Minimum Wage, New Labor Laws, Pay

2017 LABOR LAW CHANGES

The legislature passed many new employment laws or tinkered with old ones.  Below are a three of the most significant changes.

MINIMUM WAGE INCREASE

 In California, the minimum wage will increase to $10.50 per hour on January 1, 2017 for employers who have more than 25 employees.  The people of San Diego passed a ballot proposition in June that increased the minimum wage to $10.50 per hour and will further increase it to $11.50 per hour on January 1, 2017.  Workers get the highest minimum wage rate among federal, state, or local minimum wage laws.

The Federal Minimum Wage will not change for now, but one aspect of it might.  On December 1, 2016, the minimum salary for exempt employees was scheduled to increase to $47,476.00 per year.  That is more than double the old federal minimum salary requirement and is higher than most state minimum salary requirements.  However, a judge in Texas recently ruled that the law would NOT go into effect on December 1.  It might go into effect later; however, the judge may permanently bar the change.  Either way, the judge’s ruling will probably get appealed.

The minimum salary in California will increase to $43,680.00 for exempt employees on January 1, but only for employees who work for employers who employ more than 25 employees.  Why does the state minimum salary distinguish between employers who employ more or less than 25 employees?

The answer is the way in which the minimum wage works in California.  The minimum salary in California is twice the state minimum wage times the number of hours a full- time worker, at 40 hours per week, works in a year.  In other words, the number of hours the state presumes a full-time worker to work in a year is 2080 hours.  Two Thousand Eighty hours times $21 per hour (twice the $10.50 state minimum wage for employers who employ 26 or more employees) equals $43,680.00.  As of January 1, that will be the minimum salary for exempt employees who work for an employer who employs at least 26 employees.  The state minimum wage for all other employees (those who work for an employer who employs fewer than 26 workers) is $10 per hour.  Thus, for employers who employ 25 or fewer employees, the minimum annual salary for exempt workers is $41,600.00 (2 x $10/hour x 2080 hours) or $800.00 per week.

The California minimum wage rate will increase every year through 2023.  The scheduled increases are below:

For employers who employ at least 26 employees:

  1. On January 1, 2017, the minimum wage will increase to $10.50 per hour.
  2. On January 1, 2018, the minimum wage will increase to $11 per hour.
  3. On January 1, 2019, the minimum wage will increase to $12 per hour.
  4. On January 1, 2020, the minimum wage will increase to $13 per hour.
  5. On January 1, 2021, the minimum wage will increase to $14 per hour.
  6. On January 1, 2022, the minimum wage will increase to $15 per hour.

For employers who employ 25 or fewer employees:

  1. On January 1, 2018, the minimum wage will increase to $10.50 per hour.
  2. On January 1, 2019, the minimum wage will increase to $11 per hour.
  3. On January 1, 2020, the minimum wage will increase to $12 per hour.
  4. On January 1, 2021, the minimum wage will increase to $13 per hour.
  5. On January 1, 2022, the minimum wage will increase to $14 per hour.
  6. On January 1, 2023, the minimum wage will increase to $15 per hour.

The minimum yearly salary for exempt employees will increase by twice the minimum wage times 2080 hours.  The governor has the ability to delay implementation of the above minimum wage schedules.

FAIR PAY ACT

In 2015, California amended Labor Code §1197.5 to prevent employers from retaliating against employees who make Fair Pay Act claims.  That law also made it easier for employees to prove unequal gender pay.  On January 1, 2017, the law will now allow employees to make Fair Pay Act claims based on differences in pay between employees of different races and ethnicities as well as gender.  In addition, past salary levels cannot justify lower pay.

CHOICE OF LAW AND FORUM SELECTION CLAUSES

California Labor Code §925 was passed this year and will go into effect on January 1, 2017.  It prevents employment contracts from forcing California workers to bring their claims outside of California when they live and work in California.  It also prevents employers from forcing employees to be governed by the law of another state.  Out of state employers who hire California workers to perform work in California will not be allowed to use handbook provisions or employment contract provisions to force California workers to bring claims out of state and under another state’s laws.  Often, the employment laws of another state favor the employer.  Of course, trying to litigate in a different state significantly burdens most California workers.  In contrast, Labor Code §925 will allow California employees to file claims in California under California law.

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Class Action, Minimum Wage

Managers Are Not Exempt Unless They Make $41,600!

Most employers know that California requires them to pay every employee at least $10 per hour.  Did you realize that an increase in minimum wage requires an increase in salary for exempt managers?  If not, listen up.

Exempt white collar employees must meet certain criteria to be considered exempt.  Probably the most important is the minimum salary level.  Exempt employees must make two times the minimum wage in a theoretical 40-hour work week.  Forty hours per week equals 2080 hours per year (52 weeks x 40 hours).  That means the minimum salary an exempt employee must make is $41,600 (2 x $10 x 2080 hours).  Thus, California requires all managers to make at least $41,600 to be an exempt employee.  Of course, that is also the minimum salary for all other white collar exemptions, unless a particular exemption has a different minimum wage requirement.  For instance, an exempt computer professional must be paid at least $41.85 per hour or at least an $87,185.14 salary per year.  Each year the computer professional wage rates increase according to the yearly percentage increase in the California Consumer Price Index.

I believe that the minimum salary level is the most important criteria to meet for exempt employees because it is the easiest criteria to challenge in a misclassification case.  If a manager is not paid the minimum salary, then that manager simply is not exempt.  If that manager later brings a lawsuit for unpaid overtime, then the employer will lose and will owe back wages, assuming the manager actually worked overtime hours.  Most of the other exemption criteria are not as clearly discernable.

Misclassification cases often create class action liability if enough managers or other exempt employees do not receive the minimum salary.  In both individual claims and class action claims, the prevailing employees are entitled to attorney’s fees.

Employers, I highly recommend that all the managers that you want to classify as exempt make at least $41,600 per year.  Employees, if you are exempt, make sure that you are making the minimum salary.  Local wage laws that have higher minimum wage requirements also increase minimum salaries for exempt employees.  Los Angeles, for instance, will have a minimum wage rate of $10.50 per hour starting on July 1, 2016.  The corresponding minimum salary will be $43,680 (2 x $10.50 x 2080 hours).

I am available to consult with anyone who has a question about the required minimum salary or other exempt employee requirements.  Call me at (858) 292-0792.

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Discrimination, Harassment, Holiday Parties, Minimum Wage

Holiday Parties and the Law

The holiday party season is upon us, so, do employers and employees have any special concerns with holiday office parties?  Of course they do.  Luckily, employers can take steps to limit their liability exposure, and employees can keep an eye out to protect themselves.

Around holiday time, alcohol often influences how people behave.  As a rule, employees should watch how much they drink, and employers should contain the influence of alcohol during their company sponsored parties.  Common types of cases related to office holiday parties include: third party claims against intoxicated employees, sexual harassment claims, worker compensation claims, and wage claims.  As you can probably guess, the first three categories often have alcohol consumption involved with them.

For example, in Harris v. Trojan Fireworks Co., (1981) 120 Cal.App.3d 157, an intoxicated employee caused a terrible car accident while driving home from his employer’s party.  The people in the other car were terribly injured.  In fact, one person died in the accident.  The appellate court said that California laws generally bar liability for social hosts when a guest gets into a car accident after a party.  However, the court found that the work party situation was different, at least in this case, because, among other things, the party was held at the work place and during work hours, the employer paid the employee to attend, and that employee was encouraged to drink excessively.

Watch out for naughty Santa Clauses at holiday parties.  In one California case, Brennan v. Townsend & O’Leary Enterprises, Inc., (2011) 199 Cal.App.4th 1336, the plaintiff sued partly because of activities at two different parties.  At the first one, the Santa had female employees sit on his lap.  He then proceeded to ask them about their love lives.  At the second party, a different Santa wore a cap with vulgar words.  Ultimately, the employer was able to escape liability, but only after convincing an appellate court to overturn $250,000 jury award.  Employers, make your Santa’s behave!

When an employer requires attendance at a party, the employers may be exposing itself to wage claims.  Often the Courts find that required attendance is a function of employer control.  When an employer exerts control, usually the employee must be paid for the time under which he or she was being controlled.  My advice: Do not require attendance at a holiday party.

The following is a list of things that an employer can do to help contain liability for holiday parties:

  1. Attendance should be voluntary.
  2. Limit the amount of shop talk at the party.
  3. Don’t ask employees to perform special functions at the party.
  4. Invite the families of the employees.
  5. Hold the party away from the work site.
  6. Make sure that sexual harassment training is up-to-date.
  7. Make clear that sexual harassment at the party will not be tolerated.
  8. Harassment policies should cover off location events.
  9. Hold the event after hours or on a weekend.
  10. Don’t take attendance.
  11. Provide plenty of non-alcoholic beverages.
  12. Investigate complaints about party events as seriously as you would investigate other work place complaints.
  13. Choose to not serve alcohol
  14. If the employer chooses to serve alcohol, limit the amount employees can drink.
  15. Have a professional alcohol caterer screen for intoxication.
  16. Only give out a limited number of drink tickets.
  17. Have employees pay for the drinks they consume.
  18. Arrange for alternative transportation.
  19. Provide discounted rates at the hotel where the party is located.
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Minimum Wage

Employers, Don’t Mess with Minimum Wage!

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Why do some employers cut corners with employee wages, reimbursement of costs to employees, and, especially, minimum wage?  In a recent case, one employer appeared to do all three of those things and paid a big price on appeal.  (Vasquez v. Franklin Management Real Estate Fund, Inc., (2013) 222 Cal.App.4th 819.)

Mr. Vasquez worked as a maintenance technician for his employer Franklin.  Franklin required Vasquez to drive an average of thirty miles a day to pick up materials and go to various job locations during Vasquez’s work shift.  Vasquez claimed that Franklin refused to reimburse him for his mileage.  Vasquez only made $10 per hour.  After subtracting the mileage reimbursement from his daily gross pay, Vasquez said that he only made abot $7.94 per hour, less than minimum wage.  Vasquez said that under those circumstances, he had to quit.  In his lawsuit, Vasquez sued for the unreimbursed driving expenses and for wrongful discharge, among other things.

The Court found that Vasquez had alleged a supportable claim for wrongful constructive discharge because the unreimbursed expenses reduce his effective hourly rate below minimum wage.  The Court also said that a simple claim for unreimbursed expenses that did not cause an employee’s wages to dip below minimum wage would normally not provide a foundation for wrongful constructive discharge.  However, since Vasquez could claim that his employer did not pay him minimum wage, the fact that he quit was a wrongful constructive discharge in violation of fundamental public policy, namely, the failure to pay at least minimum wage.

Assuming Vasquez can prove he was not reimbursed for his driving expenses, he would be entitled to get them reimbursed in his lawsuit under Labor Code § 2802.  That code section requires employers to reimburse employees for out of pocket expenses that benefit the employer.  However, according to the Court, the failure to reimburse appears not to be a violation of a public policy that would allow for a wrongful constructive discharge.  Vasquez’s minimum wage claim provided an adequate public policy violation to allow him to quit and claim a wrongful discharge.

Employers should always reimburse employee expenses.  The law requires it.  However, the penalties can be much greater if a failure to reimburse an employee for out of pocket business expenses drives that employee’s wages below minimum wage.  The take home point: DON’T MESS WITH MINIMUM WAGE!

S. Ward Heinrichs, Esq.
BACKSTROM & HEINRICHS
Attorneys at Law
A Professional Corporation
4565 Ruffner Street, Suite 207
San Diego, CA 92111
(858) 292-0792
(858) 408-7543 (fax)

http://bestemploymentattorneysandiego.com/

http://twitter.com/#!/WardHeinrichs

www.facebook.com/BackstromandHeinrichs

http://www.linkedin.com/pub/ward-heinrichs/45/806/83b

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Minimum Wage, Uncategorized

E-Radio Interview about the Push to Increase Minimum Wage in California and the Nation

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On January 20, 2014, I gave an interview about the newly passed and newly proposed minimum wage laws in California and throughout the nation.  Please click this link to listen: http://www.successexpressmagazine.com/The-Year-of-the-Minimum-Wage.html.  The link also has the related article I posted with the radio show.  That same article is on this blog too.  Feel free to add comments about the article or the radio show.

S. Ward Heinrichs, Esq.
BACKSTROM & HEINRICHS
Attorneys at Law
A Professional Corporation
4565 Ruffner Street, Suite 207
San Diego, CA 92111
(858) 292-0792
(858) 408-7543 (fax)

http://bestemploymentattorneysandiego.com/

http://twitter.com/#!/WardHeinrichs

www.facebook.com/BackstromandHeinrichs

http://www.linkedin.com/pub/ward-heinrichs/45/806/83b

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Minimum Wage

2014: “The Year of the Minimum Wage!”

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For the past several months, my blog, emails, Big Blend Magazine articles, radio interviews, Facebook posts, and other modes of communication I use to discuss legal issues have been filled with news about minimum wage.  Of all the hot Employment Law topics, I think minimum wage is the biggest topic now and will remain so throughout 2014.

The big news for Californians is that the state minimum wage will increase from $8 an hour to $9 an hour starting on July 1, 2014.  After that, it will increase another dollar to $10 per hour on January 1, 2016.

Most recently in the news, Los Angeles is poised to pass a minimum wage increase to $15.37 per hour for hotel workers who work in a business zone around the airport (LAX).  (http://www.huffingtonpost.com/2014/01/14/la-highest-minimum-wage-hotel_n_4590136.html)  In fact, the Los Angeles City Council wants to make that minimum wage the law for the entire city.  It argues that the present minimum wage does not provide enough income for a wage earner to cover the expenses of a typical family.  Of course, Los Angeles businesses are lobbying against it saying that such a large minimum wage increase will lead to significant unemployment because the cost to do business will be too great.

Many in the Federal Government have been pushing a federal minimum wage increase too.  Democrats have proposed to increase the national minimum wage to $10.10 per hour.  It is now $7.25 per hour.  (http://www.huffingtonpost.com/2014/01/02/1010-minimum-wage_n_4532723.html) Because of our divided government, the new proposal has very little chance of passing.  If it were to pass, then the federal minimum wage would be greater than the minimum wage in all 50 states.  That means employers in every state would need to pay at least $10.10 an hour.  In contrast, some cities have minimum wages higher than $10.10 per hour.  For instance, San Francisco now has a minimum wage of $10.74 per hour.  Parts of Seattle have a minimum wage of $15.

Thirteen states have recently increased their minimum wage rates.  (http://www.huffingtonpost.com/2014/01/02/state-minimum-wage-raise_n_4530757.html?utm_hp_ref=minimum-wage) At the present time, twenty-one states and Washington D.C. have minimum wage rates that are greater than the federal minimum wage, which is now $7.25 per hour.  The other 29 states have wage rates that either mirror or are less than the federal minimum wage.  Employers in those 29 states must pay at least $7.25 per hour.  The state with highest minimum wage is Washington at $9.32 per hour.

Employers must pay the highest minimum wage that applies to them.  So, employers in San Francisco must pay the $11.74 per hour rate mandated by the city.  If the employer does business just outside of San Francisco, then it must pay the present California minimum wage of $8 per hour.  If the employer moves its business to Wyoming, which has a minimum wage of $5.15 per hour, then it must pay its employees the federal minimum of $7.25 per hour.

Some minimum wage laws allow for certain types of businesses to either be exempt from the minimum wage rate or provide for a lower rate than the standard minimum hourly rate.  Typically, high city rates have exemptions and limitations built into them.

If you want more news about the national push to increase the minimum wage, keep an eye out for articles I post on Facebook (https://www.facebook.com/BackstromandHeinrichs) and for future blog posts here.

S. Ward Heinrichs, Esq.
BACKSTROM & HEINRICHS
Attorneys at Law
A Professional Corporation
4565 Ruffner Street, Suite 207
San Diego, CA 92111
(858) 292-0792
(858) 408-7543 (fax)

http://bestemploymentattorneysandiego.com/

http://twitter.com/#!/WardHeinrichs

www.facebook.com/BackstromandHeinrichs

http://www.linkedin.com/pub/ward-heinrichs/45/806/83b

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