Are You Providing “Suitable” Seating for Your Employees?

June 27, 2011

The California Labor Code has an obscure provision referring to an order issued by the Industrial Welfare Commission.  It states:

“All working employees shall provide suitable seats when the nature of the work reasonably permits the use of seats. When employees are not engaged in the duties of their employment and the nature of the work requires standing, an adequate number of suitable seats shall be placed in reasonable proximity to the work area and the employees shall be permitted to use such seats when it does not interfere with the performance of their duties.”

On the surface this may not appear to be a big deal especially depending on the type of work environment that you may have. However, be advised that this issue is on the rise from when I wrote about it last year. There have been two appellate court decisions that have attorneys who represent employees racing to court. The penalties for a first violation can be as much as $100.00 per employee per payroll period and double that for future violations.

My concern is the use of such words as “adequate number,” “suitable seating,” and “reasonable proximity.” As usual, this type of regulation does not clearly spell out the expectation so it leaves the door open to litigation. In addition, it creates another internal issue for employers to have to deal with frivolous complaints from employees who may state that they require a “special chair” due to some physical issue that they may be experiencing (or not!).

This issue may not have an impact on every industry but it certainly can create a problem for manufacturers with an assembly line, retailers, automobile dealers, warehouse environments, and the hospitality industry.

Employers must understand that a number of these issues that launch these class action lawsuits can be avoided by simply reading the industrial welfare commission orders (IWC) and making sure their managers are following it to the letter. Don’t just rely on those laminated posters that you get every year. They do not cover California Wage & Hour laws which are the basis for these lawsuits. If you do not have the IWC orders (they are industry specific) posted you can find it on line on the California government website and simply print it out.

U.S. DOL “Approved” Formula For Paying Overtime

June 20, 2011

Automobile dealerships must now require service advisors to keep accurate daily time records, including time in, time out to lunch and back, and time out at the end of the day.  Regardless of whether the service advisor is paid on a commission basis only or base plus commission, the service advisor will be eligible for overtime pay for work in excess of 40 hours per week and, in California, for work in excess of 8 hours per day.  Each service advisor’s “regular rate of pay” will be calculated on salary (if applicable) plus commission. The California Labor Commissioner calculates the regular rate as 1/40th of this amount.  Overtime pay will be calculated at 1.5 times the regular rate times the number of hours over 40 or 8, but not both.

The formula below has been sent to the U.S. Department of Labor. The investigator who reviewed it told me that “unofficially” the formula is correct. Now, understand that the DOl is the federal agency that determined that service advisors are not exempt from overtime. I have not seen this from California’s Department of Labor Standards Enforcement however it is easy to assume that they will not be far behind. With this in mind please understand that this formula is being provided as our opinion as to how service advisors should be paid based upon the decision/opinion of the U.S. Department of Labor. Using this formula that pays service advisors overtime is based on that premise. In my opinion using it should be in compliance with any issue ultimately raised by California (or any other state). Simply stated it is always easier to lean toward the benefit of the employee under these circumstances. Does it cost more now, yes, but it will be less costly than facing either the labor board or litigation.

As a final note employers may be making schedule changes in an effort to hold down the costs of the overtime. Employees are not going to be happy. They are going to have to understand that these changes are not your doing but by that of government agencies that are in charge of such matters.

Service Advisor’s Formula


1.         Paid Commissions Only


The standard measure begins based on a 40 hour work week. The service advisor

            earned $2,000 in  commissions for the week. You have to determine the hourly

            rate by taking 1/40th of the commissions earned. Once you have determined the

            hourly rate you multiply that amount by 1.5 to determine the overtime rate.


 $2,000/40=$50 (regular hourly rate for that week) X 1.5=$75

$75 = overtime rate

2.         Base salary plus commissions


            The standard measure begins based on a 40 hour work week. The service advisor

has a base of $1,600 per month ($400.00 per week) and earned $2,000 in  commissions for the week. You have to determine the hourly rate by taking 1/40th of the base rate (for the week) and of the commissions earned. Once you have determined the hourly rate you multiply that amount by 1.5 to determine the overtime rate.



$400 (weekly rate)+$2,000(weekly commissions)/40=$60(regular hourly rate for that week) X 1.5=$90


$90 = overtime rate

I just wanted to note that the proposed formula is completely discretionary. As stated above, California has not made any decisions in this area. We have received a number of calls over the past two months or so with concerns about “how to calculate overtime for service advisors?” This formula is being provided in the event that you choose to go in this direction. I do not know of any decision by a California Court that specifically states that employers have to pay overtime to service writers/advisors.

Department of Labor Now Provides Employees With A TimeKeeping Application For Their Cellphones

June 13, 2011

Here we go again! Now the U.S. Department of Labor has jumped into the deep end of the pool by trying to help employees keep their own timekeeping record and have launched a “timesheet” application for smartphones that allows employees to record their hours worked, break times, and overtime.  The application also allows users to make notes regarding their work, view a summary of work hours and projected gross pay, and email the information as an attachment.  Additionally, the application provides users with access to the DOL’s information regarding wage laws and DOL contact information.  

The DOL stated that the intent behind the application is to provide workers with a tool that they can use to obtain wages they believe they are owed.  Secretary of Labor Hilda L. Solis stated that, “This app will help empower workers to understand and stand up for their rights when employers have denied their hard-earned pay.”  The DOL further stated that the information in the application may be “invaluable” during an investigation by the Wage and Hour Division.

That information may also impact private litigation.  As part of discovery the parties may access the information kept in this application as evidence of the employee’s claims.  Employers may also explore in discovery whether the employee’s smartphone recorded the person’s location at the time they allege that they worked.  That information may allow employers to confirm whether the person was at the job-site when they recorded time worked.  Additionally, this move by the DOL stresses the importance of drafting and training managers to enforce clear timekeeping policies that direct employees to record all the time that they work.

In fairness to the DOL I understand why they came up with this but the concept is problematic and now opens a further door to litigation. Employees tracking their own time without the employer’s oversight will create headaches for the employer. Employees can now submit any hours that they want and argue that their records are correct and that they are being cheated. In addition, the attorneys representing these individuals will have the faked records. When they request the payroll records from the employer they will use any inconsistency as the basis for a lawsuit. In addition, and as noted above, they can use this same application to make notes regarding their work. Those notes do not have to be accurate yet when reviewed by either the DOL or an attorney it will once again create a nightmare of litigation.

As I have stated repeatedly over the past few years employers are going to have to make sure their timekeeping records are accurate, always have employees sign off on any changes made by the supervisor (on a daily basis), and have your disciplinary documentation in place for those who fail to follow the proper procedures.

Supreme Court Says States May Require Use of E-Verify

June 6, 2011

OnMay 26, 2011, the U.S. Supreme Court held thatArizonamay suspend and terminate business licenses of employers who are found to willfully employ workers who are not authorized to work in theU.S.  The Court also found that the state may require E-Verify as a prerequisite to doing business in the state. 

In the 5-3 ruling, the U.S. Supreme Court majority relied on a portion of the 1986 Immigration Reform and Control Act (IRCA) which expressly provided that states and cities could impose criminal or civil sanctions for immigration violations of employers through licensing laws. 

The Court also noted that while E-Verify is optional at a national level, the federal statute was silent as to the states’ role and therefore it did not preclude states from imposing a mandatory scheme.  The U.S. Supreme Court decision certainly clears the way forArizonato begin aggressive enforcement if it so chooses and opens the door to other states to followArizona.

It should be noted that it would be far easier forArizonato enforce mandatory E-Verify than it would be to determine if an employer is willfully hiring unauthorized workers.  The latter is a complex matter that evenU.S.Immigration & Customs Enforcement (ICE) finds challenging.  We don’t foresee the State ofArizonaor its municipalities becoming I-9 audit experts.  Furthermore, E-Verify is only to be used for new hires unless the employer is a federal contractor.

The most likely impact of this decision forCaliforniabusinesses is that it is going to put pressure on Congress to roll out with mandatory E-Verify nationwide.  Otherwise, Congress will likely find that states will continue to create a patch-work of inconsistent rules.  Rep. Lamar Smith (R-Texas and Chairman of the House Judiciary Committee) has indicated that he plans to introduce such a bill in the near future. Californiaemployers may want to enroll in E-Verify soon so that they are ahead of the curve and avoid having to scramble to implement it when Congress makes it mandatory. 

Critics have complained that E-Verify is not accurate.  However, most of those criticisms are out-dated.  E-Verify has made enormous strides over the last 3 years.  CIS has an army of software developers working full time to continually improve the system.  The latest figures show that 99% of all inquiries are now confirmed within minutes.  Of the remaining 1%, most are for people that are not work authorized.  Of the few that are, the Social Security Administration is more than willing to keep a case open for several months in order to make sure that they do not cause a U.S. worker to be wrongly terminated based on immigration status.  The eight-day tentative confirmation period for E-Verify can now be easily tolled by the federal government when the facts warrant it.

Finally, for those clients who are currently not using E-Verify it is clear that the times are changing and at some point the use of E-Verify will be required.