Presented by : Ryan h. nell , esq. rnell@pettitkohn | (858) 509-5690

1. Not Just a Cost of Doing Business:Avoiding Wage and Hour Lawsuits in the California Hospitality Industry Presented by: Ryan h. nell, esq.rnell@pettitkohn.com | (858) 509-5690

4. Requirements for Exemption • Salary Test • Employee must be paid a salary of at least twice the applicable state minimum wage for full-time employment • Be careful – the salary test requirement increases each time that the minimum wage increases • Duties Test • Employee’s job duties must satisfy one of the enumerated duties • Job duties must involve the use of discretion and independent judgment

5. California Minimum Wage

6. San Diego Minimum Wage *Beginning on January 1, 2019, increases to the San Diego minimum wage will correspond with the previous year’s increase, if any, in the Consumer Price Index. The above are presumed increases are based on historical data.

7. Salary Test

8. Executive Exemption • A person employed in an executive capacity means any employee: • Whose duties involve the management of the enterprise (or department or subdivision thereof) • Who customarily and regularly directs the work of two or more other employees therein; and • Who has the authority to hire or fire other employees or whose suggestions and recommendations as to the hiring or firing and as to the advancement and promotion or any other change of status of other employees will be given particular weight; and • Who customarily and regularly exercises discretion and independent judgment; and • Who is primarily engagedduties that meet the test of the exemption.

9. Administrative Exemption • A person employed in an administrative capacity means any employee: • Whose duties and responsibilities involve performance of office or non-manual work directly related to management policies or general business operations of his or her employer or his or her employer's customers • Who customarily and regularly exercised discretion and independent judgment; and • Who regularly and directly assists a proprietor, or an employee employed in a bona fide executive or administrative capacity, or • Who performs, under only general supervision, work along specialized or technical lines requiring special training, experience, or knowledge, or • Who executes, under only general supervision, special assignments and tasks, and • Who is primarily engaged in duties which meet the test for the exemption.

10. Professional Exemption • A person employed in a professional capacity means any employee who either: • Is licensed or certified by the State of California and is primarily engaged in the practice of one of the following recognized professions: law, medicine, dentistry, optometry, architecture, engineering, teaching, or accounting, or • Who is primarily engaged in an occupation commonly recognized as a learned or artistic profession and customarily and regularly exercises discretion and independent judgment

12. Dynamex Operations West Inc. v. Superior Court A worker is considered to be an independent contractor only if all three of the following factors are present: The worker must be free from the control and direction of the hiring entity in connection with the performance of the work (both under the contract and in fact); The worker must perform work that is outside the usual course of the hiring entity’s business; and The worker must be customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed by the worker for the hiring entity. If any of the above factors is not met, a worker is presumed to be an employee, and therefore must be compensated as such

14. Meal Breaks • An employer must make an unpaid meal break of at least 30 minutes available to an employee who works more than five hours per day. • Meal break must be taken before the completion of the employee’s fifth hour of work • Employees that work more than 10 hours in a day are entitled to a second meal break • Employee and employer may agree by mutual consent to waive a meal period when the employee: • Works between five and six hours in a day • Works between ten and 12 hours in a day (second meal period waived)

15. Brinker Restaurant Corp. v. Superior Court • According to the California Supreme Court, an employer “satisfies this obligation if it relieves its employees of all duty, relinquishes control over their activities and permits them a reasonable opportunity to take an uninterrupted 30-minute break, and does not impede or discourage them from doing so.” An employer is “not obligated to police meal breaks and ensure no work thereafter is performed.” (Id.) • An employee may voluntarily choose to delay or shorten a meal break

16. Rest Breaks • An employer must provide non-exempt employees with a paid 10-minute rest break for every four hours worked (or major fraction thereof) • As with meal breaks, an employer has no obligation to “police” rest breaks, but rather need only make them available.

17. Compliance Tips/Considerations • Options to Consider: • Implement meal break waivers for shifts between 5 and 6 hours in length • Have employees affirm at the end of each shift that all breaks have been taken • Only schedule shifts shorter than five hours • Require that employees to take all earned breaks • Automatically pay meal/rest break penalties for all “missed” breaks • Encourage employees to take breaks at the beginning of their shift

18. Ryan h. nell, esq.rnell@pettitkohn.com | (858) 509-5690 ANY QUESTIONS?