California Employee Rights Advocate : California Labor Attorney & Lawyer : Southern CA Employment Law : Los Angeles, Orange County : United Employees Law Group

Starting January 1st all employers must comply with the California new wage theft protection act, Labor Code Section 2810.5. . Theft protection act sets out to clearly define how, when, and what employees shall be paid. The idea is alleviate any confusion or misunderstandings about the type of employment and benefits the employee will receive. Effective immediately all California employers regardless of company size and industry are required to give the following information to all of their employees regardless of full time part time or seasonal status.

1. Classification: exempt, non-exempt, commission, piece rate. In other words, how the employee will be paid, hourly, salary, commission only, days wage, piece rate. It’s important to note that if the employer is claiming that employee is exempt from overtime they must also cite the exemption that they feel the employee falls under.
2. How much the employee will earn: by the hour, overtime rates, annual salary, piece rate day rate.
3. When the employee will be paid: weekly, biweekly, bimonthly, monthly etc.
4. If applicable, allowances claimed as part of the wage, meals, housing etc.
5. Name of the employer or the DBA (doing business as) or any other names the employer uses to conduct business.
6. Mailing and Physical address of the employer main place of business.
7. Phone number to the main office
8. Workers compensation information: Name of insurance carrier, phone number, address

Moving forward Employers must give written notice to all newly hired employees as well. Also if any of the information above changes the employer has 7 days to furnish notice of change in writing to the employee, California Labor Code §226. Notice need not be provided to non-exempt employees who are both covered by a collective bargaining agreement and who earn at least 30% more than the California minimum wage per hour.

The Labor Commissioner will be publishing a notice template later this month for employers to use.

With new laws come new penalties, the Wage Theft Protection Act adds or increases existing civil and criminal penalties, in some instances allowing liquidated damages and attorneys' fees, and extends the applicable statute of limitation to three years.

Labor law is complex if you have any questions regarding your employment it is recommended that you contact a California labor law attorney who can help you understand your rights and in many cases will review your situation without charge.

If you have any questions about this article or our blog, feel free to call us at:

Long Beach – (562) 256-1047
Los Angeles – (213) 261-0229
San Francisco – (415) 200-0012 or (415) 230-2755
San Diego – (619) 342-1242 or (619) 272-2193

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Wage Theft Prevention Act of 2011

According to Section 2810.5 of AB 469, at the time of hire all employer must now inform, in writing, employees of rate of pay and the of how wages will be calculated. In other words: hourly, daily, piece rate, salary, commission or by some other method. If applicable the employees must also be informed of their overtime rate, allowances, the regular pay date, the name of the business or any other names the business operates under as well as the physical mailing address for the business. AB 469 also requires that any changes made to this information be given to the employees in writing within 7 days of the change. Not only does the existing law require employers to pay penalties and back wages for violating minimum wages laws it now criminalizes certain wage violations by providing that any employer who willfully violates specified wage orders, willfully fails to pay wages due, if convicted is guilty of a misdemeanor. It important to note that, the statute of limitation for collecting penalties under the Division of Labor Standards Enforcement ("DLSE") has increased from one to three years.

Commission Contracts will be required by 2013

By January 1, 2013 AB1396 will amend the labor code to require employers to have written contracts with all employees who will receive wages from commissions. This contract must also define how these commissions will be calculated and when they will be paid. This does not include bonuses or short term incentives. This should alleviate the guess work and should allow the employees the ability to track and determine, in advance, what their commission pay will be. AB1396 will be particularly helpful to employees that are classified as inside sales or outside sales people.

Wage Garnishment : Medical Debts are now Exempt

Currently the law requires employers to garnish employee’s wages up to the portion of the earnings the debtor proves is necessary to support himself or his family, for things like Child support payments, back taxes, credit card debt, and other debts can all be subjected to wage garnishment. AB 1388 adds an exemption for debt that is incurred "for the common necessaries of life furnished to the judgment debtor" or his or her family, including, e.g., hospital services and other medical debts.

Even though most of these new laws will take effect January of 2012 it is recommended you speak with an experience California labor law attorney as soon as possible if you have any questions or concerns about your employment situation.

If you have any questions about this article or our blog, feel free to call us at:

Long Beach – (562) 256-1047
Los Angeles – (213) 261-0229
San Francisco – (415) 200-0012 or (415) 230-2755
San Diego – (619) 342-1242 or (619) 272-2193

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ADT fired two commissioned salespeople because they filed a complaint with the Maryland Department of Labor claiming that they were owed overtime. In Randolph v. ADT Security Services, Inc., Judge Chasanow from the District Court of Maryland granted the plaintiffs and former ADT Security employees’ Motion for Summary Judgment as to liability against their former employer.

The complaint alleged a violation of the Fair Labor Standards Act (FLSA). During the DLLR proceedings the DLLR requested that the ADT employees produce alleged employer and client confidential information. ADT argued that the employees were lawfully terminated because they were not allowed to give out confidential information. And as such, the plaintiffs should not receive protection under the FLSA on the theory that confidential documents were included in the FLSA complaints.

To punish employees for complying with the DLLR’s instructions doesn’t seem fair. The court granted Summary Judgment in favor of the Plaintiffs, stating:

Perversely, ADT’s position would result in a situation wherein employees with the most supporting evidence would also face the greatest risk of dismissal. As a result, enforcement agencies would be less able to undertake early assessments of employees’ claims, as employees could not be expected to provide much evidence on their own (for fear of exposing themselves to termination). Employers would then have to face greater government intrusions into their business while the complaint was investigated; because of the lack of early information, these investigations would likely last longer. Meanwhile, employers would have an incentive to cull through every document attached to an FLSA complaint, looking for any violation of company policy in an effort to forestall expensive litigation.

More problematically, they could simply choose to impair the ability of employees to make claims at all by dubbing all possible supporting documentation “confidential.” Such a situation would grossly undermine enforcement of the FLSA, which hinges upon “information and complaints received from employees” (citation omitted). The FLSA anti-retaliation is about the free sharing of information

The court referred back to the definition of “complaint” and its use in standard civil litigation “embraces attached supporting documentation.” The court further ruled that cases in which the employees participate in an investigation, permits employees to disclose confidential information to investigators even when done unreasonably.

Finally the conclusion of the court:

ADT’s explicit admissions that Plaintiffs lost their jobs because of the filings with the DLLR mandate only one conclusion: ADT retaliated against Plaintiffs because they engaged in a protected activity. Summary judgment must therefore be granted for the Plaintiffs on count one of the complaint on the issue of liability.

There are three things you can take way for this case. One that retaliation laws would likely apply if you are fired for filing a complaint with the labor board or in the courts and two any information you have, proprietary or not may be used to prove your case. It’s important to save information that supports your claim for labor violations you may have suffered. If you are concerned that you may be owed unpaid wages for overtime it is advisable to contact a California labor law attorney to help you evaluate your rights.

If you have any questions about this article or our blog, feel free to call us at:
          Long Beach – (562) 256-1047
          Los Angeles – (213) 261-0229
          San Francisco – (415) 200-0012 or (415) 230-2755
          San Diego – (619) 342-1242 or (619) 272-2193 

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California labor law attorneys have recently received an extended explanation of “commission wages” from the opinion given by the California Second Appellate District court. This explanation related directly to employees that are classified as exempt from overtime under the commissioned salesperson exemption. In the case Areso v. CarMax, Inc., it was decided that CarMax’s commission plan of a flat rate per sale would be considered commission wages.

Essentially the plaintiff Areso was unsuccessful in the class action in which he was claiming misclassification as exempt from overtime under the commissioned salesperson exemption and owed overtime. California labor law attorneys for Areso argued that overtime was owed because CarMax’s commission plan did not meet the requirements as “commission wages” under Labor Code Section 204.1, which necessitates commissions to be “based proportionately on the amount or value” of the sale of the employer’s property or services.

California labor law attorneys for CarMax were pleased to hear the court found CarMax’s commission structure is a “performance-based incentive system and thus fairly understood to be a commission structure” due to the language that commissions can be founded on the “amount” rather than “value” of cars sold, interpreting “amount” to mean the number of cars sold. Furthermore, the court agreed with labor law attorneys for CarMax’s argument that prior decisions necessitate commissions to be base on “a percentage of the price of the product or service” (as first articulated in Keyes Motors, Inc. v. DLSE, 197 Cal.App.3d 557, 563 (1987)) as dicta as it related only to the part of the statutory language in Labor Code § 204.1 interpreting the “value” of the product or service.

In order for someone to be considered exempt under the commissioned salesperson exemption, Labor Code Section 204.1, the employee:
• must be involved principally in selling a product or service (not making a product or rendering a service)
• The amount of their compensation must be based proportionately on the amount or value of the product or service.

The Court opinion also interpret the word “amount” in the statute, and found that a flat payment for each car sold satisfies the statutory stipulation because the commissions are compensated based on the “amount” or number of cars sold. Further, paying a flat amount for each car is “proportionate” because it is a one-to-one proportion where the “compensation will rise and fall in direct proportion to the number of vehicles sold.”

Flat fees and proportionate percentages can be a little confusing if you are unsure whether or not you are classified as exempt correctly you should contact a California labor law attorney to examine your exemption status and determine if you are entitled to any back pay for overtime you may have worked.
 

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California labor law defines a discretionary bonus as follows:

“Discretionary bonuses or sums paid as gifts at a holiday or other special occasions, such as a reward for good service, which are not measured by or dependent upon hours worked, production or efficiency, are not included for purposes of determining the regular rate of pay.”

This seems pretty straight forward; right? However, the term discretionary is misleading because neither party ever truly has absolute discretion due to "implied covenant of good faith and fair dealing". All California employment situations are subject to "implied covenant of good faith and fair dealing", whether you have an actual employment contract outlining the terms of your employment or if you are an at will employee. This doctrine monitors parties in contracts where one party has the right to exercise broad discretion that affects the other party's rights. California labor law states when that party exercises their discretion it generally must be done "fairly".

For instance, let’s say that there is an investment banker that is usually paid an annual bonus of around $100,000. Then one year the employer decides to give the employee a bonus of only $20,000 even though the employee had one of his most productive years and was out performing his peers. Come to find out, the employer was going to lay off this employee in a few weeks and had decided to distribute the remainder of his bonus to the other employees.

This is a perfect example of where the implied covenant applies to California employment law cases. If an employee performs satisfactory work during the year with the anticipation that he would be given a bonus similar to his coworkers and to what he traditionally received in previous years, the employer does not exercise discretion in "good faith" by paying him thousands of dollars less than they do to similar employees.

This might be an extreme case for most employees, but the same concepts can be applied to any bonus and even Christmas bonuses in certain circumstances. If you feel you have not received a fair bonus please contact a California labor law attorney to review your case.
 

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If California labor law’s dictate you should be classified as a non-exempt employee,  in which you are entitled to overtime pay at 1 ½ to 2 times your straight time rate. And you are promised bonuses for reaching certain goals or you are entitled to commissions, then according to California labor law’s a special calculation must be made that increases your regular hourly overtime rate.   California wage law provides that when a non-exempt employee works hours in excess of eight in any workday or 40 in any workweek, employers must compensate the employee at 1 ½ to 2 times the employee’s regular rate of pay depending on the total number of hours worked. The “regular rate of pay” comprises more than just the employee’s hourly rate of pay it includes many different kinds of monetary remuneration an employee earns for his labor, including commissions and bonuses. 29 U.S.C. 207(e). 

When calculating the regular rate of pay, employers must follow specific rules depending on the type of income in question. Where an employee earns commissions or bonuses, the Department of Labor Standards Enforcement (“DLSE”)  uses the following rule to incorporate the additional compensation into the employee’s regular rate of pay:

“Compute the regular rate by dividing the total earnings for the week, including earnings during overtime hours, by the total hours worked during the week, including the overtime hours. For each overtime hour worked, the employee is entitled to an additional one-half the regular rate for hours requiring time and one-half and to an additional full rate for hours requiring double time.” DLSE Manual, Section 49.2.1.2 

For example, one type of incentive compensation may provide additional compensation if the store performs at a certain level. A company’s bonus plan could provide that a bonus will be paid to employees for increasing sales of specified products, increase profitability, improve customer handling and enhance quality of service. It could be referred to as an Incentive Program that requires employees to reach attendance goals to be eligible. The plan may also specify the payout schedule: eligible employees receive both quarterly and year end payouts. Another type of incentive may also pay certain hourly employees additional compensation, or a commission, for the sale of various products.

Employers must include these nondiscretionary bonuses along with other earnings to determine an employee’s regular rate on which overtime pay is computed. A bonus is “nondiscretionary” if the employer makes a promise to pay it based on the requirements being met. This includes bonuses designed to induce the employees to work more steadily, more rapidly or more efficiently, to remain with the employer, to meet attendance goals, individual or group production bonuses and bonuses for quality and accuracy of work. 29 C.F.R. 778.211(c). 

In any pay period in which a bonus has been earned the employer must recalculate the rate of pay upon which overtime for that pay period is calculated. The employer must add together all compensation earned for the workweek and then divide the compensation by the number of hours worked.


These Bonuses and Commissions Must be Timely Paid

Generally speaking, commissions and bonuses are due and payable after the employee did what was required and the amounts could reasonably be computed. Commissions are considered earned only after the happening of that event designated in the agreement with the employee so long as the event is reasonably tied to the calculation. DLSE Opinion Letter, 2002.12.09-2. 

If for example a commission is earned when the sale is made then that is the date from which all calculations are made.

Labor Code section 204 designates the time frame in which an employer must pay its employees. Wages earned by any person in any employment are due and payable twice during each calendar month, on days designated in advance by the employer as the regular paydays.

Section 204(b)(1) allows an employer additional time to pay commissions in the next pay period but only if it also itemizes the subsequent wage statement by including detailed information regarding the wages that it could not pay on time. Each wage component must be separately listed and specifically list the dates for which it is applicable.

The amount that an employee is short changed may not sound like a lot of money at first, when just looking at just a couple of pay periods. But the amount increases well into the tens of thousands of dollars when a claim includes up to four years of back wages plus interest and plus penalties.

Now you know.

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