Wage Law

Pending Bills - SB 1539, Amended, Withdrawn from Committee

A bill seeking to make it more difficult for employees to get meal breaks, or to sue, individually or collectively, for meal break wages made it out of committee on April 9, but was substantially amended on April 15 and set for hearing today. However, that hearing has been withdrawn.

SB 1539 (Margett) initially sought to specify that "providing" an employee with a meal break meant "giving the employee an opportunity to take" a meal break.

This bill would revise the statutory requirements for the provision of meal periods to specify that the requirements apply only to employees subject to the meal period provisions of an order of the IWC. The statutory requirements for providing the meal periods would be revised to specify that a meal period based on working more than 5 hours in a workday is required to be provided before the employee completes 6 hours of work, unless the existing waiver provision is invoked. The waiver provision for the 2nd meal period would be changed to provide an exception for different provisions within IWC wage orders in effect as of January 1, 2008, and to permit the employer and employee to agree to waive either the first or the 2nd meal period if the employee otherwise is entitled to 2 meal periods. The bill also would specify conditions under which on-duty meal periods are permitted rather than meal periods in which the employee is relieved of all duty. The meal period provisions of a valid collective bargaining agreement would be required to be implemented for covered employees rather than the statutory requirements. The bill would require that orders of the IWC be interpreted in a manner consistent with this section, and would require the Department of Industrial Relations to amend and republish specified IWC wage orders to be consistent with the revised meal period requirements. The bill also would declare that all those provisions are declaratory and not amendatory of existing law.

With the latest amendment, the bill looks quite different:

An act to amend Section 512 of the Labor Code, relating to employment.

LEGISLATIVE COUNSEL'S DIGEST

SB 1539, as amended, Calderon. Meal periods.

Existing law requires an employer to provide an employee who works more than 5 hours in a workday with a meal period of not less than 30 minutes, unless the employee works no more than 6 hours in a workday and the meal period is waived by mutual consent. An employer also is required to provide an employee who works more than 10 hours in a workday with a second meal period of not less than 30 minutes, unless the employee works no more than 12 hours, the first meal period was not waived, and the second meal period is waived by mutual consent. The Industrial Welfare Commission (IWC) of the Department of Industrial Relations adopts and amends wage orders that, among other things, specify how meal periods are required to be provided to covered employees within various industries, including the procedures for providing employees with on-duty meal periods.

This bill would declare the intent of the Legislature to enact
legislation to address issues related to meal periods in employment.

Instead of a massive overhaul of Labor Code section 512, the text of the bill now just reads:

THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

SECTION 1.   It is the intent of the Legislature to enact legislation to address issues related to meal periods in employment.

That's it for now. Senator Margett's other meal period bill, SB 1192, was withdrawn on April 8. That bill would have reduced the statute of limitations on meal and rest period pay to one year, and would have allowed employers to force their employees to wait as long as six hours to take a meal break.

Filibuster Defeats Ledbetter Equal Pay Bill

On Wednesday, a Senate filibuster blocked legislation to overturn the Supreme Court holding in Ledbetter v. Goodyear Tire & Rubber Co. (2007) 550 U.S. __. Hillary Rodham Clinton and Barack Obama each took time away from the campaign trail to speak in favor of the bill, but John McCain stayed away, expressing satisfaction over the bill's failure.

"I am all in favor of pay equity for women, but this kind of legislation, as is typical of what's being proposed by my friends on the other side of the aisle, opens us up to lawsuits for all kinds of problems. This is government playing a much, much greater role in the business of a private enterprise system."

In other words, he likes the equal pay laws, as long as few people actually get relief from the courts if the law is disregarded. Only six Republican senators supported the bill, which would have passed by a majority vote of 56-42, but could not be put to a vote without the 60 votes needed to end the filibuster. Had the filibuster failed, the White House vowed to veto the bill.

SB 1283 Defeated

Senate Bill 1283, which would have allowed employers to delay payment of final wages to terminated employees to as late as 24 hours following the start of the next business day after the termination, has been voted down in the California Senate. "Unfortunately, many California businesses are currently forced into the practice of immediately providing compensation when an employee is discharged for any cause," said a disappointed bill sponser Senator Harman, "for many discharged employees, the requirement on businesses creates an opportunity to take advantage of the employer by joining with other former employees to file a class action lawsuit, thereby unnecessarily clogging our already burdened court system with frivolous claims." We've never heard of even a single lawsuit, much less a class action, arising out of a single day's delay in the payment of final wages, so it sounded to us like a strong-handed solution to a problem that was merely theoretical. We think the failure of SB 1283 will have neither an effect on business nor an effect on any pending or future cases. The lesson for employers: fire at will, but don't send your discharged employee home empty-handed.

Ledbetter Legislation Update

Today is Fair Pay Day, which marks the day of the year a typical woman’s earnings catch up with a typical man’s earnings from the previous year. Despite the enactment of the Equal Pay Act and the Civil Rights Act, women still make only 77 cents, on average, for every dollar a man makes. This year, Fair Pay Day coincides with Senate debate on a bill involving equal pay and the governing statute of limitations on equal pay claims.

On May 29, 2007, the Supreme Court of the United States ruled that Lilly Ledbetter, a 19-year employee of Goodyear Tire and Rubber Company, could not sue for wage discrimination because she had not filed a claim within 180 days of Goodyear’s decision to pay her unfairly. Ledbetter v. Goodyear Tire & Rubber Co. (2007) 550 U.S. __. The decision has already had a profound effect upon a large number of pending cases.

Within a few weeks of the decision, Congressman George Miller (D-Calif.) and 93 cosponsors introduced a bill in the House of Representatives to overturn the Ledbetter holding. H.R. 2831, The Fair Pay Restoration Act of 2007, passed the House by a margin of 225 to 119. Senator Edward Kennedy and 43 other Senators cosponsored a companion bill in the Senate, the Fair Pay Restoration Act (S. 1843). That bill will be debated on the Senate floor today.

The official summary states as follows:

Fair Pay Restoration Act - Amends the Civil Rights Act of 1964 to declare that an unlawful employment practice occurs when a discriminatory compensation decision or other practice is adopted, when an individual becomes subject to the decision or practice, or when an individual is affected by application of the decision or practice, including each time compensation is paid. Accrues liability, and allows an aggrieved person to obtain relief including recovery of back pay for up to two years preceding the filing of the charge, where the unlawful employment practice that has occurred during the charge filing period is similar or related to a practice that occurred outside the charge filing period.

Applies certain amendments made by this Act to claims of compensation discrimination under the Americans with Disabilities Act of 1990 and the Rehabilitation Act of 1973.

Amends the Age Discrimination in Employment Act of 1967 to declare that an unlawful practice occurs when a discriminatory compensation decision or other practice is adopted, when a person becomes subject to the decision or other practice, or when a person is affected by the decision or practice, including each time compensation is paid.

Senator Feinstein has indicated her support for the bill. Senator Boxer is one of the cosponsors.

Study Shows Courts Far More Reluctant to Vacate Employment Arbitrations if Employer Wins

According to a new study published by a professor at the University of Illinois Law Center, and discussed in the National Law Journal today, courts are more commonly vacating or partially vacating arbitration awards for employees, and rarely disturbing awards that favor employers.

"When courts vacate many awards that rule for employees, the individual must either return to a lengthy and costly 'do over' arbitration -- or worse, be stuck with a useless award, and no other recourse ... [Court review is becoming] "an insurance program that protects employers from costly awards."

Arbitration reform could be a significant issue in 2009 if the Democrats win the White House in November.

Why Class Certification Orders Are Not Immediately Appealable

This is double-hearsay, but attorney H. Scott Leviant, who authors the legal blog The Complex Litigator, published a Forum piece in last week's Daily Journal, entitled "Cutting Class". We can't link to the article for non-subscribers, but there's a nice summary of the article over at the UCL Practitioner. The article explains why A.B. 1905, which would have allowed defendants to immediately appeal orders granting class certification, appropriately died in committee last month.

Labor Code § 226 Changes Now In Effect

Pursuant to California Labor Code § 226, California employers are required to provide certain information on employees' pay stubs, which information may include the employees' social security numbers. However, effective January 1, 2008, employers are only permitted to print the last four digits of an employee's social security number, or an employee identification number other than a social security number, on the paystubs.

Labor Code § 226(a) provides that:

Every employer shall, semimonthly or at the time of each payment of wages, furnish each of his or her employees, either as a detachable part of the check, draft, or voucher paying the employee's wages, or separately when wages are paid by personal check or cash, an accurate itemized statement in writing showing

(1) gross wages earned,

(2) total hours worked by the employee, except for any employee whose compensation is solely based on a salary and who is exempt from payment of overtime under subdivision (a) of Section 515 or any applicable order of the Industrial Welfare Commission,

(3) the number of piece-rate units earned and any applicable piece rate if the employee is paid on a piece-rate basis,

(4) all deductions, provided that all deductions made on written orders of the employee may be aggregated and shown as one item,

(5) net wages earned,

(6) the inclusive dates of the period for which the employee is paid,

(7) the name of the employee (and the last four digits of his or her social security number or an employee identification number other than a social security number may be shown on the itemized statement),

(8) the name and address of the legal entity that is the employer, and

(9) all applicable hourly rates in effect during the pay period and the corresponding number of hours worked at each hourly rate by the employee.

Under Labor Code § 226(e), an employee suffering injury as a result of a knowing and intentional failure by an employer to comply is entitled to recover the greater of all actual damages or fifty dollars ($50) for the initial pay period in which a violation occurs and one hundred dollars ($100) per employee for each violation in a subsequent pay period, not exceeding an aggregate penalty of four thousand dollars ($4,000), and is entitled to an award of costs and reasonable attorney's fees. Because these penalties can accrue at a clip of four thousand dollars per employee, plus attorney's fees, such errors can create substantial exposure to employers.

The statute requires strict compliance. In Cicairos v. Summit Logistics, Inc. (2005) 133 Cal.App.4th 949, the Court of Appeal held that Section 226 must be followed exactly, concluding that paystubs identifying the employer in that case as "Summit" rather than "Summit Logistics, Inc." violated the statute. We warned our clients and readers about the change in the social security number requirements three years ago, but another reminder can't hurt.

IRS Raises Standard Mileage Rate to 50.5 Cents per Mile

The Internal Revenue Service has issued new standard mileage rates for 2008, used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes. Beginning January 1, the standard mileage rates for the use of a car (including vans, pickups or panel trucks) will be:

• 50.5 cents per mile for business miles driven;
• 19 cents per mile driven for medical or moving purposes; and
• 14 cents per mile driven in service of charitable organizations.

The new rate for business miles compares to a rate of 48.5 cents per mile for 2007. The new rate for medical and moving purposes compares to 20 cents in 2007. The rate for miles driven in service of charitable organizations has remained the same. A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS), after claiming a Section 179 deduction for that vehicle, for any vehicle used for hire or for more than four vehicles used simultaneously. Revenue Procedure 2007-70 contains additional information on these standard mileage rates.

In California, the DLSE presumes that employers who reimburse mileage at the IRS rate have correctly reimbursed their employees for expenses incurred in the use of their cars and complied with Labor Code § 2802. However, under the recent Gattuso decision, the IRS standard mileage rate may not conclusively establish compliance with Section 2802. If an employee can show that his or her actual expenses exceed 50.5 cents per mile, an employer may have to pay the higher amount.

New Lower Rates in Effect For Computer Software Professionals

Effective January 1, 2008, the minimum hourly rate for exempt computer software professionals in California decreased from $49.77 per hour to $36 per hour. Under California Labor Code § 515.5, the computer professional overtime exemption in California applies only to employees who meet a duties test and a minimum hourly pay rate, as established each year by the California Division of Labor Statistics. For salaried workers, this equates to an annualized salary of not less than $74,880 (down from last year's $103,521.60), plus $36 for each hour worked in excess of 40 in a work week. The Division of Labor Statistics and Research will adjust the rate annually for inflation.

New Minimum Wage in Effect

Effective January 1, 2008, the minimum wage increased from $7.50 per hour to $8.00 per hour. The increased minimum wage increases the minimum salary that must be paid to exempt executive, administrative and professional employees, who must be paid no less than twice the minimum wage if they are to be denied overtime pay for work in excess of eight hours per day or forty hours per week. Thus, an employee who was paid an annual salary of $31,200 might have been exempt (assuming that the duties test was also met) last month, but now must make at least $33,280 annually to remain exempt from overtime pay.