TOP WAGE-HOUR RISKS Facing Healthcare Employers Presented by Leslie Ellis and Eli Makus March 2015

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Topics for Today Meal & Rest Periods Alternative Work Schedules Misclassification Temporary / Agency Workforce Hours Worked

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MEAL & REST PERIODS

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Meal & Rest Timing Rules • Employees who work more than 5 hours are provided a 30 minute, uninterrupted, off-duty meal period • Employees who work more than 10 hours are provided a second 30 minute meal period • Employees are provided a 10 minute paid rest-break for every 4 hours worked

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2nd Meal Period Waiver for Healthcare Workers Gerard v. Orange Coast Medical Center • Invalidated the “Healthcare Waiver” • No 2nd meal period waiver for shifts longer than 12hours • Applies retroactively • Update policies and waiver forms Note: Cannot waive second • Consider limiting shifts to 12 hours meal period and work over 12 hours

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Keys to Defending Meal & Rest Period Claims “Provide” is still key • Labor Code and Brinker require “provide” • Employers “provide”: – Via clear policy language – That is regularly communicated and available

• Consider acknowledgement forms

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Key Meal & Rest Period Policy Elements • Include premium pay in the policy • Clearly lay out timing elements on when a meal period is “provided” • Permit flexibility; require employees notify managers in advance and self-record premiums • “Provide” exempt employees with meal & rest periods (though not premium pay) • Require employees to report managers who do not permit meal & rest periods

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Other Keys to Defending Meal & Rest Period Claims • • • •

Timesheet attestation practices Make sure you actually pay premiums if owed Rarely use on-duty meal period agreements Train managers on how to avoid practices that “force employees to forego”

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ALTERNATIVE WORK SCHEDULES

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Some AWS Pitfalls • Complicated implementation process • Complicated and more restrictive rules for on-going administration • Vague laws leave many unknowns • Huge downside exposure for getting it wrong • Mutually exclusive with other pay plans

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10-Hour AWS • Must maintain set days and set start times • Overtime applies to hours outside the regular AWS schedule • Employer can change the set schedule “occasionally” • Employee requests to change shifts can be more often, but must be in writing • Menu of options permissible

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12-Hour AWS • Still difficult to administer, but not as inflexible as 10hour AWS • Can change days and start times weekly • Only for certain direct patient care employees • Must include more than one shift over 10-hours

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Keys to Compliant AWS Train Managers Audit Re-Vote

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MISCLASSIFICATION

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Misclassification Categories Exempt v. Non-Exempt Independent Contractors Volunteers

Interns

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Exempt v. Non-Exempt • Red flag jobs • Analysts • Case manager-related jobs (utilization review, prior authorization review, discharge planner, etc.) • Dieticians • Executive assistants • Lower level supervisors and managers • IT related jobs • Leads • Project managers • Physical therapists • Trainers www.ebmlawgroup.com Copyright 2015 Ellis Buehler Makus LLP

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Exempt v. Non-Exempt Audit Exempt Jobs • “Primarily engaged in” is quantitative • Job descriptions are not sufficient – analysis of actual duties performed is required • Set up any audit under the attorney-client privilege from the outset • Plan reclassifications carefully

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Independent Contractors FedEx Home Delivery, 361 NLRB No. 55 (2014) • Rejected entrepreneurial opportunity for gain or loss as the proper standard • Added a new factor to traditional test which evaluates whether the individual is in fact rendering services as an independent business

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Independent Contractors Ayala v. Antelope Valley Newspapers California Supreme Court Case • Trial court erred in focusing on the variation in the degree of control that newspaper carriers actually exercised • Proper focus is whether the company retained the right to control the work • Typically found in the contract

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Independent Contractors Steps to Take • Audit your independent contractors • Ask, is the individual actually engaged in other business opportunities or does he merely have the “entrepreneurial opportunity” to do so? • Review your IC agreement and revise it to require case-by-case variation in the right to control work that the company retains

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Volunteers • Only allowed in not-for-profit organizations • Volunteer time is not work time where it is: – For public service, religious, charitable purposes, and humanitarian objectives – Performed voluntarily and without contemplation of pay – Outside of the employee’s normal working hours – On activities that are not the same or similar to the employee’s regular work activities

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Volunteer Examples • An office employee of a hospital may volunteer to sit with a sick child or elderly person during off-duty hours as an act of charity • In contrast, a regular office employee of a charitable organization cannot volunteer to handle correspondence related to a special fund drive • Nurses cannot volunteer to give free flu shots at a community fair you sponsor, but could volunteer to register runners at a charity marathon you sponsor

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Interns • Contrary to volunteers, an intern’s service must be for the benefit of the intern • The organization must not derive any immediate advantage from the intern’s service • Interns are considered “trainees” receiving training similar to that provided in an educational environment • Interns must not displace regular workers • Interns must not be entitled to a job at the end

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Intern Practice Tips • Appoint a dedicated internship coordinator • Assign supervising employees to each intern to train and mentor • Split time between supervised work and training • Develop a training program complimentary to those in academia and teaches interns transferable skills • Put program goals in writing and have interns acknowledge in writing the internship is unpaid and they are not entitled to a job after the program • If possible, align the program with a school where the intern gets school credit for time in internship www.ebmlawgroup.com Copyright 2015 Ellis Buehler Makus LLP

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TEMPORARY / AGENCY EMPLOYEES

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Temporary Employee Liability New Labor Code § 2810.3 • Companies share liability with labor contractors (i.e., temporary staffing agencies) for: – All wages owed – Failure to provide workers’ compensation insurance

• Liability includes all civil legal liability

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Temporary Employee Liability Exclusions • • • • • • • • • • •

Employers with less than 25 employees Employers using 5 or fewer temp employees The State Motor carriers of property Motor club services Cable providers Telephone corporations Motion picture payroll services Union hiring halls Non-profit organizations providing services to workers Contracts for staff exempt from overtime

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Temporary Employee Liability Steps to Take – Work with established agencies – Audit, and then audit again • Confirm agencies have adequate insurance • Confirm agencies have proper wage-hour practices, such as properly calculating regular and overtime pay and pay meal period premiums

– Revise Contracts • Review and strengthen indemnification provisions • Include provision allowing you to audit

– Ensure your workplace is compliant • Ensure employees, including from agency, don’t work off-the-clock • Include agency workers in safety trainings, policies & practices www.ebmlawgroup.com Copyright 2015 Ellis Buehler Makus LLP

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HOURS WORKED Pre-Employment Time Training Time Day of Rest Reporting Time Pay Collective Bargaining Agreements Rounding Off-the-Clock www.ebmlawgroup.com Copyright 2015 Ellis Buehler Makus LLP

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Pre-Employment Tasks Hours Worked

Unpaid Tasks

• New hire paperwork • I-9 & tax forms • Confidentiality agreements • HIPAA agreements • Handbook acknowledgements • Training material

• Application, background & credit check authorizations • Skills & personality testing • Pre-employment medical exams • Interview time

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Pre-Employment Tasks Practice Tips • Don’t give new hires new hire paperwork prior to the first day of work • If you cannot wait, move the individual’s start date up and record and pay the employee for all time completing the paperwork • For administrative ease, consider having only one day (i.e., Mondays) as start dates and have the employee’s first day of work start in HR

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Training Time • Employer-required training is always “hours worked” – Whether on-site or off-site – Must pay for actual hours worked; estimates are insufficient

• Required travel and mileage must be paid • Cost of training must be reimbursed – including fees, books, and supplies

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Training Time Exclusions • Courses to satisfy regulatory requirements that the government imposes on an individual to maintain his or her professional license – Regulatory requirements to maintain an RN license

• Courses completed prior to employment • Courses taken by a current employee in an effort to obtain a promotion or a different job

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Training Time Tips • Train managers • Communicate – Tell employees in advance what is paid and how to record the time • Don’t forget overtime – Training and travel time counts toward overtime • Lunchtime trainings – If not avoidable, communicate in advance that employees may take a 30-minute duty free meal period before

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Training Time Tips • “Education Hours” benefits, if administered incorrectly, can lead to liability – Ensure benefit covers all required training – If employees exhaust all their hours, but still have required training to complete, ensure employees are paid for that required training time

• Employees who complete training while on leave, vacation or suspension must be paid

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Day of Rest Mendoza v. Nordstrom • Ninth Circuit asked the California Supreme Court to answer questions regarding: – Whether LC § 512 entitlement to one day’s rest in seven is a workweek or rolling measurement – Meaning of “any” in LC § 556 exception for when work does not exceed 30 weekly hours or six hours in “any” one day thereof – Meaning of “cause” in LC § 552 providing that employers may not “cause” its employees to work more than six days in seven

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Reporting Time Pay • An employee sent home before working half of his or her usual or scheduled shift, must be paid half the usual or scheduled workday, up to a maximum of 4 or a minimum of 2 hours pay

• Accurate documentation is critical

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Reporting Time Pay Practice Tips – Work employees at least half their regular shift (up to 4 hours) – Ask for volunteers – Scheduled meetings – Know if you have more beneficial policies or CBAs

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Collective Bargaining Agreements • Know the additional items in the CBA that you must pay as “hours worked” • Understanding where CBAs are an exception to wage-hour rules – California overtime rules (not federal) – Alternative work schedules

• Understanding where CBAs are not an exception to wage-hour rules – Meal periods, generally – 40 hour workweek, except 8/80 – Reporting time pay

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Rounding See's Candy Shops, Inc. v. Superior Court • Allowed so long as it is neutral and, on average, properly pays for all time actually worked over a period of time – Results in neither overpayment or underpayment

• Large increments (quarter hour) present risks because the data may show that it more favorably benefits the employer

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Rounding Practice Tips • Analyze your rounding practice to ensure employees are paid the right amount over time • Smaller rounding increments are less risky • Revise policies to include language prohibiting employees from working during the pre-shift roundup time for those who clock in early

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Off-the-Clock Work • Liable if you “knew or should have known” – Should have known ≠ Could have known

• Steps to mitigate the risk – Clear policy prohibiting off-the-clock work – Policy requires reporting violations – Implement timecard attestation language that confirms no off-the-clock work

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Off-the-Clock Work, Further Tips You’ve taken the precautions, but it still happens – Now what? • Train managers that permitting off-the-clock work will subject the managers to termination • Don’t just train managers on consequences – communicate to staff as well • Provide concrete examples • Consistently follow-through on discipline

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Off-the-Clock Work, Further Tips Also train managers on OT practices • Have and train on a policy that permits OT, where appropriate • Pay OT recorded by staff, even if not preapproved • Deny OT only where appropriate • Where OT is denied: – Ensure deadlines are reasonable and – Consequences for not completing work are not issued lightly www.ebmlawgroup.com Copyright 2015 Ellis Buehler Makus LLP

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Off-the-Clock Work, Further Tips • Random Audits – Compare recorded time to – – – –

Email times Timecard swipes Computer log-in times Door/badge swipes

• Conduct under attorney-client privilege

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QUESTIONS?

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