E-Blasts

Down to the Wire: Proposed Revisions to Wage Order 14 Finally Submitted

We previously reported on AB 1066 and how it affects employers in regards to the phase-in for overtime, which you can read here and here. Due to AB 1066, the Industrial Welfare Commission was required to revise Wage Order 14 (“Wage Order”). Updates to Wage Order 14 have been drafted and are now awaiting review. A copy of the draft revised Wage Order 14 with track changes is attached to this eBlast here. Please note that while these revisions have not received final approval they are expected to be enforced by the DLSE starting January 1, 2019.    

In addition to the overtime phase-in, the following are some of the significant proposed changes to the Wage Order:

•   Waiver of Second Meal Period

What was previously omitted in Wage Order 14 is now explicit in the proposed Wage Order to clarify second meal periods may be waived under certain conditions. Now, an employer and employee may explicitly waive the employee’s second meal period if the total hours worked is 12 hours or less AND if the first meal period was not waived. If the total hours worked is over 12 hours a second meal period may not be waived.

Currently, Wage Order 14 only says that a meal period may be waived if a work period not exceeding six hours would complete the work day, which left a lot of confusion amongst both plaintiff and defense attorneys in the state. Some industry attorneys argued that 11 hours of work was the threshold, others argued that 12 hours was the threshold and the most daring argued that a second meal period was not required at all! Now, the IWC has clarified the second meal period waiver to fall in line with almost all other industries in California.

•   No More Overtime Exemption for Irrigation Workers

As we had written here, previously, AB 1066 was silent as to the irrigator exception that currently exists in Wage Order 14. We now have an answer. The proposed Wage Order will completely abolish the current overtime exemption for irrigation workers. Permitting the disclaimer above, this becomes effective January 1, 2019, for large employers with more than 25 employees and January 1, 2022, for small employers with 25 or less employees.  In the meantime, small employers may continue to use the irrigation worker carve out for overtime.

•   Minimum Wage Rising

As all employers should be aware, the “March to $15” to raise the State’s minimum wage began in 2017 and the proposed Wage Order outlines that death march up until 2020. For whatever reason, the proposed Wage Order leaves out years 2021 and 2022 when the minimum wage will reach $15 per hour for large employers (26+ employees). Below are tables detailing the phase-in of the minimum wage requirement:

        26 or more employees                    Minimum wage per hour

                2017                                                $10.50

                2018                                                $11.00

                2019                                                $12.00

                2020                                                $13.00

    

        25 or less employees                    Minimum wage per hour

                2017                                                $10.00

                2018                                                $10.50

                2019                                                $11.00

                2020                                                $12.00

 

As previously reported here, please refer to your local city and county minimum wage requirements as they may be higher than the above.

COUNSEL TO MANAGEMENT:

There are a lot of new laws starting in 2019; please make sure to take the time to understand the implications of these laws and how they may affect your company. If you have any questions or concerns regarding the new laws including bills and wage orders or how to comply with their requirements, please do not hesitate to contact the experts at The Saqui Law Group.

Opposite Bills Proposed in Response to Dynamex “ABC” Test for Independent Contractors

By: Jeanne Rosenberg

As we previously reported here and here, in Dynamex Operation West, Inc., v. Superior Court., (“Dynamex”), the California Supreme Court embraced a standard that presumes all workers are employees instead of independent contractors, and places the burden on the employer classifying an individual as an independent contractor to establish that such classification is proper under the newly adopted “ABC” test.

Prior to Dynamex, the common law test to determine whether a worker was an employee or independent contractor consisted of a multi-factor test set forth in Borello. Under the Borello multi-factor standard, the worker has to demonstrate that the employer has sufficient control to find that there is an employee-employer relationship. In contrast, under the “ABC” test, the employer bears the burden of proving that the worker satisfies all three factors of the “ABC” test: A) the individual is free from the employer’s control and direction; B) the individual performs work that is outside the usual course of the employer’s business; and C) the individual has an independently established trade, occupation, or business.

Now, two California assemblywomen have proposed separate and distinct legislative bills opposite of each other to either codify or undo Dynamex. Last Wednesday, Lorena Gonzalez, a Democrat representing the 80th District which covers southern San Diego, introduced AB 5 named “Opportunity to Work Act”. This proposed bill would add to the Labor Code to make the “ABC” test in Dynamex into state law as early as next year. In response to Gonzalez’s bill, Melissa Melendez, a Republican representing the 67th District, which spans parts of Riverside County, announced AB 71 the very next day. This proposed bill does two important things: first, it would effectively overturn the Dynamex ruling, and second, it would adopt the multi-factor test in Borello into the Labor Code.

Melendez has more challenges as her bill faces a majority Democratic state legislature. However, she has support from businesses, employers, venders, distributors, and even workers that back her bill and who want freedom and flexibility as independent contractors without the greater risk of being misclassified under the Dynamex decision.

We will follow these two bills and report on them in the future with updates.

COUNSEL TO MANAGEMENT:

As we have stated in our eBlasts on this topic, the Dynamex decision applies only to claims made under the IWC wage order while the Borello standard applies to all other claims based upon a misclassification theory, such as wrongful termination, waiting time penalties and unfair competition claims. As always, employers using “independent contractors” should review their practices and ensure that they can rebut the Dynamex standard presumption. Should you have any questions about the effect of the Dynamex decision and whether your workers are properly classified, please contact the experts at The Saqui Law Group.

California High Court Oks Second Meal Break Waiver for Shifts Greater Than 12 Hours for Health Workers

By: Jenna Britton

On Monday, the California Supreme Court upheld a ruling allowing health care workers in California to skip a second meal break during shifts that last longer than 12 hours, meaning the workers can leave a half hour sooner.

At issue was Assembly Bill 60 (“AB 60”), also known as the Eight-Hour-Day Restoration and Workplace Flexibility Act of 1999. Starting January 1, 2000 this bill gave all workers the right to waive their second meal break if their shift lasted longer than 10 hours but was shorter than 12 hours. Thus, if the employee worked more than 12 hours, they did not have the option to waive the second meal break. AB 60 also gave the Industrial Welfare Commission (“IWC”) the power to create regulations regarding meal breaks “notwithstanding any other provision of law.”

On the back of AB 60, the IWC issued a new order in June 2000 which stated health care workers could waive their right to a second meal break during a shift that lasted longer than eight hours. This order would take effect in October 2000. During the time the order was issued but before it took effect, Senate Bill 88 (“SB 88”) was passed. SB 88 stated that new IWC orders must conform to the legislation that barred employees from waiving a second meal break during shifts longer than 12 hours. A California Appeals Court ruling in 2015 found that the IWC order clashed with Senate Bill 88.

Upon review by the California Supreme Court, the Court noted that the IWC order regarding health care workers right to waive a second meal period after 8 hours, although conflicting with the SB 88,  was still valid and enforceable as the IWC Order was issued before SB 88.The case was then sent back to the lower court. The appeals court agreed and reversed its decision in March 2017, admitting that it had failed to take in to account the fact that the date the IWC order was adopted is not the same as the date the order becomes effective.

COUNSEL TO MANAGEMENT:

While this decision focused largely on the timing of when the relevant bills and orders were put into place, it also suggests that the California Supreme Court is open to handing down decisions that allow certain industries to govern themselves. While there is no such leeway in the agriculture industry, employers, employees, unions and politicians in the industry can look to this decision as a guiding light to potential legislative fixes for some of the industry’s biggest issues, such as company-provided transportation and, as in this case, the requirement for employees to take second meal period when a vast majority of employees would rather skip the meal period to go home earlier.

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