June 1, 2016
After much anticipation, the U.S Labor Department (USDOL) has issued a final rule updating the salary and compensation levels needed for Executive, Administrative and Professional employees to be treated as exempt from the federal Fair Labor Standards Act's (FLSA) overtime, minimum-wage, and time-recordkeeping requirements. The rule takes effect on December 1, 2016.
While the new rule changes federal requirements, California farm employers must also comply with California law for similar—but not identical--exemptions.
In summary, the new federal rule brings these changes:
· The federal minimum salary threshold for so-called “white collar” exempt employees is increasing to $913 per week, which equates to a minimum annual salary of $47,476 (a huge increase from the prior requirement of $455 per week, or $23,660 per year).
· This earnings threshold will be "adjusted" (probably increased) every three years beginning on January 1, 2020. USDOL will announce each change 150 days before it will take effect.
· Employers will be able to meet up to 10% of this new threshold through nondiscretionary bonuses and other incentive payments, including commissions, as long as these payments are made at least quarterly. This crediting will not be permitted for salaries paid to employees treated as exempt “highly compensated” employees.
· The “highly compensated employee” threshold will increase from $100,000 to $134,004 (which will also be “updated” every three years).
USDOL did not change any of the "duties tests" relating to the kinds or amounts of work an exempt employee must do to qualify for this status.
Agricultural employers in California are undoubtedly wondering how—or even if—these changes affect them.
“Agriculture” has two meanings under the FLSA:
· Primary meaning: Farming in all its branches and among other things includes the cultivation and tillage of the soil, dairying, the production, cultivation, growing and harvesting of any agricultural or horticultural commodities . . ., and the raising of livestock, bees, fur-bearing animals, or poultry, and;
· Secondary meaning: Practices (including any forestry or lumbering operations) performed by a farmer or on a farm as an incident to or in conjunction with such farming operations, including preparation for market, delivery to storage or to market or to carriers for transportation to market.
In California, Industrial Welfare Commission Wage Order No. 14-2001 generally covers persons employed in agricultural occupations. But it does not apply to any employee engaged in work that is primarily intellectual, managerial, or creative and requires exercise of discretion and independent judgment, for which the remuneration is not less than twice the monthly state minimum wage for full-time employment. With the California minimum wage at $10 per hour, the remuneration requirement for such employees to be exempt from Order 14 remains at $3,467 per month ($41,600 per year).
California's exemption threshold won't catch up to (and surpass) the new federal level until 2019, when under recently enacted SB 3 the California minimum wage will reach $12 per hour for employers of 26 or more employees (those with 25 or fewer employees will have an additional year to comply with the new higher minimum wage). California’s exemption threshold will then be $4,160 per month ($49,920 per year).
Unfortunately, the intersection of California and federal wage and hour law presents a quirky if not troublesome complication for California farm employers. As noted above, an employee is exempt from FLSA overtime pay in any workweek in which he is exclusively "employed in agriculture." But the FLSA regulations require an employer to keep time records for such an employee, unless the employee is exempt from the time-recordkeeping requirement because he meets the requirements for an exempt executive, administrative, or professional employee.
This means that while time records still won't have to be kept for an agricultural employee who meets California's exemption requirements for an intellectual, managerial, or creative employee (including its soon-to-be lower salary level), time records will have to be kept under the FLSA for the same employee whose salary won't meet the newly increased salary level under the FLSA.
Thus time records under the FLSA will have to be kept for the employee even though the employee won't be entitled to FLSA weekly overtime pay (because he's employed in agriculture), and the employee will continue to be exempt from California's overtime-pay, minimum-wage, and time-recordkeeping rules.
DFEH Issues Guidelines on Workplace Issues Related to Transgender Employees
On February 17, 2016, the California Department of Fair Employment and Housing (DFEH) issued guidelines for employers on the rights under California law of transgender employee. They address what questions employers may ask transgender employees during the interview and selection process and at other times, how employers can implement dress codes and grooming requirements in a non-discriminatory manner, and for maintaining facilities that are typically assigned and used on the basis of gender, such as employee restrooms, showers, and locker rooms.
DFEH’s action grows out of a 2014 case in which a court ruled that a transgender employee could pursue a discrimination claim under the Fair Employment and Housing Act (FEHA) against an employee that had requested that the employee use restrooms and locker rooms designated for the employee’s biological sex at birth, rather than the employee’s gender identity.
Avoiding Discriminatory Questions
During the interview and selection process employers are free to inquire about employment history and other non-discriminatory questions. DFEH recommends that employers avoid questions intended to determine a person’s sexual orientation or gender identity, and to avoid questions about whether a person plans to have sex reassignment procedures or surgery.
DFEH guidelines recommends that dress codes and grooming standards be enforced in a non-discriminatory manner. A transgender man whose biological sex at birth was female must be permitted to dress and groom himself in accordance with his gender identity (like the other persons who identify as men in the workplace). A transgender individual’s compliance with dress codes or grooming standards cannot be subject to scrutiny that would not be accorded to non-transgender employees.
Restrooms and Locker Rooms
All employees, including transgender employees, have the right to use a facility that corresponds with their gender identity—regardless of their biological sex at birth. The DFEH suggests that employers, where possible, should provide unisex single stall bathrooms for any employee who would like increased privacy for any reason, also without regard to gender identity or expression. But use of unisex facilities should always be completely voluntary for all employees.
What this means for employers:
It is not necessary for an employee to have sex reassignment surgery or complete any particular step in transitioning genders to be considered transgender. FEHA’s gender identity expression protections apply to all employees—whether they identify as transgender, or are simply not gender-conforming in their modes of dress, grooming, and behavior.
Employers should be careful to ensure that they avoid questions discriminatory or questions violating employees’ privacy rights, both in the interview and selection process and after. Employers should also be careful to enforce dress codes and grooming standards in a non-discriminatory manner. Employers must also allow employees to use restrooms and locker rooms that correspond to their gender identity, and if possible, make single-stall restroom and shower facilities to all employees who wish to use them.
Governor Brown Signs Minimum Wage Increase
April 4, 2016
Bryan Little, Farm Employers Labor Service
On April 4, Governor Brown signed an increase in the California minimum wage. The minimum wage increase will take place in stages.
Under SB 3 (Leno) the minimum wage will increase to $10.50/hour on Jan. 1, 2017, and $11/hour on Jan. 1, 2018. The minimum wage would increase by one dollar per year on Jan. 1 of each year until it reaches $15/hour in 2022. Businesses employing 25 or fewer employees will have an additional year to implement each step in the minimum wage increase.
Once the minimum wage reaches $15/hour in 2020, SB 3 will be indexed annually for inflation, limited to an increase of 3.5% (rounded to the nearest 10 cents).
The Governor has some discretion to delay scheduled increases prior to 2020 based on certain very specific economic or fiscal conditions.
USDOL Guidance Seeks to Broaden “Joint Employment”
Recently-released (Jan. 20, 2016) guidance from the Wage and Hour division of the U.S. Department of Labor expresses the view of the Department that a joint employment relationship between an employee and two or more employers should be found more frequently. Wage and Hour argues that if the relationship between the employee’s apparent employer is influenced by “economic realities” of his business relationship with the business contracting his services shows an employment relationship, and whether the business hiring the putative contractor “suffers and permits” the work of the employee who may be jointly employed by the contractor and the business hiring the contractor.
Wage Statement Information – AB 1513
California has extensive and specific requirements for wage disclosures and statements to employees – most of which have been passed in response to concern about “wage theft” – the supposedly common practice of employers failing to pay or underpaying workers, failing to pay required overtime, failing to provide meal and rest periods and other wage and hour violations. Labor Code Section 226 features detailed requirements wage statements (a California-specific vast expansion of what most of us recognize as the paycheck stub):
On the October 11 constitutional deadline for action by the Governor on bills that passed by the California Legislature during it recently-ended 2014-2015 session, Governor Jerry Brown vetoed several bills that would have been harmful to California agricultural employers: