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  • Do I Have to Pay Employees When They are Sleeping?

    UPDATE:

    The California Supreme Court granted review of Mendiola v. CPS Security Solutions, Inc. in the fall of 2013.  Until the Supreme Court issues its decision, employers may not be able to rely on the sleep time rules stated below.  If you have questions about your work situation, contact an attorney familiar with California’s overtime requirements.

    To some, this question may seem simple, but the answer may surprise you.  Generally speaking, an employer must compensate an employee for all “hours worked.”  In California, most wage orders define “hours worked” as, “the time during which an employee is subject to the control of an employer, and includes all the time that the employee is suffered or permitted to work, whether or not required to do so.”  This means that if I require my employee to be at the work site, the employee is under my control and therefore I am likely required to pay the employee.  Even if she is sleeping on the job.

    How does this general rule play out in jobs where an employee is required to be at the work site 24 hours a day?  There are a host of occupations that require a presence 24-hours a day, even if the employee is not actually performing work the whole time.  Caregivers (e.g., personal attendants), ambulance drivers, guards, and ship workers are just a few examples.  One option would be to split the 24-hour shift among several workers, and pay all workers for all hours they are required to remain on the premises.  At minimum wage ($8.00 per hour in California), this means an employer will have to pay at least $192.00 per day, and usually employ three different employees each day, just to meet the minimum wage requirements.

    Some employers choose to deduct 8 hours from the employee’s working hours as “sleep time” or as “on-call” time.  Federal regulations clearly allow an employer to deduct 8 hours from the employee’s hours worked in certain situations.  But California oftentimes does not follow the federal regulations.  A recent case, Mendiola v. CPS Security Solutions, Inc., may provide some guidance.

    CPS provides on-site security guards at construction sites.  The company provides a trailer with full amenities (e.g., bed, bathroom, kitchen, internet, tv, etc.) and the guard is required to live on the premises.  Monday through Friday, the guards are on active patrol 8 hours during the day (5:00 a.m. to 7:00 a.m. and 3:00 p.m. to 9:00 p.m.), and must remain on the premises at night.  On the weekends, the guards are on active patrol 16 hours during the day (5:00 a.m. to 9:00 p.m.), and must remain on the premises at night.  The guards can technically leave the premises at night, but they have to notify the employer ahead of time so the employer can schedule a relief guard, and the guard has to carry a pager and be able to report back to the site within 30 minutes.

    The employer and employees had written “On-Call Agreements,” specifying that the guards were free to engage in their own personal pursuits during the evening, so long as they remained on the premises.  If the guard responded to an incident during the night, the guard would be paid for the time spent responding to the incident. Otherwise, so long as the guard received at least 5 hours of uninterrupted “sleep time,” the guard would not be paid for the on-call period.  Mendiola sued CPS on behalf of himself and other similarly situated guards, alleging the guards should have been paid for all hours spent at the work site because they were subject to the employer’s control.

    Unsurprisingly given past court decisions, the court determined that the time spent on site was compensable “on-call” time.  The significant restrictions placed upon the employee combined with the fact that the employee’s presence on site was primarily for the benefit of the employer meant the employer was required to pay the employee for all hours spent at the site.

    The court went on to say that when the employees worked a 24-hour shift (e.g., weekend shift), the employer could deduct 8 hours for the time the employee spent sleeping.  This is surprising because, with the exception of wage order 5 (which has a different definition of “hours worked” for employees that are required to reside on the premises, and for certain other exceptions such as ambulance drivers and attendants), there is no applicable statutory or regulatory exception for sleep time.  After concluding that the federal regulations were not appropriate authority upon which to analyze the “on-call” time, the court concluded it could follow federal regulations with regard to “sleep time.”  The court relied Monzon v. Schaefer Ambulance Service, Inc. (1990) 224 Cal.App.3d 16 and Seymore v. Metson Marine, Inc. (2011) 194 Cal.App.4th 361.  Although those cases revolved around different wage orders, both cases concluded that an employer could deduct for sleep time when an employee worked a 24-hour shift, provided the employee actually received the sleep time and the employer and employee agreed that the employee would not be paid for the time spent sleeping.  The Mendiolacourt went even further and concluded that the “sleep time” rule is applicable to all wage orders that have similar definitions of “hours worked.”

    We agree with the courts in Seymore and Monzon that because the state and federal definitions of hours worked are comparable and have a similar purpose, federal regulations and authorities may properly be consulted to determine whether sleep time may be excluded from 24-hour shifts. Further, we find this determination to be applicable to all wage orders that include essentially the same definition of “hours worked” found in Wage Order No. 9, including Wage Order No. 4.

    The court’s decision indicates an employer does not have to pay employees when they are sleeping if:

    1. The employee is working a 24-hour shift,
    2. The employee receives at least 5 hours of uninterrupted sleep time,
    3. The employee is provided a comfortable place to sleep, and
    4. The employer and employee enter into an agreement covering the sleep time.

    Based on the court’s decision, I have a few recommendations.  Do not assume that just because an employee has nothing to do means you don’t have to pay the employee.  You must pay employees for all hours worked.  If you have an employee working a 24-hour shift, you may be able to deduct up to 8 hours for sleep time, but you must have an agreement in place before the employee performs the work.  The agreement should be in writing, and preferably reviewed by an attorney familiar with wage and hour laws.

    I highly recommend speaking with an attorney to see whether your payroll practices comply with the law.

    The Law Office of Phillip J. Griego
    95 South Market Street, Suite 520
    San Jose, CA 95113
    Tel. 408-293-6341
     
    Original article by Robert E. Nuddleman, former associate of The Law Office of Phillip J. Griego.
     
    Feel free to suggest topics for the blog. We are happy to consider topics pertaining to general points of Labor and Employment Law, but we cannot answer questions about specific situations or provide legal advice. If you desire legal advice, you should contact an attorney.
     
    Your use of this blog does not create an attorney-client relationship between you and the Law Office of Phillip J. Griego. The use of the Internet or this blog for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be posted in this blog and the Law Office of Phillip J. Griego cannot guarantee the confidentiality of anything posted to this blog.Phillip J. Griego represents employees and businesses throughout Silicon Valley and the greater San Francisco Bay Area including Palo Alto, Menlo Park, Mountain View, Los Altos, San Jose, the South Bay Area, Campbell, Los Gatos, Cupertino, Morgan Hill, Gilroy, Sunnyvale, Santa Cruz, Saratoga, and Alameda, San Mateo, Santa Clara, San Benito, Mendocino, and Calaveras counties.

  • Are You Ready for the San Jose Minimum Wage Ordinance?

    The San Jose Minimum Wage Ordinance goes into effect on March 11, 2013.  Passed by voters during the last election, the new ordinance requires employers doing business in San Jose to pay a minimum of $10.00 per hour for any employee that works at 2 hours per week in San Jose.

    At first glance it might seem that the law only applies to businesses physically located in San Jose, but that is not accurate.  The ordinance defines an employer as:

    any person, including corporate officers or executives, as defined by Section 19 of the California Labor Code, who directly or indirectly through any other person, including through the services of a temporary employment agency, staffing agency or similar entity, employes or exercises control over the wages, hours or working conditions of any Employee and who is either subject to the Business License Tax Chapter 4.76 of the Municipal Code or maintains a facility in the City.”

    The City’s perspective is that anyone carrying on or conducting business in San Jose is subject to the Business License Tax.  Even if your business is located outside of San Jose if you provide goods or services in San Jose you are an “employer” under the SJMWO.

    Not all employees working in San Jose are covered by the SJMWO.  Employees who are not otherwise entitled to payment of minimum wage under California minimum wage laws (e.g., outside salespersons, certain family members of the employer, etc.) are not “employees” under the SJMWO.  Additionally, the employee must work in San Jose at least 2 hours per week.

    In addition to paying the increased minimum wage, employers subject to the SJMWO must post the SJMWO poster in a conspicuous place.  You can download copies of the SJMWO poster here.

    The City has developed a list of FAQ’s that they hope to post on their website soon.  Unfortunately, there were a few errors in the FAQ’s that require revision, so we don’t know when the FAQ’s will be posted.

    The City has, or soon will, set up an enforcement mechanism for complaints regarding violations.  One of the benefits of the enforcement/complaint process is the ability to resolve the matter through early mediation or conciliation.  One of the drawbacks is that complaints do not need to be filed with the City agency and nothing prohibits an employee from pursuing a claim with the City and in court.

    As with many wage and hour statutes and regulations, an employee suing an employer for a violation of the SJMWO is entitled to recover his/her attorneys’ fees, but a successful employer is not able to recoup its attorneys’ fees even if the employer proves there was no violation.  The City hopes that its administrative process will allow the parties to resolve cases early without extensive litigation and that the attorneys’ fees, therefore, will not be a significant issue in resolving a case.  I’ll hold my opinion until I see the results.

    One of the concerns is that an employer who has a posting violation, for example, may be subject to a $50.00 per day per employee penalty (plus attorneys’ fees), if the employer fails to have the required posting in a conspicuous place.  The penalty begins from the date of the violation and continues until the violation ceases.  For example, if you have 5 employees that each travel to San Jose at least 2 hours per week and you fail to have the correct poster, you could face over $90,000.00 in penalties.

    Employers are also required to maintain payroll records, and to allow the City access to such records, for 4 years.

    Of course, employers may not discriminate in any manner or take adverse action against any person in retaliation for exercising any of the rights under the SJMWO.

    Failing to understand and comply with the SJMWO may have devastating effects on your business.  Every employer and every employee should become familiar with the SJMWO so they can understand their rights, remedies, and responsibilities.

    The Law Office of Phillip J. Griego
    95 South Market Street, Suite 520
    San Jose, CA 95113
    Tel. 408-293-6341
     
    Original article by Robert E. Nuddleman, a former associate of The Law Office of Phillip J. Griego.
     
    Feel free to suggest topics for the blog. We are happy to consider topics pertaining to general points of Labor and Employment Law, but we cannot answer questions about specific situations or provide legal advice. If you desire legal advice, you should contact an attorney.
     
    Your use of this blog does not create an attorney-client relationship between you and the Law Office of Phillip J. Griego. The use of the Internet or this blog for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be posted in this blog and the Law Office of Phillip J. Griego cannot guarantee the confidentiality of anything posted to this blog.Phillip J. Griego represents employees and businesses throughout Silicon Valley and the greater San Francisco Bay Area including Palo Alto, Menlo Park, Mountain View, Los Altos, San Jose, the South Bay Area, Campbell, Los Gatos, Cupertino, Morgan Hill, Gilroy, Sunnyvale, Santa Cruz, Saratoga, and Alameda, San Mateo, Santa Clara, San Benito, Mendocino, and Calaveras counties.

  • Brown Vetoes Domestic Workers Bill of Rights (AB 889)

    On September 30, 2012, Governor Brown vetoed the Domestic Workers Bill of Rights (AB 889).  The governor’s veto message indicates, among other things, the bill raised too many unanswered questions about what “economic and human impact on the disabled or elderly person and their family of requiring overtime, rest and meal periods for attendants who provide 24 hours care.”  Governor Brown apparently felt that we should answer some of those questions before mandating a change in the law.  He seemed particularly troubled by the fact that the bill required the Department of Industrial Relations to find answers to the question and come up with regulations at the same time.

    I think the veto was a good move for now.  Let’s gather the facts and consider the impact of a law before we change it.

    The Law Office of Phillip J. Griego
    95 South Market Street, Suite 520
    San Jose, CA 95113
    Tel. 408-293-6341
     
    Original article by Robert E. Nuddleman, former associate of The Law Office of Phillip J. Griego.
     
    Feel free to suggest topics for the blog. We are happy to consider topics pertaining to general points of Labor and Employment Law, but we cannot answer questions about specific situations or provide legal advice. If you desire legal advice, you should contact an attorney.
     
    Your use of this blog does not create an attorney-client relationship between you and the Law Office of Phillip J. Griego. The use of the Internet or this blog for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be posted in this blog and the Law Office of Phillip J. Griego cannot guarantee the confidentiality of anything posted to this blog.Phillip J. Griego represents employees and businesses throughout Silicon Valley and the greater San Francisco Bay Area including Palo Alto, Menlo Park, Mountain View, Los Altos, San Jose, the South Bay Area, Campbell, Los Gatos, Cupertino, Morgan Hill, Gilroy, Sunnyvale, Santa Cruz, Saratoga, and Alameda, San Mateo, Santa Clara, San Benito, Mendocino, and Calaveras counties.

  • Recent Article in ACBA L&E Section Newsletter: Department of Labor Proposes Change the Companion Exemption

    If you missed some of my prior posts talking about proposed modifications to the FLSA regulations regarding “companions,” I wrote an article for the Alameda County Bar Association’s Labor & Employment Law Section Newsletter.  The issue came out in May, but somehow it passed under my radar until I was searching for new information on the topic and came across the article.

    You can download a copy of the article at the ACBA L&E Section website.

    If you, or someone you know, works in the home care industry, I highly recommend reviewing the article.

    The Law Office of Phillip J. Griego
    95 South Market Street, Suite 520
    San Jose, CA 95113
    Tel. 408-293-6341
     
    Original article by Robert E. Nuddleman, former associate of The Law Office of Phillip J. Griego.
     
    Feel free to suggest topics for the blog. We are happy to consider topics pertaining to general points of Labor and Employment Law, but we cannot answer questions about specific situations or provide legal advice. If you desire legal advice, you should contact an attorney.
     
    Your use of this blog does not create an attorney-client relationship between you and the Law Office of Phillip J. Griego. The use of the Internet or this blog for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be posted in this blog and the Law Office of Phillip J. Griego cannot guarantee the confidentiality of anything posted to this blog.Phillip J. Griego represents employees and businesses throughout Silicon Valley and the greater San Francisco Bay Area including Palo Alto, Menlo Park, Mountain View, Los Altos, San Jose, the South Bay Area, Campbell, Los Gatos, Cupertino, Morgan Hill, Gilroy, Sunnyvale, Santa Cruz, Saratoga, and Alameda, San Mateo, Santa Clara, San Benito, Mendocino, and Calaveras counties.

  • Recent Article Reveals Long Delays at State Labor Commissioner’s Office

    A recent article from the Los Angeles Daily Journal (Vol. 125 No. 057, March 23, 2012) reports “Wage claims get uneven treatment, records show.”  According to the article, data obtained through a Public Records Act request and interviews with lawyers representing business and workers reveals significant delays.

    State law requires the Labor Commissioner to conduct its hearings within 120 days after filing.  The Daily Journal’s analysis shows that 11 of the 16 regional offices did not meet that obligation in 2011.  Different offices report different average waiting periods, with Oakland showing the worst results: over 400 days to get to a hearing.  Santa Rosa, on the other hand, gets its cases to hearing within 85 days.  San Francisco heard its cases within 301 days on average.  San Jose averaged approximately 275 days to get to a hearing.

    The study did not discuss how long it takes for a decision to get mailed after the hearing.  By law, the decision is supposed to be written within 15 days after the hearing.  In my experience, however, it often takes several months to receive the actual decision.  This sometimes means a case can take between one to two years to resolve if filed with the Labor Commissioner.  Cases take even longer if they are then appealed to superior court for a trial de novo.

    Budget cutbacks and state-mandated furloughs as well as an increase in claims filed are main causes of the long delays.  In some cases, the state assigns hearing officers from other jurisdictions to help carry some of the load, and I’ve seen an improvement in the speed with which cases proceed in the last few months, but there are still significant delays.  In many instances, a case can move more quickly through court than through the Labor Commissioner.

    The Daily Journal article also discusses perceived inconsistent rulings reported by several practitioners.

    When deciding whether to proceed with a Labor Commissioner claim, claimants should consider the length of time it will take to receive a decision.  Employers should realize that they may need to maintain records for a longer period than required by law so they can ensure they have appropriate evidence and witnesses by the time a hearing comes around.

    If you are contemplating filing a claim with the Labor Commissioner, or if you’ve recently been notified that a claim has been filed, I highly recommend speaking with competent counsel familiar with the Labor Commissioner and wage and hour issues.

    The Law Office of Phillip J. Griego
    95 South Market Street, Suite 520
    San Jose, CA 95113
    Tel. 408-293-6341
     
    Original article by Robert E. Nuddleman, former associate of The Law Office of Phillip J. Griego.
     
    Feel free to suggest topics for the blog. We are happy to consider topics pertaining to general points of Labor and Employment Law, but we cannot answer questions about specific situations or provide legal advice. If you desire legal advice, you should contact an attorney.
     
    Your use of this blog does not create an attorney-client relationship between you and the Law Office of Phillip J. Griego. The use of the Internet or this blog for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be posted in this blog and the Law Office of Phillip J. Griego cannot guarantee the confidentiality of anything posted to this blog.Phillip J. Griego represents employees and businesses throughout Silicon Valley and the greater San Francisco Bay Area including Palo Alto, Menlo Park, Mountain View, Los Altos, San Jose, the South Bay Area, Campbell, Los Gatos, Cupertino, Morgan Hill, Gilroy, Sunnyvale, Santa Cruz, Saratoga, and Alameda, San Mateo, Santa Clara, San Benito, Mendocino, and Calaveras counties.

    , San Mateo, Santa Clara, San Benito, Mendocino, and Calaveras counties.

  • Court Clarifies Commission Case

    By the end of this year all commission agreements in California must be in writing.  When drafting or reviewing your commission agreement it is a good idea to keep in mind several issues; one of which is whether the commissioned employee is exempt from California’s overtime laws.  A recent court decision (Muldrow v. Surrex Solutions) addresses the basic requirements of the inside salesperson exemption.

    Let me start off by reminding you that there are two different possible sales-related exemptions under California’s overtime laws: inside sales persons and outside salespersons.  Outside salespersons are exempt under most, if not all, wage orders.  Inside salespersons are only exempt if the employment is governed by Wage Order 4 (professional, technical, clerical mechanical and similar occupations) or Wage Order 7 (mercantile industry).  If some other wage order applies then the inside salesperson exemption is not available.  There are several different distinctions between the inside salesperson and the outside salesperson exemptions that I hope to address in a subsequent article.  For now, I want to focus on a couple of key points discussed in the Muldrow case.

    Surrex Solutions Corporation locates and provides qualified candidates for employment to other companies.  Sometimes the candidates are hired directly by the customer and other times Surrex “rents” the candidate to the customer for a specified billing rate.  Surrex employees review open positions, research and locate qualified candidates, negotiate terms of employment/hiring with candidates and customers, and obtain orders from customers for the candidates.  The Surrex employees are paid a percentage of any placement/hiring fees when the customer hires the candidate directly, and a percentage of the adjusted gross profit for candidates retained on a consultant basis.  Tyrone Muldrow, on behalf of himself and other similarly situated employees, filed a class action against Surrex claiming he was entitled to overtime.  The trial court and the appellate court rejected the claim and determined Muldrow was exempt from California’s overtime laws under the inside salesperson exemption.

    The court emphasized several earlier cases distilling the necessary criteria for the inside salesperson exemption:  “First, the employees must be involved principally in selling a product or service, not making the product or rendering the services.  Second, the amount of their compensation must be a percentage of the price of the product or service.” (quoting Ramirez v. Yosemite Water Co (1990) 20 Cal.4th785)

    In addressing the first issue (i.e, was the employee involved principally in selling a product or service), the court reduced Muldrow’s job to its essence: Surrex employees would offer a candidate’s services to a client in exchange for a payment of money from the client to Surrex.  Although there was some discussion regarding duties leading up to the consummation of the sale, all of those duties were part of the selling process and therefore the employees were “involved principally in selling a product or service.”

    As to the second issue, the employees conceded that they were paid a percentage of the price of the product for the direct hires, but claimed that since the amounts paid on the non-direct hire cases was not based on the gross price of the product or service, it was not a commission.  The court had no trouble rejecting this argument.  Nothing indicates the percentage must be based on the gross price versus an adjusted gross or net price.  The court similarly rejected the employees’ argument that the commission plan should be rejected because it was “too complex.”

    An interesting issue that was not addressed by the court (and possibly not raised by either side) was the fact that the commissions are calculated by taking the gross profit then deducting ordinary costs of doing business in order to calculate the commission.  There has been discussion for some time regarding the extent to which an employer can use the ordinary costs of doing business in the calculation of bonuses, commissions and profit-sharing agreements.  The California Supreme Court has flip-flopped on the issue at least once.  The latest rule is that, at least with respect to managerial profit sharing plans, an employer can calculate a profit sharing plan using profitability which necessarily includes the ordinary costs of doing business.  Under Muldrow, it would appear an employer can also calculate a commission based on the ordinary costs of doing business (e.g., overhead, employee costs, benefit costs, etc.)

    Commission plans can be simple or they can be complicated.  Even simple commission agreements need to carefully consider a number of factors.  Now that California law will require all commission agreements to be in writing and provided to the employee, it is extremely important for you to review and understand your commission arrangement.  If your plan is not in writing, now is the time to start working on it with a knowledgeable professional.  And don’t forget to consider any possible overtime ramifications!

    The Law Office of Phillip J. Griego
    95 South Market Street, Suite 520
    San Jose, CA 95113
    Tel. 408-293-6341
     
    Original article by Robert E. Nuddleman, former associate of The Law Office of Phillip J. Griego.
     
    Feel free to suggest topics for the blog. We are happy to consider topics pertaining to general points of Labor and Employment Law, but we cannot answer questions about specific situations or provide legal advice. If you desire legal advice, you should contact an attorney.
     
    Your use of this blog does not create an attorney-client relationship between you and the Law Office of Phillip J. Griego. The use of the Internet or this blog for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be posted in this blog and the Law Office of Phillip J. Griego cannot guarantee the confidentiality of anything posted to this blog.Phillip J. Griego represents employees and businesses throughout Silicon Valley and the greater San Francisco Bay Area including Palo Alto, Menlo Park, Mountain View, Los Altos, San Jose, the South Bay Area, Campbell, Los Gatos, Cupertino, Morgan Hill, Gilroy, Sunnyvale, Santa Cruz, Saratoga, and Alameda, San Mateo, Santa Clara, San Benito, Mendocino, and Calaveras counties.

  • For Whom No Bell Tolls

    OK, maybe this case is only interesting to those of us Wage and Hour nerds, but Harris v. Superior Court could be hailed as the final nail in the Bell case trilogy.  Although this post may include more information about how sausage is made than you ever wanted to know, the Court’s decision could curtail a fairly significant number of overtime lawsuits.

    The Bell cases are  three  decisions that the Supreme Court issued regarding whether claims adjusters working for Farmers Insurance Exchange were exempt from California’s overtime requirements.  The cases were important because the court used the production/administration dichotomy to find the adjusters did not meet the administrative exemption test.

    The production/administration dichotomy distinguishes between administrative employees primarily engaged in “administering the business affairs of the enterprise” and production employees primarily engaged in “producing the commodity or commodities, whether goods or services,” that were the focus of the enterprise.  Despite the fact that Bell specifically held that the production/administration dichotomy is not useful in every case, a lot of attorneys try to rely on the distinction as a simple way of determining whether an employee is exempt.

    In Harris, claims adjusters employed by Liberty Mutual Insurance Company and Golden Eagle Insurance Corporation filed a class action seeking unpaid overtime.  The employer alleged the employees were exempt under the administrative exemption, and the plaintiffs filed a motion for summary judgment seeking a determination that “as a matter of law,” the claims adjusters could not be exempt.  The appellate court used the production/administration dichotomy and held the employees could not be exempt from California’s overtime laws.  The California Supreme Court disagreed and put a huge damper on further attempts to use the production/administration dichotomy as the sole basis for defeating a claimed exemption.

    Harris pointed out that Bell was decided based on pre-2000 regulations which did not clearly define the administrative exemption.  In 2000, the IWC amended the wage orders providing more details as to what activities qualify as exempt duties and specifically incorporated specific federal regulations.  Bell did not have the advantage of those regulations and therefore relied on the production/administration dichotomy absence clear direction from the legislature or the IWC.  Now that we have specific regulatory guidance, the production/administration dichotomy is even less useful.

    Perhaps the biggest death toll for Bell is the Supreme Court’s focus on the fact that Bell is really only applicable to pre-2000 cases.  While there may be a few pre-2000 cases still winding their way through the court system, I suspect there aren’t many of them left.

    It is also important to note that the Supreme Court did not say the claims adjusters were or were not exempt from overtime.  The court merely pointed out that the appellate court used the wrong test in determining whether the employees are entitled to overtime.  Correctly classifying employees is not easy, and you should seek the assistance of competent professionals before making a costly mistake.

    The Law Office of Phillip J. Griego
    95 South Market Street, Suite 520
    San Jose, CA 95113
    Tel. 408-293-6341
     
    Original article by Robert E. Nuddleman, former associate of The Law Office of Phillip J. Griego.
     
    Feel free to suggest topics for the blog. We are happy to consider topics pertaining to general points of Labor and Employment Law, but we cannot answer questions about specific situations or provide legal advice. If you desire legal advice, you should contact an attorney.
     
    Your use of this blog does not create an attorney-client relationship between you and the Law Office of Phillip J. Griego. The use of the Internet or this blog for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be posted in this blog and the Law Office of Phillip J. Griego cannot guarantee the confidentiality of anything posted to this blog.Phillip J. Griego represents employees and businesses throughout Silicon Valley and the greater San Francisco Bay Area including Palo Alto, Menlo Park, Mountain View, Los Altos, San Jose, the South Bay Area, Campbell, Los Gatos, Cupertino, Morgan Hill, Gilroy, Sunnyvale, Santa Cruz, Saratoga, and Alameda, San Mateo, Santa Clara, San Benito, Mendocino, and Calaveras counties.

  • Obama Directs DOL to Expand FLSA to Cover In-Home Care Workers

    “President Obama announces a new rule that will ensure in-home care workers are included in the same minimum wage and overtime protections afforded to other workers under the Fair Labor Standards Act.”

    Last year the California legislature failed to pass legislation that would have added substantial burdens to families hiring home workers, including personal attendants or other in-home care providers.  President Obama is taking credit for newly proposed Department of Labor regulations modifying overtime and minimum wage requirements for in-home care workers.  The DOL previously attempted to make similar changes in 1993 and again in 2001, but those rules never became formalized.

    A copy of the currently proposed regulations can be downloaded here. To save you the time of having to read the 186-page document, I’ve summarized the proposed changes below.  The new regulations would not take affect until after the public is allowed the opportunity to comment on the proposed changes.

    Current regulations provide an exemption from the FLSA for in-home companions.  Like babysitters, the in-home companions care for the elderly or infirm and are typically employed by the household or family as opposed to a third-party employer.  There are a number of regulations defining what a “companion” can or cannot do and still remain exempt from the overtime and minimum wage obligations of the FLSA.  The new regulations make it clear that a companion is someone who provides fellowship and protection, but does not perform general household work.  The legislative history uses the example of a neighbor who comes over to help with grandma or grandpa.

    Under the new regulations, an exempt companion can:

    • Occasionally help the elderly person get dressed or undressed, but this cannot be a part of the regular duties.
    • Occasionally assist the elderly person with grooming including combing and brushing hair, assistance with brushing teeth, applying deodorant or washing face/hands following a meal.
    • Assist the elderly person with using the toilet or changing diapers.
    • Occasionally driver the elderly person to appointments, but this cannot be a part of the regular duties (the regulations suggest the companion should typically accompany the elderly person using a taxi or public transportation).
    • Cook meals so long as the meals are going to be eaten by the elderly person while the companion is there (e.g., no more preparing a week of meals at a time) and is not to be eaten by other members of the household.
    • Do some “light laundry” for the elderly person (but not for others), which can include putting clothes in the washer or dryer and assisting the elderly person with putting away or folding the clothes.
    • Occasionally assisting with bathing, but this cannot be a part of the regular duties.
    • Provide reminders of medical appointments or a predetermined medicinal schedule (e.g., provide pills out of a presorted pill box)

    Under the new regulations a companion cannot:

    • Do household chores for the benefit of other household members.
    • Vacuum, wash windows, dust or other similar “housekeeping” chores.
    • Provide medical care such as changing bandages, taking vital signs, evaluating health or other diagnostic or medically-related tasks (pulse, blood sugar, respiration, temperature) – The DOL is requesting comments on whether companions should be allowed to apply band-aids.
    • Determine whether prescription medications need to be taken.

    The new regulations make it clear that third-party employers (e.g., agencies) cannot take advantage of the exemption.  Even if the if agency is a joint employer with the family/household member, the employee must received federal minimum wage and overtime.  The definition of what constitutes family or household member for the purposes of determining the employer includes “an individual who is a child, niece, guardian or authorized representative, housemate, or person acting in loco parentis to the elderly or infirm individual needing companionship or live-in services.”

    The new regulations also change the record-keeping requires for live-in domestic workers.  Currently employers can avoid formal pay records for domestic live-in domestic workers if the parties have an agreement setting forth the agreed upon work hours with notifications for any deviations from the standard hours.  The DOL has determined that such lax record-keeping is no longer sufficient, and that even live-in domestic workers will be required to turn in accurate records of the actual hours worked, and employers are required to maintain those records as specified in the Act.  It is my understanding that companions employed by the family/household, regardless of whether they are live-in companions or not, will not have to keep records of hours worked, but that is not entirely clear.  Companions employed by third-parties will have to keep accurate records of hours worked.

    If you are interested in submitting your comments to the DOL regarding the proposed changes, you will eventually be able to log onto http://www.regulations.gov and search for RIN 12350AA05.  When I searched for it today, it was not available, likely because the regulations are not yet ready for public comment.

    If you or someone you know uses, employs or works with companions or other domestic workers, familiarize yourself with the proposed regulations and submit your comments.

    The Law Office of Phillip J. Griego
    95 South Market Street, Suite 520
    San Jose, CA 95113
    Tel. 408-293-6341
     
    Original article by Robert E. Nuddleman, former associate of The Law Office of Phillip J. Griego.
     
    Feel free to suggest topics for the blog. We are happy to consider topics pertaining to general points of Labor and Employment Law, but we cannot answer questions about specific situations or provide legal advice. If you desire legal advice, you should contact an attorney.
     
    Your use of this blog does not create an attorney-client relationship between you and the Law Office of Phillip J. Griego. The use of the Internet or this blog for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be posted in this blog and the Law Office of Phillip J. Griego cannot guarantee the confidentiality of anything posted to this blog.Phillip J. Griego represents employees and businesses throughout Silicon Valley and the greater San Francisco Bay Area including Palo Alto, Menlo Park, Mountain View, Los Altos, San Jose, the South Bay Area, Campbell, Los Gatos, Cupertino, Morgan Hill, Gilroy, Sunnyvale, Santa Cruz, Saratoga, and Alameda, San Mateo, Santa Clara, San Benito, Mendocino, and Calaveras counties.

  • Follow Up on Current Version of AB 889 – Domestic Workers Bill of Rights

    I hope you were able to listen to the discussion this morning on KQED regarding the Domestic Workers Bill of Rights.  Unfortunately I was not able to address an area of the law that gives me the greatest concern: This bill would unduly broaden the definition of employer, unnecessarily increase who will be considered an employee, and create additional burdens on homeowners and occupants with respect to non-caregiver workers.  I apologize in advance for the length of this post (I usually try to keep them brief), but there is some background that I think is necessary.

    Putting aside the issue of whether personal attendants/caregivers should or should not be entitled to overtime, AB889 broadens the definition of an employer.  Under most wage orders, an employer is anyone who exercises control over the wages, hours or working conditions of the employee. (See Martinez v. Combs.) Court decisions have agreed that corporate officers and directors are not considered employers.  AB889, however, includes corporate officers or executives who directly or indirectly through third parties exercise control over wages, hours or working conditions of employers.  In essence, the bill eradicates the typical corporate shield that is a significant benefit of the corporate structure.

    Let’s consider how this broad definition could impact the typical independent contractor relationship most homeowners have with non-caregivers.  I’m talking about the gardener, the roofer, the pool cleaner, etc..  If you, as the homeowner, control the working conditions, then you are the employer.  If you decide on the wages you will pay or what hours the person will come into your home, then you are the employer.  You will not be able to hire a sole proprietor with no employees because otherwise you are arguably controlling the wages, hours and working conditions of the employee.  If you hire a company with employees, then hopefully the company will control the hours and wages, but I’m not so sure about the working conditions.

    Additionally, AB889 modifies the workers’ compensation laws to apply to any person who performs any work at or on your home regardless of how long they work at the home.  Labor Code Section 3351 defines who is an employee for workers’ compensation purposes.  Workers’ Compensation laws not only require workers’ compensation insurance coverage for all employees, but also requires employers to provide notice of certain rights under the Workers’ Compensation laws.  Currently, Labor Code Section 3352(h) excludes person employed by the homeowner for less than 52 hours in the 90 calendar days preceding the date of injury from the definition of employee.  AB889 deletes the 3352(h) exemption.  What that means is that you, as a homeowner, will need to carry workers’ compensation insurance for any person providing services to your home, such as gardeners, construction workers, pest control servicemen, cable installers, etc.  You will have to have workers’ compensation insurance for them even if they only come to your house one day for a couple of hours and even if they are covered by their own workers’ compensation insurance.  You will also have to provide them notification of their workers’ compensation rights.

    AB889 deletes a similar provision in Labor Code Section 226.  Labor Code Section 226 requires employers to provide itemized pay stubs to all employees.  The pay stubs must have specific information such as hours worked, wage rates, last four digits of the employee’s social security number, etc.  Currently, there is an exemption to that rule for employees employed by the owner or occupant of a residential dwelling whose duties are incidental to the ownership, maintenance or use of the dwelling.  AB889 takes away that exemption.  Like the Workers’ Compensation laws discussed above, that means you will have to provide a pay stub to your gardener, cable installer, home improvement contractor, etc.

    Regardless of which side of the aisle you are on regarding overtime entitlements for caregivers, the other changes proposed by AB889 create a significant burden on everyone, overly broadens the definition of employer, and imposes unwieldy requirements in situations that do not need reform.  I encourage you to read the bill.  Talk about the issue with your friends, families and co-workers, and come to your own conclusions regarding whether this bill is the appropriate way to resolve the problems.  Then, write your representative and let them know your thoughts.  That’s what I’m going to do.

    The Law Office of Phillip J. Griego
    95 South Market Street, Suite 520
    San Jose, CA 95113
    Tel. 408-293-6341
     
    Original article by Robert E. Nuddleman, former associate of The Law Office of Phillip J. Griego.
     
    Feel free to suggest topics for the blog. We are happy to consider topics pertaining to general points of Labor and Employment Law, but we cannot answer questions about specific situations or provide legal advice. If you desire legal advice, you should contact an attorney.
     
    Your use of this blog does not create an attorney-client relationship between you and the Law Office of Phillip J. Griego. The use of the Internet or this blog for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be posted in this blog and the Law Office of Phillip J. Griego cannot guarantee the confidentiality of anything posted to this blog.Phillip J. Griego represents employees and businesses throughout Silicon Valley and the greater San Francisco Bay Area including Palo Alto, Menlo Park, Mountain View, Los Altos, San Jose, the South Bay Area, Campbell, Los Gatos, Cupertino, Morgan Hill, Gilroy, Sunnyvale, Santa Cruz, Saratoga, and Alameda, San Mateo, Santa Clara, San Benito, Mendocino, and Calaveras counties.

  • Do you know whether you have to pay your employees overtime wages?

    Powerhouse auditing firm PricewaterhouseCoopers recently found out the hard way when the 9th Circuit held that unlicensed junior accountants —  the young accountants who perform the auditing work—may be classified as non-exempt employees. See Campbell v. PricewaterhouseCoopers, LLP, —F.3d—, 2011 WL 2342740 (9th Cir., June 15, 2011) [www.ca9.uscourts.gov/datastore/opinions/2011/06/15/09-16370.pdf].

    What does it mean to be exempt?

    Whether an employee is exempt or non-exempt affects the employer’s obligation to pay overtime. In California, if a non-exempt employee works over 8 hours per day, or over 40 hours in week, then the employer must usually pay time and a half—that is, 1.5x regular wage rate multiplied by the number of overtime hours. Depending on the employee’s hourly wage, frequency of overtime work, and the employer’s number of employees, overtime wages can add up to large amounts.

    But if an employee is correctly classified as exempt, then the employer does not have to pay overtime, no matter how many hours the employee works.

    Obviously, employers have an interest in classifying employees as exempt where possible. However, employers cannot willy-nilly declare all employees exempt, and misclassifying employees can lead to significant penalties for the employer.

    California law generally exempts employees who have executive functions (such as the CEO), administrative functions, and professional functions from overtime pay. The California Labor Commissioner has a list of exempt employees.

    What does this mean for you?

    PwC argued the junior accountants should be exempt from overtime pay under the administrative exemption or under the professional exemption. The 9th Circuit disagreed and held that the junior accountants are not “categorically ineligible” from being non-exempt. Slip op. at 1. That’s a lot of double negatives. Basically, the court reiterated that classifying an employee as exempt depended on the specific facts of the case and that it was possible for a court to find that junior accounts were non-exempt.

    For employers, Campbell raises the specter of the risk of misclassifying employees. If the district court finds that the junior accountants are non-exempt, then PwC may be liable to thousands of junior accountants for unpaid wages going back up to four years before the lawsuit was filed. That’s a lot of money at stake.

    So, bottom line, if you do not know whether your employees are exempt, check with an attorney to analyze the facts and make sure you’re not incurring possible liability.  If you think you are improperly classified, talk with an attorney familiar with California’s overtime laws.

    The Law Office of Phillip J. Griego
    95 South Market Street, Suite 520
    San Jose, CA 95113
    Tel. 408-293-6341

    Original article by Kate Bowerman, Summer Intern at The Law Office of Phillip J. Griego.

    Feel free to suggest topics for the blog. We are happy to consider topics pertaining to general points of Labor and Employment Law, but we cannot answer questions about specific situations or provide legal advice. If you desire legal advice, you should contact an attorney.
     
    Your use of this blog does not create an attorney-client relationship between you and the Law Office of Phillip J. Griego. The use of the Internet or this blog for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be posted in this blog and the Law Office of Phillip J. Griego cannot guarantee the confidentiality of anything posted to this blog.Phillip J. Griego represents employees and businesses throughout Silicon Valley and the greater San Francisco Bay Area including Palo Alto, Menlo Park, Mountain View, Los Altos, San Jose, the South Bay Area, Campbell, Los Gatos, Cupertino, Morgan Hill, Gilroy, Sunnyvale, Santa Cruz, Saratoga, and Alameda, San Mateo, Santa Clara, San Benito, Mendocino, and Calaveras counties.