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California Minimum Wage Laws

Federal minimum wage law is governed by the Fair Labor Standards Act (FLSA). The current federal minimum wage rate is $7.25 per hour for nonexempt employees. California law complements federal law and, in some cases, prescribes more stringent or additional requirements that employers must follow. Whenever employers are subject to both state and federal laws, the law most favorable to the employee will apply.

The Division of Labor Standards Enforcement (DLSE), part of the California Department of Industrial Relations, enforces and investigates minimum wage violation claims.

MINIMUM WAGE RATE
Effective Jan. 1, 2018, the minimum wage rate in California is $11 per hour for employers with 26 or more employees and $10.50 per hour for employers with 25 or fewer employees.
“Employee wages” are the entire amount of compensation an employee receives for his or her labor or services. Wages can be fixed or based on time, task, piece, commission or other method.

Minimum wage rate increases will take place every year until the minimum wage rate reaches $15 per hour by 2022. After the rates described below are implemented, the state will adjust the minimum wage rate annually to reflect the rising cost of inflation.

California law allows the governor to temporarily suspend the minimum wage rate increase schedule if the state’s economic condition does not support an increase. Under a temporary suspension, the implementation schedule would be delayed by one year. However, the governor may not implement a temporary suspension more than twice.

MEALS AND LODGING CREDITS
If the employee voluntarily agrees in writing, employers may generally include in employee wages part of the cost of meals and lodging they provide.
The adjacent table provides the maximum amount employers may credit for meals and lodging. Special rules exist for sheepherders and employees of organized camps.
• Sheepherder wages cannot be offset by meal and lodging credits; and
• Organized camps may deduct the entire value of meals and lodging from the salary of a student-employee, camp counselor or program counselor.
Refer to the California wage orders for more information on industry-specific meal and lodging credits.

TIPPED EMPLOYEES
In California, employers must pay tipped employees a wage rate equal to or greater than the state’s minimum wage rate. Employers may not deduct a tip credit from their employees’ wages. Tip payments include any tip, gratuity, money or other gift a patron gives an employee over and above the actual amount of the goods, food, drink, items or services the patron received from that business.

Employers cannot enter into contracts with their employers to override tipped employee regulations.

SUBMINIMUM WAGE RATES

California law allows disabled workers, apprentices, learners, student-employees, camp counselors and program counselors to receive wage rates below the minimum state rate. In certain cases, a license may be required for a subminimum wage rate to apply. When a license is required, the DLSE may set the terms and conditions of employment. Licenses may be revoked if the employer violates any term or condition of employment set by the license.

DISABLED WORKERS

Employers that obtain a special license issued by the DLSE may pay disabled workers a wage rate below the state’s minimum wage rate. Employers must generally obtain a separate license for each disabled employee. These licenses are valid for up to one year, and must be renewed on a yearly basis.

Nonprofit employers, including sheltered workshops and rehabilitation facilities, may receive a general license to employ disabled employees at subminimum wage rates, instead of individual licenses for each employee. Employers may be required to renew these licenses every year or on a more frequent basis.

APPRENTICES AND LEARNERS

The DLSE may also issue special licenses authorizing employers to pay subminimum wage rates as low as 85 percent of the state’s minimum wage rate to employees during their first 160 hours of employment in occupations in which they have no previous similar or related experience.

ORGANIZED CAMPS

Employers operating an organized camp can pay their student-employees, camp counselors and program counselors a minimum wage rate equal to 85 percent of the state minimum wage rate. These employers can also deduct the entire value of meals and lodging they provide to these employees.

MINIMUM WAGE RATE EXEMPTIONS

California’s minimum wage rate requirements do not apply to certain occupations and industries. Separate specific minimum wage rate and payment requirements, described in a series of minimum wage orders, apply for these employees.

Other exceptions to California’s minimum wage rate requirements include individuals who are closely related to their employer (parent, spouse or child) and outside sales personnel.

NOTICE AND POSTINGS

Employers are required to post and maintain updated information on the state’s minimum wage rate. The Industrial Welfare Commission (IWC) has provided a model poster that employers can use.

Employers covered by one of California’s industry-specific wage orders must also display a copy of the applicable wage order. These wage orders are available on the IWC’s website.

Business necessity

Business necessity is an overriding legitimate business purpose. Business necessity does not exist when the employee can demonstrate that the employer could have implemented or used an existing alternative practice that would avoid a wage differential while serving the same business purpose.

PROHIBITED WAGE DISCRIMINATION

In general, the California Equal Pay Law prohibits employers from discriminating on the basis of sex in the payment of wages.

Subject to some limited exceptions, female and male employees are entitled to equal pay for substantially similar work. Substantially similar work is determined by evaluating the level of skill, effort, responsibility and performance under similar working conditions.

California’s Equal Pay Law allows employers to pay different wages for employees of opposite sex when the wages are based on:
• A seniority system;
• A merit system;
• A system that measures earnings by quantity or quality of production; or
• A differential based on any bona fide factor other than sex.

PENALTIES

Criminal, civil and administrative penalties may apply for violations of California’s minimum wage laws.

CRIMINAL PENALTIES

Employers that violate California’s minimum wage laws commit a misdemeanor, punishable by a fine of at least $100, imprisonment for at least 30 days or both a fine and imprisonment. Employers that violate tipped employee regulations also commit a misdemeanor, punishable by a fine of up to $1,000, imprisonment for up to 60 days or both.

CIVIL PENALTIES

Employers that pay wages below the state minimum wage rate or that violate California’s equal pay laws are subject to civil lawsuits, and could be ordered to pay:
• The difference between what an employee’s wages should have been and what they actually were (plus interest);
• Liquidated damages (in an amount equal to the wage difference plus interest); and
• Court costs and reasonable attorneys’ fees.

Employers may avoid paying liquidated damages if they can prove that their actions were in good faith.

Employee lawsuits must be filed within two years of when the violation takes place (or within three years, for willful violations). In the case of any wilful violation, the DLSE can request and obtain injunctions against any further violations.

The identity of any employee that files a complaint for wage discrimination with the DLSE will remain confidential during an investigation and will not be disclosed until the validity of the claim is established.

ADMINISTRATIVE PENALTIES

In addition to the civil penalties described above, the DLSE may issue citations for any employer that violates the state’s minimum wage laws. Cited employers may be subject to fines as follows:
$100 per underpaid employee for each pay period in which the employee is underpaid, for a first offense; and
$250 per underpaid employee for each pay period in which the employee is underpaid, for a second or subsequent violation.

Employers can appeal these fines by requesting a hearing within 15 days of receiving the citation.

MORE INFORMATION
Contact Warren G. Bender Co. for more information on wage payment and work hour laws in California.

Filed under: HR,Property & Casualty — Jillian Bender-Cormier @ 11:21 pm April 10, 2018


3 Questions to Ask When Addressing Sexual Harassment at Your Business

It’s always been important to protect your business and employees from sexual harassment, but recent high-profile cases show the importance of re-examining this topic at your business. Social movements such as the “Me Too” campaign have drawn attention to sexual harassment in the workplace, resulting in a growing number of misconduct allegations. These allegations can result in a wide variety of claims and lead to serious financial and reputational damage.

Insurance carriers, courts and regulatory agencies will begin to examine businesses closely to ensure that they take sexual harassment seriously and act to protect their employees and customers. Here are some questions you need to consider when addressing sexual harassment at your business:

1. How do you encourage employees to report inappropriate conduct? The best way to address sexual harassment allegations is to respond quickly. Employees should be regularly reminded that there won’t be any retaliation for reporting inappropriate behavior. You should also ensure that there are multiple ways for employees to make anonymous reports to management.

2. Does your employee harassment training address your workplace’s unique traits? A standard workplace policy is a good starting point for addressing sexual harassment, but you should also think about how your employees interact with co-workers and customers.

3. Do your insurance policies include exclusions for sexual harassment? Many commercial general liability policies exclude claims for sexual harassment. Although employment practices liability insurance can provide you with coverage, you also need to ensure that policy periods offer coverage throughout the statute of limitations in your area.

Contact us at (916) 380-5300 for help addressing sexual harassment in the workplace.

Filed under: HR — Jillian Bender-Cormier @ 9:12 pm April 2, 2018


FBI Warns of Direct Deposit Phishing Attacks

The FBI warns that cyber criminals are posing as HR employees and using a phishing scam to get employees to provide the scammer with access to the company’s self-service payroll platform.

When employees click on the link within the scammer’s email and provide the requested information, they unknowingly provide the scammer with their W-2 and pay stub information. The scammer can then change direct deposit instructions, passwords, credentials and email addresses linked to the account to avoid detection. In the majority of cases, employers were not aware of anything until workers reported they weren’t receiving their wages.

To learn how you can prevent this from happening at your organization, please view the FBI’s suggestions or request employee cyber security training materials from Warren G. Bender Co. today.

Filed under: Cyber Liability,HR — Jillian Bender-Cormier @ 9:07 pm


The Aging Workforce – Advantages and Challenges

There are many potential implications associated with the aging workforce that employers are faced with today. Many organizations are beginning to understand that their longer-term business strategies have the potential to be compromised if the population of baby boomers currently in the workforce happens to retire at around the same time.

Many believe that older workers are more expensive and less productive than younger groups, but this conventional wisdom may leave you out of an opportunity to maximize talent base.

Aging Workforce Implications
Many employers are wary about hiring or even maintaining a primarily aging workforce at their organization despite many possible benefits. Because of the concerns surrounding this talent-management issue, employers must consider the full range of economic implications of an aging workforce, including both cost and productivity factors. The key to turning this issue into a business opportunity starts with a better understanding of its advantages and challenges.

• Older workers are somewhat less likely to be disengaged and slightly more likely to be moderately or highly engaged at work than younger groups, according to a recent Towers Perrin Talent Report.

• Because disengaged workers are more likely to leave their employers, it presents a retention risk for employers. This could mean a higher cost to the organization due to the high expense of employee turnover.

• Turnover costs can be as much as 50 percent of an annual salary for many positions, so the benefits of maintaining a stable workforce and avoiding turnover often exceeds the increased compensation and benefits costs of aging workers. Because of this, the cost to hire and maintain older workers can be quite reasonable.

• Hiring or retaining additional older workers may not cost much more than younger workers simply because these workers could offer enhanced skills such as experience, maturity and engagement.

• Even though cognitive declines can occur with age, knowledge and experience in a field can offset this. Communication and decision-making skills acquired with experience at an organization can often make up for decline in manual dexterity.

• Obviously, average pay tends to increase with service and age, but this can also result from movement up the career ladder in an organization. So, older employees are not necessarily more expensive in terms of pay.

• Although health care claims costs do tend to increase with age, and are on average higher for workers nearing retirement age, costs can also vary due to many underlying factors. A study conducted by the University of Michigan Health Management Center found that age may be less of an influence in increased health care costs than factors such as individual health risk and proper health care utilization.

Filed under: HR,Property & Casualty — Jillian Bender-Cormier @ 10:03 pm March 21, 2018


Compensable Time: What You Need to Know

The Fair Labor Standards Act (FLSA) requires employers to pay their employees for all hours they are “suffered or permitted to work.” These hours are known as “work hours” or compensable time.

What is compensable time?
Compensable time includes all hours during which an individual is actually performing productive work and all hours an employee is required by his or her employer to remain available for the next assignment. Compensable time does not include periods where an individual is relieved of all obligations and is free to pursue his or her own interests.

How is compensable time calculated?
To determine how much of an employee’s time is compensable time, employers must determine whether the employee is on duty, and how rest periods or certain industry extended hours affect an employee’s hours of work. The U.S. Department of Labor’s (DOL) Wage and Hour Division enforces work hour standards.

What are the penalties for noncompliance?
FLSA violations are punishable by a fine of up to $10,000, imprisonment for up to six months or both. In addition, these violations are subject to civil liability in state or federal courts and employers may be required to compensate employees for unpaid wages, liquidated damages, attorneys’ fees, court costs and any other amount a court sees fit to impose. Fee amounts may increase for repeat and willful offenders.

Employers may not discharge or discriminate in any manner against an employee who files a complaint or cooperates with the DOL in an investigation or proceeding.

Questions?
Contact Warren G. Bender Co. for more information on wage payment and work hour laws.

Filed under: HR — Jillian Bender-Cormier @ 9:33 pm