SAN FRANCISCO EMPLOYMENT LAW BLOG

Generally, unless an employee is exempt, he or she is entitled to overtime pay. The default is rule is that overtime is calculated at 1.5 times an employee’s regular rate of hourly pay, or “time and a half,” for each hour worked beyond 8 hours per workday or 40 hours per workweek.

For salespeople, comission pay exemption may apply. However, the exemption applies only to employees who are paid on a commissioned basis who:

• Earn at least one-and-a-half times the minimum wage,
• Earn more than half their income in the form of commissions, and
• Work in the mercantile industry (which includes retail jobs), or work in certain professional, technical, clerical, mechanical, and similar occupations.

The commissioned sale exemption only exempts employees who satisfy all three conditions during a pay period.

This means that if an employee earns less than one-and-one-half times the minimum wage during a pay period, the employee must be paid overtime compensation for overtime hours worked during that pay period. Thus, if an employee is regularly paid an hourly wage in one pay period and a combination of hourly wages and commissions in the next pay period, the employee cannot be classified as exempt during the pay period in which no commissions are paid (and is therefore owed overtime wages for hours worked beyond 8 hours/workday and 40 hours/workweek).

This last rule is important for salespeople who do not collect a commission until the customer pays for a purchase. They may be exempt during pay periods in which customers pay for purchases but nonexempt during pay periods when they collect no commissions.

Finally, “commission” has a specific meaning under California law. An employer may designate pay as a “commission” when in fact it is something else. A “commission” is a payment that is based on the amount or value of the sale of the employer’s goods or services that are sold by the salesperson. “Commission” pay may be based on the number of sales made by the salesperson, the value of the sales, or the employer’s profit on the sales. As a contrast, a payment based on production of a good or rendering of a service is not a “commission” even if an employer calls it that. Thus, for example, a construction employee who receives a percentage of a fee charged by the contractor for performing the job is not being paid a “commission”. Similarly, a mechanic who received a percentage of a fee charges by the shop to a customer is not being paid a “commission”.

This may be considered advertising in some jurisdictions. It is intended to provide general information about legal developments and is not legal advice.

Workers have the right to earn a fair wage. Laws are put in place to govern hourly wages for workers in order to prevent individuals from unfair compensation. Unfortunately, not all employers abide by these laws, and some workers may suffer due to not receiving the pay needed to provide for themselves and their families.

It was recently reported that a company in California was fined for wage theft violations. The situation involved a contractor who utilized hundreds of workers on 26 construction projects. As part of the violations, the workers were give one 30-minute meal break, but they were not given other rest breaks. Additionally, some workers were not paid overtime, and other did not receive minimum wage. Rather than paying hourly rates, the company would provide some workers with flat rates, which often did not cover all hours or overtime pay.

As a result, the Labor Commissioner’s Office has required the company to pay $1.9 million in fines. Approximately $1.8 million of that amount will go toward the 472 workers who were not properly compensated, and $72,400 would go toward civil penalties. The violations occurred from Aug. 2014 to July 2016.

Unfair compensation should not be tolerated in the workplace. Of course, many California workers may not realized that they have been the victims of wage theft or fear that they may lose their jobs if they complain. Luckily, individuals in this type of situation can enlist legal advocates to help them understand their cases and determine the best courses of action to address the issues.

Wage theft is nothing new. Workers in California and across the country have been involved in wage and hour claims for generations, and it seems that the problem continues. Most often, reports tell of wage theft in retail, restaurants and seasonal employment, where workers make low wages and may have reasons to avoid complaining about the unfair treatment. However, wage theft by employers is not limited to mom-and-pop businesses just getting by. In fact, some of the wealthiest corporations steal from their workers.

Giants like Walmart, JP Morgan and State Farm regularly face lawsuits because of illegal wage practices. A recent report cited various reasons why businesses that can afford to pay a fair wage continue to steal from their employees. It may be that workers do not always have the support of a union to fight for their pay, and in many areas, the laws related to fair wages are not uniformly enforced.

Wage theft can occur in many ways, such as misclassification of employees, not paying a fair wage and forcing employees to work off the clock. When a corporation saves money on labor, that money can go into the pockets of its executives. This, some believe, is enough motivation to break the law and deny a just wage to many hard-working employees.

The fines and penalties for wage theft do not seem to bother some of the large companies who have faced wage and hour claims multiple times. The report concludes that such companies are willing to take the risk, and the threat of fines does little to deter the practice. However, that does not mean a worker does not have the right to pursue justice when an employer pays an unfair wage. Seeking the guidance of a California attorney is often a prudent first step.

Multiple jurisdictions throughout California have enacted minimum wage laws that require payment of wages greater than those which are required by federal and California state law. Many of these jurisdictions schedule increases to take place on July 1, 2018. Below is a summary of the changes to the minimum wage, effective July 1, 2018.

Fair wages and proper compensation is what many people work for. Often, they must work long, hard hours in order to provide for their families and meet other needs, so whenever something seems off with their pay, it can be concerning. Unfortunately, some employers do not properly pay their workers, and it is often up to the employees to pursue their rightful compensation through wage and hour claims.

Taking legal action can seem intimidating, but it is often necessary when mistreatment and violations of the law have occurred. California readers may be interested in one out-of-state woman who chose to follow this course of action after not receiving her proper pay. The woman was a nail technician at a beauty salon where she claims she was required to clean bathrooms and arrive to work early without being paid for those actions.

The class action lawsuit also states that the workers were not properly paid for the hours they spent on their regular work duties. Legal representation for the woman went as far as to say that the employers picked which hours they felt like paying their workers. The owners of the salon stated that they were unaware of these allegations until the lawsuit, and they do not believe any wrongdoing took place.

People do not have to stand by and have their rights violated by employers. If California workers believe that they have not been appropriately compensated for their hours worked, they may want to gain more information on wage and hour claims. Speaking with knowledgeable attorneys could help interested parties gain thorough evaluations of their cases.

Source: CBS Denver, “Nail Tech Files Class Action Lawsuit Against Ella Bliss Beauty Bar“, Joel Hillan, May 17, 2018

The California Supreme Court adopted a new legal standard that will make it more difficult for businesses to misclassify workers as independent contractors. This will directly affect the trucking and transportation industry as well as the gig economy (e.g., Uber, Grubhub, Bellhops, Caviar, Dolly, DoorDash).

Specifically, the Court adopted a new standard for determining whether a company “employs” or is the “employer” for purposes of California law.

Under the new “ABC” test, a worker is considered an employee unless the hiring entity establishes all three of these prongs:

1. the worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of such work and in fact;
2. the worker performs work that is outside the usual course of the hiring entity’s business; and
3. the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity.

Prong A: “Free From Control And Direction”

The Court first discussed the “A” prong, which is akin to the common law control standard. The Court concluded that a worker who is, either by contract or by practice, subject to the type and degree of control a business typically exercises over employees should likewise be considered an employee. Accordingly, businesses must now establish that workers are free of such control to meet this part of the test. The Court confirmed that a business “need not control the precise manner or details of the work” in order to be found to have maintained the necessary control sufficient to lead to a finding of employee status.

Prong B: “Outside Usual Course Of Business”

Prong “B” seeks to determine whether workers can reasonably be viewed as individuals who are providing services to the business in a role comparable to that of an employee, rather than in a role comparable to that of a traditional independent contractor. Workers whose roles are “most clearly comparable” to those of employees include workers whose “services are provided within the usual course of the business” and thus would “ordinarily be viewed by others as working in the hiring entities’ business.”

Prong C: Customarily Engaged In Independent Trade

The third “C” prong seeks to identify those workers that have taken steps to create their independent business. If the worker has independently made the decision to go into business for themselves, they are likely to be found as satisfying this third prong. If, on the other hand, they are “simply designated as an independent contractor by the unilateral action of a hiring entity,” there is a substantial likelihood they will be found to be an employee.

For more information contact one of our attorneys.

Source: https://leclerclecldev.wpengine.com/wp-contentwww.fisherphillips.com/resources-alerts-contractor-apocalypse-california-supreme-court-adopts-broad?click_source=sitepilot06!3159!b2xlZ0BsZWNsZXJjbGF3LmNvbQ==, “Contractor Apocalypse: California Supreme Court Adopts Broad New Misclassification Test,” April 30, 2018.