Two recent California cases and one large settlement have given us an opportunity to better understand California employment law. Ready for a quick lesson? Note-taking is encouraged:
Employee's Use of Own Cell Phone Must be Reimbursed
Labor Code section 2802 requires that employers reimburse employees for expenses incurred in the course of their work, including things like cell phone use. But what if the employee has an unlimited use plan? What cost has the employee incurred by making a few business-related calls?
In August, the California Court of Appeals answered that question in Cochran v. Schwan's Home Service, Inc., saying the employer has to pay a "reasonable percentage" of the employee's cell phone bill when the employee is required to use his or her phone for work. The percentage of the bill will vary depending on the employee's usage, the cell phone plan, and whether the employee's usage was reasonably necessary.
Since this case was a class action, the court sent it back to the trial court to determine how to calculate damages for the 1,500 class members.
Employers should make sure their policies allow for reasonable reimbursement of all employee expenses necessarily incurred in connection with work.
PTO Bank Can Be Used for Partial Day Absence
A California Court of Appeals has confirmed that when a supervisor takes time off, the employer may deduct that pay from a PTO or vacation bank, even for an absence less than half a day.
Overtime rules require that "exempt" salaried employees be paid for a full week's work despite taking time off, because they are paid for filling a position, not for putting in hours. Employers who dock an exempt employee for lost time may end up losing the exemption and having to pay overtime, penalties and other costs.
In a 2005 case, an appellate court ruled it was okay for employers to require exempt employees to take a half day or more from their accumulated PTO or vacation time, and the labor commissioner adopted this policy. The plaintiff in Rhea v. General Atomics challenged that position, arguing that California law protects PTO as a vested benefit, and that employers should have to pay for a full week's work regardless of the actual time worked.
The court's July ruling sided with the employer, affirming the prior case and the labor commissioner's policy.
Employers should remember that they can't pay less than a full week's pay, but they can take some of that time from available PTO. Once the PTO is used up, any salary deduction may put the exemption in jeopardy.
LinkedIn Pays Fines Despite Cooperation
LinkedIn learned a lesson in wage law this summer. The Department of Labor charged LinkedIn with permitting more than 350 employees in four states to work "off the clock." Both federal and state law holds that an employer is liable for all hours an employee is "permitted or suffered to work," not just those hours the employee puts on her time card. If you have any reason at all to believe that your employees are working off the clock, it's in your best interests to put a stop to it, pronto.
The Department accepted LinkedIn's explanation that it was unaware of the off-clock work, and in fact praised the company for cooperating in its investigation and immediately stepping up to pay more than $3 million in back wages to current and former employees. But on top of that the tech giant still had to pay another $2.5 million to those employees in liquidated damages under federal law. (Imagine if they hadn't cooperated!)
Here in California, an employer is more likely to be caught by an employee's lawyer than the US Labor Department. In that case you can add thousands in potential penalties under California's Labor Code as well as attorney fees for the plaintiff's lawyers. So even innocent ignorance can have a high cost for California business.
Storrow can be reached at [email protected]
Employee's Use of Own Cell Phone Must be Reimbursed
Labor Code section 2802 requires that employers reimburse employees for expenses incurred in the course of their work, including things like cell phone use. But what if the employee has an unlimited use plan? What cost has the employee incurred by making a few business-related calls?
In August, the California Court of Appeals answered that question in Cochran v. Schwan's Home Service, Inc., saying the employer has to pay a "reasonable percentage" of the employee's cell phone bill when the employee is required to use his or her phone for work. The percentage of the bill will vary depending on the employee's usage, the cell phone plan, and whether the employee's usage was reasonably necessary.
Since this case was a class action, the court sent it back to the trial court to determine how to calculate damages for the 1,500 class members.
Employers should make sure their policies allow for reasonable reimbursement of all employee expenses necessarily incurred in connection with work.
PTO Bank Can Be Used for Partial Day Absence
A California Court of Appeals has confirmed that when a supervisor takes time off, the employer may deduct that pay from a PTO or vacation bank, even for an absence less than half a day.
Overtime rules require that "exempt" salaried employees be paid for a full week's work despite taking time off, because they are paid for filling a position, not for putting in hours. Employers who dock an exempt employee for lost time may end up losing the exemption and having to pay overtime, penalties and other costs.
In a 2005 case, an appellate court ruled it was okay for employers to require exempt employees to take a half day or more from their accumulated PTO or vacation time, and the labor commissioner adopted this policy. The plaintiff in Rhea v. General Atomics challenged that position, arguing that California law protects PTO as a vested benefit, and that employers should have to pay for a full week's work regardless of the actual time worked.
The court's July ruling sided with the employer, affirming the prior case and the labor commissioner's policy.
Employers should remember that they can't pay less than a full week's pay, but they can take some of that time from available PTO. Once the PTO is used up, any salary deduction may put the exemption in jeopardy.
LinkedIn Pays Fines Despite Cooperation
LinkedIn learned a lesson in wage law this summer. The Department of Labor charged LinkedIn with permitting more than 350 employees in four states to work "off the clock." Both federal and state law holds that an employer is liable for all hours an employee is "permitted or suffered to work," not just those hours the employee puts on her time card. If you have any reason at all to believe that your employees are working off the clock, it's in your best interests to put a stop to it, pronto.
The Department accepted LinkedIn's explanation that it was unaware of the off-clock work, and in fact praised the company for cooperating in its investigation and immediately stepping up to pay more than $3 million in back wages to current and former employees. But on top of that the tech giant still had to pay another $2.5 million to those employees in liquidated damages under federal law. (Imagine if they hadn't cooperated!)
Here in California, an employer is more likely to be caught by an employee's lawyer than the US Labor Department. In that case you can add thousands in potential penalties under California's Labor Code as well as attorney fees for the plaintiff's lawyers. So even innocent ignorance can have a high cost for California business.
Storrow can be reached at [email protected]