Wage & Hour Laws - Meal Penalties in California

Federal and State Wage and Hour are important to follow for the companies that supply and use a contingent workforce. Not following or understanding these laws can lead to costly violations that can be easily avoided. 


California, for example, is a State that has many Wage and Hour law considerations.  If you operate a business in California or utilize California residents to perform work in other States there are several important things to consider for meal breaks. 

Employees in California are entitled to an unpaid 30-minute, duty-free meal period after working for five hours and a paid 10-minute rest period per four hours of work. 

California Labor Code section 226.7 prohibits employers from requiring employees to work during any mandated meal or rest period. Employers who fail to provide the mandated meal period or rest period must pay the employee one additional hour of pay at the employee's regular rate of compensation for each work day that the meal or rest period is not provided.


A minimum of thirty (30) minute meal is required every five (5) hours unless the scheduled shift ends at six (6) hours and is mutually agreed upon between client manager and worker.  If meal is not received the employee is due one (1) hour of their wage as a meal penalty.  Employees only receive one (1) meal penalty per day regardless of how many are incurred. 

The only exceptions to the rule are when

The nature of the work objectively prevents an employee from being relived of all duty

AND

The on-duty meal break is agreed to in writing by the employee and his or her employer

AND

The employee is paid for the meal break

To ensure that your company complies with the labor law, you should:

Review meal and rest period policies for contingent workers to ensure they meet with the law

See if any positions qualify for “on-duty” meal periods and ensure that the appropriate agreements are signed

Make sure all employees read and acknowledge in writing that they understand your company’s meal and rest break policy

If a worker is not able to take their required break, you must pay the additional hour of pay they are owed

Ensure that your managers and supervisors monitor employees to make sure that they are taking their statutory breaks and mark the breaks on their timecards

Make sure you keep good records! 

Misclassified Staff at General Motors Sue Over Pay

Workers at a car factory in Ohio are suing General Motors for $4 million in back pay after they claim they were wrongfully classified as temporary employees. The workers claim they were paid forty percent less than their "permanent" counterparts. 

The group of workers were hired in 2006 and laid-off the following year before being brought back on board six months later. When they were re-hired, they claim that they wrongfully reclassified as temporary workers. 

See News Article Here for More Information

Co-employment and the contingent workforce: Do you know the risks?

Co-employment is a relationship between two or more employers whereby each has the legal responsibilities to the same employee.

Co-employment issues can present problems for the companies that supply contingent labor (temps, contractors, consultants, freelancers, and the like) and their clients. Often, client companies erroneously believe that the staffing company or other supplier they engaged the temp worker through is the sole employer of that worker. 


However, if the client company manages that contingent worker on a day to day basis, they could be regarded as a co-employer or special employer of the worker in conjunction with the worker's statutory employer - often a staffing company or 'payrolling' company. 


With co-employment, each company is liable for the decisions made by the other party. This means that if a contingent employee files a legal complaint and wins, both the supplier of the worker and the client company could be responsible for paying damages.


Co-employment risk is challenging to eliminate entirely, but there are many things you could take into consideration to reduce your risk considerably.


For the client company utilizing the contingent worker(s) services the following considerations may be observed:

• Do not discuss pay rates, increases or bonuses - this is the responsibility of the worker's statutory employer. A statutory employer is generally one who is liable for workers' compensation according to a statute establishing such an employment relationship. 
• Do not discuss opportunities for regular full-time employment without consulting the worker's employer. 
• Do not request that the worker complete timecards or forms with the client company's name on them. The worker's employer is responsible for all timecards and on-boarding paperwork (such as applications).
• Do not counsel assignment employees concerning: tardiness, punctuality, attendance, dress code, child-or elder-care arrangements or other personal matters.
• Do not inform an assignment employee that he or she is terminated or suspended. 
• Refer all questions relative to pay, benefits, duration of position or opportunity for employment to the worker's employer.
• Report any absences, tardiness or unacceptable behavior to the worker's employer.
• Inform the worker's employer about any changes in an employee's work schedule.

Emergent can help your company considerably reduce co-employment risks when working with contingent labor. 


Call us today on 855 250 5000 or e-mail info@emergent.com to find out how we can help you navigate the risks of hiring temporary labor! 

Does Your Company Use or Supply Contingent Workers? If So, Here Are Some Considerations.

Utilizing contingent workers can seem easy and seamless for your organization. Contingent workers provide some flexibility that a direct hire workforce does not. Steps to successfully utilizing a contingent worker include locating a worker, negotiating their rate, engaging them for a pre-determined length of time, and then terminating the worker's assignment when appropriate. As simple as it seems, there are many considerations when engaging or supplying contingent workers. To minimize the risk surrounding contingent workers your company may consider the following:

• If engaging the worker as a 1099 independent contractor, does the assignment meet the IRS test for Independent Contractors? See the IRS Worker Status Determination form here and a detailed IRS training manual on the subject can be found here. 
• Whether a worker is engaged on W-2 or 1099, does your company know the standards of relevant Federal and State agencies beyond the IRS? For example, see EEOC contingent worker guidelines here. Other considerations include ERISA and HIPPA. 
• Are contingent workers mentioned in your Employee Handbook? Handbooks may include language excluding contingent workers from standard benefits reserved for direct hire employees.
• Are your managers aware that contingent workers are covered under most of the same laws that apply to employees (including harassment, discrimination, and wage and hour laws)? For example, the State of Virginia provides many of it's managers with a guide to contingent workforce risk and can be viewed here.
• If your company uses contingent labor are those workers covered under your general liability insurance policy? Don’t take it for granted that they are… Additionally, ensuring that the staffing suppliers you work with carry the proper workers' compensation, general liability, and employment practices insurance can help to limit the risk of utilizing contingent workers. 

Emergent employs contingent workers you recruit, enabling your business to focus on it's core competencies. Emergent handles all employer responsibilities employment including legal, payroll, invoicing, insurance, tax, HR and workers’ comp administration for the duration of the worker's assignment. 

Misclassification vs. “Payroll Fraud”

As Federal and State agencies seek to narrow the tax gap, a new bill was recently introduced that puts independent contractor misclassification back in the forefront of the national labor and tax agenda.

Undeterred that two misclassification bills introduced in 2010 never made it out of Committee, the sponsors of the new bill are trying to drum up support  by characterizing misclassification as a form of  “payroll fraud.” – a term that invokes white collar criminality rather than an innocent oversight that is denoted by the word “misclassification”. It would appear that ignorance is no longer a defense in the eyes of the law…. 


A press release for the bill can be found here. The press release states "according to a study released in February 2009 by the Ohio Attorney General’s office, Ohio loses at least $160 million a year to each year from worker misclassification."

Should the bill pass here is what it would mean for businesses...

• Penalties for misclassification, up to $5,000 per employee, which could be staggering for the companies that are knowingly or unknowingly 'misclassifying' a significant amount of workers as 1099.
• It would be the one of the first federal laws where businesses must give newly hired workers a federally prescribed notice.
• The law would cover independent contractors who provide services through a corporation or an LLC and not just on an individual basis. 
• The bill would still allow companies to continue to pay workers on a 1099 basis – provided it is an appropriate relationship. 

-         Explaining the purposes of the new bill one of the sponsors states that the bill would “relieve the burden on American taxpayers who foot the bill when businesses” mis-classify workers. 

Read our post on 1099 misclassification for more information.