Wage & Hour Counsel : Wage & Hour Lawyer & Attorney : Littler Mendelson Law Firm : Employment Law, Labor Relations

By Jennifer Ciralsky and Sophia Behnia

In Wang v. Chinese Daily News, Inc., on remand from the U.S. Supreme Court, the Ninth Circuit Court of Appeals applied the Supreme Court’s decision in Dukes v. Wal-Mart to reverse and remand a federal district court decision certifying a California state wage law class action. Like Dukes, Wang has had a somewhat protracted history. Following certification as an FLSA collective action, and prior to the Supreme Court’s decision in Dukes, the district court certified the plaintiffs’ state wage law claims as a class action under Rule 23(b)(2) of the Federal Rules of Civil Procedure (FRCP) or, in the alternative, under Rule 23(b)(3). Following a 16-day jury trial, the plaintiffs were awarded over $2.5 million. The company appealed and the Ninth Circuit affirmed. On appeal to the U.S. Supreme Court post-Dukes, the Court vacated the Ninth Circuit decision and remanded for reconsideration in light of its decision in Dukes.

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By Christopher Kaczmarek

On March 4, 2013, the Massachusetts Supreme Judicial Court resolved a dispute regarding the effect of after-the-fact gratuitous payments on wages due under state law. In Dixon v. City of Malden, the court held that gratuitous, after-the-fact payments by the City did not extinguish the City’s obligation to pay an employee for the value of his accrued, unused vacation time.

The plaintiff in the case had been the director of a nursing home owned by the City of Malden. After over 20 years of employment, the City’s board voted not to reappoint him to the position. The City agreed to negotiate regarding retirement and severance issues, but the parties were unable to reach an agreement prior to the employee’s departure. At the time, he had accrued 50 days of unused vacation time, amounting to $13,615.54.

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By Stacey E. James

Effective January 1, 2013, California’s new Labor Code section 2751 requires employers to provide written commission plan agreements to all employees who perform services in California and whose compensation involves commissions. The agreement must explain the method by which the commissions shall be computed and paid. The commission plan must also be signed by the employer and the employer must obtain a signed receipt from each employee.

The new law incorporates the definition of commissions from California Labor Code section 204.1, which defines commission wages as “compensation paid to any person for services rendered in the sale of such employer’s property or services and based proportionately upon the amount or value thereof.” Types of payments that are specifically excluded from this definition include:

• Short-term productivity bonuses such as are paid to retail clerks;
• Temporary, variable incentive payments that increase, but do not decrease, payments under the written commission contract; and
• Bonus and profit-sharing plans, unless there has been an offer by the employer to pay a fixed percentage of sales or profits as compensation for work to be performed.

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By Laura Hayward

In See’s Candy Shops, Inc. v. Superior Court, the California Court of Appeal for the Fourth Appellate District explicitly held that in California employers are entitled to use a timekeeping policy that rounds employee punch in/out times to the nearest one-tenth of an hour (a “nearest-tenth rounding policy”) if the rounding policy is “fair and neutral on its face” and “is used in such a manner that it will not result, over a period of time, in failure to compensate the employees properly for all the time they have actually worked.” The court adopted the standard used by both the United States Department of Labor and the California Division of Labor Standards Enforcement, bringing “sweet” news to employers who use rounding policies.

The very existence of these policies had been called into question by the trial court in this case when it granted summary adjudication to the plaintiffs on several of See’s key affirmative defenses in a certified wage and hour class action challenging See’s timekeeping policy. Two of these defenses encompassed See’s claims that: (1) its nearest-tenth rounding policy was consistent with state and federal laws permitting employers to use rounding to compute and pay wages and overtime; and (2) that its rounding policy did not deny the plaintiff or class members full and accurate compensation. In response to the trial court decision, See’s filed a writ of mandate petition challenging the court’s decision on these two defenses, which was summarily denied by the appellate court. 

Undeterred, See’s filed a petition for review with the California Supreme Court, which granted the petition and ordered the appellate court to vacate its prior order and issue an order to show cause in the matter. After extensive further briefing of the issues by both parties, and the filing of several briefs by amici curiae, See’s got its just desserts when the appellate court ordered the trial court to vacate its decision and enter a new order denying summary adjudication to the plaintiffs as to See’s affirmative defenses. Of course, while the ruling leaves open the issue of whether See’s will ultimately prevail in proving its rounding policy is fair and neutral, it does spare rounding policies from what could have been a death knell.

To learn more about the decision, please see Littler's ASAP, Sweet News on Rounding for California Employers: See's Candy Shops, Inc. v. Superior Court, by Laura Hayward.

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By Brian Dixon

The favorable outcome for some employers in Arechiga v. Dolores Press, 192 Cal. App. 4th 567 (2011), which we previously discussed, has been undone by the California Legislature. In Arechiga, a California Court of Appeal ruled that a non-exempt employee’s salary could provide compensation for more than 40 hours of work in a week. This result, however fortuitous for employers, was difficult to reconcile with section 515(d) of the California Labor Code, which stated in fairly specific terms that the hourly rate of a salary-paid, non-exempt employee was the salary divided by 40. Whatever latitude there may have been for the conclusion reached by the court in Arechiga under the statute has been banished by Governor Brown’s signing Assembly Bill  2103 into law on September 30, 2012. That bill adds section 515(d)(2) and slightly revises section 515(d)(1) of the Labor Code with the stated intent to overrule Arechiga. Section 515(d)(2) now states that “Payment of a fixed salary to a nonexempt employee shall be deemed to provide compensation only for the employee’s regular, non-overtime hours, notwithstanding any private agreement to the employer.” For the typical non-exempt employee, section 515(d)(2) will mean that any salary will not extend beyond providing compensation for five, eight-hour days per week. The amendments to the Labor Code will take effect January 1, 2013. 

Photo credit: Asilvero

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The California Legislature was active this past session. As a result, numerous wage and hour laws have been enacted that will take effect January 1, 2013. Highlights include:

• Revised provisions concerning penalties for wage statement violations.
• Increasing the amount of wages that are exempt from wage garnishment.
• Specifying that fixed salaries paid to non-exempt employees only provide for an employee’s regular, non-overtime hours, regardless of the parties’ agreement.
• Additional wage statement and Wage Theft Prevention Act notice requirements for temporary services employers.

To learn more about these and other new California laws, please see Littler’s ASAP, What's New? California's Major 2012 Employment Laws Affecting Private Sector Employers, by Christopher Cobey and Tomomi Glover.

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The New York State Senate and Assembly recently passed a bill amending New York Labor Law section 193 to expand an employer's ability to make deductions from employee wages. The bill is currently awaiting delivery from the New York State Assembly to the governor's office for his approval. The governor's approval is virtually certain as his office previously submitted a memorandum supporting the amendment.

Once effective, the new law will amend Labor Law section 193 to allow employers to make additional wage deductions, with an employee's written consent, for:

• Prepaid legal plans;
• Purchases at certain charitable events;
• Discounted parking or passes, fare cards, or vouchers related to mass transit;
• Fitness, health club or gym memberships;
• Cafeteria, vending machines and pharmacy purchases at the employer's premises;
• Tuition, room, board and fees related to certain education institutions; and
• Certain child care expenses.

To learn more about the legislation and its potential implications for employers, please continue reading Littler's ASAP, Wage Deductions Almost Legal in NY? Legislation Allowing Employers to Make Wage Deductions Awaits Governor's Signature, by Bruce Millman and Adam Colón.

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By Steven Kaplan

On December 23, 2011, the U.S. Court of Appeals for the Fourth Circuit in Kunda v. C.R. Bard, Inc. held that employers in Maryland may have their employees execute employment agreements with a choice of law provision other than Maryland, so long as the other jurisdiction has a “substantial relationship” to the parties and the application of the law would not be contrary to a fundamental Maryland public policy. This case settles the issue, at least for now, of whether an employee who works in Maryland has a fundamental right to sue for wages under the Maryland Wage Payment and Collection Law (“MWPCL”) – generally a law favorable to employees.

In Kunda, the plaintiff fervently argued that the MWPCL, not New Jersey’s wage payment and collection law, should apply to her employment agreement because the MWPCL constitutes a fundamental Maryland public policy. The Fourth Circuit disagreed. Citing to two other Maryland laws that contain express language concerning whether those laws contain a strong public policy, the court noted that “by contrast, the MWPCL contains no express language of legislative intent that the law is a fundamental Maryland public policy.”

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By Brian Dixon

In Aleman v. Airtouch Cellular, a California Court of Appeal ruled on December 21, 2011 that one class representative was not entitled to additional reporting pay or split shift premiums and a second class representative could not pursue such claims because she had signed a release in exchange for enhanced severance compensation. The court did, however, reverse the award of attorneys’ fees to the employer.

The first class representative was scheduled for store meetings which occurred once or twice a month before the store opened. The meetings were scheduled at least four days in advance and were scheduled to be an hour to an hour-and-a-half in length. The class representative always worked for at least one half of the meeting time.

The first class representative sought reporting time pay under the provision of the California Wage Orders that states: “Every work day an employee is required to report for work and does report but is not put to work or is furnished less than half said employee’s usual or scheduled day’s work, the employee shall be paid for half the usual or scheduled day’s work, but in no event for less than two (2) hours nor more than four (4) hours, at the employee’s regular rate of pay, which shall not be less than the minimum wage.”

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By Jennifer Robinson, Eric Stevens and Rachel Ross

As a general rule, the Fair Labor Standards Act does not require an employer to pay an employee’s travel time between home and their regular place of work. However, Tennessee employers should be aware of another travel time issue – Are employees serving on jury duty entitled to compensation for travel time to and from jury duty when the employee is not compensated for travel as part of the employee’s usual compensation? According to an Opinion just issued by the Tennessee Attorney General, the answer is YES, “subject to certain limited exceptions.”

TCA 22-4-106(b) requires, in pertinent part:

(b) Notwithstanding the excused absence as herein provided in subsection (a), the employee shall be entitled to the employee's usual compensation received from such employment; however, the employer has the discretion to deduct the amount of the fee or compensation the employee receives for serving as a juror. Moreover, no employer shall be required to compensate an employee for more time than was actually spent serving and traveling to and from jury duty. 

On its face, the new Opinion seems straightforward – employees should be paid their travel time for jury duty even if that same travel time would not be compensable if the employee was traveling to or from work. However, as with most broad “clarifications,” this Opinion leaves several open questions.

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By Christopher Kaczmarek and Jeanne Barber

In July 2008, Massachusetts amended its state wage and hour laws to provide for mandatory awards of treble damages for plaintiffs who prevailed under those statutes. Since then, lawyers have disagreed as to whether this treble damages provision should apply retroactively. On August 31st, the Massachusetts Supreme Judicial Court resolved this dispute by unanimously holding that the treble damages provision does not apply retroactively.

In Rosnov v. Molloy, the plaintiff, an attorney, filed a complaint on April 17, 2007, claiming that her former partner withheld commissions from her in violation of the Massachusetts Payment of Wages Law. A jury found in favor of the plaintiff in March of 2009.

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In a case of first impression, California's Sixth District Court of Appeal sets down a new four-part test for distinguishing between sabbaticals and vacation in Paton v. Advanced Micro Devices, Inc. The decision is important because it provides guidance to California employers regarding the circumstances under which unused Paid Time Off (PTO) benefits must be paid out upon termination.

In the case before the court, the plaintiff became eligible for, but never took, an eight week paid sabbatical. According to the employer's sabbatical program, the paid leave would be forfeited if not used while the employee remained with the company. After the plaintiff resigned and did not receive any pay-out for his unused sabbatical, he brought a class action lawsuit claiming that the sabbatical was the legal equivalent of extra vacation for long-term employees. As a result, the employee argued, an eligible employee who did not use the eight weeks of paid time off should be paid for any unused portion upon termination, just as he would be paid for accrued and unused vacation.

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By Ryan L. Eddings

A federal judge in California held this week that employers may lawfully deduct amounts owed by employees on their employer-guaranteed credit cards from the employees’ final pay. In Ward v. Costco Wholesale Corporation, a group of former employees claimed that Costco’s deduction of outstanding amounts owed by these former employees on their Costco-sponsored credit cards from the employees’ final paychecks violated the Fair Labor Standards Act and California minimum wage and overtime legal requirements.

Like many employers, Costco provided a guaranteed credit card program to some employees, guaranteeing the credit card to the issuer in the event of an employee’s default. Each employee signed an authorization permitting Costco to deduct an amount equal to the employee’s credit card then-outstanding balance from the employee’s final paycheck. Each terminating employee received a final paycheck that included pay for all hours worked during the final pay period, as well as accrued vacation and sick leave pay. Costco then deducted an amount equal to the outstanding balance of the employer-sponsored credit card from the employees’ final pay.

At trial, the group of former employees argued that only gross wages for hours worked could be considered in determining whether Costco satisfied its obligation to pay minimum and overtime wages. The court rejected this argument, holding that it could also consider the pay for non-work, such as accrued vacation and sick leave pay. Using this figure, the court concluded that none of the nineteen former employees “had an amount withheld high enough to invade minimum or overtime wages.” Accordingly, the court entered judgment in favor of Costco, holding that plaintiffs failed to prove a violation of the FLSA and California wage and hour laws.

Photo credit: Matthew John Hollinshead

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By William Hays Weissman

Effective on July 20, 2011, employers in Arizona can mandate electronic payment of wages. Employees that do not elect direct deposit may be paid by payroll debit card, which now can be treated as the default option.

HR 2151 amends Ariz. Stat. sections 23-350 and 23-351 by allowing employers to choose one of four methods of payment of wages: (1) cash; (2) check; (3) if elected by the employee, direct deposit into a financial institution of the employee’s choice; or (4) if an employee does not designate a financial institution for direct deposit, by payroll debit card.

If an employer chooses to pay wages by payroll debit card, the employee must be entitled to withdraw his or her full wages without fee at least one time per pay period, but not more than once per week. The employer must also provide the employee with a list of all potential fees an employee may incur. Also, if the employee is paid by direct deposit or payroll debit card, the employer must furnish the employee with a written or electronic statement of the employee’s earnings and withholdings.

Payroll cards can be a win-win option for both employers and employees. Employers are given greater flexibility in methods of paying wages at reduced cost, and with greater security than cash or traditional checks. Employees no longer have to incur check cashing fees, and also have protection against lost cash. While it is not clear that Arizona’s bill represents any kind of trend by the states toward mandating electronic payment of wages, Arizona’s law should definitely be welcome by Arizona employers.

Photo credit: MBPHOTO, INC.

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On May 11, 2011, the California Supreme Court denied review of a state appellate court's decision in Price v. Starbucks. As we previously discussed, in that case, the California Court of Appeal, Second District, upheld the lower court’s orders striking the plaintiff’s itemized wage statement claim for failure to show injury and his reporting time pay claim finding no violation of law.
 

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By Josh Kirkpatrick

On May 9, 2011, the U.S. Department of Labor announced the launch of its first smartphone application, an electronic timesheet employees can use to track their hours of work, including breaks. According to a DOL press release, the information tracked through this application “could prove invaluable during a Wage and Hour Division investigation when an employer has failed to maintain accurate employment records.” The app, currently available in English and Spanish and only for iPhone, iPad and iPod Touch devices, allows users to input their hourly rate of pay and calculates the amount of wages due to the worker. Additionally, through the app, users can add comments related to their work hours; view a summary of work hours in a daily, weekly and monthly format; and email the summary of work hours and gross pay as an attachment. A glossary, limited information regarding wage and hour laws, and contact information for the DOL are accessible through the app. The agency stated it will pursue the development of updates that allow employees to track their tips, commissions, bonuses, deductions, holiday pay, pay for weekends, shift differentials and pay for regular days of rest, among other pay information.
 

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By Jennifer Nelson

Earlier this week, the Court of Appeals for the Ninth Circuit held that an employer violated Oregon’s wage and hour law by (1) crediting the cost of seasonal workers’ on-site housing toward the Oregon minimum wage, and (2) paying its workers on the day after their last workday instead of on the last workday itself.

The employer in this case, Bear Creek Orchards, Inc., operates peach and pear orchards in Medford, Oregon. The company hires approximately 350 seasonal workers for its month-long harvest. Bear Creek recruits the majority of its workforce from the San Luis, Arizona, area, and offers those workers on-site housing and meals as part of their compensation. Bear Creek charged workers between five and seven dollars a day for the housing, deducted this amount from the workers’ paychecks, and credited that amount toward its minimum wage obligation under Oregon law. In addition, the company generally provided these employees with their final paychecks on the morning after their last day of work.

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In the wave of class litigation flooding the courts in California claiming rest breaks were not permitted, one court recently denied class certification based on a common sense conclusion that the experience of a handful of guards could not be assumed to be the experience of thousands.

In a recent case, Temple v. Guardsmark LLC, two security guards sought penalties on behalf of a class of thousands of guards based on their employer’s alleged failure to provide “off-duty” rest periods and accurate wage statements.

The guards worked “solo” at various client sites and thus had no one to relieve them from duty for breaks. They alleged company policies prohibited them from leaving their posts to take ten minute rest periods, and they supported their motion for class certification with sworn declarations from fourteen guards saying they took no breaks. Defendant Guardsmark countered with 96 sworn guard declarations, each attesting to having regularly taken rest breaks, spending the time engaged in a wide variety of personal activities.

Faced with the dueling declarations, the question before the court was not whether Guardsmark in fact failed to legally provide rest periods, but whether the two security guards who sought to be class representatives could offer common evidence to prove that thousands of guards in fact were illegally denied rest breaks without trying the claims of each guard one-by-one. The court found that the guards had not shown they could resolve these claims based on “common proof.” The evidence instead suggested that many guards—at least the 96 who supported their employer—did in fact take rest breaks, and even the evidence offered by plaintiffs raised questions such as whether idiosyncratic directions of a lone wolf supervisor rather than a common company-wide policy was the reason for some employees being deprived of rest breaks.

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The California Court of Appeal, Second District, affirmed yet another ruling in favor of employers in the state. In Price v. Starbucks, case number B219501, the court upheld the lower court’s orders striking the plaintiff’s itemized wage statement claim for failure to show injury and his reporting time pay claim finding no violation of law.

Plaintiff Drake Price was employed by Starbucks as a barista for a brief period in late 2007. When Price failed to show up for a shift he was taken off the work schedule for the week, and was told to come in to “have a talk” with the manager five days later. When Price reported to Starbucks on the designated date, he was told his employment was being terminated in a “45 second” meeting. On the day of his termination, Price was paid his final wages and also paid two hours of “reporting time pay” for the termination meeting, as required by Cal. Code Regs., tit. 8, § 11050, subd. 5(A). He thereafter sued on behalf of himself and all others similarly situated, asserting claims for reporting time pay pursuant to the California Wage Orders, inaccurate wage statements in violation of California Labor Code section 226, and for various other Labor Code violations, as well as unfair business practices under the California Business and Professions Code.

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The U.S. District Court for the Western District of New York has determined that the Fair Labor Standards Act requires employers to reimburse foreign H-2B visa workers for certain expenses paid by the workers if, after subtracting the costs from the workers’ wages, the workers’ effective net salary would fall below minimum wage. See Teoba v. Trugreen Landcare, No. 10-CV-6132 (W.D.N.Y. filed Feb. 15, 2011). The plaintiffs in Teoba alleged that they had paid for the costs of obtaining an H-2B visa, traveling to the United States, and the services of a third-party recruitment firm, which the employer had retained. The plaintiffs further alleged that after deducting the costs from their earned wages they received a net salary that fell below minimum wage.

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The Seventh Circuit recently reversed the denial of class action certification in a Fair Labor Standards Act (FLSA) collective action, rejecting the notion that FLSA collective actions and state-law class actions are incompatible when filed in the same lawsuit. Ervin v. OS Rest. Servs., No. 09-3029, 2011 U.S. App. LEXIS 863 (7th Cir. Jan. 18, 2011).

In Ervin, the plaintiffs, former and current employees of a popular restaurant, sued the restaurant on behalf of themselves and all others who had previously worked or were currently employed at the restaurant as hourly or tipped employees, claiming that the restaurant’s tipping policy violated both the FLSA and two state wage & hour laws – the Illinois Minimum Wage Law and the Illinois Wage Payment and Collection Act.

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Its that time of year again. Freezing rain and snow making daily commutes difficult and dangerous; school closings keeping parents at home to care for their kids; businesses deciding to close operations. Thus, it may be a good time to review your inclement weather policy to ensure compliance with the Fair Labor Standards Act (FLSA).

For non-exempt employees, compliance under federal law is simple. Non-exempt employees must only be paid for time actually worked. The FLSA does not require non-exempt employees to be paid when they do not come to work due to inclement weather. However, employers do need to be cognizant that although federal law has no such requirements, some states have "reporting time pay" laws that require non-exempt employees be paid whenever the employee reports to work as required or requested by the employer, even if no work is available. (See our ASAP on reporting time pay).

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A number of severe winter storms have hit different regions of the United States during the past few weeks. These storms create a myriad of problems for employers. One problem that often is overlooked is whether an employer who shuts down its operations still must pay those employees who report to work. Although such pay is not required by federal law, a number of states have enacted "reporting pay" laws which may be applicable in these circumstances. See our recent ASAP for a detailed analysis of the potential implications of such reporting pay laws.

This entry was written by Christopher Kaczmarek.
 

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New York law has long prohibited employers from paying workers less than the minimum wage or failing to pay proper overtime. This newly enacted piece of legislation, the Wage Theft Prevention Act, now adds strict new penalties for failure to comply with minimum wage and overtime laws. The new law also amends current wage notification requirements for employers.

Under the Wage Theft Prevention Act, in the event of a wage payment violation, an employer may be liable for up to twice the amount that was due as wages as well as other penalties and legal fees. The law also prohibits retaliation against employees who exercise their rights under the statute.

Additionally, the new law requires notifications to be provided to employees in their native language at the time of hire and on or before each February 1st. Previously the law required such a notification to include the rate of pay and regular paydays. The new law adds several additional requirements to the contents of the notification, including more detail on the basis of pay (i.e., whether the employee is paid on a salary, hourly, piece or commission basis, etc.) and information regarding the employer, such as its address and phone number. There are also new detailed requirements concerning the acknowledgment of the required notification, and a new records retention requirement of 6 years.

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Puerto Rico is a unique jurisdiction from a payroll tax perspective because Puerto Rico private sector employees are not subject to federal income tax withholding. Puerto Rico employees generally owe personal income tax on employment wages earned and are subject to withholdings required by the Federal Insurance Contributions Act (FICA) and the Federal Unemployment Tax Act (FUTA).

As part of the tax reform recently proposed by the Governor of Puerto Rico, the Puerto Rico Secretary of the Treasury issued Administrative Determination No. 10-09 (AD 10-09), which exempts employers from their obligation to withhold Puerto Rico income tax from wages paid in December 2010 and from the 2010 Christmas Bonus. (Note: this is not a discretionary bonus.) AD 10-09 exempts employers and withholding agents from their obligation to withhold income tax at source from wages paid in daily, weekly, biweekly, bimonthly, and monthly payroll periods in December 2010. The Administrative Determination also exempts employers from the requirement to withhold income tax from the 2010 Christmas Bonus.

Any income that is not considered wages or designated as the statutory Christmas bonus is subject to Puerto Rico income tax withholding. Employers should continue making the withholdings required by federal law, including the FICA and FUTA taxes, and other applicable local and employee voluntary deductions.

This entry was written by Niza Motola.

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The Ninth Circuit Court of Appeals has recently held that the City of Oakland, California did not violate the Fair Labor Standards Act (“FLSA”) when it required its police officers to repay the City for the cost of their training if they voluntarily resigned before completing five years of employment. (Gordon v. Oakland, No. 09-16167 (9th Cir. Nov. 19, 2010)).

In Gordon, the City and the bargaining unit for its police officers had entered into an agreement which required police officers to repay the City a pro rata share of their police academy training costs if they voluntarily separated from the City’s employment prior to completing five years of service. For example, a police officer who resigned after one year of service would have to repay 80% of the training costs whereas a police officer resigning after four years of service would only have to repay 20%. A police officer who resigned after five years of service would owe nothing to the City for training cost reimbursement. The agreement further provided that any repayment would be due at the time of the officer’s separation and that the City could deduct amounts due from the officer’s final paycheck.
 

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On Thursday, the state Supreme Court dealt another blow to California employers in Pineda v. Bank of America, N.A. In a unanimous opinion, the Court announced that the penalties recoverable under section 203 of the California Labor Code are subject to a three-year statute of limitations rather than a one-year statutory period, irrespective of whether the employee seeks to recover unpaid pages along with the penalties.

Under section 203, if an employer willfully fails to timely pay final wages to an employee after termination or resignation, the employee is entitled to a penalty in the amount of a day’s wages for each day the wages remain unpaid, to a maximum of 30 days. Following a review of the statutory language, legislative history, and public policy underlying section 203, the Supreme Court ruled that all section 203 penalties are subject to a three-year statute of limitations, as specified within the statute itself. With this decision, the California Supreme Court increases the potential for wage and hour class actions seeking section 203 penalties alone, as such cases can now clearly be brought as much as three years after the alleged failure to timely final wages.

This entry was written by Dominic Messiha and Lauren Howard.

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The Texas Workforce Commission recently amended its regulations to clarify the types of compensation that must be paid to employees upon the termination of the employment relationship.

The new rules state that vacation, sick pay, paid time off (“PTO”), and paid days off “(“PDO”) accrue and must be paid to separated employees only if required by a written agreement or policy. In addition, accrued leave time does not carry over from year to year unless a written agreement or policy provides for such carry over.

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Senator John Kerry (D-MA) and Rep. Jim McDermott (D-WA) have introduced a bill that would curtail the use of a federal “safe harbor” that allows businesses to treat workers as independent contractors for federal employment tax purposes, regardless of the employee’s actual status under the common law test. The Fair Playing Field Act of 2010 (pdf) (H.R. 6128, S. 3786) would, among other things, require the Secretary of the Treasury to issue prospective guidance on worker classification for federal employment tax purposes. The safe harbor provided under section 530 of the Revenue Act of 1978 would continue to be available until the date an individual’s employment status is reclassified. The worker’s reclassification date would be the earlier of (a) the first day of the first calendar quarter beginning more than 180 days after the date of an employee classification determination by the Secretary of the Treasury; or (b) the effective date of the “first application final regulation” issued by the Secretary of the Treasury with respect to such individual (or if later, the first day of the first calendar quarter beginning more than 180 days after such regulation is issued). To learn more about the bill and its potential implications for employers, please continue reading at Littler's Washington, D.C. Employment Law Update blog.

Photo credit: SchulteProductions

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On August 31, 2010, just in time for Labor Day, New York Governor David Paterson signed into law the “Domestic Workers Bill of Rights” (“Bill of Rights”), which grants certain employment protections to household domestic workers such as nannies, caregivers and housekeepers. The Bill of Rights, which takes effect on November 29, 2010, is the first of its kind in the nation and amends New York Labor Law, in addition to other statutes, to entitle domestic workers to receive overtime pay, one day of rest per week or overtime pay when they work on their day of rest, and three days of paid time off after one year of employment. To learn more about the law and its implications for employers, please continue reading Littler's ASAP, "New York Enacts Bill of Rights for Domestic Workers," by Stephen A. Fuchs.

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New Hampshire recently amended its wage and hour law to permit employers to make deductions from employees’ wages for “legal plans and identity theft plans without financial advantage to the employer when the employee has given his or her written authorization and deductions are fully recorded.” The amendment becomes effective on August 13, 2010.

Although this amendment is modest in nature, it does clarify an issue that previously had confused many New Hampshire employers. Prior to this amendment, the New Hampshire Department of Labor had taken the position that employers could not make deductions from employees’ wages for legal services plans or identity theft plans, even though employees had voluntarily enrolled in those plans and authorized the requisite deductions, because these plans were not identified as permissible deductions under the state’s wage and hour law. This law makes clear that such deductions are now permissible.

This entry was written by Christopher Kaczmarek.

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As of May 21, 2010, Vermont joins a growing number of states who now allow employers to pay employee wages with payroll debit cards. The new law, Act 115 (S.58), amends Vermont State Code §§ 342 and 343 to permit an employer to credit an employee’s wages to a “payroll card account directly or indirectly established . . . in a federally insured depository institution.” Before the employer can do so, however, it must obtain the employee’s written consent, and fully disclose the terms and conditions of the payroll card account option. Furthermore, the employer may not pass on any of the expenses associated with the payroll card account to the employee nor may the employer receive any remuneration for using the card at the employee’s expense. Also, Vermont’s Department of Banking, Insurance, Securities, and Health Care Administration, the agency charged with regulating the Act, may impose additional obligations on employers who utilize payroll debit cards.

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On May 12, 2010, Wisconsin Governor Jim Doyle signed into law two pieces of legislation regarding the misclassification of employees. Senate Bill 672, which will become effective January 1, 2011, requires the Department of Workforce Development (DWD) to establish a system ensuring the proper classification of workers under unemployment insurance, worker’s compensation and labor standards laws. Specifically, the DWD is required to educate employers, employees and the public about the proper classification of persons performing services for an employer; receive and investigate complaints alleging misclassification; conduct investigations on its own initiative; inform other state or local agencies of misclassification of employees; and appoint attorneys to conduct hearings and issue decisions as appeal tribunals.

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After nearly four years, the California Supreme Court has finally issued a unanimous decision in Martinez v. Combs, finding that officers and directors of a corporate employer cannot be held civilly liable for causing the corporation to violate the statutory duty to pay minimum wages where the individual corporate agents acted within the scope of the agency.

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Effective July 1, 2010, Tennessee has amended its wage payment statute, Tennessee Code section 50-2-103, to allow employers to pay their employees using prepaid debit cards if the following conditions are met:

• The employee has the ability to make at least one withdrawal or transfer each pay period without cost to the employee for any amount contained on the card; and
• The employer provides the employee with a full written disclosure of any fees that may apply.

Employees must be provided the option of being paid via direct deposit or prepaid debit card. If an employee elects to be paid by direct deposit but does not designate an account at a financial institution in a timely fashion for the transfer to occur, the employer may arrange to pay the employee via prepaid debit card.

This entry was written by Andrew Voss.

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Effective March 24, 2010, employers in Utah are now permitted to use pay cards to compensate their employees for their wages or salary. The new regulation (Utah Admin. Rule R610-3-22) defines a pay card as a “stored value card that can be used at an ATM-type machine to access wages that are credited to the card.” If an employer in Utah intends to pay employees with a pay card, it must ensure that this new practice meets the following conditions:

1. With one use, or a single transaction, the employee must be able to withdraw the full amount of earned wages without incurring a fee.
2. The full amount of wages for a pay period shall be available for the employee via the pay card on the applicable payday.
3. On each payday, the employer must provide the employee with a written or electronic statement of deductions from the employee’s gross wages for the pay period at issue.
    

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The Maryland General Assembly recently amended the Maryland Wage Payment and Collection Law (MWP&CL) in two significant ways. The MWP&CL governs the timing of payment and payment of wages (such as salary, bonus or commissions) upon the termination of employment.

First, the General Assembly added “overtime wages” to the definition of “wage.” Accordingly, if a court now finds that an employer withheld overtime wages, other than as a result of a bona fide dispute, the employee may be entitled to treble damages. This represents a change from existing court precedent, which provided that an employee could sue for overtime wages only under the Fair Labor Standards Act and the Maryland Wage and Hour Law, but not under the MWP&CL. Notably, the new law fails to provide any guidance to courts about how the conflicting penalty sections of these statutes should be reconciled.

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In its ongoing enforcement efforts of California's public works laws, the State Labor Commissioner's Office issued a press release on March 10, 2010, announcing that two Southern California contractors would be prohibited from bidding on or receiving any public works projects for three years beginning April 19, 2010. California Labor Commissioner Angela Bradstreet explained that the Orders of Debarment were necessary due to the contractors’ “deliberate and willful attempts to skirt the law,” which “will not be tolerated as they take unfair advantage of employees as well as tax payers who fund these public works projects.”

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The Equal Employment Opportunity Commission (EEOC) has revised a portion of its Compliance Manual addressing the timeliness of filing pay discrimination claims in light of the Lilly Ledbetter Fair Pay Act, which was enacted on January 29 of this year. This law overturned the Supreme Court’s decision in Ledbetter v. Goodyear Tire & Rubber Co., Inc., 550 U.S. 618 (2007), which required plaintiffs to file a charge of compensation discrimination within 180 days (300 in jurisdictions that have a local or state law prohibiting the same form of pay discrimination) of the discriminatory act or decision. Continue reading on Littler's Washington D.C. Employment Law Update.

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For the past several years, plaintiffs have routinely sought punitive damages in their wage and hour actions under the California Labor Code. A December 3, 2008 decision by the California Court of Appeals for the Fourth Appellate District may put a stop to that practice.

The plaintiff in Brewer v. Premier Golf Properties sued her former employer for denying her meal and rest breaks, failing to pay her minimum wage for all hours worked, and not providing her with accurate itemized wage statements. The jury awarded the plaintiff $26,300 in unpaid wages and penalties and, after finding that the defendant employer had engaged in malice, awarded the plaintiff an additional $195,000 in punitive damages.

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