Happy New Years . . . and Happy New Laws. Starting with the good news, employers should be advised that the regulation promulgated by the Federal Department of Labor which would have required employers to increase the salary level for exempt status employees December 1, 2016, has been blocked by a federal judge in Texas. The injunction went into effect in December and therefore employers do not need to meet the new Federal salary requirement for exempt status. However, before we become overjoyed, California employers are reminded that the State minimum wage increased January 1, 2017 to $10.50 per hour. This is significant with regard to exempt status because California requires that the salary be based upon the following formula: 2 x minimum wage x full-time hours of work; which translates into 2 x $10.50 x 2080 hours which equals an annual salary of $43,680 per year, at minimum.
In addition to the above change, employers should also be advised that there has been a new ruling by the California Supreme Court in the case of Augustus v. ADM Security Services, Inc. Unfortunately, the ruling favors employees over employers and makes it clear that employees may not be on-call during rest breaks. While this seems to be a rather minor and irrelevant ruling, quite the contrary the decades old case resulted in a decision in double-digit millions for workers of ADM Security Services. More importantly, the ruling calls in question all rules pertaining to on-call duty, including those beyond rest breaks or meal period which the State Supreme Court did not address. That is not to say that on-call status has changed in California, but it certainly gives pause for employers with regard to the requirement that employees be on-call but not compensated their time until they are actually called upon. For now, employers need to know that during rest breaks and meal periods employees must be relieved of all duties. Requiring employees on rest breaks or meal periods to carry a pager and/or be available if needed will no longer be allowed as it violates the rest break and meal period requirements outlined previously in the Breaker decision.