Teleworking in Response to the Pandemic

As part of the coronavirus threat, government and health authorities continue to encourage employers to allow employees to work from home and stress the importance of social distancing.

When the Stay at Home orders were enacted in mid-March many employers scrambled to make teleworking arrangements for their employees. Those who didn’t had a formal teleworking policy made do as best they could. Now that the dust has settled it’s important to understand the legal considerations or teleworking and to consider whether teleworking will continue to be an option available to employees as business opens up.

Establishing a Temporary Telework Policy

First, if your company has not already done so, employers should establish a policy for teleworking. If your business hasn’t previously allowed teleworking as a flexible arrangement and intend only to authorize teleworking during the stay at home period the policy does not have to be implemented as a formal part of an employee handbook. It can be a stand-alone document or even an email address to those who are currently working from home. Other employers may decide that teleworking will be a benefit offered when stay at home orders are lifted. If so, policies should be drafted to reflect that new reality.

The policy should clearly address:

Employees Expected Hours of Work and Timekeeping

Working from home under the stay at home orders may be challenging for some employees who are juggling child care issues, online schooling for their children, and the lack of a dedicated work space in their home. While the FFCRA provides some relief through expanded FMLA leave for eligible employees if the crisis lasts much longer most workers will have exhausted that benefit and must determine how to effectively work from home with unexpected distractions.

As a result, employers are encouraged to be flexible in the definition of the work day and work hours, if possible. For example, allowing employees to manage their own workday and work hours and allowing them to work outside normal business hours. Again this may not be feasible for all workers and, if not, perhaps considering part time arrangements or alternative schedules that would allow employees to care for their families and other obligations and continue working in some capacity. Creativity at this time is encouraged. Once the crisis is over work schedules can return to normal.

A flexible schedule may work most effectively with exempt employees who aren’t subject to timekeeping requirements and overtime. However, there are rules with respect to how exempt employees must be paid. These rules are discussed below in the section titled Payment of Exempt Employees While Teleworking.

If an employer allows its non-exempt employees to work a flexible schedule it must consider the wage and hour implications of doing so. The California Labor Code only requires employers to pay hourly non-exempt employees for hours they actually work, including any overtime hours worked. Therefore, employers must have an accurate means for tracking all time that hourly employees worked. This means that employees need to record and be encouraged to report all start and stop times, at the beginning and end of each day, at the beginning and end of all meal periods, and for all work performed outside the normal workday (for example, off hours work that could include text messages, telephone calls, and emails and tasks worked on after normal working hours).

There are several strategies that can be implemented to maximize accurate time reporting and to maximize productivity for teleworkers. Employers should require that employees punch in and out for meal breaks and monitor employees to be sure that their meal breaks are starting before the end of their fifth hour of work in any given workday. Failure to take a timely meal break may result in penalties exactly like those the employer is subject to if the employee misses a meal break – one hour of pay for every late or missed meal break. Teleworking policies must address the employer’s expectation about when meal breaks must be taken and the requirement that the employee clock in and out for each meal break. Non-exempt employees should be instructed to take duty free meal breaks and not to multitask by working as a way to shorten the workday. If a non-exempt employee’s shift ends after six hours its recommended that employers give these employees the option to waive their meal period. The waiver should be in writing.

Finally, all non-exempt employees are entitled to rest breaks. Teleworking employees should be encouraged to take a 10 minute rest break for every four hours worked or substantial fraction thereof. Although employees need not clock out its important they are not discouraged from taking these breaks. If an employee feels they are unable to take the break because of employer pressure they could be entitled to a rest break premium – one hour of pay for missed rest breaks.

Overtime

For almost all non-exempt private sector California employees who are not covered by collective bargaining agreements, overtime pay is based primarily on the number of hours worked in a day. Non-exempt employees earn overtime pay based on hours worked each day and each workweek. Daily overtime pay requirements are as follows:

· You must pay 1.5 times the employee’s regular rate of pay for:

-All hours worked beyond eight in a single day.

-The first eight hours worked on the seventh consecutive day in a single workweek.

· You must pay double the employee’s regular rate of pay for both.

-All hours worked beyond twelve in a single workday.

-The hours work beyond eight on the seven consecutive day work in a single workweek

Employees are also entitled to weekly overtime, meaning employers are required to pay employees 1.5 times the employee’s regular rate of pay for all hours worked in excess of 40 straight time hours in a workweek. Only hours worked at straight time applied to the weekly 40-hour limit. Employees are entitled to daily overtime or weekly overtime whichever is greater.

An exhaustive review of overtime requirements is beyond the scope of this guidebook, but employers are encouraged to familiarized themselves with overtime rules and regulations in drafting teleworking policies for their non-exempt employees.

Other Wage and Hour Considerations for Non-Exempt Teleworkers

If flexible scheduling is allowed for non-exempt workers, employers need to consider the effect of split shifts. A split shift is any two distinct work periods separated by more than a one hour meal period. If there is more than one hour between shifts, the employee must receive one hour’s pay at no less than the minimum wage rate for the time between shifts. IWC Wage Orders section 4(c). The minimum wage rate is based on the state’s minimum wage, or the local minimum wage, whichever is greater. Case law has held split shift premiums aren’t due if total pay for the day is at least minimum wage for all hours worked plus an additional hour at minimum wage. Aleman v. AirTouch Cellular (2012) 209 Cal.App 4th 556. Importantly, no split shift is owed if the employee requests that a split shift be for their own convenience. IWC Wage Orders section 2. Therefore, if your business allows employees to create or request a flexible schedule be sure that they put the request in writing to avoid having to potentially pay a split shift premium. The calculation of split shift premiums is complicated and you are encouraged to contact us should you have questions on this topic.

Reporting time pay must also be considered for non-exempt employees who are able to work flexible schedules. Reporting time pay is designed to discourage employers from requiring non-exempt employees to report to a job unless there is work to be done. Typically, reporting time pay is owed when an employee reports to work only to find there is no work or he/she is given less than half of the hours he/she was scheduled for or usually works. Reporting time pay for these situations is at least half of the hours he/she was scheduled or usually works, but never less than two hours pay and never more than four hours pay. IWC Wage Orders section 5. It is unclear whether reporting time would be due for non-exempt teleworking employees as they are not required to technically return to the workplace after a shift ends nor to technically “report” to work only to find there is insufficient work available. However, given the uncertainty employers should at least consider the potential ramifications of the application of reporting time pay requirements.

The Division of Labor Standard Enforcement (DLSE) advises employers that reporting time pay be required when non-exempt employees are required to attend meetings on a day they aren’t scheduled to work or meeting attendance is required after the employee’s regular shift has ended and they had to return. Employers should be mindful of when they call meetings and expect their non-exempt employees to attend and endeavor to do so during the employee’s work day. The availability of flexible scheduling for non-exempt employees may affect whether reporting time pay is owed. DLSE Enforcement Policies and Interpretations Manual section 45.1.2. Reporting time pay is not required when work is interrupted by an act of God or other causes not within the employer’s control, among other minor exceptions. IWC Wage Orders section 5. when While the initial crisis and stay at home orders may have fallen into the category of “an act of God or causes outside the employer’s control” the on-going crisis likely would not be considered an exception because businesses have had the opportunity to regroup and fashion policies and practices applicable to their teleworking employees.

On call and standby pay may also be considered for teleworking non-exempt employees. If your business requires non-exempt employees to work on an on call or standby status, that time may qualify as hours worked, depending on how much you restrict his/her ability to actually have free time. Hours worked is defined as “the time during which an employee is subject to the control of the employer, and includes all the time the employee is suffered or permitted to work, whether required to do so or not.” IWC Wage Orders section 2. If an employee is under the employer’s control he/she must be paid even if the employee is sitting around waiting for something to happen. This is called “controlled standby”. On the other hand, on call time is not compensable if the employee can use the time spent on call for his/her own benefit. This is referred to “uncontrolled standby”. IWC Wage Orders section 2(K). There are separate rules for health care industry. The factors to be considered in determining whether an employee is on controlled standby and therefore must be paid include: (1) whether there are excessive geographical restrictions on employees’ movements; (2) whether the frequency of calls is unduly restrictive; (3) whether a required response time is unduly restrictive; (4) whether the on-call employee can easily trade his on-call responsibilities with another employee, and (6) the extent of personal activities engaged in during on-call time. Madera Police Officers Assoc., v. City of Madera (1984) 36 Cal. 3d 403. The simple requirement that the employee carry a cell phone, pager or beeper, standing alone, does not require that the employee be paid for all the hours the device is on. Additionally, the DLSE does not take the position that simply requiring the employee to respond to call backs is so inherently intrusive as to require a finding that the employee is under the control of the employer. If the teleworker is free to do whatever he/she choses at home while waiting for the call to begin work, wages are probably not due for that time. Employers who have workforces that are on call or required to stand by need to have teleworking policies that expressly address the employee’s ability to use the on call time for his/her own purposes.

Any expected productivity standards; connectivity and logistical issues (such as logistics for turning in work, conference calls, and online meetings); and parameters for bringing work documents home, including employees continued adherence to confidentiality and data security protocols.

The policy will be subject to re-evaluation and modification at will, in the employer sole discretion. Once the pandemic subsides, the policy may be terminated and employee attendance at the workplace will be considered an essential job function.

As already noted, not all jobs are conducive to teleworking. It is permissible to offer teleworking to some, but not all employees. For instance, there is no meaningful work for bank tellers to perform from home, but bank administrative workers (for example, Human Resources) may be able to transition to working from home. In selecting who can work from home, employers need to be careful not to discriminate on the basis of race, gender, age, or other legally protected characteristic. For example, employers should not mandate that all employees over the age of 60 must work from home, although employers may give certain employees the choice to work from home as long as that option is not being offered on a discriminatory basis.

Payment of Exempt Employees while Teleworking

In order for California employees to be considered exempt they must generally meet strict job duties tests particular to each exemption and meet minimum salary requirements.

The minimum monthly salary requirement for exempt executive, administrative and professional employee is no less than two times the State minimum wage for all full-time employment. The employee must earn a fixed salary that isn’t subject to change based on productivity or hours worked. Minimum wage is based on the current State minimum wage rate, not any applicable local minimum wage. Accordingly, in 2020 minimum salary threshold for these exemptions is as follows:

• For employers with 25 or fewer employees the State minimum wage is $12.00 per hour and accordingly the minimum monthly salary for these exemptions is $4,160.00 per month.

• For employers with 26 or more employees, the State minimum wage is $13.00 per hour, accordingly the monthly minimum wage salary is $4,506.67 per month for these employees. Employees who fall within the computer professional exemption or the outside sales exemption are subject to differing salary requirements and employers are encouraged to review the salary requirements, especially when employees are teleworking.

In addition, exempt employees must meet strict job duties test as defined by the specific exemption. The executive, professional, and administrative exemptions all require employees to perform exempt duties more than 50% of the time. One common requirement is that exempt employees must customarily and regularly exercise discretion and independent judgement. DLSE Enforcement Policies and Interpretations Manual §51.5. The discretion and independent judgement requirements have been subject to extensive litigation and employers who have questions whether or not their exempt employees are performing exempt duties under the duties test requirements are encouraged to contact us for evaluation.

In addition, employees considered exempt must receive a salary and the salary must be a predetermined amount paid each pay period. The amount cannot be reduced because of variations in the number of hours worked or the quality of the work perform.

These rules are important for businesses to consider during the pandemic as exempt employees who are teleworking may be performing more non-exempt duties than normal, and employers should ensure that their exempt employees do not fall below the mandatory 50% or more time spent on exempt duties. Moreover, many businesses have reduced employees’ salaries to combat financial losses resulting from the pandemic and while that is sometimes permitted if certain standards are met, employers must ensure the reduction in salary does not cause the employee to fall below the salary requirement as set forth above. If the employee’s reduction in salary causes them to fall below the monthly minimums, the employee will automatically be considered a non-exempt employee regardless of the job duties he or she performs. This means the employee will be eligible for overtime and will require meal and rest breaks. Therefore, it is important that employers consider how their employees are spending their time while teleworking and remain mindful of the minimum salary requirement for their exempt employees.

Expense Reimbursement While Working at Home

Employers must reimburse employees for all monies they expend or lose, directly relayed to performing their duties or following the employer’s instructions. Labor Code section 2802.

In addition to more obvious required reimbursements like mileage, travel and dining expenses there are other expenses that must also be reimbursed especially to teleworking employees. An employer must reimburse and employee for the employee is required to use his or her personal cell phone to make work related calls. It’s likely that employees, now required to telework, are using their personal cell phones to conduct the employers business. A court has held that an employer must pay “some reasonable percentage” of the employee’s cell phone bill to comply with the Labor Code. Cochran v. Schwan’s Home Service, Inc., (2014) 228 Cal.App. 4th 1137. Unfortunately there is no guidance as to what constitutes a “reasonable percentage” but, if an employee is teleworking and making calls with his or her personal cell phone a reasonable percentage is at least half the cell phone bill. Many employers have established flat reimbursement amounts for the employee’s use of their personal cell phone. For example, reimbursing all teleworking employee’s $100 per month for cell phone usage may be reasonable and be administratively expedient.

Employers should also reimburse a portion of a teleworking employee’s internet expense. Again, many employers have found it administratively beneficial to reimburse each teleworking employee a fixed amount each month to cover the employee’s use of their personal internet for business use.

In addition, employees may be asked to use their personal computer and printer to perform work. If this is the case, employers may need to provide reimbursement for the wear and tear on the equipment and to pay for paper or other office products the employee buys to perform work at home. Similar to a car allowance, employers might consider paying employees a set amount for use of their computer equipment. Employees should be encouraged to keep receipts of reasonable office expenses and instructed how to submit the receipts for reimbursement.

Failure to properly reimburse employees for expenses can open the employer up to penalties and legal action under the Private Attorney General Act (PAGA).

Potential Disability Considerations

Employers must also consider disability accommodation issues when employees are teleworking. If an employee has a disability-related accommodation at work (for example, taking additional breaks or using an ergonomic keyboard or chair), employers need to consider how they will provide the same accommodations for an employee working at home, subject undue hardship considerations. Although the EEOC has loosened its regulations relating to accommodating disabilities while teleworking during the pandemic, it is important that employers follow their policy and procedure with respect to requiring doctor’s notes, engaging in the interactive process, considering all alternatives that might effectively accommodate the employee, and making an effort to provide accommodations while the employee is teleworking. Disability and accommodation considerations are covered in depth in the section above titles Disability and Reasonable Accommodations under the Americans with Disabilities Act and the Department of Fair Employment and Housing Act.

Monitoring Productivity and Communications

Employers should consider how it will monitor employee productivity while teleworking. One important step is to remind employees that employers may monitor employees and they shouldn’t expect privacy when they perform work for the company and that the company may monitor their actions during the workday.

Most employee handbooks allow employers to monitor employee work and communications performed on its’ equipment including reviewing email, work product, and internet sites visited. If your company does not have a policy that allows employers to monitor this type of employee activity, it is critical that you implement such a policy to avoid the appearance and argument that the employee had a reasonable expectation of privacy in using the employer’s system and the employer violated privacy rights by monitoring employees use of these systems.

It is also important to determine how employers will measure productivity while its employees are teleworking. Will the employer require daily check-ins from employees to update supervisors and managers as to tasks accomplished? Will conference calls be utilized to ensure employees are completing tasks and understand instruction? Monitoring productivity will depend entirely on the employer’s business and the employee’s job position. As a result, productivity measurements will look different for each industry and each employer. Indeed, because schools are closed and children are at home completing school online, employees may face challenges with childcare and productivity during the pandemic. Therefore, employers will need to remain flexible in their expectations of the workday, productivity and hours worked. Employees may not have dedicated work areas in their homes and may face distractions in terms of timeliness of execution of regular tasks and other disruptions of ordinary work functions. Employers are encouraged to have flexible teleworking policies during this time period to enable employees to handle family responsibilities while also attending to work tasks. Keeping in mind the wage and hour issues that may arise from such flexibility.

Employers should attempt to provide the resources employees need to work from home effectively using company provided equipment, like computers and telephones. Where this is not possible, employers should evaluate the personal tools and equipment the employee is required to use on the employer’s behalf and determine whether and to what extent reimbursement for associated expenses may be necessary.

Occupational Safety and Health

OSHA and Cal/OSHA obligate employers to provide a workplace that is free from recognized hazards likely to cause harm, even when working from home. Employers should encourage employees to review their work area and ensure that it is free from tripping, electrical or other hazards that might pose a danger to employees. Indeed, some injuries that occur at home while an employee is performing services for the employer may be compensable under workers’ compensation. This topic is covered extensively in Sullivan on Comp Chapter 5 and in this guide under section Working from Home.

Employee Personnel Records

Employers should remind employees to update their home address and contact information, so supervisors and managers can easily communicate with them. Employers should also consider setting up an internal website and team and/or company-wide distribution lists for information sharing.

Protect Confidential and Proprietary Information

Be sure to remind teleworking employees they remain obligated to protect company confidential and proprietary information. This could mean requiring employees to work on the company’s servers and not on their own personal computer, not to save copies of documents to their personal computer and not to print documents at home considered confidential. Depending on the type of business this could simply require reminding employees of their obligation but for other employees who work with a high level of confidential and trade secret information software or other protections may need to be implemented.

Wage and Hour Enforcement and Penalties

It is important that businesses properly pay employees because, in addition to damages, penalties may be assessed for violating wage and hour laws. The State Division of Labor Standards Enforcement (DLSE or Labor Commissioner) is charged with enforcing these laws and adjudicates wage claims. Moreover, an employee may choose to bring a wage claim in civil court and, if successful, his or her attorney, may collect attorney’s fees from the employer.

Failure to pay the minimum wage subjects the employer to fines and imprisonment, and restitution of the wages to the employee. The Labor Commissioner can assess a civil penalty of $100.00 for each underpaid employee for each pay period during which the employer failed to pay minimum wage. For each subsequent intentional failure to pay the minimum wage, the penalty is $250.00. Labor Code §1197.1

The Labor Commissioner is also authorized to assess liquidated damages in an amount equal to the amount of the wages improperly withheld, plus interest. In the past, employees could only obtain these damages through litigation. The Labor Commissioner may issue a citation for a minimum wage violation and recover the civil penalty and wages. The penalty for a citation includes payment for liquidated damages.

Moreover, unlawfully withholding wages or failing to pay the minimum wages is a misdemeanor. Any employee receiving less than the applicable minimum wage or the legal overtime compensation is entitled to file a lawsuit in court. The employee can win damages, penalties, liquidated damages, and attorneys fees making wage and hour actions incredibly expensive. To make matters worse these types of actions are rarely covered by insurance.

Beginning January 1, 2020, a new law gives employees the right to seek enforcement of these additional penalties. Under the new law, employees may bring a private action to either recover the statutory penalties in a hearing before the Labor Commissioner or bring a civil action under the Private Attorneys General Act. The Private Attorneys General Act is covered below.

Individuals can be held personally liable for a company’s failure to comply with certain wage and hour laws. The Labor Commissioner’s authority to assess civil penalties for Labor Code and Wage Order violations extend not like to the employer, but to any “other person acting on behalf of the employer.” Labor Code §558. Individuals who may be personally liable for wage payments and penalties include the owner, directors, officers, and managing agents. Labor Code §558.1(b). These means a court could allow a winning employee to collect the judgment from individuals if the business is unable to pay the judgment.

Labor Code §558.1 State that “any person acting on behalf of an employer can be held liable when he/she violates open (or causes to be violated) any of the following wage and hour laws:

· Minimum wages and any minimum wage provisions found in the Wage Orders;

· Any provision regulating hours and days of work found in the Wage Orders;

· Timely payment of wages (Labor Code §203);

· The required to provide a paystub/itemized Wage Statement (Labor Code §226);

· Meal and rest break requirement (Labor Code §226.7);

· Overtime requirements (Labor Code §1194);

· Reimbursement of expenses incurred in the discharge of duties (Labor Code §2802).

If an employee is terminated or quits and the employer fails to pay the employee in a timely fashion, the employer may face waiting time penalties. The business may be required to continue the exiting employee’s wages on a day-to-day basis, up to a maximum of 30 days, until the final paycheck is ready. This rule applies to both exempt and non-exempt employees. Labor Code §203.

If an employer terminates an employee or lays him/her off with no specific return date within the normal pay period, all wages and accrued vacation or PTO earned but unpaid are due and payable immediately. Labor Code §201.

If an employee voluntarily quits with 72 hours notice or more, the employer must pay all wages and accrued vacation or PTO earned but unpaid on the last day of work. Labor Code §202.

If an employee quits with less than 72 hours notice, the employer must pay all wages and accrued vacation or PTO earned but unpaid within 72 hours after notice is given. The 72-hour requirement is actual clock hours, not business hours. Labor Code §202.

If the employer fails to provide the employee with the final paycheck in this time period, it is subject to waiting time penalties as described above for up to 30 calendar days.

An employee has three years to file a lawsuit to enforce a statutory obligation, including violations of wage and hour rules. Civil Code §338. The California Supreme Court found that failure to pay earned wages, including overtime, is an unfair business practice and violation of the California unfair competition law. Under the law an employee can file a claim for unpaid wages up to four years after the alleged failure to pay. Employees can now collect up to four years of back wages under the unfair competition law rather than three years under the Labor Code. Cortez v. Purolator Air Filtration Products Company (2000) 23 Cal. 4th 163.

Private Attorneys General Act (PAGA)

An individual aggrieved employee, acting on his or her own behalf and/or on behalf of other current and former employees, can bring a civil action to enforce provisions of the Labor Code if the government does not do so. Labor Code §2698-2699.

An aggrieved employee can recover the applicable civil penalty on behalf of himself or herself and other current or former employees against to one or more of the alleged violations was committed. Penalties are in addition to any wage and hour damages.

PAGA lawsuits are becoming increasingly common either as stand-alone lawsuits, in conjunction with other legal theories, or as an add on to class action lawsuits.

As with other wage and hour lawsuits, any employee who prevails in any action is entitled to an award of reasonable attorney’s fees and costs.

When a specific wage and hour law does not provide for a penalty, the court can assess one of the following penalties:

· At the time of the alleged violation, if the person does not employ one or more employees, the civil penalty is $500.00.

· At the time of the alleged violation, if the employer employees one or more employees, the civil penalty is $100.00 for each aggrieved employee per pay period for the initial violation and $200.00 for each aggrieved employee per pay period for each subsequent violation. Labor Code §2699.

PAGA actions are always expensive and can easily result in penalties of several hundred thousand dollars even when applied to work places with a moderate number of affected employees. An exhaustive review of PAGA actions is beyond the scope of this guidebook, but employers are encouraged to contact us should they have additional questions about PAGA, including ways to avoid becoming involved in a PAGA action.