than thirty minutes.  A second meal period of not less than thirty minutes is required if an employee works more than ten hours per day. Labor Code Section 512.

The California Supreme Court held in Brinker Restaurant Corp. v. Superior Court, that:

We conclude that, absent waiver, section 512 requires a first meal period no later than the end of an employee’s fifth hour of work, and a second meal period no later than the end of an employee’s 10th hour of work.

See my previous post on when employers must authorize employees to take meal breaks.

2. Employer’s duty to authorize meal breaks.

As long as employers effectively allow an employee to take a full 30-minute meal break, the employee can voluntarily choose not to take the break, and the employer would not owe the employee the additional hour of pay in the form of premium pay for a violation. The Supreme Court explained in Brinker:

The employer that refuses to relinquish control over employees during an owed meal period violates the duty to provide the meal period and owes compensation [and premium pay] for hours worked. The employer that relinquishes control but nonetheless knows or has reason to know that the employee is performing work during the meal period, has not violated its meal period obligations [and owes no premium pay], but nonetheless owes regular compensation to its employees for time worked.

While employees may voluntarily work through meal breaks, if the employer knows or should have known that the employee working during this time, the employer must ensure that the employee is paid for the time working.

3. Employees may waive meal breaks for shifts less than 6 hours or shifts less than 12 hours.

If the total work period per day for an employee is no more than six hours, the meal period may be waived by mutual consent of both the employer and employee.  Likewise, if the if the total hours worked is no more than 12 hours, the second meal period may be waived by mutual consent of the employer and employee only if the first meal period was not waived.  Labor Code Section 512.

 4. Meal break waivers for shifts less than six hours and less than 12 hours are not required to be in writing, but should be.

Labor Code section 512 does not require an employee’s waiver of their meal breaks for shifts less than six hours or shifts less than 12 hours to be in writing.  However, in order to avoid any potential disputes and to be able to defend against any potential claims by disgruntled employees, it is always a good practice to have the voluntary waivers documented and signed by employees.

5. Don’t confuse “on-duty” meal agreements with meal period waivers.

On-duty meal period agreements are different than meal period waivers.  The Wage Orders provide for an “on duty” meal period that is an exception to the required meal break if the following requirements are met:

An “on duty” meal period shall be permitted only when the nature of the work prevents an employee from being relieved of all duty and when by written agreement between the parties an on-the-job paid meal period is agreed to. The written agreement shall state that the employee may, in writing, revoke the agreement at any time.

Wage Order No. 4-2001(a)(emphasis added). Unfortunately, the definition of the “nature of the work” is not clear, and has been construed very narrowly against employers.  For example, the Department of Labor Standards Enforcement (“DLSE”) has issued an opinion letter addressing whether a shift manager in a fast food restaurant working the night shift would be allowed to take a “on duty” meal period.  The DLSE concluded that based on the facts presented in the situation of the fast food restaurant, the nature of the work in the restaurant should not prevent the shift manager from being relieved of all duties for 30 minutes, and therefore the on-duty meal period would not be valid in this context. Click here to download the opinion letter.

Click here for more information about on-duty meal period agreements. Implementing an on-duty meal period agreement in California needs to be approached with caution, and should only be done with assistance from knowledgeable counsel.

I’m moderating a panel discussion on best practices for how to hire and retain good employees at the Western Food Service and Hospitality Expo (WFHE).  The panelists are Joseph Pitruzelli owner of Wurstküche, Francis Drelling General Counsel at Specialty Restaurants Corporation, Naz Moin former director of Human Resources at PizzaRev, and Madelyn Alfano owner of Maria’s Italian Kitchen.  It is on Monday, August 20 at 4 p.m. in the Education Theater (session number S127.  Hope you join us if you are attending the Expo.

In addition, in connection with the California Restaurant Association (CRA), my firm is offering a special an in-person training session that will comply with all the requirements outlined in the regulations regarding California’s Mandatory Sexual Harassment Prevention Training for supervisors (AB 1825) . Supervisors for large employers are required to take this training every two years.  As a bonus, Sexual Harassment Prevention registrants will gain complimentary access to the WFHE show floor, valid day of training (Tuesday, 8/21/18).  The training is at the LA Convention Center, and will take place from 9 to 11:30 a.m. (the show starts at 11 a.m.).  This training is offered to CRA members for FREE and $25 for non-members. Both members and non-members will need to register online here before the day of the training.  Click here for more details about the training and to register.

My firm will have a booth at the show again this year, so if you attend the show, be sure to stop by and say hello.  We are at Booth #1543 (across the aisle from the California Restaurant Association’s booth).  The Expo runs from August 19 to 21 and is at the LA Convention Center.

Also, please stop by our booth and say hi to us if you are attending.  We have some nice swag for readers of the blog!

California employers need to routinely need to review their policies and practices to make sure they are complying with intricacies that may arise in their work place.  In law school, attorneys-to-be are taught to “issue spot,” and the unfortunate litigation landscape that faces California employers, business owners and their supervisors must also “issue spot” and make sure the unique aspects of California employment law are being complied with to avoid liability.  This Friday’s Five covers five issues employers should issue spot on a routine basis to help ensure compliance and reduce liability:

1. Reporting time pay

Reporting time pay is triggered when an employee is required to report for work, but is not put to work or is furnished less than half their usual or scheduled day’s work.  If this occurs, the employee needs to be paid for half the usual or scheduled day’s work, but in no event for less than two (2) hours nor more than four (4) hours, at the employee’s regular rate of pay, which cannot not be less than the minimum wage.

It is important for employers to train managers and supervisors about this requirement, so that they understand the need to pay reporting time pay, or report the instance to HR to ensure the employee receives reporting time pay if they are sent home before one-half of their shift is worked.

2. Split shift pay

A split shift is a work schedule that is interrupted by a non-paid, non-working period established by the employer that is other than a meal or rest break.  So if the employee is required to work a shift, but then asked to report to a second shift over later in the same day, the employer may be obligated to pay a split shift premium.  Again, this issue is one that front-line managers and supervisors need to be trained on to ensure that split shifts are being reported to HR or other appropriate management in the company to ensure any split shift pay obligations are being paid.

3. Expense reimbursement issues

Under Labor Code section 2802, employers need to reimburse employees for any business expenses they incur in the course of completing their work for the employer.  This basic concept sounds easy in principle, but given the technology used in today’s workplaces, there can be many areas that expose employers to liability.  For example, if employees are required to work at home, have access to the internet, print reports, or send and receive faxes, the costs for completing this work should be reimbursed by the employer.  Other areas that are often litigated are cell phone reimbursement, mileage reimbursement, and reimbursement for the costs of uniforms and safety equipment.

4. Off-the-clock claims

Employers can be held liable for unpaid wages if they knew or should have known that employees were working and not being paid for the work.  Employers should establish and regularly communicate a time keeping policy to employees and supervisors.  The policy should set forth that employees always have an open door to complain to their supervisors and other managers or human resources about missed meal and rest breaks, unpaid wages, or unpaid wages.  If employees routinely acknowledge that they understand the time keeping policy and are agreeing to record their time through the employer’s system, this can go a long way in defending any off-the-clock claims.

5. On-Call time

Even though employees are traveling to a work site or even sleeping, if the employee is under the control of the employer, the employer may have to pay them for being on-call.  For example, the California Supreme Court held that security guards who were required to reside in a trailer provided by the employer at construction worksites would still need to be paid for the time they slept while on-call.  In that case, during weekdays the guards were on patrol for eight hours, on call for eight hours, and off duty for eight hours.  On weekends, the guards were on patrol for 16 hours and on call for eight hours.  The Court held that the employer was not permitted to exclude the time guards spent sleeping from the compensable hours worked in 24-hour shifts.  See Mendiola v. CPS Security Solutions, Inc.

Likewise, in Morillion v. Royal Packing Co., the California Supreme Court held that, “we conclude the time agricultural employees are required to spend traveling on their employer’s buses is compensable under Wage Order No. 14-80 because they are ‘subject to the control of an employer’ and do not also have to be ‘suffered or permitted to work’ during this travel period.”  Generally, travel time is considered compensable work hours where the employer requires its employees to meet at a designated place and use the employer’s designated transportation to and from the work site.

This week’s Friday’s Five covers five huge misconceptions about California employment law that can land employers into huge legal trouble:

1. Meal and rest breaks seem so trivial.

The topic may seem trivial for companies that have not faced this litigation before, or for out of state employers who wrongly believe California cannot be much different than federal requirements.  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.  A verdict against Wal-Mart for $172 million is a good example of the liability that even small employers face in this regard.

2. 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, tracking and reporting paid sick leave appropriately, 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.

3. 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 and do not need to receive overtime pay.  See my previous article on the various exemptions that employees may qualify for, and the requirements necessary for employees to meet those exemptions.

4. 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 paying 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

5. My company does not need employment counsel to review our polices on a regular basis, we have it under control.

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.  California employment law is regularly changing.  In addition, employers need to make sure they are complying with intricacies that may arise in their work place, such as:

 

Also, in case you missed it, my Podcast is live:

Youtube: https://www.youtube.com/watch?v=WUbLzjwuUao&t=2s

iTunes: https://itunes.apple.com/us/podcast/zaller-talk/id1405859405?mt=2

Spotify: https://open.spotify.com/show/6zpZovQKMeZ5l2DYL0nh3q?si=KggpsQ6pSIGf1-PCMdM8dw

Have a great weekend.

Cheesecake Factory restaurants in Southern California were cited for $4.57 million for wage and hour violations and penalties by the Labor Commissioner earlier this week.  What may come as a surprise to many is that the citation was based on alleged wage violations for employees of contractors hired by Cheesecake Factory, not its own employees.  The investigation focused on the janitorial subcontractors who performed work at the restaurants.  The Labor Commissioner found that the janitorial employees were not paid for all minimum wage, overtime, not provided meal and rest breaks, and not paid for split shifts.

The subcontractor janitorial company was Americlean Janitorial Services Corp., a Minneapolis company doing business as Allied National Services, Inc. The workers were managed by a San Diego-based company, Magic Touch Commercial Cleaning.  The Labor Commissioner alleged that the workers had to work additional hours when asked to complete tasks or wait for approval of their work by the Cheesecake Factory managers.  This Friday’s Five focuses on key takeaways for California employers from the Labor Commissioner investigation and citation:

1. Cheesecake Factory is being held jointly liable for the subcontractor’s wage violations under Labor Code section 2810.3.

Effective January 1, 2015, Labor Code section 2810.3 expanded the liability of “client employers” that obtain workers through temporary agencies or other labor contractors.  The law requires that the client employer who obtains the workers through the agency must share in the liability for any wage and workers compensation issues.  The law also provides that a client employer cannot shift all of the liability for wage and workers’ compensation violations.  However, the law does provide that the client employer can seek indemnity from the labor contractor for violations.  Therefore, it is important for employers who are covered by Labor Code section 2810.3 and who obtain workers through a labor contractor to ensure the labor contractor is meeting all wage and workers compensation requirements.  The hiring company should also consider negotiating an indemnity provision in the contact with the labor contractor to protect itself should any liability arise.

2. Companies contracting for services need to ensure the subcontractors follow all applicable wage and hour laws and pay the employees properly.

With the joint liability created by Labor Code section 2810.3, companies contracting for labor at their establishments need to take steps to ensure that the contractors are following wage and hour laws.  This may entail reviewing the contractor’s pay practices, and negotiating a contract with the company providing that the contractor indemnifies the hiring company for any wage and hour violations.  The hiring company should also ensure that there are some assets or potential insurance that would be available should indemnity be required.

3. Review split shift policies to ensure compliance.

The Labor Commissioner found that the janitorial employees worked split shifts without being paid the split shift pay.  A split shift is defined in the California IWC Wage Orders as:

…a work schedule, which is interrupted by non-paid non-working periods established by the employer, other than bona fide rest or meal periods.

See Cal. Code Regs., tit. 8, § 11040, subd. 2(Q). If the employee works two shifts separated by more than a rest or meal period, they are entitled to receive one hour’s of pay at the minimum wage rate in addition to the minimum wage for that work day. See Cal. Code Regs., tit. 8, §11040, subd. 4(C). Any additional amounts over minimum wage paid to the employee can be used to offset the split shift pay due to an employee.  Additional information about split shifts can be read here.

4. Review meal break policies to ensure compliance.

The California Supreme Court made clear in Brinker Restaurant Group v. Superior Court that employers need to provide an employee their first meal break “no later than the end of an employee’s fifth hour of work, and a second meal period no later than the end of an employee’s 10th hour of work.”  The following chart illustrates the timing requirements for meal breaks:

Meal breaks must be recorded.  Generally, meal breaks can only be waived if the employee works less than six hours in a shift. However, as long as employers effectively allow an employee to take a full 30-minute meal break, the employee can voluntarily choose not to take the break and this would not result in a violation. In Brinker, the Supreme Court explained that:

The employer that refuses to relinquish control over employees during an owed meal period violates the duty to provide the meal period and owes compensation [and premium pay] for hours worked. The employer that relinquishes control but nonetheless knows or has reason to know that the employee is performing work during the meal period, has not violated its meal period obligations [and owes no premium pay], but nonetheless owes regular compensation to its employees for time worked.

Employers should also establish a complaint procedure and provide that the company has a system in place to correct any violations. If during an investigation, the employer confirms that the employee in fact missed the break because of the rush of business or some other factor, the company should pay the employee the one hour “premium pay” penalty at the employee’s regular rate of pay. Also, the company should record these payments made to employees to be able to establish it has a complaint procedure in place to address missed breaks.  The employee is entitled to receive up to two hours of premium pay per day – one hour for missed meal breaks and one hour for missed rest breaks.  If the employee missed two meal breaks in one day, they would only be entitled to one hour of premium pay.  The same applies to rest breaks.  See UPS v. Superior Court.

5. Review rest break policies to ensure compliance.

In terms of rest breaks, the California Supreme Court held in Brinker that, “[e]mployees are entitled to 10 minutes’ rest for shifts from three and one-half to six hours in length, 20 minutes for shifts of more than six hours up to 10 hours, 30 minutes for shifts of more than 10 hours up to 14 hours, and so on.”  The following chart sets forth the number of rest breaks employees are entitled to based on the number of hours worked:

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).  The California Supreme Court made it clear in Augustus v. ABM Security Services, Inc. that employers must relieve employees of all work-related duties and they must be free from control of the employer during the rest breaks.  For more information about rest breaks, see my prior post here.

On May 8, 2018, the court in Ibarra v. Wells Fargo Bank entered an order awarding Plaintiffs who filed a class action against the bank $97.2 million for rest break violations.  The original complaint alleged various wage and hour violations, and after the parties filed cross motions for summary judgment, all but the rest break claims were dismissed.  The claims were brought under Labor Code section 226.7 and derivative claims under California’s Unfair Competition Law (Business & Professions Code section 17200).  This Friday’s Five reviews five lessons employers should learn from this costly ruling for Wells Fargo:

1. Rest break obligations

As a review, in 2012 the California Supreme Court issued its monumental decision regarding meal and rest breaks under the California Labor Code in Brinker Restaurant Group v. Superior CourtIn terms of rest breaks, the Brinker Court held that, “[e]mployees are entitled to 10 minutes’ rest for shifts from three and one-half to six hours in length, 20 minutes for shifts of more than six hours up to 10 hours, 30 minutes for shifts of more than 10 hours up to 14 hours, and so on.”

This rule is set forth in this chart:

Regarding when rest breaks should be taken during the shift, the Court held that “the only constraint of timing is that rest breaks must fall in the middle of work periods ‘insofar as practicable.’” The Court in Brinker stopped short of explaining what qualifies as “insofar as practicable”, and employers should closely analyze whether they may deviate from this general principle.

2. Use caution on how to compensate piece-rate workers and activity based compensated employees for rest breaks

The California Wage Orders require employers to count “rest period time” as “hours worked for which there shall be no deduction from wages.”  (See Cal. Code Regs. tit. 8, § 11070, subd. 12(A), italics added.)  In Bluford v. Safeway Stores, Inc. (2013) 216 Cal.App.4th 864 the court interpreted this language to require employers to “separately compensate[ ]” employees for rest periods where the employer uses an “activity based compensation system” that does not directly compensate for rest periods.  (Id. at p. 872.)

In Vaquero v. Stoneledge Furniture LLC, the court explained that piece-rate compensation plans do not directly account for and pay for rest periods because the employee is not working during the rest period and therefore is not being paid.  The Wage Order requires employers to separately compensate employees for rest periods if an employer’s compensation plan does not already include a minimum hourly wage for such time.  The court set out in Stoneledge that Wage Orders apply “equally to commissioned employees, employees paid by piece rate, or any other compensation system that does not separately account for rest breaks and other nonproductive time.”

The compensation structure at issue in Wells Fargo involved advances against monthly draws, commissions, and other incentive bonuses.

3. Penalty for rest break violations

“If an employer fails to provide an employee a … rest … period[,] … the employer shall pay the employee one additional hour of pay at the employee’s regular rate of compensation for each workday that the … rest … period is not provided.” Cal. Lab. Code § 226.7(c); see also IWC Wage Order 4-2001 § 12(B).

In Wells Fargo, the court found that the company had not provided paid rest breaks for its employees, and therefore faced liability under California Labor Code section 226.7 and California Business & Professions Code section 17200 of one additional hour of pay per workday for the number of shifts in excess of 3.5 hours during the class period.  In Wells Fargo’s case, this amounted to 1,880,003 qualifying work shifts.

4. How to determine employees’ regular rates of pay

The major issue for the parties in the Wells Fargo litigation turned on the proper method of calculating the employees’ “regular rate of compensation” for rest break violations.  Wells Fargo maintained that this should only be calculated using the employee’s hourly rate that was listed on the employee’s wage statements.  If the court adopted this method, it would have resulted in damages of approximately $24.5 million.

Plaintiffs on the other hand argued that the “regular rate of compensation” should not only be the employee’s hourly rate, but should also include the employees’ commissions and other non-discretionary pay earned during the pay period.  The Plaintiffs argued that this total should then be divided by the total hours worked during the pay period.  According to this methodology, the damages equaled approximately $97.2 million.

In agreeing with the Plaintiffs, the court noted that the employees’ “normal compensation was not comprised solely or even primarily of pay calculated at an hourly rate. By definition, it included hourly pay, incentive pay, and overtime premiums, and the hourly pay was stated to be only an advance on commissions.”

5. But there is a disagreement among courts on how to calculate the “regular rate” for purposes of rest break violations

The court in Wells Fargo noted that other courts have come to the different conclusion that based on the language in Labor Code section 226.7 that items like commissions should not be included in the “regular rate” when calculating damages for rest break violations.  The court noted the following cases, but declined to follow their reasoning: Brum v. MarketSource, Inc., 2:17-cv-241-JAM-EFB, 2017 WL 2633414, at *3-5 (E.D. Cal. June 19, 2017); Wert v. U.S. Bancorp, No. 13-cv-3130-BAS (BLM), 2014 WL 7330891, at *3-5 (S.D. Cal. Dec. 18, 2014), reconsideration denied, 2015 WL 3617165 (S.D. Cal. June 9, 2015); Bradescu v. Hillstone Rest. Grp., Inc., No. SACV 13-1289-GW (RZx), 2014 WL 5312546, at *7-8 (C.D. Cal. Sept. 8, 2014), tentative ruling confirmed as final, 2014 WL 5312574 (C.D. Cal. Oct. 10, 2014).

Given the split in decisions, Wells Fargo is reported to have plans to appeal the ruling.

 

California employment law is a mind field that carries huge exposure for employers not proactively monitoring legal developments and potential legal issues.  There are some statements employers in California should never make, and this Friday’s Five reviews misaligned statements that can create significant liability for an employer.

1. My company has employment practices liability insurance, so there cannot be much exposure from employment lawsuits.

In California, it is very common for insurance companies to exclude wage and hour claims from the employment practices liability (EPLI) coverage.  This applies to single plaintiff and class action claims and representative claims under California’s Private Attorney General Act (PAGA).  This is a significant area of potential exposure for employers, and therefore, the costs and benefit analysis of an EPLI policy must take these considerations into account.

Moreover, under California law an insured cannot buy insurance to cover willful acts.  See Insurance Code section 533.  Therefore, if the employment lawsuit alleges willful acts, it is also likely not going to be covered by insurance.

Employers should seek coverage counsel to assist in reviewing the exclusions and limitations of any EPLI policies prior to purchasing in order to completely understand the coverage that is being purchased for the cost of the policy.

2. I’m busy right now, can you tell me about your workplace complaint tomorrow?

California employers have a legal obligation to conduct workplace investigations.  California Government Code section 12940(j) provides that it is “unlawful if the entity, or its agents or supervisors, knows or should have known of this conduct and fails to take immediate and appropriate corrective action.”  The law also provides that employers are liable if they “fail to take all reasonable steps necessary to prevent discrimination and harassment from occurring.”  Gov. Code section 12940(k).  If the employer fails to take the preventative measures, they can be held liable for the harassment between co-workers.  If the harassment occurs by a manager, the company is strictly liable for the harassment.  If the harassment occurred by a non-management employee, the employer is only liable if it does not take immediate and appropriate corrective action to stop the harassment once it learns about the harassment.  Investigations must follow certain parameters in order to be deemed adequate under the law.  Click here for more information about conducting adequate investigations.

3. There is no need for our company to record meal breaks, all of the employees know that they can take breaks whenever they want.

Meal breaks taken by the employees must be recorded by the employer. However, there is no requirement for employers to record 10-mintute rest breaks.  For more information about meal and rest break obligations, see my previous article.

4. Our company’s handbook is current, it was updated four years ago.

Any California employer can attest, the employment legal landscape changes on a yearly (if not more often basis).  Employers should have someone well versed on employment law reviewing the employee handbook on at least a yearly basis.

5. I’m sure my payroll company is issuing compliant pay stubs.

Employers are cautioned not to rely on their payroll companies for compliant itemized wage statements, as these companies often times do not understand the legal requirements of the Labor Code. Ensuring the required information is properly listed on the itemized wage statements is an item that employers should review at least twice a year for compliance.

Labor Code Section 226(a) requires the following information to be listed on employees’ pay stubs:

  1. Gross wages earned
  2. Total hours worked (not required for salaried exempt employees)
  3. The number of piece-rate units earned and any applicable piece rate if the employee is paid on a piece rate basis
  4. All deductions (all deductions made on written orders of the employee may be aggregated and shown as one item)
  5. Net wages earned
  6. The inclusive dates of the period for which the employee is paid
  7. The name of the employee and the last four digits of his or her social security number or an employee identification number other than a social security number
  8. The name and address of the legal entity that is the employer
  9. All applicable hourly rates in effect during the pay period, and the corresponding number of hours worked at each hourly rate by the employee

Here is an example of an itemized wage statement published by the DLSE.

Also, do not forget that under California’s paid sick leave law that went into effect on July 1, 2015 employers have additional reporting information regarding employees’ accrued paid sick leave and usage. Employers must show how many days of sick leave an employee has available on the employee’s pay stub or a document issued the same day as a paycheck.

Companies are ultimately liable for these violations, so it is best to double check your payroll company’s work to ensure compliance.

Happy New Year.  I started the Friday’s Five articles in the summer of 2014, and the interest in the articles has been more than I expected.  I appreciate everyone who has read them and provided comments and feedback. If you have any topics you would like me to address, please let me know. With that said, here is a list of five resolutions for California employers in 2018:

1. Relax – Still need to make sure your employees are taking their meal and rest breaks.

2. Train – All supervisors must be trained to comply with California’s required sexual harassment prevention training for employers with 50 or more employees.

Since 2015 the training must discuss bullying in the workplace to be legally compliant, and as of January 1, 2018, the training also needs to cover harassment based on gender identity, gender expression, and sexual orientation.

3. Read – Update employment handbook policies on a yearly basis.

2018 has a few new laws that should be addressed the employee handbook and new hire packets.

4. Run – Sorry, no play on words with this one, you just need to get outside and run a bit.

5. Organize – and keep employment files, time records and wage information for at least the length of any applicable statute of limitations.

Employers should review their systems to ensure there is a process in place on how to organize and maintain employment information for the required time periods, it is required under the law and can help defend the company should litigation ensue.

A final more bonus resolution:
Learn – more by attending my webinars on California employment laws to stay up to date.

In the next month, I will be hosting a seminar on the new laws facing employers in 2018 and what steps should be taken to comply. The date is still to be determined, but drop me an email if you are interested and I make sure you are notified once we set the date and location.

Wishing you the best in 2018!

It has been a few years that the California Supreme Court issued its groundbreaking ruling in Brinker Restaurant Group v. Superior Court.  With the end of the year approaching and employers preparing for the new year and the new legal obligations that come with it, now is a good time for employers to audit meal and rest break policies and practices. Regular readers of the blog are familiar with these issues, but it is always a good practice to review these issues at least once a year and audit meal and rest break policies and practices.  This Friday’s Five covers five issues employers should not forget regarding about meal and rest breaks.

1. Timing of breaks.
Meal Breaks
The California Supreme Court made clear in Brinker Restaurant Group v. Superior Court that employers need to give an employee their first meal break “no later than the end of an employee’s fifth hour of work, and a second meal period no later than the end of an employee’s 10th hour of work.” Here is a chart to illustrate the Court’s holding:

Rest Breaks
As for of rest breaks, the Court set forth that, “[e]mployees are entitled to 10 minutes’ rest for shifts from three and one-half to six hours in length, 20 minutes for shifts of more than six hours up to 10 hours, 30 minutes for shifts of more than 10 hours up to 14 hours, and so on.” This rule is set forth in this chart:

In regards to when rest breaks should be taken during the shift, the Court held that “the only constraint of timing is that rest breaks must fall in the middle of work periods ‘insofar as practicable.’” The Court stopped short of explaining what qualifies as “insofar as practicable”, and employers should closely analyze whether they may deviate from this general principle.

2. Rule regarding waiver of breaks.
Meal Breaks
Generally meal breaks can only be waived if the employee works less than six hours in a shift. However, as long as employers effectively allow an employee to take a full 30-minute meal break, the employee can voluntarily choose not to take the break and this would not result in a violation. The Supreme Court explained in Brinker (quoting the DLSE’s brief on the subject):

The employer that refuses to relinquish control over employees during an owed meal period violates the duty to provide the meal period and owes compensation [and premium pay] for hours worked. The employer that relinquishes control but nonetheless knows or has reason to know that the employee is performing work during the meal period, has not violated its meal period obligations [and owes no premium pay], but nonetheless owes regular compensation to its employees for time worked.

Rest Breaks
Rest breaks may also be waived by employees, as long as the employer properly authorizes and permits employees to take the full 10-minute rest break at the appropriate times.

3. Timekeeping requirements of meal breaks.
Meal breaks taken by the employees must be recorded by the employer. However, there is no requirement for employers to record 10-mintute rest breaks.

4. Implementing a procedure for employees to notify the company when they could not take a break.
If employers have the proper policy and practices set up for meal and rest breaks, the primary issue then becomes whether the employer knew or should have known that the employee was not taking the meal or rest breaks. Therefore, many allegations that the employer was not providing the required breaks can be defended on the basis that the employer had an effective complaint procedure in place to inform the employer of any potential violation, but failed to inform the employer of these violations.

5. Implementing a policy of paying employees for missed breaks and recording these payments.
Employers should show that in addition to the complaint procedure mentioned above, that the company has a system in place to correct any violations. If during an investigation, the employer confirms that the employee in fact missed the break because of the rush of business or some other factor, the company should pay the employee the one hour “premium pay” penalty at the employee’s regular rate of pay. Also, the company should record these payments made to employees in case it needs to prove later on that it has an effective remedial process in place to address missed breaks.

Happy Friday.  Through my defense of wage claims this year, I found that employers need to establish and periodically review issues pertaining to employees’ timekeeping.  This Friday’s Five is a list of the top five timekeeping issues that employers should routinely audit:

1. Establish and communicate a time keeping policy

Employers should establish and regularly communicate a time keeping policy to employees.  The policy should set forth that employees always have an open door to complain to their supervisors and other managers or human resources about missed meal and rest breaks, unpaid wages, or unpaid overtime.  If employees routinely acknowledge that they understand the time keeping policy and are agreeing to record their time through the employer’s system, this can go a long way in defending any off-the-clock claims.

2. Rounding

Employers need to review whether their time keeping system or payroll company is rounding employees’ time.  While rounding can be legal under California law, employers must still meet certain requirements to have a compliant rounding practice.  In See’s Candy Shops Inc. v. Superior Court, a California court held that the employer’s rounding policy that rounded both up and down from the midpoint of every six minutes was permitted under California law.  The employers’ policy did not result in a loss to the employees overtime.  Therefore, the court found it to be lawful.  Employers need to review:

(1) Do they have a rounding policy?

(2) If they do round, is the policy compliant with the law?

(3) Is a rounding policy necessary or is it easier to pay the exact time the employee clocks in and out?

3. De minimis time

Employers need to review if they are compensating employee for all time worked.  The de minimis doctrine may permit employers a defense for claims by employees that they were not compensated for very small amounts of time that are difficult to track.  The de minimis doctrine holds that “alleged working time need not be paid if it is trivially small: ‘[A] few seconds or minutes of work beyond the scheduled working hours … may be disregarded.’” Troester v. Starbucks Corporation (this decision is currently under appellate review).   More information about the de minimis doctrine can be read here.  While this defense may be available to California employers, employers should not rely upon the defense when it is known the employee is working time that is not compensated.

4. Record meal breaks

In addition to recording the start and stop times for employee’s work, employers are required to record when employees take meal breaks.  The Wage Orders require that California employers keep “[t]ime records showing when the employee begins and ends each work period. Meal periods, split shift intervals and total daily hours worked shall also be recorded. Meal periods during which operations cease and authorized rest periods need not be recorded.”  IWC Wage Order 5-2001(7)(a)(3).

5. Time records

Under Labor Code section 1174, employers are required to keep time records showing the hours worked daily and the wages paid, number of piece-rate units earned by and applicable piece rate paid.  These records must be maintained in the state or at the “plants or establishments at which employees are employed.”  The records must be kept for at least three years.  Labor Code section 1174(d).  The statute of limitations for wage claims can extend back to four years, so employers generally keep the records for four years.