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

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 timeframe 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.

• Email This
• Print
• Comments
• Trackbacks

• Email This
• Print
• Comments
• Trackbacks

On July 6, 2010, the Second U.S. Circuit Court of Appeals held that sales representatives for Novartis Pharmaceuticals Corporation  are entitled to overtime pay under the Fair Labor Standards Act (FLSA).  Many California employees of Novartis claimed that they were wrongfully denied overtime pay between March 23, 2000 and April 7, 2007. The representatives, who worked nine-hour days, made routine calls and visits to physicians inquiring as to whether they would prescribe the company’s products to patients. Under the FLSA, employees must be paid overtime for more than 40 hours worked per week, but there are exemptions for “outside” salespersons  and “administrative” personnel.

The Court ruled that neither exemption applies to pharmaceutical reps because

(1) representatives only promote a product and do not make “sales”
(2) their activities are so tightly controlled by the company that they are not allowed to exercise independent judgment.

According to Secretary of Labor Hilda L. Solis,  an employee who can merely promote a drug and provide samples, has not in fact made a “sale.” Judge Kearse  agreed, stating that an employee who cannot “even obtain from the physician a binding agreement to prescribe it” has not made a sale.  
Novartis contended that its representatives are exempt from overtime under the “administrative” exemption, because they are free to determine when they will visit a particular doctor and how best to earn their support, whether it be dinner, a sporting event, or some other activity. The Court rejected this argument because it failed to establish a freedom of discretion. It particularly noted that Novartis representatives have no control over the company’s marketing strategy. Furthermore, the company determines the physicians to be visited, the drugs to be recommended, and the promotional events to be held. 

The ruling in this case is important because it is the first federal appellate decision addressing the outside sales and administrative exemptions as it applies to the pharmaceutical industry.  
It also underlines the main purpose of California overtime law, which is to evenly divide work among employees. 
If you are a pharmaceutical representative and have questions regarding your entitlement to California overtime pay, take action and call a knowledgeable California labor law attorney.

• Email This
• Print
• Comments
• Trackbacks

California underwriters may indeed be owed overtime pay. This job title and the duties of underwriters, at least at one bank, have been examined in a recently decided case called Davis v. J.P. Morgan. In this case the court in the second circuit decided that underwriters approved loans under established company guidelines and their duties are for the most part non exempt duties and therefore these employees are entitled to overtime pay.

Under Federal regulations, if an underwriter works in a bona fide administrative capacity, if they perform work "directly related to management policies or general business operations" and "customarily and regularly exercises discretion and independent judgment, then they are likely classified as an exempt employee." This is different than an employee who may work in a "'production' or, in a retail or service establishment, 'sales' work." 

In Davis v. J.P. Morgan, underwriters at Chase were primarily responsible for selling loan products under management's guidelines. As the Second Circuit put it, "Underwriters were given a loan application and followed procedures specified in the Credit Guide in order to produce a yes or no decision."

California Underwriters being misclassified as exempt employees might be common issue for all underwriters in this profession in California. If the California courts follow this ruling and others like it, thousands of California underwriters could be entitled to overtime pay. Some of the largest institutions employing underwriters in California are Citigroup (NYSE: C), J.P. Morgan (NYSE:JPM)   Bank of America (NYSE:BAC) and Wells Fargo (NYSE:WFC)

Underwriters in California, if owed overtime pay, may collect up to 4 years of back pay under the liberal California overtime pay laws.

If you are a California underwriter and would like to find out if you are entitled to overtime pay, it is wise to contact a California labor law attorney.
 

• Email This
• Print
• Comments
• Trackbacks

Despite a wave of class action lawsuits, California employers continue to find ways to deny their workers overtime pay. Under California law, all employees are entitled to overtime pay unless they are considered “exempt.” Exempt employees are typically professionals, administrators, or executives whose jobs require among other things, a high degree of independent judgment. They must earn at least two times the minimum wage (approximately $28,000 per year) and more than fifty percent of their work must consist of non-exempt duties such as clerical duties, customer service, or working along specialized technical lines. A common strategy for employers is to misclassify employees as managers or assistant managers in order to avoid paying overtime; however, it is the employee’s activity and not their job title that determines whether overtime is due. Unlike federal law that focuses on the “primary duty” an employee is expected to perform, California law is based on what work the employee “engages in” or actually performs. For example, if a “manager” in an automobile company spends more than half of their time working on the line – the same activities performed by non-exempt employees – that manager may be entitled to overtime pay for all time in excess of 8 hours per day or 40 hours per week.

Many times, an effective way to combat such tactics by employers is for an employee to file a class action lawsuit. If one individual files a lawsuit and prevails, the amount the employer pays will likely not be enough to change the employer’s wrongful practices. Most employers conduct a cost-benefit analysis. Typically, it is cheaper for them to account for paying one or two employees in a lawsuit than paying all employees overtime pay. On the other hand, if one worker brings a lawsuit on behalf of all similarly situated workers, the amount potentially owed by the employer will be significantly more substantial and thus give them an incentive to comply with the law. Furthermore, an employee who takes the initiative to file a class action will typically be awarded more money than those workers who sat idly by and did nothing. Many class actions for overtime pay are successful because employers do not keep a record of exempt employees’ hours or the activities they engage in on a daily basis. Even better, in California, a single class representative may initiate a California class action lawsuit.

In addition to “misclassification,” some employers will pay overtime but not at the required one and a half times the employee’s regular rate of pay. Other typical class action lawsuits include claims for missed meal breaks and rest breaks, failure to pay for business miles or travel time to/from different business locations, paying bonuses but not paying overtime, making employees pay for their uniforms, paying employees with a check that requires a fee to cash, and not paying for mandatory company meetings.

If you believe you are owed overtime or other pay, you could be awarded damages in a class action lawsuit. Contact a knowledgeable California labor law attorney to learn about your rights and receive a complete evaluation of your situation.
 

• Email This
• Print
• Comments
• Trackbacks

As heavy unemployment takes it toll on California workers, what many employees may not realize is that they may be entitled to substantial sums of unclaimed overtime plus interest from past employers.

This is essentially money an employee worked long hours to earn but through error or oversight was never paid and is still collectable.

The labor laws in California are the most advanced in the country and are frequently misunderstood and misapplied by both large and small companies. It is fair to say that California law is much more protective than other State and Federal labor laws.

For this reason most employees have no idea that they have been grossly underpaid and can recover these lost wages.

It’s not too late to file a claim for back pay or unpaid reimbursable expenses if it occurred anytime during the last 3 years and likely in the last 4 years for claims which are likely covered under the California Business and Professions Code 17200.

This is very good news for employees who have been deprived of overtime pay from employers and should provide welcome financial relief in these challenging economic times.

Here are a few simple rules for you to consider as a first step in determining if you may be entitled to overtime pay:

It is not an employee’s title that determines if overtime must be paid. It is the type of work actually done as well as the amount of time spent on the various tasks.

It is the employer who must keep detailed records and who must prove that the employee was paid according to law. If the employer has failed to keep these records then the employee is entitled to be paid his overtime based on reasonable estimates.

There are also numerous special rules that apply such as for sales persons and brokers as well as highly trained employees. For example, engineers with advanced degrees or skilled investigators are more than likely not entitled to be paid overtime.

You definitely should not assume that you are not entitled to overtime pay because your employer told you that your job is exempt. It pays to get a professional opinion.

Strategy:

1. List all of the jobs you worked at for the past 4 years. Remember you may be barred from filing a claim if you do not file your case timely.
2. Assemble a pay stub and job description for each job and performance evaluations, if any.
3. Talk to a California labor law attorney to find out if you are entitled to overtime pay.
 

• Email This
• Print
• Comments
• Trackbacks

 It is not uncommon for employees to become discouraged or even hopeless when it comes to proving that overtime pay is due. Since in many cases, employers do not keep time records or the employee is misclassified; i.e. told they are salaried (exempt) and not entitled to overtime pay.

First, the employee must understand that pursuant to Nordquist v. McGraw-Hill Broadcasting Company (1995) 32 Cal.App.4th 555, 562, EVERY EMPLOYEE  IS ENTITLED TO CALIFORNIA OVERTIME PAY unless they fall under an exemption; ie. administrative exemption, executive exemption, professional exemption, salesperson exemption,  or computer software exemption, or another wage order preventing them from receiving overtime pay. The employer bears the burden of proof and it is the employer’s responsibility to prove the employee is not entitled to overtime pay.

The second important principle to understand is that California employers, not employees, must carry the burden of time keeping for all non exempt (employees entitled to overtime pay). For example, Anderson v. Mt. Clemens Pottery Co., (1945) 328 U.S. 680,  supports this assertion. In the event the employer did not keep time records, the courts will rely on the reasonable testimony of the employee.

 That said, should the employer produce a witness or other documentation that refutes the employee’s testimony, the burden of proving overtime, reverts back to the employee. This is where execution of the “Smoking Gun” strategy below is critical.

STRATEGY:

It is critical to immediately begin gathering information if you have an overtime pay claim.

1. Witnesses. Gather witnesses that can testify to the duties you performed and the hours you worked. Your California labor law attorney may wish to get them to sign a declaration if possible.

2. Electronic footprints. Time clock punch ins and outs, if accurate are the easiest to show time worked. When unavailable, obtain computer logins that show work start and stop times.  Also, a garage pass, suite key, register key, on site security camera tape may show time worked. Your California labor law attorney can subpoena all of this information.

3. Phone and electronic communications. Your phone bill, cell phone bill, home computer, pda or office computer, are invaluable sources of showing time worked outside of normal working hours.

4. Vendors and outside associates. When all else fails, get declarations from security personnel, and vendors who witnessed you working early or staying late.

5. Memos, handbooks and performance evaluations. Assemble memos or check in the employee handbook to see if it reveals an employer's attitude towards overtime work; i.e. Memos that make statements such as: "Stay until all work is done" or "do whatever it takes." While this may not be enough to prove your overtime case, this information can help paint a picture of the employer's attitude towards overtime to a judge or jury. Also, performance evaluations sometimes praise an employee for working excessive hours.

In addition to proving your case in court, if necessary, in many instances the gathering of these “smoking guns” may help to bring your case to a faster settlement without going to trial.

• Email This
• Print
• Comments
• Trackbacks