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Employment Laws Explore New TerritoryIMPORTANT NOTICE: This article is provided solely for research and archival purposes. MCLE self-study credit is no longer available. Even if you follow the instructions and submit payment you will not be granted MCLE self-study credit. Please note that low-cost MCLE is provided by the California Lawyers Association, pursuant to Business and Professions Code section 6056. Domestic partner registration, gender identity and stronger penalties for not paying overtime are on the books
By Amanda "Amy" Riley All signs seem to point to California as a pro-employee state, and newly enacted employment laws support that notion hands down. It has been said that there are more laws protecting worker rights in California than in any other state or even the federal government. Many of the new laws and penalties are complicated and difficult to understand. The following is a straightforward breakdown of the key points in three new laws concerning (1) increased penalties; (2) domestic partner registration and (3) gender identity. Increased penalties Overtime and other wage and hour claims in California are subject to stringent penalties, sanctions and other hidden dangers. Most employers do not realize that a failure to pay overtime results not only in an obligation to pay the overtime owed, but also in owing various “break the bank” penalties, sanctions and often employee-biased calculations. Among the new penalties is California Labor Code §2699. Effective Jan. 1, 2004, the law has a significant effect on California wage and hour claims. It also contains an attorney’s fees provision that provides an additional means for an employee to force an employer to pay any incurred attorney fees. Senate Bill 796, now encoded at California Labor Code §2699, was authored by Sen. Joseph Dunn (D-Garden Grove). Also known as the “Labor Code Private Attorneys General Act of 2004,” Senate Bill 796 was added to Part 13 of Division 2 of the California Labor Code. While there is no indication that this law is deemed retroactive by the legislature, it will likely be a familiar sight in all new employee claims against violating employers. First, California Labor Code §2699 (SB 796) provides, in part, for significant new stringent penalties against employers who fail to abide by employment laws. The amount of the penalty depends on the number of employees. Specifically, whenever a business owner violates a labor code for which another civil penalty is not specifically provided, there is a civil penalty of $500 against any business owner who does not employ one or more employees. If the business owner does employ one or more employees, the civil penalty is increased to “one hundred dollars ($100) for each aggrieved employee per pay period for the initial violation and two hundred dollars ($200) for each aggrieved employee per pay period for each subsequent violation.” This is a significant additional penalty that will be imputed to employers. Second, the law contains an attorney’s fees provision. Specifically, California Labor Code §2699 provides that “(f) . . . Any employee who prevails in any action shall be entitled to an award of reasonable attorney’s fees and costs.” This provides an additional means for an employee to force an employer to pay any incurred attorney fees. Finally, the new law allows an employee to act as a private attorney general. This means that an employee can seek damages directly from an employer, which would normally only be available to a government agency or maintain a private legal action against a private employer who violated California wage and hour laws. This remedy is only available if no government agency has yet sought citations against the employer for the same violation. Additionally, this remedy is considered an alternative remedy. In other words, an employee can seek other remedies separately or concurrently. These penalties are specifically in addition to any other penalties provided pursuant to the statute itself. The reasoning or legislative intent behind this provision would appear to be that government agencies simply do not have eyes in the back of their heads, nor do they have the time and resources to pursue all violating employers. As such, the legislature is calling on individual employees to assist the agencies in their efforts. In sum, California Labor Code §2699 primarily renders three new results as follows:
Other Penalties The new penalty is in addition to other multiple pre-existing penalty laws including, but not limited to, California Labor Code §§203, 210, 225.5, 558 and 218.6. Section 203 provides a penalty for failure to pay wages on termination. The public policy behind this law is an employee’s dependence on wages for necessities of life for himself and family. When an employee is discharged, the employee is owed all wages due on the date of discharge. When an employee quits, the employee is owed all wages due within 72 hours after resignation (unless more than 72 hours notice is given, in which case the employee is owed all wages due on the date of departure). Where timely payment is not made, a penalty is due the employee at his or her daily rate prior to departure and continuing for up to 30 days thereafter. The 30-day penalty includes weekends and holidays (i.e., it is a consecutive 30 days, not simply one month’s wages). Inability of an employer to pay the wages at time due is not a defense. On the other hand, any employee who hides to avoid payment or refuses payment upon discharge is not entitled to the penalty. Labor Code §210 provides a penalty for failure to pay wages during the course of employment. An initial penalty of $50 is owed with a $100 penalty for subsequent and/or intentional/willful violations. However, if the evidence shows that a good faith dispute existed as to the amount owed, the penalty will not be assessed. Labor Code §225.5 applies penalties to employers for such actions as issuing insufficient funds checks, requesting reimbursement of employee wages and paying less than the agreed upon rate. Again, an initial penalty of $50 is owed with a $100 penalty for subsequent and/or intentional/willful violations. Labor Code §558 provides for a $50 penalty for an initial violation of wage and hour laws. This applies for each underpaid employee for each pay period for which the employee was underpaid in addition to the amount of underpaid wages. For each subsequent violation, a $100 penalty is owed for each pay period for which the employee was underpaid in addition to the amount of underpaid wages. Finally, California Labor Code §218.6 provides that a trial court shall award interest on all due and unpaid wages at a rate provided for in California Civil Code §3289 (10 percent per annum). This interest accrues from the date that the wages were due and payable. Regular rate of pay In addition to penalties related to unpaid wages, overtime losses are also subject to the regular rate of pay calculations. Federally, 29 U.S.C. §207(e) defines regular rate of pay as “[t]he regular rate at which an employee is employed shall be deemed to include all remuneration for employment paid to, or on behalf of, the employee.” The Ninth Circuit, in Walling v. Alaska Pacific Consolidated Mining Co., 152 F.2d 812, defines regular rate of pay as: “It is not an arbitrary label chosen by the parties; it is an actual fact. Once the parties have decided upon the amount of wages and the mode of payment, the determination of the regular rate becomes a matter of mathematical computation, the result of which is unaffected by any designation of a contrary regular rate in the contracts.” (Walling v. Youngerman Reynolds Hardware Co., 325 U.S. 419, 65 S.Ct. 1242) Wages are defined in California Labor Code §200 as “[a]ll amounts for labor performed by employees of every description, whether the amount is fixed or ascertained by the standard of time, task piece, commission basis or other method of calculation.” The following are included in the definition of wages for purposes of calculating the regular rate of pay:
Domestic partners The Domestic Partner Rights and Responsibilities Act goes into effect Jan. 1, 2005. It allows same sex couples and different sex couples over age 62 to register as domestic partners within the state of California. The requirements to qualify for registration include: (1) shared residence, (2) at least age 18 and (3) capacity to consent. Essentially, each partner agrees to be jointly responsible for each other’s “basic living expenses,” such as housing and utilities. Neither individual may be married to or a registered domestic partner of another individual (essentially the equivalent of bigamy in marriage). In exchange, registered domestic partners are basically afforded the same benefits as employee spouses. A registered domestic partnership may be terminated by death, marriage, move of one partner to another residence or written notice to other partner. With thousands of domestic partner couples already registered, this new law will likely increase that number considerably. Gender identity Gender identity is now a protected class. Effective Jan. 1, 2004, Assembly Bill 196 is codified at Government Code §§12949 and 12926. Gender identity will carry the same definition as it does in the California Penal Code and California Education Code: “Identity, appearance or behavior of a person, whether or not that identity, appearance or behavior is different from that traditionally associated with the person’s sex at birth.” With gender identity as a protected class, employees will now be allowed to appear or dress consistent with their gender identity. The underlying purpose includes providing protection to those who are fired, evicted or otherwise harassed for acting or appearing in a way not traditionally associated with their sex. Mark Twain once said, “If you took all the laws and laid them end to end, there would be no end.” Several other new employment laws recently enacted or likely to be enacted soon include extension of harassment protections to non-employees such as clients and customers, stricter enforcement of labor contracts, workers’ compensation reform, increased employer health insurance coverage premium payment requirements, and increased penalties for failure to abide by employment laws. California will likely continue making complicated and abundant pro-employee decisions and initiatives. Of utmost importance, employers should be aware that ignorance of the law is not a defense. Many employers may unintentionally or unknowingly be in violation of several employment laws. As a result, these employers are opening themselves up to stringent new penalties. Critics have argued that these new penalties and increased means to seek them will either put employers out of business or, at the very least, increase insurance costs and tighten the job market. California employers can protect themselves with employee handbook updates and a legal review of their employment procedures. On the other hand, it has been argued that this law protects vital California employee rights. California employers should be on the alert, and California employees should ensure their rights are protected. • Amanda Riley practices labor and employment, family and construction law in Santa Ana, and she is an adjunct professor at Chapman and Whittier law schools. Certification
Self-assessment testAnswer the following true-false statements after reading the MCLE article on Rule of Professional Conduct 2-100. Use the answer form provided to send the test, along with a $20 processing fee, to the State Bar. If you do not receive your certificate within four weeks, call 415-538-2504.
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