Shaw Law Group's New Blog Site

Greetings, all,

Shaw Law Group will be posting at http://shawlawgroup.com/BLOG/

I am trying to seamlessly transfer our mailing list over there.  But it's possible I will be unsuccessful.  I'll let you know.

Other than a possible update about the transfer, there won't be any most posts to this site.  However, there is a link on the new blog for those of you who are nostalgic or wish to search the old site's treasure trove of wit and wisdom, and modesty.

We have a new Twitter feed as well:  @ShawLawTweets .   If all goes according to plan, the new blog's posts will appear there, too.

Facebook page, for those of you who got through the election without deleting Facebook, is going to be live soon.

If you are having trouble with any of this, please send an email to info @shawlawgroup dot com and we'll do our best.

Blog to you soon,

Greg

Shaw Valenza Blog Name and URL Address Change

Our firm's name is changing to Shaw Law Group PC.  So, we'll be changing this blog's URL to shawlawgroup.blogspot.com.  As soon as I find out what this means for email subscribers, I'll let you know.  However, we ultimately will be blogging on our new, awesome website, soon to be unveiled at www.shawlawgroup.com.

Shaw Valenza LLP had a great run. 10 1/2 years and hundreds of posts to this blog. Some of which may have contained helpful information.

Shaw Law Group is continuing the run. Yes, for those wondering, Greg will be there. And so will the blog.

See you on the other side....

Greg

Sit Down. Rest for a Period. OK, Now Get Up and Rewrite All Your Policies and Procedures.

The California Supreme Court has just issued a Christmas present to the plaintiffs' bar. The Court was generous with a coal delivery to employers as well.  

OK, holiday segue over.  Whatever you thought you knew about rest breaks in California was wrong.  The high Court today decided Augustus v. ABM, which presented two issues: 

1.  Must an employee be relieved of all duty for a paid, ten-minute, rest period? 

2.  If you are "on call" during a  rest period, does it count as a lawful break? 

The Court in a 5-2 opinion decided these questions "Yes," and "No." And that means employers must institute major changes and that there will be waves of new class action lawsuits in 2017.  

A Little Background

The case arose in the security guard industry.  ABM required its guards to take rest breaks with pagers in case there was a need for their services.  There was disputed evidence over whether they actually were bothered during breaks, and how often.  There was evidence that employees were able to surf the internet, eat snacks, etc. even while tethered to that pager for the ten minutes of break time that must occur every four hours (or major fraction thereof) under California law.  

A trial judge in LA granted the plaintiffs' motion for summary judgment and awarded the class some $90 million in penalties, including an hour of penalty time for each day worked.  Because the employees were on call, the trial court said, they were NEVER on break.  The court of appeal reversed that decision and held that being on call, without being called, is still a break. 

Supreme Court Decision 

The Supreme Court, however, agreed with the trial court. Here is the Court's rule regarding rest periods:

state law prohibits on-duty and on-call rest periods. During required rest periods, employers must relieve their employees of all duties and relinquish any control over how employees spend their break time.  

I'll spare you the analysis.  Essentially, the Court decided that only a completely duty-free rest period fulfills the Legislature's intent of promoting employee welfare and safety. Justice Cuellar, one of the two new justices, authored the majority opinion.  The other new member of the Court, Justice Kruger, wrote a concurring / dissenting opinion, joined by Justice Corrigan.

This holding has several consequences:

1.  Relieving employees of all duties is the same standard as the Court previously applied to meal periods in the Brinker case.  Yes, rest periods are paid, while meal periods are not.  Yes rest periods  are only 10 minutes; meal periods are 30 or more.  None of that matters.  

2.  To ensure the employee is relieved of all duty, employers must treat employees during rest periods the same as they are treated for meal periods. No rest breaks at your desk or in the work area if being in the work area means the employee is even potentially going to be interrupted.  No requiring employees to help customers if they come in during the break.  Potential interruption - being on call - means a non-compliant break.  A non-compliant break means a one-hour penalty per day.   

3.   Employers should schedule rest periods and should be able to explain how there is "coverage" for the employees on break. Breaks should be structured and managed so the employee is incapable of helping a customer or even discussing work with a manager.  There should be a rest area, where management is trained employees are off limits.  Or, if possible, employers may require employees to leave the work area or go outside.   Employers in certain circumstances may have to consider hiring extra workers to cover rest periods to prove that they receive employees of all duty. 

4.   "Relinquishing control" requires changes.  It was generally understood that an employer could restrict an employee from leaving the work premises during a paid rest period.  Under California law, prohibiting employees from leaving the premises is "control."  That is why employers cannot restrict employees from leaving during meal periods. Recognizing that rest breaks are shorter than meal periods, the Supreme Court expressly stated that an employee's inability to leave the premises and timely return from break does not constitute employer "control" in the rest break context. But the Court did not say employers can require employees to remain on premises, either.  So, from a risk avoidance standpoint, the safer practice is to banish employees from the work area. (Of course, if an employee returns from break late, the employee is subject to discipline. And that employee will claim retaliation for taking a break.)  

5.  Naturally, employers may find the above restrictions unreasonable. When interruptions happen, as they must from time to time, the Court noted that the break can be rescheduled, or the employer can pay the penalty.  However, the Court also mentioned that regular interruptions are not allowed.

6.  Employers' rest period policies should affirmatively state that employees are free from any duty, must take breaks as scheduled, and are prohibited from working, being available to work, etc. during rest periods. 

7.  The Court noted that the DLSE has the power to grant exemptions under certain circumstances when it is impossible to afford employees completely duty free breaks.  The exemption provision is section 17 of Wage Order No. 4.  Employers may wish to become familiar with this provision and, if appropriate, use it. 

17. EXEMPTIONS
If, in the opinion of the Division after due investigation, it is found that the enforcement of any provision contained in Section 7, Records; Section 12, Rest Periods; Section 13, Change Rooms and Resting Facilities; Section 14, Seats; Section 15, Temperature; or Section 16, Elevators, would not materially affect the welfare or comfort of employees and would work an undue hardship on the employer, exemption may be made at the discretion of the Division. Such exemptions shall be in writing to be effective and may be revoked after reasonable notice is given in writing. Application for exemption shall be made by the employer or by the employee and/or the employee’s representative to the Division in writing. A copy of the application shall be posted at the place of employment at the time the application is filed with the Division.

8. Caveat: This case is decided under Wage Order 4, a wage order that applies to many office workers and other occupations not covered by the Industry Orders.  The other Wage Orders also contain rest period provisions. Some are different (such as Wage Order 5's).  So, read your wage order and know which one(s) apply before assuming Augustus is applicable to your business. (In most cases, it is.)  

Status of On-Call / Standby Time After Augustus?

You may ask yourself, if merely carrying a pager does not constitute being "relieved of duty," then must I now pay my employees when they are at home, "on call"?  And must unpaid on-call employees be given paid, duty free rest periods? 

No. The standards regarding rest breaks at work are not the same as the standards applicable to employees who are "on call" at home.  Why? Because the Supreme Court said so:

Plaintiffs argue that the on-call break time here constituted compensable work under Mendiola, supra, 60 Cal.4th 833, so there was no way it could satisfy ABM‘s obligation to provide duty-free rest periods. ABM cites Mendiola for the opposite proposition. But Mendiola is distinguishable. For one thing, shifts lasting eight hours (e.g., Mendiola) or longer (Madera Police Officers Assn. v. City of Madera (1984) 36 Cal.3d 403, 412 [involving 24-hour shifts]) are significantly different from breaks, which are short in duration, break up work periods, and thereby protect employees‘ health and safety (Murphy, supra, 40 Cal.4th at p. 1113). For another thing, factors relevant to the extent of employer control during an on-call shift of eight hours or more are inapposite in the context of a rest or meal period. (Mendiola, at p. 841 [e.g., on-premises living requirement, excessive geographical restrictions, etc.].)

The Court's statement, appearing in a footnote, means that this case has nothing to do with "on call" time occurring when the employee is punched out.

So, that's Augustus v. ABM.  The opinion is here.  It is a major decision about rest periods that require virtually all employers to review policies and make changes. 

IRS Mileage Rate for 2017

As we say goodbye (go away, and never come back) to 2016, let's make sure you're ready for the New Year.

Big changes are in store.  And by big changes, I must mean the IRS Standard Mileage Rate.  That's the rate at which employers may reimburse employees for use of their personal vehicles for work without creating reportable income.  I know you've been waiting for this post all year.

The 2017 Standard Mileage Rate will be as follows:

Beginning on Jan. 1, 2017, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

• 53.5 cents per mile for business miles driven, down from 54 cents for 2016
• 17 cents per mile driven for medical or moving purposes, down from 19 cents for 2016
• 14 cents per mile driven in service of charitable organizations

So, that's a decrease of one cent per mile for business reimbursement.

Here's the link to the IRS's own website.

The next post is longer and very unsettling about rest periods.  So I'll use this post to wish you happy holidays, Merry Christmas and happy new year!

Court of Appeal: Wage Statements Need Not Include Vacation and PTO Balances

Labor Code section 226 explains in detail what information must be included in an itemized wage statement, which must accompany paychecks in California.  Here are the section's requirements:

(1) gross wages earned, 

(2) total hours worked by the employee, except for any employee whose compensation is solely based on a salary and who is exempt from payment of overtime under subdivision (a) of Section 515 or any applicable order of the Industrial Welfare Commission, 

(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, provided that 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 only 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 and, if the employer is a farm labor contractor, as defined in subdivision (b) of Section 1682, the name and address of the legal entity that secured the services of the employer, and 

(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 and, beginning July 1, 2013, if the employer is a temporary services employer as defined in Section 201.3, the rate of pay and the total hours worked for each temporary services assignment.

The deductions made from payment of wages shall be recorded in ink or other indelible form, properly dated, showing the month, day, and year, and a copy of the statement and the record of the deductions shall be kept on file by the employer for at least three years at the place of employment or at a central location within the State of California. For purposes of this subdivision, “copy” includes a duplicate of the itemized statement provided to an employee or a computer-generated record that accurately shows all of the information required by this subdivision.

Oh, but if you pay a piece rate, you also have to comply with section 226.2:

(a) For employees compensated on a piece-rate basis during a pay
period, the following shall apply for that pay period: * * *  

(2) The itemized statement required by subdivision (a) of Section 226 shall, in addition to the other items specified in that subdivision, separately state the following, to which the provisions of Section 226 shall also be applicable: 

(A) The total hours of compensable rest and recovery periods, the rate of compensation, and the gross wages paid for those periods during the pay period.

(B) Except for employers paying compensation for other nonproductive time in accordance with paragraph (7), the total hours of other nonproductive time, as determined under paragraph (5), the rate of compensation, and the gross wages paid for that time during the pay period.

So, do you see vacation or PTO balances there?  Me neither.  Neither did the Court of Appeal, which rejected the plaintiff's claim in Soto v. Motel 6 Operating LP (opinion here).  The Court wrote:

section 226(a) is highly detailed, containing nine separate categories that must be included on wage statements, and the code section does not identify accrued paid vacation as one of these categories. (See fn. 2, ante.) When a statute omits a particular category from a more generalized list, a court can reasonably infer a specific legislative intent not to include that category within the statute's mandate. (See Blankenship v. Allstate Ins. Co. (2010) 186 Cal.App.4th 87, 94.)
*  *  *  *
[V]acation pay cannot be fairly defined as "gross wages earned" or "net wages earned" under section 226(a)(1) or (a)(5) until the termination of the employment relationship. The employee has vested rights to paid vacation or vacation wages during the time of his employment, but these rights do not ripen and become an entitlement to receive the monetary value of the benefit as wages until the separation date. (Church, supra, at pp. 1576-1577, 1583; see Suastez, supra, 31 Cal.3d at p. 784.) Further, before separation, the amount of vacation pay to which the employee is entitled is not ascertainable. An employee is entitled to obtain the value of unused paid vacation at his or her "final rate." (§ 227.3, italics added.) Because the amount of unused vacation and an employee's final rate may change, an employee's accrued vacation balance depends on the particular circumstances at the employment termination date.

This will help employers not only with claims that vacation / PTO belong on the wage statement, but also with other items not included in section 226.  Section 226 also requires employers to provide a copy of payroll records that include only the above 9 items.  Plaintiff lawyers argue that section 226 requires more than what is listed. This decision in Soto should put that issue to rest. 

One more tip:  employers have to report paid sick leave on the wage statement (or in a separate document) per  Labor Code section 246, subd. (h):

(h) An employer shall provide an employee with written notice that sets forth the amount of paid sick leave available, or paid time off leave an employer provides in lieu of sick leave, for use on either the employee's itemized wage statement described in Section 226 or in a separate writing provided on the designated pay date with the employee's payment of wages.

Therefore, employers that rely on PTO in lieu of mandatory paid sick leave might well have to provide the PTO balance on the wage statement (or in the separate document).  Apparently that was not the case in the Soto case, or no one brought it up.   

Be careful out there.

New Laws for 2017 - Shaw Valenza's Annual Employment Law Update

We're not publishing here on the blog as regularly as we'd like. And there are just too many new laws to cover.

The California legislature was very busy last year.  Everything from a separate retirement plan for employees without an employer 401k, to expanding the equal pay law to race and "ethnicity," to a phased in $15.00 minimum wage, to penalties for mishandling I-9 verification, and more.  Long quiet, the federal government is going after employers as well, with agency decisions and regulations.    Joint employer rules, paid sick leave for federal contractors,  Let's not forget the many court decisions that shape the law in new and exciting ways (unrelated to class action certification or arbitration, even).

With the blog publishing less frequently, where o where can one get accurate summaries of the important employment law changes that will affect HR and business people in 2017?

Thank you for that excellent question.  The answer is:  SV's annual employment law update. We've been doing it for years and years.  No lie: the live sessions almost always sell out.  The webinar is available, but live is always better.

As of now, we have a live session in Sacramento now set for December 1. Get info here.
Our first webinar is set for January 19, 2017. Info is here.

Please tell your friends too.  They'll thank you, assuming they have some interest in employment law. Otherwise, they'll probably be annoyed.

Best.

Federal Contractors: Federal Paid Sick Leave Final Regulations Are Here

California employers have to provide paid sick leave.  How much paid leave, and how to administer it, depends where your business is located within the Golden State.  There is a statewide law, and a growing list of local ordinances.  San Francisco, Oakland, Emeryville, and Los Angeles are some of the localities that have passed ordinances.  Employers trying to harmonize state and local law must  provide leave on whatever terms are most generous.  That can cause some traps, particularly with respect to how the leave accrual is counted.  And don't forget the posters!

Sure, California could pass a law preempting the local ones to make life easier for employers and still provide employees with leave. But making things easier for employers is just not job 1 at the Legislature.

Now, there is yet another law that requires employers' attention. Back in September 2015, President Obama issued an Executive Order, No. 13706, in which he ordered employers with federal contracts to provide employees working on those contracts with paid sick leave.  The US Department of Labor issued proposed regulations, which are now final.

A summary of the regulations, the comments and the final regulations are in this very long PDF. 

To break it down,

 - the first 10 pages contain a summary of the various regulations
- the next 394 pages are a detailed analysis including responses to the 35,000 comments that were submitted regarding this regulation.
- Page 404 of the PDF is where the regulations begin.

What is  a Contractor and What Contracts are Covered? 

Section 13.2 (p. 406 of the PDF) of the new regulation defines who is a federal contractor, covered by the rule:

Contractor means any individual or other legal entity that is awarded a Federal
Government contract or subcontract under a Federal Government contract. The term contractor refers to both a prime contractor and all of its subcontractors of any tier on a contract with the Federal Government. The term contractor includes lessors and lessees. The term employer is used interchangeably with the terms contractor and subcontractor in various sections of this part.

Of note, the term "employee" is defined (pp. 410-411 of the PDF) as limited to those who work on federal contracts. So, employers that have operations that are separate from servicing the federal contract are not covered by this rule.

The coverage of the types of contracts that the regulation applies to is explained in section 13.3, at pp.  417 et seq. of the PDF.

What Is the Sick Leave Entitlement?

That's explained in section 13.5 of the regulation, beginning at page 420 of the PDF.

a contractor shall permit an employee to accrue not less than 1 hour of paid
sick leave for every 30 hours worked on or in connection with a covered contract. A contractor shall aggregate an employee’s hours worked on or in connection with all covered contracts for that contractor for purposes of paid sick leave accrual.

However,

A contractor may choose to provide an employee with at least 56 hours of paid sick leave at the beginning of each accrual year rather than allowing the employee to accrue such leave based on hours worked over time.

So, like California and other jurisdictions, the sick pay accrues at one hour for every 30 hours worked.  More generous than California, the federal entitlement maxes out at seven, eight-hour days.
And the employer can front-load 56 hours to the employee rather than accrue over time.

There are rules regarding "carrying over" at page 423-24 of the PDF.

Pages 425-428 include the terms of the leave, documentation the employer may require, and more.

Pages 428-431 cover the medical certification the employer may require.

Enforcement
The regulation provides for no private enforcement of the paid sick leave law.  Employees claiming a violation of the regulation must proceed through the Department of Labor.

The DOL will investigate and try to address any violations. However, the DOL may sue an employer or seek "debarment" from federal contracts.


Recordkeeping
  Section 13.5 of the regulations require employers to maintain a record of the sick leave employees have accrued and used, and furnish information to employees with the paycheck or online.
 Section 13.25 (page 441 of the PDF) requires contractors to keep a variety records for three years.
That section also requires employers to keep detailed records if they wish to segregate employees' hours worked on federal contracts versus non-contractor work.

Poster
Of course. Section 13.26 describes the obligation to post a notice prepared by the DOL.

*  *  *
Unless Congress or the new president rescinds this rule, it will go into effect.  So, employers with federal contracts, please get ready for the new sick leave obligation, create policies, and determine how you will address sick leave for employees who are not working on the contract.

Finally, I tried my best to summarize 460 pages of rule making and analysis.  If I left anything out important to you or your business, please accept my apologies.  It's best if you click the link above and read the rules along with your employment counsel!

Now please excuse me, I'm feeling a little sick.  SWIDT?

CA Employers: Learn Your I-9 Rules or Pay Up to $10,000

The employment of more undocumented immigrants, formerly known as illegal aliens, remains a top priority for the California legislature.  Whatever you think of that, the policy creates a dilemma for employers. 

The dilemma is that it remains illegal under federal law for employers to knowingly hire or retain those who are not authorized to work in the U.S.  So, employers are supposed to follow immigration law. But the California Legislature does not want employers to follow it too hard, you know? 

This year's disincentive for employers to follow immigration law is called AB 1001 (here).  It will be Labor Code section 1019.1.  

First, this law provides it is unlawful for an employer, while doing its duty under federal immigration law, to 

(1) Request more or different documents than are required under Section 1324a(b) of Title 8 of the United States Code.

So, that means that the employer is limited to asking for what the I-9 authorizes. So far so good.  Employers should be doing that anyway. 

Second, the law makes it illegal for an employer to:

(2) Refuse to honor documents tendered that on their face reasonably appear to be genuine or 

(3) Refuse to honor documents or work authorization based upon the specific status or term of status that accompanies the authorization to work.

Who gets to decide what "reasonably appears to be genuine"? And what does (3) even mean? We should call a lawyer!  Anyway, this section will create an incentive for employers to let false documents pass.  Of course, if a federal I-9 audit reveals the employer should have caught the false documentation, well that's not part of the calculus.

Third,  if an employer learns that someone has falsified information or is illegal to work, or if the authorization documents expire, employers are supposed to re-verify authorization, no?  Not so fast, employers.  It's now illegal for an employer to 

(4) Attempt to reinvestigate or reverify an incumbent employee’s authorization to work using an unfair immigration-related practice.

Ok, I'll bite: What's an "unfair immigration-related practice" and how does one know she is engaging in that practice?

So, what are the consequences for violating section 1019.1? 

 - an applicant or a representative of the applicant, such a union, presumably, can file a complaint with the Labor Commissioner;

- The Labor Commissioner can make an order of "equitable relief."  Yes, back pay is a form of equitable relief.  So is reinstatement. 

- AND, the Labor Commissioner can assess a penalty of up to $10,000.

So, employers must ensure they are complying with the I-9 rules to the letter. Deviations regarding documentation and re verification can lead to heavy financial penalties under state law, in addition to penalties possible under federal law for being too lax. 

Yikes.