Cal-Peculiarities: How California Employment Law is Different 2022 Edition

360 | 2022 Cal-Peculiarities ©2022 Seyfarth Shaw LLP  www.seyfarth.com 16.2 Retention of Independent Contractors California businesses that must file federal Form 1099-MISC must give the EDD identifying information about individual independent contractors who perform work in California and receive payment exceeding $600 or contract for such a payment. The business must provide this information to the EDD within 20 days of either making payments totaling $600 or more or entering into a contract for $600 or more with an independent contractor in any calendar year, whichever is earlier. The EDD provides a downloadable form to record basic information about the business and the independent contractor, including taxpayer identification number and the dates of the contract’s beginning and end or when calendar year payments reach $600 . 13 Because the law aims to enhance enforcement of child support obligations, its requirements do not apply to independent contractors that are corporations, general partnerships, or limited liability businesse s. 14 Failure to timely report this information triggers civil penalties, just as with respect to the failure to report new hires (see § 16.1.1), and the penalties are higher if the business and the contractor conspired not to report. 16.3 Itemized Wage Statements 16.3.1 Items the wage statement must record General requirements. California employers must, when paying wages, provide employees with an “accurate itemized statement that states such items as “gross wages earned,” “total hours worked,” specified deductions, “net wages earned,” and so on . 15 E mployers need not report total hours worked by exempt employee s. 16 Piece-rates. Wage statements to piece-rate workers must disclose the number of piece-rate units and the piece- rate for all employees paid on that basis, as well as the total hours of compensable rest and recovery periods, the rate of compensation for those periods, and the gross wages paid for rest and recovery periods during the pay period. In addition, if the employer does not pay a piece-rate employee a base hourly rate (of at least minimum wage) for all hours worked, then the employer must separately record the total hours of “nonproductive” (non- piece-rate) time, the rate of compensation for such hours, and the gross wages paid for those hours during the pay period . 17 Employment agencies. Farm labor contractors that employers use must include in the itemized statement the name and address of the legal entity that secured the employer’s service s. 18 Temporary services employers must include the rate of pay and the total hours worked for each temporary services assignment . 19 Paid sick leave balances. Employers must show paid sick leave balances for employees on their itemized wage statements or in a separate document presented contemporaneously (see § 2.14.1). Meal and rest and recovery pay. Must wage statements record premiums paid for unprovided meal or rest or recovery breaks? One might think that the correct answer is No, because premium pay is not an “earned wage.” In 2018 the California Supreme Court accepted a referral from the Ninth Circuit that raised this issue, but, because of intervening developments, never reached the issue . 20 In 2019 the Court of Appeal, in Naranjo v. Spectrum Security Services , decided that an employer was not liable for wage statements that failed to record meal premium pay. The Court of Appeal noted that the employer’s obligation is only to state “wages earned” and reasoned that the extra hour of pay owed for failing to provide breaks is not an amount earned by performing labor but rather is a statutory remedy for employer conduct . 21 T he California Supreme Court in Naranjo , however, issued a 2022 decision that upset employer expectations. The Supreme Court departed from Court of Appeal opinions to hold that (1) meal premium pay is an earned wage for wage-statement purposes and (2) wages earned must be reported on a wage statement regardless of whether they have been paid . 22