It is common knowledge throughout California workplaces that non-exempt employees are entitled to overtime if they work more than eight hours in a day or over forty hours in a week, and that employees earn “time and a half” or “double time” for overtime hours worked. However, some employers run into problems in determining the rate of pay which is ultimately multiplied by 1.5 or doubled. The rule in California is that the regular rate of pay must include all remuneration from the employer.
A common example is the restaurant employee. Suppose a restaurant employee receives a free meal during her shift. If her regular rate of pay is $15 per hour, then she would be paid $120 for an eight hour shift. However, her regular rate of pay must include the cost of the free meal (the lesser of the actual cost to the employer or the fair market value). If each meal costs the employer $10, then the employee’s total daily compensation is actually $130, or $16.25 per hour. This employee’s overtime rate would be $24.38, not the $22.50 that might be expected for a $15 per hour employee.
In this example, failure to properly calculate the employee’s regular rate of pay would result in the employee being short-changed $1.88 for each overtime hour worked. Such a shortfall could result in liability for unpaid wages, penalties under Labor Code section 203, interest and attorney’s fees.
These shortfalls are common in situations dealing with bonuses, incentives, mandatory gratuities at restaurants, free or subsidized lodging, or free trips or prizes for hitting sales targets. If any of these incentives are offered, or if anything of value is offered to an hourly employee beyond base wages, be sure to include that value when calculating the employee’s regular rate of pay.
Tuesday, February 23, 2010
The proper policing of company computers
In virtually every line of work, computers are a necessity. It has become difficult to even imagine a workplace without a computer. Yet whether computers are a “necessity” or a “necessary evil” varies from business to business. Thus, many employers create policies governing the use of office computers and access to the Internet.
A California case offers some guidance. TBG Insurance fired an employee for accessing pornographic websites on his work computer. The company requested a court order requiring the employee to turn over a computer provided by the company for home use. The company wanted to see whether the employee used the home computer for similar purposes. The employee first wanted to delete personal information he had placed on the computer, claiming such information was subject to privacy laws.
The court rejected the employee’s claim, stating that the employee signed an agreement to be bound by the company’s computer policy, which provided that the computers were provided for business purposes and not for personal use. The policy also prohibited computer use for obscene purposes and allowed the company to monitor such use. The court said the employee had no reasonable expectation of privacy (TGB v. Superior Court of Los Angeles (2002) 96 Cal.App.4th 443).
A computer/Internet policy should make it clear that company computers are to be used for business purposes, and that employees have no expectation of privacy regarding communications sent and received via the company’s email system or access to the Internet. Many companies also block potential time-wasting websites such as Facebook or Myspace. These safeguards can ensure that computers increase efficiency rather than decrease it.
A California case offers some guidance. TBG Insurance fired an employee for accessing pornographic websites on his work computer. The company requested a court order requiring the employee to turn over a computer provided by the company for home use. The company wanted to see whether the employee used the home computer for similar purposes. The employee first wanted to delete personal information he had placed on the computer, claiming such information was subject to privacy laws.
The court rejected the employee’s claim, stating that the employee signed an agreement to be bound by the company’s computer policy, which provided that the computers were provided for business purposes and not for personal use. The policy also prohibited computer use for obscene purposes and allowed the company to monitor such use. The court said the employee had no reasonable expectation of privacy (TGB v. Superior Court of Los Angeles (2002) 96 Cal.App.4th 443).
A computer/Internet policy should make it clear that company computers are to be used for business purposes, and that employees have no expectation of privacy regarding communications sent and received via the company’s email system or access to the Internet. Many companies also block potential time-wasting websites such as Facebook or Myspace. These safeguards can ensure that computers increase efficiency rather than decrease it.
Regulation of employees’ off-duty activities
Employers of course have the power to restrict certain activities of their employees at the workplace. But what about restricting activities of employees after the work day has ended? An employer can surely mandate that an employee may not smoke at his or her desk. But what about prohibiting an employee from smoking anywhere? What if the employer is motivated by a desire to keep the employee healthy, or to reduce company health insurance costs?
According to California law, employers of any size cannot discriminate based on lawful off-duty conduct of employees. Employees cannot be fired, threatened with firing, or in any way disciplined against because of lawful off-duty activities (Labor Code sections 98(k) and 98.6). Common examples are employers that discriminate against employees who drink or smoke, date other employees, or “moonlight” with second jobs.
In order for an outside activity to be protected, it must be (1) lawful and (2) performed outside working hours. Many employer conflict-of-interest policies – i.e. policies that attempt to curb employee “moonlighting” – face problems with this rule. A conflict-of-interest policy is only valid if the employee’s second job would (1) actually and directly conflict with the employer’s essential business-related interests, and (2) cause a substantial disruption of business operations. Thus, it is imperative that employers have well-drafted conflict-of-interest and trade secret policies.
So under California law, even when motivated by proper reasons, employers must use extreme caution when attempting to regulate lawful, off-duty activities of their employees.
According to California law, employers of any size cannot discriminate based on lawful off-duty conduct of employees. Employees cannot be fired, threatened with firing, or in any way disciplined against because of lawful off-duty activities (Labor Code sections 98(k) and 98.6). Common examples are employers that discriminate against employees who drink or smoke, date other employees, or “moonlight” with second jobs.
In order for an outside activity to be protected, it must be (1) lawful and (2) performed outside working hours. Many employer conflict-of-interest policies – i.e. policies that attempt to curb employee “moonlighting” – face problems with this rule. A conflict-of-interest policy is only valid if the employee’s second job would (1) actually and directly conflict with the employer’s essential business-related interests, and (2) cause a substantial disruption of business operations. Thus, it is imperative that employers have well-drafted conflict-of-interest and trade secret policies.
So under California law, even when motivated by proper reasons, employers must use extreme caution when attempting to regulate lawful, off-duty activities of their employees.
Random Drug Testing of Current Employees
Last month’s article discussed drug testing of job applicants. This article addresses random drug testing of current employees. “Random” drug testing programs are those where an employer informs employees that they may have to submit to drug testing at any time during their employment, for any reason, or for no reason at all.
Cases upholding random drug testing are limited to those involving employees in narrowly-defined, specific professions in highly regulated industries or where positions are critical to public safety or national security. The rationale is that employees in these fields have less of an expectation of privacy given the nature of their employment. Random drug testing has been upheld for truck drivers, pipeline workers, aviation employees, and correctional officers having contact with prisoners.
The justification needed to randomly test employees is as follows: the intrusion into the employee’s privacy must be justified by a compelling interest. In one case example, where random drug testing was not allowed, the court held that safety was not a compelling reason for testing a computer operator for a railroad company in a non-safety sensitive position, and that her firing for refusing to consent to the test was a breach of the employer’s covenant of good faith and fair dealing.
Unless the employee fits into these narrowly-defined exceptions, random drug testing is not allowed in California. So even though random drug testing is often the most effective program to detect and resolve drug abuse issues at the workplace, chances are that a random drug testing policy at your business would not be legal under California law.
Cases upholding random drug testing are limited to those involving employees in narrowly-defined, specific professions in highly regulated industries or where positions are critical to public safety or national security. The rationale is that employees in these fields have less of an expectation of privacy given the nature of their employment. Random drug testing has been upheld for truck drivers, pipeline workers, aviation employees, and correctional officers having contact with prisoners.
The justification needed to randomly test employees is as follows: the intrusion into the employee’s privacy must be justified by a compelling interest. In one case example, where random drug testing was not allowed, the court held that safety was not a compelling reason for testing a computer operator for a railroad company in a non-safety sensitive position, and that her firing for refusing to consent to the test was a breach of the employer’s covenant of good faith and fair dealing.
Unless the employee fits into these narrowly-defined exceptions, random drug testing is not allowed in California. So even though random drug testing is often the most effective program to detect and resolve drug abuse issues at the workplace, chances are that a random drug testing policy at your business would not be legal under California law.
Drug Testing of Job Applicants
No employer wants to conduct a drug or alcohol test of an employee. And while such instances are rare, there are times when a business has no choice but to do so. This article will outline some important requirements pertaining to drug tests of job applicants. Next month’s article will discuss drug testing of current employees.
In a landmark case, the California Supreme Court refused to allow the City of Glendale to drug test current employees applying for promotions; however, the court did allow testing of job applicants. The court held that because the testing program was administered in a reasonable fashion as part of a lawful pre-employment medical examination required of every job applicant, it was permissible as to job applicants. The court held that the employer had a significantly greater interest in testing job applicants than current employees seeking a promotion (Loder v. City of Glendate (1997) 14 Cal.4th 846). This ruling holds true even where a job applicant delays submitting to the drug or alcohol test until after beginning work (Pilkington Barnes Hind. v. Sup. Ct. (1998) 66 Cal.App.4th 28, 32).
Be advised that employers may run into problems if only certain job applicants are tested and not others. Selective testing may bring complaints of discrimination. As evidenced by the ruling from Loder case cited above, the safest thing is to either test all applicants or none.
In conclusion, the current cases show that the drug testing of a job applicant generally will be upheld. Yet as will be discussed in more detail next month, the testing of current employees is held to a much higher standard.
In a landmark case, the California Supreme Court refused to allow the City of Glendale to drug test current employees applying for promotions; however, the court did allow testing of job applicants. The court held that because the testing program was administered in a reasonable fashion as part of a lawful pre-employment medical examination required of every job applicant, it was permissible as to job applicants. The court held that the employer had a significantly greater interest in testing job applicants than current employees seeking a promotion (Loder v. City of Glendate (1997) 14 Cal.4th 846). This ruling holds true even where a job applicant delays submitting to the drug or alcohol test until after beginning work (Pilkington Barnes Hind. v. Sup. Ct. (1998) 66 Cal.App.4th 28, 32).
Be advised that employers may run into problems if only certain job applicants are tested and not others. Selective testing may bring complaints of discrimination. As evidenced by the ruling from Loder case cited above, the safest thing is to either test all applicants or none.
In conclusion, the current cases show that the drug testing of a job applicant generally will be upheld. Yet as will be discussed in more detail next month, the testing of current employees is held to a much higher standard.
Thursday, September 24, 2009
Don’t get burned by California’s Heat Illness Prevention Regulations
Whether they work in the fields, at a construction site, or out on the local streets, many Visalia employees work outdoors. Employers may not be aware that there are certain rules that apply to outdoor employees. If you have employees that work outside, then your business is covered by the California Heat Illness Prevention Regulations.
The law defines “outdoor work” broadly. Open areas like agricultural fields, storage yards, and constructions sites clearly constitute outdoor workplaces. Yet outdoor areas adjacent to buildings, e.g., loading docks, are also considered “outdoors” if an employee spends a significant amount of time working in them.
So assuming your business is covered by these regulations, what are you required to do? Employers must have an effective Injury and Illness Prevention Program (IIPP) which provides first aid and emergency response. All IIPPs must include effective procedures for hazard identification, correction, investigation of employee injuries, and communication with employees about health and safety matters.
Employers must also ensure that employees have adequate drinking water. For employees working in the heat, a minimum of one quart of drinking water per hour must be available to each employee to replace water lost by exertion in the heat.
In addition, the heat illness prevention standard requires employers to provide employees access to an area with shade. Employers must always have the capability to provide shade promptly if it is requested by an employee. The Division of Occupational Safety and Health has mandated that “adequate access to shade includes having shade actually present when the presence of shade is necessary to protect employees from heat illness.”
Non-agricultural employers may provide cooling measures other than shade, if they can demonstrate that the alternative is at least as effective as shade. Such cooling measures include other options such as fans and misting devices where the employer can demonstrate that they are at least as effective as shade at allowing the body to cool.
While these regulations are somewhat technical, and do not apply to all businesses, many Visalia businesses are required to comply with these rules because their employees must work outdoors. Following these guidelines will ensure a safe, productive workplace for outdoor employees, and will eliminate problems down the road.
The law defines “outdoor work” broadly. Open areas like agricultural fields, storage yards, and constructions sites clearly constitute outdoor workplaces. Yet outdoor areas adjacent to buildings, e.g., loading docks, are also considered “outdoors” if an employee spends a significant amount of time working in them.
So assuming your business is covered by these regulations, what are you required to do? Employers must have an effective Injury and Illness Prevention Program (IIPP) which provides first aid and emergency response. All IIPPs must include effective procedures for hazard identification, correction, investigation of employee injuries, and communication with employees about health and safety matters.
Employers must also ensure that employees have adequate drinking water. For employees working in the heat, a minimum of one quart of drinking water per hour must be available to each employee to replace water lost by exertion in the heat.
In addition, the heat illness prevention standard requires employers to provide employees access to an area with shade. Employers must always have the capability to provide shade promptly if it is requested by an employee. The Division of Occupational Safety and Health has mandated that “adequate access to shade includes having shade actually present when the presence of shade is necessary to protect employees from heat illness.”
Non-agricultural employers may provide cooling measures other than shade, if they can demonstrate that the alternative is at least as effective as shade. Such cooling measures include other options such as fans and misting devices where the employer can demonstrate that they are at least as effective as shade at allowing the body to cool.
While these regulations are somewhat technical, and do not apply to all businesses, many Visalia businesses are required to comply with these rules because their employees must work outdoors. Following these guidelines will ensure a safe, productive workplace for outdoor employees, and will eliminate problems down the road.
Thursday, July 30, 2009
What you need to know about reimbursing employee expenses
From time to time, virtually all employees are asked to dip into their own pockets for legitimate business needs. This may take form of filling up the employee’s car with gas after a long drive to meet with a client, or buying office supplies at Staples. How many of you reading this article have asked an employee to pick up a birthday cake or flowers for another employee? So when employees do use their own funds for business needs, what is the obligation of the employer?
According to Labor Code section 2802, “An employer shall indemnify his or her employee for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties, or of his or her obedience to the directions of the employer …” As alluded to above, this usually takes the form of mileage, travel, and dining expenses.
How do I reimburse for mileage?
A year ago gas prices were through the roof. Eight months ago gas prices were lower than they had been in years. Fortunately, employers have a guide when reimbursing employers for their mileage. The Internal Revenue Service (IRS) issues a standard mileage rate that fluctuates based on gas and other travel prices. The current IRS standard mileage rate is 55 cents per mile for business miles driven, 24 cents per mile driven for medical or moving purposes, and 14 cents per mile driven in service of charitable organizations. Here’s how the IRS has recently taken gas prices into account when setting the standard rate: the rate was 50.5 cents at the start of 2008, then climbed to 58.5 cents in the second half of 2008, and then came down again to the current rate of 55 cents per mile.
While the rate usually adjusts each January – as evidenced by the multiple changes in 2008 – employers need to be on the lookout for changes in the IRS mileage rate to ensure that employees are being properly reimbursed.
When do I have to reimburse my employees?
Expense reimbursements are not considered wages. As such, wage laws, such as those regulating the time and place of payment, do not apply to expense reimbursements. Therefore, employers are free to make expense reimbursements on any reasonable schedule. Many employers choose to reimburse employees once a month.
Are expenses due immediately on termination?
There are specific time frames in which employers are required to pay employee wages when the employment relationship is terminated. When an employee is terminated, all wages (including vacation) are due immediately. When an employee quits and gives more than 72 hours notice, all wages are due on the last day of work. When an employee quits and gives fewer than 72 hours notice, all wages are due within 72 hours after notice is given.
Expenses work differently, however. The deadlines described above that apply to final wages do not apply to reimbursement of expenses. Reimbursements can be made at the normal time for payment – and as outlined above, employers are free to create a reasonable schedule for reimbursement of expenses.
In conclusion, the rules regarding expenses are straightforward, and few problems arise in this regard. Nevertheless, employers can save themselves problems down the road by making sure employee expenses are handled properly.
According to Labor Code section 2802, “An employer shall indemnify his or her employee for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties, or of his or her obedience to the directions of the employer …” As alluded to above, this usually takes the form of mileage, travel, and dining expenses.
How do I reimburse for mileage?
A year ago gas prices were through the roof. Eight months ago gas prices were lower than they had been in years. Fortunately, employers have a guide when reimbursing employers for their mileage. The Internal Revenue Service (IRS) issues a standard mileage rate that fluctuates based on gas and other travel prices. The current IRS standard mileage rate is 55 cents per mile for business miles driven, 24 cents per mile driven for medical or moving purposes, and 14 cents per mile driven in service of charitable organizations. Here’s how the IRS has recently taken gas prices into account when setting the standard rate: the rate was 50.5 cents at the start of 2008, then climbed to 58.5 cents in the second half of 2008, and then came down again to the current rate of 55 cents per mile.
While the rate usually adjusts each January – as evidenced by the multiple changes in 2008 – employers need to be on the lookout for changes in the IRS mileage rate to ensure that employees are being properly reimbursed.
When do I have to reimburse my employees?
Expense reimbursements are not considered wages. As such, wage laws, such as those regulating the time and place of payment, do not apply to expense reimbursements. Therefore, employers are free to make expense reimbursements on any reasonable schedule. Many employers choose to reimburse employees once a month.
Are expenses due immediately on termination?
There are specific time frames in which employers are required to pay employee wages when the employment relationship is terminated. When an employee is terminated, all wages (including vacation) are due immediately. When an employee quits and gives more than 72 hours notice, all wages are due on the last day of work. When an employee quits and gives fewer than 72 hours notice, all wages are due within 72 hours after notice is given.
Expenses work differently, however. The deadlines described above that apply to final wages do not apply to reimbursement of expenses. Reimbursements can be made at the normal time for payment – and as outlined above, employers are free to create a reasonable schedule for reimbursement of expenses.
In conclusion, the rules regarding expenses are straightforward, and few problems arise in this regard. Nevertheless, employers can save themselves problems down the road by making sure employee expenses are handled properly.
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