California Wage and Hour Record Keeping Requirements

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1 California Wage and Hour Record Keeping Requirements FEATURED FACULTY: Robert ( Bob ) Jones, Shareholder, Ogletree, Deakins, Nash, Smoak, and Stewart, P.C. (415)

2 Robert ( Bob ) Jones, Shareholder, Ogletree, Deakins, Nash, Smoak, and Stewart, P.C. Robert ( Bob ) Jones is the former California State Deputy Secretary, Special Counsel for the Labor and Workforce Development Agency, (California Department of Labor) appointed by Governor Arnold Schwarzenegger in June As such, he was responsible for the enforcement activities of all the Divisions of the Agency, including the operation of the Division of Labor Standards Enforcement (Labor Commissioner), Division of Safety & Health (Cal/OSHA), and the State s Economic and Employment Enforcement Coalition. Prior to his appointment, Bob was the Deputy Secretary for Policy and Enforcement. He was also the Chief Counsel for the Labor Commissioner and Acting California State Labor Commissioner from 2005 to 2007, all under the Schwarzenegger administration. As Acting Labor Commissioner, he was responsible for enforcing the state s labor laws governing working conditions, minimum wage and overtime. Bob s background includes 30 years of employment litigation and dispute resolution experience before state and federal courts throughout the United States and eight years as a professional labor negotiator. Bob is a Shareholder at Ogletree, Deakins, Nash, Smoak, and Stewart, P.C. where he is chair of the California Wage & Hour Practice Group and co-chair of its national Wage & Hour Practice Group. Bob advises and represents employers in all areas of labor, employment, and legislative matters, with particular emphasis on employers doing business in California. He is a frequent presenter on employment-related topics.

3 **Certificates of attendance and CEUs, when available, must be requested through the online evaluation.** Evaluation for Live Event: We d like to hear what you thought about the audio conference. Please take a moment to fill in the survey located here: Requests for continuing education credits and certificates of attendance must be submitted within 10 days of the live event. Evaluation for CD Recording: Please use the following link to submit your evaluation of the recorded event: Please note: All links are case sensitive Receive 1.25 recertification credit hours toward PHR and SPHR recertification through the Human Resource Certification Institute (HRCI)! For more information about certification or recertification, please visit the HRCI homepage at "The use of this seal is not an endorsement by the HR Certification Institute of the quality of the program. It means that this program has met the HR Certification Institute's criteria to be preapproved for recertification credit."

4 California Wage & Hour Record Keeping Requirements Presented by: Robert (Bob) A. Jones San Francisco An informative and educational briefing addressing important labor and employment law topics. Speaker Robert A. Jones, Shareholder Ogletree, Deakins, Nash, Smoak, and Stewart, P.C. San Francisco (415)

5 Introduction Today s Topics of Discussion What is Work Time? What Must be Recorded? How Must it be Recorded? Where Must Records be Maintained? How Long Must They be Maintained? Which Records Must be Provided to Employees? Introduction Topics - Continued How Precise Must The Records Be? Other Sources of Recorded Time Rounding Ensuring Compliance Liability for Non-Compliance Time for Your Questions 2

6 Compensable Working Time California More Restrictive Than FLSA Employ means to suffer or permit work. All time which is subject to the control of an employer. Hours Worked also includes: On-call time is the employee engaged to wait or waiting to be engaged? Required Meetings and Training All Legally Required Rest Breaks Must be relieved of all duties NOT Meal Breaks Cannot be under the control of the employer All travel time with the exception of time that is not actually work related 3

7 The Continuous Workday Rule Includes work before and at the end of the workday which is integral and indispensable to the principle activity. California Requirements Sources of Requirements California Labor Code California Industrial Welfare Commission Wage Orders Labor Commissioner Web Site 4

8 California Time Recording When Employee Begins & Ends Each Work Period Meal Period Split Shift Interval Total Daily Hours Worked Rest Periods Should Not Be Recorded Meal Periods All Meal Time Must be Recorded Exception Meal Periods need not be recorded where Operations Cease Exception to Exception Garment Manufacturing 5

9 Time & Payroll Records Section 1174 Names & Addresses Ages of All Minors Hours Worked Daily Wages Paid Number of Piece-Rate Units Applicable Piece-Rates at Each Plant or Establishment Employer may not prohibit employees from keeping their own records. Time & Payroll Records Section 226(a) Copies of All Pay Statements & Records of Deductions with appropriate dates. Includes Accurate Computer Generated Showing All Required Information. IWC Wage Orders - Section 7 Additionally requires Time records showing when employee begins and ends each work period. Includes meals and split shifts. 6

10 Notice to Employees Employee Notice Labor Code Includes: All Rates of Pay and the Basis Thereof Other Listed Items DLSE Form Publications.htm#Notices_and_posters DLSE Directions NoticeToEmployee.html Commission Agreements Written Commission Agreements Labor Code 2751 Includes: Written Agreement Method for Computation Signed Receipt 7

11 New CA Healthy Workplaces, Healthy Families Act of 2014 Sick Leave Effective July 1, 2015 Requires Almost All Employers to Provide Paid Sick Days to Their Employees. Has Records Provisions Must Provide Written Statement Each Payday Amount of Sick Leave Available Must Keep Records for Three Years Hours Worked Paid Sick Days Accrued Paid Sick Days Used New CA Healthy Workplaces, Healthy Families Act of 2014 Sick Leave Penalties Failure to Keep Required Records Presumed Employees are Entitled to Maxim Number of Hours Accruable. Failure to Provide Statement with Paychecks $50 per employee per day of each violation up to a maximum of $4,000. At This Point Uncertain if Other Penalties will be applicable. 8

12 Recording Hours Worked Time sheets pen and paper Pros Simple Evidentiary Value Cheap to implement Reflects when work begins and ends Cons Risk of Human Error Increased Administrative costs Susceptible to abuse Recording Hours Worked Time Clock Pros Increased accuracy over time sheets Familiar Accurately records exact clock times Cons Can negatively affect production Administrative costs still high Accurately records exact clock times 9

13 Recording Hours Worked Automated Systems Ultipro, Kronos, Quickbooks, PenSoft, Zpay Pros Import clock data directly into payroll software Flexible entry swipecard, PIN, badge, handprint, fingerprint, webclock, voiceclock Lowers human error rate and administrative costs Allows for data collection and analysis OT trends Cons Most expensive solution Highest training costs May not record when work begins or ends DOL s iphone Personal Timekeeping App 10

14 Recording Hours Worked Free! On itunes Available in English and Spanish This new technology is significant because, instead of relying on their employers records, workers now can keep their own records. This information could prove invaluable during a Wage and Hour Division investigation when an employer has failed to maintain accurate employment records. DOL Sources of Recorded Time Time Keeping Systems Also Computer Terminals Building Access Video Surveillance Equipment Utilization Meters & Logs Cash Register Entries s! ALL Show Precise Times 11

15 Where to Maintain Records Labor Code 1174(d) Central location in the state or at the plants or establishments at which employees are employed. Labor Code 226(a) The place of employment or central location within the State of California. How Long to Maintain Records All Labor Code Sections Now Require Three Years. However The Statute of Limitations on Wage Claims as an Unfair Competition Act Violation is Four Years. 12

16 Employee Rights to Copies Labor Code All personnel records relating to performance or to any grievance. A current or former employee or his or her representative. Reasonable intervals and times. Within 30 calendar days of written request. Limited to 50 per month by representatives. Employee Rights to Copies Labor Code 226(b)&(c) Current or Former Employees Records Pertaining to Employment Right to Inspect or Copy Upon Reasonable Request within 21 Days Labor Code 432 Employees Shall be given a copy of any instrument they sign related to the obtaining or holding of employment, upon request. 13

17 How Precise? Burden is on Employer to pay for All Hours Worked Suffer or Permit Know or Should Have Known Requirement that Employees Not Work Off-The-Clock. Uniformly Enforced What About De Minimis Time? Only a few seconds or minutes which are trifles that may be disregarded. Based on: (1) The practical administrative difficulty of recording small amounts of time for payroll purposes. (2) The aggregate amount of compensable time, and (3) The regularity of the additional work Lindow v. United States, 738 F2d (9 th Cir. 1984) 14

18 Time Rounding Time Clocks Record the Actual Time The pay system then rounds this time using: 5 Minutes Tenths of Hours 6 minutes (Most Common) Quarter Hours 15 minutes (Most Dangerous) Grace Periods are Different Can clock in 10 minutes early or out 10 minutes late but cannot begin work until starting time or continue to work after ending time. Time Rounding Justification Employees must wait in lines to punch into a time clock. It is difficult for bookkeepers to calculate overtime to the minute for each employee. Are These Still Valid Concerns? 15

19 Time Rounding Expressly Permitted by FLSA 29 CFR (b) Permits recording the employees' starting time and stopping time to the nearest 5 minutes, or to the nearest one-tenth or quarter of an hour Time Rounding FLSA Remainder Often Overlooked Presumably, this arrangement averages out so that the employees are fully compensated for all the time they actually work. For enforcement purposes this practice of computing working time will be accepted, provided that it 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. 16

20 Time Rounding Must Pay for All Time Actually Worked Average over a period of Time? How long a Period? Two minutes per day over one year at $15 per hour = $125 per employee. Will Never average out unless employees are regularly allowed to leave work early or show up late. FLSA Case on Rounding Austin v. Amazon, 2010 WL (W.D. Wash. May 2010) Up to 7 minutes early Rounds up to Start Hour Up to 7 minutes late Rounds Back However, over 3 Minutes Late = Flagged for disciplinary purposes. Practice works to the favor of Amazon 17

21 Time Rounding - California FLSA Standard Adopted by California Labor Commissioner DLSE Enforcement Policies & Interpretations Manual 47.1 and 47.2 California Court of Appeals See s Candy Shops v. Superior Court/Silva, 210 Cal.App.4th 889 (October 29, 2012) California follows Federal De Minimis test The See s Candy Shops Case Widely Reported Rounding is Permitted by California Law NOT Widely Reported Will not result, over a period of time, in failure to compensate the employees properly for all the time they have actually worked. 18

22 Special CA Time Rounding Issue Meal Periods Minimum 30 Minutes Required Six Minute Rounding can result in 18 minute meal showing as 30 minutes. Only Round Time UP Possible Serious Implications Preventative Measures Don t Round Time If You Do: Have a written policy that says No Work Before Scheduled Start or After Scheduled Stop Time Regular Audits of time using other available data Computer Log-ins and outs Employee s Building Access Records 19

23 Ensuring Compliance Pay for all Hours Worked Straight Time Overtime at Appropriate Rate All Missed, Short, or Untimely Meal Period Premiums All Missed, Short, or Untimely Rest Break Premiums Ensuring Compliance Have Compliant Policies No Off-The-Clock Work Meal and Rest Periods Travel 20

24 Ensuring Compliance Enforce All Policies Maintain All Required Records Do Not Incentivize Non-Compliance Audit Compliance by Employees & Supervisors & Managers Potential Legal Liability - Wages Back Wages for Unpaid Time Four Years Overtime Rate for Over Eight Hours Liquidated Damages for Unpaid Time at Minimum Wage Interest Attorney s Fees 21

25 Potential Legal Liability - Penalties Records Section 1174 $500 to Labor Commissioner Section 226(a) $250 per Employee per Pay Period (One Year) IWC Wage Orders - Section 7 $100 per Employee per Pay Period (One Year) Perhaps Attorney s Fees Potential Legal Liability - Penalties Right to Inspect & Copy Section $750 to Employee or to Labor Commissioner Section 226(c) $750 to Employee or to Labor Commissioner Section 1174 $500 to Employee or to Labor Commissioner Section 432 Misdemeanor and $100 per Employee Attorney s Fees 22

26 QUESTIONS? 23

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