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Wednesday
May182016

Wage & Hour: DOL Doubles Down on Salary Threshold 

Lawyer for EmployersAttorney for Employers

 

by Tal Burnovski Yeyni

818-907-3224

 

White Collar Overtime ExemptionConsidering all of the political movements regarding minimum wage, equal pay and other wage and hour concerns over the past few years, most employers could read the handwriting on the wall regarding overtime rules. That handwriting has now become official:

The Department of Labor Final Rule regarding the minimum salary level required for the exemption of executive, administrative and professional employees was released today.

In the event of a conflict between federal and state laws, employers must comply with the rule most favorable to employees.  Prior to today’s Final Rule, an employee designated exempt under Federal law must have made at least $455 per week ($23,660 annually). This amount is substantially lower than the minimum salary required for exemption under California law, thus requiring California employers to comply with the state salary level test for exemption.

Here are the key changes: 

  • DOL Final Rule: Effective December 1, 2016, the "standard" salary level will increase to $913 per week (equivalent to $47,476 annually for a full-year employee), nearly double the current federal weekly threshold.  The DOL launched a Frequently Asked Questions page here.


  • California Employers: In this state, the current threshold is $41,600 ($3,466.67 monthly; $800 weekly), so California employers must comply with the higher Federal salary level (for exemption purposes) as of December 1st.  


  • Use of Bonuses to Satisfy the Test: Nondiscretionary bonuses and incentive payments (including commissions) may be used to satisfy up to 10 percent of the standard salary test requirement.

    Moreover, if an employee does not earn enough in nondiscretionary bonuses and incentive payments (including commissions) in a given quarter to retain their exempt status, the DOL now permits a "catch-up" payment at the end of the quarter. If the employer chooses not to make the catch-up payment, the employee would be entitled to overtime pay for any overtime hours worked during the quarter.


  • Automatic Updates: To ensure effectiveness of the salary level test, the DOL will update the standard salary compensation requirements every 3 years, with the first update taking effect on January 1, 2020.


  • Increase in California Minimum Wage Requirements: Note that last month, Governor Jerry Brown signed into law a bill gradually increasing California’s minimum wage to $15.00 per hour by January 1, 2022 (for employers with 26 or more employees).  As the salary level for exemption is an extension of California’s minimum wage (two times the state’s minimum wage), employers must pay close attention to the automatic updates of the DOL and the increase in California’s minimum wage, to determine which salary test they must comply with for the exemption. 

Here’s California’s newly approved Minimum Wage Schedule:  

Wage and hour and other employment laws can become very confusing given how state and federal regulations can trump one another. Employers should seek the advice of experienced employment counsel to stay compliant.

Tal Burnovski Yeyni is an attorney in our Employment Practice Group

Disclaimer:
This Blog/Web Site is made available by the lawyer or law firm publisher for educational purposes only, to provide general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for obtaining legal advice from a licensed professional attorney in your state.

Monday
Jan122015

Bay Area Blues: San Francisco's Employers/Franchisees Face Retail Workers Bill of Rights

 

by Bryan H. Clements

Doing business in San Francisco can be difficult, to say the least. At $10.74/hour, the city already had the highest minimum wage in the country at the end of 2014. On January 1, 2015, San Francisco employers began shelling out $11.05/hour; on May 1, 2015, they will begin paying $12.25/hour; and on January 1, 2018, they will pay $15/hour (a 39.6 percent increase over three years).

Franchise Employers CaliforniaNevertheless, franchisors, franchisees and other multi-unit business owners doing business in San Francisco, referred to as “Formula Retail Establishments,” will soon see their resolve to continue doing business in the city further tested.

On November 25, 2014, San Francisco's Board of Supervisors (BOS) unanimously approved two ordinances, collectively referred to as the “Retail Workers Bill of Rights.”  These ordinances are the first of their kind in the United States and are being added to the Police Code.

Formula Retail Establishments Defined

The Retail Workers Bill of Rights applies to employers with 20 or more employees and with 20 or more locations worldwide – if one or more of their locations operates in San Francisco. Formula retailers include companies with at least two of the following: 

  • A Standard Array of Merchandise

  • Standard Facades or Interior Designs

  • Standard Signage

  • Use of  Common Trademarks/Servicemarks

  • Standard Uniforms 

San Francisco’s definition of formula retail businesses includes retail trade businesses, movie theatres, hotel chains, food service businesses (including restaurants and bars) and banks. It also includes businesses providing professional, financial (accountancies, insurers, etc.), repair (plumbing, closet installation, oil change, etc.) and cleaning and janitorial services.

Franchised businesses will typically fall within the definition of a formula retail business, so franchisees can expect to be disproportionately impacted.

Groups advocating for franchise companies have attacked the ordinances claiming they unfairly target franchised businesses. For example, the day following the BOS’s vote, Robert Cresanti, Executive Vice President, Government Relations & Public Policy of the International Franchise Association, the nation’s most powerful lobbying group for franchisors, penned a sharp letter to the Mayor of San Francisco urging him to veto the ordinances.

Despite these protests however, the Mayor neither signed nor vetoed the ordinances, and they became law.

Employer Compliance with SF's Retail Bill of Rights

California Business Lawyer

The Retail Workers Bill of Rights will affect employers in many ways. To comply, formula retailers must: 

  1. Additional Hours: Offer additional hours to part-time employees before hiring new employees or engaging temporary workers.

  2. 90 for 90: If the company is sold, successor employers must retain all current employees who have been with the company for at least 90 days, for a period of 90 days.

  3. Predictability Pay: Excepting certain circumstances, employers must provide employees with two weeks’ advance notice of their schedule. Employers providing less than seven days' notice must pay one hour of extra pay per changed shift; and two hours of extra pay for less than 24 hours' notice, per changed shift.

  4. On-Call Predictability:  Employers must give employees at least 24 hours' notice before cancelling or rescheduling an on-call shift.

  5. No Part-Time Prejudice: Part-time employees will start at the same hourly wage as full time employees, and be provided with the same opportunities to advance.

  6. Retain Records: Employers must retain written records pertaining to written offers of employment, offers of additional hours, employees retained during a change of control, and work schedules for three years. Failure to preserve records will be deemed to be a failure to comply. 

Disclaimer:

This Blog/Web Site is made available by the lawyer or law firm publisher for educational purposes only, to provide general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for obtaining legal advice from a licensed professional attorney in your state.

Wednesday
Jun112014

Employers: Ready for California's Minimum Wage Increase?

Lawyer for EmployerWage and Hour Defense

 

by Nicole Kamm
818.907.3235

 

 

 

Last September, Governor Jerry Brown signed Assembly Bill 10 into law, beginning a series of increases in minimum wages for California workers. The first increases under AB 10 is about to go into effect.

On July 1, 2104, the minimum wage in California will increase from $8.00 to $9.00 per hour.  This wage hike will have a wide-ranging impact on all California employers. 

For example:  

  • Non-exempt employees paid less than $9.00 per hour must receive an increase in pay.

  • Certain exempt employees (executive, administrative, professional) must receive a monthly salary of at least twice minimum wage on a salaried basis (as well as meet other exemption requirements).  Effective July 1, 2014, the minimum monthly salary for exempt employees increases to $3,120.  Employees paid less will no longer meet the exemption.

  • Inside sales employees under Wage Orders 4 and 7 must earn more than 1½ times minimum wage for all hours worked (they must also receive more than 50 percent of their compensation from commissions).  As of July 1, 2014, to qualify as exempt, such employees must be paid at least $13.50 per hour. 

The revised California Minimum Wage Official Notice should be posted next to your IWC Wage Order and other required workplace postings. 

Since 2012, California employers have been required to provide written notice to non-exempt employees containing certain information, including rate of pay.  The DLSE form Notice to Employee can be used for this purpose. 

Employers who have already issued this wage notice do not have to reissue as a result of the minimum wage increase provided the new wage rate is shown on the employee’s pay stub (itemized wage statement) with the next payment of wages.

Now is a good time for employers to audit their pay practices to ensure compliance with wage and hour laws.  If you have questions or need assistance with an audit, please contact me.

 

Other Minimum Wage Hikes

Minimum wages in California vary by city or county.If you're doing business in the Bay Area, be aware that the Richmond City Council voted to increase wages for workers in that city to $13.00 per hour by 2018 for most employers – higher than the current minimum wage in San Francisco ($10.74/hr).  Minimum wage in San Jose is currently $10.15 per hour.

This one isn't mandated by law yet, but employers should take note the California Senate recently approved a different set of increases, set to go before the Assembly. These proposed increases, if approved, would raise minimum wage to $11.00 per hour in January 2015, $12.00 in 2016, and $13.00 in 2017.

Already in place, Assembly Bill 10 will increase wages again to $10.00 per hour on January 1, 2016. 

 

Nicole Kamm is an Employment Defense Attorney at our firm. Contact her directly: 818.907.3235; nkamm@lewitthackman.com.

Disclaimer:
This Blog/Web Site is made available by the lawyer or law firm publisher for educational purposes only, to provide general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for obtaining legal advice from a licensed professional attorney in your state.

Wednesday
Mar192014

Bridging the Pay GAP

Lawyer for EmployerWage and Hour Defense

 

by Nicole Kamm
818.907.3235

 

Last week, GAP announced it would be increasing its minimum wage to $9 in 2014 and $10 in 2015 for employees nationwide. In its press release, GAP’s Chairman and CEO, Glenn Murphy, stated the clothing company “did this because it is right for our company and right for our people.”

Just one step behind, President Obama is continuing to push efforts to increase federal minimum wage to $10.10 per hour – more  than a dollar higher than the $9 proposal made in his 2013 State of the Union address. Federal minimum wage has not increased since 2009. In states that don’t mandate a higher rate, federal minimum wage remains $7.25 per hour.

Also last week, President Obama directed the Department of Labor to propose revisions to the Fair Labor Standards Act (FLSA) regulations regarding overtime exemptions. The President asked the Labor Secretary to consider: 

  1. How existing protections can be “modernized” to conform to the intentions of the FLSA

  2. The changing nature of the workplace 

  3. Simplifying regulations to make them easier to understand by both employees and employers, and easier for employers to apply 

This has been interpreted to mean we can expect a proposed: 

  1. Increase in minimum salary paid to an employee for the employee to qualify as exempt (currently, $455 per week); and

  2. Replacement of the FLSA “primary duty” test with a more substantive test to require an employee to spend a certain percentage of his/her time on exempt duties to qualify for exempt status. 

Both of the above changes would substantially decrease the number of employees who qualify under the federal exemption test.

 

What Does This Mean for California Employers?

 

Bottom line – not much.

California minimum wage is already going up to $9 per hour as of July 1, 2014, and $10 per hour as of January 1, 2016. Now is a good time for California employers to start gearing up for the increase, including issuing new wage notices pursuant to Labor Code section 2810.5, adjusting overtime calculations, and reviewing exempt employee salaries to ensure they are at least two times the minimum wage ($37,440 as of July 1st).

As for the proposed FLSA changes, California employers are already subject to more narrow overtime exemptions requirements under state law. Among other things, to qualify as exempt in California, an employee must be paid a salary of at least $640 per week ($720 as of July 1st). California employees must also spend more than 50 percent of their weekly work time on exempt duties.

Though there is much debate over proposed changes in federal employment laws, California employers can take some comfort knowing that - in most cases - they are already required to comply with what may be implemented on a national level. Somewhat surprisingly - it would appear California is a trendsetter these days when it comes to changes in national employment law.

 

Nicole Kamm is a Wage and Hour Defense Lawyer at our firm. She can be reached via email: nkamm@lewitthackman.com

Disclaimer:
This Blog/Web Site is made available by the lawyer or law firm publisher for educational purposes only, to provide general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for obtaining legal advice from a licensed professional attorney in your state.
Thursday
Sep262013

What the Minimum Wage Hike Means for Employers

 

by Sue M. Bendavid & Nicole Kamm

 

Governor Jerry Brown signed into law Assembly Bill 10 on Wednesday, increasing California's hourly minimum wage from $8.00 per hour to $9 per hour as of July 1, 2014 – and to $10.00 per hour as of January 1, 2016. The last minimum wage hike for the state of California was in 2008.

The bill amends current California Labor Code section 1182.12. For certain counties, the rates are even higher. For example:

  • The minimum wage for employees in San Francisco has been $10.55 per hour since January 1, 2013.

  • The minimum wage for employees in San Jose has been $10.00 per hour since March 11, 2013.

The wage increase won't just affect non-exempt employees.  For employees to be properly classified as exempt, the employee must earn at least twice minimum wage on a salaried basis (as well as meet the other elements of the exemption).  Effective January 1, 2014, the minimum salary for exempt employees will increase from $33,280 to $37,440 annually.  In January 2016, exempt employees must earn at least $41,600 per year, to qualify for exempt status.

This bill also has a direct impact on certain inside sales employees.  Under certain wage orders (Orders 4 and 7), inside commissioned sales employees may qualify for a limited overtime exemption if they earn at least 1.5 x minimum wage (and if they satisfy other elements of the exemption).  With the increase in minimum wage, this necessarily increases the minimum these employees must earn to qualify for the exemption.

If an employer has voluntary agreements with non-exempt employees to permit credit of meals or lodging against the employer’s minimum wage obligation, those should be adjusted as well. 

As always, if you have questions about the new law, wage and hour claims, or other employer compliance questions, please feel free to contact us via email or phone.

 

Sue M. Bendavid and Nicole Kamm are Wage and Hour Defense Attorneys at our Firm. Contact them via email: sbendavid@lewitthackman.com, and nkamm@lewitthackman.com.

 

Disclaimer:
This Blog/Web Site is made available by the lawyer or law firm publisher for educational purposes only, to provide general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for obtaining legal advice from a licensed professional attorney in your state.

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