Quick Checklist For San Diego Employers And Employees

1. Employee Handbooks
2. Minimum Wage
3. Sick Leave
4. Vacation
5. PTO
6. Exempt Employees
7. The ABC’s of Independent Contractors

Employee Handbooks are a road map for an employer’s policies and procedures. The employer must include certain policies in the handbook but should describe many other policies to provide clarity and fairness to employees. A good handbook can also provide defenses to employment claims. If the employer is small, it may decide not to have a handbook, but it still must have certain policies in writing. Even then, a handbook is still a good idea.

All employees, with very few exceptions, must receive minimum wage. Employers who fail to pay minimum wage face lawsuits in which the employee may recover the difference between what they were paid and the minimum wage, liquidated damages equal to the amount of unpaid minimum wage, and attorneys’ fees. Those lawsuits can be very costly, especially if more than one employee did not receive minimum wage. In California, the Minimum wage is $11 per hour for employers with 26 or more employees and $10.50 per hour for those who employ fewer than 26 employees. In the City of San Diego, the minimum wage is $11.50 per hour for all employers. Next year, the minimum wage for both California and San Diego will increase. At that time, California’s minimum wage may be larger than San Diego’s, but time will tell.

California requires a minimum of 24 hours of paid sick leave per year for all employees. Depending on how the employer implements its sick leave policy, employees can accrue more than 24 hours of sick leave in a year. In contrast, San Diego requires a minimum of 40 hours of sick leave and allows for accrual of additional sick leave hours, depending on the sick leave policy.

Employers need not offer vacation to California employees, but if they do, they must follow the rules they set up in vacation policies. Vacation is an earned wage which is used at a later time. Because it is a wage, unused vacation must be paid to the employee when the employee quits or is terminated.

Paid Time Off (PTO) normally describes a hybrid of leave time for personal use (often vacation) and sick leave as defined by the PTO policy. Now that California and San Diego require paid sick leave, most employers should reconsider PTO policies. Sick leave is not a wage, so when an employee stops working for an employer, the employer need not pay the accrued sick leave to the employee. When a PTO policy combines vacation with sick leave, all of the PTO, including any amounts that may be used for sick leave, are a wage that must be paid out during employment or at the end of employment when the employee has a PTO balance. Most employers should now have separate polices for vacation and sick leave.

Exempt employees are those employees who are paid salaries and perform the higher-level work of a company. Think of managers, administrators, and professionals. They must use independent discretion and judgment when performing their jobs and must be relatively free to work under general direction and guidelines. They also must be paid a salary that equals at least two times the minimum wage. The general rule for payment of salary is: exempt employees must be paid for each week in which they perform any work. An employer may deduct a full day of an exempt employee’s salary when the employee does not work an entire day for personal reasons or when the employee misses an entire day for sickness and has no accrued sick leave, assuming the employer has a bona fide sick leave policy. An employer may also have a policy that requires employees to use vacation when the employee misses work for personal reasons or sickness, when the employee has no paid sick leave remaining. If the employer does improper deductions from a salary, the employee may be reclassified as non-exempt, and the employer may owe back wages and face other employment law violations.

In previous interviews and blogs, I have discussed the new ABC test for independent contractors. For that reason, I will not explain the details of it here. The new test will undoubtedly require more independent contractors to be classified as employees. The main reason for this is the “B” prong of the three-part ABC test: “That the worker performs work that is outside the usual course of the hiring entity’s business.” Now, I believe, the drivers for Uber will definitely be employees of Uber, not independent contractors as Uber has argued. Many similar situations to Uber exist in the San Diego and California economies.

S. Ward Heinrichs, Esq.
Employment Law Office of Ward Heinrichs
4565 Ruffner Street, Suite 207
San Diego, CA 92111
858-292-0792
(858) 408-7543 (fax)