Enforcement Policy and Interpretations Manual

The 2002 Update Of The DLSE

Enforcement Policies and Interpretations Manual (Revised)

The Division of Labor Standards Enforcement (DLSE) Enforcement Policies and Interpretations Manual summarizes the policies and interpretations which DLSE has followed and continues to follow in discharging its duty to administer and enforce the labor statutes and regulations of the State of California.

Lilia Garcia-Brower, State Labor Commissioner

AUGUST, 2019

DIVISION OF LABOR STANDARDS ENFORCEMENT POLICIES AND INTERPRETATIONS MANUAL

TABLE OF CONTENTS

1. INTRODUCTION ............................................................................................................................. 1-1 2. WAGES ............................................................................................................................................ 2-1

"Employer", Defined................................................................................................................... 2-1 "Wages", Defined ....................................................................................................................... 2-1 Piece Rate Or "Piece Work" ....................................................................................................... 2-2 Commission ................................................................................................................................. 2-2 Bonus Defined.............................................................................................................................. 2-3 Status Of Wages .......................................................................................................................... 2-3 Extension Of Wage Definitions To Public Employees ............................................................. 2-4 3. WAGES PAYABLE ON TERMINATION....................................................................................... 3-1 Labor Code ? 201 ? Discharge ................................................................................................... 3-1 Layoff, When Discharge ............................................................................................................. 3-1 Sale Of Business Constitutes Discharge .................................................................................... 3-1 Motion Picture Workers' Exception ........................................................................................... 3-2 Print Shoot Employees Exception .............................................................................................. 3-2 Oil Well Drilling Workers' Exception ........................................................................................ 3-2 Professional Baseball and Live Theatrical Or Concert Events.................................................... 3-2 Labor Code ? 202 ? Quit ............................................................................................................ 3-2 "For A Definite Period", Defined ................................................................................................ 3-2 Payment By Mail ......................................................................................................................... 3-2 Extension of Coverage of Wage Statutes to Some Public Employees ........................................ 3-3 Temporary Services Employees................................................................................................... 3-3 4. PENALTY FOR FAILURE TO PAY WAGES ON TERMINATION............................................ 4-1 "Willfully", Defined.................................................................................................................... 4-1 "Good Faith Dispute", Defined................................................................................................... 4-2 Payment By Mail.......................................................................................................................... 4-2 "Any Wages"............................................................................................................................... 4-2 "Action", Defined ....................................................................................................................... 4-3 Payment Of Wages Not Calculable Until After Termination ..................................................... 4-3 Labor Code ? 203.1 ? Civil Penalty For Payment With Non-Sufficient Funds Instrument ...... 4-3 5. PAYMENT OF REGULARLY SCHEDULED WAGES ................................................................. 5-1 Payment Of Overtime Wages, Time For .................................................................................... 5-1 Payment Of Bonus, Commission, Or Other Extraordinary Wages ............................................ 5-2 Payment At Central Location, Special Rules .............................................................................. 5-2 Commission Wages ..................................................................................................................... 5-2 Executive, Administrative Or Professional Employees, Special Rules ..................................... 5-3 Commissioned Vehicle Salespersons .......................................................................................... 5-4 Agricultural And Household Occupations Receiving Room And Board ................................... 5-5 Farm Labor Contractors' Employees .......................................................................................... 5-5 Most Agricultural Employees ..................................................................................................... 5-5 6. COMPENSATING TIME OFF, Caveat Regarding Labor Code ? 204.3 vs. ? 513.......................... 6-1 7. WAGE PAYMENT -- SPECIAL CONDITIONS ........................................................................... 7-1 Conceded Wages Must Be Paid Without Condition.................................................................... 7-1 Release Of Wage Claim Prohibited ............................................................................................. 7-1

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DIVISION OF LABOR STANDARDS ENFORCEMENT POLICIES AND INTERPRETATIONS MANUAL

TABLE OF CONTENTS (Cont'd)

7. WAGE PAYMENT -- SPECIAL CONDITIONS (Con t'd.)

Settlement By DLSE ....................................................................................................................... 7-2

Payday Notice Required .................................................................................................................. 7-2

Place Of Payment ............................................................................................................................ 7-2

Payment In Strike Situation ............................................................................................................. 7-3

Payment Of Wages Covered By Collective Bargaining ................................................................. 7-3

Wage Payment Where Holiday Occurs ........................................................................................... 7-3

Private Agreement May Not Contravene Labor Code Pay Provisions ........................................... 7-4

8. PENALTIES TO EMPLOYEES OR THE STATE .............................................................................. 8-1

Untimely Payment Of Wages During Course Of Employment ...................................................... 8-1

9. METHOD OF PAYMENT OF WAGES................................................................................................ 9-1

Wages Must Be Paid In Cash Or Negotiable Instrument Payable In Cash .................................... 9-1

Requirements Regarding Negotiable Instruments .......................................................................... 9-1

Payment By Scrip Specifically Prohibited ...................................................................................... 9-2

Payment To ERISA Trust Not Subject To Penalty ......................................................................... 9-2

Limited Exceptions To Payment In Cash Or Negotiable Instrument ............................................. 9-3

Payment Of Wages Due Deceased Employees ............................................................................... 9-4

10. FAILURE TO PAY WAGES, WITHHOLDING WAGES ................................................................. 10-1

Refusal To Pay Wages ................................................................................................................... 10-1

Employer Prohibited From Recovering Back Wages Paid To Employee ................................... 10-2

Criminal Sanctions For Secretly Paying Less Than Required By Statute Or Contract ................ 10-2

11. DEDUCTIONS FROM WAGES ......................................................................................................... 11-1

Legal Deductions ........................................................................................................................... 11-2

Recovery Of Wages Paid, Illegal .................................................................................................. 11-2

Self-Help By Employer To Recover Debt From Wages Prohibited ............................................. 11-3

Losses Which Are Result Of Simple Negligence Or Cost Of Doing Business ............................. 11-3

Not Recoverable By Deduction From Wages ............................................................................... 11-3

Losses Suffered By Employer As Result Of Dishonest Or Willful Act Of Employee ................ 11-3

Deductions For Loans Made To Employees ................................................................................. 11-4

Deductions Must Be For Direct Benefit Of Employee ................................................................. 11-5

Deductions Allowed By IWC Orders, Caveat .............................................................................. 11-5

Deductions For Tardiness .............................................................................................................. 11-6

12.

ENFORCEMENT AND COVERAGE OF WAGE STATUTES ....................................................... 12-1

Claimants Have Right To Private Action ...................................................................................... 12-1

Exemptions For Public Employers ................................................................................................ 12-1

13.

MEDICAL OR PHYSICAL EXAMINATION COSTS .................................................................... 13-1

14.

WAGE STATEMENT REQUIREMENTS ........................................................................................ 14-1

Damages and Penalties For Failure To Provide Proper Wage Statement ................................... 14-6

15.

VACATION WAGES ......................................................................................................................... 15-1

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DIVISION OF LABOR STANDARDS ENFORCEMENT POLICIES AND INTERPRETATIONS MANUAL

Prorata Vacation ............................................................................................................................ 15-1 Statute Does Not Require Employer Provide Vacation ................................................................ 15-1 Probation Periods ........................................................................................................................... 15-1 Use-It-Or-Lose-It Policies Are Not Allowed ................................................................................ 15-1 Earnings Must Be Proportional ..................................................................................................... 15-2 ERISA Preemption ............................................................................................................... 15-2, 15-3 Sale Of Business Constitutes Discharge ...................................................................................... 15-4 Vacation vs. Other Leave Benefits ................................................................................................ 15-4 16. SEVERANCE PAY PROVISIONS .................................................................................................... 16-1 Determining ERISA Coverage Of Severance Plans ............................................................. 16-1,16-2 17. RETALIATION AND DISCRIMINATION -- PROTECTED RIGHTS .......................................... 17-1 Enforcement Jurisdiction Of DLSE ............................................................................................... 17-1 Examples of Prohibited Retaliation ............................................................................................. 17-10 Filing Or Threatening To File With Labor .................................................................................. 17-10 Initiating Action or Notice Pursuant to Labor Code ?2699 ......................................................... 17-10 Family Members Protected, Protection for Pre-emptive Retaliation .......................................... 17-11 Penalties to Employees ................................................................................................................ 17-11 California Equal Pay Act ............................................................................................................. 17-11 Disclosure Of Information To Government Authorities or Employer ......................................... 17-13 Filing Safety Complaint Or Refusal To Work In Unsafe Conditions ......................................... 17-12 18. ASSIGNMENT OF WAGES ............................................................................................................... 18-1 19. GRATUITIES ? TIPS ........................................................................................................................... 19-1 Tip Pooling Limited ...................................................................................................................... 19-2 Service Charge May Be a Gratuity .............................................................................................. 19-3 No Cost May Be Imposed For Recovery For Tips Left On Credit Cards ................................... 19-4 20. EMPLOYEE BONDS ? REQUIREMENTS AND LIMITATIONS .................................................. 20-1 21. CONTRACTS AND APPLICATIONS FOR EMPLOYMENT ......................................................... 21-1 Employee Right To Copy Of Contract .......................................................................................... 21-1 Polygraph And Similar Tests Prohibited ....................................................................................... 21-1 22. PURCHASES BY EMPLOYEES ? PATRONIZING EMPLOYER .................................................. 22-1 Illegal To Require Payment To Apply For Employment .............................................................. 22-1 23. CONTRACTS AGAINST PUBLIC POLICY...................................................................................... 23-1 24. SOLICITATION OF EMPLOYEES BY MISREPRESENTATION ................................................. 24-1 25. CONSTRUCTION INDUSTRY CONTRACTORS' REQUIREMENTS .......................................... 25-1 Direct Contractor Liability ? Labor Code ? 218.7 ..........................................................................25.1 26. EMPLOYEE PRIVILEGES AND IMMUNITIES .............................................................................. 26-1 27. PROHIBITED OR LICENSED OCCUPATIONS, SUCCESSORSHIP, CAL WARN ACT ........... 27-1 28. INDEPENDENT CONTRACTOR vs . EMPLOYEE ......................................................................... 28-1 Burden Of Proof ............................................................................................................................ 28-1 Control As A Factor ..................................................................................................................... 28-1

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DIVISION OF LABOR STANDARDS ENFORCEMENT POLICIES AND INTERPRETATIONS MANUAL

TABLE OF CONTENTS (Cont'd)

28. INDEPENDENT CONTRACTOR vs . EMPLOYEE (Cont'd.)

Economic Realities Test ............................................................................................................... 28-2

Services For Which Contractor's License Is Required ................................................................. 28-3

29. OBLIGATIONS OF EMPLOYERS ..................................................................................................... 29-1

Obligation To Indemnify Employee For Expenses Or Losses ....................................................... 29-1

Labor Code ? 2810.5 Written Notice to Employees Upon Hire and for Changes ......................... 29-3

30. HEALTHY WORKPLACES, HEALTHY FAMILIES ACT OF 2014 ............................................... 30-1

31. CONTRACTS ? GENERALLY ........................................................................................................... 31-1

32. CONTRACT INTERPRETATION - GENERALLY .......................................................................... 32-1

33. CONTRACTS, IMPLIED-IN-LAW (QUASI-CONTRACTS) .......................................................... 33-1

34. COMMISSION WAGE PROVISIONS MUST BE IN WRITING...................................................... 34-1

Bonus Plan Distinguished .............................................................................................................. 34-1

Draws Against Commission .......................................................................................................... 34-2

Forfeitures In Commission Plans ................................................................................................... 34-2

Commission Forfeitures Found To Be Illegal ............................................................................... 34-3

35. BONUSES ........................................................................................................................................... 35-1

Voluntary Termination Before Vesting ......................................................................................... 35-1

Illegal Conditions ........................................................................................................................... 35-2

Discretionary Bonus ...................................................................................................................... 35-2

Termination Of Employment ......................................................................................................... 35-2

36. EFFECT OF ARBITRATION AGREEMENTS ................................................................................. 36-1

Collective Bargaining Agreements With Arbitration Clauses ..................................................... 36-1

Federal Arbitration Act Restrictions .............................................................................................. 36-2

Revocable Arbitration Agreements ............................................................................................... 36-2

Current Law Regarding Arbitration Clauses ................................................................................. 36-3

37. LEGAL ENTITIES, JOINT EMPLOYER, CLIENT-EMPLOYER, JOINT LIABILITY ................ 37-1

Liability for Other Person under Labor Code ?558 and 558.1....................................................... 37-4

38. BANKRUPTCY ................................................................................................................................... 38-1

39. ASSIGNMENTS FOR BENEFIT OF CREDITORS, RECEIVERSHIPS, ETC. .............................. 39-1

40. BULK SALE TRANSFERS, LIQUOR LICENSE TRANSFERS, ETC ............................................ 40-1

No Limit On Wage Preference ...................................................................................................... 40-2

Processing A Claim ....................................................................................................................... 40-2

Liquor License Transfers ............................................................................................................... 40-2

41. TIME RECORD REQUIREMENTS ................................................................................................... 41-1

42. RIGHT TO INSPECT PERSONNEL FILE ......................................................................................... 42-1

43. ENFORCEMENT OF WAGES, HOURS AND WORKING CONDITIONS REQUIRED

BY THE INDUSTRIAL WELFARE COMMISSION ORDERS ........................................................ 43-1

Any Exemption From 8-Hour Norm Must Be Clearly Provided ................................................. 43-2

IWC Orders Not Pre-Empted By FLSA ...................................................................................... 43-2

Coverage Or Applicability Of IWC Orders .................................................................................. 43-2

Definition Of Federal Enclave ..................................................................................................... 43-3

Employment By Indian Tribes ..................................................................................................... 43-3

Enforcement Of Contractual Rights On Federal Enclave ........................................................... 43-5

JUNE, 2002

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