REMOTE AND IN PERSON EMPLOYEES CA LABOR COMMISSIONER IS COMING FOR YOU
REMOTE AND IN PERSON EMPLOYEES CA LABOR COMMISSIONER IS COMING FOR YOU
Employers in California better get it right in the treatment of employees. Any employee working in California must be paid under California laws, including remote employees. The California Division of Labor Standards Enforcement (“DLSE”) is tasked with combating wage theft, protecting workers from retaliation, and educating the public. The DLSE strives to “level the playing field for law-abiding employers” by requiring all employers to follow the employee classification and payment of wages and benefits, regardless of immigration status.
A non-exempt employee is someone who is not exempt from overtime, usually (but not always) someone who is paid hourly, not salary. Exempt employees have certain requirements that they must meet in order to be exempt from overtime requirements. For example, the three most common exemptions, for Executive, Administrative, and Professional employees, requires that the employee be paid “a monthly salary equivalent to no less than two times the state minimum wage for full-time employment.” If an employer is not meeting that basic requirement, along with all other requirements to maintain the employee’s exempt status, then they must pay the employee overtime. The state minimum wage went up in January and is currently $13/hr for employers with 25 or less employees and $14/hr for employers with 26 or more employees (going to $14.00 and $15.00 on January 1, 2022) and various Counties and Cities have additional minimum Wage Ordinances.
Calculating overtime pay may not be as simple as employers think. Here are few of the requirements:
- Employers must pay 1 ½ times the employee’s regular rate of pay for all hours worked in excess of 8 hours up to 12 hours in any workday;
- Non-exempt employees are entitled to a day of rest. Employers must pay 1 ½ times the employee’s regular rate of pay for the first 8 hours worked on the 7th consecutive day of a workweek;
- Employers must pay double time for any hours worked beyond the first 12 hours in a workday and all hours worked in excess of the first 8 hours on the 7th consecutive day of a workweek;
- Agricultural workers may have other terms of employment requiring different overtime calculations/obligations.
- Employees that are being paid “piece rate” may have different rates of compensation for non-productive time, which can impact the calculations for overtime payment;
- Employers that offer a bonus, such as a flat rate bonus for working on the weekend, must factor that bonus into the regular rate of pay for purposes of calculating overtime;
There are also other areas surrounding overtime that may trip up employers. For example, employers that request/require an employee to work through the employee’s mandatory lunch break (if the employer is super busy that day, for example) may run into overtime issues. The employer must also pay the employee for an hour of work as compensation for the missed lunch break (more on that below). Note, an employer can ask their employee to work overtime, and in California the employee must, but the wage paid must be compensated properly.
Wages include all amounts of labor performed by employees of every description, whether the amount is fixed or ascertained by the standard of time, task, piece, commission basis or other method of calculation. Commissions are due once earned and are considered wages, but in any case, the commission agreement must be in writing and given to the employee. Tips or gratuities (money left for an employee by a patron of a business over the actual amount due the business for services rendered for goods, food, bring or articles sold) are the sole property of the employee (employers can still require tip pooling with certain restrictions) and are not considered wages for the purpose of calculating overtime (EDD consider tips wages – be careful). Note that it is illegal for employers to make wage deductions from tips/gratuities, or from using tips/gratuities as direct or indirect credits against an employee’s wages.
California employers also may face wage and hour claims if they are not careful about paying employees properly in other work-related areas/activities. What about on-call/standby time (controlled vs uncontrolled), travel time (you can pay minimum for travel time and a higher amount for actual work), training (voluntary vs mandatory), changing into and out of gear (including PPE) or uniform, day of rests, maximum hours, alternative work weeks, split shifts, meal and rest periods, and business expenses (i.e. meals and accommodations when away from home)? There are many different areas where an employer can trip up and the consequences can quickly add up (penalties, interest, etc.), so it is important for employers to seek experienced legal counsel if they have questions regarding paying employees.
Regular paydays, with a posting of such dates is required, and non-timely payment may subject employers to penalties, waiting time penalties, and importantly, an audit by the DLSE.
Some other areas where employers may get tripped up include:
Vacation/PTO
Little known fact, California employers are not required to offer vacation or paid time off (”PTO”), but if it is offered, it is considered deferred wages and importantly, while caps on accrual are allowed, “Use it or Lose it” policies are not allowed. That means, for example, that an employer that terminates an employee after 8 months of service must pay the employee for any accrued vacation time at termination even if that employer has a policy stating that employees must work 12 months before they are entitled to use vacation time.
Reporting Time Pay
If an employee is required to report for work but the employer does not put them to work or gives them less than half day work, the employer must pay a half day (not less than 2 hours and not more than 4 hours). Employers often violate this area when they have an employee come in on a day that they were scheduled to work and then immediately terminate them without including a half day’s pay for that “termination day”. Remember, employers must pay all wages owed to the employee (as well as accrued PTO, certain commission, etc.) at the time of termination. Failure to do so can lead to waiting time penalties and late payment penalties.
Rounding
Some employers use a clock-in software that rounds time up and down (start/stop and breaks) depending on the time punched. That’s a problem as “rounding” is disfavored in California and another case is now pending at the Supreme Court.
De Minimus Time
In California, all compensable work must be paid, including “de minimus” time. This may include time an employee spends doing things like putting outside signs/furniture away before the employee leaves work. Federal courts have held that employers may disregard de minimus time if certain circumstances are met; however, employers should consider speaking with legal counsel if they have questions about whether they need to pay de minimus time.
Recordkeeping
Employers need to make sure that they maintain accurate records, as well as a personnel file (which the employee must be allowed access to). There are specific requirements for itemized wage statements (paystubs) that can result in violations if employers are not careful.
Deductions From Wages
Employers cannot take anything out of an employee’s paycheck unless 1) the employer is required to do so by Federal or State law (i.e. taxes); or 2) the deduction is expressly authorized by the employee in writing (i.e. deductions to cover insurance premiums, welfare or pension contributions, etc.).
Rest and Meal Breaks
Employers must provide employees that work at least 5 hours with an uninterrupted 30 minute meal break (and a place to take that meal break). If the employee works 10 hours or more, they must be given a second meal break. Employers must provide meal breaks (affirmative duty) and must encourage rest periods.
Anti-harassment/Sexual Harassment Training
Are you up to speed on the required training for supervisors and employees? The requirements for both are different. Additionally, some employers, such as Farm Labor Contractors, need to provide sexual harassment training to their employees in each employee’s native language.
COVID-19 Impacts
Do you require your employees to get the COVID vaccine? If so, have you paid for the employee’s time spent getting the vaccine?
Are you paying wages timely in light of COVID work from home? Remember, the employee must have notice of and access to the funds on the pay date, or there may be waiting time penalties.
If your employees are working from home right now due to covid, are you required to pay an employee for drive time to/from the office to pick up supplies for work? There is no case law specific to this specific situation yet, but related case law indicates the answer might be yes.
If your employees are working remotely, how do employers comply with posting required notices? (Hint, you may need to email the notices and/or make the notices available online.)
If your employees are working remotely, have you assessed whether you need to compensate them for using their own resources for work (i.e. using a personal cell phone to make work calls)? Are they using a work computer or a personal one? If they are using a personal one, do they have adequate anti-virus and other protections installed?
You may notice that there are far more questions than answers related to COVID impacts on employees. That is because this is still an evolving area. Employers who need answers to any of the above questions are encouraged to seek experienced business counsel. Epps & Coulson, LLP has experience counsel that can assist you in employment and other business related areas. We also offer a general counsel program that includes an employment audit and ongoing legal updates for employment, contract, corporate, leasing and other legal areas. See our website: www.companiescounsel.com.
Employers: How many wage violations are you making?
Employees: How much in compensation are you not being paid?
If you have a competitor that is unfairly competing (not paying wages adequately), the DIR wants to hear about it. You can contact them at makeitfair@dir.CA.gov
For more information feel free to contact Dawn: dcoulson@eppscoulson.com.
EPPS & COULSON, LLP
Attorneys admitted to practice in
California, New York, Colorado, Texas, Oregon and Hawaii
Information contained in this Memo is intended for informational and educational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney. It is considered advertising under laws of some states. Epps & Coulson, LLP encourages you to call us to discuss these matters as they apply to you or your business.
