Reminder: California Minimum Wage Going Up 1/1/2016

There are so many new laws and rules going into effect that one obvious one may slip through the cracks.  The minimum wage in California is going up on January 1, 2016 to $10.00 per hour.   It says so right here on the old Minimum Wage Notice that has been around for a couple of years now. (HERE).

Because of the minimum wage increase, the California minimum salary for exempt "white collar" employees will increase to $3,466.6667 per month or $41,600 annually.  Also, those of you relying on the inside sales exemption (requiring minimum compensation of 1.5X minimum wage, take note that your employees will have to make at least $15.00 / hour).  

There are other wages pegged to minimum wage as well, but my boundless generosity is limited by time this morning. So, please consult with your attorneys, read your wage orders and labor code, and enjoy time with family and friends this holiday season. 

Best wishes for a safe and enjoyable holiday, and Merry Christmas.

Greg

 

Ninth Circuit Poses Questions to CA Supreme Court Re Suitable Seating Obligations

Happy New Year!
The Ninth Circuit is considering several class action appeals over California's "suitable seating" requirement contained in its wage orders.  Here is an example from Wage Order 7-2001, governing the retail industry:

14. Seats.(A) All working employees shall be provided with suitable seats when the nature of the work reasonably permits the use of seats. 

The Ninth Circuit is considering appeals in two cases.  One involves bank tellers.  One involves retail clerks.

In the retail case, CVS's cashiers spend about 90% of the time working a cash register, ringing up transactions.  The other 10% of the time, she has to walk around the store, performing various tasks. CVS does not provide seats for the cashiering duties, believing that standing employees provide better customer service.  CVS told the plaintiff her job involved extensive standing when it hired her. 

In the bank case, tellers spend a great deal of time at their windows, making deposits, processing withdrawals, etc.  They also escort customers to safety deposit boxes, check ATMs and perform other duties that require mobility.

The employees argue:

if an employee is engaged in a task that can objectively be performed while seated, the employer must provide the employee with a suitable seat. Under this interpretation, neither the employee’s other tasks nor the employer’s business judgment would affect whether the nature of the work reasonably permits the use of seats.

On the other hand, the employers say: 

courts should discern the nature of an employee’s work by considering the entire range of tasks the employee actually performs in combination with the employee’s job description, the layout of the workplace, the employer’s business judgment concerning the employee’s job, and any other factors the court deems relevant. An employer would only be subject to Section 14(A) when all of these factors taken together reasonably permit the use of a seat.

The Court's dilemma is that the Wage Order's text permits either interpretation because it's vague.

So, does the "nature of the work" in either or both cases reasonably permit the use of seats?  And who gets to decide?  The Ninth Circuit wants to know how the California Supreme Court interprets "the nature of the work."  Here are the questions the federal court would like answered:

1. Does the phrase “nature of the work” refer to an individual task or duty that an employee performs during the course of his or her workday, or should courts construe “nature of the work” holistically and evaluate the entire range of an employee’s duties? 

a. If the courts should construe “nature of the work” holistically, should the courts consider the entire range of an employee’s duties if more than half of an employee’s time is spent performing tasks that reasonably allow the use of a seat? 

2. When determining whether the nature of the work “reasonably permits” the use of a seat, should courts consider any or all of the following: the  employer’s business judgment as to whether the  employee should stand, the physical layout of the workplace, or the physical characteristics of the employee? 

3. If an employer has not provided any seat, does a  plaintiff need to prove what could constitute “suitable seats” to show the employer has violated Section 14(A)?

As the Ninth Circuit points out in its request, if the Supreme Court agrees to answer these questions, it will have a significant effect on California employers and employees:

Section 14 could have a dramatic impact on public policy in California as well as a direct impact on countless citizens of that state, both as employers and employees. Even a conservative estimate would put the potential penalties in these cases in the tens of millions of dollars. See Cal. Lab. Code § 2699(f)(2) (“If, at the time of the alleged violation, the person employs one or more employees, the civil penalty is one hundred dollars ($100) for each aggrieved employee per pay period for the initial violation and two hundred dollars ($200) for each aggrieved employee per pay period for each subsequent violation.”); see also Home Depot U.S.A., Inc. v. Super. Ct., 120 Cal. Rptr. 3d 166, 177 (Cal. Ct. App. 2010) (finding California Labor Code § 2699(f)(2) applies to Section 14 of Wage Order 7-2001); Bright v. 99cents Only Stores, 118 Cal. Rptr. 3d 723, 730 (Cal. Ct. App. 2010) (same).

As a former restaurant worker, I was thinking that if the plaintiffs' interpretation is correct, then a waiter taking an order would have the right to sit down at the table?  Taking the order, after all, is a duty that may be accomplished while seated.  How about the bartender?  There are other industries where the task-based approach could change the workplace significantly. Third base coach?  Factory worker?  Professor?  Will the seat have to have wheels if some movement is required within the work area (because that is "suitable")?  Does the employer have any say in what the "nature of the work" involves, or will that be up to the courts / a jury / the Division of Labor Standards Enforcement?   

Anyway, we'll see in the next few weeks if the California Supreme Court is interested in answering these and other questions.  Let's hope these questions are addressed so employers and lower courts may understand what is expected of them.

The case is Kilby v. CVS and the Ninth Circuit's request to the California Supreme Court is here.  As of now, there is no Supreme Court online docket for this case. 

Court of Appeal: On-Call and Sleep Time

CPS guards construction sites.  Some of the security guard employees sleep in on-site trailers.  CPS compensated them for the time they were required to investigate potential problems at the sites, such as break ins.  Otherwise, the employees were considered "on call," but were uncompensated.

On weekday shifts, employees actively worked 8 hours and were "on-call" for eight hours.  On weekends, employees worked 16 hours and were "on call" for eight.  During weekday periods when the construction crews were working, the live-in employees were free to do as they pleased, leave the facility, etc.

The employees who lived in trailers could keep personal items and could have visitors as the client permitted. But families were not permitted to live within the trailers. The trailers were basically small, self-contained, mobile apartments with cleaning facilities, etc.

The live-in employees signed on-call agreements, which provided for circumstances under which the employees could leave the trailers during on-call time:

if a trailer guard wished to leave the jobsite during on-call hours, he or she was required to (1) notify a dispatcher, (2) provide information as to where the guard would be and for how long, and (3) wait for the reliever to arrive.6 After leaving the jobsite, the guard was required to remain within a 30-minute radius and carry a pager or radio telephone. If called during that time, the guard was required to respond immediately. The trailer guards were not allowed to leave a jobsite before a reliever arrived. If no reliever was available, CPS had the right to order a trailer guard to remain at the jobsite, even if the trailer guard had an emergency.

The company did not consider on-call time to be hours worked, but paid employees for time they waited for a reliever or were denied a reliever, as well as when they have to investigate alarms or noises.

Employees sued, claiming they should have been paid for all on-call time, not just the time actually working. The parties agreed that Wage Order 4-2001 applied.

The trial court issued a preliminary injunction, ordering CPS to pay for on-call time pending the resolution of the lawsuit. CPS appealed.  Interestingly, one of the class reps lost a DLSE hearing on the same issue.  Additionally, CPS had sought guidance from the DLSE and U.S. DOL, and conformed its practices based on the opinions received.  Nevertheless, the lawsuits continued and the trial court granted summary adjudication in favor of the plaintiff, holding that the employees should be paid for all on-call time.

So, the issue on review was whether the time employees spent in their trailers should count as "hours worked" under Wage Order 4.  "Hours worked" are “the time during which an employee is subject to the control of an employer, and includes all the time the employee is suffered or permitted to work, whether or not required to do so.” 

The court thoroughly reviewed what it means to be subject to the employer's control, and cited this seven-factor test for on-call situations:

In resolving the degree to which employees are able to engage in private pursuits during on-call time, courts generally apply seven factors: “„(1) whether there was an on-premises living requirement; (2) whether there were excessive geographical restrictions on [the] employee‟s movements; (3) whether the frequency of calls was unduly restrictive; (4) whether a fixed time limit for response was unduly restrictive; (5) whether the on-call employee could easily trade on-call responsibilities; (6) whether use of a pager could ease restrictions; and (7) whether the employee had actually engaged in personal activities during call-in time.‟”

Applying this and other legal principles discussed in the opinion, the court concluded that the weekday on call time should have been paid as hours worked:

By their presence on site during the on-call hours, the guards perform an important function for their employer and its clients: they deter theft and vandalism. CPS promises its clients security services throughout the night and for 24 hours on Saturday and Sunday, and would be in breach if no security guards were present between 9:00 p.m. and 5:00 a.m. The parties‟ On-Call Agreements designate that period as “free time,” but it is clear from the Agreements and the stipulated facts that trailer guards are not free to leave at will. A guard may leave only when and if a reliever is available. From this, it can reasonably be said that the restrictions on the on-call time are “primarily directed toward the fulfillment of the employer‟s requirements,” and the guards are “substantially restricted” in their ability to engage in private pursuits.



* * *


They are required to live on the jobsite. They are expected to respond immediately, in uniform, when an alarm sounds or they hear suspicious noise or activity. During the relevant hours, they are geographically limited to the trailer and/or the jobsite unless a reliever arrives; even then, they are required to take a pager or radio telephone so they may be called back; and they are required to remain within 30 minutes of the site unless other arrangements have been made. They may not easily trade their responsibilities, but can only call for a reliever and hope one will be found.24

Most important, the trailer guards do not enjoy the normal freedoms of a typical off-duty worker, as they are forbidden to have children, pets or alcohol in the trailers and cannot entertain or visit with adult friends or family without special permission. On this record, we conclude the degree of control exercised by the employer compels the conclusion that the trailer guards‟ on-call time falls under the definition of “hours worked” under California law.

However, the court then decided that the on-call time during the weekend, 24-hour shifts was not hours worked. The court relied on decisions holding that employers may deduct 8 hours of sleep time from employees' work time when they are engaged in 24-hour shifts.  The ruled the following standard would apply to 24-hour shifts:

There are sound reasons for permitting an employer who engages an employee to work a 24-hour shift and compensates him or her for 16 of those hours to exclude the remaining eight hours for sleep time, as long as the time is uninterrupted, a comfortable place is provided, and the parties enter into an agreement covering the period. Most employees would be sleeping for a similar period every day, whether on duty or not, and the compensation provided for the other 16 hours, which should generally include considerable overtime, ensures that the employees receive an adequate wage

So, employers seeking to avoid payment for 24-hour "live in" shifts under Wage Order 4 should ensure: there is an agreement to exclude sleep time, there is a comfortable place to sleep, and the sleep time generally is interrupted.  If the sleep period is interrupted, the agreement should provide for compensation for time worked, and for the entire period if there are frequent or considerable interruptions.


The case is Mendiola v. CPS Security Solutions, Inc. and the opinion is here.