Recent Developments in Wage and Hour Law

By Ronald J. Souza

Donning & Doffing

The United States Supreme Court recently clarified, in IBP, Inc. v. Alvarez, that compensable work time under the Fair Labors Standards Act (FLSA), for employees who are required to wear protective garments or gear to perform their job, includes the time spent donning the protective gear prior to the employee's work shift. Also compensable is the time spent walking to the employee's work station, the time spent removing the protective gear at the end of the work day, and the time spent walking from a work station to a locker room or other location for removal of the gear. This ruling potentially reaches farther than just workers who don protective gear. It arguably reaches all time that employees are required to spend, on site, preparing for the work day.

Overtime for Short-Notice Pay

Employees who get higher "short call" or "call back" pay for reporting to work on short notice are still entitled to overtime under the FLSA if that extra work keeps them on the job more than forty hours in a work week. (See Wage and Hour Opinion Letter, FLSA 2005- 36.) Extra compensation may not be credited toward the employer's overtime obligations under the FLSA. However, the regular compensation provided for the " 'short call' hours worked...may be counted towards minimum wage obligation under the Act." This FLSA Opinion Letter applies only to em-ployees who are "on call" to appear for work on short notice. Employers employing workers in that way must be cognizant of their overtime obligations where that on-call time, coupled with regular hours of work, pushes workers beyond a fortyhour work week.

Independent Contractors

In Garces v. Cannon Pacific Services, the California Appellate Court has found that certain street sweepers were employees and not independent contractors, and were thus entitled to overtime pay for overtime work. The court emphasized that the key test of the employee-contractor distinction is "whether the employee was subject to the employer's orders and control and was liable to be discharged for disobedience or misconduct." In this case, CPS not only controlled the details of the sweepers work but it also had the right to fire them for disobedience, and it was of no consequence that the workers signed documents referring to themselves as "subcontractors." This case is a reminder that employers should be sure that service providers identified as "independent contractors" are truly that. Beyond the Labor Code implications, there are Workers' Compensation insurance, tax withholding, EDD, and other consequences which can amount to significant money.

Meal Periods

In Cicairos v. Summit Logistics, Inc., the California Court of Appeal found that employees could sue their employer for mandatory meal period violations where the employers actively discouraged employees from taking the breaks. In this case, the employer's policies provided for meal breaks but the employer was found to have actively discouraged the employees from taking their breaks because the employer did not schedule meal periods, create an activity code for meal breaks, or monitor compliance so that "most drivers ate their meals while driving or else skipped a meal nearly every working day." Employers must provide in a meaningful way for their employees to take meal period, rest period, and other breaks mandated by state labor laws. The court here found that the employer paid lip service to that entitlement but practically made it impossible for its employees to realize the benefits of those laws.

Car Expense Reimbursement

In Gattuso v. Harte-Hanks Shoppers, a group of employees successfully sued their employer for indemnification for expenses incurred in using their personal automobiles for employer business. In this case, outside sales representatives used their own cars to visit customers but the vast majority did not get reimbursed for vehicular expenses. The California Court of Appeal found that the employer was obligated to reimburse the employees for automobile expenses, but could do so by providing increased salaries or commissions, instead of reimbursing the employees for their actual automobile expenses. Employers must reimburse employees for all out-of-pocket job-related expenses (e.g., uniforms). If there is no agreement regarding the method or rate of reimbursement for automobile use, the employer will be responsible for actual costs incurred-usually at the IRS rate ($0.405 per mile).

Shoe Store Manager Overtime

In Murphy v. Kenneth Cole Production, Inc., the California Court of Appeal ruled that a manager of a Kenneth Cole shoe store was owed overtime because most of his work was spent selling shoes and stocking merchandise. The title "manager" and being required to perform some human resources functions did not transform the store manager's job into exempt status, where most of his time was spent on non-exempt tasks. Remember that labels such as "manager," although typically describing exempt positions, do not necessarily do so. Where there is doubt, employers should assure that employees with exempt classifications are spending at least half of their time performing exempt duties.

City of San Francisco Minimum Wage/Conditions Ordinance

The City of San Francisco has adopted the Sweat Free Contracting Ordinance, which establishes minimum wage and minimum labor conditions intended to apply to workers anywhere in the world. The ordinance applies to any business that contracts with the City to supply materials, supplies, equipment, etc. This ordinance pertains only to companies doing business with the City of San Francisco and prohibits "sweat shop labor," which is broadly defined as work performed by any worker under terms or conditions that "seriously or repeatedly violate laws" of any jurisdiction in which the work is performed, including any labor, wage, safety, environment law, or "collective bargaining right."