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As the L&E Law Blog readers may recall from the August 31, 2011 blog post and the teleseminar I conducted on September 14, 2011, the court in Arechiga v. Dolores Press, Inc. (2011) 192 Cal. App. 4th 567 was the sole California decision that held that “mutual wage agreements” were legal in California despite the express language in section 515 of the Labor Code.

Review of Arechiga:

In Arechiga, the court held that mutual wage agreements that factored in overtime pay into a non-exempt employee’s set weekly compensation were enforceable if they were in writing and contained at least the following:

(1) the days that the employee would work each week;
(2) the number of hours the employee would work each day;
(3) that the employee would be paid a guaranteed salary of a specific amount;
(4) that the employee was told the basic hourly rate upon which his salary was based;
(5) that the employee was told his salary covered both his regular and overtime hours; and
(6) that the agreement was reached before the work was performed.

AB 2103:

AB 2103 was signed by Governor Brown on September 30, 2012. The bill expressly states that “[i]t is the intent of the Legislature, in enacting this act, to overturn the decision in Arechiga v. Dolores Press (2011) 192 Cal.App.4th 567.”

Section 515(d)(1) of the Labor Code has always provided that when calculating the overtime rate for non-exempt full time salaried employees, “…the employee’s regular hourly rate shall be 1/40th of the employee’s weekly salary.” The court in Arechiga held that such language did not preclude an employer and employee from agreeing to a set regular rate of pay and set overtime rate of pay, all of which is included in a set weekly salary. In order to prevent an employer from factoring in overtime into a non-exempt employee’s weekly salary, the new law adds the following language to section 515(d):

“(2) 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 contrary.”

Therefore, the strict reading of section 515 that California courts applied prior to the Arechiga case is now codified in the statute.

What Does All of This Mean?

Using the facts from the Arechiga as an example, below is the difference in overtime pay a non-exempt employee paid on a salary basis would receive under section 515 versus under an illegal mutual wage agreement.

• Employer and employee agree that a salaried non-exempt employee will work 11 hours a day, 6 days a week, for a total of 66 hours per week (26 hours of which were overtime) and will be paid a set weekly salary of $880.00
  • Under an illegal mutual wage agreement, the employee’s regular rate of pay is $11.14 per hour and the overtime premium is $16.71 per hour. The employee is paid a total of $880.00.
  • Pursuant to Labor Code section 515(d), the employee’s regular rate of pay is $22.00 per hour and the overtime premium is $33.00 per hour. ($880.00 / 40 hours = $22.00 and $22 x 1 ½ = $33.00). Thus, the employee would be entitled to $880.00 for all regular hours (40 hours) and an additional $858.00 in overtime pay (26 hours x $33.00 per hour).

Lesson.

There is a big difference between the two methods of calculation – $858.00! Therefore, if employers are going to pay non-exempt employees on a salary basis, they must remember that such salary will be used to calculate their regular rate of pay based on a statutory 40 hour workweek, which will in turn form the basis of their overtime premiums. The higher the weekly salary, the higher the regular rate and overtime premiums will be.

California Gov. Jerry Brown signed into law earlier this month the Workplace Religious Freedom Act, AB 1964, a bill that expands the prohibition against religious discrimination by employers. This new law mandates that workers receive equal protection despite their religious beliefs or appearance while protecting those who wear religious attire. The bill reportedly was numbered after the Civil Rights Act of 1964, a series of federal statutes that were among the first to outlaw employment discrimination in the United States.

The new law gives workers the right to express their faith in their dress and appearance; for instance, by wearing turbans or beards (like those worn by Sikh men), yarmulkes (like those donned by Jewish men), or hijabs (as adorned by Muslim women). Additionally, it makes it unlawful to segregate such employees; for example, by making them work in areas out of the public view on account of their appearance. The law also requires employers to provide religious accommodations to workers unless the requested accommodation would result in significant difficulty or expense. Because the new law does not expressly address the topic, it remains to be seen whether companies whose employees wear uniforms must allow workers to modify or discard the employer’s regalia.

Employers who wish to reduce the risk of exposure to liability under this new law should consider revising their dress-code policies, reevaluating job assignments for their religiously attired employees, and providing additional training to their human-resources professionals. Prudent employers also should consult legal counsel about such steps and to weigh their options when faced with an employee’s request for a religious accommodation.

AB 1844 is now law. Among other things, it:

(1) prohibits an employer from requiring or requesting an employee or applicant for employment to disclose a user name or password for the purpose of accessing personal social media or to require the employee or applicant to access personal social media in the presence of the employer or to divulge any personal social media;

(2) prohibits an employer from discharging, disciplining or threatening discharge or discipline or any other form of retaliation against employee or applicant for not complying with the request or demand by the employer that violates these “no inquiry, no demand” provisions.

Take away: Don’t require any employee or applicant to give you access to social media.

A complete version of the bill can be viewed at http://www.leginfo.ca.gov/pub/11-12/bill/asm/ab_1801-1850/ab_1844_bill_20120911_enrolled.pdf.

Governor Brown recently approved a significant – although many would stay still inadequate – overhaul of California law that governs the what, how and when of disability access suits under state law.

Business owners have long complained about suits based on disabled access laws. Many business owners feel the system is easily abused by “shake down” plaintiffs demanding settlements for technical noncompliance with disability access bars that do not actually impede access.

The new bill makes adjustments to earlier amendments to California Disabled Access law. These changes include:

• Alteration of the minimum damages scheme. In some instances the damages have been reduced from $4,000 to $1,000. The bill requires courts to consider a plaintiff’s duty to mitigate damages.
• Imposes attorney monitoring and reporting requirements – Attorneys filing these suits must report the suits to the state agencies.
• Requires that in some instances certain businesses receive notice of noncompliant conditions and receive opportunity to cure them.
• Enhances the system of inspections by Certified Access Specialists. Premises inspected in compliance with the statute enjoy some protections against disability access suits.
• As of July 1, 2013, requires that commercial property owners state in any lease or rental agreement if the property has undergone inspection by a Certified Access Specialist.
• Makes further adjustments to the Certified Access Specialist program including certification free limits, and outlines the duties of the Office of the State Architect and the California Commission on Disabled Access.

A complete copy of the bill is available at http://www.leginfo.ca.gov/pub/11-12/bill/sen/sb_1151-1200/sb_1186_bill_20120919_chaptered.pdf.