Dynamex Just Blew-Up Everything Employers Knew About Independent Contractors

Q.      I own a small gym and proudly offer the largest variety of work out classes in town. I operate the gym by contracting with individuals experienced in the various classes my gym offers. These instructors select their own class material to teach and set their own class schedules. I previously met with an attorney to ensure that the these instructors were properly classified as independent contractors, and not employees. Can I continue to rely on the opinion that my business model satisfies the California independent contractor standard?

A.      Unfortunately for California business that operate by using independent contractors, the California Supreme Court recently restructured the independent contractor standard, referred to as the “ABC Test” and it is much less flexible than the previous balancing test established in Borello.

On April 30, 2018, the California Supreme Court issued its ruling in Dynamex Operations West, Inc. v. Superior Court, completely overhauling (but not overruling) the independent contractor standard previously set forth in the seminal case of S.G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal. 3d 341.

The Supreme Court ruled that the test for determining the proper classification of an independent contractor requires a hiring entity to establish all of the following factors: A) The worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of such work and in fact; B) The worker performs work that is outside the usual course of the hiring entity’s business; and, C) The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity.

Part A: Free From Control and Direction
This prong looks at the degree of control the company has over the individual. If the individual is subject to the same type of control a business typically exercises over employees, then the individual is not an independent contractor. For example, setting the person’s schedule, dictating the way in which the person performs the work, or the location of the work is performed would . Prior to Dynamex, this was the principal factor considered in the Borello balancing test. Now, it is considered equally as important as prongs B and C of the ABC test.

Part B: Outside the Usual Course of Business
This prong requires the individual to perform a type of work that is outside of the company’s ordinary business, i.e., is the individual performing a service for the company, or would the individual be viewed by others as an employee of the company. This prong is a significant deviation from the Borello standard and as a practical matter will prevent the use of independent contractors for most companies, except where the person’s work has no tangible connection to the hiring entity’s business. The Dynamex case uses the example of a retail store that uses the services of a plumber – the plumber is an independent contractor – versus a clothing manufacturer that uses a work-at-home seamstress, or a bakery that uses cake decorators, both would be an employee under the ABC Test.

Part C: Independent Trade
This prong requires that the individual is engaged in its own independently established business, rather than being a person assigned the independent contractor status by the company. Dynamex held that this requirement could be satisfied by showing the individual markets their own business and such as obtain their own business license, and performing their service for multiple entities.

Notably, the new ABC Test only applies to Industrial Welfare Commission Wage Orders. The California Supreme Court did not make any rulings about whether this test would also apply to other wage and hour laws, such as claims for reimbursement for business expenses, workers’ compensation or unemployment, but the opinion suggests such laws will remain subject to the Borello standard (click here to see our July, 2015 blog post about NFL cheerleaders for a summary of Borello standard/balancing test factors).

In sum, those California businesses using independent contractors should review these relationships to make sure they comply with the new standard, and be sure the answer to all three parts of this new test is “yes.” As always, the employment team at Baker Manock & Jensen would be happy to assist your business with any questions or concerns this new test might bring.

New Year, New You (and New Rules, Too!)

Q:    Last year I opened a hand-rolled ice cream shop that I run with the help of my fifteen employees. Business is booming, so I want to hire more employees and open another location in early 2018. Are there any new laws I should know about before I expand my business?

A: Yes, indeed. Get out your note pads California employers, because your legislature has insisted on a few additions to your 2018 “resolutions.” Effective January 1, 2018, your employment operations will be affected as follows:

  • Employment Application Restrictions:
    • Conviction History: Employers with five or more employees, including state or local government employers, can no longer ask applicants, orally or in writing (i.e., on an application), about criminal history before a conditional job offer is given. Employers may consider results of a criminal background check after a conditional offer is made. However, if conviction history is a factor in denying employment to the applicant, the prior conviction must have a “direct and adverse relationship with the specific duties of the job that justify denying the applicant the position.” The conditional offer can be rescinded due to conviction history, but the employer must inform the applicant of the rescission in writing, along with other various notification requirements, and provide applicant a chance to respond.[1]
    • Salary History: Employers, including state and local government employers, are prohibited from asking orally, in writing, personally or through an agent, for an applicant’s salary history. Applicants may voluntarily and without prompting disclose salary history, but an employer cannot rely on an applicant’s salary history information as a factor in determining whether to hire an applicant or what salary to offer an applicant. Employers must also provide a pay scale for an applicant’s position upon a reasonable request.[2]
  • Prohibition of Medical and Recreational Marijuana: While anyone 21 and older can now buy and consume marijuana in California, employers can still prohibit its use. Employers may still impose drug tests on employees, and may refuse to hire prospective employees or terminate employees who use marijuana. Employers may do so regardless of whether the use occurred on the job, and regardless of whether the use is medical or recreational, if that use conflicts with company policy.[3]
  • Harassment Training Requirements for Gender Identity, Gender Expression and Sexual Orientation: Employers with 50 or more employees must now include training on gender identity, gender expression, and sexual orientation harassment as a component of the recently mandated two hour sexual harassment that must occur every two years.[4]
  • Minimum Wage Increase: The minimum wage in California has increased to $10.50 per hour for employers with 25 or fewer employees. The minimum wage has increased to $11.00 per hour for employers with 26 or more employees. This also means that the minimum threshold for most exempt workers is increasing as it must be at least two times the minimum wage. As a reminder, minimum wage is increasing again soon and is scheduled to reach $15.00 per hour by January 1, 2023 for all employers, regardless of size.[5]
  • Extended Pregnancy Leave Requirements: Employers with 20 or more employees must provide eligible new parents up to 12 weeks of unpaid leave from work to bond with a new child. Previously, this requirement only applied to employers with 50 or more employees.[6]
  • Joint Liability for General Contractors: General contractors may now be held jointly liable for the wage and hour violations of their subcontractors under contracts signed after January 1, 2018. Only the following parties can pursue a claim under this law: (1) the Labor Commissioner; (2) a third party owed fringe benefit payments; or (3) a joint labor management cooperation committee. General contractors remain protected from penalties or liquidated damages. Moreover, general contractors can verify wages actually owed upon request, and withhold disputed wages if a subcontractor fails to provide requested information.[7]

If you have questions related to these new regulations, Baker Manock & Jensen’s employment attorneys would be happy to assist. Happy New Year and good luck sticking with those resolutions!


[1] Assembly Bill 1008

[2] Assembly Bill 168

[3] Proposition 64

[4] Senate Bill 396

[5] Senate Bill 3

[6] Senate Bill 63

[7] Assembly Bill 1701

This Legal Update / Bulletin is for educational purposes only as well as to give you general information and a general understanding of the law, not to provide specific legal advice. The hypothetical question is posed to illustrate a point and does not contemplate all potential legal considerations This update should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.

Vacation from Voting?

Q:     Bernie Sanders believes that election day should be a national holiday so that everyone has the opportunity to vote.  Indeed, back in 2015 he introduced a bill that would make the first Tuesday after the first Monday in November during even-numbered years a holiday called “Democracy Day.”  This week, Bernie again tweeted about it.   What is California’s take on this?

A:     Every day is Democracy Day in California!  While not an official holiday, in California, pursuant to California Election Code section 14000, employees are eligible for two hours of paid time off for the purposes of voting ONLY IF they do not have sufficient time outside of working hours to vote.  Employers may require the employee vote at the beginning or end of the employee’s shift to limit disruption.  Employees must give their employees at least three days notice that they want to take advantage of the law.

The Election Code also requires that at least ten days before every state wide election, an employer post a notice to employees advising them of their right to time off under this law.  The notice can be found here – http://www.sos.ca.gov/elections/time-vote-notices/.  Many of the standard employee notification posters purchased from the Chamber of Commerce and like organizations already contain this notice.

I wonder, if Democracy Day became law, would voting increase or decrease?  If you throw in California’s new paid sick leave – employees (with election day flu) could make a nice little four-day weekend of it and hit the coast instead of the polls.  And, as turkey and burgers are already taken, I wonder what would become the traditional Democracy Day meal? Perhaps, quinoa and kale…

This Legal Update / Bulletin is for educational purposes only as well as to give you general information and a general understanding of the law, not to provide specific legal advice. The hypothetical question is posed to illustrate a point and does not contemplate all potential legal considerations This update should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.


Can I 86 an employee who acts like a number 7?

Q.     I am a general contractor, and I just finished a building project for a local non-profit veterans group that is going to provide treatment for those who served overseas and are suffering from PTSD. My workers and I have been invited to attend the grand opening and ribbon cutting ceremony.  Because I am proud of the building, the veterans and my employees, I am requiring that my employees attend the grand opening (and of course, paying them to do so).   I am concerned that one or two of my employees will seize on the recent controversy surrounding San Francisco 49ers backup quarterback, Collin Kapernick, and embraced by other professional athletes, and refuse to stand for the national anthem.  In my opinion, this would be insulting to the veterans that the building was built to support and alienate potential developers from using my company in the future.  Can I require my employees to stand for the national anthem?  Can I terminate an employee for not standing up?

A.     I think at some point in the near future, the United States Supreme Court will answer this query for us.  But, in the meantime, an employer must tread carefully.  If an employee is terminated for refusing to observe the national anthem, he might be able to argue that the termination was unlawful.  However, it is unclear how those arguments would be received by U.S. courts at this time.

The most obvious argument would be driven by Labor Code Sections 1101 and 1102.  Labor Code section 1101 states:

“No employer shall make, adopt, or enforce any rule, regulation, or policy: (a) Forbidding or preventing employees from engaging or participating in politics or from becoming candidates for public office. (b) Controlling or directing, or tending to control or direct the political activities or affiliations of employee.”

Labor Code section 1102 states:

“No employer shall coerce or influence or attempt to coerce or influence his employees through or by means of threat of discharge or loss of employment to adopt or follow or refrain from adopting or following any particular course or line of political action or political activity.”

Another employee argument may be made under the National Labor Relations Act (“NLRA”).  The NLRA gives employees the right to act together to try to improve their pay and working conditions, with or without a union.  If standing for the national anthem is determined to be a “working condition,” then employees could argue that refusing to stand is a protected “concerted activity.”

The interesting component of Labor Code Sections 1101 and 1102 is that both hinge on the term “political,” while the NLRA hinges on the term “working condition.”  Both terms are difficult to define.   Extreme positions like advocating to over-throw the government have been specifically interpreted not to be “political.”  Such an interpretation may protect an employer that terminates employees that, for example, support jihadist ideologies. But, what about an extreme domestic movement that advocates ignoring all law enforcement directions and refusing to acknowledge their authority?

Another issue to consider is whether an employee can limit the time and place of expression without infringing on an employee’s rights.  What if, instead of kneeling down during the national anthem, an employee wears a t-shirt stating “Make America Great Again” or “I’m with Her”?  Or, instead of  quietly kneeling, the employee was actually disruptive?

Employees do not have a Constitutional right to free speech or freedom of expression at work. The Constitution’s right to free speech only applies when the government is trying to restrict it. Even then, it’s not absolute. So employers are generally free to restrict employee speech, at least while they are at work.  However, an employees’ protected speech under the NLRA is an exception to an employer’s broad rights to restrict both speech and expression at work. Section 7 of the NLRA gives employees the right to discuss wages hours and working conditions and organizing a union.

Furthermore, a private employer should consider the implication of anti-discrimination laws. An employer should ask himself: Is this employee’s speech being restricted or punished because the employee is expressing religious or other beliefs that are different from the employer’s or from co-workers? Are employees of some religions or national origins allowed to express themselves regarding religion or national origin, but not others?

These are all delicate issues in a confusing time, which can make a simple grand opening and ribbon cutting ceremony a powder keg for an employer.

Nut again! Ag Overtime Bill is Reintroduced

Q:     I thought the ag overtime bill failed?  Why am I hearing about it again?

A:     On April 28, 2016, we posted a blog entitled “Lettuce Get Back to Work” discussing AB 2757 that would change the way agricultural workers are paid overtime.  Currently, agricultural employees are paid overtime after 10 hours instead of 8 hours (which is the standard for most other industries).  In addition, there is currently no daily double time after 12 hours for agricultural workers, which is also standard for other industries.  The argument has always been that the seasonal nature of agriculture makes excluding it from other standard industry rules reasonable.   Many individuals oppose the bill for economic reasons as well. Specifically, opponents argue that this new overtime requirement will drive agriculture out of the state and will lead to greater plantings of less labor-intensive crops, thus hurting the very people an increase in overtime was intended to help.  On the flip side, proponents argue that what is fair for other industries is also fair for agriculture – particularly in light of the difficult nature of farm work.  Nonetheless, on June 2, 2016 the arguments against changing the overtime requirements for agriculture workers failed, but by a very slim margin.

On August 22, 2016, AB 1066, a bill almost identical to AB 2757, passed in the senate, thus setting up another tight vote in the assembly.  AB 1066 allows for the overtime requirements to be phased in over a period of four years, starting on January 1, 2019, meaning that the bill will be in full effect on January 1, 2022.  Unlike its predecessor bill, AB 1066 further provides that employers who employ 25 or fewer employees have an additional three years to phase in the new overtime requirements – thereby not making them mandatory until 2025.

Agricultural employers should note, however, that if the bill is passed, they cannot simply opt out of these overtime requirements by using farm labor contractors.  This is due to section 2810.3 of California’s Labor Code, which imposes liability on a business for a labor contractor’s failure to comply with Labor Code provisions addressing wages and hours (e.g. overtime).

ALERT: Important news for farmers and others that pay, or previously paid, piece-rate – Notice to DIR is now required by July 28, 2016

Q:     What is going on with the lawsuit regarding piece-rate pay?

A:     We have previously discussed the new piece-rate legislation (AB 1513) in an earlier blog. No doubt, many employers (particularly those that have traditionally paid piece rate such as agricultural employers) view this legislation as a piece of what is found on many livestock farms across the Valley.  In short, the AB 1513 legislation resolved a dispute as to whether an employer was required to specifically pay for rest breaks where the employees were being paid piece-rate.  Prior to the legislation, there was a theory that an employer could pay an employee entirely by “piece-rate” so long as at the end of the day (or pay period) the employee made more than the minimum wage once the employer divided the compensation by the number of hours worked.  AB 1513 put that theory to rest and determined that employers must specifically pay for rest breaks and other non-productive time (such as heat breaks) even if the ultimate pay far exceeded minimum wage.

Because the previous “piece-rate” compensation was a fairly accepted and common pay practice, AB 1513 attempted to provide a mechanism for employers that did not specifically pay for rest breaks to avoid uncertainty and extensive liability.  Accordingly, AB 1513 stated that employers could file with the Department of Industrial Relations (“DIR”) and enter an agreement to provide back payments.  If the employer provided notice and made the specified payments, they would then have an affirmative defense against any employee that subsequently filed a claim for a failure to properly pay for non-productive time.  The original date for employers to provide notice to the DIR indicating that the employer was going to make the back payments was July 1, 2016.  The Nisei Farmer league filed a case in Fresno County Superior Court challenging the implementation of the law.  As a result there was a temporary restraining order staying the enforcement of the new law, and thus, staying the requirement to provide notice to the DIR.  On July 25, 2016, the court denied the preliminary injunction further staying enforcement of the new law. The date for employers to provide notice to the DIR is now July 28, 2016.

This Legal Update / Bulletin is for educational purposes only as well as to give you general information and a general understanding of the law, not to provide specific legal advice. The hypothetical question is posed to illustrate a point and does not contemplate all potential legal considerations This update should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.


Employment Lessons from TMZ

Q:     The Kardashian-West/Swift feud heated up again this week with Kim releasing audio allegedly secretly taken of Taylor and Kanye.  Taylor is upset (like, even more than boy break up upset), and I think she just needs to “Shake It Off.”[1]  I own a business, and I record all my conversations with employees.  But, I  only record them to protect myself from the “Golddiggers[2] who may sue me for wrongful termination, discrimination, or harassment.  I’m not trying to make anyone “Famous,”[3] and I am definitely not trying to be “Mean.”[4]  My recording policy is “Safe and Sound[5] for my business right?

A:    Sorry, but “I Knew You Were Trouble[6] when this question came up!  Both you and Kim, are in violation of California’s privacy protections.  In California, all people have the right to privacy.  Indeed, it is enumerated in Article I, section 1 of California’s Constitution.  This right to privacy is broad enough to encompass the actions of private employers.  Surreptitiously recording another person may be considered a violation of that person’s constitutional rights.

Moreover, and perhaps more importantly, in California you can be criminally liable if you  record another individual without their consent.  See California Penal Code section 632.  Not only does the Penal Code provide for possible jail time and fines, it also permits a victim to sue for civil damages.

And, because the evidence would have been illegally obtained, you would likely not be able to use it at any wrongful termination, harassment, or discrimination trial, even in the event that an employee actually sued.

If you are still set on recording the termination meeting, you can do so only if the employee consents to the recording.  It is recommended that the consent be in writing.

Like Kim, you are not “Out Of The Woods[7] with your liability for secretly recording private conversations.  You need to “Begin Again[8] and rethink your policy.

[1] https://en.wikipedia.org/wiki/Shake_It_Off

[2] https://en.wikipedia.org/wiki/Gold_Digger_(Kanye_West_song)

[3] https://en.wikipedia.org/wiki/Famous_(Kanye_West_song)

[4] https://en.wikipedia.org/wiki/Mean_(song)

[5] https://en.wikipedia.org/wiki/Safe_%26_Sound_(Taylor_Swift_song)

[6] https://en.wikipedia.org/wiki/I_Knew_You_Were_Trouble

[7] https://en.wikipedia.org/wiki/Out_of_the_Woods_(song)

[8] https://en.wikipedia.org/wiki/Begin_Again_(Taylor_Swift_song)

This Legal Update / Bulletin is for educational purposes only as well as to give you general information and a general understanding of the law, not to provide specific legal advice. The hypothetical question is posed to illustrate a point and does not contemplate all potential legal considerations This update should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.


How to Ride the Heat Wave Without a Wipeout

Q:        I just saw the seven day forecast and there is no relief from the heat in sight!  And, I just read an article that stated that there are real impacts for valley farmers.[1]  What can an employer do to keep  employees’ temperatures and  litigation risks down during this heat wave?

A:        Due to the extensive history of heat related deaths during our Central Valley summers, particularly in the agricultural industry, California has enacted strenuous regulations to ensure that employees are kept safe from the heat. Commonly known as the Cal/OSHA Heat Illness Prevention Standard, these regulations apply to all outdoor places of employment, while certain industries, including agriculture, construction, landscaping, oil/gas extraction, and transportation, are subject to additional requirements for “high heat procedures.”  (See 8 Cal. Code of Regs. § 3395.)

Pursuant to the Heat Illness Prevention Standard, shade is required to be present when the temperature exceeds 80 degrees Fahrenheit. The employer must have one or more areas with shade that can accommodate at least the number of employees on a break at any given time..  These shaded areas must either be open to the air or equipped with ventilation or cooling.  Furthermore the shaded areas must be located as close as practicable to the areas where employees are working.  You must not only allow, but encourage your employees to take “cool-down” breaks, for no less than 5 minutes, as often as needed.  (See 8 Cal. Code of Regs. § 3395 (d).)

When the temperature exceeds 95 degrees, additional procedures are required. (See 8 Cal. Code of Regs. § 3395(e).)  To that end, the employer must ensure that a communication system is set up, such as providing each employee with a cell phone, so that employees at each work site can contact a supervisor when necessary.  The employer must also observe employees for signs of heat illness and remind employees throughout the work shift to drink plenty of water.  One or more employees on each site must be authorized to call for medical services.  Also, the employer must ensure that your employees take a minimum ten minute preventative cool-down rest period every two hours.

Additionally, a new employee must be monitored very closely for the first 14 days of his or her employment, unless he or she has previously worked in similar outdoor conditions at least 10 of the past 30 days for 4 or more hours per day. (See 8 Cal. Code of Regs. § 3395(g).)  All employees must be trained on the risk and symptoms of heat illness, the employer’s procedures for complying with the Heat Illness Prevention Standard, the employer’s procedures for contacting medical services, and the importance of rest and water.  (See 8 Cal. Code of Regs. § 3395(h).)  Furthermore, the employer must have your company’s Heat Illness Prevention Plan available in English and Spanish at an employee’s request.

Lastly, don’t get burned by the new piece rate legislation. Remember, employees that are paid piece rate must be compensated for heat breaks.

As the Central Valley heats up, so does an employer’s risk of liability. Protect yourself with nothing less than 60 SPF, a wide brimmed hat and follow these procedures.  And, as always, contact your employment law attorneys with any questions – don’t let their pasty computer tans fool you – they know how to deal with the heat.

[1] http://abc30.com/weather/high-heat-impacting-valley-farmworkers/1395595/


Work Warriors and Medical Inquiries.

Q:     Cleveland Cavalier forward Kevin Love was out for last night’s NBA finals game against the Golden State Warriors. In game 2, Harrison Barnes elbowed Love in the head and then Love appeared to suffer from concussion type symptoms.  Love has indicated that he is “frustrated” by the Cavalier’s decision to keep him out of the game.  As an employer, what can you do if you suspect an employee is prevented from performing based on a medical condition?  Is it legal to ask an employee about a suspected medical condition and seek medical certification that the employee is capable of performing his/her job?

A:     The EEOC’s Enforcement Guidance on Disability-Related Inquiries and Medical Examinations of Employees Under the Americans With Disabilities Act answers this precise question.

 Generally, [an employer may ask] a disability-related inquiry or [require a] medical examination of an employee [. . . so long as it is] “job-related and consistent with business necessity” [and] an employer “has a reasonable belief, based on objective evidence, that: (1) an employee’s ability to perform essential job functions will be impaired by a medical condition; or (2) an employee will pose a direct threat due to a medical condition.”

Sometimes this standard may be met when an employer knows about a particular employee’s medical condition, has observed performance problems, and reasonably can attribute the problems to the medical condition. An employer also may be given reliable information by a credible third party that an employee has a medical condition, or the employer may observe symptoms indicating that an employee may have a medical condition that will impair his/her ability to perform essential job functions or will pose a direct threat. In these situations, it may be job-related and consistent with business necessity for an employer to make disability-related inquiries or require a medical examination.

In Kevin Love’s situation, it is likely playing against the Warriors with concussion like symptoms would pose a direct threat to himself thus making any inquiry into his medical condition reasonable. Then again, the Warriors are a direct threat to anybody they play.  Go Warriors.

Working Overtime to Keep Up with the New Rules for Overtime

Q:        ALERT:  Is there a new law regarding who must be paid overtime?

A:        Sort of – it is actually not a law, but rather a new regulation promulgated by the Department of Labor (“DOL”) without congressional action.  The new rule amends the existing regulation that sets forth who is entitled to overtime pursuant to the Fair Labor Standards Act (“FLSA”).

As an initial matter, all non-exempt employees are entitled to overtime pursuant to the FLSA – and this new regulation does not change that fact – it only redefines who is eligible to be classified as “exempt”. The former rule provides that an employee can be exempt if he or she earns twice the minimum wage and passes a “duties test.”  The former FLSA regulation adopted the minimum wage in the state where the employee worked to set the salary minimum needed for the exemption.  Accordingly, in California, in order to be exempt pursuant to the FLSA, an employee generally needed to earn at least $41,600.00 per year ($10 (minimum wage) x 40 (hours per week) x 52 (weeks per year) x 2).

California has its own rules pertaining to who is exempt – but, until the new FLSA regulation it always mirrored the FLSA overtime salary threshold. In other words, prior to the new regulation both California and the FLSA utilized a “double the minimum wage” standard.

On May 18, 2016 the DOL raised the salary threshold amount needed to be considered exempt under the FLSA. The FLSA regulation is no longer based on a “double the minimum wage” standard. Pursuant to the new regulation, the minimum salary to be classified as an exempt employee is now $47,476.00 per year.  The new regulation also establishes a mechanism to automatically increase that amount every three years.  The new rule also redefines the  “highly compensated exemption” that had a reduced duties test if the employee made $100,000.00 per year.  The new regulation increases the salary threshold for the “highly compensated” exemption to those making a minimum of $134,004.00 per year.

The new regulation takes effect on December 1, 2016.

There are some interesting aspects of this new Federal regulation that will need to be watched carefully in California. Based on the new regulation, there may now be a difference between those that qualify as exempt under California law and those that are exempt under federal law.  Specifically, those that make between $42,600 and $47,476 could be treated as non-exempt for the purposes of federal law but exempt for the purposes of California law.  This is important because the FLSA only provides overtime for employees who work over 40 hours in a week while in California, non-exempt employees receive overtime for working over 8 hours in a day OR working over 40 hours in a week.  Additionally, pursuant to the FLSA, there is no entitlement to meal and rest breaks while the California Labor Code makes them a requirement for all non-exempt employees.  As such, unless the California rules are amended, or until California overtime rate increases so that “double minimum wage” exceeds the amount cited in the new FLSA regulation, employers could face a situation in which the salary threshold for daily overtime and meal and rest breaks is different than the threshold for weekly overtime.  That said, it is expected that California, and its current legislative makeup, will quickly adapt to provide the most overtime and employee benefits as possible.  And, even if they don’t, with the rising California minimum wage (set to hit $15 in 2022), it will be a short lived discrepancy.  It would also not be surprising if California takes the position that it must follow the more stringent federal regulation even for the purposes of  California overtime even if California does nothing to amend it own regulation.  As such, caution is needed.

With wage and hour lawsuits on a dramatic rise, there is no doubt that this new regulation will create confusion and will increase the pool of plaintiffs eligible to make wage and hour claims. This likely means overtime for plaintiff’s attorneys.  If you have questions related to this new regulation and its effects on your business, you should call your employment attorney.

This Legal Update / Bulletin is for educational purposes only as well as to give you general information and a general understanding of the law, not to provide specific legal advice. The hypothetical question is posed to illustrate a point and does not contemplate all potential legal considerations This update should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.