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No Wage Law Exemption for Religious and Charitable Institutions

March 12, 2000

Q With the changes in overtime laws Jan. 1, how are churches, their preschools and school staffs affected? Do they fall under the same rules as secular businesses? How would teachers and other contract workers be treated? Our church and school is very concerned because of the added expense.

--R.S., West Covina

*

A Religious and charitable institutions have long been covered by California's minimum-wage and overtime requirements.

Under the new law, churches and their schools along with most businesses must return to the overtime practices that were legally required before 1998--paying nonexempt employees wages of time and a half after eight hours in a day and 40 hours in a week and double time after 12 hours in a day.

As before, credentialed teachers are exempt from these overtime requirements because they are classified as professionals.

But there is a twist under the new law. An exempt employee must now be paid a monthly salary that is at least twice the state minimum wage for full-time employment. Because the minimum wage is $5.75 an hour, a teacher must be employed full time and paid at least $1,993 a month to qualify for the exemption.

As a result, the state labor commissioner is taking the position that part-time or hourly professionals, including teachers, can no longer be considered exempt employees and must be paid daily and weekly overtime.

The new law is not applicable to public school teachers and other governmental employees. Their wages and overtime rights are governed by a different set of laws.

--Joseph L. Paller Jr.

Union, employee attorney

Gilbert & Sackman

Pregnancy Leave Law Allows Two Exceptions

Q. We own a small but profitable mail-order company and pay three people to run it.

Two work part time, primarily out of their homes, providing various support services. They are paid as independent contractors. The third works full time on the premises and is responsible for almost all the day-to-day operations. This person is paid as an employee through an employee leasing company.

Until now, this leasing arrangement has worked well, relieving us of a lot of paperwork and legal concerns, while providing the employee access to a credit union, 401(k) plan, medical insurance and other things that a one-person shop normally would not provide.

One month after the full-time employee was hired, she became pregnant. We have been informed by her and the leasing company that she is entitled to as much as four months of pregnancy disability leave under California law, and that we must hold her job for her during that time.

This is a tremendous hardship for such a small company. We were under the impression that pregnancy leave didn't apply to companies with fewer than five employees. But the leasing company says we must comply because it has more than five employees. Is this true?

--W.B., West Los Angeles

*

A. It is true that the law requiring an employer to provide leaves of absence for employees disabled by pregnancy, childbirth and related medical conditions applies only to employers with five or more employees. This law requires the employer to hold the employee's job for the period of time the employee actually is disabled--to a maximum of four months.

At the end of the leave period, the employee is entitled to be reinstated to the job she held before the leave, with two exceptions:

* She would not otherwise have been employed in the same position for legitimate business reasons unrelated to pregnancy disability leave.

* In preserving the job by leaving it unfilled or hiring a temporary employee, the employer's ability to operate the business safely and efficiently would have been substantially undermined.

This law applies to the leasing company because it has more than five employees. Though it seems that this law does not apply to your company, it is difficult to understand why it would be a hardship for you to fill the position with a temporary employee during the leave.

--Deborah C. Saxe

Management attorney

Heller Ehrman White & McAuliffe

Late-Paying Employer Could Face Penalties

Q. I work for a small business in a small town where jobs are not easy to come by.

We are supposed to be paid on the 5th and 20th of the month, but our checks are almost always late--sometimes by as much as a week. Then the checks frequently bounce.

The employer has a long list of excuses and does not think it's a big deal. If we try to talk to her about it she cuts back our hours as punishment.

--W.D., Bishop, Calif.

*

A. State laws govern when wages must be paid to employees. Most nonsalaried employees, for example, must be paid at least twice each month on a regularly designated payday.

If an employer fails to comply, these workers may have a claim for breach of contract or fraud. The employer could also face criminal penalties.

The labor commissioner also could impose civil penalties of $50 each time an employer fails to pay an employee. For any willful and intentional violation after that, the penalty increases to $100 for each employee, plus 25% of the amount that was unlawfully withheld. Failure to pay wages promptly may also be a violation of the federal Fair Labor Standards Act.

It is illegal for the employer to retaliate against an employee who complains about such violations. It is important to document such complaints in writing or by filing a complaint with the California Division of Labor Standards Enforcement.

--Don D. Sessions

Employee rights attorney

Mission Viejo

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