H.R. Alert / July 2012
by Larry Levy, Employee Relations Management
Did you know….?
- Who is responsible for keeping track of the employees’ hours of work?
This may surprise you. It is your responsibility to accurately record the actual work hours for all your non-exempt employees. It is not the responsibility of your employees. You may use time sheets, time cards, time clocks, computerized time clocks or time record programs on your cash register. It doesn’t make any difference as long as the information can be readily retrieved and will satisfy the wary eye of the state Labor Commissioner
- What information needs to be recorded on the time sheet?
For every non-exempt employee and for every work day you must record the actual time
- they started work;
- they began their meal break;
- they ceased their meal break;
- they ceased working at the end of the work day; and
- any overtime they earned each day and each week.
Ensure that every time card reflects this information on a daily, weekly or bi-weekly basis. Further, have the employee sign in black or blue ink the time card signifying his/her agreement to the hours reported. Also have the supervisor sign the time card verifying the accuracy of the reported hours. Writing down that the employee worked 8 hours on a given day will not pass muster. Nor will stating an employee took a one-hour lunch on a given day. You must document the actual hours worked.
- You need to know California’s daily and weekly overtime rates for non-exempt workers.
California non-exempt workers will be paid 1-1/2 times their regular rate of pay for hours worked in excess of 8 hours in a workday, or 40 hours in a workweek, and for the first 8 hours worked on the 7th day of work in any workweek. Further, these non-exempt workers will be paid 2 times their regular rate of pay for hours worked in excess of 12 hours in a workday and in excess of 8 hours on the 7th day of work in any workweek. Only these hours actually worked are counted to determine overtime pay. This needs to be documented in your employee handbook.
Some employers denote employees as being on a salary but that does not mean salaried non-exempt workers are ineligible for the overtime premium. It means when a “salaried” non-exempt worker works over 8 hours in a work day or over 40 hours in a work week you must calculate their hourly wage and apply the overtime premium.
- Determine when the work week begins to calculate overtime.
If you have to pay overtime after an employee works over 8 hours a day or 40 hours a week it is important to define when the work week begins. Most employers define the work week as beginning at 12:01 A.M. Monday morning and running through midnight on the succeeding Sunday night. It really doesn’t really matter when the work week begins (e.g., Wednesday at 3:00 P.M. etc.) as long as you are consistent from one week to the next. This, too, needs to go into your handbook.
- Realize that overtime requirements apply to almost all types of wages, not just the hourly wage or salaries.
Non-exempt workers are also entitled to receive the overtime premium on commissions, piece-rates and no-discretionary bonuses. As an example if you pay bonuses every month this should be factored into the overall compensation and thus will raise their hourly wage and increase the amount of overtime premium. As an example, if your worker earns $25.00 per hour but receives a $300.00 bonus each month their overall hourly wage increases from $25.00 per hour to $26.87. The overtime premium at a rate of 1.5 equals $40.30 per hour. For every hour of overtime you owe this worker $40.30. Consider non-monetary bonuses!
- Misclassifying Employees as Independent Contractors.
This newsletter is insufficient to address the dangers of misclassifying employees although I have addressed this issue in the past. Suffice to say, there are numerous financial penalties for violating this and I recommend you consult with me before you use independent contractors. President Obama has hired several hundred investigators to identify those employers who misclassify employees. It’s ugly!
- When do you have to pay the Employee his/her Final Paycheck?
Several employers are under the mistaken belief they have 72 hours to provide a departing employee his or her final paycheck. Or they believe they can pay the employee at the end of the pay period. Both are wrong. You must pay a departing employee all his/her earned wages or salary including his or her accrued and unused paid vacation on his/her final day of employment. This applies to employees who resign, are laid-off or have been terminated for performance reasons. The only exception is the employee who resigns without providing you with advance notice and you have 72 business hours to provide them with their final paycheck. If you mess up here you will have to pay “waiting time penalties” calculated at a full day’s wage up to 30 days until the employee receives his/her final paycheck.
- Do I have to Enforce Meal and Rest Breaks?
Last May’s H.R. Alert focused on California Supreme Court’s decision on both meal and rest breaks. If you did not get this Alert please call me. You must provide but not police meal and rest breaks. My recommendation is to encourage non-exempt employees to take a 30 minute unpaid meal break for every five hours of work and schedule the meal break between the fourth and fifth hour. If the employee works a 6 hour shift the meal break may be waived by mutual consent. Further, you must provide at least at least one 10 minute paid rest break for every 4 hours of work. Do not discourage your employees from taking these breaks. Yes, it is still true if you eliminate meal and rest breaks you are obliged to pay employees an additional hour’s wage for each missed break. If they miss both the meal and rest breaks you owe them not one but two hours of additional wage.
- Do I have to pay the overtime premium when the overtime was not authorized by management?
Yes, you do. However, the lack of authority may constitute a “performance issue” that you may confront, counsel and discipline. Do you have to pay an employee who works “off the clock?” Likewise, all work is compensable (fancy term meaning you have to pay) and you must pay employees for any work performed even if it was not authorized.
10. Just because an Employee is defined as “Exempt” under Federal Law does not mean the Employee is Exempt under California Law.
This is a complicated area of the law and requires an analysis of each exempt position. Employees are not exempt unless they qualify to the following:
- Are primarily engaged (more than 50% of the time) in exempt (management, etc.) duties
- Customarily and regularly exercises discretion and independent judgment.
- Earns a monthly salary that is at least twice the minimum wage, e.g. $640.00 per week, $2,773.34 per month or $33,280.00 per year.
Please be very careful in this area and consult with me if you are ever in doubt.
- How often do you have to pay your Non-exempt Employees?
At least semi-monthly.
- What needs to be included in an Itemized Pay Statement
Please include the following information in each of your pay stubs:
- The employer’s name and address
- The employee’s name and the last four digits of his/her social security number.
- The dates of work for which the employee is being paid.
- The gross wages earned.
- The net wages earned.
- The total hours worked for non-exempt employees
- If employees were paid on a piece-rate basis what was the piece rate and the units earned.
- All applicable hourly rates
- All deductions
And now a little feedback, please.
As most of you know, there have been several significant changes in both federal and California wage and hour laws over the past several years. Those laws are not included in this newsletter. I am contemplating presenting several briefings at the bay area builder exchanges this fall that will update you as to these changes. I envision a four hour seminar on a Friday morning from 8:00 A.M. to 12:00 P.M. Each participant will receive an itemized handout documenting all the changes in the laws. Anticipate these seminars will be offered in Santa Rosa, San Rafael, San Leandro, Napa and San Francisco. A continental breakfast with plenty of beverages will be served. To cover the room rental and food I envision a fee of $100.00. On the other hand, would you consider participating in a webinar.
Please let me know what you think by checking off the following:
⃝ I think it is a great idea! Depending upon the day and location, count me in.
⃝ I would prefer participating in a webinar.
⃝ Thanks but no thanks. I will continue to call you if I have questions.
Please e-mail this page to larrylevy@earthlink.net or fax it to (415) 892-6596
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