1. California Payroll Association Wage and Hour Developments
Thursday, September 11, 2014

2. Brian Dixon Co-Chair, Wage and Hour Practice Group
Presented by:
Brian Dixon
Co-Chair, Wage and Hour Practice Group
Littler Mendelson, P.C.

3. Wage and Hour Developments
White-Collar Exemptions
Commission-Sales Exemption
Commission Pay Timing
Meal and Rest Periods
Heat Recovery Periods
Piece-Rate and Commission Pay Plans
Independent contractors
Arbitration and PAGA claims

4. White Collar Employees
Overtime exemptions
Does employer qualify for the exemption
Does employee do work of exempt quality
Does employee do sufficient quantity of exempt work
Does employee received the required compensation

5. White Collar Employees
Heyen v. Safeway Inc., California Court of Appeal
Fact finder must determine objective purpose of employee’s actions
Concurrent duties test rejected, employee’s actions can only be exempt or non-exempt
Realistic expectations test confirmed
Fact finder is to
Look at what employee did
Whether what employee did was consistent with realistic expectations
Whether employer communicated about failure to meet expectations
Primary duty is determined week by week

6. Expense Reimbursements
Cochran v. Schwan’s Home Service, Inc., California Court of Appeal
Employer must reimburse employees for reasonable percentage of cost of cellular phone service – even if employee already had unlimited phone service and incurred no additional cost in answering phone

7. Expense Reimbursements
Cochran v. Schwan’s Home Service, Inc., California Court of Appeal
Must employer pay reasonable percentage for use of
Employee’s home internet service?
Employee’s home land line?
Employee’s reading glasses?
Employee’s watch?

8. Inside Sales Exemption
Employer must be traditional retail or service establishment
Employer must be covered by Wage Order 4 or 7
Employee must spend more than one half his or her time in sales
Employee must earn more at least time and one half the minimum wage for each hour worked
More than one half of employee’s compensation must be commissions

9. Inside Sales Exemption
Peabody v. Time Warner, Inc. California Supreme Court
Commissions paid monthly cannot be credited toward the minimum compensation requirements for an earlier bi-weekly pay period.

10. Commission Pay Timing
Peabody v. Time Warner, Inc. California Supreme Court
“In other words, all earned wages, including commissions, must be paid no less frequently than semimonthly.”

11. Meal and Rest Periods Post-Brinker
The Brinker standard
Employer must “provide” meal breaks, proof problems compel strict compliance
Clarified the timing and duration
Reinforces the importance of lawful policies
Premium pay for missed meals and rest periods
Must be timely
Must be correctly identified on pay stub

12. Meal and Rest Period Problems
Auto-deduction for meals without effective exception reporting policy
Granting employees too much latitude to waive meal periods
Production pay schemes
Interrupted meals
Leaving the premises

13. Practical Solutions Time card certifications
Monitoring missed meals and rest periods through timekeeping system
Regular audits of records and practices
Training managers and employees
Forced scheduling
Hotline for reporting non-compliance

14. California Expands Break and Premium Pay Requirements to Heat Recovery Periods
What’s HOT in California -
Required written guidelines and training to avoid heat illness in outside employees
Always provide water
Make shade available when over 850
Provide 5-minute, paid heat recovery periods whenever needed
Pay one-hour of premium each day any heat recovery period is not provided

15. Piece-Rate Pay Plans Under Attack
Employer must pay the minimum wage for:
Each separate hour worked, even where an employee is earning above the minimum wage when averaged over all hours worked
Any small amount of work that does not directly result in piece rate or commission compensation
Rest periods

16. Who Is … And Is Not, An Employer
Ayala v. Antelope Valley Newspapers, California Supreme Court
The alleged employer’s right to control, not the exercise of control, is most important
FedEx Ground Cases, Ninth Circuit Court of Appeals
Scrutinize the entire relationship even where contractor has some control
Patterson v. Domino’s Pizza, LLC, California Supreme Court
Franchisor is not joint employer of franchisee’s employees even though every franchise relationship entails some control by franchisor

17. Independent Contractors – Risks of Failed Relationship
Overtime and minimum wages
Civil and statutory penalties for misclassification, failure to pay wages, pay timely, check stubs
Employment taxes
Denial of other employee rights
Wrongful termination
I-9 compliance

18. Independent Contractors – Risks of Failed Relationship
Less commonly perceived risks of failed independent contractor relationships:
Arbitration of disputes
Intellectual property
Claims for benefits and discrimination issues in plans

19. Un-Civil Procedure
Iskanian v. CLS Transportation of Los Angeles, California Supreme Court
Class action waivers in arbitration agreements are enforceable
PAGA waivers in arbitration agreements are not enforceable
Fardig v. Hobby Lobby Stores, Inc., Quevedo v. Macy’s, Inc., Parvataneni v. E*Trade Financial Corporation, United States District Courts
PAGA waivers in arbitration agreements are enforceable

20. Un-Civil Procedure Private Attorney’s General Act
No class action certification required for Plaintiff to proceed
Plaintiff can pursue claims on behalf of any aggrieved employee
One-year(?) statute of limitations
Potential penalties cannot be summed to remove PAGA case to federal court

21. PAGA PENALTIES AND SOME OTHER BAD THINGS
Employee’s time card is missing one hour of time, employee’s paycheck is short, employee quits –
Penalty for inaccurate time card – LC 1199
Penalty for untimely payment – LC 210
Penalty for late payment of final wages – LC 201
Penalty for inaccurate pay stub – LC 226

22. MORE BAD THINGS
Penalty for failure to comply with the Wage Order – LC 558
Unpaid wages as part of penalty – LC 558
Waiting time penalty – LC 203
Penalty for not paying minimum wage – LC
Liquidated damages for not paying the minimum wage – LC
Attorney’s fees, interest, costs

23. QUESTIONS?

24. THANK YOU!
R. Brian Dixon Littler Mendelson, P.C