4 Wage and Hour Challenges for California Employers

A legal perspective on human resources idiosyncrasies in the Golden State

By Mishell Parreno Taylor and Deidra A. Nguyen August 22, 2017
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This is the second article in a three-part series about California-specific workplace compliance issues. Part One focused on four leave-law idiosyncrasies.

Wage and hour compliance in California can be complicated, particularly in light of the ever-changing landscape. On Jan. 1, 2017, alone, employers faced approximately 30 new or amended state or local labor and employment requirements—many of which focused on wage and hour compliance.

Below are just a few areas for businesses to be mindful of if they have employees working in California.

[SHRM members-only toolkit: Complying with California Wage Payment and Hours of Work Laws]

1. Daily Overtime

While the federal Fair Labor Standards Act requires overtime to be paid at one and one-half times a nonexempt employee's regular rate of pay for all hours worked beyond 40 in a workweek, the Golden State takes it one step further.

Employers in California must also pay nonexempt workers one and one-half times their regular rate for all hours worked over eight in a day.

In practical terms, this means that an employee who works less than 40 hours in a week may still be entitled to overtime if he or she works more than eight hours in a given day. The good news is that the law does not require employers to pay both daily and weekly overtime when doing so would result in paying overtime on hours that are already being paid at an overtime premium.

It is important to be mindful that California daily overtime requirements may be applicable to employees who work in California even on a temporary basis. Furthermore, employers should note that they must pay double time in some circumstances.

2. Rest Breaks

Under California law, an employer must "authorize and permit" employees to take a 10-minute rest break for each four hours or "major fraction thereof" worked. The following table illustrates what this means based on hours worked:

 

Number of Rest Periods per Hours Worked
Hours Worked Number of Breaks
Less than 3.5 hours0
3.5 to 6 hours1
6 to 10 hours2
10 to 14 hours3

The good news is that if an employee's workday is less than three and a half hours, employers are not required to provide a paid rest break. Another piece of good news is that a critical wage and hour decision (Brinker v. Superior Court), rendered over five years ago, brought clarity to what is required of a California employer when it comes to rest break obligations.

As confirmed by the court in Brinker, a California employer only has to provide its eligible employees with the required rest breaks and does not have to force employees to take them.

Failure to comply can be costly. An employer that doesn't provide an employee with a timely rest period will face a penalty of one hour of pay for each day the break was not offered.

3. Alternative Workweek Schedules

The alternative workweek schedule is a tool, common in manufacturing industries, that provides employers some reprieve from daily overtime requirements while imposing very specific and unusual procedural requirements.

Nonexempt employees in a pre-existing, identifiable work unit or group may elect to work a defined schedule that differs from the standard schedule of eight hours per day, five days per week without receiving daily overtime.

For example, employees may elect to work a four-day schedule of 10 hours each. While such a schedule would ordinarily require payment of two hours of daily overtime for each day of the schedule, a properly adopted alternative workweek schedule obviates the requirement to pay daily overtime.

To properly adopt an alternative workweek schedule, the employer must:

  • Select an identifiable group or unit in the workplace that will work the alternative workweek schedule (e.g., a shift, department or facility).
  • Disclose to employees within the affected group or unit how the alternative workweek would impact employees' working conditions, including their wages, benefits and hours.
  • Conduct in-person meetings with affected employees to allow employees to ask questions about the proposed alternative workweek schedule.
  • Conduct an election—at least 14 days after the meeting—by secret ballot, during which affected employees can vote on whether to adopt the proposed alternative workweek schedule.

If at least two-thirds of affected employees vote in favor of the alternative workweek schedule, the employer may require employees to begin working the new schedule no sooner than 30 days after the election and must report the results of the election to the California Division of Labor Statistics and Research.

Although alternative workweek schedules are a useful tool because they eliminate the need for daily overtime, they greatly limit scheduling flexibility and impose costly repercussions for work outside of the defined schedule.

4. Fair Scheduling

Fair scheduling, also called predictable scheduling, represents a burgeoning area of the law that—like many employment laws—started in San Francisco and is systematically taking root across California (and in other states, too).

In November 2014, San Francisco passed two ordinances imposing scheduling requirements on private employers. The cities of San Jose and Emeryville followed suit, passing fair-scheduling laws that took effect earlier this year.

Outside of California, New York City and Seattle have passed fair-scheduling laws and Oregon just enacted the first statewide law.

Although the laws differ in each jurisdiction, they generally embrace one or more of the following requirements:

  • A good-faith estimate of the employee's anticipated work schedule prior to or at the commencement of employment.
  • Employees' right to request input into their work schedules.
  • The right to rest between work shifts.
  • Advance notice of the work schedule.
  • Compensation for schedule changes.
  • Offers of work to existing employees before hiring externally.

Employers should note that some of these laws apply to large retail and hospitality employers while others have a broader reach.

California's ever-evolving wage and hour laws, and the accompanying penalties for even minor violations, highlight the importance of periodically reviewing and possibly updating handbooks and policies on wage and hour practices. Additionally, training a workforce on an employer's updated policies and how to properly partner with human resources on compliance-related matters are key components of successful compliance.

Up next in our three-part series will be a discussion on the expansive and highly regulated area of anti-discrimination laws in California.  

Mishell Parreno Taylor and Deidra A. Nguyen are attorneys with Littler in San Diego. 

 

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