California’s Fair Pay Act went into effect with the new year and the California Labor Code now sets forth specific categories of information that each wage statement must contain. Resolve to stay on top of those and other California employment laws. Here are our top six tips for protecting your company or organization from employment claims in 2016.
One: Anticipate Fair Pay Act – Review Job Description and Compensation Practices
The California new Fair Pay Act became effective January 1. The Act amends California Labor Code section 1197.5 which prohibits discrimination in pay based on gender. Additionally, federal contractors are subject to new rules promoting “pay transparency,” effective January 11, 2016. These changes signal efforts to encourage employees and applicants to share information about their compensation with one another without fear of discrimination. Too often employers rely on outdated job descriptions and inaccurate requisite qualifications to justify compensation differences. We recommend employers audit employee job duties and pay practices to ensure pay is based on objective factors that can be justified – not just the job title of the individual.
Two: Identify a Wage & Hour “Compliance Person”
Busy supervisors can become complacent with enforcing company rules on wage and hour requirements. Too many HR professionals confess they simply cannot get supervisors and managers to “buy-in” to the myriad of wage compliance obligations that must be implemented with employees. One way to avoid this continual conflict and still try to protect the organization from wage violations is to either hire or identify a specific individual whose job title or duties include wage and hour compliance. This employee’s job would include developing and implementing the necessary controls to make wage and pay practice compliance a priority for the organization.
Three: Correct Wage Statements Pursuant to Labor Code 226
The easiest thing employers can do right now, today, to help avoid wage violations is review their pay stubs for compliance with the Labor Code. Section 226(a) sets forth specific categories of information that each wage statement must contain. As a result of recent legislative updates and court interpretations, penalties for inaccurate or incomplete wage statements have become essentially automatic – driving litigation in this area through the roof! Moreover, increased scrutiny on those who pay on a piece rate or commission basis means greater opportunity for noncompliance. Verify that paid sick leave balances are also indicated here. Do not assume that because your organization uses a large payroll service that the company’s wage statements are accurate. Too many employers have been shocked to discover that a category was technically deficient (i.e., listing a company dba instead of the legal entity, failing to include the pay period ending date) subjecting them to compounding penalties.
Four: Update Policies & Acknowledgments
Handbook policies that notify employees of the employer’s expectations regarding leave rights, off-the-clock work and meal and rest periods provide a useful tool in defending litigation. For instance, time spent by non-exempt employees using their smart phones remotely for work-related email may be viewed as compensable. Thus, notifying employees through a written policy about what is and is not permitted “off hours” is crucial. Employers should additionally make sure that time cards and electronic recording programs contain language that allow employees to acknowledge that they have “recorded all time worked.” Finally, meal and rest period policies are now a necessity in employee handbooks. Courts have held that class certification may be suitable in cases involving the lack of a policy or the existence of a non-compliant policy on meal and rest periods.
Audit Meal/Rest Period Compliance and Pay Practices
Most California companies are aware of employees’ rights to meal and rest periods. But employers are often caught off-guard when they discover in litigation that certain employees were not provided lunches until the sixth hour or that employees were not consistently permitted to take rest breaks. Auditing time cards regarding meal period recording and correcting the way meal/rest periods are provided can help avoid surprise compliance issues. Also, in light of the minimum wage rising to $10 per hour and increased attention of exempt status by government regulators at the state and federal level, periodic audits to determine if proper overtime is being paid and to assess appropriate exempt/non-exempt status is also highly recommended.
Train Supervisors & Employees (and Document!)
California employers with 50 or more employees are required to provide all supervisors with training every two years related to sexual harassment and abusive conduct in the workplace. But who says you should stop there? Provide periodic education to all employees on the organization’s policies and procedures. Meet with employees to discuss expectations related to meal and rest periods and provide employees the opportunity to report any practical issues with taking their breaks. Explain why it is important for your non-exempt employees to report all hours worked and injuries on the job. Discuss expectations related to civility in the workplace. Finally, keep track of the company’s training efforts (including copies of any agendas and employee attendance sheets) as this may help prove valuable defenses later.
