wage and hour issues part 1 presented by: todd m. …...wage and hour litigation trends average...

WAGE AND HOUR ISSUES – PART 1

PRESENTED BY: TODD M. ROBBINS, PARTNER

ATKINSON, ANDELSON, LOYA, RUUD & ROMO

The views and opinions expressed in this presentation are those of the authors and do notnecessarily reflect those of CASBO.

Agenda: PART 1

Introduction

Minimum Wage Increases

Overview of the Fair Labor Standards Act (“FLSA”)

California Exemptions

The Key Differences Between California & Federal Guidelines

DOL Audits

Wage and Hour Litigation TrendsAverage workweek for full-time adults in U.S. is now 47 hours

50% of full-time employees say they work more than 40 hours per week

Hours Percentage

60+ 18%

50-59 21%

41-49 11%

40 42%

Less than 40 8%

Source : Gallup data from 2013-2014 Work and Education Polls

Wage and Hour Litigation Trends

• Salaried workers work longer hours

• Hourly workers still average over 40 per week

Hours Paid Salary Paid Hourly

60+ 25% 9%

50-59 25% 17%

41-49 9% 12%

40 37% 56%

Less than 40 3% 8%

Source : Gallup data from 2013-2014 Work and Education Polls

Wage and Hour Litigation Trends• Increase in technological capabilities

– 9-5 workday is becoming 24/7

– Higher demands on responsiveness, shorter turnaround times

– More telecommuting, remote work

Wage and Hour Litigation Trends• Workplace flexibility

– 67% of HR professionals think EEs have a balanced work-life—45% of employees don’t

– 64% of managers expect employees to be reachable outside of the office on personal time

Source: Gallup Business Journal, Dec 18, 2012

Wage and Hour Litigation Trends• Workplace flexibility

– Gallup study on employee well-being:

• Engagement > more time off

• Flextime > more vacation, paid time off

• Flexibility = strongest factor in overall well-being

Source: Gallup Business Journal, Dec 18, 2012

Wage and Hour Litigation Trends• Corresponding focus of DOL and plaintiffs’ bar:

– Misclassification claims (e.g., independent contractor)

– Off-the-clock and overtime work

• Telecommuting, donning and doffing

– Travel time and expense reimbursement


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36352

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37825 38094

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33090

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36416

3330932504

33603

27500

30000

32500

35000

37500

40000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Employment Litigation Nationwide

Source : Civil Cases Filed, by Nature of Suit report from www.uscourts.gov


21032 21157 2095520507

19746

17516

14353 14416 1431415231

1606516909 16976

15266

1383114281

10000

12500

15000

17500

20000

22500

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Discrimination Case Filings Nationwide



1935 1960

3904

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36174039 4207

7310

53936073

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81527500

81608781

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2500

5000

7500

10000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Wage and Hour Case Filings Nationwide


Wage and Hour Litigation TrendsYear Empl Cases Wage/Hr Cases % of Total

2010 34,689 6,825 19.7%

2011 34,875 6,335 18.1%

2012 36,416 8,152 22.4%

2013 33,309 7,500 22.5%

2014 32,504 8,160 25.1%

2015 33,603 8,781 26.1%


Wage and Hour Litigation Trends• DOL Wage and Hour Division budget increased 33.6% since 2007:

Year Appropriations to WHD

2007 $170,220,000

2009 $193,092,000

2011 $227,491,000

2013 $215,184,000

2015 $227,500,000

Requested for 2017 $276,599,000

Source : FY2017 Congressional Budget Justification; U.S. DOL Wage and Hour Division

Wage and Hour Litigation Trends• DOL-Timesheet App:

– EEs track hours and “determine wages owed”

– EEs can forward time records directly to WHD

Wage and Hour Litigation Trends• “Workers Owed Wages” website:

– “[W]orkers can look up in Spanish or English whether they are owed back wages.

– Recouped $1 million in back wages since 2015.

Wage and Hour Trivia

What is the minimum wage be in California effective January 1, 2017?◦ A. $9.50

◦ B. $10.00

◦ C. $10.50

◦ D. $12.00

California Minimum Wage Increases – Non-Exempt Employees:

Effective Date Non-Exempt Employees

Jan. 1, 2017 $10.50

Jan. 1, 2018 $11.00

Jan. 1, 2019 $12.00

Jan. 1, 2020 $13.00

Jan. 1, 2021 $14.00

Jan. 1, 2022 $15.00

California Minimum Wage Increases –Exempt Employees:

Effective Date Exempt Employees

Jan. 1, 2017 $43,680

Jan. 1, 2018 $45,760

Jan. 1, 2019 $49,920

Jan. 1, 2020 $54,080

Jan. 1, 2021 $58,240

Jan. 1, 2022 $62,400

Local Minimum Wage Ordinances

City/County Current Min. Wage Next Increase

Berkeley $11.00 10/1/16 - $12.53

El Cerrito $11.60 1/1/17 - $12.25

Long Beach Same as state 1/1/18 - $12.00

Los Angeles City $10.50 7/1/17 - $12.00

Los Angeles County (unincorporated areas)

$10.50 7/1/17 - $12.00

Malibu $10.50 7/1/17 - $12.00

Mountain View $11.00 1/1/17 - $13.00

Pasadena $10.50 7/1/17 - $12.00

Richmond $11.52 1/1/17 - $12.30

Sacramento Same as state 1/1/18 - $11.00

San Diego $10.50 1/1/17 - $11.50

San Francisco $13.00 7/1/17 - $14.00

Santa Monica $10.50 7/1/17 - $12.00

Sunnyvale $11.00 1/1/17 - $13.00

Overview of the Fair Labor Standards Act (FLSA)

Exemptions◦ Executive Exemptions

◦ Administrative Exemptions

◦ Professional Exemption

◦ Highly Compensated Exemption

2016 Increases in Federal Salary Basis Test

Nevada v. Department of Labor (2016 E.D. TX) 4:16-cv-00731

◦ Currently on appeal to the Fifth Circuit Court of Appeals

FLSAExempt Employees

To be exempt from overtime under the FLSA, the employee must meet:

The “salary basis” test and

The “duties test” ◦ Executive

◦ Administrative

◦ Professional

California Education Code requirements are similar but not identical.


The “salary basis” test requires:

The employee regularly receives each pay period◦ A predetermined amount constituting all or part of his or her compensation

◦ That cannot be reduced because of variations in the quality and quantity of work. (29 C.F.R. § 541.602.)


Executive: An executive employee’s primary duties typically include: selection, evaluation, and discipline of employees with regular direction over two (2) or more employees.

◦ Employee must earn a salary of at least $455 ($913 on 12/1/16) per week;

◦ Employee’s primary duty must be management of the enterprise or a department or subdivision; and

◦ Employee customarily and regularly directs the work of two (2) or more employees. (29 C.F.R. §541.100.)


Administrative: An administrative employee’s primary duties typically include office or non-manual work that is directly related to the management policies or general business operations of the employer or its customers. The position must require the exercise of independent judgment and discretion.

◦ Employee earns a salary of at least $913 per week; and,

◦ Employee’s primary duty:

◦ Is office or non-manual work;

◦ Directly related to the employer’s management policies or the general business operations of the employer or its customers; and,

◦ Includes work requiring the exercise of discretion and independent judgment. (29 C.F.R. § 541.200.)


Professional: A professional employee’s primary duties typically include work requiring advanced knowledge in a field of science or learning, involving the exercise of creative talent.

◦ Employee earns a salary of at least $913 per week; and,

◦ Employee’s primary duty is either:

◦ Work requiring advanced knowledge in a field of science or learning customarily acquired by a prolonged course (as opposed to general academic education or apprenticeship) of specialized intellectual instruction; or,

◦ Teaching, tutoring, instructing, or lecturing if the employee is employed in such activities as a teacher in a school system or similar institution. (29 C.F.R. § 541.303.) The salary amount test does not apply to those covered by this section.


Special Computer Employees Exemption:

◦ Special provision for some computer employees not otherwise professionally exempt. (29 U.S.C. §213(a)(17).)

◦ Applies to:◦ Systems analysts

◦ Programmers (who “write code”)

◦ Software engineers

◦ Workers who apply systems analysis techniques and procedures to determine hardware, software, or system functional specifications, or

◦ Workers who design, develop, test, or modify computer systems or programs based on user or design specifications


Special Computer Employees Exemption:

◦ Need not be paid on a salary basis! May be paid:◦ At least $913 per week on a salary basis, or

◦ At least $27.63 per hour on an hourly basis.

◦ Does not include:

◦ Employees whose primary duties are manufacturing or repair of computer hardware, or

◦ Employees who are not primarily engaged in systems analysis, programming, or software engineering.

Overview of the Fair Labor Standards Act (FLSA)

Flores v. City of San Gabriel, 824 F.3d 890 (9th Cir. 2016)◦ “City's cash payments to police officers in lieu of medical

benefits under the city's flexible benefits plan were not excludable from the calculation of the officers' regular rate of pay for overtime purposes under the FLSA...”

Overtime: Calculating the “Regular Rate”

The “regular rate” is generally computed by dividing the employee’s total compensation in any workweek by the total hours actually worked in that workweek.

Examples of Compensation Included In Regular Rate:◦ Cash in lieu of benefits

◦ Longevity Pay

◦ Shift differential payments

◦ Coaching Stipend

Examples of Payments Excluded From Regular Rate:◦ Perfect attendance bonus (maybe)

◦ Expense reimbursements

Overtime: Calculating the “Regular Rate”

Example: Employee works 46 hours during the week, receives cash in lieu of benefits of $500 annually, and receives $15 per hour before any adjustment for the bonus.

His regular rate and overtime premium rate is calculated as follows:

Calculating the “Regular Rate”

Step 1 Multiply the total number of hours worked in the pay period by the straight hourly rate.

$15 x 46 hours = $690

Step 2 Add the weekly amount of the $500 cash in lieu payment ($9.62) to the amount calculated in Step 1.

$9.62 + $690 = $699.62

Step 3 Divide the amount calculated in Step 2 by the total number of hours worked in the pay period to determine the employee’s regular rate.

$699.62 ÷ 46 = $15.21 / per hour

Step 4 Multiply the regular rate calculated in Step 3 by 1.5 to determine the employee’s premium rate.

$15.21 x 1.5 = $22.82/ per hour

Salary Basis Test◦ Two times state minimum wage

California’s Exemptions

FLSA v. California Salary Level Test ** pending outcome of Nevada v. Department of Labor (2016 E.D. TX) 4:16-cv-00731

CALIFORNIA FLSA

December 1, 2016 $41,600 $47,476**

January 1, 2017 $43,680 $47,476**

January 1, 2018 $45,760 $47,476**

January 1, 2019 $49,920 $47,476**

January 1, 2020 $54,080 TBD

January 1, 2021 $58,240 TBD

January 1, 2022 $62,400 TBD

California’s Exemptions

Duties Test◦ Executive Exemption: A person employed in an executive capacity

◦ Administrative Exemption: A person employed in an administrative capacity

◦ Professional Exemption: A person employed in a professional capacity

The Key Differences Between California and Federal Guidelines

• Be engaged in work that is primarily (more than 50% of the time) intellectual, managerial, or creative, and that requires exercise of discretion and independent judgment. The federal duties test does not require exempt employees to spend more than 50% of their time performing exempt work.

• Receive a monthly salary equivalent to two times the state minimum wage.

The Key Differences Between California and Federal Guidelines

• Additionally, the professional exemption under California guidelines specifically includes employees who are:

◦ Licensed or certified by the State of California to practice law, medicine, dentistry, pharmacy, optometry, architecture, engineering, teaching, or accounting; or

◦ Engaged in commonly recognized learned or artistic professions.

Selected Issues Concerning Classification of Exempt Employees

Customarily and Regularly Exercises Discretion and Independent Judgment

•Determination of “Primary” Activity of Employee: Quantitative vs. Qualitative Test

•Education Code section 45130

◦ Supervisory, Administrative or executive

◦ Certified by the Governing Board in writing

Hypothetical #1: Classified Manager

Maintenance Crew Lead◦ Duties: Responsible for maintaining the school buildings and

grounds. Coordinates the work of three groundskeepers and makes recommendations for their terminations and promotions.

◦ Salary: $38,000

Hypothetical #2: Academic Administrator

Principal/Division Dean ◦ Duties: Assist in the management of instructional programs and

operations of the school site/division.

Salary: $125,000

Hypothetical #3: Psychologist

Psychologist ◦ Duties: Perform psycho-educational assessments to determine

appropriate programs and instructional processes to enable students to achieve maximum achievement and adjustment.

Salary: $95,000

Hypothetical #4: Executive Assistant

Executive Assistant to the Superintendent◦ Duties: Plan, coordinate and perform efficient, timely and highly complex advanced-level executive

assistant duties requiring independent judgment and analysis; perform substantive and procedural administrative work.

◦ Salary: $46,000

When the DOL Performs an Audit

A DOL audit can be triggered by a call or complaint from a single employee or other person.

The DOL can investigate by interviewing employees and reviewing payroll records.

Generally, a settlement can be reached with the employer agreeing to:◦ Provide back pay to employees who reasonably show they have been denied overtime

◦ Alter practices to avoid uncompensated regular or overtime work

◦ Adopt accurate recordkeeping practices

QuestionAnswer

For questions or comments, please contact:

Thank You

Todd M. Robbins(951) 683-1122

[email protected]

Disclaimer

This AALRR presentation is intended for informational purposes

only and should not be relied upon in reaching a conclusion in a

particular area of law. Applicability of the legal principles

discussed may differ substantially in individual situations.

Receipt of this or any other AALRR presentation/publication

does not create an attorney-client relationship. The Firm is not

responsible for inadvertent errors that may occur in the

publishing process.

© 2017 Atkinson, Andelson, Loya, Ruud & Romo

wage and hour issues part 1 presented by: todd m. …...wage and hour litigation trends average...

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