Reminder: A Recap of the New Laws Effective January 1, 2012

December 26, 2011

Let me begin this last article by thanking you for supporting my Blog throughout the year! We are currently receiving over one- thousand hits per month from employers all over the country and are continuing to grow our outreach. Potts & Associates will offer some additional services and seminars throughout 2012 so stay tuned for those announcements along the way.

The following reminders are for laws that will be effective January 1, 2012, and only apply to California employers! These are only a recap. You can go into the archives and get more information if you need or go directly to the law as indicated next to the particular category.

Pregnancy Disability Leave (AB 299)

Employers are now prohibited from refusing to maintain and pay for group health insurance coverage for the duration of pregnancy disability leave, for up to four months in a twelve month period.

Organ and Bone Marrow Donor Leave (SB 272)

Employers must grant a leave of absence of up to thirty days in a twelve month period to an employee who is an organ donor program and up to five days in a twelve month period to an employee who is a bone marrow donor. The days for the leave are business days not to include weekends. Employers can condition the leave upon the employee’s use of any paid days off that they may have on the books.

Credit Reports (AB 22)

This particular law significantly restricts an employer’s ability to obtain credit reports for employment purposes. It generally permits employers that are seeking to fill only specific, identified exempt positions to obtain and use credit reports to screen applicants or current employees.

Credit reports also may be obtained for employees of financial institutions subject to Sections 6801-6809 of the U.S. Code.

Willful Misclassification of Independent Contractors (AB 459)

Although this is a California law please be reminded that the Feds are also cracking down in this area. This particular law now imposes a civil penalty of between $5,000 and $15,000 for EACH violation on a person or employer that willfully misclassifies an individual as an independent contractor. The penalty increases to between $10,000 and $25,000 for each violation if the person or employer has engaged in a pattern or practice of willful misclassification.

Wage Payment Detail (AB 469)

This change requires employers to provide nonexempt employees, at the time of hire, a written notice of eight different points of notification to the new hire (such as rate of pay, whether hourly, shift, day, week, piece commission, regular pay day etc.). Please go back to my archives for the exact requirements.

 

Use of E-Verify System (AB 1236)

This provision states that state agencies, cities and counties, cannot require private employers to use the Federal E-Verify System to confirm the legal immigrant status of workers they hire, except when required by Federal law or as a condition of receiving Federal funds.

Genetic Information (AB 559)

This new law amends the California Fair Employment & Housing Act (FEHA) to prohibit discrimination on the basis of genetic information.

Gender Expression (AB 887)

This law is also an amendment to FEHA to clarify that prohibited discrimination in employment and housing on the basis of sex or gender includes discrimination on the basis of a person’s gender identity and gender expression (includes a person’s gender-related appearance).

 

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Calculating Overtime for Non-Hourly Non-Exempt Employees, and Calculating Overtime on a Bonus

December 19, 2011

Calculating Overtime for Non-hourly Non-exempt Employees

California Labor Code Section 515(d) states that for the purposes of computing the overtime rate due to a nonexempt full-time salaried employee, the regularly hourly rate is generally 1/40th of the employee’s weekly salary. If the contracted hours are fewer than the legal maximum of 40 regular hours in one work -week, the contracted hours are used as the denominator.  All hours over the legal maximum regular hours in any one workweek or workday must be compensated at the resulting overtime rate.

Similarly, when earnings are determined on a piece work, commission, or some other non-hourly basis, the overtime pay due must be computed based on the average hourly rate. This is calculated by dividing the total pay for employment (except for certain exclusions) in any workweek by the total number of hours actually worked.

A group rate for piece workers is another acceptable method for calculating the regular rate of pay. Under this method, the total number of pieces produced by the group is divided by the number of people in the group; each worker is paid accordingly. The regular rate for each worker is determined by dividing the pay received by the number of hours worked. Keep in mind, the regular rate cannot be less than minimum wage.

Computing Overtime on a Bonus

Although discretionary bonuses are excludable when you compute the regular rate of pay, nondiscretionary bonuses are included.

For bonuses based on a percentage of production or some other formula, the overtime premium is half or all (for double-time hours) of the regular bonus rate. The regular bonus rate is calculated by dividing the bonus by the total hours worked (including overtime hours) during the period for which the bonus applies.

For example, if an employee receives a $200 bonus for a workweek in which he worked 50 hours, the regular bonus rate is $4.00 ($200 divided by 50). The employee would be entitled to an additional half of  the regular bonus rate ($2.00) for each time –and-one-half overtime hour worked and the full bonus rate ($4.00) for each double time hour, if any.

If the bonus is a flat sum (for example, $500.00 for continuing to the end of the season), the regular bonus rate is determined by dividing the bonus by the maximum legal regular hours worked during the period covered by the bonus. So, if an employee received $500.00 and worked 500 regular hours, the bonus regular rate is $1.00. She would be entitled to $1.50 overtime on the bonus for each time-and-one-half overtime worked and $2.00 overtime on the bonus for each double-time hour, if any.


Minimum Wage Goes Up (For Some) Effective January 1, 2012

December 12, 2011

MINIMUM WAGE FOR COMPUTER PROFESSIONALS

California’s Department of Industrial Relations has announced that the minimum pay required for computer professionals to qualify for overtime exemption in California is increasing effective January 1, 2012.  The increase is 2.5% higher than the current minimum pay rate and requires that these employees be paid at least $38.89 per hour, which translates to a monthly salary of $6,752.19 and an annual salary of $81,026.25.  Employers should note that these minimum pay thresholds are applicable to only to California computer professionals.  The minimum rate of pay under federal law is different (the hourly rate being $27.63 per hour).  Employers with exempt computer professionals in California should review their pay practices to ensure compliance with the increased pay requirements. 

California employers are cautioned that not all employees who work in the computer field qualify for overtime exemption, regardless of how much they are paid.  In order to qualify, these employees (in addition to being paid at least the minimum pay detailed above) must meet very specific duties tests, generally involving programming, software development, as opposed to installation, maintenance, repair, and the like. A description of these duties can be found on the California Department of Labor Standards Enforcement website.  The duties tests under California law are, again, somewhat different than those applied under the federal computer professional exemption.  As such, employers with California computer professionals who are or will be classified as exempt, should carefully review the duties and pay to be sure exempt classification is proper.   

San Francisco’s Minimum Wage Goes Up In January 2012  

San Francisco’s minimum wage, which currently is $9.92 per hour, is increasing to $10.24 per hour effective January 1, 2012.  This makes San Francisco the first city in the country with a minimum wage in excess of $10 per hour.  The minimum wage increase is tied to a new law passed by San Francisco voters in 2004 which automatically increases the city’s minimum wage in accordance with inflation.  Employers with employees who work more than two hours in a workweek inside San Francisco city limits should ensure their payroll practices are updated to reflect the new minimum wage.


Appellate Court Finds Supervisors Not Personally Liable

December 4, 2011

With veterans returning from the middle-east, employers need to be reminded that various laws prohibit discrimination against employees on account of military service.  One of these laws is California Military & Veterans Code Section 394.  This law prohibits employment discrimination against members of the armed forces because of their membership or service.  Recently, in a case of first impression, a California court addressed whether individual supervisors may be sued and held personally liable for discrimination under Section 394.  In Haligowski v. Superior Court (Pantuso), the plaintiff was a Lieutenant in the Navy and was called to active duty in Iraq during the course of his employment with defendants.  After returning from a 6 month tour of duty, plaintiff was informed his employment was terminated.  Unsurprisingly, plaintiff sued for discrimination.  He sued not only his employer, but also his immediate supervisors.  The individual supervisors asked the trial court to throw out the claims against them individually, but the trial court refused, holding that Section 394 allows for personal liability against individual supervisors.  The supervisors appealed.

On appeal, the California appellate court reversed, holding that Section 394 only allows for liability against an employer, not against individual supervisors.  The court reasoned that although Section 394 prohibits discrimination by any “person,” that does not necessarily mean that liability may be imposed against any “person.”  The court explained that California’s primary law prohibiting employment discrimination, FEHA, similarly prohibits discrimination by any person, yet it is well-established that only employers (not individual supervisors) may be held liable for discrimination under FEHA.  The court held that there was no reason to treat employment discrimination under Section 394 any differently.

To be clear, the court in no way addressed the propriety of the employee’s claims against the employer, much less held that the employer acted properly in terminating the employment relationship.  The court simply held that the employee would have to pursue his claims only against the employer and not against his individual supervisors. Whew, at last, this is some relief for supervisors but remember, this is only one aspect of not being held personally liable. Don’t get crazy on me!