News & Analysis

Netflix ups the ante on paid parental leave

Netflix recently announced that it will offer unlimited paid parental leave to a portion of its workforce for the first year following the birth or adoption of a child. The announcement of this generous parental leave policy has refocused public attention on the need for an increase in family leave benefits for all workers. Netflix's announcement has spurred conversation about the pros and cons of unlimited parental leave and the societal effects of leave policies.

7 'gotchas' of the 24/7 workplace

The growing ease of technology has made it dangerously easy for the 24/7 workplace to create liability for employers. The following is a reminder of the dangers that lurk in our 24/7 working world.

1. Off-the-clock work

Both California and federal laws require that employers pay for work performed. For nonexempt employees, this can quickly add up if significant time worked isn't correctly reflected on an employee's time card or another time-accounting system, such as a "virtual" time clock software system. California law requires that employees be paid for all hours worked, which includes all the time they are suffered or permitted to work, whether or not they are required to do so. Therefore, when a nonexempt employee performs work, even "voluntarily," he must be paid for it.

A common risk for employers occurs when nonexempt employees log in to the company system from home to check their e-mail. By doing so, they are working, and many employers don't have a mechanism in place to ensure that such working time has been properly accounted and paid for. Even more dangerous in this 24/7 world is nonexempt employees who are allowed to download work e-mails to their smartphones so they can check and respond to e-mail throughout the evening and the next morning while they are "clocked out" and away from the office.

2. Unpaid overtime

Employees are entitled to daily and weekly pay for overtime unless they qualify under California's exemptions from the overtime laws. The California Labor Code requires overtime payment and provides for exemptions, including administrative and managerial employee exemptions. California's standard daily overtime calculation is 1½ times the employee's regular rate of pay for any work performed beyond eight hours, up to and including 12 hours in a single workday. The regular rate of pay must be doubled for hours worked in excess of 12 in a single workday. California also requires premium pay for work performed on the seventh consecutive workday of a single workweek, which is 1½ times the regular rate for the first eight hours and double time for all hours worked thereafter. Consistent with federal law requirements, 1½ times the regular rate of pay must be paid for hours worked over 40 in a single workweek (if they aren't already paid for with an overtime premium).

Overtime is often implicated in the 24/7 workplace when a nonexempt employee actually records work performed after she leaves the workplace, which often results in working over eight hours a day and/or 40 in a workweek. If an employee who is regularly scheduled to work eight hours a day, five days a week (for a total of 40 hours) works even a little bit once she clocks out and leaves the office, overtime payment would be triggered on a daily and weekly basis for any time worked after she left the office. Overtime pay is still implicated and owed regardless of whether it is accounted for on a time card or in an accounting system.

3. Meal and rest break violations

California employers must provide nonexempt employees with a meal period of at least 30 minutes if they work more than six hours in a day. You may also have to provide a second meal period if employees work 10 or more hours. In addition, a rest period of at least 10 minutes for every four hours worked, or major fraction thereof, is mandated. Failure to comply with the mandatory meal and rest period requirements can expose you to liability (one hour of pay at the employee's regular rate for a missed meal break and another hour for a missed rest period). In a 24/7 workplace, violations are likely to happen when, for example, an employee works extra time that would trigger another rest or meal period.

4. Reimbursements

Under Labor Code 2802, California employees are entitled to be reimbursed for business use of personal items if those items are necessary for performing their duties. In the 24/7 workplace, this requirement is implicated when an employee uses his personal smartphone or another device to check and respond to e-mails. Employers should reimburse employees for business use of their personal electronic devices. Indeed, this law's real teeth are in the attorneys' fees provision, which states that employees are entitled to attorneys' fees incurred in their attempts to enforce their rights under the law.

5. Waiting time penalties

California employees are entitled to be paid immediately when an employer terminates the employment relationship. When an employee quits without giving advance notice, payment must be made within 72 hours. If payment is not made, the employee may be entitled to a penalty of up to 30 days' pay.

In the 24/7 workplace, if an employee has worked off the clock and hasn't been paid for it, then wages owed and unpaid upon termination would trigger waiting time penalty liability. Further, if the off-the-clock work exceeds eight hours in a single day, the employee must be paid at the appropriate overtime rate. Otherwise, it will be deemed wages still due and owed, again triggering a waiting time penalty payment.

6. Workers' compensation claims

Since the 24/7 workplace has blurred the lines of stopping and starting work as well as what really is and isn't considered "working," the historical workplace has changed as it relates to when and where "workplace" injuries occur. Would an employee who trips and falls in a mall while walking and responding to an e-mail have a viable work-related injury claim? Would it make a difference if he tripped while jumping out of bed to pick up a call after hours from his boss? These are just some of the potential work-related injury issues that are created by our 24/7 working world.

7. Always working but never working

Since the new world order is a 24/7 workplace, there's a sense from employees that they're always working, and thus, the potential for burning out is high. This may manifest itself with less-than-energetic employees. From an employer's perspective, some employees may not be as efficient or hardworking as they used to be, so a little more work now and then is only fair. In the employer's view, the employee was paid for a full day but didn't give a full day's work, and it begrudgingly pays extra for the work the employee did after leaving the workplace.

Bottom line

Employers should be mindful of the implications of the brave new 24/7 world in which we work. If nonexempt employees are working off the clock, make it "on the clock" and pay them for it. If the extra hours implicate overtime, pay it at the proper California daily and weekly overtime rates. If you have told nonexempt employees not to work once they leave the office and they continue to do so, pay them for the work and then discipline them for failing to follow the rules. Remember, California law requires payment for employees who suffer or are permitted to work. So payment is due whenever an employee works, even if she is "voluntarily" working away from the workplace outside of the company's regular business hours.

The author can be reached at Cozen O'Connor in Los Angeles, mflores@cozen.com.

California Supreme Court says 'yes' to arbitration clause

Many California employers have arbitration agreements with their employees. If a lawsuit between the employer and employee arises, the employer may need to go to court to enforce the arbitration agreement. A recent California Supreme Court case upheld an arbitration provision in a sales agreement, even though it contained a class action waiver and multiple arguable terms. However, the court also reaffirmed that "unconscionability," meaning a contract provision is substantially unfair, is still valid grounds to challenge an arbitration clause.

9th Circuit parses RLA to determine applicable bargaining rules

The Railway Labor Act (RLA) regulates labor relations in the rail and air industries with a goal of minimizing work disputes that could disrupt travel and transport. The rules are complicated and somewhat arcane, as amply illustrated by a recent decision of the U.S. 9th Circuit Court of Appeals (whose rulings apply to all employers).

9th Circuit orders second look at class action settlement of wage claims

Because a class action potentially affects the rights of individuals who aren't actively involved in the litigation, the settlement of such claims requires court approval. And when some class members object to the settlement terms, special scrutiny is required. That's why the 9th Circuit recently sent a class action settlement back to the trial court for another look at the fairness of the deal.

DOL issues guidance on employee vs. independent contractor classification

Determining whether a worker is an employee or an independent contractor can be a confusing (and, if done incorrectly, costly) endeavor. Though some employers may knowingly misclassify workers to reduce costs and avoid the burden of certain employment laws, it is equally—if not more—likely that the fact-specific multipart classification tests used for this purpose have simply confused well-meaning employers into getting it wrong.

No employment storm in sight

I'm excited about the projected wet El Niño this fall. Lord knows we need it to pull us from the brink. But as dramatic as I hope the water will be, a wet year is really part of the long-term "normal." El Niño pulled us out of droughts in 1982-83 and 1997-98, and it repeats (we hope) every 15 years or so. The droughts, the storms—none of it is unexpected.

U.S. Supreme Court poised to decide whether public-sector 'agency shop' is constitutional

In its 2015 term, the U.S. Supreme Court will decide what may prove to be one of the most important labor law cases in decades—whether an "agency shop" in the public sector is constitutional. In an agency shop, all employees represented by a union—supporters and detractors alike—can be compelled to either join the union or pay the virtual equivalent of dues, initiation fees, and assessments. The challengers—public school teachers and a nonprofit religious organization—contend that compelled payments to a union they oppose violate their rights under the First Amendment to the U.S. Constitution. A decision in their favor would reverse 38 years of court precedent allowing agency shops in the public sector.

New amendments clarify California's paid sick leave law

Last year, the California Legislature enacted the Healthy Workplaces, Healthy Families Act (HWHFA), which requires most employers in California to provide paid sick leave to employees. Most employers had to make significant changes to their policies and timekeeping and payroll practices. However, the law wasn't exactly a model of clarity, and many employers were unsure of how to implement the new requirements or how to integrate them into preexisting sick leave or paid time off (PTO) policies.

AB 987 forbids retaliation for requesting reasonable accommodation

On July 16, Governor Jerry Brown approved Assembly Bill (AB) No. 987. AB 987 amends part of California's Fair Employment and Housing Act (FEHA) and clarifies that an employer may not discriminate or retaliate against an employee for requesting a reasonable accommodation.