labor lawAdivision of labor law center

With the current economic crisis, many employers are considering giving workers additional unpaid time off during the holidays. This includes giving workers Friday, November 28 (the day after Thanksgiving) and/or Friday, December 26 (the day after Christmas) off without pay.

Other employers are considering closing for an entire week between Christmas and New Years.

However, these tactics raise issues around the payment of exempt salaried employees that every employer needs to be aware of. (more…)

A U.S. district court judge has ordered Gardena, Calif.-based Southern California Maid Services and Carpet Cleaning to pay $3,467,789 in back wages, plus $1,058,973 in liquidated damages, to 385 current and former low-wage domestic workers.  This case was reported in the most recent issue of the Labor Advocate, the labor law newsletter published by the U.S. Department of Labor.

This action resolves a lawsuit filed by the U.S. Department of Labor alleging that the workers were misclassified as independent contractors in violation of the Federal Fair Labor Standards Act (FLSA).

The FLSA requires that covered employees be paid at least the federal minimum wage and receive overtime at one and one-half times their regular rates of pay for hours worked beyond 40 per week. Employers must also maintain accurate time and payroll records.

“One of the highest priorities of this department is making sure workers are paid all of the wages they have earned,” said U.S. Secretary of Labor Elaine L. Chao. “In this case, we are recovering more than $4.5 million for nearly 400 workers.”

Investigators from the Labor Department’s Wage and Hour Division found that Southern California Maid Services and Carpet Cleaning misclassified the home and carpet cleaners as independent contractors, resulting in minimum wage and overtime violations. The company also failed to keep accurate records of the employees and the hours that they worked.

The East Los Angeles District Office Wage and Hour Division learned of the employer’s practices through participation in the Employment Education and Outreach (EMPLEO) partnership. EMPLEO is an alliance of organizations and government agencies that assist Spanish-speaking workers and employers with work-related concerns. EMPLEO has a local, toll-free helpline: (877) 55-AYUDA (552-9832). Volunteers help refer callers to the appropriate EMPLEO partner for assistance.

The Mexican Consulate of Los Angeles, a member of EMPLEO, provided assistance in locating Spanish-speaking witnesses to pursue this litigation.

This is just the most recent in a series of minimum wage violations uncovered by the U.S. Department of Labor’s Wage and Hour Division.

In August 2007, five jointly-operated restaurants in Long Island, New York were ordered to pay almost $1 million to 191 low-wage workers. The employees had been forced to work long hours for wages less than the minimum wage, without overtime pay.  The court ordered that if the employers did not pay up, their restaurants could be sold and the proceeds used to pay the employees.

Earlier in 2007, under a voluntary agreement to prevent a federal suit, Wal-Mart, Inc. agreed to pay $33 million in unpaid overtime wages to 86,680 employees throughout the nation. An internal audit revealed that the company had incorrectly classified some employees as “salary-exempt” when in fact they were entitled to overtime pay. In other cases, the company admitted that it had based overtime pay on the employee’s base hourly rate, not including incentives and bonuses in the employee’s average rate as required by law.

The Fair Labor Standard Act requires that most U.S. employees be paid at least the federal minimum wage, which is currently $5.85 per hour. The FLSA also mandates that employees must be paid 1.5 times their usual hourly rate for each hour over 40 in a single work week.

Many employers mistakenly believe that any worker paid by salary is exempt from overtime. The FLSA does provide a number of exemptions to the overtime law for bona fide executive, administrative, professional and outside sales jobs. In general, employees must meet job duty and salary tests, to be exempt from overtime.

The U. S. Department of Labor Wage and Hour Division collected more than $171 in back wages for some 246,000 employees in 2006. Thos wages were a result of 31,987 “compliance actions” in 2006.

The California Industrial Welfare Commission sets the state’s minimum wage, and as of January 1, 2008, California’s state minimum wage jumped 50 cents to $8.00 per hour.

The increase is the result of a two-step process that began in 2006.

 Under pressure from the Democrats to raise the state minimum wage, Governor Arnold Schwarzenegger agreed to bump the minimum by 75 cents from $6.75 to $7.50 on January 1, 2007, and to add an additional bump of 50 cents to $8.00 on January 1, 2008.

The increase in 2007 was the first raise in the California minimum wage since 2002.

In February of 1998, the California minimum wage was on par with the federal minimum of $5.15. In March of 1998, the rate rose to $5.75, then to $6.25 in 2001, and then to $6.75 in 2002.

A minimum wage of $8.00 per hour may seem generous, but California has the highest cost of living and some of the highest real estate prices in the country.

As a matter of fact, California’s minimum wage is not the highest in the nation. Previous to the January 1, 2008 increase, both Oregon and Washington had higher state minimum wages at $7.80 and $7.93 per hour, respectively. These two states also raised their minimums on January 1, 2008. Oregon’s rate jumped 15 cents to $7.95 per hour, and Washington’s increase of 14 cents brought its rate to $8.07 per hour.

Washington now holds the questionable honor of having the highest state minimum wage in the United States.

Like Washington and Oregon, several states have established their own state-mandated minimum wage rates. Other states enacted rates to echo the federal minimum wage. On July 24, 2008, the federal minimum wage will increase, meaning that several more states will raise their minimum wage rates as well.

These increases, both in California’s minimum wage and in the federal minimum wage, will require California employers to update their labor law posters. Legally, an employer who doesn’t display the updated posters can be fined.

The year 2008 has already experienced several changes in state minimum wage laws, and is slated to see several more.

On New Years Day, 2008, Arizona, California, Colorado, Delaware, Florida, Iowa, Massachusetts, Missouri, Montana, New Mexico, Ohio, Oregon, Vermont and Washington, fourteen states in all, enacted raises in their state minimum wage rate.

On July 1, 2008, five more states will follow suit. Michigan and Illinois will each raise its state minimum wage by twenty-five cents. Michigan’s will go from $7.15 to $7.40 per hour. Illinois’s will rise from $7.50to $7.75.

Kentucky and West Virginia, will add seventy cents to their minimum wage rates, resulting in new rates of $6.55 per hour and $7.25 per hour, respectively. Pennsylvania workers will enjoy a 90 cent per hour raise to their minimum wage rate, giving them a new minimum of $7.15 per hour.

Later in July, Utah, Oklahoma and a number of other states will establish higher minimum wage rates, too. These states have enacted laws which tie their minimum wage raises to the federal minimum wage.

On July 24, 2008, the federal minimum wage rate will increase from $5.85 to $6.55 per hour.

President George W. Bush signed the increase into law on May 24, 2006 as part of the Fair Minimum Wage Act of 2007. This Act established a three-tier system to increase the federal minimum wage. The bump on July 24, 2008 is the second step of the system.

Whenever a change occurs in any labor law, employers must update their labor law posters or face the possibility of a fine. Companies are required to display these posters in prominent spots in the employee work area, and to update for both state and federal law changes. Businesses seeking up to date information can visit www.laborlawcenter.com.

Effective January 1, 2008 the California state minimum wage will increase to $8.00 per hour. This 50-cent increase was part of a minimum wage compromise agreed to in 2006. However, that doesn’t mean that the new California minimum wage will be the highest in the nation.

Currently, the highest state minimum wages are Oregon at $7.80 per hour and Washington at $7.93 per hour. Both Oregon and Washington have provisions in the state statute for automatic increases in the minimum wage due to the cost of living. On January 1, 2008, the Washington minimum wage will increase by 14 cents to $8.07 per hour. On that same date, the Oregon minimum wage will increase by 15 cents to $7.95 per hour.

Since both Washington and Oregon’s minimum wages increase each year, they are likely to quickly outpace the California rate unless new legislation is passed in the Gold Rush State.

The California minimum wage is set by the state’s Industrial Welfare Commission.

In 2006, amid strong pressure by Democrats to increase the state minimum wage, Governor Arnold Schwarzenegger agreed to a two-step increase, with a 75-cent bump from $6.75 to $7.50 on January 1, 2007 and a 50-cent bump on January 1, 2008. 

The 75-cent increase in 2007 was the first hike in the California minimum wage since 2002.

As recently as February of 1998, the California minimum wage was just $5.15 per hour. That’s on a par with the federal minimum, and a low rate considering the fact that California has the highest cost of living – and some of the highest real estate prices – in the nation.

The progression of minimum wage increases in California is:

• March 1, 1998     $5.75
• January 1, 2001  $6.25
• January 1, 2002  $6.75
• January 1, 2007  $7.50
• January 1, 2008  $8.00

A number of other states also have minimum wage increases slated for January 1, 2007. On that date, the Florida minimum wage will increase by 12 cents from $6.67 per hour to $6.79 per hour. The Delaware minimum wage will increase on that same date.

The California minimum wage applies to nearly every worker in the state. There are a very few exception. Outside salespeople are exempt from the state minimum wage law.  In addition, any worker who is the parent, spouse or child of the employer can legally be paid less than the minimum wage. Apprentices under the State Division of Apprenticeship Standards may earn less than the state minimum wage.

California also permits learners to earn less than the state minimum wage, regardless of the learner’s age. To qualify, an employee must be working in an occupation where they have no previous or related experience. These workers must be paid 85% of the prevailing minimum wage, rounded up to the next 5 cents. That’s $6.40 for 2007 and $6.80 for 2008. This rate is only valid for the first 160 hours of employment.

California does not automatically exempt minors from the minimum wage law. Unless a minor meets the requirements for the learner’s rate above, he or she must be paid at least the minimum wage. The minimum wage is a right that cannot be voluntarily waived by employees under a union contract or private agreement.

In some circumstances, workers who are physically or mentally disabled (or both) may be paid less than the state minimum wage by non-profit organizations such as sheltered workshops or rehabilitation facilities. Both the individuals and the employers must be issued a special license by the Division of Labor Standards Enforcement, authorizing payment of a rate lower than the state minimum wage.

California is one of just a handful of states where tipped employees are entitled to the minimum wage, so they must be paid $8.00 per hour beginning January 1, 2008, as well.

A California trucking company faces action by the U.S. Department of Labor (DOL) to recover some $1.4 million in back wages for 80 current and former employees. In addition,  the complaint seeks to bar the company and each of its owners from receiving government contracts for three years.

The action charges that Alan Berman Trucking of Woodland Hills, California is in violation of federal regulations that require federal contractors to pay “the prevailing wage and benefits” to their workers. The prevailing wage is a floating amount set in each geographic area, based on the average pay for similar work. The prevailing wage was established so that federal contractors didn’t underpay local workers.

Alan Berman Trucking has approximately $10 million in contracts with the U.S. Postal Service. During the time under investigation, the company provided hauling services for mail between the Los Angeles and San Francisco Bay areas.

“Federal contractors have a responsibility to pay workers in accordance with federal law,” said U.S. Secretary of Labor Elaine L. Chao. 

The complaint requires the company to pay $1,369,870 to 80 truck drivers who are current or former employees.

Investigators with the DOL’s Wage and Hour Division found that the company violated the law on eight different contracts, by treating drivers as independent contractors. Drivers were required to use their own trucks and assume all costs. The company paid drivers by the mile or by the trip, but failed to pay fringe benefits as required by law. The company also made illegal deductions to the employee’s pay for fuel, and failed to reimburse the drivers for maintenance, and wear and tear to their trucks.

The company also failed to keep accurate records of the hours the drivers worked, as required by law.

Alan Berman trucking is a repeat offender. The DOL has investigatged the company nine times, and found violations in eight of those investigations. The suit specifically names the owner, Alan Berman of Woodland Hills California, as well as Vice President Osvaldo “Ozzie” Tarditti of Northridge, California, as defendants. The current suit covers violations between June 2004 and February 2007.

While this is the first prevailing wage violation in some time, it is by no means the first violation to federal wage laws.

In August, five jointly-operated restaurants in Long Island, New York were ordered to pay almost $1 million to 191 low-wage workers. The employees had been forced to work long hours for wages less than the minimum wage, without overtime pay.  The court ordered that if the employers did not pay up, their restaurants could be sold and the proceeds used to pay the employees.

The Fair Labor Standard Act requires that most U.S. employees be paid at least the federal minimum wage, which is currently $5.85 per hour. The FLSA also mandates that employees must be paid 1.5 times their usual hourly rate for each hour over 40 in a single work week.

Many employers mistakenly believe that any worker paid by salary is exempt from overtime. The FLSA does provide a number of exemptions to the overtime law for bona fide executive, administrative, professional and outside sales jobs. In general, employees must meet job duty and salary tests, to be exempt from overtime.

The U. S. Department of Labor Wage and Hour Divison collected more than $171 in back wages for some 246,000 employees in 2006. Thos wages were a result of 31,987 “compliance actions” in 2006.

Earlier this year, under a voluntary agreement to prevent a federal suit, Wal-Mart, Inc. agreed to pay $33 million in unpaid overtime wages to 86,680 employees throughout the nation. An internal audit revealed that the company had incorrectly classified some employees as “salary-exempt” when in fact they were entitled to overtime pay. In other cases, the company admitted that it had based overtime pay on the employee’s base hourly rate, not including incentives and bonuses in the employee’s average rate as required by law.