• Interesting Article Regarding New Regulations Regarding Homecare

    The New York Times ran an blog article regarding an interview with Select Home Care regarding ways some employers are considering to survive recently enacted and currently pending changes regarding in-home care.  The implementation of AB241 requiring overtime for caregivers in California and soon-to-be-imposed federal regulations requiring overtime for caregivers throughout the nation have employers scrambling to consider how they can keep in-home care affordable and profitable.

    The article suggests three alternatives employers are considering:

    1. Raise rates to cover the increased costs, which will mean fewer people will be able to afford in-home care.  Raising the costs will not increase the profit margins, but will result in fewer clients which means companies will have to do more with less.  Companies could hire more workers so the employees each work less hours, but that will reduce the employee’s income and require more managers to oversee the work.  This doesn’t result in more money for the workers, but could help keep the cost to the client down.
    2. Switch employees to independent contractors.  The article makes it seem like this is a viable option, but I have serious doubts this will be an effective solution.  Particularly in California where there are hefty fines for willfully misclassifying an employee as an independent contractor, and given the broad definition of “employer,” under AB241, I don’t recommend this course of action in most cases.
    3. Change the business model to a referral agency.  Referral agencies do not employ the workers, but can still help families locate and hire quality workers.  This could lower the costs for the families because they are not having to pay the profit margins for the caregivers, but it comes with its own sets of risks.  Most likely, the family will become the employer, which means the family needs to understand and comply with the myriad of laws impacting employers and employees.  This can be a daunting concern.

    The article quotes a few other industry professionals, and most seem to agree that the first option (raising prices to cover the costs) is the safest route.  I agree.  Hiring more caregivers, each working fewer hours, will help keep the costs down, but can impact the continuity of care.  This is particularly important for clients with Alzheimer’s or dementia.  Instead of having one worker working a 24-hour shift, you’ll end up with two to four workers working shorter shifts.  Financially this is the best option.  I don’t know if this will be the best option for providing quality care to the elderly and disabled.

    Governor Brown (CA-D) has taken the position that the best way to deal with the increasing costs is to limit the number of hours the employees work.  That is why his budget proposal does not allow caregivers under the state’s In-Home Support Services program to work more than 40 hours per week.  Of course, Governor Brown hasn’t indicated how the clients will care for themselves during the remaining 128 hours of the week.

    There is one last assumption in the article that bears addressing.  All of the sources seem to imply that they can deduct up to 8 hours of sleep time for 24-hour shifts.  Because the California Supreme Court granted review of Mendiola v. CPS Security Solutions, Inc. in the fall of 2013, we cannot guarantee that an employer can deduct for sleep time.  While the federal regulations allow employers to deduct for sleep time, the issue has not been decided in California.  Employers in California that deduct for sleep time may run the risk of having to go back several years to pay for the uncompensated hours of work.

    The New York Times blog promises to do a follow-up with Select Home Care to check on their progress.  If you, or someone you know, uses or provides in-home care, you should speak with a knowledgeable employment attorney to understand the rights and obligations imposed by 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.

  • Is an Employer Responsible for Paying Overtime When It Does Not Know the Employee is Working Off The Clock?

    Possibly not. An employer is obligated to pay an employee for all hours worked. Most Wage Orders in California define “hours worked” as “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.”

    Several federal court cases have held that “suffered or permitted to work” means only work that is performed “with the knowledge of the employer.” For example, in Forrester v. Roth’s I.G.A. Foodliner, Inc. (9th Cir. 1981) 646 F.2d 413, the court held that “where an employer has no knowledge that an employee is engaging in overtime work and that employee fails to notify the employer or deliberately prevents the employer from acquiring knowledge of the overtime work, the employer’s failure to pay for the overtime hours is not a violation of §207” Id. at 414. “An employer must have an opportunity to comply with the provisions of the FLSA.”

    The courts point out that an employer cannot escape responsibility by negligently maintaining required records or by turning its back on a situation, but if the employee “prevents the employer” from acquiring knowledge of the uncompensated overtime, the employer has not “suffered or permitted” the employee to work in violation of the FLSA.

    In May 2014, a California Court of Appeal applied this rule to claims under the California Labor Code. See, Jong v. Kaiser Foundation Health Plan, Inc. (2014) 171 Cal.Rptr.3d 874. California courts often look to federal law in interpreting state wage and hour claims. Although the California Supreme Court implicitly endorsed the federal interpretation of hours worked in Morillion v. Royal Packing Co. (200) 22 Cal.4th 575, 585, the specific question presented in Jong was not addressed. At least one federal court decision (White v. Starbucks Corp (N.D.Cal. 2007) 497 F.Supp.2d 1080, 1083) applied the “no knowledge” rule to a California wage claim, but California courts are not required to follow federal interpretation of state laws. To my knowledge, Jong represents the first instance in which a California court specifically held that if an employer does not know an employee worked overtime, the employer is not liable for the unpaid overtime compensation.

    There are a number of key facts that allowed the court to conclude the employer had no knowledge of the off-the-clock hours. The plaintiff testified that he was aware that it was Kaiser’s policy to pay for all hours worked and to pay for all overtime hours employees recorded, even if an employee should or could have obtained pre-approval before working the overtime but failed to do so. The plaintiff also testified that he was familiar with the applicable time keeping rules and that he knew how to use the timekeeping system. The plaintiff also signed a document confirming he knew employees were not supposed to work off-the-clock. The nail in the coffin was the fact that the plaintiff testified he did not know whether anyone in Kaiser management was aware he was performing off-the-clock work. The two other named plaintiffs in the case had discussions with supervisors about working off the clock, and the court allowed those cases to proceed to trial.

    Jong emphasizes the importance of having policies that prohibit off-the-clock work and require employees to record all hours worked. The case also confirms the importance of ensuring the employer knows about all hours worked. If an employee is going to bring a claim for unpaid wages, the employee needs to ensure that a management employee knows the employee is working off-the-clock.

    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.

  • What’s the Deal with Alternative Workweeks?

    Some employees want to work longer hours each day in exchange for working fewer days per week.  These “alternative workweeks” are permissible, provided the employer follows prescribed methods of adopting and implementing the policies.  The most common alternative workweek situation allows employees to work four ten-hour days without receiving overtime.  Without the alternative workweek policy, the employee would be entitled to two hours of overtime every day. With a proper alternative workweek agreement, the employee can work the schedule without the employer incurring overtime pay.

    Many alternative workweek agreements are invalid because employers fail to follow the appropriate procedures for adopting the policy or they fail to notify the Labor Commissioner about the policy.  To be enforceable, an alternative workweek agreement must comply with the following:

    (1)           The employer must present a written schedule available for the employees (this can be one option or several options from which the employees can choose).

    (2)           Employees can submit alternatives to the employers options with the employer’s approval;

    (3)           The written schedule must specify the number of days and amount of hours offered (the actual days do not have to be specified);

    (4)           There must be at least two (2) consecutive days off during the week;

    (5)           If the employees elect an alternative workweek, they can switch between the various alternative workweeks offered by the employer;

    (6)           Each workday must consist of at least four (4) hours but not more than ten (10) hours;

    (7)           The employer must inform the employees what effect the alternative schedules will have on wages and benefits;

    (8)           If more than 5% of the workforce does not speak English, the notice of available schedules must also be in the language of that portion of the workforce;

    (9)           The employees must meet at least 14 days before they vote on the alternative workweek and the employees must be given advance written notice of the meeting;

    (10)        If all employees cannot attend a single meeting, the employer must hold multiple meetings;

    (11)        The employer must mail a copy of the disclosure to any employees who could not attend the meeting;

    (12)        The ballot must be all affected employees;

    (13)        The “affected employees” can be limited by division, department, job classification, shift, separate location or recognized subdivision of a work unit;

    (14)        The vote must carry by a 2/3 approval;

    (15)        The ballots must be confidential (i.e., no names or employee ID)

    (16)        The election must occur during work hours at the worksite;

    (17)        The vote cannot be used to retroactively allow an alternative workweek;

    (18)        The results of the election must be filed with the Labor Commissioner within 30 days of the election (do not send the ballots).  The results can be mailed to:

    Division of Labor Statistics & Research,

    Attn: Alternative Workweek Election Results

    P.O. Box 420603

    San Francisco, CA 94142

    (19)        The Labor Commissioner must receive the following:

    • Company name, phone, address and contact person;
    • Date of the election
    • Election results summary
    • Description of alternative workweeks from the election
    • Statement that the election was by secret ballot, written, and passed by a 2/3 vote

    (20)        The employer cannot require employees to work the new work hours for at least 30 days after the announcement of the final election results – The regulations do not appear to prohibit allowing an employee to work the alternative workweek if they voluntarily choose to do so.

    When deciding whether to adopt or offer an alternative workweek, the employer should consider:

    • What schedule(s) did you have in mind for the alternative workweek?  (i.e., hours, days, etc.)
    • Do you want to offer more than one option?  (i.e., four 9-hour days and one 4-hour day, plus four 10-hour days)
    • Will employees be able to choose not to work an alternative workweek?
    • Do you want to allow employees to submit alternatives to your options?
    • Will each employee get at least 2 days off?
    • What effect will the alternative workweek have on wages & benefits? (consider how vacation accrues, eligibility for health benefits)
    • What percentage of your workforce does not speak English? (if more than 5%, Notice of available schedules must be provided in their language)
    • Will all employees be able to attend a single meeting to discuss the proposed schedule? If not, how can all employees have a chance to meet?
    • Which employees will be “affected”?
    • How are you going to ensure the ballots are confidential? (use drop box and form)

    If an employer adopts an alternative workweek wherein the employee is scheduled to work ten hours per day and the employee actually works more than ten hours, the employer must pay one and one-half times the employee’s regular rate of pay for all hours in excess of the alternative workweek schedule.  Additionally, if an employee works more days than scheduled under the alternative workweek agreement, the employer must compensate the employee at the overtime rate even if the employee works less than forty hours during the week. Employees are still entitled to double time for hours in excess of twelve hours per day.

    You can search the Labor Commissioner’s database for employer names to find out if the employer has registered a valid alternative workweek election.

    Phillip J. Griego & Associates
    95 South Market Street, Suite 520
    San Jose, CA 95113
    Tel. 408-293-6341
    East Bay 925-364-4655

    Original article by Robert E. Nuddleman, former associate of Phillip J. Griego & Associates

    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 Phillip J. Griego & Associates. 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 Phillip J. Griego & Associates cannot guarantee the confidentiality of anything posted to this blog.

    The attorneys of Phillip J. Griego & Associates represent 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.

  • New Law Limits Attorneys’ Fees in Wage and Hour Cases

    In many, if not most, wage and hour cases (e.g., unpaid overtime, minimum wage, commissions, bonuses, etc.), the employer can pay more in attorneys’ fees than what is allegedly owed in unpaid wages.  Under the “American System,” each side bears the cost of their own attorneys unless the contract or statute under which the lawsuit proceeds provides for recovery of attorneys’ fees.  In the employment law field, some statutes allow the prevailing party to recover their attorneys fees.  Other statutes only allow the prevailing employee to recover attorneys’ fees.

    The legislature uses one-sided attorneys’ fee provisions (i.e., only the employe can recover attorneys’ fees) to make it easier for employees to hire attorneys because the employee typically has less money than the employer, and the employee will need to hire an attorney on a contingency-fee basis.  By allowing the employee to recover attorneys’ fees, an attorney may be willing to handle “lower value” cases knowing she or he will recover her or his attorneys’ fees at the end of the litigation.  This creates an incentive for attorneys to take cases that are otherwise not economically feasible to prosecute.

    In an unpaid wage claim there are two different statutes that apply depending on whether the claim is for overtime/minimum or wages other than overtime/minimum wage.  Under Labor Code section 1194.2, in any claim for the recovery of unpaid minimum wage or overtime, only the employee can recover his/her attorneys’ fees.  The employer cannot recover its attorneys’ fees even if it proves it paid the employee correctly.

    Under Labor Code section 218.5, in any other claim for wages or benefits not covered by Labor Code section 1194.2 (e.g., non-overtime/minimum wage claims), the prevailing party is entitled to attorneys’ fees.  This means that if an employee sues the employer for unpaid commissions or bonuses and loses, the employee is responsible for the employer’s attorneys’ fees.

    Thanks to a new law signed by Governor Brown, the employer will soon be able to recover its attorneys’ fees under Labor Code section 218.5 “only if the court finds that the employee brought the court action in bad faith.”  Proving “bad faith” is a very high standard.

    There is no exigency clause, so the amendment will take effect January 1, 2014.

    If you have a question about payroll practices, contact an attorney familiar with California’s wage and hour 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 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.

  • Top Mistakes Employers Make Presentation on March 28, 2013

    I will present the Top Mistakes Employers Make presentation on March 28, 2013, for the Gavilan Employers Advisory Council.  The Gavilan EAC provides local employers with relevant Information on human resource issues and other topics of interest, opportunities to network professionally, and a greater understanding of the resources available through the Employment Development Department (EDD) and the California Employer Advisory Council (CEAC). Its membership represents a cross-section of the businesses and industries in the region, and strives to build a partnership between local employers and the EDD.

    The presentation will cover new laws for employers doing business in California as well as the biggest mistakes employers make that lead to costly litigation.

    If you are interested in attending, you can register for the event on the GEAC’s website.

    Top Mistakes Presentation Gavilan_3-28-13 Flyer.

    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.

  • 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.

  • Are the DOL Numbers Correct? Recent Study Questions Accuracy of Economic Impact on Home Care Industry

    A recent article written by Hoffman Miller Advertising on behalf of Private Care Association questions the validity of the economic impact analysis published by the Department of Labor regarding the proposed modification of FLSA regulations on the home care industry.  When the DOL initially proposed amending FLSA regulations eliminating the companion exemption for workers employed by third-party employers, the government produced an economic impact analysis indicating the revised regulations would have little effect.  I’m not an economist, but even I questioned the data and conclusions as contrary to common sense. Given the increased number of home care providers and the expected increased need for home care services, it is unlikely that requiring overtime premium for companions would have little impact.

    The home care industry including Private Care Associates “engaged a private Research Company, Navigant Economics, to conduct an independent study on the effects of these proposed changes.”  The report can be viewed at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2017109#

    According to the research company, “the deadweight losses from the proposal would far exceed the PRIA’s estimate, and that the costs of the proposal would likely exceed the benefits.”

    The proposed repeal Companion Care Exemption and the Live-in Exemption to the FLSA would likely create substantial disruptions in the market for home health care, increasing the costs of companion care and reducing its availability. The Department of Labor’s PRIA understates the costs of the rule in important ways, including minimizing or ignoring a variety of compliance costs, underestimating the elasticity of demand for labor, and assuming incorrectly that demand for companion care is completely inelastic. As a result, its finding that the costs of the proposed rule would be de minimis is both unsupported and incorrect. We conclude that the costs of the rule would be substantial, including reduced availability of companion care services, lower quality of care, and increased fiscal pressure on both state governments and the Federal government, and that net costs would almost certainly exceed the net benefits.

    As mentioned by Hoffman Miller Advertising:

    While the comment period for the proposed rule already closed on March 21, the home care industry continues to encourage individuals to express their concerns to their elected representatives in Congress and to the DOL’s Secretary of Labor, Hilda Solis.

    U.S. Department of Labor

    200 Constitution Ave., NW

    Washington, DC 20210

    (202) 693-6000

    Email talktosolis@dol.gov

    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.

  • 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.

  • Look Out Brinker and Brinkley, Here Comes Sharon

    As employers and employee advocates eagerly await the California Supreme Court’s decision in Brinkley and Brinker regarding the lengths to which employers must ensure employees are afforded the opportunity to take meal breaks, some companies have decided to go so far as to discipline employees who voluntarily work “off the clock.”  I have to admit that when a manager asks me, “what do I do if an employee insists on working through lunch,” I have offhandedly commented that the only choice may be to discipline the employee for refusing to follow the employer’s reasonable directions.  Well, it turns out that may not be the best advice.

    A recent Chicago Tribune article reports a victory for Sharon Smiley after she was fired for working during her lunch hour.  In Illinois, like California, employees are entitled to a lunch break in the middle of the day.  After 10 years of employment, Sharon Smiley decided to work through a lunch break to finish some work. Her manager became upset because Sharon was apparently in violation of company policies so he sent her to HR.  HR had a short discussion with her and then fired her for misconduct (violating company policies) and insubordination (refusing to follow the employer’s instructions).  Sharon was devastated.

    To add insult to injury, the company opposed her unemployment insurance claim.  She went to several different attorneys, all of which told her she had no chance of winning.  Undaunted, and really with no other choice, Sharon represented herself.  She appealed the initial unemployment insurance benefits denial, and the superior court judge overturned the decision.  Last week an appellate court upheld the lower court’s decision allowing Sharon to obtain unemployment insurance benefits.

    To my knowledge there are no plans to file a wrongful discharge claim.

    The article is particularly interesting here in California as the Supreme Court decides whether employers must force employees to take lunch breaks or merely ensure employees have a realistic opportunity to take the required breaks.  I guess I’ll have to add a few more caveats to my advice.

    You can read the original Chicago Tribune article here.

    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.