Monday, July 21, 2014

California court confirms employers may deduct from exempt employee leave banks

The San Diego division of the Court of Appeal has confirmed that California employers may deduct from exempt employee leave banks for partial-day absences, without destroying the employee's exemption.

General Atomics provided its employees with a set amount of paid annual leave determined by the employee's length of service. Employees could draw upon the paid leave for absences caused by illness, vacation, and personal and family obligations. The company deducted from the accumulated leave for any partial-day absences. Lori Rhea filed a lawsuit challenging the company's practice as a violation of the salary-basis requirement for several recognized exemptions from the wage and hour laws. The Court of Appeal rejected her argument. Rhea v. General Atomics, Case No. D064517 (Jul. 21, 2014).

It is a requirement of many of the exemptions under federal and state law that the employee earn a salary, which means the receipt of a pre-determined amount per pay period that "is not subject to reduction because of variations in the quality or quantity of the work performed." Kettenring v. Los Angeles Unified School District, 167 Cal.App.4th 207 (2008). Rhea argued that her employer's practice resulted in her not receiving a salary, because unauthorized deductions from her leave bank for partial-day absences constituted a forfeiture of wages that she had earned. The Court of Appeal rejected the argument, because the employer was not taking away something that Rhea had earned. It was just applying the rules it had established for how Rhea could enjoy the fruits of what she earned.

The Court of Appeal in San Francisco reached the same result in Conley v. Pacific Gas & Elec. Co., 131 Cal.App.4th 260 (2005). Rhea sought to distinguish that case because PG&E had only deducted for partial-day absences that exceeded four hours. The Rhea Court could see no basis in California law for distinguishing among partial-day absences based on the length of the absence.

The California rule stated in Conley and Rhea matches the interpretation of federal law that the Department of Labor stated in a January 19, 2009 opinion letter, and the interpretation of California law that the Labor Commissioner stated in a November 23, 2009 opinion letter.

Tuesday, July 15, 2014

Minimum Wage On The Rise

Pressure is mounting at the national, state and local levels to boost the minimum wage. There is pressure on the Los Angeles City Council to raise the minimum for the City to $15. On July 14, 2014, the San Diego City Council took the first step toward raising the minimum to $11.50 by January 2017.

The federal minimum wage establishes a floor for the entire United States of of $7.25 per hour, but each state may establish its own minimum wage, as many have done. At the end of April 2014, sponsors of a bill to raise the federal minimum wage to $10.10 failed to obtain the votes necessary to allow the Senate to consider it.

The California minimum wage was raised to $9.00 per hour on July 1, 2014, and is scheduled to go to $10.00 per hour on January 1, 2016. California law allows local municipalities to set their own minimum wages. San Francisco has adopted a minimum wage ($10.74 per hour for 2014) that adjusts annually based on the regional consumer price index. San Jose has a similar ordinance, and a current minimum wage of $10.15 per hour. Because others will certainly follow, employers must monitor local legislative activity wherever they have employees to ensure that their wages meet local requirements.

A May 2012 post explored some of the details of the minimum wage.

Monday, July 14, 2014

California's Commissioned Employee Exemption

In response to an inquiry from the Ninth Circuit, the California Supreme Court has explained how earnings should be allocated when determining whether a commissioned employee's wages exceed one and a half times the minimum wage. That is one of the elements of California's commissioned employee exemption from overtime requirements. See Wage Order No. 4, section 3(D).

Susan Peabody earned commissions selling advertising for Time Warner. Three things had to occur for Peabody to earn a commission -- (1) procurement of the order; (2) broadcast of the advertising; and (3) collection of the revenue from the client. Every other week Time Warner paid her $769.23 in hourly wages, which was the equivalent of $9.61 per hour, based on a 40-hour workweek, but did not amount to one and a half times the minimum wage. Time Warner paid commissions every other pay period. Time Warner argued that it should be allowed to allocate the commissions after the fact to the pay periods in which they were earned.

The Supreme Court rejected the argument. "An employer may not attribute wages paid in one pay period to a prior pay period to cure a shortfall." Peabody v. Time Warner Cable, Inc., Case No. S204804 (July 14, 2014). In rejecting the argument, the Supreme Court declined to follow federal authorities applying the similar exemption available under the Fair Labor Standards Act. (See 29 U.S.C. section 
207(i).) There are too many differences between federal law and California law in the wage and hour area to draw upon federal authorities when interpreting the commissioned employee exemption.

Thursday, June 26, 2014

Does stress from rush hour traffic require an accommodation?

That is the question posed by a disability discrimination complaint filed recently in New Jersey. Andrea DeGerolamo alleges that she suffered from "great anxiety and depression which was especially aggravated by crowded roadways experienced during the heavy traffic of rush hour." According to her complaint, her employer initially accommodated her by allowing her to come in after morning rush hour and to leave before evening rush hour.

The employer, Fulton Financial, removed the case from the state court where it was filed to the United States District Court in Camden. It is captioned DeGerolamo v. Fulton Financial Corp., Case No. 14-cv-03774-JHR-JS.

Unauthorized Aliens May Sue For Discrimination

The California Supreme Court has ruled that unauthorized aliens may sue for discrimination under the Fair Employment and Housing Act. The ruling came in a disability discrimination lawsuit brought by an employee who had used another's social security number and card to verify his employment eligibility. Salas v. Sierra Chemical Co., Case No. S196568 (Cal. Supreme Court 6/26/2014).

Senate Bill 1818 provides: “All protections, rights and remedies available under state law, except any reinstatement remedy prohibited by federal law, are available to all individuals regardless of immigration status who have applied for employment, or who are or who have been employed, in this state.” The provision was enacted into Civil Code section 3339, Government Code section 7285, Health and Safety Code section 24000, and Labor Code section 1171.5.

The Court ruled that the state law was not preempted by federal immigration law, except to the extent it authorizes an award of lost pay damages for any period after the employer's discovery of an employee's ineligibility to work in the United States. The Court also ruled that the unclean hands after acquired evidence documents was not an absolute bar, but only affected the remedy available.