Good morning, and welcome to the latest edition of my Monday Morning Briefing, and nearing the end of the third week of war in Ukraine.  If you want to support the refugees in Poland who have been impacted by this war and enjoy some beautiful and delicious hamantaschen in honor of Purim this week, bakeries all over city, nation and world are participating in #Hamantaschen_for_Ukraine.   You can find bakeries close to your home, or there are ones that ship. 

LOS ANGELES AND OTHER CITIES IN CALIFORNIA LOOKING TO ROLL BACK MORE COVID RESTRICTIONS AS NUMBERS CONTINUE TO DECLINE

With the number of COVID-19 cases continuing to drop, the Los Angeles City Council members voted 12 – 0 last Wednesday to drop the ordinance that went into effect last November, requiring many indoor establishments such as restaurants, bars, hair salons, gyms and movie theatres to require vaccines for patrons.  The ordinance for mass outdoor events would be similarly repealed.   The rule for bars, nightclubs and wineries has already been repealed.  The official rescission should come any day (I’m checking the news as I am writing this article just to ensure it hasn’t already happened this morning). 

San Francisco and Berkeley have all issued similar statements that they, too, are looking to roll back their vaccination requirements.  Contra Costa County has already repealed its requirement back in February.

Only West Hollywood remains steadfast in its commitment to retain vaccination requirements at the moment. 

WAGE & HOUR PRIMER: SECTION 2802 + RISING GAS PRICES

Now that the pandemic is finally waning, we employment lawyers get to return to opining about the subjects we truly love, such as parsing the sections and subsections of the California Labor Code.  Too often, trends in the real world come back to haunt employers.  The pandemic created all sorts of new, fun areas of exposure for us in the employment law sector.  So, too, is our current global situation, to the extent that it is wreaking havoc with gas prices.  Why do gas prices impact employer liability? 

Because employers are required to reimburse their employees for their out of pocket costs to operate their vehicles when those vehicles are being used for work purposes, under California Labor Code Section 2802.  And when gas prices go up, employees who have not been adequately reimbursed for this expense suddenly become acutely aware of their rights, even when their employers often are not.

So let’s discuss exactly what your obligations are to pay for the costs of your employees’ drive time.

First, before you all start to panic, you are NOT required to pay for your employee to COMMUTE to work.  So let’s define a “commute.”  A “commute” is a drive to and from a base of an employee’s operations, such as an office.  Or, if an employee works at several locations throughout the day, the commute would be to the employee’s first job of the day, or back home from the employee’s last job of the day. 

So, a true COMMUTE is not compensable, either in time or miles.  BUT (there is always a but in law), there are many things that can occur during this drive to change it from being a true commute to a drive that needs to be compensable, both in wage and mileage.  First, if the employee is carrying something related to work with them back and forth, company materials, boxes, inventory, tools, etc, it is arguable that the employee is doing more than just driving.  Now they are arguably transporting work materials, potentially making the drive compensable. 

Next, if a co-worker is also in the car.  Not in the sense of two friends commuting together, but if one employee is tasked to stop and pick up another employee on the way into work.  At that point, the drive immediately becomes work-related and is compensable. 

Here is another problem.  What if the employee previously worked in the office, but now is working remotely.  But maybe the employee reports to the office very “occasionally,” like for an all hands meeting.    Suddenly, that drive to work may no longer be a commute.  It may depend on where their “base” is seen to be.  If they are working flex time, partly at work and partly at home, that’s probably okay.  But again, the pandemic has changed much in this world.

Third, if an employee is tasked to stop and run and errand, to or from work.  Or at lunch (which, of course, could also violate a lunch break for a non-exempt employee).  When I ask this question of my clients, I often see faces go white.  What about employees who drop the Fed Ex on the way home, or stop at the bank.  “But it’s not even out of their way!”  “The bank is a block from their house!”  Yes, and that means that entire drive TO the bank, that is a block from their house, is work related, for both time and mileage.   Or maybe you have someone just run product quickly between a few stores.  All of these seem like nothing little errands.  Maybe you shove a few dollars into someone’s hands out of petty cash.  But are you tracking it?  Do you have forms?  A process? 

Labor Code Section 2802 requires that employees be reimbursed for all reasonable expenses they incur during employment.  With regard to mileage, the California Labor Commissioner looks to the IRS rate as the default for a reasonable reimbursement rate.  Now keep in mind that the IRS sets that rate as the maximum you can pay an employee without it being viewed as income to the employee.   And in other times, I have suggested to my clients that if they thought the IRS rate was probably higher than what their employees were out of pocket given gas prices, maintenance, license and registration, insurance and depreciation for the kinds of cars and kinds of driving their employees were doing, they should do some math and come up with a different rate and challenge it.  It would probably have to be darn close, though.

But,  now?  Have you driven by a gas pump lately?  I mean, I drive a Tesla, and even I know that gas prices are out of control.   The IRS rate for 2022 is 58.5 cents.  To be candid, I have to think they will be raising it mid-year (they have done that in other years where we have had obscene rate hikes.)

So let me bottom-line this for you.  If you are not paying for every mile that your employees are driving for each and every work related drive, at the absolute maximum rate of 58.5 cents, you are sitting on a time bomb.  And if you have large forces of employees out their driving, that is a very large bomb.  Because this is going to be a button pusher with your employees right now.  And this is easily a PAGA issue or class action.  And in a PAGA suit, it’s a per payroll violation, $200 per payroll period.  And even if Viking River Cruises comes down in our favor, individual employees can come back in groups and sue under PAGA.  PAGA doesn’t go away even if our class action waivers are upheld.  We have lawyers out there threatening to go find hundreds of our employees, one by one.  We still have to clean up our acts.

Don’t be cheap about this.  Not now.   These pennies you are shaving add up to people, and rightly so when gas is nearly $7 a gallon.   Do the right thing. 

Next week we will talk about Section 2802 and cell phones!  (a little birdy told me some of you are group texting your employees!)

Stay safe and Happy Purim!

#StandWithUkraine

#Hamantaschen_for_Ukraine