07 Nov 2016 Employment Law Issues in Food, Beverages & AgTech
Employers must comply with both Federal and state employment laws and regulations. Most companies face the challenge of keeping up to date with the ever changing landscape of employment laws and regulations which typically vary from state to state. While there are a host of employment law issues that companies must be aware of and comply with, trends show that certain compliance issues present a greater risk of litigation (including class action litigation) than do others. The following is a summary of some of the employment law compliance issues which present greater risks of litigation in the food, beverages and AgTech industries.
California’s Agricultural Labor Relations Act is the most vivid example of these principles. Agricultural workers are specifically excluded at the federal level from the union organizing protections of the Nationa lLabor Relations Act. In 1975, however, California’s young, first-term governor shepherded a similar law through the state legislature, granting such protections to agricultural workers. The governor was Jerry Brown.
Some states (again including California, but also some other states) have promulgated regulations for different types of agriculture-related industries, including specific regulations for (i) industries preparing agriculture products for market, on the farm, (ii) canning and freezing and preservatives industries, (iii) industries handling products after harvest and, (iv) the catch all “agriculture industries.” These regulations govern not just overtime pay and other wage-related obligations suchas meal and rest breaks, but also child labor laws,bathroom facilities, and the like.
In some states, laws which govern employee pay and classification provide for awards of attorney’s fees. This means that if your company is sued for a violation of these types of laws and any violation is found, your company will have to pay the attorney’s fees of an employee who files a claim. Wage and hour violations on a large scale basis are often brought to court in class action litigation.This type of litigation is extremely expensive, and for the most part employment practice liability insurance policies have exclusions for wage and hour claims. Companies should thus be highly incentivized to take a proactive approach and regularly obtain a full review of their employment practices and the status of their legal compliance with governing laws and regulations.
1. Minimum Wage
The Federal minimum wage is $7.25 per hour. Twenty-nine states (plus D.C.) have minimum wage laws. These range as high as $10.50 per hour. California’s minimum wage is $9.00 per hour. Some counties and cities also have minimum wage laws. Before hiring employees in any state you must check the governing minimum wage in the jurisdiction where your employees will perform services for your company.
2. Overtime Pay
An employer who requires or permits an employee to work overtime is generally required to pay the employee premium pa
y for such overtime work. Employees covered by the Fair Labor Standards Act (FLSA) must receive overtime pay for hours worked in excess of 40 in a workweek of at least one and one-half times their regular rates of pay. The FLSA does not require overtime pay for work on Saturdays, Sundays, holidays, or regular days of rest, unless overtime hours are worked on such days. The FLSA, with some exceptions, requires bonus payments to be included as part of an employee’s regular rate of pay in computing overtime. Extra pay for working weekends or nights is a matter of agreement between the employer and the employee (or the employee’s representative). The FLSA does not require extrapay for weekend or night work or double time pay.
3. Employee Classification: Employee vs. Independent Contractor
Federal and state laws heavily regulate employee classification issues. While the laws vary, they generally mandate that workers who do not control the nature, scope, materials and means of their work are employees. Working relationships which exceed over twelve months are particularly at risk of being determined by a taxing authority or other agency as an employer/employee relationship. Tax and other regulatory penalties for a misclassification can be extremely substantial.
4. OSHA/Safety Compliance
Federal and state laws require companies to train employees in the safety and health aspects of their work. Employers are obligated to take steps to prevent injuries, illnesses and fatalities. Employers should have and follow robust compliance protocols.
5. Gender Equal Pay
Federal and state laws prohibit wage discrimination by gender. This issue has recently garnered a lot of attention in the press, and we anticipate that companies in all industries will face increased scrutiny.