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[VIDEO] BB&K Webinar: Annual Labor & Employment Update 2016

08 Dec 2016 00:00:00 -0800

BB&K Labor and Employment attorneys discussed new legislation and case law impacting California employers - private and public.

What was discussed:

New legislation
Wage and hour update
Harassment, discrimination and retaliation
Disability discrimination and medical leaves
Benefits update including discussion of the Affordable Care Act and the Flores case
Marijuana in the workplace
Public agency cases and updates

This activity has been approved for minimum continuing legal education by the State Bar of California in the amount of two (2) hours of General Participatory credit. Best Best & Krieger LLP certifies that this activity conforms to the standards of approved educational activities prescribed by the rules and regulations of the State Bar of California governing minimum continuing legal education. Best Best & Krieger LLP is a State Bar of California Approved Provider, #1035.

When:
Thursday, Dec. 8
9:30 - 11:30 a.m. PT

Click here for questions.

Materials
Annual Labor & Employment Law Update
New Legislation and Case Summaries

To view a recording of the webinar, click here.

Best in Law: Employers, Be Aware of Just-signed Laws

28 Nov 2016 00:00:00 -0800

By D. Brian Reider

As we wind up this year and look back on the election, legislation passed in California and recent court decisions, there are multiple issues for employers to watch for in the next year, and beyond. Two recently signed bills are worth note.

First, if a business establishment has “single user” restrooms available to the public, Assembly Bill 1732, recently signed into law by Gov. Jerry Brown, requires that, by March 1, the restroom be identified as “all gender” and be universally accessible. New signage must be installed to make it clear that the restroom is not intended solely for males or females. A “single user” restroom has no more than one water closet and one urinal and a locking mechanism controlled by the user.

Second, Brown signed Senate Bill 1234, which mandates that, eventually, all California businesses that employ at least five employees offer a retirement savings plan or make automatic payroll deposits into a state-sponsored program for the benefit of those employees.

The California Secure Choice Retirement Program will require that, at some point, (probably not until 2018), workers whose companies do not offer a retirement plan will have 3 percent of their wages deducted. The wages will be deposited into an account overseen by a soon-to-be-created state board. Workers can opt out of the deduction.

Another topic of concern for employers coming out of the election is the passage of Proposition 64, known as the Control, Regulate and Tax Adult Use of Marijuana Act. Effective immediately, adults 21 and over may legally use and grow marijuana for personal use, and, beginning in January 2018, it will be legal to sell the drug.

The Act contained a number of protections for employers, who will be allowed to develop or maintain drug-free workplace policies, regardless of whether the marijuana use is medicinal or recreational. Employers are also allowed to continue pre-employment screening and limited testing of current employees for marijuana. The policies a company will need to protect itself are complex, and a knowledgeable attorney should be consulted to ensure compliance with both California and federal laws.

Finally, one recent California court decision is worth mentioning. It relates to what must appear on an employee’s wage statement – a mundane sounding issue that can have serious implications if an employer is sued for failure to comply with state law.

In Soto v. Motel 6, Operating L.P., an employee class action claim was filed in which it was alleged that the employer failed to include the monetary amount of accrued vacation pay in the employees’ wage statements. This was claimed to be a violation of California Labor Code section 226, which has detailed requirements for what must be on a wage statement.

The Court of Appeal upheld a trial court decision that dismissed the lawsuit, holding that, under section 226, accrued vacation was not required to be listed on the paystub. The reason, fundamentally, was that the purpose of the wage statement is to tell the employee what they are actually being paid at that time so they can object to any omissions or inconsistencies. The case serves as a good reminder that every employer should have an expert review employee paystubs to ensure that all required information is included.

This article first appeared in the Press-Enterprise on Nov. 27, 2016. Republished with permission.

PIHRA 2016 Legal Year in Review

10 Nov 2016 00:00:00 -0800

Best Best & Krieger LLP Partner Joseph Ortiz will present “2016 Legal Year in Review,” for the Professionals In Human Resources Association. This presentation focuses on the laws that the savvy HR practitioner should know about, and the significant changes that occurred in Human Resources in 2016. The presentation will include a roll call of the most recent employment-related laws passed by the California Legislature, as well as a "best of" summary of the five biggest legal changes that occurred in 2016. Included will be a discussion of the status of the new white collar exemption salary requirements, new gender protection issues, and much, much more.

When
Thursday, Nov. 10
11:30 a.m. - 1:30 p.m.

Where
Best Best Krieger
3390 University Ave.
5th Floor
Riverside, CA 92501

For more information or to register, click here.

Employee Rights!

17 Sep 2016 00:00:00 -0800

Best Best & Krieger LLP Partner Joseph Ortiz will present a seminar on employee rights.

When:
Saturday, Sept. 17
9 a.m.

Where:
Riverside County Bar Association
4129 Main St., 3rd Floor
Riverside, CA 92501

For more information, click here.

Best in Law: Beware of In-Lieu-Of Payments to Employees

13 Jul 2016 00:00:00 -0800

By Cynthia Germano

Employers who allow their employees to opt for taxable cash payments in lieu of health benefits must consider the value of the payments when calculating overtime rates, a federal appellate court has ruled.

If not overturned, the decision may have a major effect on how employers provide benefits going forward, and expose employers to significant liability for the manner in which they compensated certain employees over the last several years.

The case was filed by a group of current and former police officers who worked for the city of San Gabriel. Through a Flexible Benefits Plan, the city provided a designated amount of money per month to each employee to be used to purchase medical, vision and dental benefits. While employees were required to use a portion of these funds to purchase vision and dental insurance, employees with access to alternative medical coverage (for example, through a spouse) could decline to use the remaining benefits and opt for a cash payment instead. The cash payment would then be added to the employee’s regular paycheck as taxable wages. Because the city designated the cash payments as benefits, it did not consider the value of the payments when calculating the employees’ regular rate-of-pay and resulting overtime rate.

The police officers sued, claiming that the city violated the Fair Labor Standards Act because the cash provided to the employees in lieu of benefits was not considered in calculating their overtime rate, and thus that they were underpaid for the overtime hours they had worked.

In a decision issued June 2, the U.S. Ninth Circuit Court of Appeals agreed with the officers. The FLSA provides that an employee must be paid overtime at one and one-half times the “regular rate of pay,” and that the “regular rate of pay” includes the hourly rate of pay, as well as “all remuneration for employment” paid to or on behalf of an employee – but excludes vacation and holiday pay and “other similar payments to an employee which are not made as compensation for his hours of employment.”

The city argued that the cash-in-lieu-of benefits qualified as “other similar payments.” But the court disagreed, finding that the cash-in-lieu benefits were considered compensation for employment, and thus had to be calculated in the regular rate for determination of overtime. The city’s failure to do so meant that the city had not been paying the correct overtime rate.

The court further decided that, because the city was unable to produce evidence establishing that it made appropriate efforts to determine whether it was paying overtime in accord with the FLSA, it had “willfully” violated the law. As a result, the employees were entitled to be compensated for the overtime pay they should have received for three years, and were also entitled to an additional award of liquidated damages in the amount of the unlawfully withheld overtime.

The amount of “back” overtime that employers might have to pay if this decision is not overturned may not be overwhelming, but employers will be also be required to pay various penalties and interest for not timely paying employees in the first place, as well as potential liquidated damages.

The decision may also discourage employers from offering flexible benefit plans to employees, a point which was noted by the court but left for the Legislature to address.

While the city has asked the Ninth Circuit to reconsider its decision, until and unless the decision is actually overturned, employers who offer cash payments to employees who opt out of health benefits should diligently examine their payroll practices and determine whether they are complying with the FLSA in terms of calculating overtime.

* This article first appeared in The Press-Enterprise on July 10, 2016 Republished with permission.

Ninth Circuit Shakes Up Regular Rate-of-Pay Calculations in Flores v. City of San Gabriel

16 Jun 2016 00:00:00 -0800

The City of San Gabriel was underpaying its police force by miscalculating their regular rate of pay, the U.S. Ninth Circuit Court of Appeals held in Flores v. City of San Gabriel . The City offered cash-in-lieu of benefits to its police officers, to be used for purchasing medical, vision and dental benefits. While employees were required to use a portion of these funds to purchase vision and dental insurance, employees with access to alternative medical coverage (for example, through a spouse) could decline to use the remaining benefits and opt for a cash payment instead. The cash payment would then be added to the employee’s regular paycheck. The City did not consider the value of that cash payment when calculating the employees’ regular rate of pay and resulting overtime rate. A group of current and former officers sued, claiming they were underpaid for overtime hours worked because the cash provided to employees in-lieu of benefits should have been used in calculating their overtime rate.

In an opinion issued earlier this month, the court agreed with the plaintiffs, finding that the City’s failure to consider the cash-in-lieu of was a mistake, resulting in the employees not being paid sufficient overtime pursuant to the Fair Labor Standards Act. The City argued that the cash-in-lieu of benefits should be exempted from regular rate of pay calculation under FLSA section 207(e)(2), which provides a list of payments that are not considered when calculating the regular rate of pay. The list includes a series of specific exemptions, such as vacation and holiday pay, and at the end includes a catch-all provision for “other similar payments to an employee which are not made as compensation for his hours of employment.” The City argued that the cash-in-lieu of benefits qualified under that catch all provision. The court rejected the City’s argument, noting that the simple fact that the cash-in-lieu of benefits were not tied to hours worked or amount of services provided did not mean that the cash-in-lieu benefits were not considered compensation for employment. Rather, the court focused on whether the character of the payment was considered compensation for work. The court explained that payments properly excluded under the “other similar payments” clause of section 207(e)(2) were those for non-working time, such as vacation or sick time, and that the cash-in-lieu payments at issue were not similar to payments for non-working time or reimbursement for expenses.

The City went on to argue that even if the cash-in-lieu of benefits were not exempt under section 207(e)(2), the payments should be exempt under 207(e)(4), which exempts “contributions irrevocably made by an employer to a trustee or third person pursuant to a bona fide plan for providing… health insurance or similar benefits for employees.” The court disagreed, holding that because the cash-in-lieu payments were made directly to the employees, no such exception could apply.

The court further found that, even if the payments had been made to a third party, the City’s Flexible Benefits Plan did not qualify as a “bona fide plan” under 207(e)(4), so even the City’s payments to trustees or third parties could not be excluded from the regular rate of pay. The court considered the Department of Labor’s definition of the term “bona fide plan” as set forth in 29 C.F.R. Section 778.215, which requires any cash payments under a plan (in lieu of benefits) to be purely incidental. The court found that the City’s plan did not qualify because 40 percent or more of the City’s contributions were paid directly to employees rather than received as benefits, which was not an incidental amount.

While it is expected that the Flores decision will be appealed, at this point employers have no choice but to live with the ruling, which could include looking at options to restructure “cash in lieu of” payments.

For more information about this decision and how it may relate to your agency or business, contact the attorney authors of this Legal Alert listed at right in the Labor & Employment practice group, or your BB&K attorney.

Please feel free to share this Legal Alert or subscribe by clicking here. Follow us on Twitter @BBKlaw.

Disclaimer: BB&K Legal Alerts are not intended as legal advice. Additional facts or future developments may affect subjects contained herein. Seek the advice of an attorney before acting or relying upon any information in this communiqué.

Best in Law: Act Now on New OT Rule

13 Jun 2016 00:00:00 -0800

By Cynthia Germano and Thomas O’Connell

The U.S. Department of Labor recently updated the regulations governing which executive, administrative and professional employees (“white collar workers”) are entitled to the Fair Labor Standard Act’s minimum wage and overtime pay protections.

For more than a decade, the salary threshold for white collar workers stood at $455 per week ($23,660 per year) – or approximately the 20th percentile for a full-time salaried employee. However, beginning Dec. 1, full-time salary workers making less than $913 in weekly pay – or $47,476 a year, an amount equivalent to the 40th percentile of earnings – are entitled to overtime compensation for any work done over 40 hours in a week.

This rule change also mandates that this threshold automatically increase every three years, beginning in January 2020, to match the 40th percentile of full-time salaried workers in the lowest-wage Census region. Pursuant to this standard, the Department of Labor estimates that in 2020 the threshold will increase to $1,005.15 per week ($51,268 per year).

The Department of Labor acknowledges that this rule will have a dramatic effect on employers. The Department estimates that 4.6 million workers exempt under the previous salary threshold will be entitled to overtime protection under the FLSA. As a result, the Department estimates that the average direct employer costs will total approximately $239.6 million per year. Additionally, the it estimates that this new rule will transfer income from employers to employees in the form of higher earnings at approximately $1.18 billion annually.

The explicit goal of this new overtime rule is to reduce misclassification of overtime-eligible workers and establish what the department believes is the most appropriate demarcation line between exempt and nonexempt white-collar workers.

However, this new rule may actually function contrary to the department’s desires. Our economy has made great strides in recent years to recover from the recession, but there are numerous businesses that have made calculated decisions regarding hiring and salary.

This rule does not create any additional revenue for employers. Thus, faced with the financial realities and risks that this new overtime rule presents, many businesses will be forced to reduce employee hours, salaries and/or their workforce.

In addition, this rule will create numerous compliance issues for employers and force them to make significant changes to their operations.

Employers will need to consider implementing policies that reduce the risk that an employee may perform unscheduled work that goes beyond 40 hours per week. This includes, but is not limited to, policies governing whether and how employees are allowed to work from home, since such work has less or no direct oversight. Employers will also need to perform wage and hour audits to assess whether their current employee classifications remain correct under new salary thresholds. For those employees whose classifications would be incorrect, employers will have a variety of options to consider, including whether to reclassify employees from salary to hourly workers or whether it would be more profitable to raise the pay of those employees over the new salary threshold to avoid paying those employees overtime.

Whatever employers decide, they must do so quickly to meet the deadline. As noted by Forbes earlier this month, the average wage and hour settlement payment costs companies approximately $6.9 million. Businesses simply cannot afford to ignore this dramatic change in the law.

* This article first appeared in The Press-Enterprise on June 12, 2016 Republished with permission.

The Dramatic Effect of the Department of Labor’s New Overtime Rule

18 May 2016 00:00:00 -0800

Effective immediately, the U.S. Department of Labor has updated the regulations governing which executive, administrative and professional employees (white collar workers) are entitled to the Fair Labor Standard Act’s minimum wage and overtime pay protections. The salary threshold for exemption for white collar workers has stood at $455 per week ($23,660 per year) — or approximately the 20th percentile of earnings for full-time salaried employees — for more than a decade. This new rule dramatically increases the minimum threshold to be reset annually at the 40th percentile of weekly earnings for full-time salaried workers. For this year, this means that all white collar workers who make less than $913 per week ($47,476 per year) are now entitled to overtime for any work over 40 hours per week. The rule will take effect on Dec. 1.

By the Department of Labor’s own admission, this rule change will have a serious effect on employers. Indeed, the Department of Labor estimates that 4.6 million workers exempt under the previous salary threshold are now entitled to overtime protection under the FLSA. As a result, the Department of Labor estimates that the average direct employer costs will total approximately $239.6 million per year. Additionally, the Department of Labor estimates that this new rule will transfer income from employers to employees in the form of higher earnings at approximately $1.18 billion annually.

The explicit goal of this new overtime rule is to reduce misclassification of overtime eligible workers and establish what the Department of Labor believes is the most appropriate demarcation line between exempt and nonexempt white collar workers. In addition, this rule will create numerous compliance issues for employers and force them to make significant changes to their operations. Employers will need to consider putting in place policies that reduce the risk that an employee may perform unscheduled work that goes beyond 40 hours per week, as well as policies governing whether and how employees are allowed to work from home, where their time has less direct oversight. As noted by Forbes earlier this month, the average wage and hour settlement payment costs companies approximately $6.9 million, and businesses simply cannot afford to ignore this dramatic change in the law.

Please feel free to share this Legal Alert or subscribe by clicking here. Follow us on Twitter @BBKlaw.

Labor & Employment Law Update

09 Feb 2016 00:00:00 -0800

Best Best & Krieger LLP partners Alison Alpert and Arlene Prater will provide a labor and employment law update during the Association of Legal Administrators San Diego Chapter's "Annual Labor & Employment Law Update & Legal Resource Fair." Alison and Arlene's presentation will focus on hot topics including:

New Legislation and Court Cases
California Wage and Hour Issues
How to Handle Unemployment Claims
Transgender Cultural Competency.

When
Tuesday, Feb. 9
1:30 - 3:30 p.m.

Where
Doubletree by Hilton Mission Valley
7450 Hazard Center Dr.
San Diego, CA 92108

For more information or to register email Kathy Culver at kculver@ssvwlaw.com.

BB&K Wins Overtime Ruling in Appellate Court for Client

27 Jan 2016 00:00:00 -0800

Best Best & Krieger LLP Partner Howard Golds and Associate Elizabeth Han secured a ruling from a California Appellate Court that a business client’s formula for calculating an employee’s overtime rate on flat sum bonuses paid in the same pay period in which they are earned is lawful.

Dart Container Corporation of California was sued in Riverside Superior Court by a former employee, who sought class action status, claiming that Dart did not properly compute bonus overtime under California law. Dart’s written policy is to pay a $15 attendance bonus to employees who attend their regularly-scheduled weekend shift. Dart included the attendance bonus when calculating the regular rate for overtime purposes, but the former employee claimed that Dart used an incorrect formula in doing so.

When the Superior Court dismissed the case in favor of Dart on summary judgment, the former employee appealed. The Fourth District Court of Appeal published an opinion upholding the lower court’s ruling. The Court of Appeal agreed with the BB&K team’s argument that Dart’s overtime flat sum bonus formula complies with federal law, which is lawful because there is no California law on point.

To read the full opinion in Alvarado v. Dart Container Corp. of California, click here.