Labor Code Tips

Defense-side employment lawyers?or businesses that employ even one person in the Golden State?likely have stories to tell about someone tripping over the statutory minefield better known as California employment law. Here is a sampling of issues that commonly trigger liability, plus tips on how to avoid problems.

Employee Reimbursement

Employees are entitled to be reimbursed for business use of personal items if necessary to perform the duties of their job. (Cal. Labor Code § 2802.)

Employers should be reimbursing employees for business use of their personal electronic devices (for example, cell phones used for business). They should also know that employees are entitled to attorneys fees incurred in their attempts to enforce their rights under this law.

Personnel Records

Employers are required to produce their employees' personnel records for inspection within 30 days of a written request. (Cal. Labor Code § 1198.5.) This rule applies to both current and former employees. Recent statutory amendments require that employers also must provide a copy of the requested personnel records.

Waiting-Time Penalties

If the employer terminates the employment relationship, the employee is entitled to be paid immediately for all wages due. If the employee quits without giving advance notice, payment must be made within 72 hours. (Cal. Labor Code § 203.) If payment is not made, the employee may be entitled to a penalty of up to 30 days' pay. Note that the term "wages" includes accrued vacation time.

If an employer owes even a single day of vacation to a highly paid employee and fails to pay it upon termination, the liability adds up quickly. Consider someone who earns $150,000 per year. One day of unpaid vacation could potentially cost more than $17,000 in waiting-time penalties. (Here's the math: $150,000/year = daily rate of $576.92; $576.92 x 30 days = $17,307.60.)

Overtime

Employees are entitled to daily and weekly pay for overtime unless they qualify under California's exemptions from overtime laws. (Cal. Labor Code §§ 510, 515 [exemptions include administrative and managerial employees, among others].) The standard daily overtime calculation is one-and-one-half times the employee's regular rate of pay for any work performed beyond eight hours, and up to and including twelve hours in a single workday; the rate increases to double time for all hours worked in excess of twelve hours in any workday.

Premium pay also is due for work performed on the seventh consecutive workday in a workweek: one-and-one-half times the regular rate of pay for the first eight hours, and double time for all hours worked in excess of that. For any hours worked in excess of 40 hours per workweek that were not already paid at an overtime premium, the overtime rate is one-and-one-half times the employee's regular rate of pay.

Meal and Rest Breaks

Employers must provide nonexempt employees with a meal period of at least 30 minutes if they work more than six hours in a day. If the employees work ten or more hours, the employer may have to provide a second meal period. In addition, a ten-minute rest period is required for every four hours worked, or major fraction thereof. (Cal. Labor Code §§ 512, 516.) Violations incur penalties based on the employee's regular hourly rate of pay.

A conservative compliance plan for the average eight-hours-per-day worker is to schedule and enforce approximately four hours of work, with a ten-minute rest period after two hours, then a one-hour meal period and four additional hours of work, with a ten-minute rest period after two hours. If the employee has to work overtime, do not have the overtime exceed two additional hours, otherwise a second meal period will be triggered. This second meal period can be waived only if the total hours worked in the day do not exceed twelve hours; both the employee and employer agree; and the employee takes the first meal period of that day.

Commissions

Employers must put commission agreements in writing, and the agreements must specify the method by which the commissions will be computed and paid. The employee must get a signed copy, and the employer must get a written receipt confirming the employee actually received the copy. (Cal. Labor Code § 2751.) California employers would be wise to self-audit their files and determine if their commission agreements comply with the code requirements. If not, they should prepare new, compliant agreements and secure the required written confirmation of receipt from each commission-paid employee.

Notice of Changes

Employers must give written notice to employees when certain changes are made in the employment relationship. Key triggers are changes in the rate of pay, including overtime rates, and changes in the identity of the employer or workers compensation insurance carrier. (Cal. Labor Code § 2810.5.) This is another area in which a self-audit may be wise. The California Division of Labor Standards Enforcement has prepared a "Notice to Employee" form to help employers comply with this section of the code (available online at www.dir.ca.gov). Assuming the person receiving the notice is an at-will employee, it should include a reminder to the effect that nothing in the notice changes the at-will employment relationship.

Employee Handbook

California employers are wise to prepare, distribute, and follow an employee handbook. But a few words of caution are in order: First, make sure the handbook is up to date. Second, review it every year with counsel to make sure it remains up to date. And third, adhere to it. If you don't, it may not be worth the paper it's printed on.

This article serves merely as a quick overview. When employers administer legal rules that govern the workplace, they should consult with knowledgeable employment counsel. Each employment case is unique and requires detailed analysis. The key is to seek counsel before disputes arise, not after.

Michelle Lee Flores is a member of the labor and employment department of Cozen O'Connor in Los Angeles.

---