Seyfarth Synopsis: While employers usually don’t need to pay for travel time associated with an employee’s ordinary commute, federal and California law create exceptions that employers should know—particularly when company policy requires a certain type of transportation.

For many of us, automobile traffic—at least during the B.C. (before covid) era—has been as synonymous with California as its sunny weather and ocean beaches. Many businesses have adopted creative policies to help mitigate the stress that traveling employees face, but these policies sometimes create unintended costs by requiring businesses to pay for the travel time.

When Is Travel Time Compensable?

Generally, employees aren’t entitled to pay for their ordinary commute to and from work. There are, however, some notable exceptions under federal and state law.

Federal law, for instance, requires employers to pay for time spent on three types of travel: (1) to another city for a special one-day assignment, (2) to another job site during the workday, and (3) to receive instructions, perform work, or retrieve tools. But federal law doesn’t require employers to pay workers for their time spent commuting in an employer-provided bus or in a mandatory carpool.

On this point, California differs from federal law in an important way. Under the California Supreme Court’s decision in Morillion v. Royal Packing Co., employers must pay for “compulsory travel time”—time employees spend traveling on and waiting for transportation required by an employer. In Morillion, the employees were entitled to pay for travel time because their employer required them to take an employer-provided bus between a designated point and the work site and prohibited them from using their own transportation, even though they were free to pursue personal activities on the bus ride itself.

Also, in California, even if employees use personal vehicles for their commute, they may be entitled to pay for travel time if they are required to carry tools or employer equipment in their vehicles between home and job sites, if they are effectively prevented from using the commute for their own purposes.

These rules about compensable commute time in California have their limits, though. Employers need not pay for the time employees spend traveling on transportation that their employer merely provides but does not require them to use. Similarly, employees aren’t entitled to paid travel time simply because they travel in a company vehicle. However, California law does require employers to pay for travel time if use of a company vehicle is mandatory and is subject to rules that severely restrict the employee’s personal activities, such as prohibiting the employee from making stops or carrying passengers.

For example, a tech company offering an employee shuttle between San Francisco and Silicon Valley probably doesn’t need to pay employees for travel time, so long as the shuttle use is optional and the employees can pursue personal activities during the ride. Conversely, the outcome would likely differ if the employer required employees to meet at a designated spot and take a ride-share vehicle to the work site.

How Is Compensable Travel Time Calculated?

Usually, compensable travel time is calculated at the employee’s hourly rate (with a higher rate for overtime, if applicable). But employers and employees may agree to a separate rate for travel time if they agree before the travel and the separate rate is at least the minimum wage (with a higher rate for overtime, if applicable).

Is Travel Time Between Job Sites Compensable?

Travel time during the workday is usually compensable if the travel is required by the employer. For instance, employees are generally entitled to pay for travel time between different job locations.

But is the entire travel time compensable? Well, it depends. Because employers need only pay for time under their “control,” they need not pay for time associated with an employee’s purely personal pursuits.

Suppose an employee travels an hour and a half between job sites—spending 45 minutes driving and the other 45 minutes getting a haircut or viewing memes online (maybe, even both). The employer must pay only for the 45 minutes of driving time. In practice, however, identifying and segregating purely personal time can be a difficult task.

When Is Temporary Reassignment Compensable?

According to the DLSE, California law requires employers to pay travel time if they require an employee, on a short-time basis, to travel anything more than a minor distance to report to a worksite other than the employee’s usual workplace. This pay is calculated as the additional time (and not distance) normally required to travel between the employee’s home and the regular workplace, and the time between home and the temporary worksite.

But a long-term transfer to a different work site—even if distant—is treated differently. The DLSE has stated that absent any contractual term, employers need not pay for travel time to a new location so long as the transfer lasts more than one month (travel to the new location becomes the employee’s “ordinary commute” after one month).

Remember to Reimburse!

Employers should always remember to reimburse employees when appropriate. Under Labor Code § 2802, employers must reimburse employees for all necessary expenses incurred in connection with employer-required travel. A prime example is reimbursement for mileage for travel between different job locations in a single workday.

Workplace Solutions

Payment for travel time for employees can definitely cause some employers to hit bumps in the road. For more information on this or any related topic, please contact the authors or your Seyfarth attorney.

Edited by Coby Turner

Seyfarth Synopsis: The controversy surrounding AB 5 unveiled a clear need for a new avenue of classifying so-called gig workers to combine the certainty of employee designations with the flexibility of gig jobs. What are the promises of and prospects for a hybrid classification that would provide workers with some employee benefits while also providing workers and companies some of the freedom and efficiencies observed in a gig economy? Can we see what the future will hold? This post explores some possibilities.

In the exceptionally popular Game of Thrones series, the third eye of the indispensable Three-Eyed Raven symbolizes perception beyond ordinary sight, or a third way. This need for future thinking and a third way has become increasingly more important in California when it comes to worker classifications.

By now, everyone knows all about AB 5: its legacy, its controversy, the numerous legislative exceptions it has inspired, the myriad court battles it has provoked, and the responsive initiative that has qualified for the November 2020 ballot. Indeed, not only have we written extensively on the measure, we also have our own tag dedicated exclusively to the issue. So what is the future of the gig economy in California? Is there a workable “third” way of classifying workers in the gig sector. While answering that question requires prescience beyond the mortal ken, we will put on our best “Three-Eyed Raven” hat to foresee some possible roads the future of the gig economy may take.

“I Have Been Many Things. Now, I Am What You See”—Piecemeal Legislative Changes

Many California gig businesses maintain they cannot survive if they must classify their drivers as employees under AB 5. The measure’s author, Lorena Gonzalez, insists the bill is not so bad for business. But if so why, then, are there a variety of stand-alone bills that would provide exemptions for at least 16 different industries?

Is a scattershot approach to legislation really the best solution? And must we choose between (a) dismantling the ABC test and AB 5 and (b) leaving AB 5 in place to require that all gig sector employees be classified as employees? Is there instead a third way—a hybrid classification that would provide the flexibility of the gig economy while ensuring that workers reap at least some benefits of employee status? This elusive third way has been discussed for years, but the controversies over AB 5 controversy may finally force the issue.

Meanwhile, the pandemic and the government’s response thereto—through the CARES Act and otherwise—may have played its own part in forcing the issue. The pandemic left gig workers particularly vulnerable, as independent contractors are normally ineligible for unemployment compensation. But the CARES Act gave them eligibility, limited by prior earnings.

“It Is Beautiful Beneath The Sea. But If You Stay Too Long, You’ll Drown”—Making A Dramatic Change

Drastic legislative changes to the employment marketplace have precedents. Industrial-era jobs were transformed during the Industrial Revolution when labor unions were empowered to negotiate for higher wages, shorter hours, and safer working conditions. Many believed these changes were too radical, but we’ve become accustomed to them. We may have seen a modern analog when the House passed the historic, $3 Trillion HEROES Act, which would make fundamental changes in the workplace.

“Look For Me…Beneath The Tree…North!”—Elusive “Third Way” Of Classifying Workers

So what would a “third classification” look like? One legislative option is SB 1039, authored by Senator Cathleen Galgiani. SB 1039 would “develop a modern policy framework that facilitates independent work for those who voluntarily choose it by creating a third classification of workers with basic rights and protections relative to work opportunities.” The stated rationale is that AB 5 has made it “increasingly obvious that a binary system for classifying workers as either independent contractors or employees is outdated and inapposite of the current reality of the labor market and work opportunities presented in the gig economy and the desire of workers seeking flexible working conditions.”

Despite SB 1039’s stated intentions, its substance has yet to take shape. Those crafting the measure might look to New York’s Freelance Isn’t Free Act, which took effect in May 2017. The Act requires an employment-type contract whenever a freelancer completes $800 worth of work, and provides freelancers with additional monetary remedies if a hiring party tries to avoid paying. The Act establishes a complaint procedure to be administered by the City and provides for a private right of action.

The Act does not, however, provide the employee benefits AB 5 does—such as a minimum wage, workers’ compensation, unemployment insurance, paid sick leave, and paid family leave. To address these concerns, SB 1039 could be amended to include such protections without going so far as pulling gig sector workers out of the IC designation and imposing on companies all the cascading Labor Code burdens that come along with an “employee” designation. For example, an amendment could tie benefits to hours worked, or to certain duties performed, or some combination of both.

“You Will Never Walk Again, But You Will Fly”—The Future Of Work

SB 1039 also refers to Governor Newsom’s Future of Work Commission, established via executive order. Although the pandemic has paused the Commission’s work, the Commission previously explored models to improve access to benefits tied to employment (e.g., paid time off, healthcare, training) for workers who have been excluded from certain benefits. Subjects that the Commission has investigated include portable benefits models and small groups that contribute to a centralized organization that provides access to benefits. Indeed, portable health benefits is one potential solution the Tech sector has suggested to ensure that gig workers have access to medical benefits. Once the Commission returns to work, its progress will be a good barometer for the future of the gig economy in California.

Undoubtedly, gig companies provide services that many consumers want, and many Californians want the flexibility these gig jobs offered prior to enactment of AB 5. In light of these realities, we hope to see the California Legislature find that sweet middle ground that promises some of the benefits of an employee classification while allowing for the flexibility typically associated with gig professions.

“The Time Has Come…Leave Me!”—Workplace Solutions

So what should employers consider, given the uncertain future of gig workers? Employers that use independent contractors must be sufficiently agile to adapt to a new classification—one that could cause additional administrative duties, but one that would also save resources and create efficiencies. With change likely to come, employers should be reviewing their practices regarding independent contractors to ensure they are in line with AB 5 now, and to prepare for legislative change. Just as the Three-Eyed Raven must move from mortal body to mortal body, employers must also be prepared to adapt to a potential third way of classifying workers.

Edited by Michael Wahlander

Seyfarth Synopsis: Effective July 13, 2020, California issued statewide restrictions on a number of business operations due to the resurgence of COVID-19. It ordered all bars to close for indoor and outdoor service, as well as indoor services for restaurants, wineries, and movie theaters. The State also closed fitness centers, non-essential offices, places of worship, hair salons, personal care services, and malls in at least 29 counties that have remained on the State’s watch list for at least 3 days.

On July 13, Governor Gavin Newsom announced the immediate closure of indoor operations of dine-in restaurants, wineries and tasting rooms, movie theaters, family entertainment centers, zoos and museums, and cardrooms statewide. Bars, brewpubs, breweries, and pubs statewide must close all operations—both indoor and outdoor—unless they offer outdoor sit-down, dine-in meals, and they may only sell alcohol with a meal. If operating outdoors, the State requires bars, pubs, brewpubs, and breweries to follow the dine-in restaurant guidance and encourages takeout and delivery services whenever possible.

The Governor further imposed restrictions on more businesses in counties that have remained on the state’s monitoring list for three consecutive days. Currently at least 29 counties are on the list, including some of the State’s most populous counties such as Los Angeles, San Diego, and Orange. For these counties, the Governor ordered the following businesses and activities to shut down, unless their operations can be modified to operate outdoors or to offer pick-up service:

  • Fitness Centers,
  • Worship Services,
  • Protests,
  • Offices for Non-Essential Sectors,
  • Personal Care Services (such as nail salons, body waxing and tattoo parlors),
  • Hair Salons and Barbershops, and
  • Malls.

Although the latest State directive has not expressly indicated which office workspaces fall under the category of “Offices in Non-Essential Sectors,” the California Department of Public Health’s concurrently issued Guidance directs businesses to refer to the State’s list of Essential Workforce, issued as part of the March 19 statewide shelter-in-place order.

California’s patchwork of county orders, frequently imposing stricter restrictions than the State, adds another layer of complicity to the analysis.  Non-essential businesses considering keeping their offices open in the identified counties should consult their local County and City Public Health Departments, as well as any local orders, to ensure compliance with the State’s order.

Workplace Solutions

For more information on best practices for reopening businesses, and to stay up-to-date on both state and local COVID-19 developments, be sure to visit Seyfarth’s COVID-19 Resource Center, or contact one of our experienced attorneys directly.

Edited by Coby Turner

Seyfarth Synopsis: When we think of California employers encountering complex issues during the COVID-19 pandemic, images of retail, service, and other types of businesses come to mind. But one special type of employer needs to be mindful of California law: the family who employs workers to support the household as nannies, chefs, security personnel, personal assistants, and personal caregivers. We highlight below some of the key issues for California families to consider as they cross the threshold from family to employer.

It is critical that families who employ workers of any kind (beyond a casual babysitter) carefully structure the relationship. We see many claims made by domestic workers against the families and individuals who have retained them as employees or contractors. These claims are stressful, time consuming, and often very expensive for the family to resolve, particularly where the employment relationship did not end on good terms.

Can We Classify Family Workers as Independent Contractors?

Traditionally, many families employed domestic workers as independent contractors. Other than some very limited cases, such as an occasional babysitter, this approach is now fraught with huge legal risk in California (and was risky even in the past).

Last year, Governor Newsom signed Assembly Bill 5 (AB5), which codified a three-part test to determine whether a worker providing services in California is an employee for purposes of the California Labor Code, the state’s Wage Orders, and the Unemployment Insurance Code. With some very limited ad hoc statutory exceptions, this law was very expressly designed to eliminate independent contractors in California. We discuss AB5 here and here in prior posts.

AB5 establishes significant potential penalties for employers, including families, who misclassify employees as contractors. These penalties are in addition to the very substantial meal and rest period penalties, paystub penalties, unpaid wages, overtime, waiting time penalties, interest and attorneys’ fees that a disaffected domestic worker can seek if misclassified as an independent contractor.

Without delving into great detail, California domestic workers and attendants of every kind often will not qualify as contractors under the new AB5 test. The fact that an individual may want to be an independent contractor is also almost entirely irrelevant under California law.

This means that families who have erroneously classified their nannies, au pairs, frequent gardeners, housekeepers, cooks, personal attendants, and other staff as independent contractors face the risk of enormous potential liability, not including the costs of defense. The law also gives domestic workers huge leverage over the family, if for some reason the relationship does not work out. When hiring any of these types of domestic employees, therefore, families should seek legal help to structure an employment relationship to avoid these risks.

What are California’s Current Overtime Rules?

Assuming that a domestic worker is properly classified as an employee, one primary area of risk will involve whether, when, and how to pay overtime. When it comes to overtime requirements, California provides extraordinarily generous legal protections for hourly, non-exempt employees. While federal law only requires overtime for hours worked in excess of 40 in a workweek, California employers generally must pay hourly non-exempt employees daily overtime at time and a half, and possibly double time, depending on how many hours they work in a day or week. These overtime obligations also apply to employers of domestic workers—with some limited exceptions and variations.

Specifically, when determining what overtime rules may apply to a particular domestic employee, there are generally two questions to consider. First does the worker qualify as a “personal attendant” as opposed to other types of domestic workers? Second, does the employee live in the home? The answer to these two questions will determine when overtime is owed, if at all.

What are the Overtime Rules for Domestic Workers and Personal Attendants?

As noted above, California law has different overtimes rules for personal attendants, as compared to other types of domestic workers.

  • Personal attendants usually are employed by a private household or any third-party employer recognized in the health care industry to work in a private household. Duties of a personal attendant include supervising, feeding, and dressing a child or person who needs assistance because of advanced age, physical disability, or mental deficiency. Typically they are nannies, nurses, and caretakers.
  • Other domestic workers provide services related to the care of people in the home, or maintain private households or their premises. Typically they are butlers, chauffeurs, cooks, gardeners, tutors, housekeepers, guards, and assistants to healthy adults.

It is critical to note that if the employee spends more than 20 percent of the time performing work other than supervising, feeding, and dressing a child or person who needs supervision (such as making beds, housecleaning, cooking, laundry, or other duties related to the maintenance of a private household or the premises), then the employee cannot be considered a personal attendant and, thus, is an “other domestic worker” subject to the overtime requirements applicable to such workers.

Employees who qualify as personal attendants who work in the home are entitled to overtime pay (1.5 times the regular rate of pay) for any hours worked over nine hours per day or over 45 hours per week. (The federal Fair Labor Standards Act might mandate overtime pay after 40 hous in a workweek for a live-in personal attendant, but this depends on whether the employee is employed directly by the family or a professional employer organization.) Personal attendants who work in the home are not entitled to double time. But keep in mind the 20%-duties rule (described above), which, if triggered, will make the employee an “other domestic worker.”

If the employee does not qualify as a personal attendant and, thus, is an “other domestic worker,” the overtime rule that applies comes from IWC Wage Order 15. A domestic worker’s entitlement to overtime will depend on whether the domestic worker lives with the family or in the home.

  • Domestic workers who do not live with the family or in the home are entitled to:
    • overtime (1.5 times the regular rate of pay) for hours worked over eight in a day or 40 regular hours in a workweek;
    • overtime for the first eight hours worked on the seventh consecutive day of the workweek (depending on the hours spread over the workweek);
    • double time (2 times the regular rate of pay) for hours worked over 12 in a day; and
    • double time for hours worked over eight on the seventh consecutive day of the workweek.
  • Live-in domestic workers are entitled to:
    • overtime for hours worked over nine in a day;
    • overtime for the first nine hours worked on the sixth and seventh consecutive day of the workweek; and
    • double time for hours worked over nine hours on the sixth and seventh consecutive day of workweek.

Are Domestic Workers and Personal Attendants Entitled to Meal Periods and Rest Breaks?

Resolution of the “personal attendant” question will also dictate whether the employee is entitled to meal and rest periods.

If the worker qualifies as a personal attendant, the family does not have to provide meal periods and rest breaks, although it certainly can do so. However, all other domestic workers, regardless of where they live, are entitled to the same meal periods and rest breaks as any other California employee.

Generally, this means an unpaid 30-minute off-duty meal period if the employee works five or more hours and a paid 10-minute rest break for every four hours worked or major fraction thereof. The meal period must begin before the employee has worked more than five hours, and the employee must be relieved of all duties (including not being on call and being free to leave). The law provides for extremely onerous penalties for failure to provide these breaks (and it is very easy for employees to simply claim they did not get them). It is critical, therefore, that even family employers have clear rules, policies and practices to ensure these breaks are being made available, in full, at the required times, and that the meal periods are being fully documented.

Can a Family Apply Meal and Lodging Credits Against the Employee’s Minimum Wage?

Yes, to a small extent. But there are strict limits specified in the law and this arrangement must be documented in a voluntary written agreement between the family and the employee before the work is performed. Families that would like to take a meal and lodging credit should work with experienced counsel before doing so.

Are Family Employees Entitled to Paid Sick Leave?

Yes. California’s Paid Sick Leave law applies to all employers regardless of size. In addition, depending on the city in which the family lives or where the work is performed, some California cities have paid sick leave ordinances that require employers to provide more paid sick time than state law requires. Those cities currently include Berkeley, Emeryville, City of Los Angeles, Oakland, San Diego, San Francisco, and Santa Monica.

How Do Families Protect Their Property, Privacy and Other Interests?

Families that employ domestic workers and personal attendants open their doors to people with whom they might not have any history. These families have a strong desire to protect their property, their children and their privacy. As a result, we recommend employers consider conducting post-offer criminal history background checks on applicants before allowing them access to the family home. Of course, families that conduct such checks must comply with federal and state background check laws.

Moreover, families should consider a very strong confidentiality agreement that is carefully tailored to the privacy interests they seek to protect, and an enforceable arbitration agreement, mandating private arbitration. Both of these need to be tailored specifically for domestic workers to be enforceable and to avoid running afoul of numerous legal limitations on, and impediments to, such agreements.

Families also will need to secure worker’s compensation insurance and set up an account with the state’s Employment Development Department, the agency responsible for overseeing and administering unemployment benefits for California workers. Moreover, if the domestic worker or personal attendant will drive the family’s car or use other equipment, the family should secure appropriate automobile insurance coverage and work with their insurance broker to obtain any other general liability insurance policies to protect their property and interests.

Next Steps for Families that are Employers

While we’ve highlighted some key issues to consider when a family dives into employer status, there are a number of other laws and best practices to consider before families employ domestic workers and personal attendants, such as:

  • implementing proper time keeping and final pay practices;
  • ensuring legally compliant wage statements (an employer must specifically set up the wage statements to be compliant; the payroll services do not do that for the employer typically as a matter of course);
  • managing issues as to the homeowner’s general liability policy and coverage for use of vehicles by domestic staff;
  • ensuring the security of video, network and financial systems and records (and potential bonding of the worker);
  • maintaining control over family photographs, videos, images, and information;
  • managing issues related to health screening and drug testing of caregivers;
  • overseeing the lease or rental of space for live in workers, and ensuring that they do not become subject to the protection of state and local tenant protection laws;
  • managing issues as to immigration compliance;
  • determining whether any county or city laws require more than state law (e.g., local minimum wage requirements, posting requirements, etc.);
  • ensuring proper workers compensation coverage;
  • handling travel by caregivers, and paying properly for it (and avoiding liability issues), and
  • implementing of other key policies including, anti-discrimination and harassment policies.

Families should work with counsel experienced with these unique issues before allowing workers access to their family homes, their children, and their private lives.

Edited by Coby Turner

Seyfarth Synopsis: Two weeks after issuing a statewide face covering mandate, and just days after ordering seven counties to shut down bars, Governor Newsom made the decision to re-close the indoor operations of several sectors in 19 counties in an attempt to flatten the spike in new California COVID-19 cases.

As summer began and businesses across California started to reopen, the state saw a sharp uptick in COVID-19 cases. In response, the California Department of Health quickly issued a mandatory face covering directive on June 18, which we previously blogged about here.

Wanting To Start Again

Since then, Governor Newsom has implemented additional measures to help mitigate the spread of COVID-19 across the state. On June 28, Newsom tweeted that he was ordering bars to close in seven counties and recommending bars close or remain shuttered in an additional eight counties.

Now, as we head into July 4th weekend—a holiday typically (but not this ) celebrated in large public and private gatherings—California is taking a more aggressive approach in an attempt to halt the spike in new cases. On July 1, via Twitter and California’s COVID-19 resource page, the Governor broke the news of additional closures across the state.

And When It’s Time, You’ll Know

Effective immediately, the following indoor activities are shut down in 19 counties for a minimum of three weeks:

  • Restaurants
  • Wineries and Tasting Rooms
  • Movie Theaters
  • Family entertainment centers (e.g., bowling alleys, miniature golf, batting cages, and arcades)
  • Zoos and Museums
  • Cardrooms

The 19 counties affected by the Governor’s new directive are: Contra Costa, Fresno, Glenn, Imperial, Kern, Kings, Los Angeles, Merced, Orange, Riverside, Sacramento, San Bernardino, San Joaquin, Santa Barbara, Santa Clara, Solano, Stanislaus, Tulare, and Ventura.  Notably absent from the list are Napa and Sonoma, enabling wineries there to continue welcoming the public to their tasting rooms.

There’s Still A Chance For You

With the exception of bars, which must cease all operations, businesses ordered to close may remain open if the operations can be transitioned to outdoor or pick-up service.

Workplace Solutions

As tensions rise over both new and existing business closures, and with some local agencies refusing to enforce statewide directives, it remains uncertain what the landscape will look like for California businesses. However, we continue to closely monitor California COVID-19 developments. If you have questions, please be sure to visit Seyfarth’s COVID-19 Resource Center, or contact your favorite Seyfarth attorney directly.

Edited by Coby Turner

Seyfarth Synopsis: As counties begin loosening local restrictions and summer approaches, and in an effort to preempt a rise in COVID-19 cases, the California Department of Public Health issued a directive mandating that residents statewide wear face coverings.

Before today, California only recommended that residents wear face coverings as a precautionary measure with COVID-19, and the State left it in local governments’ hands to decide whether a mandatory requirement was necessary. As summer heats up and tempts residents to spend more time outside and congregate, Governor Newsom and the California Department of Public Health have issued a mandatory face covering directive to mitigate the spread of COVID-19 throughout California.

Masks on Top!

Under this new directive, unless a resident is specifically exempted, face coverings must be worn statewide in the following “high-risk” circumstances:

  • Inside of, or in line to enter, any indoor public space;
  • Obtaining services from the healthcare sector in settings including, but not limited to, a hospital, pharmacy, medical clinic, laboratory, physician or dental office, veterinary clinic, or blood bank;
  • Waiting for or riding on public transportation or paratransit or while in a taxi, private car service, or ride-sharing vehicle;
  • Engaged in work, whether at the workplace or performing work off-site, when:
    • Interacting in-person with any member of the public;
    • Working in any space visited by members of the public, regardless of whether anyone from the public is present at the time;
    • Working in any space where food is prepared or packaged for sale or distribution to others;
    • Working in or walking through common areas, such as hallways, stairways, elevators, and parking facilities;
    • In any room or enclosed area where other people (except for members of the person’s own household or residence) are present when unable to physically distance.
  • Driving or operating any public transportation or paratransit vehicle, taxi, or private car service or ride-sharing vehicle when passengers are present. When no passengers are present, face coverings are strongly recommended.
  • While outdoors in public spaces when maintaining a physical distance of 6 feet from persons who are not members of the same household or residence is not feasible.

West Coast Represent: County, City, and Industry Guidance

While the statewide directive does not specifically address California employers’ obligations, employers should keep in mind that more restrictive local orders will control. Accordingly, if a county or citywide order mandates wearing face coverings under additional sets of circumstances, or orders employers to provide face coverings to employees, the business must still abide by those requirements. Likewise, FAQs issued this afternoon direct Californian employees to industry guidance for additional situations warranting mask wearing at work.

Workplace Solutions

We are continuing to monitor California COVID-19 developments. If you have questions, please be sure to visit Seyfarth’s COVID-19 Resource Center, or contact your favorite Seyfarth attorney directly.

Edited by Coby Turner

Seyfarth Synopsis: California employers seeking to mitigate the financial impact of the COVID-19 pandemic may consider adjusting certain pay plans as a way to control costs. Where these adjustments involve commission agreements and bonus plans, it makes cents to invest some time in recalling that phrase coined by Benjamin Franklin: “An investment in knowledge pays the best interest.” So here we review a few California peculiarities about commissions and bonuses.

Faithful readers of this blog know that California employers must use written agreements to define how they compute and pay commissions and bonuses based on a percentage of sales or profits. California treats that pay as wages, which cannot be forfeited once they have been earned. In other words, once compensation has been “earned” under the terms of an agreement, it is, in effect, “money in the bank” and must be paid even if the agreement is modified before the compensation is payable. That’s why changes to commission and bonus agreements must be prospective rather than retroactive, and cannot reduce “earned” compensation even after a new agreement has been signed.

Consider the following example. Employee Wally Warbucks has a commission agreement with his employer, Cheddar, Inc., providing that Warbucks will earn a 20% commission on sales of Cheddar’s widgets. The agreement states that a commission is “earned” when the customer pays the invoice on the sale, and is payable in the pay period after it is earned. On May 1, 2020, Warbucks sells 100 widgets to customer A, who pays for the widgets on June 1, 2020. On June 2, 2020, Warbucks and Cheddar enter into a new commission agreement, providing that the commission on widget sales will now be just 15%. Under this scenario, Warbucks is entitled to a 20% commission on his May 1, 2020 sale to customer A, even though the new agreement went into effect before the commission was payable.

Workplace Solutions. Employers who wish to reduce compensation for employees paid by commissions or bonuses that are based on a fixed percentage of sales or profits should do the following to avoid pitfalls that employers may later find taxing: (1) carefully review the terms of the agreements to be changed; (2) provide employees with reasonable advance notice of their intent to make changes to the agreements; (3) ensure that new agreements clearly spell out all requirements for computation and payment of the commissions and bonuses; (4) require that employees sign off on the new agreements; and (5) ensure that compensation earned under the terms of superseded agreements is paid in accordance with those agreements.

Employers need not buck at the complexities involved with making these changes, but should instead spend time with a Seyfarth attorney to guide them so that their interests will be protected.

Seyfarth Synopsis: In the popular PBS show Downton Abbey, a large staff attends to the every domestic need of the British Earl and his family. Those of us somewhat less fortunate have likely felt the additional household burdens associated with the SIP orders. And as California businesses re-open, companies and workers have yet another chore to attend: cleaning uniforms more often. We have tailored this post to examine some implications for employers.

Etiquette From A Bygone Era

Although we previously blogged on employer reimbursements for uniforms, tools, and equipment, the new realities of operating a business amidst heightened sanitation requirements make it time to suit up for a reexamination of the issues.

In general, the underlying rules regarding employer reimbursements for uniforms, tools, and equipment have not changed. Under California law, employers still must pay for or reimburse a non-exempt employee for all costs associated with uniforms, regardless of how much the employee earns. This law differs from federal law, which generally allows employers to pass those expenses off to employees so long as their pay does not drop below the minimum wage. Even in California, though, employers typically need not reimburse employees for time spent personally cleaning clothing if the cleaning requires minimal time or care and can fit within the employee’s typical laundry schedule.

The Nature Of Life Is Not Permanence, But Flux

COVID has brought a dramatic shift to our work hours and environments. Once upon a time, people shared clothing items—like aprons (or waistcoats!)—with the colleagues working before and after them. But person-to-person transmission of COVID has brought some sharing practices into question. Similarly, uniform clothing items such as vests or ties once were cleaned infrequently and yet now may require aggressive, regular cleaning to guard against COVID transmission.

For employees whose uniforms need special cleaning, California employers must provide and maintain the uniform without cost to the employee. Likewise, any uniforms that require ironing, dry cleaning, special laundering, or sewing and repairs because of the nature of employment must be maintained by the employer or covered by a uniform maintenance credit that pays for the time and costs incurred in maintaining it.

The World Is A Different Place From The Way It Was—Uniforms in the Time of COVID

Bringing this back to the present, what about uniform or work clothing items that, pre-COVID, would have required little to no maintenance or cleaning? If items like vests and aprons must now be cleaned after every shift—in excess of employees’ normal laundry habits—the new cleaning regimen may lead to claims that the employee should be reimbursed for the extra time or expenses involved.

But employers are not without options! One potential solution is to provide employees with multiples of required clothing items. Even if an employee must wear and clean a vest every day, having several on hand to rotate through family laundry cycles would reduce the burden of keeping them clean and sanitary. Another possible solution is for the employer itself to take responsibility for cleaning work garments, such as by enlisting a qualified laundering service.

Employers could also have employees wash uniform items at the worksite. But care must be taken with respect to washing soiled garments. For example, the CDC cautions against handling laundry from people who are infected, recommends wearing gloves, and warns that shaking laundry can release virus fomites into the air. Our Workplace Safety team is well-versed on the CDC’s guidance on ways to minimize the risk of virus transmission when handling clothing and other frequently handled workplace items.

It’s Not A Masquerade—What About Masks?

Currently, the CDC and others are advising employees to wear masks when performing work that puts them in contact with others. Indeed, some jurisdictions, such as Los Angeles, have required individuals to wear face masks at certain public places.

Assuming that the face masks worn by employees are generic—i.e., no company branding, logos, or special color—they likely are not a “uniform” under California law. Employers thus should not need to reimburse employees for time spent washing masks, especially if the amount of time spent cleaning masks does not significantly add to the employee’s laundry burden.

But this is California, so take care to minimize the time employees may feel required to devote to cleaning their masks. Again, providing multiple masks for employees to rotate through the workweek may help obviate any potential issue of required special cleaning.

Workplace Solutions

In our current new reality, frequent washing of often-used garments like vests and aprons may be advisable. But employees who lack a large staff of butlers, valets, and maids may feel additional burdens associated with this new requirement. Here, as with everything we do in the COVID-infused employment workplace, we must take care when implementing policies and procedures that keep both employees and the public safe while also complying with California’s often peculiar employment laws. As always, please reach out to Seyfarth with questions.

Edited by Coby Turner

We are pleased to announce the release of the 2020 edition of our in-demand book, Cal-Peculiarities: How California Employment Law is Different. The book is available in a convenient, searchable eBook format. Click HERE to order your copy to be delivered via e-mail today!

We also invite you to join us for a free webinar going over some of the biggest changes in the last year! The webinar will be on Thursday, May 28, 2020 with Seyfarth attorneys Chantelle Egan, Coby Turner, and Ann Marie Zaletel. They will discuss the latest legal developments of interest to executives, managers, in-house counsel, and human resources professionals with employees or workers in California, including:

  • New! Overview of COVID-19 provisions in the state of California
  • New! Expansion of ABC test for independent contracting
  • New! Ban on no-rehire provisions in settlement agreements
  • New! Ban on mandatory arbitration agreements
  • New! Expanded lactation accommodation: impacts on return to work
  • New! Expansion of Paid Family Leave benefits
  • New! Ban on hairstyle discrimination (the CROWN Act)
  • New! Organ donation leave entitlement
  • New! Minimum wages and salary thresholds for exempt status
  • New! Sexual harassment training requirements
  • New! Extension of filing deadlines for discrimination suits
  • “Regular rate” issues for meal premium pay and sick pay
  • “Unlimited vacation” plans under new scrutiny
  • Emerging issues in the life of COVID-19

While there is no cost to attend this program, registration is required. Please click HERE to register! The webinar will be offered at the following times:

1:00 p.m. to 2:30 p.m. Pacific

4:00 p.m. to 5:30 p.m. Eastern

3:00 p.m. to 4:30 p.m. Central

2:00 p.m. to 3:30 p.m. Mountain

On behalf of your Cal-Pecs team, thank you for your continued interest in the blog.

 

Seyfarth Synopsis: “Per diem” (or per day) employment may seem like a simple way to maintain a flexible workforce enabling employers to respond to last-minute changes in staffing needs. But certain legal and practical issues can hamper this flexibility. Here we briefly overview per diem employment, and describe some best practices to avoid common mishaps.

What is Per Diem Employment?

Employers sometimes refer to employees who work variable and irregular hours as “per diem” employees. Some employees prefer this status, as it provides them with flexibility and the opportunity to pick up work (often at higher rates of pay), without committing to a regular schedule. This arrangement can benefit employers as well, as it enables them to utilize a pool of employees to supplement regular staffing when the workload increases or during staff shortages. While per diem employment is common in the health care, education, and construction industries, and in connection with seasonal retail and agricultural work, the flexible nature of per diem status has also led employers in various other industries to consider this work status alternative.

While per diem employment typically is part-time, it differs from most part-time arrangements. Part-time employees work a shorter schedule than their full-time colleagues, while per diem employees often work full shifts.

While part-time employees might earn benefits (typically at a reduced rate), per diem employees generally do not. But per diem employees typically earn a higher hourly rate, reflecting their ability to fill shifts on short notice.

Benefits of Per Diem Employment

Flexibility. Per diem staffing provides employers with flexibility. Employers that can draw on a pool of vetted, trained per diem workers don’t have to scramble to meet unexpected staffing needs. Hospitals thus often use per diem health care workers during flu seasons, when they experience a surge in patients. Employees enjoy a corresponding flexibility. Many individuals with competing family or employment responsibilities enjoy the chance to earn extra money without committing to a regular schedule for a particular employer. These employees can keep up their skills (particularly in clinical or technical professions like healthcare) without committing to regular employment.

Control of Labor Costs. Per diem staffing can also be cost effective. Employers generally need not worry about having to pay for employees who are not currently needed or about having to continue contributions to benefit plans when the work is not there.

Employer Best Practices

Notwithstanding its clear advantages, per diem employment raises special challenges that employers should keep in mind:

Clear Employee Understanding. Make sure the employee understands the employment relationship. To ensure that the nature of the employment relationship is clear, employers should maintain written policies or agreements outlining the characteristics of the relationship (for example, the limited hours, the absence of any guarantee of hours, the limitations on benefits, and the expected availability).

The ACA. Beware of full-time equivalency. Under the Employer Shared Responsibility provisions of the Affordable Care Act, if an employer with more than 50 full-time (or full-time equivalent) employees hires an employee who averages over 30 hours per week—or 130 hours a month for the initial measuring period used by the employer (could be 6 or 12 months)—then the employee could be considered a full-time equivalent employee who must be offered at least one health plan option that provides minimum value and is affordable. Employers, to avoid an unexpected triggering of healthcare eligibility, should track how many shifts per diem employees are selecting.

Personnel Records and Actions. Employers should maintain documentation for per diem employees to the same extent as full-time or part-time employees. Employers should follow the same disciplinary and corrective action processes for per diem employees that they follow for other employees, and see that per diem employees receive regular feedback about their performance.

Scheduling Ordinances. Some jurisdictions have predictive scheduling laws that may affect the ability to offer per diem employment. Be sure to check local ordinances!

Unemployment. In California, per diem employees can file unemployment claims. This is yet another reason why it is critical to record whether per diem employees are refusing work or restricting their availability. It is particularly important for employers to have a clear policy regarding any availability expectations for per diem employees. This practice will allow employees to understand the scope of the commitment that they make as a per diem employee and any limitations on their ability to decline shifts.

Processes. Employment laws apply! Employers should be mindful that employment laws—and often the employer’s own policies—extend to per diem employees as well as regular full-time and part-time employees. Employers must ensure that per diem employees understand their policies, including timekeeping and meal- and rest-period requirements. Employees who work infrequently, or for multiple employers, may need reminders of these policies. Managers also need to understand that EEO policies, including the duty to reasonably accommodate employees with disabilities, apply equally to per diem employees.

Paid Sick Leave and Protected Absences. Even though they may not work many hours, per diem employees are entitled to paid sick leave under California law and many local laws. As per diem employees often are not eligible to accrue PTO, employers that rely on PTO plans to meet paid sick leave requirements should ensure that per diem employees (and other excluded employees) are covered by a separate policy that provides the required accrual and use of sick leave. Although per diem employees are not steady employees and thus may not have enough hours to qualify for FMLA/CFRA leave, note that employees who have 12 months of service and who have worked 1,250 hours in the preceding 12 months are entitled to FMLA/CFRA leave. Employers should track hours worked to stay in compliance with FMLA.

Meeting Short-Term Needs. Consider using temporary workers in some instances instead of per diem employees. Employers might have short-term projects that arise, and need employees with a specialized skill set for a short time frame. Such projects might be better staffed by temporary workers than per diem workers. This approach will help employers avoid tricky issues that might arise when the short-term need ends, such as whether the conclusion of employment could be treated as a termination (triggering final pay obligations for the employer).

Final Pay. Be mindful of final pay issues. Final pay in California is due on the final day of employment (or within 72 hours, if the employee resigns without notice). The final-pay requirements apply to all employees, including per diem employees. Employers should communicate regularly with their per diem employees to ensure that the term of their employment is clear. Final pay may be due immediately upon the end of an assignment, so it is important to define clearly when an assignment ends.

Workplace Solutions

Per diem employment can be a flexible way for employers to address unforeseen staffing shortages or fluctuations in work. Nonetheless, employers should be mindful that they still have important obligations to per diem employees. Employers should make sure they are following all best practices to ensure compliance with California and federal employment laws for all employees, even those who work sporadically.

If you would like to learn more about using per diem employees in your workforce, please contact a Seyfarth Shaw attorney for assistance.

Edited by Elizabeth MacGregor