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California’s onerous employment laws continue to vex businesses

By   /   Friday, August 28th, 2015  /   Comments Off on California’s onerous employment laws continue to vex businesses

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Employers continue to be battered by onerous California employment laws, and there is little end in sight.

For those employers who can’t move their operations to another state, you’re stuck with the detailed state rules that create traps for employers.

One of the latest tactics by plaintiffs’ lawyers is to file lawsuits because of information missing on pay stubs.

For example, if an employer forgets to include either the start or end date of the pay period, or is missing the company’s address (even if it’s on the paycheck), that’s a violation of Labor Code section 226(a) and its laundry list of what’s required; resulting in thousands of dollars of penalties per employee.

One of our clients had correct on-line direct deposit paystubs, but the hard copy paystub that many employees received was missing the start date; resulting in a lawsuit and a $150,000 settlement.

The state legislature is currently addressing this unfairness by creating new legislation that hopefully will be signed into law effective January 1, 2016.

The legislation will give employers one opportunity to fix their defective paystubs before they can be sued. Since it’s not the law yet, we are seeing a rash of these cases. Check your paystubs for the nine required items.

Meals and rest break penalties also continue to vex California employers.

Employers generally understand that non-exempt hourly employees must be provided a 30 minute uninterrupted meal break, but employers often forget to ask themselves a few key questions that could keep them out of legal hot water. Are employees clocking in and out for meals so the employer has a record of compliance? Are employees beginning these meals by the end of the fifth hour of work? When shifts start at 7 a.m., meals must begin by noon.

If employees work over 10 hours, are they at least informed of their right to take a second meal, even if they routinely decline? Are employers training their supervisors or lead persons to observe these rules, as they are often the weak link on these issues?

For rest breaks, employers generally understand that employees receive an uninterrupted 10 minutes for each 4 hours of work. Employers routinely forget, however, that employees must receive another 10 minutes for any “major fraction” of four hours (i.e., more than 2 hours).

For example, if an employee works 10 hours and 15 minutes, that’s three segments, each requiring a 10 minute break (4 hours/4 hours/2 hours 15 minutes).  Employers also need to reference this “major fraction” language in their handbooks.

Many employers remember the famous Brinker case, in which the California Supreme Court ruled that employers don’t have to force employees to take their meals. But few remember that the case was sent back down to the trial court in part because Brinker’s employee handbook omitted the rest break “major fraction” language.

Despite the fact that Brinker is seen as a great employer victory, the company still paid out $56 million to resolve the case. Some victory.

If you have employees on a piece rate (paid for each unit of work completed), which is common in auto repair and agricultural harvesting, the hot topic is whether the piece rate covers rest breaks.

The California Labor Commission, based on some recent cases, takes the position that the employer must separately pay for the rest break.

Even having a separate hourly rate and a parallel piece rate or bonus system (paying the greater of the two), may not be enough to avoid liability. To calculate the liability, that’s at least 20 minutes a day (two rest breaks) over as many as four years of work, and potentially triple damages for such failure to pay.

One last bit of bad news (I tell my clients never to eat before a meeting with me): If you’re working with staffing agencies or employee leasing organizations, you need to be clear about whether the agency’s arbitration agreement with its workers actually covers you.

We have encountered situations in which the language in the agency agreement doesn’t cover you as the underlying employer, and then you’re stuck in superior court instead of arbitration. You think that you’re insulated from liability because it’s not your employee, but you control the work environment and will likely be dragged into any wage and hour or harassment/discrimination/wrongful termination litigation regardless of your agreement with the staffing agency.

Also, even if the agreement is properly written, employees may still pursue you in court for Private Attorney General Act (PAGA) claims, the “sue your boss” law enacted several years ago.

These are just a few of the employment laws that can cause sleepless nights. Stay tuned. New anxiety-inducing and profit-depleting laws are right around the corner for 2016.

• Jonathan Fraser Light is an employment attorney with LightGabler LLP in Camarillo.

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