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October 13, 2024October 15, 2024

California’s Meal and Rest Break Laws: What Employers Need to Know

Summary

California requires employers to provide their staff with a meal break and several rest breaks, depending on shift length.
Due to waiver conditions, industry-specific exceptions, and confusing legal jargon, complying with these rules is tricky.
Misunderstanding is no excuse for getting rest breaks wrong in California. Employers must equip themselves to schedule, track, and pay rest breaks correctly to avoid legal trouble.

Employee meal and rest break laws vary by state. Some lack regulations, while others have strict guidelines – the most stringent being California.

So, if you’re an employer in California, how do you know if you’re implementing meal and rest breaks correctly? Let’s break down what you need to know about these rules, what happens when you break them, and practical tips to ensure you remain compliant.

What are California’s Meal and Rest Break Laws?

According to California’s Labor Commissioner’s Office, also known as the Division of Labor Standards Enforcement (DLSE), most non-exempt employees in California are entitled to distinct categories of breaks: a meal break and a rest break.

Meal Breaks

Employees who work more than five hours in a day are entitled to a 30-minute unpaid lunch break.
Employers must provide an additional 30-minute unpaid meal break to employees working more than 12 hours in a day.

Several conditions must be met to satisfy the requirements for a reasonable meal break. Employees must be fully relieved of all their duties, the break must go uninterrupted, and the employer cannot discourage or prevent it. Employees must also be free to use the time as they see fit. Whether they eat lunch, leave the premises, or take a quick nap, it’s their prerogative.

Failing/refusing to give a meal break

If an employer fails to provide a reasonable meal period, they owe the employee one extra hour of pay at the regular rate for each day they do not receive a meal break. This is what is known as premium pay.

If an employee’s meal break is less than 30 minutes, and they never agreed to end their break early in writing, it is considered “interrupted” and must be paid, along with the one additional hour of premium pay for a missed break.

Employees who do not receive premium pay have the right to submit a wage claim to the Labor Commissioner’s Office.

Waiving meal breaks

Can meal break times be waived? Yes, but only under certain circumstances. Both employer and employee can agree to waive the meal break if a shift is 6 hours or less. At the same time, employees can skip the second 30-minute meal break, provided they took the first meal break and worked more than 10 but less than 12 hours.

Waiving breaks should not be standard practice and should only be agreed to if a meal break will prevent an employee from completing an essential task. Employers should always properly document waived breaks in writing to protect themselves from unclaimed wage lawsuits.

On-duty meal breaks

There are cases when employees can’t be fully relieved of their duties during meal breaks or leave the premises while on break. If that’s the case, the rules for on-duty meal periods will apply, and these are the following:

If an employee must remain at the work site or facility during the meal period, the meal period must be paid.
On-duty meal periods are only allowed under certain conditions where the nature of the job makes it impossible for workers to be free of all of their duties while on break. Examples are sole employees in a coffee kiosk, night shift workers in a convenience store, or security guards stationed alone.
Both employer and employee must agree in writing. The document should state the terms of the on-duty meal period and explicitly state that the employee can cancel the agreement anytime if they no longer wish to have on-duty meal breaks.
On-site meal breaks should only happen for real, job-related reasons requiring employees to stay on the premises, not just because the employer and employee agree. The nature of the work should make it necessary for employees to remain at the job site, even during meal breaks.

Rest Breaks

Employers must provide a ten-minute paid rest period for every four hours worked or a significant fraction thereof.
As much as possible, the break should be taken around the middle of the work period.
The 10-minute rest break should start when an employee reaches a proper place to rest away from their work area. Employers must provide a suitable place for rest that’s separate from the restroom and available during work hours.
If a rest break is not provided, the employee is owed an additional hour of premium pay at their regular pay rate.

As with meal breaks, employees must be free from job responsibilities during their rest period. Furthermore, employees must not be on call during this time. Employees working at most three and a half hours are not entitled to rest breaks.

Employees can skip their rest breaks, but it must be their choice without any pressure or influence from the employer. It’s also wise to document every time a break is missed or skipped – an employer should have in writing why a break was skipped and if the employee agreed to it.

What makes compliance with California’s break time laws challenging

Due to the sheer complexity of California’s break laws, it can be difficult for employers to get everything right, even if they have the best intentions. Here are some of the most common roadblocks employers face regarding California meal and rest break laws:

Complying with industry-specific rules and exemptions

Aside from the basic rules around unpaid meal breaks and paid rest periods, California employers must also ensure that they follow applicable industry-specific regulations and exemptions. Here are some examples of such:

Employees in the motion picture industry must not work for more than 6 hours without taking at least a 30-minute break but not exceeding an hour. After that, employers must provide a second meal break no later than 6 hours after the previous one has ended. (IWC Order No. 12)
Hot meals and drinks must be provided for production employees working after 12 midnight. (IWC Order No. 12)
Performers engaged in strenuous activities, such as swimmers, dancers, and skaters, shall have additional interim rest periods during shootings and rehearsals. (IWC Order No. 12)
Rest breaks can be staggered in the construction, drilling, logging, and mining industries to prevent disruptions in operations. If a break is missed, it must be provided within the same workday; otherwise, the employer must pay a penalty for the missed break. (IWC Order No. 16)
Healthcare industry workers who work shifts longer than 8 hours may voluntarily waive their right to one of their two meal periods, provided that there’s a written agreement signed by the employer and employee. Employees can revoke the waiver with at least one day’s written notice. (IWC Order No. 4)
Employees who are directly responsible for the care of children under 18 years old or still in the foster system who need 24-hour care and employees who are working in 24-hour residential care facilities for the elderly, blind, and developmentally disabled individuals may be required to work on-duty meal periods without extra pay, especially if they must meet regulatory standards. This applies if:
- The employee eats with the residents and is provided the same meal for free.
- The employee is solely responsible for the residents, and a free meal is provided during the day shift.

Incorrect interpretations

Legal jargon is notoriously ambiguous and sometimes difficult to understand. Regardless, incorrectly interpreting California’s break laws can result in costly lawsuits—case in point: Bono Enterprises, Inc. vs. Bradshaw.

Bono Enterprises Inc., operating under the business name American Temporary Services (ATS), was a temporary work agency that supplied roughly 1,000 Californian employers with a workforce. One of their clients is a manufacturing plant in Modesto. ATS temp workers were not given security clearance in the plant, which resulted in them remaining in the plant premises during their 30-minute meal breaks.

Several employees filed complaints for not receiving paid wages for lunch periods when they had no choice but to stay on the premises. However, ATS argued that the wording of the rule is vague and unclear.

Furthermore, employees are relieved of all work duties during their meal breaks and can access an on-site cafeteria and relaxation areas.

The commissioner ruled in favor of the employees, and the court agreed with their interpretation. The ruling emphasized that unpaid meal breaks must allow employees to spend their time as they choose, including leaving the premises. Being restricted on-site meant they could still be under the employer’s control, which violates the law.

This case clearly illustrates how easily the law can be misunderstood and reminds employers to tread carefully and err on the side of caution. It’s best to seek legal advice when in doubt or faced with unclear regulations.

Tracking break times

While it’s not the employer’s job to police how employees spend their break time, it is their duty to ensure that breaks are provided as required by the law.

The challenge comes with determining which breaks are paid and unpaid and knowing when an employee qualifies for premium pay. Employers must also ensure the system isn’t misused to gain extra pay, such as manipulating break times to extend paid hours. And let’s not forget documentation and keeping track of waivers. These tasks add to the already heavy workload of HR workforce management.

Stay on top of California Labor Laws with Workforce.com

California meal and rest breaks are not only difficult to understand but also tricky to implement. Luckily, a payroll system like Workforce.com can help you automatically ensure employees receive what they are entitled to.

Here is how Workforce.com handles breaks in California:

Properly identifying paid and unpaid meal breaks

Workforce.com helps you identify which meal breaks are unpaid and when premium pay will apply.

Employees clock in and out for meal breaks on Workforce.com’s time clock app. If they return early, you can set up shift questions asking if they are coming back by choice. If so, the break remains unpaid. However, if they answered no and indicated their manager asked them to return early, it would be an interrupted, paid break. Managers are notified in these cases to verify the situation.

Automated timesheet attestations

When staff clock out of their shift, you can prompt them with a series of questions certifying the accuracy of their timesheets. If no meal or rest breaks were taken, Workforce.com will give the employee an option to sign a waiver indicating whether or not they agreed to take their break. Every attestation and break waiver is filed securely in your document library, which you can refer to in case of an external audit or lawsuit.

Ensuring breaks are properly scheduled

Managers can easily customize and schedule compliant breaks in Workforce.com’s scheduling system. These breaks can be configured to automatically apply to any shift that meets the minimum required length. These preventative workflows ensure correct breaks are always scheduled with minimal manual effort.

Notifications and alerts

With Workforce.com’s mobile employee app, employees get reminders to take their breaks and clock in and out for meal and rest periods. At the same time, managers can also receive notifications if any of their team members seem to have missed their breaks. This way, they can investigate and address any issues quickly.

Automated premium payments

When an employee fails to receive or misses a break, Workforce.com’s payroll system automatically calculates the correct premium payment amount they are owed based on their time logs and pay rate. This additional pay is reflected on the timesheet and properly paid out on payday.

Learn more about how Workforce.com’s payroll and scheduling system can help you easily manage rest breaks in California. Book a demo today.

September 25, 2024September 25, 2024

Predictive Scheduling Laws Explained: A Guide for Employers [2024]

Summary:

Inconsistent shifts and sudden schedule changes place undue financial and logistical stress on the lives of employees outside of work.
Predictive scheduling laws address this issue by mandating advance notice for schedules and premium pay for sudden shift changes. However, navigating these laws can be challenging due to varying city and state regulations.
Employers navigate predictive scheduling laws with specialized software that accounts for local labor ordinances, enforces fair scheduling practices, automates predictability pay, and maintains records.

Unpredictable shifts and last-minute changes have long been sources of financial instability and stress among hourly workers. In response, some cities nationwide have implemented predictive scheduling laws, also known as Fair Workweek laws, to create more predictable and transparent schedules for employees.

While predictive scheduling laws are intended to improve worker well-being and foster a healthier workplace, it is not always easy for employers to implement these new standards. Understanding the ins and outs of these ordinances is essential to avoid penalties and maintain workforce satisfaction and productivity.

Whether managing a retail chain, restaurant, hotel, or any business with hourly staff, this article will help you balance operational flexibility with legal compliance.

What are predictive scheduling or Fair Workweek laws?

Predictive scheduling laws are ordinances that promote fair schedule processes, including giving sufficient notice to employees about their work schedules.

While Fair Workweek ordinances may vary city by city, they typically include the following:

Advance notice of work schedules, typically 14 days in advance
Predictability pay or premiums when schedules change after the notice period
Right to rest between shifts or clopening bans
Right to decline shifts made past the advance notice or opportunities for extra hours
Good faith estimates of work schedules upon hiring

The impact of unpredictable schedules on workers

Unpredictable schedules are a significant source of disruption in workers’ personal lives. Employees cannot properly budget for the month, make plans with acquaintances, or reliably fulfill other obligations without an appropriate degree of certainty in their work schedule.

For shift-based workers, flexibility means knowing their work schedules well in advance, not the day before a shift so that they can plan for childcare, doctor’s appointments, second jobs, studies, and other obligations.

Financial pain points are another issue workers must contend with when their schedules are unpredictable. It’s hard for them to anticipate their earnings and manage their budgets when their income is erratic.

In response, some cities have passed rules around predictive scheduling to help alleviate such challenges for employees. So, which places implement Fair Workweek ordinances?

Where are predictive scheduling laws being implemented?

Oregon

Oregon is the only place where predictive scheduling laws are being implemented state-wide so far.

Covered employers

Businesses in the retail, hospitality, and food services industries that have at least 500 employees

Advance notice requirements

14 days in advance, including on-call work
Good faith estimates upon hiring
Employees can decline shifts that are not included in the written work schedule.

Predictability pay

Employees are entitled 1 hour at regular rate of pay plus wages if the following changes are made without advance notice:

Additional 30 minutes or more to a shift
Date or time change of a shift with no loss of hours
Additional work or on-call shift

Employees are entitled to half of their regular rate of pay if:

Hours are subtracted from the shift before or after they report for duty
Changes result in loss of shift hours
A shift is canceled
When they are scheduled for on-call work but are not called in

Rest hours and clopening

There must be a rest period of 10 hours in betweeen shifts. Employees can decline the rest period and be paid time and a half pay.

Exceptions

Additional pay is not required for schedule changes due to natural disasters or events outside an employer’s control, such as floods, earthquakes, tsunamis, wildfires, extreme temperatures, war, or explosions.

California

Berkeley

Covered Employers

Employers in the City of Berkeley with 10 or more employees in the:
- Building services, healthcare, hotel, manufacturing, retail, or warehouse services with 56 or more employees globally
- Restaurant industry and has more than 100 employees globally
Franchisees primarily engaged in the retail or restaurant industries associated with a network of franchises that employ 100 or more globally
Non-profit organizations in the building services, healthcare, hotel, manufacturing, retail, warehouse services, or restaurant industries and employ 100 or more globally

Advance notice requirements

14 days or two weeks’ notice
Good faith estimate for new employees
Employees have the right to decline hours that are added after the notice period.

Predictability pay

1 hour of predictability pay for any schedule change made between 1 and 14 days before a shift.
Up to 4 hours of predictability pay (or the number of hours reduced, whichever is less) for cancellations or reduced hours with less than 24 hours’ notice.
1 hour of predictability pay for adding, changing, or moving a shift with less than 24 hours’ notice.

Rest hours and clopening

Employers must allow employees to decline shifts that occur less than 11 hours apart.

Exceptions

Predictability pay is not applicable to employee-initiated shift swaps or changes. It is also not owed for grace periods of 10 minutes before and after a shift.

Access to hours for existing employees

Employers must offer any additional hours to existing part-time employees before hiring new staff or temporary workers.

Emeryville

Covered employers

Employers with nonexempt full-time, part-time, on-call, contract, and seasonal employees that are in:

Retail with 56 or more employees globally
Fast food with 56 or more employees globally or 20 or more employees in Emeryville

This includes franchisees associated with a franchisor or a network of franchisees with more than 12 locations globally.

Employers located outside the city but employ workers performing work in Emeryville are also covered.

Advance notice requirements

14 days in advance
Good faith estimate to new employees
Employees can decline unscheduled hours given less than the notice.

Predictability pay

If a schedule change is made between 1 and 14 days before the shift, employees receive 1 hour of pay for any affected shift.
For cancellations or reduced hours with less than 24 hours notice, employees get the lesser of 4 hours of pay or the originally scheduled hours.
Any other changes made within 24 hours will give employees 1 hour of pay.

Rest hours and Rest hours and clopening

Employers must pay time and half pay for any hours worked for shifts that are less than 11 hours apart.

Exceptions

Predictability pay does not apply to employee-initiated shift swaps or for grace periods of 10 minutes or less before and after a shift. The same goes for an employee who works past the schedule to finish a transaction.

Access to hours for existing employees

Employers must offer additional hours to existing qualified part-time employees until they reach 35 hours of work in a calendar week.

San Francisco

Covered employers

Formula Retail establishments with at least 40 stores worldwide and 30 or more employees in San Francisco, including janitorial and security contractors.

Advance notice requirements

2 weeks in advance
Good faith estimate to new hires

Predictability pay

1 to 4 hours of pay for schedule changes made with less than 7 days’ notice
2 to 4 hours of pay if an employee is on-call but not called in to work

Exceptions

Predictability pay is not applicable when:

There is a threat to the safety of employees’ and employers’ property, public utility failure, Acts of God, or causes outside the employer’s control.
An employee scheduled to work cannot come in and did not provide at least 7 days’ notice.
An employee failed to report to work or was sent home.
An employer requires the employee to work overtime.
An employee swaps shifts with a co-worker or asks for a shift change.

Access to hours for existing employees

Employers must first offer additional work to existing part-time employees as determined by the employer or if the part-timer has done similar work.

Los Angeles

Covered employers

Retail businesses with 300+ employees globally

Advance schedule notice period

14 days notice
Good faith estimate for new employees
Employees reserve the right to decline hours, shifts, and work locations made after the advance notice period.

Predictability pay

1 hour at the regular rate for any increase in hours over 15 minutes
1 hour at the regular rate for changes in the date, time, or location without changing the hours
Half the regular rate for a reduction in hours by 15 minutes or more
Half the regular rate for on-call hours when the employee isn’t called to work

Rest hours and Rest hours and clopening

Employees must not work a shift that starts less than 10 hours from the previous shift. Otherwise, employees must provide written consent, and time and a half pay applies for shifts following an insufficient rest period.

Exceptions

Predictability pay does not apply if:

An employee initiated the schedule change.
An employee agrees to cover an absent employee’s shift, provided the employer informs them that it’s voluntary and they can decline.
The employee’s hours are reduced due to a violation of law or company policy.
The employee accepts additional hours offered under section 185.05.
The employer’s operations are affected by legal issues or force majeure.

Access to hours for existing employees

Employers must offer work to current employees at least 72 hours before hiring a new employee or using a contractor, temporary service, or staffing agency to perform work.

Illinois

Chicago

Covered employers

Employers that have at least 100 employees globally in the building services, healthcare, hotels, manufacturing, and warehouse services industries
Restaurant businesses with 250 employees and 30 locations
Employers with employees earning less or equal to $31.85 per hour or less than or equal to $61,149.35 in a year

Advance notice requirements

14 days’ notice
Written estimate of work hours for new employees

Predictability pay

1 hour of pay for every affected shift if the employer subtracts, adds, and changes shifts with no loss of hours after the 14-day notice period
1 hour of additional pay for every affected shift when an employer adds hours or changes shifts with no loss of hours less than 24 hours before a shift
50% of pay for lost hours when the employer subtracts hours less than 24 hours before a shift starts

Rest hours and clopening

Employees can decline shifts that start less than 10 hours after their last shift. If they work a shift within that time, they must be paid 1.25 times their regular rate.

Exceptions

Predictability is not applicable in cases of:

Threats to employers, employees, property, or when authorities advise against work.
Utility failures (electricity, water, gas, or sewer issues) at the workplace.
Natural disasters like floods, earthquakes, tornadoes, or blizzards.
War, civil unrest, strikes, safety threats, or pandemics.
Shift trades or coverage agreed upon by employees.
Schedule changes mutually agreed upon by employee and employer, confirmed in writing.
Schedule changes requested by the employee, confirmed in writing.
Reduction in hours for documented disciplinary reasons.

Access to hours for existing employees

Employers must first offer extra shifts to qualified employees. If no employees accept, the shifts can be offered to temporary or seasonal workers who have been with the employer for at least two weeks.

Evanston

Covered employers

Employers with:

100 or more employees globally, franchises included, in the hospitality, retail, warehouse services, manufacturing, and building services industries
At least 30 locations globally and 300 employees in the food service and restaurant industry

Advance notice requirements

14 days notice
Good faith estimate for new employees

Predictability pay

1 hour of predictability pay if employers add hours or change the date/time of a shift after the 14-day notice period, with no loss of hours.
1 hour of predictability pay if employers reduce hours from a regular or on-call shift with more than 24 hours notice.
If less than 24 hours notice is given, employees may receive up to 4 hours of predictability pay, depending on the number of hours affected.
For on-call employees not called in, the employer must pay half of the missed hours or 4 hours, whichever is less, if the employee isn’t being paid their regular rate.

Rest hours and clopening

Employees must be paid 1.5 times their regular rate for any hours worked less than 11 hours after their last shift. They must provide written consent to work within this 11-hour window.

Access to hours for existing employees

Employers must offer extra shifts to qualified employees first. If no employees take the shifts, they can be offered to temporary or seasonal workers who have been with the employer for at least two weeks.

New York

New York City

Fair Workweek rules in New York City apply to two work sectors — fast food and retail industries.

Covered employers

Fast food establishments that are part of a chain and are one of 30 or more establishments nationally.
Retail employers that operate one or more retail establishments in New York City

Advance notice requirements

Fast food businesses must give regular schedules that stay the same week-to-week and must give schedules 14 days in advance.
Retail employers must give 72 hours’ advance notice of work schedules. Shift additions and cancellations are prohibited with less than 71 hours’ notice, and there must be no on-call shifts.
Workers can accept or decline additional work time.

Predictability pay

Fast food employers must pay $10 to $75 for every change made to a shift after the notice period for
Retail employers must pay $300, as well as damages, to the affected workers. A fine of $500 can also be imposed. It could be more if the employer violated the law before.

Rest hours and clopening

Fast food employers are not required to pay premiums for schedule changes due to:

Threats to employees’ or employers’ property
Public utility failure or public transport shutdown
Natural disasters such as fire or flood
Federal, state, or local state of emergency
Severe weather conditions that can compromise employee safety
Employee-initiated changes such as time off requests, using sick leaves, arriving late, or needing to leave early (must be adequately documented)

More about New York City’s Fair Workweek Laws for Fast Food and Retail Businesses

Pennsylvania

Philadelphia

Covered employers

Employers with more than 250 employees worldwide and 30 or more locations worldwide, including chains and franchises in the service, retail, and hospitality industries.

Advance notice requirements

14 days’ notice
Good faith estimate upon hiring an employee
Employees may decline additional work hours not posted in the schedule after the notice period.

Predictability pay

1 hour of regular rate of pay when the employer adds time to a scheduled shift. The same applies when changes are made to the date, time, or location with no loss of hours.
Half of the regular rate of pay for any scheduled hours the employee does not work due to reduced hours from a regular or on-call shift. The same applies when an on-call shift is canceled.

Rest hours and clopening

There should be a rest period of at least 9 hours between shifts. Otherwise, an employee must consent in writing. Employers must also pay $40 for each clopening shift.

Access to hours for existing employees

Before hiring new employees or using subcontractors or staffing agencies, the employer must first offer available shifts to existing employees.

Washington

Seattle

Covered Employers

Retail and food service establishments with at least 500 employees worldwide
Full-service restaurants that have at least 40 full-service locations worldwide

Advance notice requirements

14 days advance notice
Good faith estimate for new employees
Employees can decline hours not in the originally posted schedules

Predictability pay

1 hour of pay for hours added to a shift or when the date or time is changed
Half of the hours not worked when an employee is sent home early
Half of the hours not worked when an employee is scheduled for on-call work but is not called in

Rest hours and clopening

There must be 10 hours of rest in between shifts. Employees are entitled to time and a half pay for clopening hours that are less than 10 hours apart.

Exceptions

Predictability pay is not applicable when:

The employee asked for the changes in schedule or traded shifts with a co-worker.
The employee responded to a message about available hours because another employee couldn’t work.
The employee replied to a message about hours available due to unexpected customer needs.
The reduction in hours was due to discipline.
The change was due to threats, public official recommendations, utility failures, natural disasters, or legal issues.

Access to hours for existing employees

The employer must offer extra hours to current employees before hiring external candidates, subcontractors, or temporary workers. Employers must post a notice of available hours for three days. Employees have two days to decide if they want the extra hours before the employer hires outside help.

Compliance Tips for Fair Workweek Ordinances

Implementing predictive scheduling laws into your operations can be complicated – it’s easy to overlook crucial details if your policies aren’t thorough. Here are some practical tips to help your business remain on the right side of the law.

Stay abreast of ordinances in your place of business

Only a handful of cities have an ordinance for predictive scheduling, but this could change in the future. It’s best to stay informed about any updates or new regulations in your area.

Keeping up with changes is crucial if you’re in a city or state that has existing Fair Workweek laws. For example, New York City previously required fast food employers to provide a good faith estimate of work hours to new hires, but this was replaced with a mandate for regular week-to-week schedules.

Check with local and state governments regularly for updates on employment laws and scheduling practices to ensure your business remains compliant.

Invest in predictive scheduling software

Predictive scheduling laws are just one of the many employment regulations that businesses must comply with. Many businesses invest in scheduling and payroll solutions that help mitigate predictive scheduling headaches. Software like this automates key areas like shift notifications and predictability pay, ensuring that you meet Fair Workweek standards.

Workforce.com, a scheduling and payroll platform designed for hourly workforces, specializes in predictive scheduling and Fair Workweek compliance. Here’s how it can help:

Shift scheduling and labor forecasting – Avoid over or understaffing with demand-based schedules. Workforce.com can use data that indicates possible demand, such as historical sales, foot traffic, booked appointments, and even weather information, so you can schedule the correct number of staff for each shift well in advance.
Alerts and announcements—A critical part of Fair Workweek ordinances is ensuring employees are notified of posted schedules in time. Workforce.com makes this easy—once a schedule is published, employees are notified through the app, and you can also print the schedule. A robust communications feature lets you send announcements about schedule updates and live chat with staff and managers to maximize transparency and efficiency.
Pay rules – Assign pay rules to each employee, including those predictability pay they may be entitled to when certain conditions get triggered. Once set up, these rules are automatically applied during payroll, eliminating the need for manual entries and calculations.
Employee tags and classification – Assign tags to covered employees of predictive scheduling rules to ensure they receive the correct pay when predictability pay conditions are met. You’ll also receive automatic alerts when scheduling an employee at risk of working a clopening shift.
Shift swapping – Workforce.com has shift-swapping functionality that allows qualified staff to take up vacant shifts. This helps automate the process and provides a simple way to track and record shift changes.
Payroll – Another crucial part of complying with predictive scheduling laws is ensuring covered employees are paid what they’re owed, including applicable predictability pay. Workforce.com automatically computes wages, overtime, deductions, and predictability pay premiums based on timesheets and hours worked by your employees.
Recordkeeping – Employers are required to maintain records of schedules and documentation related to Fair Workweek compliance. Workforce.com centralizes this information, making it easily accessible. In the event of an audit or when you need to retrieve these records, everything is organized and readily available.

Train managers and HR teams

Managers and human resources are at the frontline of implementing predictive scheduling laws. Train them to understand the specifics of these ordinances and how to communicate them to staff. As a crucial part of compliance, they must have the training and resources to ensure company policies align with and adhere to applicable labor laws.

Why fair scheduling practices matter

Fair scheduling practices are essential to any hourly workforce, regardless of whether predictive scheduling laws exist in your area. Equitable workplace policies should not just stem from the need to comply – they should begin with the desire to equip and support your employees.

A consistent and transparent scheduling system minimizes scheduling conflicts, reduces absenteeism, improves retention, and provides flexibility for hourly staff. This should be standard practice, whether mandated by law or not. Discover how Workforce.com helps you implement best practices with employee scheduling, payroll, and HR for hourly workforces. Book a demo today.

September 17, 2024September 24, 2024

Employees using cell phones for work? Here’s how California employers must pay up

Summary:

In California, reimbursing employees for work-related personal cell phone use is more than just a perk. It’s the law.
Compliance with cell phone reimbursement laws may be challenging as there are ambiguities about reasonable compensation amounts.
Employees can use software like Workforce.com on computers to perform administrative work duties, avoiding the need for cell phone reimbursements.
Compliance-specialized HR software like Workforce.com can also handle distributing reimbursements and stipends if needed.

The lines between personal and professional mobile phone use are becoming increasingly blurred. Many employees use their personal devices for work-related purposes, whether answering emails, calling clients and team members, coordinating projects, or accessing company portals. If this is the case, who should foot the bill?

California addresses this overlap with Labor Code 2802, a law that attempts to clarify who should cover the costs of using a personal cell phone for work purposes.

So what does this law entail, and how does it protect employers and employees? Let’s take a closer look to help you navigate this legal dilemma in the Golden State.

What is California Labor Code 2802?

California Labor Code 2802 mandates that employers fully reimburse employees for any job-related expenses they may incur; this includes all costs related to using a personal cell phone for work duties. This law protects employees and ensures employers are not sidestepping operating expenses.

So, if your employees use their cell phones to call clients, communicate with suppliers, manage company platforms, or perform other job-related activities, they may be entitled to reimbursement – depending on your state.

Clearly, this is more than just a job perk. It’s the law, and employers in California must comply. But this is much easier said than done due to the ambiguous nature of the way the labor code was written. The critical question here is how to measure what qualifies as reasonable compensation. And how do you even begin to job-cost phone-related activities?

The Cochran vs. Schwan’s Home Services Case

If your employees have unlimited call minutes, do you still need to reimburse them for cell phone use? Yes, you should. The court decision for Cochran vs. Schwan’s Home Services case reiterates why this is the case.

In this class action suit, the plaintiff claims that California Law 2802 is violated because they use their cell phones for work-related calls in their job duties for a food delivery business but are not reimbursed for such costs. However, the defendant argued about the appropriateness of the class certification. According to them, the employees have varying reimbursement claims. They also countered that some employees didn’t incur additional costs because they were on a plan with unlimited minutes or included in a family plan.

The California Court of Appeals ruled that employees are still entitled to reimbursement even if they’re on a mobile plan with unlimited minutes or a family plan. The issue is about properly reimbursing employees for using their personal cell phones to perform work duties and not about whether or not employees incur additional expenses on top of their plan for making work-related calls. Since the employer benefits from these calls, they should cover the expense as part of their business operations.

So, the next question is how much? The court didn’t mandate a specific amount by which employees must be reimbursed, making the ruling pivotal for this piece of California law and the employers that must comply. Such uncertainty makes it even more challenging for employers to determine how much they should reimburse employees for cell phone usage.

How do you calculate reasonable reimbursement?

Since the law doesn’t state an exact dollar amount or formula by which you should reimburse employees for cell phone use, how do you identify that sweet spot?
According to a study by Oxford Economics and Samsung, most company reimbursements for mobile expenses range between $30 to $50 per month. On average, the monthly amount is $40.20 per employee. In addition, 98% of companies surveyed provide full or partial stipends to cover employee mobile expenses.

The reasonable reimbursement or stipend amount depends on your operations and how crucial mobile devices are for your employees’ tasks. According to the same study, 53% of executives said employees need mobile phones to do their jobs well, and 57% said mobile devices are key to getting work done.

Figure out how much of your employee’s screen time is devoted to work. For instance, if 50% of their daily phone usage is spent on job-related activities, you can consider providing a stipend or reimbursement equal to half of their monthly plan.

On the other hand, you can opt for exact reimbursement based on their usage if they can highlight specific line items in their phone bill that are directly related to work. However, this can be challenging since most mobile plans are bundled or have unlimited call minutes or data.

The key to determining a reasonable reimbursement amount is to ensure that you’re reimbursing what employees are due while still not overpaying.

What are the methods for reimbursement?

As with the amount, the law lacks specificity regarding how employers should distribute reimbursements. At the end of the day, it is really up to the employer.

One way is to follow a standard reimbursement process through HR. Staff submit receipts and documentation so that the employer can compensate them based on what’s stated in their invoice. However, this can cause additional admin work for both the employer and employee.

To simplify things, an employer ditch the reimbursement method in favor of a monthly stipend to cover cell phone-related expenses. But what happens if the cell phone expense exceeds the allotted stipend? In this case, it’s always good to have a backup reimbursement process in place. It is also worth noting that overspending is a very real risk with a stipend since expenses aren’t being explicitly tracked.

In short, for simplicity and less headache, go for a stipend. To avoid the risk of overspending, choose a reimbursement process.

Of course, employers could avoid all of this hassle by simply giving employees work phones on a separate company phone plan. However, this is obviously expensive and requires additional IT and security support. This option should really only be considered for the most obvious use cases where cold calling is a routine part of the job.

When should employees receive the reimbursement?

This is also determined by the employer and usually weighed against factors such as how often cell phones are used for work. It can be distributed monthly, quarterly, or annually or along with payroll.

Are cell phone reimbursements taxable?

Cell phone reimbursements are not considered income or an amount added to an employee’s wage, but they cover expenses for cell phone use for business purposes. So, technically, they are not part of an employee’s earnings. However, they are usually considered non-taxable as long as they are given for “substantial non-compensatory business reasons,” as stated by the IRS.

Again, the key here is to ensure that employees determine a reasonable amount to reimburse. For instance, if your employee’s monthly bill is $100 and you pay $105 as reimbursement for cell phone use, the excess of $5 should be returned to you, or they would need to file it as income, which can be taxable.

The essentials of a reimbursement policy

The key to complying with the California Labor Code 2802 is to have a policy in place. As you create this for your organization or revisit your existing rules, you must ensure that it covers the following:

Who’s eligible for reimbursement? Look at your operations and determine which roles rely heavily on their personal cell phones to get work done. For instance, employees who usually work at the company headquarters with access to company resources are less likely to use their mobile plan than those who work in various locations and are more likely to use their cell phones for work-related purposes while on the go.
What type of usage warrants reimbursement? Specify what work-related tasks done on mobile entails because it’s best to define what constitutes business and personal use. Typically, work-related usage includes company calls, emails, and accessing company platforms.
What is the documentation needed? List the documents employees must submit, such as receipts, invoices, or billing statements.
How will the reimbursement be computed? State clearly in your policy whether you will reimburse down to the cent or assign a stipend.
How will the reimbursement process go? Detail the steps involved so that your employees will know how to proceed.

When you create a reimbursement policy, see that you’re using clear language and be specific as much as possible. Keep it accessible to all employees, and make sure to update it if need be.

Other states with reimbursement laws

There is no federal law that requires employers to reimburse employees for work-related expenses. However, the FLSA states that you might need to if those expenses cause wages to go down below minimum wage.

Aside from California, here are other places that have laws on reimbursing employees for work-related expenses:

District of Columbia – DC Municipal Regulations Section 7-910

On top of wages, employers must also “pay the cost of purchasing or maintaining any tools required of the employee in the performance of the business of the employer.”

Illinois – Illinois Wage Payment and Collection Act Section 9.5

An employer must pay back an employee for any necessary costs or losses the employee has while doing their job and directly related to work for the employer. ‘Necessary costs’ include all reasonable expenses or losses required for the job that mainly benefit the employer.

Iowa – Iowa Code 2024 Section – 91A.3(6)

Any expenses an employee has that are approved by the employer must either be paid back before they’re spent or within 30 days after the employee submits an expense claim.

Minnesota – Minnesota Statute 174.24 Subd. 5

Once employment is ended, employers must reimburse the total amount deducted directly or indirectly for any items listed in the previous subdivision except for uniform or clothing rental and maintenance by motor vehicle dealers. Once reimbursed, employers can ask the employees to return any items they the employee provided reimbursement for.

Montana – Montana Code 39-2-701

An employer must cover an employee’s necessary expenses or losses that happen while doing their job or following the employer’s orders.

New Hampshire – New Hampshire Revised Statutes Section 275:57

If an employee spends money for work-related expenses at the employer’s request, and these expenses aren’t normally covered by the employee’s wages or advance payments, the employer must reimburse them within 30 days after the employee provides proof of payment.

New York – New York Labor Law Section 198 C – Benefits or Wage Supplements

Besides any other penalties, if an employer agrees to pay benefits or wage supplements to employees, but fails to make the payments within 30 days, they can be charged with a misdemeanor.

North Dakota – North Dakota Century Code Section 34-02-01

An employer must reimburse an employee for any necessary expenses or losses from doing their job or following the employer’s orders, even if those orders were illegal, unless the employee knew they were illegal at the time.

Pennsylvania – Unreimbursed Business Expenses

Some employees might be able to subtract certain job-related expenses from their state income tax. Qualified expenses may include travel and mileage, certain mobile phone use, and office supplies.

South Dakota – South Dakota CL 60-2-1

An employer must cover any necessary expenses or losses an employee has while doing their job or following the employer’s orders, even if the orders were illegal, unless the employee knew they were illegal at the time.

Seattle – Wage Theft Ordinance

Seattle employers must pay employees on a regular pay day. Compensations include wages, tips, and reimbursements for expenses incurred on behalf of the employer.

Massachusetts

While Massachusetts law doesn’t explicitly mention about expense reimbursement, the state’s Attorney General strongly recommends employers to cover necessary and unavoidable employee expenses.

Handle cell phone reimbursements with ease

Worried about cell phone reimbursement logistics? Maybe it is time you consider leaving it to the experts.

Workforce.com is a powerful HR tool that covers time and attendance, scheduling, and payroll — helping you comply with obscure labor laws every step of the way. Employees can check their shift schedules, clock in for work, update their direct deposit information, and much more, all in one place.

Workforce.com is uniquely equipped to handle all things related to California labor compliance, including cell phone reimbursements. Within the system, you can easily classify employees eligible for reimbursement with special tags, provide them with a way to upload necessary documentation, and ensure that they receive their reimbursements.

Worried about a scheduling and time clock app adding to your reimbursement bill? Think again. Workforce.com offers flexibility since staff can access it from computers too—devices not tied to personal cell phone plans. This can help minimize or even eliminate the need for cell phone reimbursements entirely. Regardless of how big your HR team is, you can rest assured that crucial admin tasks are taken care of.

Discover how Workforce.com can help you with payroll, reimbursements, and more. Book a demo today.