From high profile cases in Hollywood to the Silicon Valley, to high-profile legislation, gender pay equity has been top of the news in the past year.  On January 1, 2016, the California Fair Pay Act — widely publicized as the toughest (gender) pay equity law in the nation — became effective.  Other states (Massachusetts, New Jersey,
Continue Reading Pay Equity Legislation: Not Just Gender Anymore

Counting moneyWe normally write about how California law differs from American law generally. Today, though, we highlight a recent California case that rejected the notion that California law should deviate from analogous federal wage and hour law. That case is Alvarado v. Dart Container Corp. of California. More detailed information appears here.

In Alvarado, the California Court of
Continue Reading The California Regular Rate Of Pay: Not So Peculiar

Girl in black suit takes stool up.The countdown begins to receiving some clarity on the suitable seating rule from the California Supreme Court. On January 5, 2016, the Court heard oral argument in the consolidated matters of Kilby v. CVS Pharmacy, Inc. and Henderson v. JP Morgan Chase Bank. These putative class actions claim that the employers violated Section 14 of Wage Orders 4-2001 and
Continue Reading Edge of Our Seats: Oral Argument on “Suitable Seats” Cases

By: Emily Schroeder 

In a recent blog post, we discussed how recent California judicial court decisions may erode the once-solid foundation of traditional incentive pay systems. Specifically, Armenta v. Osmose and Bluford v. Safeway held that while a piece rate compensated employees for their “productive time”—time spent actually working on piece-rate tasks—the piece rate did not compensate them for
Continue Reading Commission Pay Post-Peabody

By Michael Kopp and Sarah Hamilton

In a simpler world, only the time an employee spent working would count as “hours worked.”  In the world we live in, the employer may need to keep the pay clock running to track time that might be regarded as off duty, such as time spent sleeping, traveling, on call, or at rest. With a rising number of lawsuits now seeking to recover pay for idle time, let’s review some main issues.

The big picture: it is employer control, not employee productivity, that matters. California’s Wage Orders uniformly define “hours worked” as “the time during which an employee is subject to the control of an employer, and includes all time the employee is suffered or permitted to work, whether or not required to do so.” So the key question often is not whether the employee is actually working during the time in question, but whether the employee merely is subject to the employer’s control.

When do I need to pay employees for not (really) working?

  • When can sleeping on the job be “hours worked”? In California, the final answer remains to be seen. Federal law allows employers and employees to agree to exclude up to 8 hours of a 24-hour shift as unpaid sleep time, as long as: (1) the employer provides adequate sleeping facilities, (2) the employee has at least 5 hours of uninterrupted sleep, (3) the employee agrees to the sleep deduction, and (4) sleep-time deductions are only permitted from a 24-hour shift.  California courts traditionally followed the federal approach. See Monzon v. Schaefer Ambulance Serv., Inc., 224 Cal. App. 3d 16 (1990). But stay tuned—whether California will continue to permit such agreements, and on what terms, is the central issue pending before the California Supreme Court in Mendiola v. CPS Security Solutions, Inc. We will keep you updated here at CalPecs with new developments!
  • Are rest and recovery breaks “hours worked”?  California’s Wage Orders provide that the 10-minute rest breaks mandated for every 4 hours of work (or major portion thereof) are counted as  “hours worked.” That means they must be paid for and counted in determining whether the employee worked overtime.

But did you know there are other potentially paid breaks?  Required lactation breaks can be compensable time, to the extent those breaks coincide with the standard 10-minute rest periods mandated by the Wage Orders. (But lactation breaks taken outside of or in excess of the standard 10-minute rest periods are, to that extent, not compensable time.)  Also, for employers with outdoor places of employment, mandated “cool down” recovery time, for the purpose of heat illness prevention, is compensable time. See our previous article here for more details.

  • The daily commute: is heading to work also work?  Generally, the daily work commute (home-to-work and work-to-home) is not compensable as “hours worked” under either federal and California law. But if the employee performs work during the commute, such as reviewing reports while on the train, that time may be compensable.

Are there any other potential commuting pitfalls for the unwary employer?  Yes. California courts have held that employer-provided shuttles to work can convert this daily commuting time into “hours worked,” where the employer requires employees to use the employer-provided transportation. Morillion v. Royal Packing Co., 22 Cal. 4th 575 (2000). In contrast, commuting on truly optional employer-provided work shuttles need not be compensated. Overton v. Walt Disney Co., 136 Cal. App. 4th 263 (2006).

By Mark Grajski and Maya Harel

In theory, the California Labor Code and the Wage Orders allow employers the freedom to do what employers traditionally have done: pay employees solely with commissions or solely with piece rates. This idea of incentive pay—you reap what you sow— has been around a long time!

But a wave of California judicial court decisions has eroded the once-solid foundations of traditional incentive pay systems. In response, employers have been moving towards complicated hybrid compensation systems.

So what do you need to know when deciding to use one of these incentive or hybrid compensation systems?

Beware: Averaging Earnings Over the Pay Period Is Not Allowed to Satisfy Minimum Wage

Federal law allows employers to average wages over a pay period to meet minimum wage requirements (dividing total compensation by total number of hours worked). California does not. Courts have read California’s minimum wage statute to require employers to pay the minimum wage separately for each hour worked.

The tension between this requirement and traditional commission and piece-rate pay systems became apparent in 2005 in the California Court of Appeal decision in Armenta v. Osmose. In Armenta, employees earned their pay solely through piece rates. The Armenta court held that while the piece rate compensated employees for their “productive time”—time spent actually working on piece-rate tasks—the piece rate did not compensate them for their “non-productive time”—time spent doing anything else.

  • What Kinds of Pay Systems Have Employers Used In Response, and Do They Pass Legal Muster?

In an attempt to comply with Armenta, many employers created complicated hybrid hourly and incentive compensation systems. Unfortunately, even these laudable efforts to comply with California law may still expose well-intentioned employers to liability.

For example, in Bluford v. Safeway, the employer paid its truck drivers a certain figure to each mile driven, a piece rate for certain non-driving tasks, an hourly rate for other tasks, and a different hourly rate for unexpected driving delays. Even so, an unsympathetic Court of Appeal held that Safeway’s system violated the Wage Order because the system did not provide separately for an hourly rate for rest breaks, which the Wage Order designates as “hours worked.”