USCIS ISSUES UPDATE TO I-9

In March, we finally got the updated I-9 that was about 6 months late.  Now they have updated that I-9 which has a date of July 17, 2017.

Work site enforcement and I-9 audits and inquiries by ICE will continue to increase.  An updated I-9 form has been issued.  Your Company needs to make sure that it is completing the new Form I-9 for every newly hired employee, auditing its I-9 forms, complying with the E-Verify requirements as applicable, and otherwise review and follow the immigration compliance strategies we have previously taught, including on how to respond to SSA and identity theft inquiries.  As part of your compliance, you should implement the new I-9 as soon as possible.

The link for the new form is here: https://www.uscis.gov/i-9  note: you cannot use the Spanish version except in Puerto Rico.

On July 17, 2017, USCIS issued a revised Form I-9.  All employers must use the new Form I-9 by September 18, 2017.  The newest version of the Form I-9 is dated 07/17/17 in the bottom left corner, with the expiration date of 08/31/2019 in the top left corner. You can use either the 11/14/2016 or the 07/17/17 Form I-9 through September 17, 2017.  On September 18, 2017, however, use only the 07/17/17 Form I-9 and make sure the I-9 is fully complete and section 1 must be completed on the first day an employee works for you.

There were changes made to both the Form I-9 instructions and the Form I-9 itself.  Make sure to post the new Form I-9 instructions on the wall where you have your required employment posters.  And, have the List A, B and C page available for employees when they complete the I-9 form.   Do not ask employees for specific types of documents to complete the I-9 form.  Always let the employee choose one document from List A or one document from List B and C.

The changes to the new Form I-9 are minimal.  One change is that the old sentence that read employee must complete the Form I-9 “no later than the end of the first day of employment” was changed to read that Section 1 must be completed “no later than the first day of employment.

Another change is that on the Form I-9 instructions, the DOJ Office of Special Counsel for Immigration-Related Unfair Employment Practices was changed to the Immigrant and Employee Rights Section to reflect the new name of the Office of Special Counsel (“OSC OF DOJ”)that was changed on January 18, 2017.  This is the government  agency that handles discrimination charges if a company is considered overzealous in asking for specific or additional documents, or is discriminatory in how it handles SSN mismatches, or if a company targets or singles our individuals with EAD authorizations or permanent resident cards differently than others.

And, another change is that on the Form I-9, List C on the List of Acceptable Documents, it was revised to add the Form FS-240 Report of Consular Birth Abroad and all the certifications or reports of birth issued by the Department of State were combined into one number on the List of Acceptable Documents.  The other List C documents (with the exception of List C) were then renumbered.

Please ensure that your Company implements the new Form I-9 before September 19, 2017.  It may also be a good time to conduct an internal I-9 audit and I-9 training to help ensure proper compliance with the immigration, employment verification, and E-Verify requirements, as applicable.  Let us know if you want us to complete any I-9s training with booklets and certificates or do any I-9 audits of I-9 forms etc.   Please stay vigilant on your internal I-9 audits and ensure your team is trained on completing I-9 forms, avoiding discrimination, know how to respond to government investigations, and are following protocols on responding to police, DES or other third party inquiries about identity issues.  Keep safe in the hot summer and take time now to audit your I-9 forms.

The fines have increased significantly.  Companies who previously had one audit are likely on the list for a second audit.  Those companies who already experienced a second I-9 audit and violations were noted, are likely to see a third audit so it pays to take the time to ensure your I-9’s are in compliance.  Please let us know if you have any questions or if there is anything we can do to assist you.  HR Mobile Services, Inc. will continue to monitor and update your current and future employee packets and forms to comply with State and Federal regulations.

UPDATE TO CALIFORNIA IRRIGATORS AND OVERTIME

Late last  year and early this year we discussed the new Agriculture Labor laws going into effect in California.  Mostly it was centered on the reduction of hours over time from a 10 hour work day to an 8 hour work day.

However, in the language of the bill was a very important phrase that said this bill affects “all Agricultural workers”.  This created quite a stir among lawyers and the split was about 50\50.  Some took this literally to mean that all workers in the agriculture profession, were now subject to the same rules and there would be no exceptions.  Others, pointing to the history going back the the 1930’s that exempted irrigators from the overtime regulations, that this would be cleaned up by the Labor Commissioner who is charged with rewriting the Wage Orders to comply with the legislation.

So far, we have not seen a new Wage order 14 so the one that is on the books is all we have to direct our work for now.

At the beginning of the year, we advised people, based on legal opinions, to continue treating irrigators as exempt employees until we heard from the Labor Commissioner.  At that time, we figured we would see something in writing by March and since it was raining, most employers were not working irrigators over 10 hours a day.  However, now we are into July with no definitive answer.  So, at this point, we are changing our recommendations, and it is our opinion that you SHOULD pay irrigators for overtime if they work over 10 hours in a day or over 60 hours in a week, just as you do other workers.

We base this opinion on the following:

  1. Previously, if the decision came down that you would have to pay overtime to irrigators going back to January 1, 2017, we were most likely not talking about a lot of hours and the employer can pay it out in one check and would most likely avoid any penalty fines.
  2. Now that we are in the heat of the year and irrigators are working full time, there is more possibility of them working overtime and the bill to pay back-wages is increasing.  At this time, it would be better to pay overtime incurred since July 1 and if we hear later that you must pay overtime from January 1, you can still pay that smaller amount in one check and avoid penalties.
  3. We don’t want to create a situation where you have many employees who have moved on to other employers and they come back to you and accuse you of not paying overtime.  This becomes more of an issue as time goes by.

The decision to pay overtime is still your at this writing, but we feel it is the better position to pay it now and avoid more trouble potentially in the future.  Even if the Labor Commissioner ultimately corrects the wording or interpretation and exempts irrigators from overtime, it is a small price to pay for avoiding litigation later.

WORK WEEKS UPHELD BY CALIFORNIA SUPREME COURT

Monday, the California Supreme court voted 7-0 in favor of the seven days in the same  work week interpretation.  This means that, if you define your work week, as long as an employee has one day off in that workweek, they are not eligible for premium ovcr-time payments.  They rejected the interpretation that employees should only work 6 days and affirmed the wording that employees may only work 6 days in the same work week.

Here is how it works.  If your work week is Monday through Sunday, and the employee works every day in the week, the hours they work on Sunday would be subject to the 7th day penalty where the first 8 hours are at time and a half and all hours after the 8th hour are double time.  However, if an employee worked Wednesday to the following Wednesday, there is no violation of the seven day rule because they had at least one day off in each work week as defined.

This is why it is so important to establish and notify your employees of your work week in your employee handbook and other documents.  It does not have to align with paydays, but it is preferable.  Remember, if you pay twice a month, it is possible that a payday falls in the middle of a pay period and you may miss an employee working through the seven day rule because part falls in 2 different pay periods.  You are still responsible for paying the penalty overtime if this happens.  You would apply it in the pay period where the seventh day was worked.

Overall, this is a victory for employers who have been following these rules as written for many years.  To change them now would have been a huge hit to employers across California.  Having one day off a work week is good for employer and employee, but a new law of 1 day off in any seven days could be hard to adjust.  This is especially true of businesses such as restaurants where you have high turnover, people calling in sick and then you have to ask another employee to come in to cover a shift.

So, rejoice, the courts did the right thing.  The best way to keep the government out of these things is to pay properly, follow the law and make sure your competition is doing the same.

PROTOCOLS IF OSHA, ICE OR OTHER AGENCIES COME ON YOUR PROPERTY

When any agency comes on the property, first notify the Manager/Owner of the Property.

If you are one of our customers, call HR Mobile Services at (559) 625-2322 or Ken directly

Keep the agents aside and away from other workers until you know the reason for their visit.

Ask to see their credentials.

Verify if this is a random visit, or due to a complaint being filed.

Make note of any dates that may be limiting their search.

If they are with ICE, you have 72 hours to produce the I-9s in question.  Do not let them intimidate you as this is your right.  Kindly ask them to leave and set a time and date to meet with them in 3 days.

If they are with OSHA, you can only put them off for an hour or so until the highest ranked supervisor on the property can be contacted and meet them.  Meanwhile, make sure they are kept by the office or away from viewing most of the property and employees.  Check your phones, as HR Mobile Services, Inc. may be trying to reach you to give you additional directions.  Make sure to have someone check restrooms for Paper and Paper towels.  Check for quick items like no personal food mixed with medication in the refrigerators, electrical panel doors shut, general clutter and tripping hazards put away.

IS WATER AVAILABLE AND PAPER CUPS WITH A TRASH RECEPTICLE NEARBY?

Keep your employees calm.  They are much safer on the dairy than if they leave the location.  Nothing can happen to them on the property, they are protected.

BE COURTEOUS AND LISTEN TO WHAT THE INSPECTORS ARE TELLING YOU.   YOU WANT TO HAVE A GOOD WORKING RELATIONSHIP AT THIS POINT.   YOU DON’T NEED TO BE THEIR FRIEND, BUT YOU DON’T NEED ANY ENEMIES EITHER.   STAY CALM! 

If you are one of our customers……..Call HR MOBILE SERVICES, INC. (559) 625-2322 IMMEDIATELY!

100% HEALED BEFORE RETURN TO WORK POLICY IS NOT LEGAL

Blanket policies that say an employee must be 100-percent healed before he/she can return to work after an injury are unlawful. Instead, you must assess whether the employee can perform the essential functions of the job with or without reasonable accommodation.

The Department of Fair Employment and Housing (DFEA) is the California equivalent of the EEOC Federal agency. Recently, there has been increased use of the Americans with Disabilities Act (ADA) in conjunction with worker’s compensation injuries. Specifically, employers must make a reasonable effort to accommodate modified duty or they are not complying with the ADA.

The Fair Employment and Housing Act (FEHA) prohibits discrimination against employees with disabilities and requires employers to provide a reasonable accommodation to allow qualified employees with disabilities to perform their jobs.

“Whenever an employee with a disability seeks an accommodation, the employer has a duty to provide an individual assessment to determine if that employee can perform the duties of the job, with or without an accommodation,” said DFEH Director Kevin Kish.

Policies requiring employees to be ‘100% healed from injury’ in order to work deny employees their right to an individual assessment and violate the FEHA.”

A recently resolved case cost the employer $250,000 and a number of policy changes and required training of management staff.

Our Worker’s Compensation personnel are willing to work with you and your adjuster to come up with ideas to allow the employee to work while recovering.

DEALING WITH EMPLOYEE WALKOUTS – DON’T REACH FOR TERMINATION PAPERS FIRST

The information below comes from the California Chamber of Commerce and provides a very good review of your rights as employers and employees regarding walking off the job.  HR Mobile Services, Inc. agrees with most of the assumptions in this piece.  However, I would also point out that it mentions other factors.  In the case of leaving live animals unattended this could be animal abuse and requires a higher standard of the employee and their actions.  Also, walking off without communicating with the employer or not showing up to work and not communicating with the employer is not a protected action.  In most cases, the employees were not walking off because of the particular employer or their work conditions.  One customer reported an employee said he was not coming in because the employer voted for Trump.  That is not a protected action.

Please read the full article below.

Quite a few news reports discuss recent employee walkouts across the country in protest of new federal policies, such as the recent “Day Without Immigrants” protests.

Employers are obviously concerned about how these protests might affect their business operations and what they should do. In some news reports, employers showed support for employees who choose to protest. But in other reports, employers found that the protest activity was cause for disciplinary action.

The situation can be tough to navigate.

If an employee doesn’t show up at all or walks out in the middle of a shift, this will certainly create a mess for employers, the customers they are trying to serve and the work that needs to get done. Employers want to be able to ensure productivity and maintain attendance policies.

Despite these legitimate concerns, employers should exercise caution before taking disciplinary action against an employee who fails to show up to work because of a protest. In some, but not all, circumstances, the employee’s behavior may be legally protected.

If you have concerns that employee walkouts will disrupt your ability to operate, the best course of action is to seek advice of counsel.

Possible Protections

The National Labor Relations Act (NLRA) protects the rights of employees to engage in “protected concerted activity,” which the National Labor Relations Board (NLRB) generally defines as two or more employees taking action relating to terms and conditions of employment for their mutual aid or protection (Sections 7, 8(a)(1)).

This right applies to both union and nonunion employees. In fact, the NLRB often enforces this right in nonunionized settings.

In some circumstances, when employees get together to specifically protest working conditions or job issues, such as wages, the NLRA protects those activities. For example, we saw workers protesting in 2015 for a higher minimum wage. Since this activity was related to improving the employees’ working conditions, it may be entitled to protection under the NLRA.

In other circumstances, the question is more difficult. For example, if workers walk off the job to participate in a general rally opposing the current administration, it is less likely that they are organizing together to try and improve their working conditions. In this situation, NLRA protections might not apply to the employees’ behavior.

It’s not going to be easy for an employer to make a split-second decision as to whether the workers’ activity is protected or not. Recent walkouts involved federal immigration policy and enforcement measures. Both of these can affect workplace conditions, especially if your business employs a large number of immigrants. But not all the protests zeroed in on a specific issue of improving workplace conditions.

Given the difficulty of determining whether the activity is protected, caution on the employer’s part and consultation with counsel is warranted before taking any disciplinary action. Each boycott may be different, and, thus, employee participation may or may not be protected. Also, blanket statements that the employees cannot participate without jeopardizing their jobs may not pass legal muster.

Unfortunately, this area involves a detailed analysis.

Loss of Protections

Keep in mind that employees can lose any protections they are entitled to. For instance, if employees engage in certain acts of misconduct, the NLRA will not protect them. Examples could include planning the destruction of property or threatening or engaging in violence.

If the walkouts are not isolated occurrences but are, instead, reoccurring, employees may also lose protection. Under current law, workers who strike multiple times, especially in the same labor dispute, can lose the NLRA’s protections and face discipline or termination. The NLRB, in some situations, has found that intermittent strikes are not protected.

Slowdowns, where the workers stay at work but don’t do anything, may also be unprotected.

Immigration Protections

California provides several protections against immigration-related discrimination and retaliation, laws that are stronger than even federal protections. These laws may come into play with the protests or walkouts.

Under California law, all individuals, regardless of immigration status, who applied for employment or who were employed in the state are entitled to all protections, rights and remedies available under state law, except any reinstatement remedy prohibited by federal law.

This includes state labor, employment, civil-rights and employee-housing laws. You cannot inquire about a person’s immigration status except when necessary by clear and convincing evidence to comply with federal immigration law. These laws are found in several overlapping California statutes (Civ. Code sec. 3339; Lab. Code sec. 1171.5; Health and Safety Code sec. 24000; Govt. Code sec. 7285).

California also has strong protections for immigrant workers who complain about unfair wages or working conditions (Labor Code sec. 1019). For instance, an employer may not threaten to contact, or contact, immigration authorities because an employee complained that he/she was paid less than the minimum wage.

Critically, it’s unlawful in California to report or threaten to report the suspected citizenship or immigration status of an employee, former employee, prospective employee or a member of the employee’s family because that person exercised a right under the Labor Code, Government Code or Civil Code. This is a broader protection than just protecting complaints about wages and hours; it also covers other rights, such as bringing a discrimination or harassment complaint under the Government Code.

In addition:

·         Business and Professions Code section 494.6 permits the state to suspend or revoke an employer’s business license where the employer makes a report or threatens to report suspected immigration status in violation of Labor Code section 244.

·         Penal Code section 519 provides that a person may be guilty of criminal extortion if the person threatens to report the immigration status or suspected immigration status of an individual, or his/her relative or a member of his/her family.

Both California and federal laws also protect workers from discrimination on the basis of national origin.

Off-Duty Conduct

Remember that California law protects employees for engaging in lawful conduct during nonworking hours. So if the employees engage in protests outside working hours, leave it be. Labor Code section 96(k) allows employees to bring claims for lost wages when they are disciplined or discharged for lawful conduct during nonworking hours.

California’s Labor Code section 1101 prohibits employers from adopting or enforcing any rule, regulation or policy that:

·         Forbids or prevents employees from engaging or participating in politics or from becoming candidates for public office.

·         Controls or directs, or tends to control or direct the political activities or affiliations of employees.

Best Practices

If you are affected by walkout activity, keep the following in mind:

·         Plan ahead if you know that employees are going to engage in walkouts.

·         Deal with staffing issues.

·         Consider talking to your workers to allow them to explain why they are planning to participate in the walkout.

·         Consult legal counsel about the appropriate course of action.

·         Don’t automatically take disciplinary action or threaten disciplinary action without legal consultation.

·         Make sure that company policies are job-related and applied consistently and fairly.

·         Remember that your employees’ social media activities may also be protected.

·         Train managers and supervisors to be mindful of employee protection issues.

What do immigrant protections mean in relation to recent walkouts or boycotts?

·         Employers should not assume that an employee who protests is undocumented.

·         Employers should never ask employees to re-verify their eligibility to work (by completing a new Form I-9) simply because the employees are involved in political activity relating to immigration issues or because the employer is now suspicious that the employee is undocumented. The Form I-9 should have been completed at the time of hire.

·         Supervisors and managers should understand that using, or threatening to use, the suspected immigration status of an employee or employee’s family member because that employee is exercising protected rights is unlawful conduct.

RULES FOR ROUNDING PAYROLL PART 2

THIS IS A CONTINUATION FROM PART 1 OF THIS DISCUSSION. THIS NEW INFORMATION IS FROM LATE 2016.

Rounding times is allowed under California Law, but there has been a need for more information from the courts. The See’s Candy case is the rounding standard and has been bouncing around the courts for many years. An appellate court decision that further clarifies the ability of California employers to round employee timecard entries has been published.

By ordering its decision in Silva v. See’s Candy Shops, Inc. to be published, the 4th District Court of Appeal provides helpful guidance to employers on the factual circumstances that satisfy the standards for rounding of timecard entries.

The December 9, 2016, decision in Silva v. See’s Candy affirms that California employers may round employee timecard entries to the nearest tenth of an hour (6 minutes).

Background

See’s Candy uses a timekeeping software system to keep track of its employees’ working hours. The software system required employees to “punch” in at the beginning and end of their shift.

Timecard adjustments were made only in accordance with two See’s policies: 1) the nearest-tenth rounding policy; and 2) the grace period policy. Former employee Pamela Silva filed a class action lawsuit challenging these two policies.

Under the nearest-tenth rounding policy, in and out punches were rounded up or down to the nearest tenth of an hour. Under the separate grace period policy, employees whose schedule had been programmed into the timekeeping system could voluntarily punch in up to 10 minutes before their scheduled start time and 10 minutes after their scheduled end time. Employees, under See’s rules, were not permitted to work during that time, but could use it for personal activities.

In October 2012, the 4th District Court of Appeal issued an employer-friendly opinion by concluding that, under California law, employers may round employee timecard entries to the nearest tenth of an hour if the rounding policy is neutral, both as written and as applied. This ruling was particularly important because there was no statute or prior case law that explicitly authorized this common practice, which is permissible under federal law and followed by California’s labor agency.

The 2012 ruling did not explain how to determine whether a rounding policy had a neutral impact over a period of time and did not require any specific method of calculation for determining whether rounding resulted in under-compensating employees. Also not covered were the facts needed to support a summary judgment (issued without a trial) for an employer defending itself in claims alleging unlawful rounding on timecards.

Additional Guidance

The December 2016 ruling provides additional guidance regarding grace period policies, pointing favorably to See’s policy of prohibiting employees from working during the grace period and the “undisputed evidence” that employees engaged only in personal activities during the grace period and were neither working nor under the employer’s control during that time.

joined the U.S. Chamber of Commerce in asking the appeal court to publish its December 2016 ruling, pointing out that employers who use rounding are frequently the targets of litigation.

“Decisions addressing when California employers are entitled to summary judgment in such cases provide important benchmarks for the parties and for the courts charged with adjudicating rounding claims,” stated the joint letter asking that the decision be published.

For California employers facing class action lawsuits involving rounding claims, the letter CalChamber Involvement

CalChamber involvement in the case dates back to October 2011, when the CalChamber filed a letter urging the appeal court to review the trial court’s erroneous decision that the practice of rounding employee time entries to the nearest 6 minutes violated California law.

In a letter submitted by John A. Taylor Jr. of Horvitz Levy LLP, the CalChamber stated, “whether a rounding defense forecloses liability or merely creates a triable issue of fact to be resolved after class certification can literally be a multimillion-dollar question,” the letter said.

RULES FOR ROUNDING TIME FOR PAYROLL PART 1

THIS POSTING BEGINS THE STORY IN 2012.

Overturning a trial court determination that California law does not permit “rounding” of time entries for payroll purposes, the California Court of Appeal in See’s Candy Shops, Inc. v. Superior Court holds that an employer may round employees’ clock-in and -out times to the nearest tenth of an hour, provided that the rounding is “fair and neutral” and does not result in a failure to pay employees over a period of time.

The court also cited with approval legal authority that authorizes rounding to the nearest five minutes or quarter of an hour. Although the California Labor Commissioner had a long-standing enforcement position approving of neutral time-rounding policies, this is the first decision of a California appellate court regarding the Labor Commissioner’s position under California law. This decision brings California in line with approved practices under the federal FLSA and the laws of other states.

Background

See’s Candy Shops, Inc. required hourly employees to record the start and end times of their shifts and meal periods using timekeeping software. The time records were then used to calculate employee pay, subject to two adjustments: (1) the company rounded clock-in and -out times up or down to the nearest tenth of an hour; and (2) the company applied a “grace period” at the start and end of shifts. Under the grace period policy,

employees could voluntarily clock in up to ten minutes before the start of their shift and clock out up to ten minutes after the end of their shift, but pay would be based upon scheduled start and end times.

In a highly controversial decision that attracted national attention, the trial court ruled that the time-rounding and grace period policies were impermissible. See’s Candy Shops appealed.

The Court of Appeal reverses and approves of rounding policies

The Court of Appeal stated that California employers should be permitted to use the same long-standing rounding practices that are permitted throughout the United States.

The Court of Appeal held that so long as the rounding policy is neutral over time, the net effect allows employers to calculate time efficiently, with no loss of wages to employees.

Applying this analysis to See’s Candy Shops’ policy, the court found evidence that the time-rounding policy was neutral on its face because it rounded both up and down to the nearest tenth of an hour, and did not result in a loss of wages to employees over time.

As a result, the Court of Appeal reversed the trial court’s ruling that the time-rounding policy was per se impermissible. The case now goes back to the trial court on the issue of whether the rounding policy is “fair and neutral” in practice, i.e., whether in practice the policy works to disadvantage the See’s Candy Shops employees.

Take-away messages from the decision

Many employers do not round time, and this decision does not establish any broader right than was previously permitted under the DOL regulations and DLSE Manual. If anything, this decision highlights that employers who use rounding may face legal challenges and the expense of defending the fairness of the practice in court. This decision also highlights that rounding cannot be used as a cost-saving measure, as

any discrepancy between rounded and actual time should work in employees’ favor or, at the very least, be neutral. While some employers may find that rounding time is convenient and saves on administrative costs, any savings should be weighed against the potential costs of auditing rounded payroll records and justifying their fairness in litigation.

With those cautions in mind, employers who do employ rounding can take comfort that time-rounding policies, when properly drafted and applied, are permissible in California that:

(1) any rounding must be “fair and neutral,” meaning that time must be rounded up as well as down; and

(2) as applied, the policy must not result in a failure to compensate employees fully over time.

Employers who utilize rounding should conduct periodic audits of time and pay records to ensure that the rounding does not produce a net loss to employees. Employers may wish to engage legal counsel to conduct the audit so that the analysis is protected by the attorney-client and attorney work product privileges.

The Court of Appeal did not rule on whether the “grace period” policy was permissible. At a minimum, any such policies should state that clocking in during the grace period is voluntary, that employees may not work during the grace period and are free even to leave the premises until the start of the shift or after the end of the shift, and that if an employee performs work during the grace period, he or she should notify a supervisor so that the time will be paid.

 

Employers should adopt written policies providing that off-the-clock work is not permitted, and that any employee who performs work while not clocked in should notify a supervisor so that he or she can be paid for the time. In addition, supervisors should be trained on these policies and directed to inform Human Resources if they become aware of off-the-clock work, so that payment can be made.

Continue on next blog (Part 2)


 

NEW PAYROLL \ W-2 SCAM MAKING THE ROUNDS….BEWARE!

Recently the Internal Revenue Service (IRS) issued an alert to payroll and human resources professionals to warn them about an email scam.  In our effort to keep our customers protected and informed we are passing along this information.  Also, please note that all W-2 forms should be distributed in California no later than January 31.  If your w-2 is returned by mail as undeliverable, do not open the envelope. The sealed envelope with its postmark serves as proof that you attempted to send the Form W2 on time. Make a copy of the envelope and keep the copy in your records for 4 years.

The IRS is urging company payroll officials to double check any executive-level or unusual requests for lists of Forms W-2 or Social Security numbers (SSNs).

In this scam, cybercriminals attempt to trick payroll and human resource officials into disclosing employee names, SSNs and income information. The thieves then use the stolen personal information and data to try to obtain money, including filing fraudulent tax returns for refunds.

The criminals send a fake or “spoofing” e-mail pretending to be from the actual CEO or CFO of the company. In the email, the “CEO” requests a list of employees and information about the employees, including their SSNs, from company payroll officers or human resource employees.

The following are some of the details that may be contained in the emails:

  • Kindly send me the individual 2016 W-2 (PDF) and earnings summary of all W-2 of our company staff for a quick review.
  • Can you send me the updated list of employees with full details (Name, Social Security Number, Date of Birth, Home Address, and Salary).
  • I want you to send me the list of W-2 copy of employees wage and tax statement for 2016, I need them in PDF file type, you can send it as an attachment. Kindly prepare the lists and email them to me ASAP.

The IRS warns that cybercriminals are using more sophisticated tactics to try to steal even more data that will allow them to impersonate taxpayers.

Concerned employers can visit the IRS website to get assistance with reporting phishing and other online scams.

For more information on protecting personal, financial and tax data, see IRS.gov/taxessecuritytogether for additional steps businesses and individuals can take. Businesses that retain sensitive financial data are also encouraged to review and update their security plan. Safeguarding Taxpayer Data, A Guide for Your Business, provides a starting point and recommendations from the IRS.

FAQ ON PIECE RATE PAY AND PAY CALCULATIONS (AB 1513 and Labor Code 226.2)

Due to the continued interest and volume of calls we have received concerning piece-rate pay and how to properly follow the new laws, we are posting this information from the California Website.  You can read the full FAQ at https://www.dir.ca.gov/pieceratebackpayelection/AB_1513_FAQs.htm

You must list on  your paycheck stubs the piece-rate pay, the time and averaged pay rate for rest\recovery periods, and a third line for non-productive time.  Pay careful attention to the overtime provisions as well.

Here is the important information that you need.  Pay special attention to the area about calculating average pay:

Piece-Rate Compensation – Labor Code §226.2 (AB 1513)

Topics covered in this section

General information
Piece-Rate compensation and wage statement requirements effective January 1, 2016 and later
The affirmative defense provisions of Labor Code Section 226.2 (Relating to time periods prior to January 1, 2016)
Calculating and making back payments to employees and former employees for purposes of the affirmative defense
Employee claims about Piece-Rate compensation

General Information

Q. When does the law go into effect?

A. By operation of law, AB 1513 went into effect on January 1, 2016.

Q. What does AB 1513 do?

A. AB 1513 adds section 226.2 to the California Labor Code, which applies “for employees who are compensated on a piece-rate basis for any work performed during a pay period.”

In general terms, Labor Code section 226.2 does two things:

  1. It establishes compensation and wage statement requirements for rest and recovery periods and “other nonproductive time” for piece-rate employees going forward from the effective date of the statute.
  2. It establishes, for certain employers and under certain circumstances, an “affirmative defense” to any claim or cause of action for damages or statutory penalties based on an employer’s alleged failure to pay compensation due for rest and recovery periods and other nonproductive time for time periods prior to the effective date of the statute.

Q. What is piece-rate compensation?

A. Labor Code section 226.2 does not change the existing definition of what constitutes “piece-rate” compensation.

The existing Division of Labor Standards Enforcement Manual contains the following explanation of piece-rate compensation:

2.5.1 Piece-Rate or “Piece Work”

The American Heritage Dictionary defines the term piece-rate as: “Work paid for according to the number of units turned out.” Consequently, a piece-rate must be based upon an ascertainable figure paid for completing a particular task or making a particular piece of goods.

2.5.2 Examples of piece-rate plans can be as diverse as the following:

  1. Automobile mechanics paid on a “book rate” (i.e., brake job, one hour and fifty minutes, tune-up, one hour, etc.), usually based on the Chilton Manual or similar;
  2. Nurses paid on the basis of the number of procedures performed;
  3. Carpet layers paid by the yard of carpet laid;
  4. Technicians paid by the number of telephones installed;
  5. Factory workers paid by the widget completed;
  6. Carpenters paid by the linear foot on framing jobs.

2.5.3 A piece-rate plan of compensation may include a group of employees who share in the wage earned for completing the task or making the product.

2.5.5.1 Piece-rate and commission plans may be in addition to an hourly rate or a salary rate of pay. Such plans may also be in the alternative to a salary or hourly rate. As an example, compensation plans may include salary plus commission or piece-rate; or a base or guaranteed salary or commission or piece-rate whichever is greater.

(Reference: DLSE , pages 2-2 to 2-3.)

Q. Does the law apply to employees who work on a commission basis?

A. No, the law does not apply to employees who are compensated on a commission basis.

By its terms, Labor Code section 226.2 applies to “employees who are compensated on a piece-rate basis for any work performed during a pay period.” Note, however, that it is the nature of the compensation that is determinative, not the label.

Existing Labor Code section 204.1 defines “commission wages” as: “compensation paid to any person for services rendered in the sale of such employer’s property or services and based proportionately upon the amount or value thereof.”

(See also the Ramirez v. Yosemite Water Co. (1999) 20 Cal. 4th 785, 803 [“Although section 204.1 applies specifically to employees of vehicle dealers, both parties contend, and we agree, that the statute’s definition of ‘commission’ is more generally applicable.”].)

As the Supreme Court explained in the Ramirez case, quoting Keyes Motors, Inc. v. Division of Labor Standards Enforcement (1987) 197 Cal.App.3d 557, 563,

“. . . Labor Code section 204.1 sets up two requirements, both of which must be met before a compensation scheme is deemed to constitute “commission wages.” First, the employees must be involved principally in selling a product or service, not making the product or rendering the service. Second, the amount of their compensation must be a percent of the price of the product or service.’” (Ramirez, supra, 20 Cal. 4th at 803-04.)

The Division of Labor Standards Enforcement Manual contains the following language concerning the difference between piece-rate compensation and commission compensation:

2.5.4 Commission

Labor Code § 204.1 defines commissions as: “Compensation paid to any person for services rendered in the sale of such employer’s property or services and based proportionately upon the amount or value thereof.” Keyes Motors v. DLSE (1987) 197 Cal.App.3d 557.If the compensation is based on a percentage of a sale, the compensation plan is a commission. On the other hand, a compensation plan which pays employees for the number of pieces of goods finished, the number of appointments made or the number of procedures completed, is based on a piece-rate, not a commission rate; though such compensation plans often refer to the payment as “commission”.

2.5.4.1 Shared commissions

Again, as with a piece-rate plan, a commission plan may include a group of employees who share in the commissions earned. (For a detailed discussion of commissions refer to the DLSE Enforcement Manual, Section 34.)

Q. Does this statute change overtime compensation requirements?

A. Labor Code section 226.2 expressly states in the opening paragraph that it “shall not be construed to limit or alter minimum wage or overtime compensation requirements, or the obligation to compensate employees for all hours worked under any other statute or local ordinance.”

This means that in any workweek in which a piece-rate employee worked overtime hours, overtime compensation must be calculated and paid according to existing law.


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Piece-Rate compensation and wage statement requirements effective January 1, 2016 and later

Q. What are the compensation requirements for rest and recovery periods for piece-rate employees?

A. Labor Code section 226.2, subdivision (a), paragraphs (1) and (3) provide that:

  • Employees must be compensated for rest and recovery periods separate from any piece-rate compensation, and
  • The rate of compensation for rest and recovery periods shall be the higher of:
    • An average hourly rate determined by dividing the total compensation for the workweek, exclusive of compensation for rest and recovery periods and any premium compensation for overtime, by the total hours worked during the workweek, exclusive of rest and recovery periods.
    • The applicable minimum wage.

This means that piece-rate employees must be paid compensation for rest and recovery periods that is separatefrom their piece-rate compensation. An employer may not treat the piece-rate compensation as including compensation for rest and recovery periods, no matter how the piece-rate was determined.

The hourly rate of compensation for rest and recovery periods must be the same as the hourly rate (averaged over the workweek) that an employee earned during the workweek for time during which he or she was performing work. If, for some reason, this average hourly rate comes out to less than minimum wage, then the employee must be paid at minimum wage.


Q. How does an employer determine the average hourly rate to be paid for rest and recovery periods?

A. The formula for determining the average hourly rate to be paid for rest and recovery periods is set forth in the statute, as follows:

Divide the total compensation for the workweek, exclusive of compensation for rest and recovery periods and any premium compensation for overtime, by the total hours worked during the workweek, exclusive of rest and recovery periods.”

(Labor Code §226.2(a)(3)(i).)

The following are some examples of application of this formula.


Examples:

1. For a workweek of piece-rate compensation only:

  • A piece-rate employee works a 5-day, 40-hour workweek.
  • The employee has two 10-minute rest periods authorized and permitted per day, for a total of 100 minutes (1.67 hours) of rest periods for the workweek.
  • The employee earns $500 in piece-rate compensation for the workweek.
The average hourly rate to be paid for the rest periods for this employee is calculated as follows:
$500 total compensation not including compensation for the rest periods
÷ 38.33 total hours less rest periods
= $13.04/hr
x 1.67 hrs
rest periods for the workweek
= $21.78 compensation for rest periods for the workweek
Total compensation for the workweek:
$500 piece-rate compensation
+ $21.78 compensation for rest periods
= $521.78

2. For a workweek of piece-rate compensation and a base rate of minimum wage for all hours worked:

  • An employee works a 5-day, 40-hour workweek.
  • The employee has two 10-minute rest periods authorized and permitted per day, for a total of 100 minutes (1.67 hours) of rest periods for the workweek.
  • The employee is paid minimum wage ($10/hour) for all hours worked, including the two 10-minute rest periods, for a total of $400.
  • The employee also earns a total of $300 in piece-rate compensation for the workweek.
The average hourly rate to be paid for the rest periods for this employee is calculated as follows:
$683.30 Total compensation for the workweek, not including compensation for rest and recovery periods, which is the $300 in piece-rate compensation, plus the minimum wage paid for all hours worked except the 1.67 hours of rest period time
÷ 38.33 Total hours less rest periods
= $17.83/hour Note: $10/hour of this time is already calculated into and paid in the employee’s minimum wage of $10/hour for all hours worked, including the rest period time.

Therefore, the additional amount owed for rest periods under this example is $7.83/hour.

Total compensation for the workweek:
$400 Minimum wages for all hours worked, including the rest period time
+ Piece = rate compensation
+ $7.83 x 1.67 hours = Additional amount over minimum wage required to pay correct average hourly rate for rest periods

3. For a workweek with both piece-rate work and hourly work:

  • An employee works a 5-day, 40-hour workweek.
  • On two 8-hour days of this workweek (for a total of 16 hours), the employee works at an hourly rate of $10/hour, and does no piece-rate work.
  • On the other three days of the week (for a total of 24 hours), the employee does piece-rate work only and earns a total of $300 in piece-rate compensation.
  • On each day of the workweek, the employee has two 10-minute rest periods authorized and permitted, for a total of 100 minutes (1.67 hours) of rest periods for the workweek.
  • On the two hourly-work days, these rest periods are compensated at the $10 hourly wage.
The average hourly rate to be paid for the rest periods for this employee is calculated as follows:
$453.30 Total compensation for the workweek, not including compensation for rest and recovery periods, which is the $300 in piece-rate compensation, plus the $160 for hourly work, less $6.70, which is the compensation for the 40 minutes of rest and recovery periods on the two hourly-rate days.
÷ 38.33 Total hours, which is 40 hours less the 1.67 hours of rest period time
= $11.83/hour Note: For the days on which the employee worked at an hourly rate, $10/hour of this time is already been paid as part of the hourly rate. For those two days, the employee is owed only an additional $1.83/hour for the rest periods. For the days on which the employee did piece-rate work, the rate to be paid for the rest periods is $11.83.
Total compensation for the workweek:
$160 For the hourly rate worked on two days
+ $300 Piece-rate compensation
+ $1.83 x .67 hours = $1.23 The additional amount owed for the rest periods on the hourly rate days to bring them to the average hourly rate for the workweek.
= $473.06

4. For a workweek of piece-rate compensation and overtime hours:

  • An employee works a 6-day, 47-hour workweek, for which 7 hours constitute overtime.
  • The employee has two 10-minute rest periods authorized and permitted per day, for a total of 120 minutes (2.0 hours) of rest periods for the workweek.
  • The employee earns a total of $800 in piece-rate compensation for the workweek.
The average hourly rate to be paid for the rest periods for this employee is calculated as follows:
$800 Total compensation for the workweek, not including compensation for the rest and recovery periods or premium pay for overtime.
÷ 45 hours Total hours, not including the rest and recovery periods.
= $17.78/hour

x 2.0 hours

= $35.56

Compensation for rest and recovery periods for this workweek.
The overtime premium compensation for this employee is:
$800 Piece-rate compensation
+ $35.56 Compensation for rest and recovery periods
= $835.56
÷ 47 hours
= 17.78/hour Regular rate of pay
x .5
= $8.89 Premium pay due for overtime hours
x 7 hours Overtime hours
= $62.23
Total compensation for the workweek:
$800 Piece-rate compensation
+ $35.56 Compensation for rest and recovery periods
+ $62.23 Premium pay for overtime hours
= $897.79

Q. If an employer pays a base hourly rate for all hours worked (for example, minimum wage), but also pays additional piece-rate compensation, is it sufficient for the employer to just pay minimum wage for the employee’s rest breaks?

A. No. Going forward, the statute requires compensation at an average hourly rate determined by dividing total compensation by the total hours worked in the workweek, as explained above. This encourages employees to take their authorized rest breaks, without feeling that doing so will decrease their compensation.

Q. What types of compensation must be included in determining the average hourly rate to be paid for rest and recovery periods?

A. The statute says that the average hourly rate shall be “determined by dividing the total compensation for the workweek, exclusive of compensation for rest and recovery periods and any premium compensation for overtime, by the total hours worked during the workweek, exclusive of rest and recovery periods.”

As indicated above, the statute refers to “total compensation” for the workweek. This type of formula is similar to the manner in which employers are currently required to calculate a regular rate of pay for overtime compensation purposes. The Division of Labor Standards Enforcement Manual contains information on the types of compensation within a workweek that generally must be included for this purpose and those that are not. (See DLSE Manual, §49.1 to 49.1.2.3 (items to be included) and §49.1.2.4 (types of compensation not included.)


Q. What are “rest and recovery periods”, as referred to in the statute?

A. Labor Code section 226.2 does not change the definition for rest and recovery periods. Those terms have the same meaning as they do under existing law.

“Rest” periods are defined and required under a number of existing wage orders. For example, existing Wage Order 1 (Manufacturing Industry) contains the following provision regarding rest periods:

12. Rest Periods

A. Every employer shall authorize and permit all employees to take rest periods, which insofar as practicable shall be in the middle of each work period. The authorized rest period time shall be based on the total hours worked daily at the rate of ten (10) minutes net rest time per four (4) hours or major fraction thereof. However, a rest period need not be authorized for employees whose total daily work time is less than three and one-half (3 1/2) hours. Authorized rest period time shall be counted as hours worked for which there shall be no deduction from wages.

B. If an employer fails to provide an employee a rest period in accordance with the applicable provisions of this order, the employer shall pay the employee one (1) hour of pay at the employee’s regular rate of compensation for each work day that the rest period is not provided.

(Wage Order 1, ¶12, 8 CCR section 11010.)

Most of the existing wage orders contain similar, or identical, provisions on rest periods.

Existing Labor Code section 226.7 defines a “recovery period” as “a cooldown period afforded an employee to prevent heat illness.”

Labor Code section 226.7 also provides that:

(b)   An employer shall not require an employee to work during a meal or rest or recovery period mandated pursuant to an applicable statute, or applicable regulation, standard, or order of the Industrial Welfare Commission, the Occupational Safety and Health Standards Board, or the Division of Occupational Safety and Health.

In Brinker Restaurant Corp. v. Superior Court (2012) 53 Cal.4th 1004, 1029, the California Supreme Court said the following concerning rest periods (applying Wage Order 5):

Employees are entitled to 10 minutes rest for shifts from three and one-half to six hours in length, 20 minutes for shifts of more than six hours up to 10 hours, 30 minutes for shifts of more than 10 hours up to 14 hours, and so on.

(Id. at 1029.) See also Brinker, supra, 53 Cal.4th at 1033 (“An employer is required to authorize and permit the amount of rest break time called for under the wage order for its industry.”)


Q. Does Labor Code section 226.2 mean that employers will need to track the number of minutes that employees actually take for their rest and recovery periods?

A. No. Section 226.2, subdivision (a)(2) requires that an employee’s itemized wage statement state “[t]he total hours of compensable rest and recovery periods, the rate of compensation, and the gross wages paid for those periods during the pay period.” (Emphasis added.)

If an employer has authorized and permitted two 10-minute rest periods during an employee’s work shift (see quote from Brinker above), the “compensable” rest and recovery periods are those that have been authorized and permitted according to existing law. That is the amount of time for which an employee must be compensated (i.e., the “compensable” period), and which must be itemized on the wage statement, regardless of whether the employee actually took only 8 minutes on one rest period (less than the amount of time that was “compensable”), or took 13 minutes on another rest period (more than the amount of time that was “compensable”).

Similarly, for recovery periods (“a cooldown period afforded an employee to prevent heat illness,” see Labor Code section 226.7), the employer will need to determine the amount of time that was “afforded” (i.e., authorized and permitted), which may depend on the circumstances. The amount of time that was afforded is the amount of time for which employees must be compensated (i.e., the “compensable” period) and which must be itemized on the wage statement.


Q. Why are there different rules for employers who pay on a semi-monthly basis?

A. Actually, the compensation requirements for rest and recovery periods are the same for all employers, including those that pay on a semi-monthly basis. For employers who pay on a semi-monthly basis, however, there is a provision that allows the employer to pay for rest and recovery periods at a rate of at least the minimum wage for the pay period in which the rest and recovery periods occurred, and then to “true up” the compensation owed (to pay “the additional compensation required”) applying the average hourly rate formula that is required and explained above, in the following pay period. This is because when a semi-monthly pay period ends in the middle of a workweek, it may not be possible to determine the “average hourly rate” for that workweek at the time the paycheck is issued for that payroll period.

This is consistent with existing rules in Labor Code section 204 that apply to employers who pay wages on a semi-monthly basis. That section provides, for example, that “all wages earned for labor in excess of the normal work period [e.g., overtime] shall be paid no later than the payday for the next regular payroll period.” (Labor Code §204(b)(1) (language in italics added).)


Q. What is “other nonproductive time”?

A. Labor Code section 226.2 defines “other nonproductive time” as “time under the employer’s control, exclusive of rest and recovery periods, that is not directly related to the activity being compensated on a piece-rate basis.”

What constitutes “other nonproductive time” under this definition will obviously vary depending upon the nature of the work and the “activity being compensated on a piece-rate basis.”


Q. What are the compensation requirements for other nonproductive time?

A. Labor Code section 226.2, subdivision (a)(1) and (a)(4) provide that:

  • Employees must be compensated for other nonproductive time separate from any piece-rate compensation, and
  • Employees must be compensated for other nonproductive time “at an hourly rate that is no less than the applicable minimum wage.

This means that piece-rate employees must be paid compensation for “other nonproductive time” that is separate from their piece-rate compensation. An employer may not treat the piece-rate compensation as including compensation for other nonproductive time, no matter how the piece-rate was determined.

The compensation requirement for other nonproductive time is simply that it be paid at an hourly rate of no less than the applicable minimum wage.

The statute also contains a kind of “safe harbor” provision in subdivision (a)(7), which states:

An employer, who in addition to paying any piece-rate compensation pays an hourly rate of at least the applicable minimum wage for all hours worked, shall be deemed in compliance with paragraph (4).

This means that if an employer pays a base hourly rate of at least the applicable minimum wage for all hours an employee works, in addition to any piece-rate compensation, the employer will be deemed in compliance with the compensation requirements for other nonproductive time.


Q. Does an employer need to track the amount of other nonproductive time worked by an employee who is compensated on a piece-rate basis?

A. It depends. If the employer utilizes the “safe harbor” option of subdivision (a)(7) (i.e., “in addition to paying any piece-rate compensation, pays an hourly rate of at least the applicable minimum wage for all hours worked”), then the compensation and wage statement requirements for other nonproductive time are satisfied, and the employer is not required to determine or to record the actual amount of hours worked in other nonproductive time. (See §226.2(a)(2)(B); (a)(4); (a)(7).)

If the employer does not use this “safe harbor” option of paying an hourly rate of at least minimum wage for all hours worked, then the amount of hours worked in other nonproductive time must be determined (§226.2(a)(5)), listed on the wage statement, (§226,2(a)(2)(B)), and compensated separately at an hourly rate of at least minimum wage (§226.2(a)(4)).

Subdivision (a)(5), however, provides that “[t]he amount of other nonproductive time may be determined either through actual records or the employer’s reasonable estimates, whether for a group of employees or for a particular employee, of other nonproductive time worked during the pay period.” (Labor Code §226.2(a)(5).) This allows employers the option of determining the amount of other nonproductive time worked based on a reasonable estimate, rather than actual tracking of time.

Subdivision (a)(6) further provides that:

An employer who is found to have made a good faith error in determining the total or estimated amount of other nonproductive time worked during the pay period shall remain liable for the payment of compensation for all hours worked in other nonproductive time, but shall not be liable for statutory civil penalties, including, but not limited to, penalties under Section 226.3, or liquidated damages based solely on that error, provided that both of the following are true:

A. The employer has provided the wage statement information required by subparagraph (B) of paragraph (2) and paid the compensation due for the amount of other nonproductive time determined by the employer in accordance with the requirements of paragraphs (4) and (5).

B. The total compensation paid for any day in the pay period is no less than what is due under the applicable minimum wage and any required overtime compensation.

In general terms, this means that if an employer makes a good faith error in determining the amount of other nonproductive time for a worker, whether determined through records or based on an estimate, in that the employee actually worked more other nonproductive time than was in the estimate or as otherwise determined by the employer, the employer remains liable to compensate the employee for all of the other nonproductive time the employee actually worked (at an hourly rate of at least minimum wage), but will not be liable for any statutory penalties.

This provision is subject to the two qualifications in subparagraphs (A) and (B), quoted above, including that the employer must have paid the employee at least minimum wage and any required overtime compensation on that minimum wage.


Q. Are there any wage statement requirements under this law?

A. Yes. Labor Code section 226.2, subdivision (a)(2) provides that:

The itemized statement required by subdivision (a) of [Labor Code] Section 226 shall, in addition to the other items specified in that subdivision, separately state the following, to which the provisions of Section 226 shall also be applicable:

  1. The total hours of compensable rest and recovery periods, the rate of compensation, and the gross wages paid for those periods during the pay period.
  2. Except for employers paying compensation for other nonproductive time in accordance with paragraph (7), the total hours of other nonproductive time, as determined under paragraph (5), the rate of compensation, and the gross wages paid for that time during the pay period.

As indicated in the language in italics above, an employer is not required to state the total hours of other nonproductive time, the rate of compensation, or the gross wages paid for that time, if the employer “in addition to paying any piece-rate compensation, pays an hourly rate of at least the applicable minimum wage for all hours worked,” as authorized by the “safe harbor” language in subdivision (a)(7).

The wage statement requirements should be read in tandem with the current requirement under section 226, subdivision (a), that an itemized wage statement show “all applicable hourly rates in effect during the pay period and the corresponding number of hours worked at each hourly rate by the employee…” (§226(a)(9)). To the extent there may be overlap between this provision and section 226.2(a)(2) going forward, the requirements will be harmonized. Employers will not be required to state the same information twice on the wage statement.