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.
You can find more information about DFEH’s guidance at this link.
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.
Dress Codes
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.
Read more: USDOL Guidance Seeks to Expand Federal-Law “Joint Employment”
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:
Read more: Governor Brown Vetoes Employment Regulatory Bills
Governor Brown Signs Piece-Rate Resolution
Two California appellate court decisions issued in 2013 have caused confusion and fostered numerous wage-and-hour lawsuits against California farmers who use piece-rate compensation plans. In response, the Legislature has sent to the governor a measure intended to provide some clarity and relief in this troubling area of the law.
Labor Commissioner Offers Paid Sick Leave Clarifications
In an August 7 letter to Bakersfield attorney David G. Blaine, Labor Commissioner Julie Su has offered clarity as to the meaning of a "day" for the purposes of compliance with the Paid Sick Leave (PSL) mandate. Previously, the length of a "day" for employees customarily working ten hour days was unclear. The law that established the PSL mandate is AB 1522 the Healthy Workplaces, Healthy Families Act (2014), later amended by AB 304 (2015).
The question concerned use of "front-loaded" PSL, where an employer grants an employee three "days" PSL at the beginning the year. In that situation, is that employer obliged to grant an employee who customarily works ten hours per day 24 hours of paid sick leave (as specified by AB 1522) or 30 hours, which would be the equivalent of three days for employees who usually work 10 hour days (such as ag employees covered by Wage Order 14, or employees working subject to a flextime arrangement).
According to the Labor Commissioner's interpretation of the law, such an employer would be obliged to furnish 30 hours of PSL, as this would result in the employee being furnished sufficient PSL to cover the minimum of three days mandated by the PSL statute.
Similarly, the Labor Commissioner interpreted the "3 day or 24 hours" limitation which employers are permitted to impose on use of PSL in any given year as requiring the employer of a ten-hour employee to limit the employee to total use of 30 hours of PSL, rather than 24 as specified in the statute. Again, the Labor Commissioner cites the general rule that the Legislature expressed its intent in the PSL legislation that employees should be permitted to take a minimum of three days of PSL, including 30 hours of PSL if the employee normally works a ten hour day.
You can read the Labor Commissioner's letter at this link.
Paid Sick Leave Corrections Bill Signed by Governor Brown
On July 13, Governor Brown signed AB 304 (Gonzalez, D-San Diego) making several adjustments and corrections to AB 1522 (also by Assemblymember Gonzalez) passed by the California Legislature in 2014.
The process of implementation in late 2014 and early 2015 revealed a number of problems with the original sick leave mandate bill, some of which are fixed by AB 304:
- Specifies that existing paid time off (PTO) and paid sick leave (PSL) programs that accrue in a different manner than that specified by AB 1522 (one hour of PSL for every 30 hours worked) are compliant with the PSL mandate if the accrual method used allows an employee to earn at least 24 hours of leave by the 120th calendar day of employment. This allows employers to use more common accrual methods that accrue by the pay period, rather than by the number of hours worked.
- Excuses employers from providing additional paid sick leave if they had a PSL or PTO program in place as of January 1, 2015 that allowed employees to accrue at least one day or eight hours of PSL or PTO within three months of employment, and allowed employees to accrue at least three days or 24 hours of PSL or PTO within nine months of employment.
- Clarifies that if an employer pays out unused PTO at termination, the employer is not required to reinstate that accrued but unused PTO if the employee returns to the employer's employment within one year.
- Allows an employer providing unlimited paid sick leave or paid time off to report the employee's leave balance on a pay check stub or wage statement as "unlimited."
- Allows employers to calculate the rate of pay for employees paid on commission or by piece-rate to calculate the proper rate at which paid sick leave is paid to the employee by either:Clarifies that it is not necessary for employers to maintain any records or inquire into employee's reasons for using PSL or PTO.
- Dividing the employee's total compensation over the prior 90 days by the hours worked in the prior 90 days; or,
- Calculating the PSL pay rate in the same manner as the employer calculates the employee's regular rate of pay for the purpose of calculating overtime.
FELS will furnish further guidance and information about the implementation of the PSL mandate as it becomes available.
Paid Sick Leave Compliance Resources
FELS Sacramento offices have received numerous telephone calls and emails from FELS Newsletter subscribers and CFBF members requesting assistance with compliance with various aspects of the new Paid Sick Leave (PSL) mandate imposed by AB 1522, passed by the California Legislature in 2014.
Here are some compliance resources that may be of help to you in meeting the basic requirements of the PSL mandate:
Workplace posting and Individual Employee Notification (both available in English and Spanish at this link on the DLSE website.)
- The posting is required in the workplace to inform workers about the new PSL law. It should be placed with other workplace informational postings required by other laws, like minimum wage and workplace safety and health information.
- The individual employee notice is a revision of the notice employers have been required to provide for several years by "wage theft prevention" legislation passed by the California legislature (Labor Code 2810.5). The Office of the Labor Commissioner had indicated that employees must be individually notified about PSL using the information provided by this form. This form is a template provided by the Office of the Labor Commissioner; you are not required to use this exact form, but you are required to provide all the information from the template about PSL.
- Frequently Asked Questions (FAQs) about the PSL mandate. These FAQ may he helpful for employers to understand the Labor Commissioner's expectations for compliance with PSL.
- FELS Federal & State Employment Notifications Posters & Book include the new workplace postings required by the PSL mandate; you can order posters and books at this link.
If we can be of further assistance, please contact FELS at 800-753-9073 or This email address is being protected from spambots. You need JavaScript enabled to view it..