During our recent Top 10 Wage & Hour Risks in California webinar, we gave attendees the opportunity to ask wage and hour lawyer and Morgan, Lewis & Bockius partner, Melinda Riechert, and Emtrain's President, Janine Yancey, about wage and hour law including properly classifying employees, meal and rest breaks, PTO, and other compliance-related questions.
Check out their answers and, if you have any additional questions, you'll have an opportunity to ask your own questions at the bottom of the page.
Top questions about complying with California wage and hour laws:
DISCLAIMER: No Attorney-Client Relationship Created by Use of this Document. We cannot provide legal advice, nor can we provide advice regarding specific workplace situations. This document includes information about legal topics and workplace best practices. Such materials are for informational purposes only and may not reflect the most current legal developments. These informational materials are not intended, and should not be taken, as legal advice on any particular set of facts or circumstances. You should contact your in-house staff for advice on specific workplace and/or legal problems.
1. I've been looking on the CA gov website and I can't find any info on: if a payday falls on a Saturday or Sunday, what are the legal requirements for the paycheck? It talks about when paydays fall on holidays, but not specifically weekends.
Saturdays and Sundays are considered “holidays” per California codes. See the DIR website for more info. Therefore, payment can be made on the next business day.
2. Can you combine PTO and sick leave on pay stubs?
California’s paid sick leave law requires that you state on the paystub how much California paid sick leave the employee has remaining. Therefore, assuming you have separate categories for PTO and paid sick leave, they should be broken out separately on the paystub.
Some companies have chosen to combine PTO and paid sick leave into one bucket (and provide 3 days upfront), but there are risks and dangers in doing so, since your entire PTO bucket becomes subject to the paid sick leave requirements (including no requirement for notice, no discipline for use, payment at the “regular rate” rather than the hourly rate, payout on termination, and use for any purpose allowed under the sick leave leave), and you must be sure that all employees (including temporary and part time) receive paid sick leave.
3. We converted many of our freelance contributors to a temporary employment agency that absorbs the hiring risk, but charges back payroll taxes, etc. Is this a common model among staffing agencies?
We cannot provide legal advice on specific workplace situations. However as a best practice, staffing firms should cover all employment costs (including taxes) and charge clients a reasonable fee for services that cannot be directly mapped back to actual employment costs. Apportioning employment costs blurs the line of who is the employer.
4. When is the $47,476 effective?
The new DOL requirement is effective December 1, 2016.
5. What about for positions that "prefer" an advanced degree like a Masters in Library Science for librarian.
Positions that require an advanced degree are likely to qualify for the professional exemption. If it’s simply “preferred” to have a master’s degree for the position, then it would not qualify for the professional exemption but could qualify for the administrative exemption.
6. Is the Computer Software exemption level for CA only or is this also federal?
Federal law also has a computer employee exemption, but the requirements are very different than the California Computer Professional exemption.
7. We have Regional Sales Managers but they are not on the road 50% of the time. I am going to classify them under the Administrative Exemption because they work on business operations and exercise discretion and control when preparing proposals and negotiating contracts. Is this 'safe'?
We cannot provide legal advice on specific workplace situations. Generally a person who is selling, and time spent selling, cannot qualify for the Administrative Exemption. Typically a Regional Sales Manager will be supervising 2 or more sales representatives or District Managers 50% or more of the time and therefore qualify under the Executive Exemption. If the RSM is not supervising sales people or District Managers, you might want to change the title to more accurately reflect the position and create a job description that shows that the position exercises judgment and discretion on matters affecting business operations and P&L.
8. What about marketing trade show hours - how do you compensate for this for non-exempt employees?
You must pay a California based non-exempt employee for all time worked in excess of 8 hours a day or 40 hours a week, including travel time, even if the trade show is not in California. Therefore, you need to track all hours worked during the trade show and any travel time, since all those hours count as hours worked. Make sure the California resident non-exempt employee also gets meal and rest breaks in accordance with California law, even if the trade show is not in California.
9. Can you discuss continuous workday in a bit more detail? If a nonexempt employee logs on to email at home, and then commutes to the office, is that compensable time?
If the employee’s time spent working from home at the beginning of the day or at the end of the day is more than de minimis, there is a risk that the court would apply the continuous workday rule and require payment for commute time. This is a very complicated area of the law and you should consult with legal counsel.
10. Meal and rest breaks - are they paid or unpaid?
Rest breaks are paid. Meal breaks are unpaid.
11. Do you recommend that team members clock in and out for the paid rest break, even though they are being paid for those 10 minutes? Just to cover and prove that we are allowing rest breaks?
We cannot provide legal advice on specific workplace situations. Most employers do not require employees to clock in and out for rest breaks. Instead they have a clear policy communicated to employees, with reminders, of the right to take rest breaks, they require employees to verify on their time cards that they were provided all breaks or have reported missed breaks to Human Resources, and they train managers on the employee’s right to break, and that managers are to ensure that employees receive their breaks.
12. Do they have to sign a waiver each time they waive or is one general waiver enough?
We cannot provide legal advice on specific workplace situations. However if you are talking about the waiver of the right to take a first meal break if the employee works 5-6 hours, or a second meal break if the employee works 10-12 hours and took the first meal break, then the waiver is only required once, but the waiver should state that the employee has the right to revoke the waiver.
13. What are the rules for breaks? Such as hourly breakdown and how many breaks allotted.
Here is a chart:
14. With time cards becoming more electronic, do you still recommend that timecard reports are printed and employee signs?
Electronic record-keeping with a digital signature is also permitted.
15. Will you please review when the unpaid meal period must be taken? Before the start of or before the end of the 5th hour of work?
The unpaid meal period must be taken before the end of the 5th hour of work. See the DIR website for more information.
16. What is employer best practice for addressing employees who repeatedly take lunch break later than 5th hour?
We cannot provide legal advice on specific workplace situations. However as a best practice, employers can implement a system requiring non-exempt employees to verify, preferably in writing, they are allowed to take a meal period before the end of the 5th hour of work, but choose to take it later.
17. If employer asks the employee to use their personal phone to sign off their time cards from the special app, employer should pay for that time?
Yes, all administrative startup or wind down time is compensable. Plus, the employer may be obligated to pay a portion of the cost of the phone if the employer requires the employee to use a personal device for business purposes.
18. For exempt ee's that exhaust all of their available PTO and they are absent for a full day because of illness, weather, etc., is it OK to dock their pay?
Yes, employers can deduct a full day’s pay from an exempt employee if the employee was provided sick pay/PTO and uses it all up. It’s docking pay for partial day absences that creates problems for the exempt status.
19. If an employee has CA Paid Sick Leave available but does not choose to take it, can we go ahead and assign it to them on their timecard? Then when they approve their timecard they are agreeing with using their CA PSL?
We cannot provide legal advice on specific workplace situations. However as a general rule, employers can require employees who are sick to exhaust their paid sick leave bank before utilizing other types of paid leave, if the employer treats all leaves the same and provides notice to employees. But most employees will prefer to use sick leave rather than PTO (which carries over from year to year and must be paid out on termination) or take an unpaid day.
20. Regarding mandatory sick time, if we give 5 sick days plus offer paid vacation and floating holiday, does this satisfy the 1 hr for every 30 worked?
For California paid sick leave, if you give employees 5 days up front, then you have satisfied California’s requirements. For the sick leave laws of the various cities, you still need to make sure that you are providing a sufficient number of days to satisfy the 1 hour for every 30 worked requirement. For example, an employee working 2080 hours a year must receive 8.6666 days of paid sick leave. See discussion above regarding the problems of combining paid sick leave and PTO.
21. Is Sick Pay payable upon termination for San Diego?
No, unless the employer’s policy provides for a payout upon termination. Generally, sick leave is available to take but is not compensable upon termination.
22. If you have a salaried non-exempt employee, can they be paid monthly?
No. California non-exempt employees must be paid twice within a month on days designated in advance as regular paydays. Wages earned between the 1st and 15th days, inclusive, of any calendar month must be paid no later than the 26th day of the month during which the labor was performed, and wages earned between the 16th and last day of the month must be paid by the 10th day of the following month.
Other payroll periods such as weekly, biweekly (every two weeks), or semi-monthly (twice per month) when the earning period is something other than between the 1st and 15th, and 16th and last day of the month, must be paid within seven calendar days of the end of the payroll period within which the wages were earned. See Labor Code Section 204.
23. Please clarify the paid sick leave - does this apply to all (not just Nonexempt) employees?
Yes. Any California employee who works for 30 or more days within a year from the beginning of employment, is entitled to paid sick leave. Employees, including part-time and temporary employees, will earn at least one hour of paid leave for every 30 hours worked, or three days upfront, whichever the employer chooses.
Exceptions: Employees covered by qualifying collective bargaining agreements, In-Home Supportive Services providers, and certain employees of air carriers are not covered by this law.
24. A company offers accrued Time Off With Pay (200 hours a year), though does not specifically identify hours accrued as available sick leave hours, does the general Time Off With Pay hours meet the requirement for offering sick leave hours?
Yes, employers may provide employees a general PTO that employees can use for health care purposes. However, see answer to question above regarding the problems with combining PTO and paid sick leave.
25. Have the Wage and Theft notice forms been updated for the cities that have different sick pay rules?
No. California’s Department of Industrial Relations website only provides a template that reflects California law. It does not provide templates tracking local city laws. Employers will need to update the notice template to reflect the differing city paid sick leave policies (San Francisco, Oakland, Emeryville, Los Angeles, Santa Monica, San Diego) to the extent the employer’s policy varies per city requirements (as opposed to providing one policy that meets all local city requirements).
26. Regarding final paycheck, any instances where a direct deposit is ok in California?
Employers can make an automatic deposit of final wages if authorized by the employee and as long as the deposit is made “immediately upon termination.”
27. We made a mistake in processing a raise and transposed the amount, overpaying the employee several hundred dollars over 3 pay periods, until detected. Our understanding is that we cannot recoup that from the employee - our error is their win. True?
You can recoup it from the employee, but you cannot take it from the employee’s paycheck without permission. See this DLSE Opinion letter that clarifies their position on this issue. However, you should explain the mistake the employee and ask the employee to agree to pay it back.
28. Do paychecks have to show vacation and PTO accrual balance?
No, here’s a helpful example from the Department of Industrial Relations regarding the information that should be reflected on the paystub.
29. What does the law say on annual bonuses for employees that leave after year end, but before bonuses are paid. If plan says employee must be employed as of a certain date to receive bonus, is that enough?
In general, an employee who voluntarily quits his or her employment before the payout date of the bonus is not entitled to receive the bonus. Courts have recognized that there can be a retention requirement in the bonus plan that requires employment on the bonus payment date to earn the bonus.
However, an employer cannot terminate an employee in order to deprive the employee of the bonus. You should check with legal counsel. Bonuses constitute additional salary, and thus, must be paid in accordance with Labor Code §§ 201 and 202 when an employee is terminated or voluntarily quits his or her employment. See the DIR website for more information.
30. If the sick is paid under PTO, does it have to be paid at the 1 hour for every 30 hours?
No. California paid sick leave can be paid either 3 days up front or 1 hour for every 30 hours worked. Cities who have adopted sick leave ordinances have different requirements. See discussion above over issues that arise if the employee decides to use PTO to meet its sick leave requirements. An employer’s PTO policy can be more generous than California paid sick leave.