Litigator Outlook: ‘Californization’ of State Employment Laws Likely to Linger


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As the new Trump administration transitions to power, employers shouldn’t rest easy when it comes to handling employment law issues because state and local governments are moving in to fill the gaps. 

A wage-hour compliance webinar hosted by The Miller Law Group on Jan. 31 outlined some of this year’s hot legal issues and best business practices. Presenters included partners Carolyn Rashby, Oswald Cousins and Walter M. Stella.

Fed Pulls Back, States Push On 

The Trump administration’s campaign promises were based on less regulation and a pro-business model, “creating the effect of the ‘Californization’ of state laws as the feds pull back,” Stella said. 

For instance, state and local governments are implementing their own minimum wage, overtime, and meal and rest break laws. They’re “filling the vacuum” and “advancing” where the federal government may not be taking steps, he said. 

According to Stella, it’s key for employers to “mitigate litigation risk through consistent practice” in response to legal changes. 

Conversely, he warned that certain types of practices applied “across the board” could give rise to the creation of similarly-situated groups for class action purposes. In federal cases, “75 percent of the time conditional certification is granted,” he said. 

In 2015, there were fewer employee lawsuits, but the payouts were “larger and more significant,” and there was “no tapering off of overall value of litigation costs to employers,” he noted. 

Minimum Wage Concerns

Employers may be located in jurisdictions where the state minimum wage rate exceeds the federal minimum wage. In addition, they may have employees in different localities. 

“Many employers are covered by a higher minimum wage [under] state law,” and “a lot of organized labor and anti-poverty groups are promoting the $15 livable wage on the state and city/county level,” Rashby stated.

Unsurprisingly, some employers find themselves scratching their heads in determining which laws apply. For example, it may be confusing when a worker telecommuting from home lives in a city or state that is different from the location of the employer’s place of business. 

To preclude legal issues, Rashby said employers “are going to have to keep track of different hours employees are working at different minimum wage rates.”  

Overtime Considerations

A federal court in November 2016 halted the Obama-era Labor Department’s final overtime rule that increased the annualized minimum salary level required for exemption. However, employers should still consider any state law changes that could affect employees’ overtime pay. 

Addressing California employers, Cousins observed the federal rule’s impact on the state was minimal because the state’s salary rate eventually would have exceeded the federal annualized minimum salary level. 

However, he noted, employers should contemplate “increasing [their] exempt employees’ salaries along with state minimum wage increases,” as the minimum salary required for overtime exemption increases as the state’s minimum wage increases, as is the case in California.

Cousins also briefly discussed overtime compensation in relation to employee technology use. He recommended that employers consider implementing policies regarding technology use outside the workplace. Further, it’s helpful to adopt specific policies for exempt and nonexempt employees, he said. 

Employers should be particularly concerned about providing cellphones to nonexempt employees. Providing a cellphone to a nonexempt employee carries “risk because they may need to be paid overtime,” Cousins said. 

An exempt employee’s cellphone use may not be as risky with regards to overtime requirements, he added. 

De Minimis Activity, Rounding 

What employee activities are compensable and how to handle time rounding are questions employers continue to confront. Stella discussed how employers should approach rounding policies and de minimis activity.  

Stella said: Under federal law, “insubstantial time doesn’t need to be paid. This typically includes activity that is either difficult to record or an aggregate amount that is insubstantial.”

He also highlighted that rounding policies typically are okay for employers under federal law and specifically, California state law, so long as the rounding is “neutral” and it’s “not cutting anyone short in time in the amount”—either the employer or the employee. 

In terms of compensable time, it’s important for employers to consider that while they may not have requested services from an employee, they may still have to pay up if “that person arguably was put in a position to perform those services,” Stella noted. 

Employers should be prepared with solutions for circumstances in which work is performed outside of official work hours or employee services not demanded are performed. 

Stella stated that in terms of compensation for on-call time, a key factor is whether or not the employee possesses “the freedom to do what [he or she] wants until they get that call.” 

Employee Breaks: Be Proactive

Employers should take steps to ensure they’re making “appropriate determinations of who is entitled to meal and rest breaks under applicable state or federal law,” Stella said. 

Accurate time records and timekeeping are key to managing employee rest breaks, he stressed. 

“When employees aren’t given those breaks and the employer doesn’t have those records, it’s an issue,” Stella said, noting that recordkeeping is “especially important for nonexempt employees and can be the crux of a case.” 

There are rest break scenarios that employers should prepare for and work to prevent. For example, an employee may forget to take a rest break, decide not to take a rest break or may feel like he or she can’t take a rest break. Stella recommended that employers work to mitigate these types of rest break issues. 

As a best practice, he advised employers to adopt a policy of written acknowledgements on time cards. “This is a good idea to show a meal and rest break was taken,” he emphasized. 

Stella also suggested that managers be “well-trained” and “have knowledge of the employer’s meal and rest break rules.” 

To address circumstances in which workplace issues impede employees from taking allocated rest breaks, Stella stressed the importance of training. Employers should “provide training to employees—especially managers. Manuals and policies should encourage employees to step forward immediately to a manager or human resources to let them know if a meal or rest break was impeded so the employer has a chance to fix the problem.”  

Future in Flux Under Trump

Questions loom for labor and employment stakeholders given the Trump administration’s emphasis on business-friendly policies. Regardless of the current political climate, employers should remain vigilant and continue to implement best practices and preventative policies in compliance with federal and state laws.

 

 

 

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