Posted on September 23, 2013 by Epstein Becker & Green

Consumer Financial Protection Bureau Issues Warning To Employers Who Use Payroll Cards

By Lisa M. Watanabe

On September 12, 2013, the Consumer Financial Protection Bureau (CFPB) issued a bulletin warning employers that they cannot require their employees to receive wages on payroll cards. The CFPB's bulletin was issued amid the growing unrest among workers about the high and unexpected fees often associated with payroll cards.  Critics say that the fees may be so high that employees end up making less than the minimum wage.

In recent years, there has been an increasing amount of employers (especially in the retail and food-service industries) who have adopted this method of payment to reduce the costs associated with distributing cash or checks. Rather than receiving their wages through cash or check, employees receive them on a bank card that can be spent like a credit/debit card or used to withdraw cash at a bank or ATM.

Over the past few months, this payment method has been widely reported in the media. In June, a woman filed a class-action lawsuit against the operators of 16 McDonald's restaurants in northeastern Pennsylvania challenging their use of payroll cards and protesting the fees and costs incurred to access the wages. (Natalie Gunshannon v. Albert/Carol Mueller T-A McDonalds, Case No. 20130710 in the Court of Common Pleas of the State of Pennsylvania, County of Luzerne). Moreover, in July, the New York Attorney General's office sent letters to several companies requesting documents related to their payroll card programs to ensure compliance with the consumer protection laws.

Employers who use payroll cards should take heed of the CFPB's bulletin. The bulletin explains the protections that must be afforded to employees and cautions employers that state law may impose additional restrictions on how employers make wages available to their employees (e.g. mandating alternatives to payroll cards or requiring affirmative consent).

The CFPB has authority to enforce the law against anyone who violates it, including employers and the banks that issue the payroll cards. Therefore, employers who use payroll cards should contact their counsel to ensure their program complies with applicable state and federal laws.

 

Posted on September 12, 2013 by Marisa S. Ratinoff

California's Leave Laws May Create the Perfect Storm for Employers

In this month’s Take 5 newsletter, I discuss how California is unique for making numerous types of protected leaves of absence available to employees.  All of these options can add up to a lot of protected leave.

Following is from the introduction:

National employers often find it challenging to navigate the employment laws of the various states in which they do business. In most cases, the easiest solution may be to adopt national policies that follow federal law. This process will not work, however, for employers that do business in California, where state protections are often more expansive and provide greater employee rights than their federal law equivalents. This is particularly true in the leave of absence arena. California is unique in that it makes numerous types of protected leaves of absence available to employees. The cumulative impact of administering all of the available leaves in California can be quite burdensome and lead to a perfect storm in which an employee may continue to be on a protected leave of absence for more than one year. Here's why …

The full issue is here.

Posted on September 09, 2013 by Epstein Becker & Green

California Legislature Brings Prevailing Party Attorneys' Fees Provision for Wage Claims in Line with Rule in Discrimination Cases

By Jennifer Nutter

Until recently, California retail employers could leverage the threat that employees suing them for nonpayment of wages (including sales commissions), fringe benefits, or health and welfare or pension fund contributions would have to pay the employer’s attorneys’ fees in the event that the claim was unsuccessful.  Labor Code Section 218.5 provided that the court “shall” award the “prevailing party” its attorneys’ fees in such cases (assuming a request was made at the beginning of the suit).

It had long been argued by attorneys representing employees in these types of cases that Section 218.5 should be interpreted to mean that a prevailing employer would only be entitled to its fees if the employee’s suit was found to be frivolous, unreasonable, or without foundation – a standard announced in Christiansburg Garment Co. v. EEOC (1978) 434 U.S. 412 in connection with Title VII discrimination claims and later applied to claims brought under California’s Fair Employment and Housing Act (FEHA) as well.  However, both Title VII and FEHA give courts discretion to award a prevailing party its attorneys’ fees, whereas Section 218.5, on its face, made the award unconditional if the suit was successfully defended.

 On August 26, 2013, Governor Jerry Brown put an end to the uncertainty by signing SB 462 into law.  The bill amended Section 218.5 to provide that a prevailing employer is only entitled to recover its attorneys’ fees for defending an employee’s lawsuit for nonpayment of wages, fringe benefits, or health and welfare or pension fund contributions, if it can show that the action was brought in “bad faith.” 

 It remains to be seen how this new standard will be interpreted by the courts, but because the policy considerations of not chilling meritorious suits brought by employees against their employers are the same as in Title VII and FEHA cases, it is likely to be a similarly high bar.

Posted on June 04, 2013 by Epstein Becker & Green

The Ninth Circuit's Opportunity to Clarify California's Suitable Seating Requirements

by Lisa M. Watanabe

In recent years, retailers, grocery stores and banks have been hit with a wave of lawsuits over California’s suitable seating requirements set forth in §14 of the Industrial Welfare Commission’s Wage Orders.  (See http://www.dir.ca.gov/iwc/wageorderindustries.htm for § 14 in 16 of the 17 industry-specific Wage Orders).  Despite the surge in lawsuits, there continues to be several unanswered questions regarding the interpretation of subsections (A) and (B) to §14 which state the following:

  1. All working employees shall be provided with suitable seats when the nature of the work reasonably permits the use of seats.
  2. When employees are not engaged in the active duties of their employment and the nature of the work requires standing, an adequate number of suitable seats shall be placed in reasonable proximity to the work area and employees shall be permitted to use such seats when it does not interfere with the performance of their duties.

For example, how does an employer determine when the “nature” of an employee’s work “reasonably permits the use of seats” (in which case §14(A) would apply) or generally “requires standing” (in which case §14(B) would apply)?  Additionally, as is often the case with retail employees such as a cashier or clerk, what if an employee performs a variety of assigned job duties, some of which may permit seating and some which may not? 

A pending case before the Ninth Circuit – Kilby v. CVS Pharmacy, Inc. – should provide answers to courts and litigants to these questions.  Kilby, a former cashier/clerk, filed a representative suit against CVS in 2009 for its alleged failure to provide her with suitable seating under §14(A).  The district court dismissed the lawsuit on the grounds that §14(A) was not applicable to Kilby’s job position.  (See Order Granting CVS’s Motion for Summary Judgment.)  In its decision, the district court interpreted §14(A) as requiring a “holistic” assessment of an employee’s entire range of assigned duties to determine whether the employee’s job “as a whole” reasonably permitted the use of seats (§14(A)) or generally required standing (§14(B)).  The district court also considered CVS’s business judgment in its decision – i.e., CVS expected its clerks/cashiers to perform their work while standing, and trained them to do so (among other things, CVS showed a training video to new hires that reinforced its expectations of them to perform a variety of work while standing). 

On appeal, Kilby contends that the district court misinterpreted §14 and, and in doing so, failed to account for evidence that she spent approximately 90% of her time performing duties that could have been done while seated.  The district court’s interpretation of §14, according to Kilby, allows employers to deprive employees of seats “simply by assigning a handful of tasks that require standing … even if the workers’ other assigned tasks consume a significant portion or even the vast majority of the work day.”  As such, Kilby requests the Ninth Circuit to interpret §14 as guaranteeing employees the right to suitable seating whenever a specific task or duty performed for an appreciable period of time can reasonably be accomplished while seated.  Kilby also challenges the district court’s consideration of CVS’s business judgment in determining the nature of an employee’s work on the grounds that it frustrates the Industrial Welfare Commission’s intent to create an objective standard for determining which duties could be performed while seated.

The Ninth Circuit now has an opportunity to clarify the legal standard for §14 and offer much-needed guidance on the scope of suitable seating requirements for employees, including those individuals with mixed seating and non-seating job tasks.   Moreover, the case will clarify what role, if any, an employer’s business judgment, expectations and training may have in assessing the nature of an employee’s work.  The parties’ briefing has been completed and oral arguments before the Ninth Circuit (which should be scheduled and posted on the Ninth Circuit’s website -- http://www.ca9.uscourts.gov/calendar/ -- in the next few months) will surely keep courts, litigants, and employers on the edge of their seats.

Posted on April 29, 2013 by Epstein Becker & Green

Floating Holidays - Why Employers May Want to Keep Them from Floating into California

By:  Jennifer L. Nutter

“Floating Holidays” are typically a fixed number of personal days that employees may use at any time during the year over and above any vacation, sick or other paid time off (“PTO”) they may have.  Usually such days do not accrue under the employer’s policy and are not paid out at the time of termination.

Those of you familiar with some of the idiosyncrasies of California wage and hour law are probably aware that “use it or lose it” vacation policies are not permissible, while bona fide sick leave policies may be set up in this fashion, and the treatment of holidays (such as Christmas and Thanksgiving) is largely left up to employers.

What you may not know is that California views “Floating Holidays” as little more than a linguistic disguise, and they can spell trouble if not managed properly.  If the Floating Holidays may be taken at any time, then California will consider them to be vacation days and they will be governed by all of the same rules, including automatic accrual (subject to reasonable capping) and payout upon termination of employment.  If, on the other hand, the Floating Holidays must be taken on (or within close proximity to) specific events such as employee birthdays or anniversary dates, then California will treat them like any other holiday.

One way employers can avoid confusion and potential pitfalls is by not offering Floating Holidays to their California employees at all and instead institute a combined PTO policy. 

If Floating Holidays are offered, there are some things to keep in mind:

1.   The written policy should clearly reflect when Floating Holidays may be used and what happens when they are not.

2.   If the Floating Holidays must be used on or near specific days, treat them the same as other holidays and spell this out in your written policy.

3.   If the Floating Holidays may be taken at any time, they will be treated as vacation days under California law.  Accordingly:

a.   Be sure to track accrued and unused days because they must be paid out at the time of termination along with any other wages owed.

b.   Consider capping Floating Holidays as you would vacation time so that they do not accrue indefinitely for employees who do not take them.  Reasonable caps (usually 1.5 to 2 times the annual accrual) may be applied such that once employees reach the cap, they do not accrue any additional time until some time is used.

 If you do decide to offer your California employees Floating Holidays and to cap them, be careful that you do not inadvertently turn the cap into a frontloaded “use it or lose it” policy.  Here is an example of how this may occur:  On January 1st each year, an employer grants its employees 2 Floating Holidays to be used any time during the year, and caps accrual at 3 days (1.5 times the annual allotment).  Because the employer uses January 1st as the date that it grants Floating Holidays, it looks at employees’ accrued days on that date in order to determine how many new days, if any, each employee will receive for the year.  An employee who is at the 3-day cap on January 1st will not be granted any Floating Holidays for that coming year.  The problem with this practice is that employees may lose some or all of their annual Floating Holidays based on their accrual status on a single date (i.e., if an employee with 3 accrued Floating Holidays has not used at least 2 of those days by January 1st, he or she will lose some or all of the Floating Holidays for that coming year).  Thus an employee who happens to take his or her 2 Floating Holidays for 2013 in December of that year, will earn 2 Floating Holidays for 2014, but an employee who waits until January 2nd and 3rd of 2014 to use the 2 days from 2013 will not earn any Floating Holidays for 2014.  This is the classic “use it or lose it” scenario just shifted by one day from December 31st to January 1st.  This result can easily be avoided by treating the accrual just as you would vacation time and allowing employees to earn their 2 Floating Holidays at any time during the year that they fall below the cap, not just on January 1st.

In summary, consider combining PTO for your California employees instead of offering separate “Floating Holidays.”  This will simplify administration and avoid confusion.  If you do offer Floating Holidays, be sure to decide whether they will be treated as vacation (taken at any time) or as holidays (tied to a specific event), spell this out in your written policy, and follow the applicable set of rules.

Posted on April 24, 2013 by Epstein Becker & Green

Epstein Becker Green Releases New Version of Wage & Hour Guide App

We are pleased to announce the release of a new version of our Wage & Hour Guide app that puts federal and state wage-hour laws at retail employers’ fingertips. To download the app, click here.Wage & Hour Guide App for Employers

The new version features an updated main screen design; added support for iOS 6, iPhone 5, iPad Mini, and fourth generation iPad; improved search capabilities; enhanced attorney profiles; expanded email functionality for sharing guide content with others; and easier access to additional wage and hour information on EBG’s website, including the Wage and Hour Division Investigation Checklist and other resources. The new version continues to be offered at no cost.

The wage-hour app has proved to be an incredibly valuable tool for retail employers, answering many of their questions in seconds, while also providing them with a link to our wage-hour blog, where they can find developments in this ever important area of the law,” said Michael Kun, co-creator of the app and national Co-Chairperson of EBG’s Wage and Hour, Individual and Collective Actions practice group, in the Los Angeles office.

How Does the App Work?

Rather than searching through a variety of cumbersome resources to locate applicable wage and hour laws, users of the Wage & Hour Guide app can follow easy-to-navigate steps to find the answers to many of their questions, including citations of federal statutes, regulations, and guidelines, as well as those of California, the District of Columbia, Georgia, Illinois, Maryland, New York, Texas, and Virginia. The following state guides were added after the initial launch of the app: Connecticut, Massachusetts, and New Jersey. To provide the best experience possible, the app enables users to download the guide to their iPhone or iPad device for reference anywhere, at any time, with or without a connection.

Posted on April 08, 2013 by Epstein Becker & Green

April 2013 Take 5 Newsletter: Five Recent Actions Employers Should Consider

The April 2013 issue of Take 5 was written by David W. Garland,  Chair of Epstein Becker Green's Labor and Employment Steering Committee and a Member of the Firm in the New York and Newark offices.

In it, he summarizes five recent labor and employment actions that employers should consider:

  1. EEOC Releases Letter Addressing Wellness Programs and Reasonable Accommodation Obligations
  2. Paying Interns May Not Be Enough to Stave Off Wage and Hour Claims
  3. House Committee Votes Out Bill Prohibiting NLRB from Acting Without a Quorum
  4. New York City Human Rights Law Expanded to Prohibit "Unemployment" Discrimination
  5. New Jersey May Become the Latest State Law Banning Employers from Requesting Social Media Passwords

Click here to read the full version on ebglaw.com

Posted on March 26, 2013 by Epstein Becker & Green

Actual Duties Define Exempt Status of Managerial Retail Employees and Precludes Class Certification

By: Marisa S. Ratinoff and Amy B. Messigian

Exempt or non-exempt: That is the question.  One of the most difficult areas in wage and hour law for retailers is properly classifying their managerial employees for purposes of determining if overtime need be paid or meal and rest breaks provided.  Long has been the rule that the actual duties the employee performs will determine if he or she is misclassified.  While this is often frustrating to retailers, whose assessment of an individual's job duties may be a judgment call as to whether they meet or do not meet the specific requirements of an exemption, the fact that an individual analysis is required may prevent class certification.

The California Court of Appeal just affirmed a trial court's denial of class certification for Sears, Roebuck and Co.'s managers and assistant managers, holding too many individualized issues existed for the misclassification claims to be resolved on a class wide basis.  While the employees’ job descriptions may provide a uniform basis for class-wide resolution, the required assessment of each manager's or assistant manager's actual job duties did not. 

Accurate job descriptions are critical but equally as important, and what often gets neglected, is understanding the duties the employee actually performs.  The employee’s actual duties will determine the outcome of a single plaintiff's misclassification claim and provide a defense to class-wide misclassification claims. 

Posted on January 28, 2013 by Epstein Becker & Green

EBG Provides a Wage and Hour Division Investigation Checklist for Retail Employers

Epstein Becker Green is pleased to announce the availability of a Wage and Hour Division Investigation Checklist, which provides retail employers with valuable information about wage and hour investigations and audits conducted by the U.S. Department of Labor (DOL). Like EBG’s first-of-its kind Wage and Hour App, which provides detailed information about federal and state laws, the Checklist is a free resource offered by EBG.

The Checklist provides step-by-step guidance on the following issues: preparation before a Wage and Hour Division investigation of the DOL; preliminary investigation issues; document production; on-site inspection activities; employee interviews; and back-wage findings, and post-audit considerations.

“The multitude of wage and hour claims and lawsuits that workers have filed under the Fair Labor Standards Act and its state law counterparts have made wage and hour law the nation's fastest growing type of litigation. And federal and state agencies are investigating and pursuing wage and hour claims more aggressively than ever,” said Michael Kun, the national Co-Chairperson of the firm's Wage and Hour, Individual and Collective Actions practice group. “We hope that our Checklist will serve as an important resource for retail employers to use when confronted with an audit – and perhaps help them avoid an audit altogether.”

Click Here to Download EBG's Wage and Hour Division Investigation Checklist