HR That Works Blog

By now you may have heard that the California Supreme Court finally decided the Brinker case, ruling in favor of employers. It concluded that an employer’s obligation is to relieve its employees of all duty, with the employee thereafter at liberty to use their rest or meal period for whatever purpose he or she desires. The employer need not ensure that no work is done. Thankfully for California employers the court ruled that you can treat employees like the adults they are supposed to be! Here’s the bottom line to a decision that took much too long to come to such a commonsense conclusion:

1. You have to offer rest and meal breaks.
2. It’s up to employees to take them.
3. Your managers can’t dissuade employees from taking their breaks.
4. If they can’t take the break, you pay a one-hour penalty.

Much of the case had to do with the class action certification process, which is only of interest to the lawyers. Of course, if it’s to be a class action, the issue is whether common or individual questions predominate and that question often depends on a resolution of issues closely tied to the merits. Here are some quotes from the Brinker decision that apply to rest and meal period:

• “To earn the first ten-minute break, one must be scheduled for a work shift of at least three and one-half hours, while to earn the next ten minutes, one must be scheduled to work four hours plus a major fraction to earn the next ten, eight hours plus a major fraction, and so on.” So, employees are entitled to ten-minute rests for shifts from 3.5-6 hours in length, 20 minutes for shifts of 6 hours up to 10 hours, and 30 minutes for shifts of 10 hours up to 14 hours, and so on.
• “As a general matter, one rest break should fall on either side of the meal break.”
• “The meal period requirement is satisfied if the employee: 1) has at least 30 minutes uninterrupted, 2) is free to leave the premises, and 3) is relieved of all duty for the entire period. Again, the employee must be relieved of any duty or employer control and are free to come and go as they please. It is not the employer’s obligation to ensure that no work is being done.
• “When someone is employed for 5 hours, an employer is put to a choice: 1) it must afford an off-duty meal period; 2) consent to a mutually-agreed upon waiver if one-hour or less will end the shift; or 3) obtain written agreement to an on-duty meal period if circumstances permit. Failure to do one of these will render the employer liable for premium pay. If work does continue, the employer will not be liable for premium paid. At most, it will be liable for straight pay, and then only when it ‘knew or reasonably should have known’ that the worker was working through the authorized meal period.”
• “Proof of an employee’s working through a meal period will not alone subject the employer to liability of premium pay. Employees cannot manipulate the flexibility granted them by employers to use their breaks as they see fit to generate such liability. On the other hand, an employer may not undermine a formal policy providing meal breaks by pressuring employees to perform their duties in ways that omit breaks. For example, common scheduling policies that make taking breaks extremely difficult or creating incentives to forgo or otherwise skipping breaks. “
• “The first meal period must start after no more than five hours. A second meal period is only required after ten hours of work.”

In the case, the plaintiff also contended that Brinker required employees to perform work while clocked out and that meal break records were altered to conceal time working during those periods.

Additional notes: Remember that all meal periods are required to be recorded. Rest periods are not so required. Think about this twist: It can be argued that those employees who worked through their meal breaks and thereby out-produced their peers, are doing so voluntarily with a desire to be promoted. If in fact they are promoted ahead of their peers, their peers can then argue that you basically discouraged them from taking meal breaks and violated the law.

As further evidence of the attack on 1099 labor, the DOL issued the following press releaseon Feb. 9^th:

WASHINGTON — Nancy J. Leppink, deputy administrator of the U.S. Department of Labor’s Wage and Hour Division, and California Secretary of Labor Marty Morgenstern have entered into a memorandum of understanding regarding the improper classification of employees as independent contractors. Leppink and California Labor Commissioner Julie A. Su hosted a press teleconference Feb. 9 during which they discussed how the U.S. Department of Labor and the state of California will embark on new efforts, guided by this memorandum, to protect the rights of employees and level the playing field for responsible employers by reducing the practice conducted by some businesses of misclassifying employees. This partnership is the 12th of its kind for the U.S. Department of Labor.

“This memorandum of understanding helps us send a message: We are standing together with the state of California to end the practice of misclassifying employees,” said Leppink. “This is an important step toward making sure that the American dream is still available for workers and responsible employers alike.”

“California is proud to enter into this partnership with the U.S. Department of Labor to work together to attack the problems of the underground economy,” said Su. “Gov. Brown just signed an important law that went into effect on Jan. 1, increasing penalties for willful misclassification. With the Labor Department, we are poised to use all the tools in our arsenal to lift the floor for hardworking employers and employees throughout the state.”

Employee misclassification is a growing problem. In 2011, the Wage and Hour Division collected more than $5 million in back wages for minimum wage and overtime violations under the Fair Labor Standards Act that resulted from employees being misclassified as independent contractors or otherwise not treated as employees.

Business models that attempt to change, obscure or eliminate the employment relationship are not inherently illegal, unless they are used to evade compliance with the law. The misclassification of employees as something else, such as independent contractors, presents a serious problem, as these employees often are denied access to critical benefits and protections — such as family and medical leave, overtime compensation, minimum wage pay and Unemployment Insurance — to which they are entitled. In addition, misclassification can create economic pressure for law-abiding business owners, who often struggle to compete with those who are skirting the law. Employee misclassification also generates substantial losses for state Unemployment Insurance and workers’ compensation funds.

Memorandums of understanding with state government agencies arose as part of the U.S. Department of Labor’s Misclassification Initiative, which was launched under the auspices of Vice President Biden’s Middle Class Task Force with the goal of preventing, detecting and remedying employee misclassification. Colorado, Connecticut, Hawaii, Illinois, Maryland, Massachusetts, Minnesota, Missouri, Montana, Utah and Washington have signed similar agreements. More information is available on the U.S. Department of Labor’s misclassification Web page at http://www.dol.gov/misclassification/.

A California Appellate Court shut down a class action effort which, in a sense, would have provided employees for a minimum of two hours show up pay for attending weekly team meetings which were not concurrently conducted with their work schedules. For example, when employees show up for an all team meeting on a Saturday morning at 10:00. The court ruled that as long the meeting was a) scheduled, and b) the meeting lasted for at least half the time scheduled, and c) the employees were paid for the time they did attend, the law has been satisfied. However, if it’s not a scheduled meeting and say somebody is pulled into the office for only 15 minutes, then you may be required to pay between two and four hours of show up pay depending on their “normal work schedule.” Reporting time pay is defined in the following manner:

“Each workday an employee is required to report to work and does report, but is not put to work or is furnished less than said employee’s usual or scheduled day’s work, the employee shall be paid for half the scheduled or usual day’s work, but in no event for less than two hours no more than four hours, the employee’s regular rate of pay which shall not be than less than minimum wage.”

So, for example, if they normally work an 8-hour day, and they’re sent home, they have to be paid for four hours. If they normally work a 3-hour day and are sent home, they must be paid for at least 2 hours. In this case, the battle was over employees showing up for weekly meetings when they did not go to work immediately thereafter.

Bottom line: Identify how long the meeting will be, spend at least 50% of the scheduled time, and make sure they record their time.

As a farewell to 2011, the California Supreme Court went to great lengths to spell out the parameters of the administrative overtime exemption. This is the exemption from overtime laws that seems to get employers into trouble more than any other. If you are a human resource executive in California you must read this case. Yes, there is a lot of legal mumbo jumbo…but it’s something you must understand or you will unnecessarily expose your company to overtime claims. Perhaps as here on a class action basis.

In Harris v. Liberty Mutual Insurance, the court provided much guidance. Here is some of the instructive language:

[W]ork qualifies as administrative when it is directly related to management policies or general business operations. Work qualifies as directly related if it satisfies two components. First, it must be qualitatively administrative. Second, quantitatively, it must be of substantial importance to the management or operations of the business. Both components must be satisfied before work can be considered directly related‖ to management policies or general business operations in order to meet the test of the exemption. (Fed. Regs. § 541.205(a) (2000).)….

[T]he administrative/production worker dichotomy distinguishes between administrative employees who are primarily engaged in administering the business affairs of the enterprise and production-level employees whose primary duty is producing the commodity or commodities, whether goods or services, that the enterprise exists to produce and market.

The Court understands that:
[B]ecause the dichotomy suggests a distinction between the administration of a business on the one hand, and the production end on the other, courts often strain to fit the operations of modern-day post-industrial service-oriented businesses into the analytical framework formulated in the industrial climate of the late 1940‘s.

Bottom line: The administrative exemption causes the vast majority of mis-classification headaches. According to this decision even the judges and the DIR have a hard time getting it right. Read this case. Make sure your workers are not mis-classified. If they are, take a look at the report on HR That Works So You Have a Wage Claim Exposure–What Do You Do About It?

We’ve been getting a lot of Hotline queries regarding holiday pay. Here’s the basic Federal law on it:

The Fair Labor Standards Act (FLSA) does not require payment for time not worked, such as vacations or holidays (federal or otherwise). These benefits are generally a matter of agreement between an employer and an employee (or the employee’s representative).

On a government contract to which the labor standards of the McNamara O’Hara Service Contract Act (SCA) apply, holiday and/or vacation fringe benefit requirements are stated in the SCA wage determinations in contracts that exceed $2,500.

On a government contract to which the labor standards of the Davis-Bacon and Related Acts apply, holiday pay and/or vacation pay is required for specific classifications of workers only if the Davis-Bacon wage determination in the covered contract specifies such requirements for workers employed in those classifications.

There is no requirement that employers have to pay overtime to eligible employees for holiday work, unless the employees work more than 40 hours in the same workweek, or 8 hours that day in California. Also paid holidays don’t count towards the 40-hour overtime rule.

Remember, exempt employees always get paid for holidays if they worked any portion of the week.

Here’s California FAQ on it: www.dir.ca.gov/dlse/FAQ_Holidays.htm. The theme is the same in the other states as well. Many state regulations don’t mention it at all.

Colorado

Colorado wage law does not require nor prohibit any paid holidays, and does not require nor prohibit any extra pay for working on holidays. When an employee is paid for a non-work holiday, the holiday hours do not count towards overtime unless actual work was performed on the holiday.

Illinois

Q: Am I entitled to holiday pay in Illinois?
A: No, unless by employment contract or agreement.

New York

Q: Must an employer pay workers for holidays, sick time and/or vacations?
A: Under the New York State Labor Law, payment for time not actually worked is not required unless the employer has established a policy to grant such pay. Holidays, sick time and/or vacations fall under ‘time not worked.’ When an employer does decide to create a benefit policy, that employer is free to impose any conditions they choose.

Hope that helps!

Inc. Magazine did an excellent article on the history of the workplace you can read by clicking here.

The U.S. Department of Labor’s Wage and Hour Division will host a free online conference for federal, state and local contracting officials to provide information on federal rules concerning prevailing wages and other labor law requirements. The conference will be webcast live from 10 a.m. — 3 p.m. EDT on both Tuesday, Oct. 4, and Wednesday, Oct. 5.

Wage and Hour Division staff and federal partners will cover Davis-Bacon Act and McNamara-O’Hara Service Contract Act compliance principles; the process of obtaining wage determinations and adding classifications; compliance and enforcement processes; and the process for appealing wage rates, coverage and compliance determinations. The Oct. 4 session will focus on Davis-Bacon, and the Oct. 5 session will focus on the SCA.

To participate in the online conference, contracting officials should send the following information to whdpwc@dol.gov: name, title, organization, session(s) of choice and email address.

For more information on the federal prevailing wage statutes and other laws administered by the Wage and Hour Division, call its toll-free helpline at 866-4US-WAGE (487-9243) or visit its Web pages at http://www.dol.gov/whd/. The section available by clicking “ARRA Information,” which features information related to the American Recovery and Reinvestment Act, offers many of the division’s most recently developed compliance assistance materials.

Two La Nopalera restaurants in Jacksonville, Florida, and their owners have been ordered to pay 30 employees $934,425 in back wages and liquidated damages under the terms of consent judgments issued by the U.S. District Court for the Middle District of Florida. The agreements resolve a lawsuit based on an investigation by the Wage and Hour Division that alleged violations of the Fair Labor Standards Act. “All workers deserve to be paid fairly, and the Labor Department will hold accountable employers that take advantage of their employees,” said Secretary Solis. “We want workers to know we will defend their rights to compensation for all hours worked, and we want companies that play by the rules to know we will take action against those that use illegal tactics to gain a competitive advantage.” Read the News Release

This case addressed the applicability of California wage and hour law to nonresident employees who work in California. The court ruled California law governs their pay, even if the state they reside in also governs their pay. “California’s overtime laws apply by their terms to all employment in the state, without reference to the employee’s place of residence. http://www.courtinfo.ca.gov/opinions/documents/S170577.PDF

The court reminded employers: “The Legislature has… exempted certain out-of-state employers who temporarily send employees into California from the obligation to comply with the workers‟ compensation law (Lab. Code, § 3200 et seq.), on the conditions of compliance with the home state’s compensation laws and interstate reciprocity (see id., § 3600.5, subd. (b)). In contrast, the Legislature has not chosen to authorize an exemption from the overtime law on the basis of an employee’s residence, even though it has authorized exemptions on a variety of other bases.”

Further: “California law…might follow California resident employees of California employers who leave the state “temporarily . . . during the course of the normal workday” (id., at p. 578), and California law might not apply to nonresident employees of out-of-state businesses who “enter California temporarily during the course of the workday” (ibid., italics added). In contrast, plaintiffs here claim overtime only for entire days and weeks worked in California, in accordance with the statutory definition of overtime. (See Lab. Code, § 510.) Nothing … suggests a nonresident employee, especially a nonresident employee of a California employer such as Oracle, can enter the state for entire days or weeks without the protection of California law.”

Note: the court did not have to decide the case on the fact of an out of state employer as Oracle is CA based.

Employers must get their wage and hour act together, including time keeping protocols, because the pressure form the DOL, state agencies and profit seeking attorneys is not going away any time soon. In a DOL release I received today the game just got kicked up one more notch:

The U.S. Department of Labor announced the launch of its first application for smartphones, a timesheet to help employees independently track the hours they work and determine the wages they are owed. Available in English and Spanish, users conveniently can track regular work hours, break time and any overtime hours for one or more employers. This new technology is significant because, instead of relying on their employers’ records, workers now can keep their own records. This information could prove invaluable during a Wage and Hour Division investigation when an employer has failed to maintain accurate employment records.

The free app is currently compatible with the iPhone and iPod Touch. The Labor Department will explore updates that could enable similar versions for other smartphone platforms, such as Android and BlackBerry, and other pay features not currently provided for, such as tips, commissions, bonuses, deductions, holiday pay, pay for weekends, shift differentials and pay for regular days of rest.

For workers without a smartphone, the Wage and Hour Division has a printable work hours calendar in English and Spanish to track rate of pay, work start and stop times, and arrival and departure times. The calendar also includes easy-to-understand information about workers’ rights and how to file a wage violation complaint.

Of course this doesn’t mean the employee has accurately tracked hours, only that they can. One more reason to use the Timesheet Certification Form on HR That Works.