Best Practices for Payrolling Workers in California

A GUIDE FOR PARTNERS OF PEOPLE 2.0 2 Best Practices for Payrolling Workers in California

California Payroll Best Practices

The state of California has some of the most complex wage and hour requirements for employers in the entire US. Under California labor law, workers are entitled to numerous rights and protections, and they can recover large penalties if employers violate those rights.

This document will provide guidance and outline some of California’s requirements when it comes to employee wage notifications, breaks, overtime compensation, reporting time pay, deduction from wages, and final pay requirements. This document is not inclusive of all wage and hour legislation in California, rather it highlights some of the most frequently asked questions regarding California wage and hour laws. For additional information on the topics covered in this document, please contact [email protected]. Best Practices for Payrolling Workers in California 3

CALIFORNIA WAGE THEFT PREVENTION NOTICE Under California Labor Code Section 2810.5, the Wage Theft Prevention Act, employers must provide written notice to new hires that includes information on employer name and address, pay rates, overtime rates, pay schedule, sick leave, and workers’ compensation rights. For temporary workers, this notice must be provided at the start of every new assignment in California and must include the name, address, and phone number of the entity for whom the employee will perform work. Failure to provide this notice could result in civil penalties.

Affiliates of People 2.0 can generate the notice through the People 2.0 software under each California employee’s profile. The notice will populate all the required information and may be emailed to employees directly from the People 2.0 software. Staffing representatives may select Actions under the employee profile and select Start Sheet Email to deploy the Wage Theft Notice to the employee.

MEAL AND REST BREAKS Rest Breaks: Under California law, employers are required to provide rest breaks to hourly/ non-exempt employees. Employees must be permitted to take a paid 10-minute rest break for every four hours worked, or major fraction thereof, as set forth in the chart below. These breaks must be provided in the middle of each work period, and employees must be relieved of all duties and allowed to leave the premises during this 10-minute break. Rest breaks are paid time and need not be recorded on time sheets.

Breaks are not required for employees whose total daily work time is less than three-and-a- half hours. Employers that do not provide the break as required by law are required to pay penalties for each day on which a rest break violation occurred. The penalties are described in detail later in this document.

REST BREAK REQUIREMENTS

Hours on the Clock 10-Minute Rest Breaks 0 – 3:29 hours 0 3:30 – 6 hours 1 6:01 – 10 hours 2 10:01 – 14 hours 3 14:01 – 18 hours 4

Meal Breaks: In addition to rest breaks, employers in California must provide a 30-minute unpaid off-duty meal break before an employee works more than five hours in a workday. An employee who works more than 10 hours in a workday is entitled to a second 30-minute off-duty unpaid meal break. During the meal break, employees must be relieved of all duties and permitted to leave the client’s facility. Employees should not be required to monitor phones or radios and should not be interrupted during their meal breaks. 4 Best Practices for Payrolling Workers in California

MEAL BREAK REQUIREMENTS Hours on the Clock 30 Minute Meal Breaks 0 – 5 hours 0 5:01 – 10 hours 1 10:01 – 15 hours 2 15:01 – 20 hours 3

The meal break must start before the employee works five hours in a workday, as set forth in the example below.

START OF MEAL BREAK Time Worked Hour 6:00 a.m. to 7:00 a.m. 1st hour 7:00 a.m. to 8:00 a.m. 2nd hour 8:00 a.m. to 9:00 a.m. 3rd hour 9:00 a.m. to 10:00 a.m. 4th hour 10:00 a.m. to 11:00 a.m. 5th hour (first meal break must begin before 10:59 AM)

It is best practice not to wait until the last minute to schedule meal breaks in case an employee clocks in early, as this could make the meal period late. Further, an employee must be off-duty for at least 30 minutes and should not return from a meal until 30 minutes has elapsed. Meal breaks are unpaid.

Meal Waiver: If the employee’s workday will be completed in six hours or less, the employee may consent to waive the right to a meal break with mutual consent between the employee and their supervisor. If the entire workday exceeds ten hours of work, but does not exceed 12 hours, the employee may waive the right to a second meal break. However, the second break may be waived only if the employee took the first break. The employee must sign a meal break waiver before waiving any meal breaks. The meal break waiver is available on the Affiliate Resource Center.

Meal and Rest Break Employer Penalties: If an employee is not provided with an uninterrupted off-duty meal period of at least 30 minutes before working more than 5 hours, the employer is required to pay the employee one hour of pay at the employee’s regular rate for each workday in which a meal period is not provided. A short or late meal period can result in the same penalty as providing no meal period at all.

If an employee is not provided 10-minute rest break(s), the employer is required to pay the employee one additional hour of pay at the employee’s regular rate for each workday in which a rest break was missed. People 2.0 employees using Web Time Entry, are prompted to document breaks or enter a reason for any missed meal and/or rest breaks. If using paper timesheets or other time keeping systems, staffing representatives processing and approving time must ensure that all employees have a way to report missed meal and/or rest breaks. Best Practices for Payrolling Workers in California 5

TIME KEEPING Under the FLSA and California labor law, employees are not permitted to perform off-the-clock work. Employees must be informed on the first day of their assignment how to record work time in the employer’s preferred software or method. In addition, the start and stop time of the employee’s shift, and the start and stop time of each meal break, must be recorded. While it is the employee’s responsibility to accurately record start times, end times, and meal breaks, time- card approvers should also be looking for any inconsistencies or missed breaks when reviewing timesheets.

Overtime: Under California Labor Code Section 510, eligible non-exempt employees must receive overtime, paid at 1.5 times the regular rate, if they work more than eight hours in a day or 40 hours in a week. After working 12 hours in a day, California employees must receive double time, paid at two times the regular rate. In addition, if an employee works a consecutive seventh day in a workweek, that employee is entitled to time and a half for the first eight hours of work and double time for additional hours.

Affiliates entering new assignments in the People 2.0 software must ensure that the appropriate California overtime plan is selected for non-exempt employees working in California.

Reporting Time Pay: Reporting time pay is partial payment for employees who report to work expecting to work a specified number of hours and are then denied those hours, due to inadequate scheduling, or lack of notice of cancellation by their employer. Under California Code of Regulations (Cal. Code Regs.Tit. 8, § 11070), each workday an employee is required to report to work, but is not put to work, or is provided less than half of the scheduled day’s work, the employee must be paid for half of their scheduled day’s work, but no less than two hours nor more than four hours, at their regular rate of pay.

For example, if an employee is scheduled to report to work for an eight-hour shift and is sent home after one hour, the employer must pay the employee four hours of pay at their regular rate (one for the hour worked, and three hours as reporting time pay). Only the one hour actually worked will count towards any overtime calculation. Reporting time pay is not required if one of the following circumstances occurs:

• When the client’s operations cannot begin or continue due to threats to employees or property, or when authorities recommend that work not begin or continue • Failure in public utilities (electricity, water, gas, sewer etc.) • When the interruption of work is caused by something outside of the employer’s control (earthquake or natural disaster) • When the employee’s scheduled shift is less than two hours

DEDUCTIONS FROM WAGES Under California Labor Code Section 221 and 224, employers may only make deductions from employees’ wages in limited circumstances, including tax withholdings, garnishments or court orders, contributions to health benefit plans (when authorized). Employers must comply with both federal and state laws when making these deductions, particularly the limits on the amount deducted. 6 Best Practices for Payrolling Workers in California

PROHIBITED DEDUCTIONS Medical or Physical Examinations: Employers may not deduct the cost of any pre-employment medical or physical examination, including a drug test taken as a condition of employment, or any medical or physical examination required by law.

Overpayment Deductions: Under California law, it is unlawful for an employer to collect over- payments of wages from the employee’s paycheck. However, the employee may voluntarily agree to repayment of any overpaid wages, as long as the employee’s wages are not reduced below the California minimum wage at the time of the deduction. When this is mutually agreed to, employers should have a signed agreement in place with the employee.

Uniforms and Work Tools: An employer may not require an employee to pay the cost of any uniform or equipment required for the job. Please notify People 2.0’s HR department for guidance before completing any payroll deductions in California, particularly those associated with a final pay check. For deductions that are permitted by law, the employee’s written authorization will be required.

FINAL PAY REQUIREMENTS Final pay laws in California are complex, especially when it comes to contingent workers. Califor- nia Labor Code Section 202 provides employers the specific guidelines outlined below for paying wages at the end of an assignment.

Employees Who Are Fired, Discharged, Terminated or Laid Off: An employee who is terminated must be paid all unpaid wages that have been earned, up to and including the date of termination, on the same day that their employment ends. This means, the final paycheck must be pro- cessed and available before communicating a termination to an employee.

Resignations: Employees who quit and give notice of at least 72 hours before their last day of work must be paid their final wages on their last day. If the employee ends their assignment without giving any notice, the final paycheck is due within 72 hours.

Waiting-time Penalty: A waiting-time penalty may apply when an employer does not provide final wages within the required timeframe. The penalty is equal to the employee’s daily rate of pay and is calculated by multiplying the daily wage by the number of days between the required timeframe and the actual receiving of wages, for up to 30 days.

For example, if an employee that is paid $15 per hour, and regularly works eight hours per day is involuntarily terminated on Monday and does not receive their final paycheck until Friday, a waiting time penalty of $120/day must be applied for each day the employee did not receive their final check.