Sacramento Employment Law Blog

Running a business can be extremely rewarding for many business owners but the responsibilities, especially the financial ones, can sometimes be overwhelming. The good news is that business owners can minimize their business taxes.

The Internal Revenue Service regulate independent contractors differently from employees. Whether you hire people as independent contractors or as employees will affect the amount of taxes you will pay and the amount of taxes you withhold from the employee’s paycheck. This also has an impact on any additional costs your business must bear, any documents and information the person or people you hire must provide you, and tax documents you must give them.

The factors that separate an independent contractor from an employee are threefold. First, if the business has the right to direct or control how the work is done through instructions, training or other means, Behavioral Control exists and the worker is more likely to be deemed an employee. Second, the person is an employee where the business can direct or control the financial or business aspects of his or her job. This is because the business exercises Financial Control over the worker.

And finally, the Type of Relationship helps determine whether or not the worker is an employee. In other words, the more a business has the right to control or direct on what is to be done and how it is done, the more the worker is likely to be considered an employee. If the business can only control the result of the work done, as opposed to the means and the methods of accomplishing the result, then the worker is more likely to be deemed an independent contractor.

In short, knowledge of the Tax Laws applicable to business payroll taxes can reduce numerous business costs and expenses. However, misclassification of workers as independent contractors can end up with substantial tax bills, penalties for failing to pay employment taxes and failing to file required tax forms. Therefore, speaking with a tax professional can help you assess your case more effectively.

If you are seeking tax advice or need assistance with a tax problem, contact the Law Office of Bowman and Associates to discuss your legal options.

San Francisco Superior Court Judge John K. Stewart granted final approval to a settlement on July 30, 2009 in a class action suit brought on behalf of some 700 current and former Pacific Gas and Electric Company (PG&E) employees in California, for unpaid overtime. The settlement will mean that $17,250,000 will be paid out to compensate the employees for their back pay and attorneys’ fees and will require that PG&E pay the majority of the covered employees overtime compensation in the future.

At issue was the classification of the employees, who said that PG&E considered some employees exempt from overtime pay. The employees also alleged that PG&E violated Business and Professions Code §17200. The trial court initially denied class certification, but plaintiffs prevailed on appeal as three subclass of employee were certified pursuant to the job duties test.

While many employers in overtime cases reduce employees’ base pay when converting them from salaried to hourly pay in order to compensate for the availability of overtime pay, this settlement prohibits PG&E from doing so.

Contact Kara Keister at the Law Office of Bowman and Associates today at (916) 923-2800 to pursue your employment related claims.

Three former Home Depot assistant managers claim they were denied overtime pay. Home Depot stores failed to pay assistant managers the U.S. Department of Labor mandated overtime wages.

Chicago, IL—Three former employees of the U.S.-based home improvement company, Home Depot, have file a lawsuit claiming the retailer failed to pay earned overtime wages for the past three years. The group of former assistant managers at an Illinois Home Depot store filed the lawsuit on Tuesday, July 21, 2009 in the Circuit Court of Cook County, as reported by Reuters.

The three former assistant managers accused Home Depot for knowingly misclassifying managers as being exempt from overtime. According to the lawsuit, the plaintiffs claim they were illegally deprived of earned wages when the retailer required them to work up to 55 hours a week. They claim they were never issued payment for the time they worked over 40 hours. The claimants also accused Home Depot of having policies, which terminate assistant store managers and reduce their salaries if they fail to work the required 11-hour minimum shift in which they were routinely scheduled. The plaintiffs stated this is a regular practice at the 57 Illinois Home Depot centers, which affected all of their assistant managers within the last three years. According to the U.S. Department of Labor (DOL) http://www.dol.gov and the Fair Labor Standards Act (FLSA) “employees must receive overtime pay for hours worked in excess of 40 in a workweek of at least one and one-half times their regular rate of pay”. The former employees are seeking class action status. Home Depot stated they could not comment on this matter because they have yet to see the lawsuit.

If you or a loved one has experienced a similiar situation to this, you may be entitled to compensation. Contact the experienced employment law attorneys at The Law Office of Bowman and Associates to discuss your legal options.

Kansas delivery drivers sue Pizza Hut claiming franchise violated fair wage laws.

Kansas City, KS–Delivery drivers, employed by Pizza Hut, represented by employment law attorneys filed a lawsuit against the national pizza chain alleging unfair wage practices. The Pizza Hut delivery drivers assert they received income below the required federal minimum wage, as reported by The Kansas City Star.

The lawsuit, which was filed in Kansas City in May, states even though delivery drivers are paid hourly wages, the income doesn’t cover the cost of gas and usage of the employee’s vehicle to perform deliveries. The hourly wage does not cover work-related cell phone usage and buying and cleaning of worker’s uniforms Pizza Hut requires. The cost to employees to work at the Pizza Hut franchise causes employee wages to fall well below minimum wage. Pizza Hut has attempted to seek the dismissal of the unfair wages lawsuit, stating the company was operating within the laws and guidelines of the federal Fair Labor Standards Act, which permits a reasonable approximation of expenses.

Pizza Hut, which is owned by NPC International Inc., of Oakland Park, holds claim to the largest Pizza Hut franchise in the world. NPC manages 1,161 Pizza Hut restaurants in 28 states. In Colorado, similar lawsuits have been filed recently against another Pizza Hut franchisee, a Papa John’s franchisee, and Pizza Hut Inc. Domino’s Pizza in Minnesota and New York have been named in federal wage violations legal actions.

If you feel that you or someone you know has been treated unfairly on the job, contact the experienced employment law attorneys at the Law Offices of Bowman and Associates to discuss your legal options.

On January 29, 2009, the Lilly Ledbetter Fair Pay Act (“Ledbetter Act”) was signed into law by President Obama. This law drastically changes litigation of pay discrimination because of the following:

• The statute of limitations is reset for filing a wage claim each time an employee receives a paycheck, benefits, or “other compensation.” This allows the employee to sue for alleged discrimination based on when she is affected rather than when the determination was made.
• It applies to alleged discriminatory pay practices based on all categories, including age, color, race, gender, disability, national origin, and religion.
• Discreet “decisions” regarding compensation, as well as any “other practice” that affects an employee’s compensation is now also included in the definition of unlawful employment practices.
• The statute extends the applicability of the new law back to May 27, 2007.

In 2007, the United States Supreme Court decided Ledbetter v. Goodyear Tire & Rubber Co., 550 U.S. 618 (2007) which in turn, prompted the passing of the Ledbetter Act. Plaintiff Lilly Ledbetter worked for Goodyear from 1979 to 1998. Upon retirement, she filed a gender discrimination claim against Goodyear claiming that she received smaller annual pay increases than her male coworkers throughout her employment. Initially, a jury found that Goodyear’s pay practices were discriminatory. The Supreme Court however, held that the statute of limitations regarding this matter had passed. The Court interpreted the law under Title VII to state that the time at which the discriminatory pay decision is made is when the time for filing an equal pay claim begins to run, rather than each time an employee receives a paycheck, which is when the decision affects the employee.

The Ledbetter Act reverses the 2007 Supreme Court decision as well as amends Title VII, the Americans with Disabilities Act of 1990 (ADA), the Rehabilitation Act of 1973, and the Age Discrimination in Employment Act of 1967 (ADEA). It specifies that unlawful discrimination occurs when:

• “A discriminatory compensation decision or other practice is adopted.”
• “When an individual becomes subject to a discriminatory compensation decision or other practice.”
• “When an individual is affected by application of a discriminatory compensation decision or other practice, including each time wages, benefits, or other compensation is paid, resulting in whole or part from such a decision or other practice.”

With the passing of the Ledbetter Act, employers can be subject to pay discrimination liability for alleged discriminatory decisions made years earlier, based on whether they have been continuing to compensate an employee. Regarding Title VII, the ADA, the Rehabilitation Act, and the ADEA, the Act is not limited to pay claims based solely on gender discrimination, but also to pay discriminations based on race, national origin, religion, and disability.

The Ledbetter Act is written in especially broad language that expands the potential group of plaintiffs in numerous other manners. It re-activates the limitations period each time an employee receives a paycheck, benefits or when other compensations are paid. Benefits and other compensations could include things such as health benefits, paid leave, bonuses, stock options, and pension payments. However, the Act specifies it is not intended to “change current law treatment of when pension distributions are considered paid.” This language protects the rule that “pension distributions are considered paid upon entering retirement and not upon the issuance of each annuity check.” In other words, it will not allow employees to rely on post-retirement pension payments to restart the time limitations beyond the end of the employment relationship. See H.R. Rep. No. 110-237, at 18 (2007), citing Florida v. Long, 487 U.S. 223, 239 (1998); Maki v. Allete, Inc., 383 F.3d 740, 744 (8th Cir. 2004).

Discriminatory compensation decisions as well as “other practices” are prohibited by the Act, which suggests that any practice that affects compensation may generate a claim, not merely discreet decisions. Senator Arlen Specter proposed that the language “other practices” be stricken from the Act, arguing it would “promote an enormous amount of litigation as to whether ‘other practices’ included such items as promotion, hiring, firing, training, tenure, [or] demotion.” 155 Cong. Rec. S755 (daily ed. Jan 22, 2009) (statement of Sen. Specter). Senator Barbara Mikulski, who sponsored the Senate bill, discarded Senator Specter’s amendment because it did not cover “job evaluations,” “classifications” and other “personnel actions that still result in discriminatory wages.” 155 Cong. Rec. S758 (daily ed. Jan 22, 2009) (statement of Sen. Mikulski, in effect confirming that the Act’s broad language intentionally includes a wide variety of practices).

Under the previous law, the recovery of back pay was limited to two years preceding the filing of a discrimination charge under Title VII. The Ledbetter act does not change that. It also does not prevent an employer from contending that an employee’s claim is time-barred under the equitable doctrines of waiver, estoppels, or laches. 155 Cong. Rec. S754 (daily ed. Jan 22, 2009) (statement of Sen. Mikulski).

Reasons for compensation decisions that are made are essential for employers to document and maintain, as well as retaining those documents and the data supporting pay decisions. This can become expensive and troublesome over time, but technology vendors are progressively offering practical resolutions, and the benefits may prove to outweigh the costs if, long after decisions are made, employees are filing suit. Employers should consider these factors while making compensation decisions and assessing their maintenance programs and procedures.

Regarding litigating claims involving compensation discrimination, the Ledbetter Act restores common sense to the law. Discriminatory pay practices are continuing and increasing injuries to the American workforce. Merely because the discrimination occurred 180 or 300 days before the plaintiff filed, it does not mean the harm has grown obsolete. For plaintiffs currently affected by compensation discrimination, the Ledbetter Act allows them to rectify the harm that was done, while employer liability for back pay is limited to the two years previous to the filing of the claim.

Wage and compensation claims can be very confusing and failure to follow the specific procedures could cost you, as an employee or as an employer. Contact an experienced Employment Law attorney in Sacramento if you have any questions about wages, hours or overtime pay.

A recent lawsuit filed by Carter Stephens, a former firefighter for the city of Pasadena, alleging that he was forced into retirement after complaints over racial harassment at his job, was resolved by the city for $1.17 million. According to his lawsuit, Stephens faced racial discrimination such as a swastika drawn on his equipment and references to the “N” word, as well as fellow firefighters leaving blood, urine, and feces in his bedding. Stephens complained routinely about these incidents, but no action was taken, and Stephens’ suit alleges that his retirement was forced by the inaction.

A federal jury awarded $1.2 million to a group of teachers who filed a lawsuit against the Elizabeth Forward School District in Allegheny County, Pennsylvania claiming they were discriminated against because of their ages. Their lawsuit claimed that they were hired at the district’s lowest pay grade despite teaching experience, while younger teachers were hired at higher salaries. The jury also found that the discrimination was “willful,” which could potentially double the portion of the award that compensates the teachers for unearned back pay.

If you or a loved one have been discriminated against on the basis of your age, religion, race or any other federally protected status, contact an experienced discrimination attorney in Sacramento today for your free initial consultation.