Ventura County Employment Law Attorney, Ted Schneider, Comments on the New Federal Overtime Rules Issued May 18, 2016 under the Fair Labor Standards Act

By: Ted Schneider, Esq. On Wednesday, May 18th, the U.S. Department of Labor released their final overtime rules under the Fair Labor Standards Act. Salary Under the new rules, effective December 1, 2016, the annual salary threshold at which an employee in California can be considered exempt from overtime pay will be substantially increased from $41,600 to $47,476, or $913 per week. An employee must be paid a predetermined and fixed amount that is no less than the new threshold. The changes will affect 4.2 million workers nationwide, doubling the annual salary threshold in some states. The Labor Department set the standard salary level at the 40th percentile of earnings of full-time salaried workers in the lowest-wage census region.  The final rule includes a mechanism to automatically update the salary level requirement every three years to ensure that it remains a meaningful test for distinguishing between overtime-protected white collar workers and workers who may not be entitled to overtime pay and to provide predictability and more graduated salary changes for employers. The Department last updated these regulations in 2004, when it set the weekly salary level at $455 ($23,660 annually). Duties The final rule is not changing any of the existing job duty requirements to qualify for exemption.  It is important to note that salary alone does not determine whether a worker is exempt from overtime pay.  Employers must also consider the duties of the worker and how much independent discretion they have to exercise in their duties including hiring, firing, managing, and supervising. In addition to earning at least the new salary threshold, in California, qualifying “executive, administrative, or professional” duties must be the majority of a worker’s duties in order for the employee to be exempt from overtime pay. While employers have some time to prepare, it is important they make sure that they’re properly classifying and paying employees, and tracking time accurately. The attorneys at Schneiders & Associates can deliver legal guidance on this and other wage and hour questions any California employer may have. Bonuses The Final Rule amends the salary basis test to allow employers to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the new standard salary level. Side Affects Many employers already struggle with overtime costs. These rule changes affect wage and hour compliance for businesses of all sizes and can have a significant impact on their labor costs. With the substantial increase in the number of employees eligible for overtime, it’s more important than ever for employers in California to examine their compliance with wage and hour laws. The experienced employment law attorneys at Schneiders & Associates, LLP advise employers on complex wage and hour issues. For more information about Schneiders & Associates, LLP Employment Law services, visit our website at www.rstlegal.com. Interested clients may also contact info@rstlegal.com to schedule an appointment with an employment law attorney in our Oxnard, CA office.

New Bill Poses Limitations and Unnecessary Expenditures

By: Roy Schneider, Esq.

Early this year, an act to amend Section 4925 of the Civil Code, relating to common interest developments was introduced by assembly member, Don Wagner. The proposed bill will allow any community association member’s attorney to attend all association board meetings which the member may attend.

While it may seem like common sense to allow a member’s attorney to be present at any board meeting where he or she may be present, the realistic implications of the proposed bill pose discussion limitations and unnecessary expenditures for common interest association boards. For example: Not all associations currently have legal counsel, and those that do, do not always have their counsel attend the entire board meeting. Should a board choose to continue that approach, they could experience discussion limitations at meetings due to volunteer board members’ fears of liability and of how the discussions may be used in the future. In another instance, an association board may decide to combat liability and discussion limitations by having its own counsel present at all meetings- then threats of increased legal fees ensue.

If you serve as a volunteer on a community association board and you have questions about how this proposed bill amending section 4925 will impact the way your association board will operate, contact an attorney at Schneiders & Associates, LLP, a law firm providing comprehensive legal services including advice and assistance on these types of matters for more than thirty Homeowners Associations in Ventura, Santa Barbara, and San Luis Obispo Counties.

 


Employer Client Alert – New Heat Illness Prevention Regulations Effective May 1, 2015

The California Department of Industrial Relations, in conjunction with Cal/OSHA, announced amendments to the current heat illness prevention regulations.  The new law became effective May 1, 2015.  According to the DIR, the new heat illness prevention requirements offer additional safeguards for outdoor workers.  Revisions to the heat illness prevention regulation include the following:

  • Water must be pure, suitably cool, and provided free to workers.  It must be located as close as practicable to where employees are working so they can hydrate frequently during their shift. The employer must provide each employee with a minimum of one quart of water per hour for the entire shift.
  • When temperatures exceed 80 degrees Fahrenheit (prior regulation specified 80 degrees), shade is required for all workers on break, and for all those who take their meal periods onsite. For climates cooler than 80 degrees, shade must still be made available upon request.
  • Workers who take cool-down rest breaks must be monitored and asked if they are experiencing heat illness symptoms.
  • High-heat procedures (when temperatures exceed 95 degrees Fahrenheit) now include new employee monitoring requirements and mandatory pre-shift meetings to review high heat procedures, encourage employees to drink plenty of water, and remind employees of their right to take a cool-down rest break when needed.
  • High-heat procedures have been modified for the agriculture industry to mandate one 10-minute preventative cool-down rest break every two hours when temperatures equal or exceed 95 degrees Fahrenheit.
  • Employers must ensure that supervisors and workers are adequately trained to recognize and react to heat illness signs or symptoms and how to contact emergency medical services.
  • Any workers who display or report any signs or symptoms of heat illness, must not be left alone or sent home without being offered on-site first aid or emergency medical services.
  • All workers must be closely observed during a heat wave.
  • Any worker newly assigned to a high-heat area must be observed by a supervisor or designee during the first 14 days of employment.
  • Training must be provided for all outdoor workers before starting any work involving heat illness risk. The training must be presented in a language that employees understand, and must be documented.

The amendment increases the requirements of heat illness prevention plans.  If you would like us to review your current heat illness prevention plan for compliance with the new standards, or to assist you in creating a compliant plan, please contact the employment law attorneys at Schneiders & Associates, L.L.P.

Client Alert – AB 2755 Signed Into Law Prohibiting “Non-Voting Directors” on Non-Profit Boards

Governor Jerry Brown signed AB 2755, which amends Corporations Code Section 5047, to make it clear that a person is only a director as defined in the statute if that person has the right to vote as a member of the governing body and that a person who is a director by virtue of occupying a specific position within or outside the corporation (an ex officio director) can only be a director if that person has the right to vote as a member of the governing body. AB 2755 will take effect on January 1, 2015.

California Law Now Provides New Protections for Employees of Temp Agencies and Labor Contractors

Governor Brown recently signed into legislation AB 1897.  With this new law, California will have some of the country's most comprehensive protections for temporary workers. The new law is designed to protect workers, including factory assemblers, hotel maids, warehouse workers, farm laborers, janitors, and food processors who often work for years at the same company, but are paid less and denied benefits because they are employed by a labor contractor, such as a temp agency.

The new law will hold companies legally responsible if the temp agencies and subcontractors they hire put workers in harm's way or fail to pay them correctly.  Temporary workers are more likely to be injured on the job than regular workers.  Employers who utilize the services of labor contractors or temp agencies now will share with these companies all civil legal responsibility and civil liability for the payment of wages and the failure to obtain valid workers’ compensation coverage.

The law prohibits a client employer from shifting to the labor contractor legal duties or liabilities under workplace safety provisions with respect to workers provided by the labor contractor. Under the new law, companies could face fines if the temp agencies they use or their subcontractors fail to pay employee wages. The law affords companies a grace period to ensure temp agencies comply.

If your company contracts with temp agencies or labor contractors, and you would like to know more about your legal responsibilities to these individuals who perform work for your company, please contact the employment law attorneys at Schneiders & Associates, L.L.P.

Starting July 1, 2015, Employees Are Entitled to Paid Sick Leave

Last week, the Governor signed into law AB 1522:  The Healthy Workplaces, Healthy Families Act of 2014.

Existing law authorizes, but does not require, employers to provide their employees paid sick leave.  This bill enacts the Healthy Workplaces, Healthy Families Act of 2014 to provide that an employee who, on or after July 1, 2015, works in California for 30 or more days within a year from the commencement of employment is entitled to paid sick days.  This bill applies to employers of all sizes.  The law covers virtually all employees in California, other than certain union employees.

The sick days will accrue at a rate of at least one hour for every 30 hours worked.  The leave is paid at the employee’s normal hourly wage.  An employee would be entitled to use accrued sick days beginning on the 90th day of employment.  Employers will be permitted to limit an employee’s use of paid sick days to 24 hours (3 days) in each year of employment.  Employers that already provide paid sick leave or PTO at the minimum rates prescribed by this bill would not have to provide additional paid sick days pursuant to this law.  Consistent with current law governing paid sick leave, employers are not required to pay an employee for accrued, unused sick days upon termination.

The bill prohibits an employer from discriminating or retaliating against an employee who requests paid sick days.  The bill requires employers to satisfy specified posting and notice and recordkeeping requirements.  The bill authorizes the Labor Commissioner to impose specified administrative fines for violations, and authorizes the commissioner or the Attorney General to recover civil penalties against an employer who violates these provisions, as well as attorney’s fees. 

U.S. Supreme Court Clarifies That Severance Pay is Taxable— in Most Cases

The U.S. Supreme Court, in an 8-0 decision, recently ruled that severance payments made to employees who are involuntarily terminated are taxable wages under the Federal Insurance Contributions Act (FICA).  Quality Stores, Inc., et al., 12-1408.  The Court reversed the Sixth Circuit Court of Appeals ruling in favor of Quality Stores, which was seeking a $1 million tax refund based on its argument that severance payments were not covered by FICA and were excluded from taxation based on the Internal Revenue Code.  The Court’s ruling resolved a split between the Sixth Circuit and the Federal Circuit.

Quality argued that its severance payments to terminated employees were actually supplemental unemployment compensation benefits, which are not considered "wages" under the Internal Revenue Code. The Court noted that the severance payments were made only to employees and were based on employment-driven criteria including the position held, the employee’s length of service with the company and salary at the time of termination. Relying on the “broad definition of wages under FICA,” the Court ruled that severance payments to employees who are terminated involuntarily are taxable under FICA.

However, in its decision the Court noted IRS revenue rulings that severance payments tied to the receipt of unemployment compensation benefits "are exempt not only from income tax withholding but also FICA taxation." Thus, employers appear to continue to be able to make severance payments not taxable through a carefully crafted structure linking the severance payments to the employee’s receipt of unemployment compensation benefits.

If you have any questions about the impact of this decision, please contact the business attorneys at Schneiders & Associates, L.L.P.

Notice to the IRS of Change in Address or Responsible Party Now Required Within 60 Days

Effective January 1, 2014, any entity with an Employer Identification Number (EIN), including a nonprofit organization, must use Form 8822-B to notify the IRS of a change of (i) a mailing address, (ii) a business location or (iii) the identity of a "responsible party".  An organization’s original "responsible party" was the individual or entity named on the Form SS-4 application that was filed to obtain its EIN. The instructions to  Form 8822-B define a responsible party as "the person who has a level of control over, or entitlement to, the funds or assets in the entity that, as a practical matter, enables the individual, directly or indirectly, to control, manage, or direct the entity and the disposition of its funds and assets." If the person originally designated as the responsible party at the time of filing the EIN is no longer affiliated with the organization or no longer fits that definition, then the organization should use Form 8822-B to let the IRS know. 

Form 8822-B must be filed within 60 days of the change. If such a change occurred before January 1, 2014, and the entity has not previously notified the IRS in some other manner, Form 8822-B must be filed before March 1, 2014.

New Lease Rules

Effective July 1, 2013, commercial leases and rental agreements will need to contain a statement by the landlord as to whether the commercial property being leased or rented has undergone an inspection by a Certified Access Specialist. If the property has undergone such an inspection, the disclosure must state whether the property has or has not been determined to meet all applicable statutory construction-related accessibility standards. Civ. Code, § 1938In addition, commencing July 1, 2013, owners of certain commercial buildings are required to disclose to tenants and prospective tenants energy consumption information relating to the building, thus further implementing the Energy Star Benchmarking requirements promulgated as part of AB 1103 and subsequently, AB 531. Specifically commencing July 1, 2013, any commercial building with total gross floor area measuring in excess of 50,000 square feet must disclose energy benchmarking data to tenants leasing the entire building. Commencing on January 1, 2014, this requirement is expanded to include buildings with a total gross floor area measuring in excess of 10,000 square feet, and commencing on July 1, 2014, this requirement is further expanded to include buildings with a total gross floor area measuring at least 5,000 square feet. Whether you are a landlord or prospective tenant, it is important to make sure your lease not only provides the benefits and protections you require, but that it is fully compliant with all statutes and regulations.  If you would like a review of your lease or assistance in negotiating its terms, contact the real estate attorneys at Schneiders & Associates, L.L.P.

California Amends Sexual Harassment Law

Governor Brown recently signed Senate Bill 292, amending the Fair Employment and Housing Act to allow an employee claiming sexual harassment to prevail without having to show that the allegedly harassing conduct was motivated by the harasser’s "sexual desire." S.B. 292 was authored by Senate majority leader Ellen M. Corbett and principally sponsored by the California Employment Lawyers Association, an organization of attorneys that represent workers in employment cases.

The bill set out to eviscerate a June 2011 California Court of Appeal decision which rejected a male ironworker’s sexual harassment claim despite evidence that he was subjected to a "barrage of sexually demeaning comments and gestures by his male supervisor." The bill’s supporters felt that Kelley v. The Conco Cos., 196 Cal. App. 4th 191 (2011), "confused sexual harassment law" and weakened workers’ protections under the FEHA.

In Kelley, the court acknowledged that the supervisor’s comments were "graphic, vulgar, and sexually explicit" and, when interpreted literally, "expressed sexual interest and solicited sexual activity." Nonetheless, the court affirmed dismissal of the sexual harassment claim because the plaintiff could not present evidence that "the harasser was homosexual" or "motivated by sexual desire."

Effective January 1, 2014, SB 292 overrules Kelley by adding one sentence to the FEHA, stating that "sexually harassing conduct need not be motivated by sexual desire." So, in future sexual harassment cases, an employee who is subjected to vulgar sexual comments or actions need not prove that the conduct was motivated by the harasser’s "sexual desire."

In light of the new legislation, California employers should consider updating their sexual harassment policies and training materials. The employment lawyers at Schneiders & Associates, L.L.P. will be pleased to review your policies with you and assist you in the necessary training. Please contact us for more information