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10 Things You Need To Know About EEOC’s New Retaliation Guidance

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On August 29, 2016, the Equal Employment Opportunity Commission (EEOC) released its Enforcement Guidance on Retaliation and Related Issues. The document is a helpful tool for employers when navigating the often-treacherous retaliation road, and will be used by agency investigators, plaintiffs’ attorneys, and courts as a guidepost when examining employer actions. Here are 10 things you need to know about the guidance in order to stay up to speed.

1. The Guidance Is Not Gospel.

First things first: this guidance is not controlling law. It is not on par with statutes, regulations, and court decisions. However, that does not mean that you should ignore the document. Not only does it compile a treasure trove of controlling authority in the form of case citations and references to law, but courts will often look to agency guidance when called upon to examine a thorny issue.

2. The Guidance Was Necessary.

This guidance replaces the agency’s discussion on retaliation contained in its 1998 Compliance Manual, the last such document on the topic. A lot has changed in the intervening 18 years, necessitating the updated and revised document. Most notably, the number of retaliation claims filed against employers each year has skyrocketed.

In 2015, for example, nearly 40,000 EEOC retaliation charges were filed against employers, an all-time high and a 119% increase since 1998. Moreover, retaliation charges have been the most frequently alleged claims filed with the agency since 2009, accounting for over 44% of all charges in 2015.

3. The Guidance Covers A Broad Array Of Claims.

The guidance covers all of the types of retaliation claims governed by the EEOC, which includes Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act (ADEA), Title V of the Americans with Disabilities Act (ADA), the Equal Protection Act (EPA), Title II of the Genetic Nondiscrimination Act (GINA), and Section 501 of the Rehabilitation Act.

4. The Guidance Discusses What Activity Is “Protected.”

Not every employee action can form the basis of a retaliation charge; only a certain kind of “opposition” will serve as a valid basis. The EEOC guidance states that opposition will only satisfy this standard if it is reasonable, and that the employee must base the opposition on a good faith belief that the employer conduct is, or could become, unlawful.

The original draft of the guidance, proposed by the EEOC in January 2016, took several positions that seemed contrary to current controlling authority on the subject. Therefore, Fisher Phillips submitted comments to the agency in February 2016 with the aim of ensuring a balanced approach. The final version of the guidance includes several revisions suggested by the firm that will aid employers when it comes to defining “opposition.”

For example, the initial version minimized the impact of a helpful 2001 Supreme Court case on retaliation, Clark County School District v. Breeden. The firm comments requested that the agency elevate the discussion of Breeden from a mere footnote so that it could “play a more central role in the opposition section.” The comments also suggested that the agency adopt a more deferential attitude towards the case, given that it stands as controlling law over all federal courts and agencies, including the removal of language marginalizing the case as having “unusual facts.”

The final guidance does just that, removing such dismissive language, elevating the Breeden discussion to its own section, and affording employers with ample authority to defend claims on the opposition standard.

5. The Guidance’s Discussion On “Adverse” Conduct Takes An Expansive Approach.

The guidance follows the Supreme Court’s 2006 pronouncement in Burlington Northern v. White which decided that a “materially adverse action” subject to challenge under anti-retaliation provisions encompass a broader range of actions than an “adverse action” subject to challenge under typical statutory non-discrimination provisions. Therefore, the agency provides a laundry list of employer activities that could form the basis of an “adverse” action under retaliation theory.

While most employers understand that demotions, suspensions, and terminations can justify a retaliation claim, the guidance also points out that actions such as threats, warnings, low evaluations, and transfers could be enough to dissuade an employee from engaging in protected activity, thus satisfying the second prong of a retaliation claim.

6. The Guidance Discusses The Key “Causation” Element.

Fisher Phillips’s comments on the agency’s proposed “causation” standard were the most extensive because the firm believed they were most in need of revision. Critically, the initial EEOC proposal was dismissive of another helpful Supreme Court case, University of Texas Southwest Medical Center v. Nassar (2013). That case was particular critical of the agency’s 1998 Compliance Manual position on retaliation, expressly rejecting the guidance as lacking in persuasive force and failing to address the specific statutory language. It called the agency’s conclusions, in fact, “into serious question.”

Nassar established important principals in this field, focused mainly on the standard a worker would need to establish in order to advance a viable claim of retaliation. The initial agency proposal offered but a brief mention of Nassar and this standard, and included a discussion of the EEOC’s preferred lower standard that had been rejected by the Supreme Court. The finalized guidance corrects this misstep, creating an entire section to discuss the proper “but-for” causation standard that should apply in cases against private employers.

The firm’s comments also pointed out to the agency that its original proposal included a detailed discussion of the many ways in which a causal link could be found between an employee’s activities and an employer’s adverse action, but not much on how employers could demonstrate the opposite: that no actionable retaliation took place.

The agency responded to this suggestion by creating an entire new section entitled “Examples of Facts That May Defeat a Claim of Retaliation,” which employers should find helpful when responding to charges of retaliation. It includes examples such as poor performance, inadequate qualifications, negative job references, misconduct, reductions in force or downsizing, and others.

7. The Guidance Includes A “Promising Practices” List.

The guidance offers employers a list of five suggestions that it believes will reduce the risk of violations. It revised the list from being called “best practices” in the proposed version to “promising practices” in the final guidance because, according to the EEOC, “there is not a single best approach for every workplace or circumstance.”

The guidance recommends (a) implementing a written anti-retaliation policy; (b) training all supervisors on the anti-retaliation policy; (c) providing advice and individualized support for those who could be in a position to retaliate and those who could be in the firing line for retaliatory action; (d) proactively following up after protected activity or opposition has taken place; and (e) reviewing your internal employment actions to ensure full compliance with the EEO laws on retaliation.

While most of these actions are fairly intuitive and are part of most employers’ thorough and mature human resources compliance efforts, we recommend specifically citing to these “promising practices” when defending against charges of discrimination.

8. The Guidance Tackles ADA Interference Claims.

The guidance points out that, unlike other statutory claims, the ADA also contains a non-interference provision which prohibits actions getting in the way of employees exercising or enjoying their ADA rights. It goes beyond simple retaliation protection, offering coverage for anyone who is subject to coercion, threats, intimidation, or other interference with respect to ADA rights. The guidance delves into this topic by providing five hypothetical scenarios demonstrating statutory violations and a bullet point list of prohibited tactics.

9. The Guidance Reminds You To Not Take It Personally.

The guidance concludes with the agency pointing employers towards an article written by an EEOC manager regarding how supervisors should respond if accused of discrimination or harassment. In the article entitled, “Retaliation – Making It Personal,” the EEOC acknowledges that it may be difficult for managers not to take EEO allegations personally, but cautions them not to take actions that could be perceived as retaliatory.

Some suggestions include avoiding public discussion of the allegation, keeping sure not to isolate the complaining employees, avoiding reactive behavior, not interfering with the EEOC process, and avoiding making threats to the employee in question.

10. The Guidance Is Complemented By Other Resources.

Aside from the guidance, the agency also issued two short user-friendly resource documents: a question-and-answer publication summarizing the guidance document, and a short Small Business Fact Sheet condensing the major points in the guidance in non-legal language. Combined they form a helpful collection of material with which you will want to familiarize yourself. Whether developing policies, conducting training, responding to charges of discrimination, or otherwise defending your organization’s actions, these materials should be the part of every human resource professional’s toolkit.

If you have any questions or need further assistance, please contact your HR Ideas representative at 925-556-4404.

Fifth Circuit Overturns $226,000 Fine Imposed on a Staffing Company for Completing Section 2 of Form I-9 Remotely

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The Department of Homeland Security (DHS) takes the position that employers must physically review original documents in the actual presence of a new hire when completing the attestation in Section 2 of the Form I-9 (the attestation is a statement from the employer indicating the employer reviewed the new hire’s documents and the documents belong to the new hire). In other words, DHS prohibits employers from reviewing copies of documents remotely or via video when completing a Form I-9. In a decision published on August 11, 2016, the United States Court of Appeals for the Fifth Circuit found that a Minnesota staffing company was not liable for a $226,000 fine it received when it completed Section 2 in Minnesota after reviewing copies of the Form I-9 documents presented by new hires located in El Paso, Texas.

While the Fifth Circuit’s holding contradicted ICE’s position on Section 2 requirements, the holding focused solely on the notice due to employers when administrative agencies assess penalties for violations of ambiguous laws. The court even notes at the conclusion of the opinion that DHS has discretion to require employers to follow certain procedures for completing Section 2 within the confines of the INA. In fact, since 2013, DHS has done so, and noted in its guidance that the Section 2 attestation must be completed by an individual who reviews original documents within the physical presence of an employee.

Clients with questions regarding Form I-9 practices should consult your HR Ideas representative.

Suitable Seating Law in California – 4 Q&A’s

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What Is the Suitable Seating Law?

California employment law requires that “all working employees shall be provided with suitable seats when the nature of the work reasonably permits the use of seats.” Recently there have been a number of lawsuits where employees sued their employer for not providing suitable seating. This law is not yet settled regarding 1) what is considered a suitable seat and 2) who needs one.

What Is Considered a Suitable Seat?

Suitability depends on circumstances of the work: chairs, stools, and benches may be required. The number of seats also depends on the work, as one seat per employee may not be necessary if employees rotate between standing and sitting.

Additionally, if employees are required to stand because of the nature of their work, employers are required to provide suitable seating in proximity to the work area. Employees must be allowed to use such seating as long as it doesn’t interfere with their work.

Who Needs a Suitable Seat?

Employers are required to provide seating when the “nature of the work reasonably permits the use of seats.” While it is clear that people who work at a desk will need a seat, other jobs such as mechanics or retail clerks may or may not permit the use of seats. In particular, cashiers have filed lawsuits arguing that they should be provided with seating. However, at least one court found that the employer was not liable because cashiers needed to project a “ready-to-assist attitude to customers waiting in line.”

Additionally, employers need not wait for employees to request a seat in order to assess the situation. The Ninth Circuit Court of Appeals determined that an employee could pursue a lawsuit even without having asked for a seat.

What Happens If You Don’t Comply with Suitable Seating Requirements?

Employers in California may be sued for not providing suitable seating under two different laws:

The Private Attorney General Act: The California Private Attorney General Act (PAGA) provides for an employee’s private lawsuit resulting from violations of suitable seating wage orders. Under PAGA, courts assess penalties on a per violation basis. Specifically, the penalty for initial violation is $100 per day for each worker. Penalties for all subsequent violations are increased to $200 on the same per day / per worker basis.
Class Action Lawsuits: Employees frequently bring their claims as part of class actions, and several $100 or $200 fees may be aggregated to become quite substantial.

Further, employers should note that unfairly disciplining or terminating a worker who requests suitable seating may violate other state and federal laws such as the Americans with Disabilities Act, which may lead to further penalties.

Should you have any questions, please contact your HR Ideas representative at 925-556-4404.

FAQs on the Final Overtime Regulations

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On May 18, the U.S. Department of Labor’s (DOL) Wage and Hour Division released the new final overtime rule. The new minimum salary level for the executive, administrative, and professional employee exemptions under the Fair Labor Standards Act (FLSA) will be $913 per week, or $47,476 per year, under final regulations. This new salary threshold—which will become effective on December 1, 2016—more than doubles the current minimum salary level of $455 per week, or $23,660 per year and will have a dramatic impact on employers. Below are answers to some frequently asked questions about the new rule.

Q. Why is the Department of Labor revising its overtime regulations for white collar workers now?

On March 13, 2014, President Obama signed a presidential memorandum directing the Department to update and modernize the Part 541 regulations. The DOL has long stated that the current salary levels, last set in 2004, were outdated and no longer useful in helping to separate lower-salaried white collar employees who should get overtime pay for working extra hours from those who should be exempt. The DOL estimates that, in Fiscal Year 2017, over 4.2 million currently exempt workers will become nonexempt if their salaries are not raised.

Q: Which exemptions are affected?

The final rule increases the minimum salary level for these exemptions: executive, administrative, professional, and computer professional. In addition, the final rule increases the minimum annual compensation and the minimum weekly salary threshold for highly compensated employees.

Q. What are the significant changes to the overtime regulations for white collar salaried workers?

The new regulations increase the standard salary level from $455 per week ($23,660 for a full-year worker) to $913 per week ($47,476 for a full-year worker).

Employers will be able to use non-discretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the standard salary level, provided these payments are made on a quarterly or more frequent basis.

The total compensation threshold for the highly compensated employee (HCE) exemption was raised from $100,000 to $134,004. The DOL did not make changes to how employers may use bonuses to meet the salary level component of the HCE test. To meet the exemption, employers must pay workers at least $913 per week on a salary basis, while the remainder of the total annual compensation may include commissions, nondiscretionary bonuses, and other nondiscretionary compensation.

Q. Did the Department of Labor change the duties tests for any of the exemptions?

No, the DOL did not make any changes to the duties tests.

Q. How do the final regulations affect the outside sales exemption?

The final regulations did not make any changes to the outside sales exemption. There is still no salary requirement for this exemption, and the job duties requirements have not changed.

Q. When will these changes take effect?

The effective date of the new regulations is December 1, 2016. Future automatic updates to these thresholds will occur every three years, beginning on January 1, 2020.

Q: What should employers do now?

The first step is to identify exempt employees and job positions that currently are paid less than $913 per week or $47,476 per year. For employees currently classified as exempt but whose compensation will not satisfy the new minimum salary threshold, employers should:

Plan for reclassifying these employees as nonexempt or raise their salaries to meet the new thresholds;
Determine how to compensate affected employees (e.g., determine what their regular hourly rate will be and whether any of these employees will be paid as salaried nonexempt employees);
Make necessary changes in payroll processing and information technology systems to convert these employees to nonexempt status;
develop communication plans, including identifying who will communicate the changes to affected employees; and
Monitor employee morale after making these changes.

Please contact your HR Ideas representative at 925-556-4404 should you have any questions.

HOT WAGE-HOUR ISSUES: THE SALARY BASIS TEST AND THE “REGULAR RATE” OF PAY

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Employers face a host of challenges to properly paying employees, particularly when it comes to overtime. When employees are properly classified as “exempt” from the overtime rules, an employer need not worry about these issues. But, the penalties for misclassification can be significant.

Employers who reward non-exempt employees (those entitled to overtime) with additional forms of compensation beyond a base hourly rate, like bonuses or commissions, also face liability if they do not include such payments amounts in the calculation of the overtime owed to these employees.

Minimum Salary Requirements for Exempt Employees

Properly classified “white-collar” executive, administrative, and professional exempt employees are paid for the quality and not the quantity of their work. They are not entitled to overtime. To qualify for these overtime exemptions, employees must perform certain (generally higher level) duties and receive a minimum fixed salary.

Recently, the U.S. Department of Labor amended its overtime regulations to drastically increase the minimum salary requirements for white-collar exempt employees. Effective December 1, 2016, the previous minimum salary of $455 per week ($23,660 per year) will increase to $913 per week ($47,476 per year). Thereafter, the minimum salary will increase automatically every three years, according to an established formula. The new rules permit employers to use nondiscretionary bonuses and incentive payments (those tied to hours worked, production, or efficiency) to satisfy up to 10 percent of the minimum salary requirement.

Currently, California’s white collar exemption requirements are stricter than the federal exemption requirements. For example, the California minimum salary for exempt employees is twice the state’s minimum wage ($41,600 per year), which is much higher than the existing federal minimum salary. Additionally, California rules require employees spend no less than 50 percent of their time on exempt duties, while federal law does not include such a quantitative, time-based requirement.

As a result of the changes the federal regulations, California employers seeking to take advantage of the white-collar exemptions must meet the higher level salary requirements of the federal rules. Otherwise, employees—even salaried employees meeting the stricter duties requirements of California law—will be entitled to overtime under federal law.

Calculating the “Regular Rate” of Pay

Another challenge for employers is properly calculating the overtime rate for non-exempt employees. Many employers mistakenly pay overtime at time and half or double the employee’s base hourly rate, without taking into account other forms of compensation, such as multiple pay rates, shift differentials, commissions, and production bonuses. In fact, these and other forms of non-discretionary compensation received during the workweek must be included in the “regular rate” of pay used to calculate overtime.

The federal regulations—also relied on for interpreting California law on this issue—address how or if an employer must factor various forms of compensation into the “regular rate.” Generally, compensation not measured by or dependent on hours worked, production, or efficiency, such as discretionary year-end bonuses and gifts, are excluded from the regular rate. Similarly, payments for periods when no work is performed, such as holiday, vacation, and sick pay, also do not factor into the regular rate.

But, given the variety of ways that employers compensate non-exempt employees, employers must regularly review their pay practices to ensure compliance with these requirements. Recently, in Flores v. City of San Gabriel, the Ninth Circuit Court of Appeals held in a case of first impression that cash payments made to employees in lieu of health benefits must be included in the “regular rate” under the FLSA, even though the payments did not directly relate to work hours. The court reasoned that the payments were a form of compensation for performing work, and therefore should be included in the regular rate.

Employers Should Conduct Self-Audits to Avoid Costly Penalties

The consequences of failing to satisfy the requirements for the overtime exemptions (i.e., “misclassification”)—including the minimum salary requirement—can be significant. Employers may owe amounts for hours that were worked but not paid, including overtime, failing to provide meal and rest breaks, failing to keep accurate time records, and a variety of other related claims and associates penalties. Employers considered to have “willfully” misclassified face additional penalties, as well.

Similar liability results when employers do not properly pay overtime to non-exempt employees at the “regular rate.” In addition to owed wages, employers may owe penalties for failing to provide accurate wage statements, and “waiting time” penalties to former employees who were not paid all amounts owed at termination. Again, “willful” violations increase the statute of limitations and subject the employer to potential liquidated damages.

To avoid these and similar wage and hour pitfalls, California employers should regularly audit their wage and hour practices to ensure compliance. Employers working with third-party payroll processors should not assume the processors are ensuring each employee meets the minimum salary requirements, or properly calculating the regular rate, either. Instead, employers—who will ultimately be legally response for compliance—should assume primary responsibility for these functions (e.g., identifying amounts to be included in the regular rate), and should rely on their payroll processors to perform the calculations correctly.

Should you have any questions, please contact your HR Ideas representative at 925-556-4404.

Cal DIR Will Resume Enforcement on August 1 of the Requirement to Submit Certified Payroll Records Online

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The California Department of Industrial Relations (DIR) is advising Public Works contractors and
subcontractors that enforcement of the requirement to submit certified payroll records
using DIR’s online system will resume on August 1.

The requirement to keep certified payroll reports (CPRs) has not changed and the
electronic certified payroll reporting system is fully operational. The enhancements to
DIR’s online system, available as of August 1, 2016, consist of a simplified online filing
form. The requirements for uploading payroll records via XML remain unchanged. New
User Guides and video tutorials with detailed instructions will accompany the release of
the enhanced system.

The Public Works Compliance Page can be found at:
http://www.dir.ca.gov/Public-Works/PublicWorks.html

Employee Password Sharing Can Be Criminal Activity!

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A divided 9th Circuit Court of Appeals has upheld the criminal conviction of a man who accessed his former employer’s database to gain proprietary information by using a former co-worker’s username and password. The case of US v. Nosal involved a former high-level executive at Korn/Ferry International, an executive search firm.

The executive sought information in Korn/Ferry’s database to help set up his own competing business. At first, he used his own user name and password to download the information. After the company revoked his access, the executive used his former assistant’s user name and password with her permission.

The federal appellate court ruled that the executive blatantly circumvented Korn/Ferry’s computer use policy and its decision to revoke his computer system access. The court explained that a confidentiality agreement Korn/Ferry required each new employee to sign clearly prohibited password sharing.

Writing for the 9th Circuit panel, Circuit Judge M. Margaret McKeown explained that one of the goals of the Computer Fraud and Abuse Act (CFAA) was to “deter and punish certain high-tech crimes, and to penalize thefts of property via computer that occur as part of a scheme to defraud.” Judge McKeown found it significant that Korn/Ferry had categorically barred the executive from accessing its system.

The fact that a current employee had lawful access to the database did not permit that employee to share her password with the former executive. Therefore, the former employee’s access was unauthorized and in violation of the CFAA.

Marijuana Legalization Is In The Hands Of California Voters in November

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California voters will decide this November whether recreational marijuana will be legalized in the state after an initiative gathered enough support to be placed on the ballot.

Recreational marijuana use is already fully legal in Alaska, Colorado, Oregon and Washington.

While some say it will help fix a broken system, there’s a lot of concern about what the repercussions of legalizing pot will be.

Those in support say prohibition has not worked.

The initiative would allow adults aged 21 and older to possess, transport and use up to an ounce of cannabis for recreational purposes and grow up to six plants.

Businesses and governmental agencies will still have the right to enforce a drug-free workplace.

“Employees have the right to make sure their employees don’t come in intoxicated with alcohol, and they have the same right they’re not impaired by marijuana.

There will also be heavy regulation involved from the packaging of the product to advertising.

Various law enforcement agencies and health groups warn that legalization will lead to more drugged driving and allow dealers of harder drugs to infiltrate the new scene.

There is also concern the initiative doesn’t address issues with current law where teens are already finding ways around the system to get medical marijuana.

If passed, it would authorize resentencing for prior convictions and decriminalization would be effective on Jan. 1, 2017.

Are My California Pay Stubs Compliant?

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Nearly all California employment wage and hour class action lawsuits assert a cause of action under California Labor Code Section 226 as plaintiffs’ attorneys almost always automatically include such cause of action when there are other alleged underlying wage violations, i.e. failure to pay overtime. By asserting this cause of action in their class action complaint, the plaintiffs are provided with the ability to access written itemized wage statements (more commonly known as pay stubs) of (a) a sample of putative class members regardless of whether or not a class action is certified and (b) the entire class if a class action is ultimately certified. At first glance, disclosing pay stubs does not seem problematic except for the time and expense associated with providing the same to the plaintiffs’ attorneys. However, once the plaintiffs’ attorneys are in possession of the pay stubs, they will analyze them to determine if they are non-compliant on their face, which can create large penalties for an employer.

Employers are required to provide employees with pay stubs, which can be a stand-alone document or a detachable part of a pay check. In California, Labor Code Section 226 governs pay stubs. Under Labor Code Section 226, the following items must appear on every pay stub:

Gross wages earned;

Total hours worked by each employee (except for salaried employees who are exempt from the state overtime rules);
The number of piece-rate units earned and any applicable piece rate (if the employee is paid on a piece rate basis);[1] All deductions;
Net wages earned;
The inclusive dates of the period for which the employee is being paid;
The employee’s name and only the last four digits of the employee’s social security number or an employee identification number other than a social security number;
The name and address of the legal entity that is the employer (and if the employer is a farm labor contractor, the name and address of the legal entity that secured the services of the employer); and
All applicable hourly rates in effect during the pay period and the corresponding number of hours worked at each hourly rate by the employee.
Temporary service employers are also required to provide on pay stubs the rate of pay and the total hours worked by each temporary employee for each temporary services assignment. It should also be noted that in California, the amount of paid sick leave available to an employee is also required to be on the face of the pay stub or provided to the employee in a separate document with the employee’s wages on the designated pay dates.

If any of the items enumerated above are missing, employees may be entitled to penalties. Under Labor Code Section 226, an employee may recover the greater of all actual damages or $50 for each initial violation per employee, and $100 per employee for each subsequent violation, not to exceed an aggregate penalty of $4,000 for a period of one year preceding the filing of a lawsuit. When such penalties are applied to each member of a class, the financial exposure for the employer can be considerable. In addition, employees may recover costs and reasonable attorney’s fees. Moreover, if there is a violation on the face of the pay stub, a plaintiffs’ motion for class certification will more than likely be granted, at least with respect to a Labor Code Section 226 claim.

Although this post relates to California’s itemized wage statement requirement, this issue is not unique to California. In fact, the majority of states have requirements for what must be included on a pay stub as well as applicable penalties for the failure to comply.

COURT RULINGS PROVIDE MORE THAN $1M IN BACK WAGES, DAMAGES FOR MORE THAN TWO DOZEN BAY AREA WORKERS

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Two separate court rulings in U.S. District Court for the Northern District of California are putting more than $1 million in back wages and damages into the hands of dozens of workers denied minimum wage and overtime by the owners of nearly a dozen Bay Area residential care facilities.

In a consent judgment entered May 17, 2016, by Magistrate Judge Donna Ryu, San Miguel Homes for the Elderly of Union City agreed to pay $425,000 in back wages and damages to 26 caregivers working at its Union City facilities, and admitted to not paying minimum wage and overtime.

The action follows a U.S. Department of Labor Wage and Hour Division investigation that found egregious minimum wage and overtime violations as the company made caregivers work around the clock without paying them for all of their hours. The department filed suit against San Miguel Homes in December 2015 after the company’s owners refused to meet with division investigators, claiming that they were not obligated to comply with the Fair Labor Standards Act. In January, the division learned that the company’s owners were threatening to sue workers suspected of cooperating with the investigation, and having employees falsify timesheets.

The consent judgment also requires the company to provide adequate coverage during all shifts to eliminate employees working off the clock and to ensure the company pays employees properly for all hours worked.

In a second ruling, Judge James Donato approved a consent judgment March 7, 2016, between the department and Razel Cortez and Elizabeth Palad, owners of eight residential care facilities. The facilities are Walnut Creek Willows in Walnut Creek, Elizabeth’s Care Home 1 and 2 in South San Francisco, Samantha’s Care Home in San Bruno, New Haven Care Home in Union City, and Rayzel’s Villa and Villa San Lorenzo in San Lorenzo.

Division investigators found the employer misclassified caregivers as independent contractors, paid them a flat monthly salary well below minimum wage, provided no premium for overtime even though the employees often worked 60 hours per week, and failed to keep any records of the employees’ hours worked. The court’s order requires the homes and their owners to pay unpaid wages and damages totaling $643,992 due to minimum wage and overtime violations of the FLSA.

That consent judgment also requires the defendants to hire a third-party monitor to audit their compliance with the FLSA, to post copies of the consent judgment and notices of employee rights in both English and Tagalog at each of their facilities, to provide detailed pay stubs to every employee each pay period and direct them to review the documents, and to provide contact information for the Wage and Hour Division, in both languages, with every pay stub.

The department’s Wage and Hour Division continues to find violations in the residential care field, particularly in the Bay Area. In the 2015 fiscal year, its San Francisco District Office concluded more than 100 investigations of residential care facilities and nursing homes, resulting in $3 million in back wages and damages for more than 475 employees