Overtime Rules for Inside Salesperson Commissions
If your business sells products or services, it is likely that you have at least one inside salesperson who earns commissions on the sales that the inside salesperson makes. If this inside salesperson has the potential to earn a decent amount in commissions, your company may have classified this salesperson as an exempt commissioned employee. This means that you are not paying this person overtime pay for overtime hours worked. If this is the case, you may be incorrectly paying your inside salesperson and exposed to a potential claim for wage theft. Exempt vs Non-Exempt Classification Certain commissioned inside sales employees may be exempt from overtime pay in California if the employee earns more than one-and-a-half times the minimum wage each workweek, and more than half of the employee’s compensation represents commission earnings. (Outside salespeople do not need to meet the minimum salary requirements.) The calculation on the second prong could get complicated where the employee gets a draw on commissions. In addition to the two prongs, in order for an inside salesperson to be exempt from overtime pay, a … Continue reading
New Overtime Rules Under FLSA Approved – What You Need to Know
The Department of Labor recently approved changes to the overtime rules under the Fair Labor Standards Act (FLSA) that will have a significant impact on California employers and workers. According to the Department of Labor, the new rules will affect over 300,000 California workers who will either be entitled to overtime pay or receive raises to maintain their exempt employee status. Here are some answers to commonly asked questions about the new rules. Who is affected by the new rules? Employees who are exempt from minimum wage and overtime pay protections under the executive, administrative, and professional (EAP) exemption and the highly-compensated employee (HCE) exemption of the FLSA. (Learn about exempt vs non-exempt employees.) The FLSA covers a majority of workers. Details on who is covered by the FLSA are available from the Department of Labor. What are the changes made by the final rule? In addition to meeting the duties test, in order to meet the EAP exemption requirement, the employee must receive a salary of at least $913 per week or $47,476 annually. HCEs must receive $134,004 annually … Continue reading
New Proposed Overtime Rules – Potential Effects on California Employers
There has been much discussion about the Department of Labor (DOL)’s proposed changes to federal overtime rules under the Fair Labor Standards Act (FLSA). California employers may have mostly ignored the federal overtime rules because California’s rules are more protective of employees and have a higher threshold for overtime exemptions. However, if these rules go into effect, California employers will have to make some adjustments. Failure to properly classify employees as exempt vs non-exempt and follow overtime rules could be costly for employers. What Are the Proposed Changes to Federal Overtime Rules? Under FLSA regulations, an employee is exempt from the right to overtime pay if s/he meets the following 3 requirements: Paid on a salary basis regardless of the number of hours worked; Receives a salary of at lease $455/week or $23,660/year; and Satisfies the duties tests for exempt employees (executive, administration, professional, computer, and outside sales regulations). The DOL proposed increasing the salary threshold from $455 per week to $970 per week ($50,440) annually. The salary threshold for the highly-compensated employee exemption would increase from $100,000 to $122,148 per … Continue reading
Employee Handbook: Your First Line of Defense
Many business owners, managers (other than human resources professionals), and employees view employee handbooks as pesky hindrances to flexibility and growth. The contrary is true, and knowing when and how to use your handbook could save your business from hours of lost productivity, low morale, and expensive lawsuits. Solutions to 3 Common Issues Await in Your Handbook 1. Time Off/Leave Requests Your employee handbook could guide you through the following analysis: Does the employee have a right to time off? You are likely familiar with common requests for leave due to illness,pregnancy, disability, and jury duty. However, you may not be aware of lesser-known leaves such as those for victims of domestic violenceor for alcohol rehabilitation. Thus, when the leave request is uncommon, check your employee handbook to confirm whether the employee is entitled to time off. Whether and what type of documentation must the employee provide? Is the time off paid or unpaid? Does the request for time off trigger your duty to engage in the interactive process? Does the request for time off trigger your duty to accommodate? Although … Continue reading
Independent Contractor Misclassification
A few days ago, Uber agreed to pay up to $100 million to settle class-action lawsuits in California and Massachusetts claiming that its drivers are employees not independent contractors. Paying out $100 million is by no means the end of this story. The settlement does not affect other drivers’ ability to sue on the same grounds nor does it preclude the Labor Commissioner from determining that individual drivers are in fact employees (which it has done in at least one case). The U.S. Department of Labor also recently issued a formal interpretation of the federal Fair Labor Standards Act as it pertains to the classification of independent contractors. This advisory opinion signaled the intention of federal regulators to scrutinize independent contractor classifications and treat most workers as employees. Most companies do not have enough independent contractors to be subject to class action lawsuits worth $100 million, but how will a $1 million lawsuit or even a $100,000 lawsuit affect your business? If your company uses independent contractors, here are some steps you could take to minimize your exposure: Closely examine … Continue reading
Victim of Domestic Violence Leave
Women make up just under half of the U.S. labor force (46.8% according to the U.S. Bureau of Labor Statistics). Thus, ensuring that women are safe, healthy, and productive is imperative to your business and the country’s economic growth. Yet, every 9 seconds, a women in the U.S. is beaten or assaulted. A greater proportion of women are victims of domestic violence but men suffer from domestic violence as well. In fact, in 1 year, more than 10 million women and men are physically abused by an intimate partner in the United States. (National Coalition Against Domestic Violence). In an effort to protect victims of domestic violence the California legislature have enacted laws to protect employees who are victims of domestic violence. Do You Know Your Legal Obligations to Your Employees? Non-discrimination: All employers are prohibited from discharging, discriminating, or retaliating against an employee: Who takes time off to appear in court pursuant to a subpoena or court order. (Lab. Code § 230) Because of the employee’s status as a victim of domestic violence, sexual assault, or stalking, if the … Continue reading
Tip Pooling Distribution Restrictions Upheld by Ninth Circuit
Tip pooling is a common practice in the restaurant industry but the legal back and forth of how much and to whom the pooled tips could be distributed has lead to much confusion within the food services industry. Restaurants May Not Require Wait Staff to Share Pooled Tips With Back of House Staff Last month, in the case of Oregon Restaurant and Lodging Association et al. v. Perez et al., the Ninth Circuit upheld the Department of Labor’s rule barring employers from collecting tips given to waiters or other service employees and distributing to back of house staff not in the chain of service (i.e. cooks and dishwashers). Since California is within the Ninth Circuit’s jurisdiction, the Court’s decision in this case will lead to increased litigation against restaurants for unpaid wages. Highly successful restaurants have closed their doors as a result of these wage and hour claims. PRACTICAL TIP: Enterprises with tip pooling practices should have a written tip pooling policy that specifically outlines how tips are pooled and shared. Such written policies should clearly state that pooled tips will not be … Continue reading
California Aggressively Fights Wage Theft
Senate Bill (S.B.) 588 that went into effect on January 1, 2016, seeks to ensure recovery of unpaid wages by victims of wage theft. What is Wage Theft? Wage theft is defined as failing to pay workers for all of their work, regardless of whether it is intentional or merely an honest mistake. This includes paying below minimum wage, failing to pay overtime, violating meal and rest break requirements, and failing to pay for off-the-clock work. New Penalties for Wage Theft If an employee brings a successful wage claim against your company, the Labor Commissioner can now place a lien on the company’s property or levy on the business’ bank accounts and/or accounts receivable, including a lien or levy to recover the employee’s attorneys’ fees. SB 588 prevents a company from closing down its business and re-opening under a new name in order to avoid their debts to workers. Owners and anyone else acting “on behalf of” the employer are now individually liable for wage and hour violations. This means that the Labor Commissioner can now seize the personal property and bank accounts … Continue reading
Computer Fraud Prevention: How to Protect Your Company’s Information
In today’s business environment, companies live and die by the information and data you possess. Your company’s confidential information is probably housed on a network that is accessible by some, or all, of your employees. Are you doing enough to protect your company’s data from computer fraud leaving with an employee and winding up with a competitor? The Computer Fraud and Abuse Act (CFAA) The CFAA is a federal law that makes it illegal to “intentionally access a computer without authorization or exceed[ing] authorized access, and thereby obtain[ing] . . . information from any protected computer.” 18 U.S.C. § 1030(a)(2). Although commonly used to prosecute criminal hackers, the CFA is valuable to employers for the following reasons: 1) the CFAA captures a broader range of conduct than does a traditional trade secrets claim (it doesn’t require a showing that the accessed information rises to the level of a trade secret); 2) the CFAA is one of the few independent causes of action an employer can use to pursue a federal cause of action relating to such theft; and 3) the CFAA … Continue reading
Wage Claim Process in California
In California, workers who believe that they are owed wages, overtime, or vacation pay may file their claims in court or with the Labor Commissioner. Claims filed with the Labor Commissioner are adjudicated by the Division of Labor Standards Enforcement (DLSE) and is a much more informal process. If you recently received a Notice of Claim and Conference from the DLSE, here is an overview of what the process normally looks like. Worker Filed a Claim. The process began with an employee (plaintiff) filing a DLSE claim form alleging that his/her employer (defendant) failed to pay wages or other compensation owed to the plaintiff. After the claim is assigned to a Deputy Labor Commissioner (deputy), he or she will determine, based on the circumstances of the claim, how to proceed. Within 30 days of the filing of the complaint, the deputy will notify the parties as to which of the following actions the DLSE will take as to the claim: referral to a conference; referral to a hearing; or dismissal of the claim. Not all cases will go to a … Continue reading