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Issue 1 - 2016 Newsletter

In This Issue:

  • Kendall Burton Appointed Director
  • Individual Liability For Labor Code Violations
  • Employers Can Now Cure Certain Wage Statement Violations, But They Must Act Quickly



Announcement

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We are very pleased to announce that Kendall Burton has been appointed a Director of our firm. Ms. Burton has been a key attorney with Simpson, Garrity, Innes & Jacuzzi, P.C. for well over 10 years. She is a highly skilled and experienced litigator, as well as a strategic and pragmatic employment law counselor.

 

 

Individual Liability for Labor Code Violations

California added a new section to the California Labor Code that creates individual liability for certain “high level” employees for violations of specific sections of the California Labor Code (Labor Code Section 558.1). Any employer, or other person acting on behalf of an employer (limited to a person who is an owner, director, officer, or managing agent of the employer), may be held liable for violating the following:

  • any provision regulations, minimum wages, or hours and days of work in any order of the Industrial Welfare Commission
  • Section 203 - payment of wages on termination of employment
  • Section 226 - paystub reporting requirements
  • Section 226.7 - meal period premium
  • Section 1193.6 - recovery of attorney fees for lawsuits to recover unpaid minimum wage and/or overtime
  • Section 1194 - failure to pay minimum wage for all hours worked
  • Section 2802 - reimbursement of business expenses

 
What does this mean? This new law allows claims to be made against individuals (e.g., CEO, President, CFO, Human Resources Director, etc.) as well as the employer in a variety of cases. Expect to see lawsuits regarding wage and hour for meal and rest breaks, overtime, paystub violations, and expense reimbursements, among others, to include claims against “high level” employees in addition to the employer.

What should you do? This new law makes it even more important that your wage and hour compliance is up to date and accurate. Take steps to ensure that you don’t open-up your organization, or yourself, to further liability. Consider undertaking a wage and hour audit, that could include:

  • Updating your handbook for compliance
  • Making sure the policies drafted are being implemented
  • Analyzing job descriptions and job classifications (exempt vs. non-exempt)
  • Reviewing paystubs for compliance (do not rely on your payroll company - it is your liability not theirs!)
  • Reviewing your expense reimbursement policies, including your policy upon termination
  • Reviewing your final pay practices
  • Assessing your meal and rest break practices
  • Analyzing your timekeeping practices and overtime practices
  • Reviewing all forms related to wage and hour practices

 
We recommend that you work with experienced employment law counsel when undertaking an audit. Simpson, Garrity, Innes & Jacuzzi, P.C. has extensive experience in helping its clients with effective audits.

 

Employers Can Now Cure Certain Wage Statement Violations,
But They Must Act Quickly

In recent years, there has been an explosion of California lawsuits over employee wage statements. This litigation is based on California Labor Code Section 226, which requires that all employers issue employee wage statements (paycheck stubs) which contain: (1) gross wages earned, (2) total hours worked by the employee (for non-exempt employees), (3) the number of piece-rate units earned and any applicable piece rate if the employee is paid on a piece-rate basis, (4) all deductions, (5) net wages earned, (6) the inclusive dates of the period for which the employee is paid, (7) the name of the employee and only the last four digits of his or her social security number or an employee identification number other than a social security number, (8) the name and address of the legal entity that is the employer, and (9) all applicable hourly rates in effect during the pay period and the corresponding number of hours worked at each hourly rate by the employee. If the wage statements issued by an employer omit any one of these items, the employer can be held liable for penalties of up to $4,000 per employee.

To make matters worse, most of the recent wage statement litigation has included the Private Attorneys General Act of 2004 (“PAGA”), which allows a single employee to bring a representative action on behalf of other similarly “aggrieved employees.” These PAGA suits often result in employers facing the potential of enormous PAGA penalties, in addition to the “up to” $4,000 penalty.

In an effort to help slow the tide of this PAGA litigation, the Legislature has now given employers a very limited ability to correct certain violations of Section 226. Prior to filing suit under PAGA, an employee or former employee must send a letter (known as a “PAGA letter”) regarding the alleged Labor Code violations to both the Labor Workforce Development Agency and the employer. Effective January 2016, once the employee sends a PAGA letter, the employer has 33 days to “cure” or correct certain violations of Section 226 by reissuing fully compliant past wage statements. However, the ability to cure is limited to violations based on failure to state: (1) the inclusive dates of the period for which the employee was paid; and (2) the name and address of the legal entity that is the employer. Curing such violations can save an employer from having to pay huge PAGA penalties, but only if they act very quickly after receiving a PAGA letter.

It is important that employers carefully review their wage statements to ensure that they are compliant with the requirements of Labor Code Section 226. It is also extremely important that employers contact counsel immediately if they receive a letter to the LWDA regarding alleged violations of Section 226. Simpson, Garrity, Innes & Jacuzzi, P.C. has extensive experience in conducting reviews of wage statements.

Special Alert - May 2016
Issue 3 - 2015 Newsletter

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South San Francisco, CA 94080
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Tel: 650-615-4860
Fax: 650-615-4861


2175 N. California Blvd, Suite 710
Walnut Creek, CA 94596
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Tel: 925-322-8889
Fax: 925-322-8890


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