ICE Inspections – What Employers Need to Know After AB 450
With the recent news regarding ICE raids on 7-11’s across the country, rumors of raids targeted at Northern California businesses and California’s Attorney General announcing plans to prosecute employers for violation of new laws passed through AB 450, employers should have a plan in place in the event of a raid. As January 1 AB 450 created new laws governing employers’ obligations related to immigration enforcement efforts. Below is some guidance for employers to use in navigating these tricky situations as well as an overview of the new laws stemming from AB 450.
Tips for Handling Immigration Agency Inspections:
- Do not allow agents to enter any non-public area, or provide access to records, without a valid warrant, or for records a valid “Notice of Inspection.”
Public areas: generally parking lots, lobbies, waiting areas, or other places the public enters or is permitted to enter.
Non-public areas: offices, back of house areas, areas marked “private” or “no trespassing,” and areas where the public is not permitted to enter due to company policy.
- When requesting a warrant, communicate with the agent in a public area and away from employees.
(Make sure the warrant is valid and signed by a Judge. Warrants from the Department of Homeland Security are not valid.)
- If you receive a “Notice of Inspection,” notify employees promptly (within 72 hours).
- Do not unnecessarily re-verify employment.
- Consider implementing a plan with the procedure to follow in the event of an inspection.
- Train employees – especially front-of-house workers, or those that greet visitors – on the new law and what to do in the event of an inspection. Employees should be advised to tell inspection agents that they are not authorized to allow entry and the name of the person who is.
Tips for Communicating with Employees about Inspections:
- Ensure you are abiding by the required notice procedure and content of Labor Code §90.2, described below.
- You may advise employees that they do not have to talk to immigration enforcement agents, and they do not have to provide any documents.
- Advise employees to call an immigration attorney, Legal Aid, or another resource.
- Avoid getting admissions from employees regarding whether they are legally authorized to work unless you are required by law to re-verify their status.
AB 450 created obligations of an employer as it relates to (1) an immigration agency inspection, (2) notice to employees regarding an inspection, and (3) re-verifying employment. Violation of these new laws carries fines for employers that vary from $2,000-$10,000.
Obligations Upon Immigration Agency Inspection:
(Gov. Code §§7285.1, 7285.2, 7285.3)
- Employers cannot provide voluntary consent to ICE agents to enter non-public areas without a warrant.
- Employers can and should take an ICE agent to a public area where employees are not present in order to verify if there is a warrant.
- Employers cannot provide voluntary consent to an ICE agent to access, review or obtain employee records without a subpoena or warrant.
Employers may challenge the validity of the warrant or subpoena.
- Employers may provide I-9’s or other forms if a Notice of Inspection has been provided to the employer, without requiring a subpoena or warrant.
Employee Notice Regarding Inspection:
(Labor Code §90.2)
- Provide notice within 72 hours of receipt of any Notice of Inspection. The notice must contain (1) the name of the agency conducting the inspection, (2) the date the notice was received, (3) the nature of the inspection (to the extent known), and (4) a copy of the Notice of Inspection. The Labor Commissioner will have a template available by July 1.
- Provide a copy of the Notice of Inspection to employees that request it.
- Provide a notice of the results of the inspection to all affected employees within 72 hours of receipt of the results, along with written notice of the obligations of both the employer and employee. This notice must contain (1) description of the identified deficiencies as stated in the inspection results, (2) the time period to correct the deficiencies, (3) the time and date of any meeting with the employer to correct the deficiencies, and (4) notice that the employee has a right to representation during any meeting scheduled.
“Affected employee” is one that is identified in the results from the immigration agency who may lack work authorization, or whose work authorization contains deficiencies.
(Labor Code §1019.2)
- Employer is not permitted to re-verify the employment eligibility of a current employee at a time or manner not required by Section 1324a(b) of Title 8 of the US Code. Essentially, this means that employers can only re-verify employment for current employees at the time the work authorization expires.
New Employment Laws for 2018
It is a new year, which means new employment-related laws. Here is a quick look at the highlights:
- Minimum wage is $10.50 per hour for employers with 25 or fewer employees. It is $11.00 per hour for everyone else.
- The new IRS reimbursement rate for business travel is 54.5 cents per mile, up one cent from last year.
- Employers can no longer ask applicants about criminal history before a conditional job offer is given.
- Employers can no longer ask applicants questions about their salary history.
- Employers with 20 or more employees must provide eligible new parents up to 12 weeks of unpaid leave from work to bond with new child.
- Employers are prohibited from allowing ICE to enter nonpublic areas of employment or access to employment-related documents (such as Form I-9’s) without a warrant.
For a detailed look at the new employment-related laws please refer to this document.
Napa and Sonoma County Fires: Employer Resources and Obligations
In light of the devastating fires in Napa and Sonoma Counties, employers should be aware of some available resources and other obligations required by law. We have compiled some information regarding available benefits, employee pay, leaves, and other information Napa and Sonoma County employers may find useful, below.
- Unemployment Benefits Available
- Disaster Unemployment Assistance
A Major Disaster Declaration was approved by President Trump as of October 10, 2017. This means that employees unable to work due to the fires can apply for Disaster Unemployment Assistance. This benefit is available for up to 26 weeks for employees impacted. More information can be found here.
- Partial Claim
If there is lack of work for no more than two weeks, employees can apply for partial benefits. In these circumstances, the employer should fill out the Notice of Reduced Earnings (DE2063) to provide to employees so that the employee may submit their claim for benefits. More information regarding a partial claim can be found here.
If there will be no work for more than two weeks, then employees should submit an ordinary application for unemployment benefits rather than a partial claim.
- Wages Notice
If the employer will have 10 or more employees out of work the employer may fill out a Wages Notice which can simplify the benefit application process. The form can be completed online, printed, and mailed or faxed to the EDD. The Wages Notice form is DE 4806.
Employers unable to furnish work to employees due to a natural disaster are not obligated to pay non-exempt employees. However, exempt employees still must be paid their full salary for weeks in which any work is furnished. If no work is furnished or completed by the exempt employee for a full workweek, then the employer does not have to pay the full weekly salary to those employees
Unless an employee requires leave due to qualifying physical or mental injuries and illnesses or disabilities, to the employee or certain family members, there are no leave obligations for employers.
In light of the devastation of the Napa and Sonoma fires, employers may choose to exceed their obligations under the law by permitting employees to take leave paid or unpaid, and/or use leave banks despite no serious health condition impacting the employee or certain eligible family members. This leave can be granted for employees impacted by the disaster to rebuild or for those volunteering to assist in disaster relief efforts.
4. Provide a Safe Workplace
Employers remain obligated to furnish a safe and healthful place of employment and may not require or permit an employee to be in any place of employment that is not safe and healthful. Employers open during the fires and its aftermath should provide appropriate protective equipment, such as respirator masks, to employees to ensure their safety.
5. Emergency Action Plan
The need for an emergency action plan is highlighted in times of disaster, and it is required by law to be a part of the Injury and Illness Prevention Program. Employers with 10 or more employees must have the emergency action plan in writing. Cal OSHA has guidance on developing this plan on here.
6. Payroll Tax Extension
Employers can request an extension of up to 60 days to file state payroll reports and/or deposit state payroll taxes. A written request for the extension must be received within 60 days of the original delinquent date of the payment or return.
7. Reconstruct Payroll Records
Employers that lost payroll records due to the fire should reconstruct the records in order to file quarterly and/or yearly payroll tax reports. Employers can make reasonable estimates based upon the best information available, and the EDD can provide copies of previous reports on which to base the estimates.
Employer Obligations for Heat Illness Prevention during Harvest
This weekend, the weather forecasters predict temperatures in Napa County will reach 108 degrees with parts of Sonoma County and Mendocino County topping 112 degrees. Even in the early hours, agricultural laborers working harvest may be exposed to high heat conditions. What follows is a quick refresher for those employers with outside work areas on their legal obligations for heat illness prevention. We encourage all employers to “over-deliver” when appropriate on these standards.
The Cal/OSHA regulations require employers to:
1. Provide fresh water.
Employers must provide employees with fresh, pure, and suitably cool water, free of charge. Enough water must be provided for each employee to drink at least one quart, or four 8-ounce glasses, per hour and the water must be located as close as practicable to the work area. Employers are also required to encourage employees to drink water frequently
2. Provide access to shade.
When temperatures exceed 80 degrees, employees must be provided shade at all times in an area that is ventilated, cooled, or open to air and that is as close as practicable to the work area. There must be sufficient space provided in the shade to accommodate all employees taking rest. When temperatures do not exceed 80 degrees, employees must be provided timely access to shade upon request. Employees should be allowed and encouraged to take preventative cool-down rest as needed, for at least 5 minutes per rest needed.
3. Have high heat procedures in place.
High heat procedures are required of agricultural employers when temperatures exceed 95 degrees. The procedures must provide for the maintenance of effective communication with supervisors at all times, observance of employees for symptoms of heat illness, procedures for calling for emergency medical services, reminders for employees to drink water, pre-shift meetings to review heat procedures and the encouragement of employees to drink plenty of water and take preventative cool-down rest as needed.
Agricultural employers must additionally ensure employees take, at a minimum, one 10-minute preventative cool-down rest period every two hours in periods of high heat.
4. Allow for acclimatization.
New employees or those newly assigned to a high heat area must be closely observed for the first 14 days of their assignment. All employees must be observed for signs of heat illness during heat waves. A “heat wave” is any day where the temperature predicted is at least 80 degrees and 10 degrees higher than the average high daily temperature the preceding 5 days.
5. Train all employees regarding heat illness prevention.
Employees must be trained regarding the risk factors of heat illness and the employers’ procedures and obligations for complying with the Cal/OSHA requirements for heat illness prevention. Supervisors must additionally be trained regarding their obligations under the heat illness prevention plan and how to monitor weather reports and how to respond to heat warnings.
6. Have emergency response procedures.
Employers must have sufficient emergency response procedures to ensure employees exhibiting signs of heat illness are monitored and emergency medical services are called if necessary.
7. Have a Heat Illness Prevention Plan.
Employers must have a written heat illness prevention plan that includes, at a minimum, the procedures for access to shade and water, high heat procedures, emergency response procedures, and acclimatization methods and procedures.
Gender-Neutral Restroom Guidance:
By March 1, 2017 all business establishments, places of public accommodation, or state or local government agencies must designate single-user toilet facilities as “all-gender.” A single-user toilet facility is a toilet facility with no more than one water closet or urinal with a locking mechanism controlled by the user. There is no requirement in the law that the bathroom be available to the general public.
The signage needs to comply with Title 24 of the California Code of Regulations (the California Building Code), which dictates size, shape and accessibility standards. The specific requirements for single-use toilet facilities are found in Chapter 11B of the Building Code and specifically at Sections 11B-703.7.2.6 (for mounting height requirements) and 11B-703.7.2.6.3 (for unisex geometric symbol requirements)—both available here (at page 90). This can be confusing, but a quick Google search yields dozens of vendors who purport to provide placards that comply with state and federal standards for unisex restrooms. For questions about whether a specific sign complies with the new law, contact Greg Walsh.
Important 2017 Employment Changes:
State Minimum Wage: $10.50 per hour for employers with 26 or more employees. $10.00 per hour for those with 25 or less employees. Cities throughout the state have higher minimum wages. Consult local ordinances if employees regularly work in cities outside Sonoma or Napa Counties. Note, exempt employees for employers with 26 or more employees must make at least $43,680. (For smaller employers it remains $41,600.) Exempt employees must back at least twice the minimum wage on an annualized basis based on full time employment (2080 hours).
IRS Mileage Rate: The mileage reimbursement rate for cars, vans, pickups or panel trucks is 53.5 cents per mile. This is down from 54 cents per mile for 2016.
New I-9 Form: As of January 22, 2017 employers must use the new I-9 form to document that employees are authorized to work in the United States. The new form can be found here.
Legalization of Marijuana: Although California has now legalized recreational use of marijuana, employers may continue to prohibit marijuana use, possession or impairment on the job. Employers can also continue to test for marijuana in pre-employment screening tests, subject to existing privacy rights disclosures.
Gender Neutral Bathrooms: By March 1, 2017 all business establishments, places of public accommodation or state or local government agencies must designate single-user toilet facilities as “all-gender”. A single-user toilet facility is a toilet facility with no more than one water closet or urinal with a locking mechanism controlled by the user. There is no requirement in the law that the bathroom be available to the general public.
Piece-Rate: If you pay any workers by piece-rate make sure your payroll practices are compliant with respect to calculating and reflecting rest/recovery breaks and other non-productive time and pay. Do not solely rely on your payroll service to do this properly. Verify that it is being done correctly. It is extremely complicated.
Federal Exempt Salary Increase: The new Department of Labor overtime exemption rule is on hold through court action. It is uncertain whether it will eventually be implemented, revised or squashed. If implemented the new minimum salary threshold for exempt employees would be $46,467 (higher than the current California requirement).
FEHA Policies: Check your discrimination, harassment and prevention policies and training practices to make sure they are compliant with new Department of Fair Employment and Housing regulations.
For more information on these or any other employment laws impacting your business contact Jennifer Douglas Phillips.
More Hoops: EDD Wants Employers to Report AB 1513 Safe Harbor Payments For All Past Quarters
Employers who paid safe harbor payments under AB 1513 are facing a new vexing, last minute challenge. Although the payments were taxable wages to employees and former employees for the tax year 2016, the California Employment Development Department (“EDD”) recently issued a notice that employers who made these payments must report the back payments for the quarters for which they were made. The EDD is expecting employers to not only submit a DE 9 (Quarterly Contribution Return and Report of Wages) and pay the contributions for the 2016 quarter that the back pay was made, but also submit a DE 9c for the quarters in which the employees earned the back pay and should have been paid (back to July 2012). To add insult to injury the forms cannot be electronically filed. Employers must mail the forms to a specific address. The EDD’s notice is attached here.
For more information on this and other AB 1513 issues contact Jennifer Douglas Phillips.
Alert: Court Denies AB 1513 Injunction – Safe Harbor Deadline Now July 28, 2016
Today, the Fresno County Superior Court denied Nisei Farmers League’s request for a preliminary injunction staying the enforcement of AB 1513’s affirmative defense deadlines. AB 1513 is recent legislation specifying how nonproductive time should be compensated for employees paid by piece-rate. The new deadline to file with the DIR is July 28, 2016.
Under AB 1513 (codified as Labor Code 226.2) employers had until July 1, 2016 to file with the Department of Industrial Relations (“DIR”) its intention to opt into the affirmative defense provisions outlined under the law. The court had previously granted a temporary restraining order staying the provisions until ten days after the July 18, 2016 hearing on the injunction. The court did not rule on the merits of Nisei Farmers League’s complaint that the law is unconstitutional. That matter will be heard at a later date. For now, employers are back to where they were on June 29, 2016, with three days remaining to file for the safe harbor.
For more information about this or other employment related matters contact Jennifer Douglas Phillips.
ALERT: Legal Challenge To AB 1513 Filed. Deadline to file for Safe Harbor protections extended to July 18, 2016.
Nisei Farmers League filed a lawsuit on June 27, 2016 in Fresno Superior Court challenging the legal validity of certain provisions of AB 1513 governing payment for nonproductive time for employees compensated by piece rate. The extension of time to file for safe harbor protections with the California Labor Commissioner was extended in order to provide time for a hearing. Nisei Farmers League is requesting a restraining order to stay enforcement of the law pending the court’s decision on the merits of the lawsuit. More detail about the lawsuit, including links to the court documents, can be found here.
Please note, that while the deadline has been extended to register for the safe harbor provisions, there has been no decision about the validity of the law, which has been in effect since January 1, 2016.
Big Changes Ahead: Minimum Salary for Exempt Employees Must Be $47,476 By December 1, 2016
On May 18, 2016 the United States Department of Labor (“DOL”) released its final updated regulations governing overtime exemptions. The DOL’s Wage and Hour Fact Sheet detailing the changes can be found here.
Although it does not go as far as the proposed rules, the new regulations dramatically expand the number of workers eligible for overtime compensation under the Fair Labor Standards Act (“FLSA”) raising the current salary threshold for exemption of $455 per week ($23,660 per year) to $913 per week ($47,476 per year). Assuming the regulations survive legal hurdles posed by Congress, Employers will have until December 1, 2016 to comply with the new regulations. The salary requirement will then automatically adjust every three years with the first adjustment occurring January 1, 2020.
Historically, California employers safely ignored the FLSA minimum salary requirements as California’s minimum salary was higher. California requires a minimum salary of twice the minimum wage based on a full time schedule of 40 hours per week (2080 hours per year). The current minimum salary requirement for exempt employees in California is $41,600 ($20 x 2080), nearly twice the former federal requirement.
Now, everything has changed and it is time for employers to identify employees who will be impacted by the updated regulations and to plan accordingly. Employers can either increase exempt employees’ salaries to meet the new threshold (incentive bonuses and commissions will be allowed to account for up to 10% of the minimum salary requirement) or they can reclassify the employees as nonexempt. For more information about implementing the DOL’s updated regulations and any other employment related matters, contact Jennifer Douglas Phillips Gregory Walsh or Owen Dallmeyer in our Labor & Employment group.
Deadline Looming for Employers to Elect “Piece-Rate Back Pay” Safe Harbor under AB 1513
It’s decision-making time under AB 1513 for employers of piece-rate workers in California. More specifically, if you employ piece-rate workers in California, you must give notice to the state’s Department of Industrial Relations by July 1, 2016 if you want to avail yourself of the safe harbor under the statute and secure the complete affirmative defense to claims for failure to pay for nonproductive time for periods prior to December 31, 2015.
If you are asking yourself if this applies to you, here is some background:
Effective January 1, 2016, AB 1513 added a new section to California’s Labor Code (Section 226.2, available in full here) that established compensation and wage statement requirements for nonproductive work time, i.e., rest and recovery periods and other work time that was not directly compensated by a piece-rate workers “piece-rate.” Formerly, employers would argue that they had built such nonproductive time into the “piece-rate.” AB 1513 effectively put an end to that. The DIR has a set of answers to “Frequently Asked Questions” (available here) that is a helpful resource for specific questions.
In brief, Labor Code Section 226.2 requires that piece-rate workers be compensated separate from their piece-rate earnings, based on an average hourly rate, for mandatory rest periods, heat recovery periods, any other time that is not directly compensated by an employee’s piece-rate, e.g., meetings, waiting time, etc. (or “nonproductive time”). The employee’s wage statement must also separately state certain information related to this compensation. The formula for calculating an employee’s “average hourly rate” is also set forth in the statute. The DIR’s FAQ site has good examples of this calculation under various scenarios—hint: it’s not a simple average.
While AB 1513’s requirements apply from January 1, 2016 (the statute’s effective date) forward, it also prescribes two “safe harbors” for employers to utilize to defend against claims for unpaid nonproductive time.
First, under the statute, an employer is deemed in compliance with its requirement to pay separately for other nonproductive time, if it pays employees at least minimum wage for all hours worked in addition to piece-rate pay. This safe harbor applies to all nonproductive time except rest and recovery periods. Employers are required to pay the average hourly rate for all rest and recovery periods during any period the employee is paid on a piece-rate basis. There is no exception to this.
Second—and the subject of this posting—Employers have an affirmative defense under the statute to any claim or cause of action for failure to pay for rest periods, recovery periods, or other nonproductive time, for time periods before December 31, 2015. But, to take advantage of this safe harbor, you must pay each of your employees (past and present) for any unpaid or underpaid nonproductive time from July 1, 2012 to December 31, 2015 inclusive.
You can do this by either:
(1) Calculating and paying the actual sums due, plus interest, or
(2) Paying each employee an amount equal to 4% of his or her gross earnings in pay periods during which the employee worked for a piece-rate from July 1, 2012 to December 31, 2015.
If you choose to pay the 4%, you can set off from the payment any amounts already paid directly for nonproductive time to the employee, but no more than 1% of the employee’s gross earnings for the time period. Under either method, you must provide a statement summarizing how you calculated the payment; you must use due diligence to locate and pay former employees; and you must make payments to the Labor Commissioner’s Unpaid Wages Fund (with additional admin fees) for former employees who you cannot locate.
But, as mentioned, if you want to avail yourself of this protection, you will need to act fast. Notice to the DIR of a “Piece-Rate Back Pay” election must be given no later than July 1, 2016, and all payments must be complete by December 15, 2016. The DIR’s website has an easy form that employers can be fill out and submit to provide the DIR with the requisite notice of piece-rate back pay election and which can be found here.
This posting is but an overview of the specific, detailed, and sometimes complex requirements established by AB 1513 and Labor Code Section 226.2. We encourage you to consider whether the risk of litigation or liability warrants taking advantage of this statutory protection. For more information about this and other employment issues contact Jennifer Douglas Phillips or Owen Dallmeyer from DP&F’s Employment Group.
Employment Laws for January 1, 2016
Ringing in the New Year means time to implement the latest California employment laws. Here is a summary of some of the more significant ones. For more detailed information contact Jennifer Douglas Phillips via email.
Minimum Wage: The California minimum wage increases to $10.00 per hour. Don’t forget this also means that salaried, exempt employees must now make at least $41,600 per year (twice the minimum wage).
Piece-Rate Pay (AB 1513): If you pay your employees by piece-rate, you must separately reflect rest and recovery periods as well as non-productive work on employees’ wage statements. Rest and recovery periods must also be paid at an hourly rate of either the average hourly rate of the employee for the applicable workweek or minimum wage, whichever is higher. The applicable hourly rates for everything must be reflected on the wage statement (piece-rate, rest and recovery rate, non-productive work).
Affordable Care Act Reporting: Applicable Large Employers (“ALE”), those with 50 or more full-time equivalent employees, must submit reports to the IRS by February 28 or electronically by March 31. ALE’s must also provide tax Form 1095-C to each of their employees by January 31. More information about the ACA reporting requirements can be found here.
New Postings: Make sure to obtain the latest posters and applicable wage orders and post them at your workplace. If you are unsure what wage order should be posted discuss with your legal counsel or review the Labor Commissioner’s helpful publication entitled “Which Wage Order?” (A copy of it is here) You can obtain the fully compliant postings through the Cal Chamber. Here is a link to its web store.
Seating for Employees: This is not new, but the courts will likely issue decisions this year clarifying when employers are required to provide seats to employees. Wage orders in California (governing nearly all employees) already contain provisions requiring employers to provide “suitable seating” to employees “when the nature of the work reasonably permits”. There are numerous class actions pending around the state concerning this issue. We encourage you to examine your workplace and provide seats to employees whenever possible. If you are unsure if seating is appropriate in your workplace consult legal counsel for guidance and an examination of the potential risk in not providing seats.
CEB Wine Law Forum (Nov. 5-6 in Paso Robles)
Thursday and Friday, November 5th & 6th
Paso Robles, California
Three DP&F attorneys will be speaking at the annual CEB Wine Law Forum,™ taking place on November 5th and 6th in Paso Robles, California. The Forum, sponsored by the International Wine Law Association and moderated by DPF’s Richard Mendelson, will address Water Regulation, the AVA System, and Employment Law. Mr. Mendelson will speak on the history and future of the U.S. AVA system, and DPF Director Carol Ritter will lead a panel on protecting and promoting AVAs. DPF co-managing partner Greg Walsh will lead a panel discussion on employment law issues faced by winery and vineyard owners.
The event is sponsored by the International Wine Law Association and Napa Valley Vintners.
Additional information and on-line registration can be found on the CEB website.
Water and Wine—Thursday Morning
Water and Wine—California
Water and Wine—Paso Robles
Appellation Designations—Thursday Afternoon
35 Years Later—An Examination of the AVA System
Promoting and Protecting AVAs
Employment Law Matters—Friday Morning
Challenges of a Seasonal Workforce
Top 5 Wage & Hour Issues Facing Winery and Vineyard Owners
9 hours MCLE Credit
New Paid Sick Leave Rules . . . Already
On July 13, 2015, Governor Jerry Brown signed AB 304 amending California’s brand new paid sick leave law (Labor Code 245 et seq.). The full text of the bill and its amendments to the law can be found here.
The most significant change for the wine industry is the rate of pay for sick leave. In the original law there was a complicated formula looking back over 90 days for anyone receiving commissions, variable hourly rates or piece-rate pay. There was also confusion as to whether the formula applied to both exempt and non-exempt employees. The amended law will give employers the option to pay non-exempt hourly employees their regular rate calculated from the workweek in which the employee uses paid sick time (this is the same calculation already used to determine overtime pay) or the 90-day look back calculation. It also clarifies that exempt employees can be paid however the employer normally calculates wages for paid time off.
The actual wording of amended Labor Code 246 (k) addressing rate of pay is:
(k) For the purposes of this section, an employer shall calculate paid sick leave using any of the following calculations:
(1) Paid sick time for nonexempt employees shall be calculated in the same manner as the regular rate of pay for the workweek in which the employee uses paid sick time, whether or not the employee actually works overtime in that workweek.
(2) Paid sick time for nonexempt employees shall be calculated by dividing the employee’s total wages, not including overtime premium pay, by the employee’s total hours worked in the full pay periods of the prior 90 days of employment.
(3) Paid sick time for exempt employees shall be calculated in the same manner as the employer calculates wages for other forms of paid leave time.
What you need to know about California’s new Paid Sick Leave
The paid sick leave law went into effect January 1, 2015, but employers are not required to provide paid sick leave to eligible employees until July 1, 2015. The new law is Labor Code Section 245 et seq.
Beginning January 1, 2015, employers must provide notice to all employees about the law. A copy of the compliant notice is here. Beginning January 1, 2015 employers must also start using a new Wage Theft Notice whenever non-exempt employees are hired. The new Wage Theft Notice is here.
If employers already have a paid sick leave or paid time off (“PTO”) policy that meets or exceeds the law’s requirements, then those employers do not need to provide any additional time. If employers do not have such a policy they will have until July 1, 2015 to develop and implement it. All employers are encouraged to review their policies to determine if they are compliant.
Here are the requirements:
1. Who is eligible?
Employees who work 30 or more days a year in California are entitled to paid sick leave. This means on-call employees or seasonal employees who work less than 30 days a year are not entitled to the leave.
Very few employees are excluded from the law. Some employees covered by collective bargaining agreements, some in-home support service employees, and some air carrier employees are excluded. Everyone else is covered as long as they work 30 or more days a year in California. This means part-time, temporary and seasonal employees, as well as regular full-time employees and those who are compensated on commission.
2. What must employers provide?
Employers must provide employees with no less than 24 hours or three days of paid sick leave, or equivalent paid leave, such as PTO, for employee use each year. Because the law uses the words “no less than” employees who work 10 hour days are entitled to at least 30 hours of paid sick leave to equate to their three days of work. And employees who work six hour days are entitled to the 24 hours of paid sick leave, which in their case would equate to four paid sick days.
If an employer provides employees with the full amount of leave in the beginning of the year, the employer does not have to accrue or carry over paid sick leave. The employer must provide the employee with at least 24 hours or three paid sick days for employee use for each year of employment or calendar year or 12-month basis.
3. How is the sick leave accrued?
If employers do not provide paid sick leave in a lump sum at the beginning of the year, employees are to accrue paid sick days at a rate of not less than one hour per every 30 hours worked beginning on July 1, 2015, or on the employee’s hire date if hired after July 1, 2015. Employees must be allowed to carry over any accrued, but unused sick leave into the next year, but employers may cap the employee’s accrual at 48 hours or six days of paid sick leave.
4. What rights do employers have to limit the use of paid sick leave?
Employers can require that employees work at least 90 days before using any accrued sick leave. This works as a probationary period. Employers can limit the amount of paid sick leave employees can take in one year to 24 hours or three days.
5. At what rate is the sick leave paid?
The rate of pay for sick leave is the employee’s regular hourly rate. If the employee’s pay fluctuates because of different hourly rates, commissions, bonuses or piece rates in the 90 days of employment before taking accrued sick leave, the rate of pay is calculated by dividing the employee’s total wages, not including overtime premium pay, by the employee’s total hours worked in the full pay periods of the prior 90 days of employment. This is a significant change for employers who normally pay a straight hourly wage for vacation or sick time.
6. How is sick leave tracked?
The new law requires employers to show the accrued sick leave on employees’ pay stubs or on a document issued the same day as the paycheck. This poses significant issues for employers that provide unlimited time off to exempt employees. There is no exclusion for such employees, which means employers must begin tracking paid sick days for these employees.
7. What happens to accrued sick leave when employment terminates?
Unlike accrued vacation time, employees are not entitled to accrued but unused sick leave at termination.
California Labor Commissioner Issues Required Postings for New Paid Sick Leave Law
The California Labor Commissioner recently issued the Paid Sick Leave poster template and Wage Notice for employers to use as of January 1, 2015 in compliance with California’s new paid sick leave law, AB 1522. Employers do not need to use these documents in their workplace, but if they create their own posters and notices, the information must be the same. Employers can find the Labor Commissioner issued posting here and the Wage Notice here.
Although the posting and wage notices are to be used as of January 1, 2015, employees’ entitlement to paid sick days does not go into effect until July 1, 2015. For legal guidance on implementing the new law contact Jennifer Phillips by clicking here.
Employees in the Earthquake Aftermath
While the dust was settling last week many questions arose about employees. The two biggest issues were employee safety and employee pay.
A. Employee Safety
Employers are responsible for their employees’ safety in the workplace. If employers remain open during clean up they must make sure their employees are safe. Employers should be mindful of employees handling broken glass and moving large objects. Employers may need to take steps, such as providing gloves, hiring a cleaning or moving crew, or providing an alternative work station so that their employees’ can work safely.
B. Employee Pay
Equally important is employee pay. Some businesses remain closed and employees have not returned to work.
1. Pay Obligations
Employers are not required to pay non-exempt employees if the employer is unable to provide work to the employees due to a natural disaster.
Employers are required to pay exempt employees full salary if the worksite is closed or unable to reopen due to a natural disaster for less than a full workweek. Employers are not obligated to pay exempt employees if the worksite is closed or the employer is unable to reopen for a full week.
2. Unemployment Insurance
If employers anticipate having employees out of work for an extended period of time their employees may be eligible for unemployment benefits. Information concerning unemployment can be obtained from the Employment Development Department (“EDD”) at (http://www.edd.ca.gov/Unemployment/Disaster_Unemployment_Assistance.htm)
- Partial Claim: Employees can qualify for partial unemployment if they are out of work for no more than two consecutive weeks. This allows the employer to keep the employee technically employed. If the layoff is for more than two weeks, the regular unemployment claim process is used.
- Disaster Unemployment Assistance: This is a federal program that provides financial assistance to individuals whose employment has been lost or interrupted as a direct result of a major disaster and who are not eligible for a regular unemployment claim. These benefits are 100 percent funded by the federal government, as opposed to the employer. They are available only for weeks that fall within the Disaster Assistance Period, which is the first day of the week following the date of the disaster and ends 26 weeks after the disaster was declared by the President of the United States. The claims are submitted through the EDD and information can be found here: http://www.edd.ca.gov/pdf_pub_ctr/de8714y.pdf. On September 2, 2014, Governor Brown requested a Presidential Major Disaster Declaration for the state. As of the date of this blog, however, there has not been a declaration.
- Wages Notice: If the employer will have 10 or more employees out of work the employer may fill out a Wages Notice which can simplify the benefit application process. The Wages Notice form is DE 4806 http://www.edd.ca.gov/pdf_pub_ctr/de4806.pdf. The form can be completed online, printed, and mailed or faxed to the EDD.
3. Payroll Taxes
Finally, employers in Napa, Solano and Sonoma Counties directly affected by the earthquake may request up to a 60-day extension of time from the EDD to file their state payroll reports and/or deposit state payroll taxes without penalty or interest. This extension may be granted under Section 1111.5 of the California Unemployment Insurance Code (CUIC). Written request for extension must be received within 60 days from the original delinquent date of the payment or return to file/pay.
California’s New Minimum Wage Affects Wine Industry Employers
As of July 1, 2014 California’s minimum wage is $9.00 per hour. All employers with employees making minimum wage should review their payroll practices to ensure the change has been implemented moving forward. Employers will need to update their Wage Notices to reflect the change for new employees, but existing employees can receive notice through their paystubs.
In addition, as of July 1st all exempt employees must make at least $37,440 per year. This is based on the calculation of two times the minimum wage for the equivalent of a full time worker, which is set at 2080 hours per year. By definition exempt employees are paid for their work, not the number of hours worked. This may affect your piece-rate practices as well, so take care to ensure that employees receiving piece rate wages do not receive less than this new rate per hour.
These rates will be in effect until January 1, 2016 when the rate will increase to $10.00 per hour for non-exempt, hourly employees and $41,600 for exempt salaried employees. Finally, note that this is a state minimum wage. Some jurisdictions require even more per hour, and the employee always receives the benefit of the most generous policy.
For more information or assistance contact Greg Walsh (firstname.lastname@example.org) or Jennifer Phillips (email@example.com) in Dickenson, Peatman & Fogarty’s labor and employment practice group.
Class Action Waivers Enforceable in Employment Arbitration Agreements
On Monday, June 23, 2014 the California Supreme Court held that class action waivers are enforceable in employment arbitration agreements. This means that an employee and employer can agree through a binding arbitration agreement that the employee may not assert class action claims against the employer. In the same case the Court found that a representative action through California’s Private Attorney General Act (“PAGA”) cannot be waived. The Court found a distinction between a class action which primarily benefits employees and a PAGA action which primarily benefits the state. Under PAGA, an employee may notify the state of its intention to bring a representative action against the employer seeking civil penalties for Labor Code violations. If the state consents and the employee prevails, 75% of the penalties go to the state and 25% go to the individual employee who brings the action.
Questions left open by the Court include whether the arbitration agreement can require the PAGA action to be arbitrated and if the PAGA action is not arbitrated whether the arbitration would be stayed pending the outcome of the PAGA action in civil court.
The Court found that the United States Supreme Court’s seminal 2011 case of AT&T Mobility v. Concepcion made clear that the Federal Arbitration Act preempts a state’s refusal to enforce a class action waiver on grounds of public policy or unconscionability. The case is called Iskansian v. CLS Transportation Los Angeles LLC, and the full opinion can be read here: http://www.courts.ca.gov/opinions/documents/S204032.PDF .
With questions about this decision or what it means for you or your business, email Jennifer Phillips at firstname.lastname@example.org.
Affordable Care Act Employer Mandate for Medium Sized Employers Delayed Another Year
In a further reprieve to employers the White House announced Monday, February 10, 2014 that portions of the Affordable Care Act’s employer mandate will be delayed another year. Employers with 50 to 99 employees will have until January 1, 2016 to offer quality affordable health care to their employees who work 30 or more hours a week or pay a penalty. The employer provision applicable to large employers, those with 100 or more employees, is still slated to begin January 1, 2015. The individual mandate took effect January 1, 2014.