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Employment Law Alerts & Articles
Jan 01
California Employers Required To Provide Notice Regarding Wage Rate To Employees
Beginning January 1, 2012, California employers face new statutory obligations to notify non-exempt NEW HIRE employees of their rate of pay and compensation. To ensure employees clearly understand their compensation rates, and in furtherance of the general public policy California endorses requiring reasonable notice to employees of any change in a term of employment, California employers must now provide written disclosure of general employment information (as described below) to non-exempt employees at the time of their hire. AB 469 further requires that employers provide written notice to its current employees within seven (7) days of any change to the general employment information employers are now required to report.
Pursuant to new Labor Code § 2810.5, employers must provide written disclosures that contain the following information:
- The rate or rates of pay and basis thereof, whether paid by the hour, shift, day, week, salary, piece, commission, or otherwise, including any rates for overtime as applicable.
- Allowances, if any, claimed as part of the minimum wage, including meal or lodging allowances. This requires description of any other form of compensation the employer provides other than base salary, such as per diem amounts or travel expense budgets.
- The regular paydays the employer designates as required under Labor Code § 204.
- The name, aliases, physical address, and telephone number of the employer.
- The name, address, and telephone number of the employer’s workers’ compensation insurance carrier.
- Any other information the Labor Commissioner deems material and necessary.
This new notification obligation does not extend to employees exempt from payment of overtime wages by statute or wage order, employees of the state or any political subdivision thereof, or to employees covered by a collective bargaining agreement that expressly provides for wages, hours of work, working conditions, and provides for premium wage rates for overtime worked. Failure to comply with the new law subjects an employer to penalties provided for in the California Labor Code for statutory violations. Of important note is the fact that AB 469 extended the statute of limitations for the Division of Labor Standards Enforcement (“DLSE”) to collect statutory penalties from one year to three years, thus allowing potential recovery for claims under this new law to exist for three years.
To assist employers in providing the appropriate written notification to its non-exempt employees, the DLSE provides a sample form employers may use to comply with the new Labor Code § 2810.5, which can be found at: http://www.dir.ca.gov/dlse/LC_2810.5_Notice.pdf
Jan 01
New Restrictions On Credit Checks For Employment in California
As of January 1, 2012, California employers joined six other states to restrict the use of credit checks to make employment decisions as to most jobs and as to employment transaction such as hiring, promotion and termination. Specifically, except for statutory exceptions identified under California Labor Code § 1024.5, AB 22 prohibits an employer from obtaining a consumer credit report for employment purposes. The intent of the bill was to further protect employee rights, and address the growing concern related to the most recent recession and its effect on unemployment and the reduced financial capabilities suffered by today’s workforce.
The few exceptions the Labor Code carves out for private employers in California are limited to the following types of employment:
- A managerial position. This would appear to relate to not only those individuals that qualify for the executive or managerial overtime exemption, but any supervisory role over another employee.
- A position for which the information contained in the report is required by law to be disclosed or obtained, such as fiduciary or professional positions requiring economic responsibilities and obligations.
- A position that involves regular access, for any purpose other than the routine solicitation and processing of credit card applications in a retail establishment, to bank or credit card information, social security numbers, or a person’s date of birth. This exception was not meant to apply to retail or store cashiers who handle cash register transactions.
- A position in which the person is, or would be, a named signatory on a bank or credit card account of the employer, authorized to transfer money on behalf of the employer, or authorized to enter into financial contracts on behalf of an employer. This includes positions such as a Chief Financial Officer, Accounting Department personnel, and Payroll employees.
- A position that involves access to confidential or proprietary information. This exception appears to suggest that employees who execute Confidentiality and Non-Disclosure Agreements would qualify for exemption from the AB 22 prohibition against credit checks.
- A position that involves regular access to cash totaling Ten Thousand Dollars ($10,000.00) or more during the workday.
If an applicant or employee does fall under one of the statutorily identified exceptions, the employer may obtain a credit report about an individual’s credit worthiness, credit standing, or credit capacity provided the employer provides written notice to the employee explaining why a credit check is being requested, from whom, and allowing the employee to request a free copy.
It is important to note that AB 22’s prohibition relates to credit checks only; the new statute does not preclude employers from conducting background reference or criminal record checks (other than to require that the statutory notices to employees regarding background checks include the reporting agency’s website address with the contact information already required for reporting to the applicant or employee).
However, the continued allowance of criminal background checks does not suggest that an employer should exercise its discretion to uncritically conduct criminal background checks. For example, on January 11, 2012, Pepsi Beverages agreed to pay the Equal Employment Opportunity Commission $3.1 million in settlement of racial bias claims related to its use of criminal background checks to screen out job applicants. Alleging that the company’s old policy of not hiring workers with arrest records disproportionately excluded black applicants, the settlement should serve as a poignant reminder to employers regarding the potential legal risks associated with the use of criminal background checks.
Dec 15
New California Law Permits Labor Commissioner to Award Liquidated Damages for Minimum Wage Violations
As of January 1, 2012, many new employment laws will take effect in California that will have a significant impact on California employers. One of these laws is AB 240, which will amend California Labor Code sections 98 and 1194.2. California law currently sets a minimum wage for all employees in California, with limited exceptions, and prohibits employers, unless specified, from paying less than the state minimum wage. Employees who believe they have a claim for their employer’s failure to pay minimum wages have the option of filing a lawsuit in superior court, or filing a claim with the Labor Commissioner’s office. Current law, however, permits aggrieved employees to recover liquidated damages only through complaints filed in court.
In an effort to ensure that victims of minimum wage violations receive the same relief regardless of whether they file a complaint in court or with the Labor Commissioner, Governor Jerry Brown signed AB 240 into law on September 7, 2011. AB 240 authorizes the Labor Commissioner to “recover liquidated damages in an amount equal to the wages unlawfully unpaid and interest thereon,” for an employee who brings a complaint alleging payment of less than the minimum wage. AB 240, however, also provides that if an employer “demonstrates to the satisfaction of the court or the Labor Commissioner that the act or omission giving rise to the action was in good faith and that the employer had reasonable grounds for believing that the act or omission was not a violation of any provision of the Labor Code relating to minimum wage, or an order of the commission, the court or the Labor Commissioner may, as a matter of discretion, refuse to award liquidated damages.” The new law will not only increase the likelihood that employers will have to pay liquidated damages for minimum wage violations, but will likely result in more employees pursuing their minimum wage claims through the Labor Commissioner.
Jun 02
United Parcel Service, Inc. v. Superior Court of the State of California for the County of Los Angeles
In a ruling directly impacting California employers, the Second Appellate District for the California Court of Appeals held that California Labor Code § 226.7 permits employees to recover up to two premium payment penalties per workday should an employer fail to provide mandatory meal and rest periods. In United Parcel Service, Inc. v. Superior Court, 2011 Cal. App. LEXIS 682 (June 2, 2011), the Court rejected prior analysis emphasizing language in § 226.7 that an employee was entitled to only one premium payment regardless of the amount of breaks missed in a workday.
As California employers are acutely aware, both the California Labor Code and the Industrial Welfare Commission’s Wage Orders require employers provide employees who work a certain amount of hours in a workday both a meal period and a rest period.[1] However, a dispute arose between the plaintiffs’ bar and defense counsel as to the amount of penalties available to an employee in situations where an employer failed to provide both a meal and rest break in a single day. Employee rights advocates argued that the intent of the law was to provide a one hour penalty for each type of break an employer failed to provide, while employment groups stressed the language in § 226.7 that read an employee was entitled to one additional hour of pay for each workday limited the penalties available.
California Labor Code § 226.7 states, “If an employer fails to provide an employee a meal period or rest period in accordance with an applicable order of the Industrial Welfare Commission, the employer shall pay the employee one additional hour of pay at the employee’s regular rate of compensation for each work day that the meal or rest period is not provided.” In Corder v. Houston’s Restaurants, Inc., 424 F. Supp.2d 1205 (C.D. Cal. 2006), the United States District Court for the Central District of California interpreted this language to limit the amount of penalties available to one hour of pay regardless of the number of breaks an employer failed to provide in any single workday. Id. at 1207 fn. 2 (“§ 226.7(b) states that the employer is liable ‘for each work day’ that a break is not provided. Thus, the plain wording of the statute is clear that an employer is liable per work day, rather than per break not provided”).
Rejecting this proposition, United Parcel Service relied on legislative history and the remedial nature of legislative enactments regarding the regulation of wages and hours to find that § 226.7 instead requires an one hour penalty for missed meal periods and a separate one hour penalty for missed rest breaks. Relying on another Central District of California decision, Marlo v. United Parcel Service, Inc., 2009 U.S. Dist. LEXIS 41948 (C.D. Cal. 2009), the court in United Parcel Service found for the employees by relying on two grounds: (1) legislative reference to the Wage Orders lent persuasive authority that the Wage Orders’ separation of meal and rest period requirements into two unique provisions required separate penalties for failing to provide meal and rest breaks; and (2) permitting a premium payment for failing to provide each type of break is in accordance with the public policy behind meal and rest break mandates protecting employee rights.
As such, UPS would suggest that employers may now be liable for two hours of additional pay as a penalty should they fail to provide a meal break and a rest break in a single workday solely because of the placement of a paragraph in the Wage Orders. The added potential liability should UPS be found controlling encourages employers to take the proactive recourse of documenting rest periods as well as meal periods, even though the law does not require documentation of rest periods. Rather, the California Labor Code requires employers keep records documenting employee meal breaks only. However, should an employer determine that the fear of litigation outweighs the administrative hassle of paperwork, then strenuous recordkeeping of rest periods provides employers strong evidence as to the taking of breaks (or employee voluntarily refusal to take a break) so as to limit potential penalties arising from employee claims.
[1] Employers in California must provide a 30 minute, undisturbed meal break before the beginning of the 5th hour of work (unless the workday is less than 6 hours and the employee expressly waives the meal period), and must also provide a second meal break if an employee works more than 10 hours in a single workday. In regard to rest breaks, an employer must provide a 10 minute break to an employee for every 4 hours of work or major fraction thereof (unless the workday is less than 3.5 hours). Whether an employer needs to “provide” a meal or rest break, or “ensure” that employees take such breaks, is an issue currently before the California Supreme Court pursuant to Brinker v. Superior Court and its progeny.