Paystubs and When An Employee Requests Records

How many times have you said the following words:   “If I had known this, I would have done things differently.”   That is a common refrain of many small business owners in California. Many small businesses have grown organically and owners often cobbled together pieces of agreements and policies from your former employers and samples on the internet thinking “if my big employer did this, it must be fine,” and generally “winging it.”  It generally works pretty well, sometimes even for years, until it doesn’t. When given the opportunity to reflect, most business owners will have the nagging feeling that they’re doing something “wrong.”  You’re trying your best, paying your employees well, giving them flexibility, and are fair.  Unfortunately, that is not enough. One of these moments  that highlights the extreme complexity of having employees in California is when the business receives a letter from a lawyer asking for a copy of an employee’s personnel file and pay records. Upon receiving this letter, you will probably ask: What documents do I have to make available? The employee left years … Continue reading

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Salary History and Equal Pay Laws Clarified

News of the Pay Privacy law prohibiting reliance on an applicant’s salary history in determining employment and pay hit the business world at the end of 2017 and went into effect in January 2018.  Since pay is a large factor in the hiring decision, the new law raised many questions among business owners who are especially concerned about complying with California employment laws.  Some of the common questions related to the salary history requirements and equal pay were: Is it legal to ask an applicant about their desired salary or salary requirement?   Am I liable if an applicant voluntarily gives me their salary history or what they made a their last job?   If an applicant voluntarily discloses their salary history, can I take that information into consideration?   What about a current employee, I already know what they make, so can I take their salary into consideration to determine raises or pay for a new or different position? The conflict between California labor and employment laws and the practical questions that business owners must ask and take into … Continue reading

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Confidentiality Agreements in Sexual Harassment Cases – Banned if AB 3080 Signed

It’s difficult as a business owner to know what you need to know in the area of employment law and employee rights without having someone to guide you. The legal landscape is complex and ever-changing. New laws keep getting passed and court decisions could easily turn something that was an acceptable practice into a prohibited practice, forcing employers to scramble to change practices, usually crossing their fingers and hoping that the changes don’t trigger someone to ask whether what you were doing in the past was wrong. Most of the time, you don’t even know what you don’t know. I’ve often heard business owners say “had I known that I would have done it differently, but no one told me.” We’re here to tell you. The California legislature recently passed Assembly Bill 3080 (AB 3080), which is now awaiting Governor Brown’s signature.  The bill has 2 main components. Bans Confidentiality Agreements Regarding Sexual Harassment Claims The first responds to the #MeToo movement and the argument that confidentiality agreements in settlements of sexual harassment claims allow harassers to become repeat offenders … Continue reading

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Waiting Time Penalties (to Appeal or Not to Appeal)

  “I quit.”   These words from an employee leads to a string of questions from an employer.   What do I need to pay the employee? How quickly do I have to do it? Can I wait until the next batch of payroll checks are processed? Do I have to cut the employee a separate check? What happens if I do it wrong? These are all legitimate questions because the laws in California are very specific about what an employer must do and the penalties for failing to do it correctly in the eyes of the law. A recent appellate opinion (Nishiki v. Danko Meredith, APC) is a great example of how a small inconsistency in the final paycheck that ultimately meant the employee is owed only $2,250 in penalties, resulted in the employer having to pay over $86,000 to the former employee in attorney’s fees. That’s 3,822% of the penalty itself. The inconsistent final pay check What happened in Nishiki could have happened to any one of us.  In this case, plaintiff, who worked as a paralegal at … Continue reading

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Off-the-Clock Work Must be Paid

Last week, the California Supreme Court, in a case called Troester v. Starbucks Corporation, confirmed that California wage and hour law “does care for small things.” In this case, it cares about small increments of time spent on work off-the-clock by hourly employees. Small increments in this case is about 4 to 10 minutes after clocking out. De Minimis Doctrine This is a departure from federal law’s more employer-friendly version of the de minimis doctrine. The de minimis doctrine is an established defense under the Fair Labor Standards Act (FLSA), which allows employers to disregard time as de minimis (and therefore not have to pay employees for that time) if the employer could prove: (1) it would be difficult and impractical for the employer to record the additional time; (2) the total amount of compensable time is minimal; and (3) the additional work is irregular. For example, pre-shift or post-shift meetings. Starbucks Hourly Employee Worked 4 to 10 Minutes Off-the-Clock Each Shift In the Troester v. Starbucks case, Douglas Troester worked for Starbucks as an hourly shift supervisor. As part of … Continue reading

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New Independent Contractor Test Could be Game Changer

The California Supreme Court recently published an opinion that describes a new independent contractor test that is broader than the current independent contractor test.  The “Borello” multi-factor test has been applied for decades, and this new test makes it harder for businesses to properly classify a worker as an independent contractor. This opinion will affect many businesses that hire independent contractors within the State of California. The main take away from this opinion, Dynamex Operations W. v. Super. Ct., Cal. is this: There is a new independent contractor test for purposes of the obligations imposed by a wage order. Here is a breakdown to help understand the preceding statement: What are wage orders? In California, employment laws are spelled out in different places, including statutes, case law, and wage orders. This case specifically addresses the obligations that are imposed on employers by the wage orders that apply to different industries. These wage orders address issues such as the payment of wages (minimum wage), regulating meal and rest breaks, and the number of hours worked (overtime pay), for example. Since these wage … Continue reading

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Non-Compete Agreements in California

Non-compete agreements are void in California except in certain limited circumstances.  More specifically, California’s Business & Professions Code § 16600 states: “Except as provided in this chapter, every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.” This means that non-competition clauses in employment agreements that purport to prohibit an employee from working for a competitor or starting a competing business after the employee leaves are void.  This is true in California, even if the prohibition is limited to a certain geographic area or for a limited period of time.  This is because California fiercely protects a person’s right to work and to engage in the profession of his or her choice, including working for a competitor or starting a competing business. Under what circumstances are non-compete agreements valid in California? Although the general rule is that agreements that prohibits someone from competing or engaging in a lawful profession, trade, or business is void, there are specific circumstances where a court will uphold a non-compete agreement.  … Continue reading

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Equal Pay Act Litigation – Salary History May Not Justify Wage Differential

In an Equal Pay Act opinion that is significant for employers in California, Washington, Nevada, Arizona, Oregon, Idaho, Montana, Alaska, and Hawaii, the 9th Circuit Court of Appeals, held: “prior salary alone or in combination with other factors cannot justify a wage differential. To hold otherwise – to allow employers to capitalize on the persistence of the wage gap and perpetuate that gap ad infinitum – would be contrary to the text and history of the Equal Pay Act, and would vitiate the very purpose for which the Act stands.” This decision came just one day before Equal Pay Day. April 10, 2018, this year’s Equal Pay Day, is the symbolic date to which an average woman working full time had to work to earn what her male counter-part earned in 2017 – an extra 99 days. Case Facts In Rizo v. Yovino, a female employee, Aileen Rizo, sued her employer, Fresno County Office of Education, when she learned that male colleagues who were hired into similar positions were placed in higher salary steps. This pay disparity was not because … Continue reading

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Tip Pools – Law Changes (Again)

Two years ago, the Ninth Circuit held that employers may not share tips from tip pools to back of the house staff who aren’t in the “chain of service.”  Last month, this rule was revised by federal law.  This means that California employers in the restaurant, hotel, and other service industries where tips are common place, may now distribute tips to those who were previously excluded, such as cooks and dishwashers.  This is a welcome change that many of my clients who own restaurants and hotels believe is the fairer rule. Below is a recap on what this means for California employers: Tip pooling policies may now provide that back of the house employees can share in  tip pools. This means that tip pooling policies may now require tip pools to be distributed not only to bussers but also to cooks and dishwashers, for example.  This practice was prohibited in the last 2 years. Certain employees are still prohibited from being paid from tip pools. Owners, managers, or supervisors of the business may not share in tip pools.  Employers should … Continue reading

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Overtime Pay and Flat Rate Bonuses

Unpaid overtime is one of the most common wage and hour claims against employers and proper calculation of overtime pay can be extremely confusing. Employers often want to incentivize employees with bonuses, but unwittingly create increased exposure for failure to correctly pay overtime. An example of how incentivizing employees could blow up in an employer’s face is the recent Supreme Court decision in Alvarado v. Dart Container Corporation of California. Defendant Dart Container is a manufacturer of food service products. Plaintiff Hector Alvarado was employed as a warehouse associate who was paid on an hourly basis and who, in addition to his normal hourly wages, received an “attendance bonus” of $15 per day that he was scheduled to, and did work, on a weekend day. He received the $15 flat rate bonus regardless of whether he merely completed the shift or exceeded the shift and worked overtime hours. The gist of the dispute was this: How to calculate the regular rate of pay for purposes of calculating the overtime pay rate (generally, 1.5 times the regular rate of pay)? The … Continue reading

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