California HR Compliance Update

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California HR Compliance Update 09-30-10

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California HR Compliance Update

  1. 1. – KPA CONFIDENTIAL – California HR Compliance Update Thank you for joining us. We will begin at 10am MST.
  2. 2. CNCDA Seminars Speakers: John Boggs – Legal Counsel Peter Welch - CNCDA President Brian Maas - CNCDA Government Affairs Jonathan Morrison - CNCDA Staff Counsel Health insurance experts Register at: http://www.cncda.org/events/ Legal_and_Regulatory_Update _Flyer.pdf
  3. 3. CNCDA Seminars
  4. 4. Employers are required to comply with a myriad of complicated local, state and federal employment regulations. These regulations are difficult to understand, poorly communicated by regulatory agencies and continually changing. As the cost of non-compliance continues to skyrocket in both punitive fines and employee litigation costs & settlements, the challenge is made worse by economic downturn and the increase in employee ligation that results from hard times. EVER FEEL LIKE YOU ARE PREY? Webinar Overview
  5. 5. POPULAR WAGE- HOUR LAWSUITS *Meal Break and Rest Period Claims *Commission Pay Plan Problems *Overtime Exemptions Challenges *Unlawful Deductions from Pay Charge-Backs “Costs of Doing Business” *Proper Overtime Calculations Regular Rate of Pay Issues Bonuses Variable/Hybrid Pay Plans
  6. 6. MEAL BREAKS & REST PERIODS #1 Basis for Wage/Hour Suits Against Dealers • 30 minutes for each five hours, unless less then six or less than 12 hours (can be waived only if first not waived). • Must clock in and out or at the very least keep a record that the lunch break was taken • 10 minute rest period (paid) for each four hours of employment
  7. 7. Meal and Rest Compliance Unresolved - Case to Watch! • Compliance with California's meal- and rest-period requirements has been a source of significant litigation in both federal and state courts. • In early 2008, class certification for a meal- and rest-period lawsuit was denied by a federal district court, which found that nothing in California law required the employer to ensure that employees took their meal breaks, but rather the employer need only supply or make such time available to employees. Brown v. Federal Express Corporation 249 F.R.D. 580 (2008) • However, because this is a federal court ruling it did not change the law in California that employers must ensure employees stop working during their meal breaks. As such, merely providing meal breaks to nonexempt employees is insufficient.
  8. 8. • Then, in July 2008, a California court of appeal denied class certification for almost 60,000 restaurant employees because the lower court did not properly consider the elements of the employees' claims in determining if they were susceptible to class treatment. Specifically, the court found that: – While employers cannot impede, discourage or dissuade employees from taking rest periods, they need only provide, not ensure, rest periods are taken. – Employers need only authorize and permit rest periods every four hours or major fraction thereof and they need not, where impracticable, be in the middle of each work period. – Employers are not required to provide a meal period for every five consecutive hours worked. – While employers cannot coerce, require or compel employees to work off the clock, they can only be held liable for employees working off the clock if they knew or should have known they were doing so. • Because rest and meal breaks need only be made available and not ensured, the court also found that individual issues predominate and, based upon the evidence presented to the trial court, they are not amenable to class treatment. • Further, the off-the-clock claims are also not amenable to class treatment because individual issues predominate on the issues of whether employees were forced to work off the clock, whether the employer changed time records and whether the employer knew or should have known employees were working off the clock. Brinker v. Superior Court 165 Cal. App. 4th 25 (2008) • This case was appealed to the California Supreme Court, which stayed the holding. The Supreme Court had not yet decided whether it will hear this case as of the date of publication. That places the ruling on hold and is therefore not enforceable law as of this time. • A new appellate case was decided following Brinker but we have to wait and see what happens in Brinker.
  9. 9. What Should You Do? • Contact legal counsel to ensure that your policies reflect the most prudent practices relating to meal and rest breaks and tracking employee time. • Always track hours worked and not worked by all nonexempt employees. • Make sure supervisors and managers consistently enforce your policies and procedures, in particular, as they relate to meal and rest breaks for exempt and nonexempt employees—Strongly consider a written certification under penalty of perjury confirming that all meal breaks and rest periods were taken.
  10. 10. TIME FOR PAYMENT Standard Rule: Wages must be paid twice per month on regularly scheduled pay days. Exceptions for white collar and some defined industries.
  11. 11. Payment on Resignation Within 72 hours of resignation or within 72 hours of notice of resignation, whichever is later. Payment on Termination At time of termination
  12. 12. Penalty Pay One day of wages for each day late up to 30 days of penalty pay– about six weeks of pay. Plus attorney fees and costs
  13. 13. COMPENSATION PRIMER: THE BASICS Fine $100/$200 per Pay Period per Person fine Problem Areas Lunch Periods for Sales, F&I, Service Writers Record Keeping Accurate record of hours worked each day/week and amounts paid and deducted
  14. 14. Equal Pay Must pay male and female employees performing “substantially equal” work the same wages unless based on other legitimate factor
  15. 15. CHILD LABOR ISSUES Age 16 - limit for general occupations Age 18 limit for 17 occupations declared "hazardous" (with some exemptions for apprentices and student learners), such as driving on public roads; and 14- and 15-year-olds may be employed in limited sales and clerical occupations, with strict hours and times-of-day limitations.
  16. 16. MINIMUM WAGE California minimum wage is $8.00 per hr. Deductions or required employee payments for "tools of the trade"; uniforms required by the employer, by law, or by the nature of the work (including maintenance); cash or inventory shortages; "out of policy" checks; expenses incurred for the employer, etc., cannot cut into the minimum wage.
  17. 17. Willful Misconduct or Gross Negligence Not mere stupidity!! 2x Minimum Wage for Providing Own Tools Tool Certification To Solve the Problem UniformsUniforms -- Cannot charge for cost or maintenance (including Laundering)
  18. 18. Over eight in a day or forty hours in a week is time and one-half. Any work in excess of 12 hours in one day shall be compensated at the rate of no less than twice the regular rate of pay for an employee. OVERTIME RULES DAILY AND WEEKLY
  19. 19. First eight hours worked on the seventh consecutive day of work in any one workweek shall be compensated at the rate of no less than one and one-half times the regular rate of pay for an employee. In addition, any work in excess of eight hours on any seventh consecutive day worked of a workweek shall be compensated at the rate of no less than twice the regular rate of pay of an employee.
  20. 20. OVERTIME PAY HOURS WORKED DOES NOT INCLUDE VACATION, SICK LEAVE OR HOLIDAY DAYS SWEAT TIME
  21. 21. HOURS WORKED Employers must accurately record and properly pay for all "hours worked," i.e., all the time for which an employee is "suffered or permitted" to work. “Hours worked" generally includes all time which an employer knows or has reason to know an employee has worked -- not just that work an employer has expressly directed to be done.
  22. 22. HOURS WORKED Thus, employers must evaluate what activities are "hours worked" and must develop an effective system for capturing that time in their records. Problem Areas: Work done at home or away from office
  23. 23. Work before and after scheduled shifts or "normal" hours, such as pre- or post-shift work, "shift change" overlap, or close-up time; Otherwise idle "on-call" time during which the employee's use of the time for personal pursuits is restricted; Examples of hours worked which often are not properly included
  24. 24. Short break periods, and meal periods during which employees are not completely relieved of their duties; Some types of training time; Some travel time, such as travel between locations during a workday; Work done at home; Work done away from the office; Meeting time; and Work at more than one location.
  25. 25. OVERTIME EXEMPT OR NOT EXEMPT? THAT IS THE QUESTION
  26. 26. COMMON OVERTIME EXEMPTIONS Commission Exemption Executive/Managerial Exemption Administrative Exemption
  27. 27. THE WHITE COLLAR EXEMPTIONS Executive, Administrative and Professional Overtime Exemptions Salary Test– at least $2773.00 per month Problem: Commissioned Managers not involved in selling Primary Responsibility Test: Many employers are misled by common misconceptions such as that "salaried" employees need not be paid overtime, or that "everybody" pays this or that kind of employee as being "salaried-without- overtime.”
  28. 28. THE WHITE COLLAR EXEMPTIONS Must spend more than 50% of time at work exercising independent judgment and discretion as to matters of importance (managing 2 or more full-time employees, administration of general business operations such as CFO, Director of HR, etc.)
  29. 29. Salary is for 40 hours only-- overtime for up to four years Penalties for non-payment of overtime Attorney fees for the employee’s attorney Errors Regarding Exempt Status
  30. 30. THE SALARY TEST Don’t Lose Salary Status
  31. 31. LOSING SALARY STATUS No Exemption from Overtime To avoid losing the salary test, deductions may generally be made only: For absences of one or more whole days due to personal reasons other than sickness, accident, or disability; For absences of one or more whole days caused by sickness, accident, or disability IF this is done in conjunction with a bona fide sick-pay plan;
  32. 32. For time not worked in the initial or terminal week of employment; For penalties imposed in good faith for violating safety rules of major significance; or To offset any amounts an employee received for jury duty or witness fees or as military pay.
  33. 33. OVERTIME EXEMPTION COMMISSION SALES One and One-Half Times the Minimum Wage More Than Half of Earnings from Commission Must be involved in selling-- not performing services
  34. 34. WARNING! DON’T LET A SALARY OR HOURLY WAGE EXCEED THE AMOUNT OF COMMISSIONS EARNED OR YOU WILL LOSE THE EXEMPTION WARNING! MAKE SURE TO DISCLOSE PACKS ON PAY PLAN WARNING! MAKE SURE YOU DEFINE EARNED COMMISSIONS
  35. 35. OVERTIME EXEMPTION COMMISSION SALES MINIMUM WAGE OVERTIME EXEMPTION VS. FLUCTUATING WORK WEEK
  36. 36. ALTERNATIVES TO OVERTIME RESTRUCTURE PAY PLAN TO MAKE COMMISSIONED RESTRUCTURE PAY PLAN AS FLUCTUATING WORK WEEK-Piece Rate Worker
  37. 37. PIECE RATE & NON-EXEMPT COMMISSION FLAT RATE TECHNICIANS ARE NOT EXEMPT FROM OVERTIME Fluctuating Work Week Overtime Total Earnings divided by Total Hours Worked= Regular Rate 1/2 the Regular Rate for every overtime hour Problem Area: Must Pay Overtime on Bonuses, Not just Hourly and Flat Rate Pay
  38. 38. The example below assumes a seven day workweek with 50 hours actually worked (sweat time). This calculation is based on a piece rate of $20.00 per piece. 1. Total Flag Hours Paid: 42 at 20.00 per piece = $840.00 2. Total Hours Actually Worked (i) 40 straight-time hours 40 (ii) 10 overtime hours 10 3. Regular Rate = $840.00 (total earnings) ÷ 50 hours (total hours worked) =$16.80 4. Hourly Overtime Rate = $16.80 X .50 $8.40/hour 5. Overtime Due = 10 hours @ $8.40/hour $84.00 6.Total Compensation Due (42 Flag Hours x $20.00) = $840.00 (10 overtime hours x $8.40) = $84.00 Total Compensation = $924.00
  39. 39. PAID VACATION No Use it or Lose It Maximum Accrual is Okay PTO treated like Vacation PAID HOLIDAYS Be Careful On Floating Holidays PAID SICK LEAVE A Good Thing for Salaried Managers
  40. 40. Alternative Work Week Rules Meeting Secret Ballot Election- 2/3 Majority Vote Notification to DLSE Don’t back into it Make-Up Time Rule Compensated Time Off New Harsher Penalties
  41. 41. DEALERSHIP PROFIT-BASED PAY PLANS UNDER ATTACK! DO YOU NEED TO CHANGE YOUR PAY PLAN? • “Packs” represent potential problems, if they are used, they should be specifically identified by dollar amount (no “hidden” “undisclosed” packs) in a signed pay plan. Packs should never be identified as a way to allocate overhead or expenses, but instead should be described as “an amount of the gross profit on which the salesperson is not paid a commission.” • If salespeople are not paid on under-allowances, or if over- allowances are charged against commissionable gross, that should also be identified. Likewise, if salespeople are not paid on factory incentives and/or holdback, that should be made clear in the pay plan.
  42. 42. Questions and Answers John P. Boggs, Esq. Fine, Boggs & Perkins LLP (650) 712-8908 jboggs@employerlawyers.com
  43. 43. Contact Information www.kpaonline.com bross@kpaonline.com 866-356-1735

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