0 comments on “Employers Get Some Relief from Wage and Hour Penalties”

Employers Get Some Relief from Wage and Hour Penalties

By Deborah Petito |

Any employer who has been sued for wage and hour violations knows that the acronym “PAGA” stands for California’s Private Attorney General Act.  It allows employees to bring wage and hour claims against an employer on behalf of all employees and collect 25% of the penalties that would go to the State if the State had brought the claim.  While the State is supposed to get the remaining 75%, in my experience, such an allocation is rarely made.

Wage and Hour Penalties

There are endless penalties for various wage and hour violations including the following:

  1. $50 for the first pay period and $100 for every subsequent pay period up to $4,000 per employee where the employee either does not receive a wage statement with their pay checks (these may be made available electronically if the employee has access to a computer) or receives a wage statement that does not contain the required information.
  2. Up to thirty days of wages (that is 30 x 8 hours x the employee’s hourly rate) if the employee is not paid either on a given payroll date or when the employee resigns or is terminated. This penalty can run from the date of any inaccurate pay stub.

There are other penalties that are included in PAGA and not listed above.

Amendment to PAGA

PAGA claims were becoming extremely expensive for employers even when the violations were very minor.  Last year, the California State Legislature amended PAGA to provide limited relief for two very minor violations that can result in huge penalties.  Effective October 2, 2015, an employer has 33 days to correct the following two specific violations:

  1. Failure to provide employees with an itemized wage statement that includes the beginning and ending dates of the pay period; and
  2. Failure to provide employees with an itemized wage statement that includes the name and address of the legal entity which is the employer.

This change will not eliminate PAGA claims, but it can reduce the amount of penalties at issue, namely the potential for up to $4,000 in penalties per employee for a wage statement violation.  Employers need to keep their eyes open for letters that employees are required to send to the State and the employer before a PAGA claim is filed.  PAGA letters will contain a laundry list of wage and hour violations.  If the letter contains an allegation that the dates of the pay period and/or the employer’s legal name are not included on the wage statement, employers should immediately make those corrections and notify the State and the employee’s attorney that the corrections were made.  The employer must also provide a copy of the corrected wage statement to the employee(s).  This will, at a minimum, eliminate some of the penalties that an employee may claim as part of a larger wage and hour case and put the employee’s attorney on notice that the employer is attentive and responsive to wage and hour claims.

Thank you for joining us on ClarkTalk!  We look forward to seeing you again on this forum.  Please note that the views expressed in the above blog post do not constitute legal advice and are not intended to substitute the need for an attorney to represent your interests relating to the subject matter covered by the blog.  You should certainly consult legal counsel of your choice when considering this or any other employment issue.  If you wish to consult with the author of this post or another attorney at Clark & Trevithick, please contact Debbie Petito dpetito@clarktrev.com or Leonard Brazil lbrazil@clarktrev.com by email at or telephonically by calling the author at (213) 629-5700.

0 comments on “Are Your Exempt Employees Still Exempt?”

Are Your Exempt Employees Still Exempt?

By Deborah Petito |

Just a reminder that the minimum wage in California increased to $10/hour on January 1, 2016.   Some cities and counties, including San Francisco and San Jose, have set higher minimum wage rates and employers should check their local jurisdiction.  The California Labor Commissioner has the authority to enforce the local minimum wage rates effective January 1st.  Also, keep in mind that exempt employees must make a minimum of two times the minimum wage.  Hence, exempt employees must make a minimum of $41,600 per year.  The minimum annual salary will be greater if the local minimum wage is higher.  If an exempt employee’s salary is less than $41,600, it does not matter what their job duties and responsibilities are, they will not be considered exempt in California and must be paid overtime and provided rest and meal breaks.

This is a good time to review your exempt positions to ensure that they meet the California and federal requirements for exemption, starting with the salaries.

Thank you for joining us on ClarkTalk!  We look forward to seeing you again on this forum.  Please note that the views expressed in the above blog post do not constitute legal advice and are not intended to substitute the need for an attorney to represent your interests relating to the subject matter covered by the blog.  You should certainly consult legal counsel of your choice when considering this or any other employment issue.  If you wish to consult with the author of this post or another attorney at Clark & Trevithick, please contact Debbie Petito dpetito@clarktrev.com or Leonard Brazil lbrazil@clarktrev.com by email at or telephonically by calling the author at (213) 629-5700.

0 comments on “Traps for the Unwary Lurk in New Paid Sick Leave Law”

Traps for the Unwary Lurk in New Paid Sick Leave Law

By Leonard Brazil

We’ve entered a new year and employers are scrambling to ensure they are in compliance with another layer of employment laws.  But first make sure you’ve already properly implemented the paid sick leave law that effectively kicked in on July 1 of last year and has already been amended once!

You are probably aware of the paid sick leave law so I won’t summarize it.  (You can review a summary here).  Instead, I want to focus on some of the traps for the unwary–nuances in the law which leave employers vulnerable to unknowing violations.

Employee Handbook’s Inclusion of Introductory Period.  Check whether your employee handbook includes a policy that a new hire’s first 30, 60 or 90 days is an “Introductory Period.”  Some of those policies state new hires must complete their Introductory Period before they begin to accrue sick leave or paid time off (PTO).  Such a delay in the accrual of sick leave or PTO would violate the paid sick leave law.  New hires are to commence accrual (or sick leave front loaded) immediately when hired if the employee has already worked in California for at least 30 days for the same employer within a year of commencement of employment.

Inconsistency With Family & Medical Leave Act.  Another trap for employers arises if they are covered by the federal Family & Medical Leave Act/California Family Rights Act (collectively “FMLA”).  Under the FMLA, the minimum increment of leave you may require an employee to take cannot exceed 1 hour.  However, the paid sick leave law states the minimum increment an employer may impose for the use of sick leave cannot exceed 2 hours.  The FMLA and paid sick leave law have different minimum increments of leave an employer can require.  A problem may arise because some FMLA policies state employees are required to use available sick leave while on FMLA for their own serious medical condition.  If employees take leave of 1 hour under the FMLA for their own serious medical condition and the employer applies available sick leave to the FMLA absence of 1 hour, the employer will have violated the sick leave law which does not allow sick leave in increments of less than 2 hours.

Determining Minimum Front Load Requirement.  The poorly drafted sick leave law also exposes employers to another surprise violation.  The law states an employer may “front load” sick leave at the beginning of the year instead of having it accrue through the year so long as the leave is not less than 24 hours or 3 days.  The California Division of Labor Standards Enforcement (DLSE) interprets the “24 hours or 3 days” differently than you may have thought.  The DLSE states that if a part-time employee works, for example, 4 hours a day, the minimum amount of leave which must be front loaded is not the amount of time they worked in 3 days (12 hours) as one would think—it would be 24 hours (See August 8, 2015 DLSE Opinion Letter).  I hope the DLSE’s interpretation will be rejected by the courts because it seems absurd to give employees more sick leave pay for their absence than would have been received if they actually worked those days!  Likewise, the DLSE states an employee working a regular shift in excess of 8 hours would be entitled to receive sick leave based on the total hours worked in 3 days.  For example, employees with a regular 10-hour shift would be front loaded 30 hours, not 24 hours.

Plaintiff employment lawyers will automatically look at an employer’s sick leave policy with the hope of snaring unsuspecting employers who think they are safe because they prepared a sick leave policy to comply with the new law—but have they?

Thank you for joining us on ClarkTalk!  We look forward to seeing you again on this forum.  Please note that the views expressed in the above blog post do not constitute legal advice and are not intended to substitute the need for an attorney to represent your interests relating to the subject matter covered by the blog.  You should certainly consult legal counsel of your choice when considering this or any other employment issue.  If you wish to consult with the author of this post or another attorney at Clark & Trevithick, please contact Debbie Petito dpetito@clarktrev.com or Leonard Brazil lbrazil@clarktrev.com by email at or telephonically by calling the author at (213) 629-5700.

0 comments on “Ever Heard of Comparable Worth? California’s New Gender Equity Law May be the Next Big Employment Issue”

Ever Heard of Comparable Worth? California’s New Gender Equity Law May be the Next Big Employment Issue

In the 1980s there was an to attempt to require employers to compensate male and female employees equally for comparable work.  It was commonly referred to as “comparable worth.”  It required that jobs of various types be compared to other “similar” jobs and that employees in both jobs be compensated at the same rate.  The idea was that some jobs were normally occupied by women and others by men so the types of duties and responsibilities of different positions should be compared to determine if these jobs were comparable to others and should be paid at the same rates.  The problem was determining what constituted “similar” work.  Is a nurse the same as an engineer?  Or a mechanic?  You can see the problems that arose and it was eventually abandoned.

The Amended Law

This year, the California Legislature has taken a step back towards comparable worth in their amendment of Labor Code section 1197.5.  This is not a new law.  Labor Code section 1197.5, passed in 1949, has always required that employees be compensated equally.  It previously prohibited an employer from paying an employee less than the compensation paid to an employee of the opposite sex in the same establishment for equal work in jobs that required equal skill, effort and responsibility.  The changes in the law effective January 1, 2016, remove the location element and place the burden on the employer to show that the differences in pay  are not based upon gender.

Specifically, the California Legislature has amended the statute eliminating the terms “within the same establishment,” “equal work” and “equal skill, effort and responsibility.”  Now California law prohibits an employer from paying any of its employees of the opposite sex different compensation for “substantially similar work, when viewed as a composite of skill, effort and responsibility.”  It appears that location can no longer be a consideration.  Should a  position in San Francisco be paid the same as a “similar” position in Los Angeles?  What about Fresno?  What is a similar position?  What happened to compensation to recruit and retain?  As you can see, employers are now required to make very difficult judgment calls on which positions are similar.

The changes place the burden on the employer to affirmatively show that any difference in compensation is not unlawful.  The employer cannot pay employees of the opposite sex different rates for “substantially similar work, when viewed as a composite of skill, effort, and responsibility, and performed under similar working conditions.”  These terms are not defined.  However, the employer can pay different rates if such rates are based on (1) a seniority system; (2) a merit system; (3) a system that measures earnings by quantity or quality of production;  or (4) a bona fide factor other than sex such as education, training or experience.

The law also now prohibits retaliation against an employee who discloses their own wages, discusses the wages of others, inquires about another employee’s wages, or aids and encourages another employee to exercise his or her rights under this statute.  California already has a law that prohibits employers from preventing employees from discussing their compensation (sometimes referred to as the 9 to 5 law because it was authored by Tom Hayden, then married to Jane Fonda who starred in the movie “9 to 5”) and, therefore, employees are able to discuss their compensation if they choose to do so.

If an employer violates this law, the employee is entitled to the difference in the wage rates and an equal amount as liquidated damages.

The amended law is likely to generate additional litigation and new case law in California as the courts determine whether positions are comparable and evaluate employer defenses to differences in pay rates.

Affirmative Steps to Take to Determine if the Wages Paid by your Company or Organization are in Compliance

So, what precautions may an employer take?  There are several proactive steps that you can take:

  1. Conduct an audit of your compensation for the same positions and do that on a state-wide basis.
  2. Compare positions that are close to the same compensation level.  Determine if certain jobs are paid less and whether there is a gender tie to the pay differential.  Remember that paying a man (or woman) more because they are the “head” of the family or the sole or major breadwinner will be in violation of the law.
  3. Evaluate all positions to determine which ones are require similar skill, effort and responsibility. Do these jobs tend to be held by women or men?  Are they paid at different rates?
  4. Make sure any compensation adjustments are adequately documented so you can justify raises that are unequal.
  5. Make sure that anyone involved in hiring, or those who determine starting salaries and/or increases in wages are aware of the new law and that decisions are carefully documented.

Although immediate litigation in this area is not likely, it is prudent to try to bring your company or organization into compliance now rather than when you are gathering documents and preparing for litigation.

Thank you for joining us on ClarkTalk!  We look forward to seeing you again on this forum.  Please note that the views expressed in the above blog post do not constitute legal advice and are not intended to substitute the need for an attorney to represent your interests relating to the subject matter covered by the blog.  You should certainly consult legal counsel of your choice when considering conducting a review of your pay practices.  If you wish to consult with the author of this post or another attorney at Clark & Trevithick, please contact Debbie Petito dpetito@clarktrev.com or Leonard Brazil lbrazil@clarktrev.com by email at or telephonically by calling the author at (213) 629-5700.