As employers navigate employee health and safety and government shutdown orders during the COVID-19 pandemic, they must do so while complying with California’s strict wage and hour laws. The new temporary “normal” is an essential business operating at full, limited, or repurposed capacity, with health and safety measures in place, and the rest of the workforce working “remotely.”
Handwashing, personal protective equipment, and temperature checks are common; for remote employees, workspaces, internet connection, and devices are vital. This raises new wage and hour concerns in an already complex environment for compliance.
Defining the Relationship
Many companies are retooling to deliver their products or services to customers while still complying with government shutdown orders. This includes using drivers to deliver products and outside agencies to perform cleaning and other services necessary to maintain operations during the pandemic. This solution impacts wage and hour laws in several ways:
- Joint Employment - California Labor Code section 2810.3 makes companies that use workers supplied by other companies, like gig economy companies and staffing agencies, jointly liable to the workers for any unpaid wages and failure to provide workers’ compensation insurance. See our blog posts here and here.
- Independent Contractors - California’s independent contractor test still applies to whether services performed may be done as an independent contractor. Even short-term, part-time work, in a new job position may not satisfy the test to allow the worker to be classified as an independent contractor. See our blog post here.
In an effort to avoid layoffs, some employers are reducing employee pay. See our blog post on those considerations here. Others who are in high demand (like healthcare) are incentivizing employees to continue to work during the pandemic.
- Minimum Salary Threshold and Hourly Rate - Employers may not reduce the compensation for any exempt (salaried) employee below the minimum salary level threshold for the exemption. Nor may employers pay below the minimum wage for any work performed by a non-exempt (hourly) employee. See our blog post here.
- Reclassifying Means Different Rules - Reclassifying an employee from exempt to non-exempt means the employer must maintain time records, compensate for weekly and daily overtime work, and provide meal and rest breaks. See our blog post here on the requirement for unencumbered breaks.
- Hazard Pay - Increases in pay are common for certain essential employers seeking employees to work during the pandemic, either via higher hourly rates or bonuses. This is permissible but must be administered correctly to determine the “regular rate” and pay overtime.
- Weighted-Average Overtime - For non-exempt employees paid two or more rates during the workweek, the regular rate is the “weighted average” which is determined by dividing the total earnings for the workweek, including earnings during overtime hours, by the total hours worked during the workweek, including the overtime hours. See here for the DLSE Guidance.
- Regular Rate - Many types of bonus payments must be included in the “regular rate” in calculating overtime pay for non-exempt employees. See our blog here.
Personal Protective Equipment, Handwashing, and Temperature Checks
Essential operations are required to implement health and safety measures under the government shelter-in-place/shutdown orders. Many employers are requiring personal protective equipment and handwashing. As a further precaution, some employers are taking the temperature of employees using a contactless thermometer (while adhering to EEOC guidance available here) and not allowing those with a fever to work.
- Compensable Time (Off-The-Clock Work) - The time spent putting on and taking off personal protective equipment (donning and doffing) may be compensable. The same may be true of handwashing and taking the temperature of employees. See our blog post here on security checks being compensable. If so, requiring employees to do this on meal or rest breaks may trigger the need for paying premium payments.
- Reimbursing Expenses - Employers must provide or reimburse for the cost of any required equipment. See our blog post here. This includes personal protective equipment required at the worksite.
- Reporting Time Pay - Generally, if an employee reports for their regularly scheduled shift but is required to work fewer hours or is sent home, the employee must be compensated for at least two hours, or no more than four hours, of reporting time pay. See here for the DLSE Guidance, including during a pandemic.
Employees Working Remotely (Telecommuting)
Many essential and non-essential businesses are allowing, asking, or requiring employees to work remotely, in compliance with the government orders. Employers across industries have turned “remote” for swaths of the workforce that have never before been set up to work from home.
- Timekeeping at Home - With a non-exempt worker who typically clocks in and out at the worksite, it may be difficult to track time worked and meal and rest breaks. Non-exempt employees must record all time worked and take all meal and rest breaks just as though they were at an office or other physical workspace. “Rounding” clock in/out times, while potentially defensible, may invite class action litigation and is not advised. See our blog post here.
- Reimbursement for Workstation and Connectivity - Telecommuting often requires a home workstation – e.g., computer, internet connection, phone, and other supplies – depending on the job. Employers must provide employees or reimburse them reasonable expenses incurred for items needed to work from home. Courts have said that reimbursement is required for an employee’s personal cell phone and voice and data plan when the phone is required for business purposes. This is more frequent with remote work and required tools (like Zoom, Skype, etc.) for connectivity during virtual meetings. See our blog posts here and here.
- Travel Time - Travel time, i.e., where there is an “assigned” workplace and the employee is required to travel to another site – is compensable, subject to an offset of the time it normally takes an employee to commute to his/her assigned workplace. Whereas, commute time – i.e., the time spent commuting from home to work and from work to home – is generally not considered “hours worked” and, thus, is not compensable. Any task during the day that requires a non-exempt employee who is working from home to drive (like depositing money at the bank) may be compensable.
- Day of Rest - Non-exempt employees must be given a “day of rest” in a workweek. See our blog post here. This is easier to administer when the worksite involves a physical place of work, instead of an employee’s home.
- Wage Statements and New Paid Leave - The federal Families First Coronavirus Relief Act applies to employers with under 500 employees (and local ordinances may apply to larger employers). Employers should create a separate pay category for these paid sick leaves, to track for compliance and tax credit purposes. See our blog post here and the Department of Labor FAQ here. Employers should ensure that the display of paid sick leave on the wage statements complies with California Labor Code section 226a. See our blog post here.
The facts, laws, and regulations regarding COVID-19 are developing rapidly. Since the date of publication, there may be new or additional information not referenced in this advisory. Please consult with your legal counsel for guidance.
DWT will continue to provide up-to-date insights and virtual events regarding COVID-19 concerns. Our most recent insights, as well as information about recorded and upcoming virtual events, are available at www.dwt.com/COVID-19.