Articles Posted in Wage and Hour Violations

The California Supreme Court recently issued a decision holding that employers must pay employees according to their “regular rate” rather than according to their straight-time hourly rate. The case applies retroactively and thus applies even to California employment cases that have already been decided and to previous miscalculations.

In the case, Ferra v. Loews Hollywood Hotel, LLC, the plaintiff filed a complaint against her employer, alleging that the employer improperly calculated her payment for non-compliant meal periods and rest periods. Under California law, employers must also provide employees with required meal, rest, and recovery periods. Under section 226.7 of the California Labor Code, if an employer fails to provide an employee with a compliant meal, rest, or recovery period, the employer must pay the employee an additional hour of pay at the employee’s “regular rate of compensation.” Under another section of the Code, California employers are required to provide their employees with overtime pay when employees work more than a certain amount of time. Overtime pay is calculated by multiplying the employee’s “regular rate of pay,” which factors in all wages and other non-discretionary earnings, such as non-discretionary bonuses and incentive compensation.

The Supreme Court’s Decision

California’s Supreme Court recently issued a significant decision concerning California meal periods for employees. In California, in general, employers must give employees with a 30-minute meal period after at least the fifth hour of work and after at least the tenth hour of work. If an employee is not provided a compliant meal period, then the employer must pay the employee an additional hour of pay at the regular rate for each workday during which the meal period was not provided. In practice, many employers round time punches to the nearest quarter of an hour, one-tenth of an hour, or five minutes.

In the case before the Court, the Court considered whether rounding time was permissible in the context of a meal period. In the case of a named plaintiff in the class-action lawsuit, the plaintiff’s employer used a timekeeping system that rounded the time punches to the nearest 10-minute increment. So if an employee clocked out for lunch at 11:02 and clocked in at 11:25, it would be recorded as 11:00 and 11:30. Thus, the employee’s meal period was only 23 minutes, as opposed to the full 30 minutes. An expert estimated that the use of the timekeeping system resulted in a denial of premium wages for short and delayed lunches amounting to over $800,000.

The Court maintained that employers could not round time in the context of meal periods. The court held that time rounding does not comply with the precise time requirements set out in Labor Code section 512 and Wage Order No. 4. The court reasoned that the relatively short length of a 30-minute meal period means that the potential incursion on that period is significant. The court held that the provisions concerning meal periods are intended to prevent even minor infringements on the meal period requirements, and rounding time does not meet that objective. The court held that even if the employer overpaid the members of the class for actual work based on the timekeeping, the issue is whether the rounding policy resulted in the proper payment of premium wages for meal period violations. The court also held that if an employer’s records indicate that no meal period was taken for a shift over five hours, there is a rebuttable presumption that the employee was not relieved of duty and no meal period was provided. Thus, the employer can assert this as a defense, and it is the employer’s burden to plead and prove that assertion.

In a momentous decision, the California Supreme Court ruled that employers must compensate employees for the time spent waiting and undergoing security searches of their belongings and technology devices. The decision signifies a major departure from the federal Fair Labor Standards Act. Under the federal standard, employers did not have to compensate employees for time spent undergoing mandatory security screenings. Although California employers should know that they must pay employees for time worked, many employers toe the line to avoid fully compensating their workers.

There is a growing number of California workers who have successfully challenged their employers’ unlawful compensation practices. While federal law does not provide as much protection to employees, California state law requires employers to compensate employees when the worker is under the employer’s control. Many California class-action lawsuits stem from employers refusing to compensate workers for time spent undergoing security and bag checks.

Two significant cases arose from employment lawsuits against Apple and Amazon. In the case against Apple, employees claimed that they were required to undergo mandatory security checks before leaving company property for any reason. The time spent waiting took anywhere between 5 to 45 minutes. The employees argued that this time could amount to nearly two hours of unpaid overtime a week and over 100 hours every year. In reviewing the case, the courts analyzed whether the waiting time was compensable under the “control standard.” Inquiries regarding whether the employee is under the employer’s control require the court to look at the totality of the circumstances. Some relevant factors involve whether the employer requires the activity, where the activity occurs, if the activity benefits the employer or employee and whether an employee may be subject to disciplinary measures if they do not comply. In the case against Apple, the court found that the search was mandatory, occurred at the workplace, involved significant control by the employer, and benefits the employer by deterring theft. As such, the California court of appeals held that the technology giant must pay the nearly 12,000 affected employees for the time they spent during these mandatory screenings.

The California Supreme Court recently issued an opinion addressing whether belt sorting qualified as “public works” under California’s Labor Code (CLC). According to the record, the Los Angeles County Sanitation District (District) and a neighboring Recycling and Transfer facility operate the county’s transfer and disposal of trash. The defendant in this matter is a staffing agency that provides belt sorting workers to staff the two facilities. The defendant supervised the workers, who were not considered employees of the District. The plaintiffs filed a lawsuit against the defendant, alleging, amongst several issues, the company’s failure to abide by employment and wage law under section 1720(a)(2) of the CLC. In response, the defendants argued that the statute does not cover the District or the plaintiffs’ work. The trial court granted the motion, and the appeals court reversed the ruling.

California’s wage law works to “protect and benefit” those working on public works projects. From a public policy perspective, the law works to protect employees from substandard wages, allow union contractors to compete with nonunion contractors, and compensate nonpublic employees with higher wages to address the lack of job security and benefits they do not enjoy.

Under CLC, employers must provide prevailing wages to anyone “employed on public works”, including those working under a contractor or subcontractor on a project for public work. Section (a)(1) defines “public works’ to include construction, alteration, demolition, installation or repair work. Section (a)(2) further explains that public work is work done for “irrigation, utility, reclamation” and District improvement.

The law requires that employers provide non-exempt California employees the ability to receive meal breaks and rest periods. In some instances, employers must provide exempt employees with the right to take meal breaks. The law does not extend to certain workers such as farm and domestic workers, or personal attendants. Under the state’s wage and hour law, non-exempt employees must receive a thirty-minute meal break if they work more than five hours in a day. The employer must allow for the break within the first five hours of the workday. Those who work more than ten hours are entitled to a second 30-minute break. Similarly, employers must provide exempt employees with a ten-minute rest break for those working more than three and a half or more hours. Employers who violate these laws may be subject to a California employment lawsuit.

For instance, the Supreme Court of California recently decided two questions of law related to a class-action lawsuit against an employer for wage-and-hour violations. In this case, the defendant is a healthcare service and staffing company. The company assigned the plaintiff to work eight-hour days at various shifts. The defendant maintained a policy that the meal period was for an “uninterrupted” 30 minutes, and workers were relieved from job duties during and could leave the premises during this period. Further, the policy specified that supervisors should not discourage workers from using this meal period.

Although the policy seems to comply with the state’s wage and hour laws, an issue arose because the employees used an electronic timekeeping system that rounded their punched time to the nearest 10-minute allotment. For instance, if an employee clocked out for their break at 12:02 p.m. and returned at 12:25, p.m., the record would show a 30-minute break instead of a 23-minute break. This was most relevant when a nurse would take lunch at the end of their fifth hour of work. The defendants won their motions at trial on the basis that California’s wage-and-hour laws do not prohibit rounding.

Hundreds of thousands of California independent contractors and gig workers will likely not have to reimburse the state for overpaid Pandemic Unemployment Assistance (PUA) benefits.

The new COVID-19 stimulus package signed into law allows states to waive attempts to collect excessive PUA payments as long as workers meet two requirements:

  1. Their original PUA application was filed in good faith

A nearly decade-long court battle ends as national department store chain Burlington Stores Inc. has agreed to pay almost $20 million for misclassifying workers to avoid paying them overtime.

According to court records, roughly 1,630 employees will receive an average payment of $12,000 as part of the settlement. California workers are included under a second class-action suit filed against the company.

A nine-year court battle erupted over worker classifications

For decades, farmworkers in California were excluded from most state and federal wage and hour laws requiring employers to pay overtime for time worked exceeding 40 hours per week or eight hours per day. Since 1976, agricultural employers were only required to pay OT to those working more than 10 hours a day or 60 per week.

That changed in 2019 when Assembly Bill 1066 went into effect. Starting on Jan. 1, 2019, a new timetable began for overtime rules affecting farmworkers. The changes are being phased-in until they receive roughly the same treatment for overtime pay as workers in most other professions.

The law only applies to larger employers for now

State and federal laws protect California workers against employers who expect or require their employees to perform work-related duties without compensation.

Working “off the clock” is a common wage and hour violation for any uncompensated work done for an employer that should count for overtime purposes.

Typical off-the-clock violations

Employers sometimes commit wage theft through illegal deductions from their workers’ paychecks. California law protects employees and penalizes employers for these violations, just as they do for failing to pay overtime, denying rest or meal breaks or other illegal activity.

In the Golden State, employers can only make deductions allowed under state or federal laws, or when an employee authorizes them. That approval must be in writing and include insurance premiums or deductions for other health, welfare or pension contributions.

 Unlawful payroll deductions

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