Wage Law

Existing law, the Domestic Worker Bill of Rights (Labor Code section 1451-1453), regulates the hours of work of domestic work employees who are personal attendants and provides an overtime compensation rate for those employees. The Domestic Worker Bill of Rights defines terms for its purposes and requires the Governor to convene a committee to study and report to the Governor on the effects of its provisions on personal attendants and their employers.

Pursuant to Labor Code section 1453, the Domestic Worker Bill of Rights would be repealed as of January 1, 2017. SB 1015 deletes that repeal date. By extending the effect of the Domestic Worker Bill of Rights, the violation of which is a misdemeanor, this bill would expand the definition of a crime, which would impose a state-mandated local program. Here is the full text of the heart of the Domestic Worker Bill of Rights, Labor Code section 1451:

1451.  As used in this part, the following definitions apply:
   (a) (1) "Domestic work" means services related to the care of persons in private households or maintenance of private households or their premises. Domestic work occupations include childcare
providers, caregivers of people with disabilities, sick, convalescing, or elderly persons, house cleaners, housekeepers, maids, and other household occupations.
   (2) "Domestic work" does not include care of persons in facilities providing board or lodging in addition to medical, nursing, convalescent, aged, or child care, including, but not limited to,
residential care facilities for the elderly.
   (b) (1) "Domestic work employee" means an individual who performs domestic work and includes live-in domestic work employees and personal attendants.
   (2) "Domestic work employee" does not include any of the
following:
   (A) Any person who performs services through the In-Home Supportive Services program under Article 7 (commencing with Section 12300) of Chapter 3 of Part 3 of Division 9 of, or Sections 14132.95, 14132.952, and 14132.956 of, the Welfare and Institutions Code.
   (B) Any person who is the parent, grandparent, spouse, sibling, child, or legally adopted child of the domestic work employer.
   (C) Any person under 18 years of age who is employed as a babysitter for a minor child of the domestic work employer in the employer's home.
   (D) Any person employed as a casual babysitter for a minor child
in the domestic employer's home. A casual babysitter is a person whose employment is irregular or intermittent and is not performed by an individual whose vocation is babysitting. If a person who
performs babysitting services on an irregular and intermittent basis does a significant amount of work other than supervising, feeding, and dressing a child, this exemption shall not apply and the person
shall be considered a domestic work employee. A person who is a casual babysitter who is over 18 years of age retains the right to payment of minimum wage for all hours worked, pursuant to Wage Order
No. 15-2001 of the Industrial Welfare Commission.
   (E) Any person employed by a licensed health facility, as defined in Section 1250 of the Health and Safety Code.
   (F) Any person who is employed pursuant to a voucher issued through a regional center or who is employed by, or contracts with, an organization vendored or contracted through a regional center or the State Department of Developmental Services pursuant to the Lanterman Developmental Disabilities Services Act (Division 4.5 (commencing with Section 4500) of the Welfare and Institutions Code) or the California Early Intervention Services Act (Title 14 (commencing with Section 95000) of the Government Code) to provide services and support for persons with developmental disabilities, as defined in Section 4512 of the Welfare and Institutions Code, when any funding for those services is provided through the State Department of Developmental Services.
   (G) Any person who provides child care and who, pursuant to subdivision (d) or (f) of Section 1596.792 of the Health and Safety Code, is exempt from the licensing requirements of Chapters 3.4 (commencing with Section 1596.70), 3.5 (commencing with Section 1596.90), and 3.6 (commencing with Section 1597.30) of Division 2 of the Health and Safety Code, if the parent or guardian of the child to whom child care is provided receives child care and development services pursuant to any program authorized under the Child Care and Development Services Act (Chapter 2 (commencing with Section 8200) of Part 6 of Division 1 of Title 1 of the Education Code) or the California Work Opportunity and Responsibility to Kids Act (Chapter 2 (commencing with Section 11200) of Part 3 of Division 9 of the Welfare and Institutions Code).
   (c) (1) "Domestic work employer" means a person, including corporate officers or executives, who directly or indirectly, or through an agent or any other person, including through the services of a third-party employer, temporary service, or staffing agency or similar entity, employs or exercises control over the wages, hours, or working conditions of a domestic work employee.
   (2) "Domestic work employer" does not include any of the following:
   (A) Any person or entity that employs or exercises control over the wages, hours, or working conditions of an individual who performs domestic work services through the In-Home Supportive Services program under Article 7 (commencing with Section 12300) of Chapter 3 of Part 3 of Division 9 of, or Sections 14132.95, 14132.952, and 14132.956 of, the Welfare and Institutions Code or who is eligible for that program.
   (B) An employment agency that complies with Section 1812.5095 of the Civil Code and that operates solely to procure, offer, refer, provide, or attempt to provide work to domestic workers if the relationship between the employment agency and the domestic workers for whom the agency procures, offers, refers, provides, or attempts to provide domestic work is characterized by all of the factors listed in subdivision (b) of Section 1812.5095 of the Civil Code and Section 687.2 of the Unemployment Insurance Code.
   (C) A licensed health facility, as defined in Section 1250 of the
Health and Safety Code.
   (d) "Personal attendant" means any person employed by a private householder or by any third-party employer recognized in the health care industry to work in a private household, to supervise, feed, or dress a child, or a person who by reason of advanced age, physical disability, or mental deficiency needs supervision. The status of personal attendant shall apply when no significant amount of work other than the foregoing is required. For purposes of this subdivision, "no significant amount of work" means work other than the foregoing did not exceed 20 percent of the total weekly hours worked.

School teachers often work long hour, and are generally exemption from overtime pay under California law. However, public school teachers often enjoy high salaries and outstanding benefits. The same is not always true, however, for private school teachers. California law currently allows private school teachers to make as little as $800 per week (double the minimum wage) and still be required to work longer hours of unpaid overtime.

AB 2230 would suspend that earnings standard until July 1, 2017. On and after that date, the bill would prescribe a revised earnings standard for exemption from the overtime provisions described above that would require the employee to earn no less than the lowest salary offered by any school district or the equivalent of no less than 70% of the lowest schedule salary offered by the school district or county in which the private elementary or secondary institution is located, as specified.

Here's the full text of AB 2230:

AB 1066, a bill authored Assemblymember Lorena Gonzalez (D-San Diego), to provide daily overtime to California agricultural workers, has been signed into law by Governor Brown.

Existing law sets wage, hour, meal break requirements, and other working conditions for employees and requires an employer to pay overtime wages as specified to an employee who works in excess of a workday or workweek, as defined, and imposes criminal penalties for the violation of these requirements. Existing law has exempted agricultural employees from these requirements.

AB 1066, the Phase-In Overtime for Agricultural Workers Act of 2016, removes this exemption for agricultural employees regarding hours, meal breaks, and other working conditions, and creates a schedule phases in overtime requirements for agricultural workers over the course of 4 years (from 2019 to 2022). Beginning January 1, 2022, the bill will require any work performed by a person, employed in an agricultural occupation, in excess of 12 hours in one day to be compensated at the rate of no less than twice the employee’s regular rate of pay. The bill would provide employers who employ 25 or fewer employees an additional 3 years to comply with the phasing in of these overtime requirements. The bill also authorizes the Governor to delay the implementation of these overtime pay provisions if the Governor also suspends the implementation of a scheduled state minimum wage increase. The bill would require the Department of Industrial Relations to update a specified wage order for consistency with these provisions, as specified.

Here is the full text of the new law:

In Morris v. Ernst & Young, LLP (9th Cir. 2016) ___ F.3d ___, the Ninth Circuit held that the National Labor Relations Act prohibits employers from requiring, as a condition of employment, that employees waive their right to participate in concerted legal claims in the form of a class action.

Ernst & Young required employees to sign agreements saying that they would pursue any legal claims through arbitration, and only as individuals, in separate proceedings, barring the joining of multiple plaintiffs or a putative class in any such arbitration. In fact, the agreement expressly barred any claims to be brought on behalf of any other person. Plaintiffs filed a wage and hour class and collective action in District Court, and the court granted Ernst & Young's motion to compel arbitration. The Ninth Circuit reversed, holding that the agreement’s “separate proceedings” provision violates the essential, substantive right established by the NLRA to participate in concerted activities for the purpose of collective bargaining "or other mutual aid or protection.”  The Court distinguished Johnmohammadi v. Bloomingdale's, Inc. (9th Cir. 2014) 755 F.3d 1072, 1075 by noting that Ernst & Young offered its workers no opportunity to opt out of the agreement. The decision leaves a split between the circuits, with the 7tth Circuit and 9th Circuit holding in favor of employees, and the 2nd, 5th and 8th Circuits siding with the employers.

California, in Iskanian v. CLS Transp. Los Angeles, LLC (2014) 59 Cal. 4th 348, 373, upheld class action waivers, but suggested that in some instances, they could violate the NLRA. Morris would appear to at least offer a distinction, if not a broad limitation of Iskanian, which may give some employers pause when considering whether to cite CAFA and remove a case to District Court, since district courts in California will now be bound to follow Morris.

You can download the full text of Morris here in PDF.

In Esparza v. Sand & Sea, Inc. (CA2/4 B268420 8/22/16), an employer tried to have its cake and eat it, too, with respect to an arbitration agreement. It included the arbitration provision in an employee handbook, which also made clear that nothing in the handbook was intended to create a binding agreement between the employee and the employer.The court found that this rendered the handbook insufficient to establish an agreement to arbitrate.

"The question in this case is whether an arbitration provision in an employee handbook is legally enforceable.  The employee handbook containing the arbitration provision included a welcome letter as the first page, which stated, “[T]his handbook is not intended to be a contract (express or implied), nor is it intended to otherwise create any legally enforceable obligations on the part of the Company or its employees.”  The employee signed a form acknowledging she had received the handbook, which mentioned the arbitration provision as one of the “policies, practices, and procedures” of the company.  The acknowledgement form did not state that the employee agreed to the arbitration provision, and expressly recognized that the employee had not read the handbook at the time she signed the form.  Under these circumstances, we find that the arbitration provision in the employee handbook did not create an enforceable agreement to arbitrate.  We therefore affirm the trial court’s denial of the employer’s petition to compel arbitration."

You can download the full text of the opinion here in Word of PDF.

The Ninth Circuit has reinstated an arbitration decision that had been vacated by the U.S. District Court. In SW Reg. Council of Carpenters v. Drywall Dynamics, Inc. (9th Cir. 14-55250 5/19/16), the arbitrator ruled that an employer was bound by a memorandum of understanding extending the term of a labor agreement. The district court vacated the arbitration award on the grounds that the arbitrator’s interpretation of the parties’ agreement was not plausible and was contrary to public policy. The Ninth Circuit held that the district court’s decision exceeded its narrow authority to determine whether the arbitrator’s award was based on the parties’ contract and whether it violated an explicit, well-defined, and dominant public policy. You can read the entire opinion at this link. [PDF]

The Supreme Court has agreed to review the Court of Appeal's decision in Alvarado v. Dart Container Corp. of California (2016) 243 Cal.App.4th 1200 (SC S232607/E061645, review granted, 5/11/16), concerning overtime calculations and the "regular rate of pay" for employees paid flat sum bonuses.

In Alvarado, the employer calculated overtime as follows:

1. Multiply the number of overtime hours worked in a pay period by the straight hourly rate (straight hourly pay for overtime hours).
2. Add the total amount owed in a pay period for (a) regular non-overtime work, (b) for extra pay such as attendance bonuses, and (c) overtime due from the first step. That total amount is divided by the total hours worked during the pay period. This amount is the employee’s “regular rate.”
3. Multiply the number of overtime hours worked in a pay period by the employee’s regular rate, which is determined in step 2. This amount is then divided in half to obtain the “overtime premium” amount, which is multiplied by the total number of overtime hours worked in the pay period (overtime premium pay).
4. Add the amount from step 1 to the amount in step 3 (total overtime pay). This overtime pay is added to the employee’s regular hourly pay and the attendance bonus.

Plaintiff contends that this method fails to pay proper overtime in violation of Labor Code sections 510 and 1194 by not including shift differential premiums and bonuses in calculating overtime rates.

Defendant prevailed on a motion for summary judgment. The court found that there was no legal basis for plaintiff’s proposed formula because federal law did not conflict with the employer's method and there was no California law providing a formula for calculating overtime on bonuses, and plaintiff’s proposed formula was based solely on California public policy and void regulations from the Division of Labor Standards Enforcement (DLSE) Manual which have no force or effect.

Plaintiff contended that Marin v. Costco Wholesale Corp. (2008) 169 Cal.App.4th 804 applies and under that holding, the defendant’s formula dilutes and reduces the regular rate of pay by including overtime hours when calculating the regular rate of pay used to compute overtime on plaintiff’s flat sum bonuses.

The question presented on review is:

What is the proper method for calculating the rate of overtime pay when an employee receives both an hourly wage and a flat sum bonus?

You can follow the progress in Alvarado here.

In Corbin v. Time Warner (9th Cir. 13-55622 5/2/16), the 9th Circuit affirmed a district court’s summary judgment in favor of Time Warner Entertainment-Advance/Newhouse Partnership in a putative class action brought by a Time Warner employee.  In his rounding claim, plaintiff alleged that Time Warner's policy of rounding all employee time stamps to the nearest quarter hour deprived him of earned overtime compensation. The plaintiff also alleged that he was not compensated for one minute when he mistakenly opened an auxiliary computer program before logging into Time Warner’s timekeeping software.

The court held that Time Warner’s rounding policy complied with the federal rounding regulation, 29 C.F.R. § 785.48(b) and that the policy was neutral both on its face and as applied to plaintiff. They concluded that the district court properly interpreted and applied the regulation, and granted summary judgment to the employer.  The district court also properly granted summary judgment on plaintiff’s log-in claim and classified the one minute of uncompensated time as de minimis. The court held that all three factors in Lindow v. United States (9th Cir. 1984) 738 F.2d 1057, 1062 supported the district court’s conclusion that plaintiff’s one minute of uncompensated time was de minimis.

Finally, the 9th Circuit held that the plaintiff failed to demonstrate the existence of a material fact to his derivative California state law claims. Because the court affirmed the summary judgment to Time Warner on the rounding claim, there was no need for the district court to reconsider whether the claim can form the basis of a viable class action proceeding.

This is slightly off topic, but since we have some unsatisfied judgments we're trying to collect, this story caught our eye. "U.S. marshals arrest man for unpaid student loan." You can have someone arrested for not paying a debt? We've got some former employers we'd love to have tossed in jail for failing to pay their workers. But we abolished debtor prisons long ago right?

Right.

He wasn't arrested for not paying a debt. He was ordered to show up for a debtor's exam, and he disregarded the court order, so he got a bench warrant for that. It took them three years to get him, too. Fortunately, we usually get our money faster than that.

Now that the California minimum wage has increased to $10 per hour as of January 1, 2016, California employers must also pay more to keep exempt workers exempt. In addition to the Duties Test, California employers who classify workers as salaried exempt must meet the Salary Test. Among other things, this means that the salary must be no less than double the minimum wage for full time work.

A full-time minimum wage earner now makes $20,800 per year. Thus, a salaried exempt worker must be paid at least $41,600 annually to meet the California standards ($10 per hour x 40 hours per week x 52 weeks per year, doubled).

Failure to meet this standard can prove costly, even if an employee only works an extra 30 to 60 minutes per day. A worker who is misclassified as exempt who works an extra 45 minutes a day, at $40,000 a year, would accrue an overtime liability of $5,625 per year. Employees can reach back four years under California's statute of limitations, so that could grow to $22,500 over four years, for just one worker. Make the same mistake with a staff of 45 employees and you're looking at a seven figure liability.