GUARDING OVERTIME: NAVIGATING STATE LAWS AND ELIMINATING NON-BILLABLE HOURS

Jeff DiDomenico, Trackforce Valiant + TrackTik, CALSAGA Network Partner

In California’s security industry, overtime management is more than just a compliance challenge—it’s a strategic necessity to mitigate costs and promote employee satisfaction. California has strict overtime laws, especially for workers like security guards who are not exempt from these rules. California’s overtime laws, which are more stringent than federal mandates, demand meticulous attention from employers. Understanding and implementing these regulations are vital for maintaining compliance and fostering a fair work environment.

In California, employment laws dictate specific criteria for overtime pay that significantly impact how security companies manage their staffing. Non-exempt employees, such as security guards, are entitled to overtime pay under circumstances broader than the federal standard.

California stipulates that security personnel earn 1.5 times their regular pay rate for hours worked beyond 8 in a single day or for the first 8 hours on the seventh consecutive day of work in a week. Even more, they are due double pay for hours worked beyond 12 on any given day and for all hours worked beyond 8 on the seventh consecutive day of work. Such measures ensure workers are compensated fairly for longer shifts, promoting a better balance between work and rest.

Additionally, California’s laws require that employers pay for “reporting time.” This means if guards show up for work but work less than half their expected shift, among other situations, they still must be paid.

Another nuance of California employment law is travel time where additional state rules dictate that employees must be paid for travel time between job sites during work hours. If security guards must report to a different location than usual workplace or travel to another site for the day, that travel time is considered work time and must be paid as such

This intricate web of regulations underscores the importance of precise overtime management to avoid unnecessary costs and ensure legal compliance. This is where automation solutions can make a big difference.  The careful adoption of automation for workforce management not only streamlines adherence to California’s specific overtime laws but introduces efficiencies that benefit the company’s bottom line.

Learn how to tackle the overtime challenge head-on in our latest whitepaper: Guarding Overtime: Navigating State Laws and Eliminating Non-Billable Hours with Workforce Management Technology.

In 2000, Jeff joined Trackforce as a partner and took on the role of VP of Business Development & Strategy. Throughout his tenure with Trackforce, Jeff has been dedicated to establishing the company as North America’s foremost provider of security management software. In addition, Jeff is a frequent speaker at various security associations and is recognized as a leading figure and content curator in the security industry.

INSURANCE CARRIERS AND SECURITY GUARD CONTRACTS: KEY CONSIDERATIONS

Shaun Kelly & John Koskinen, Assured Partners , CALSAGA Preferred Broker

Introducing John Koskinen

Hello everyone,

I’m John Koskinen, and I’m excited to introduce myself to the security and insurance world. I’m partnering with Shaun Kelly to deepen our security insurance team. I wanted to take a moment to thank CALSAGA and all the attendees for a fantastic conference. There were so many great topics discussed, including legal issues, social media, and, of course, our favorite—insurance.

The industry has a bright future with plenty of opportunities for growth, and we are eager to support as many of you as we can. Following up on Shaun’s insurance speech from Thursday, I wanted to share some additional information regarding service and contract agreements with clients.

Thank you for your time and support.

Insurance Carriers and Security Guard Contracts: Key Considerations

A strong, well-negotiated security guard contract is crucial in the security industry to protect your business from unwarranted liability. When a new customer inquires about your services, it’s an opportunity to protect the client and protect you. Drafting a solid contract with your legal counsel and insurance team ensures your business is protected from unnecessary risks and outlines your responsibilities.

Protecting Your Business:

The contract’s main objective should be to prevent the client from adding terms into your contract that assign responsibility from them to your security company. If the drafting is not done carefully, the company could find itself in hot water in case a claim arises.

Terms to Understand:

To safeguard your business, here are some terms to understand.

Indemnification, or Hold Harmless Clauses:  These clauses have the potential to shift the Client’s liability to your business, holding you liable for all claims, including potential claims brought about by the client’s carelessness.

Additional Insured: You are providing your client with the same terms, conditions, and rights as you, when you add them as an additional insured under your insurance policy.

Primary and Non-contributory: Primary and non-contributory is a term commonly used in contract insurance requirements to stipulate the order in which multiple policies triggered by the same loss are to respond. Security guard companies typically do not want their liability insurance to be primary and non-contributory. Instead, they prefer other parties’ policies to pay first. If primary and non-contributory language favours your client, your insurance policy will pay in full before the clients policy will pay anything towards a claim/loss. Try to limit this wherever possible.

Waiver of Subrogation: Restricts your ability to recover losses by preventing your insurance company from recovering costs from a third party or client that may have caused a loss.

Understanding Client Contracts:

Large clients often use legal and technical language in contract drafting, which may not be clear-cut for business owners. It’s crucial to review these agreements and raise concerns about clauses that don’t adequately address your interests, as these may transfer risk back to you.

What do Insurance carriers look for?

Insurance companies look for contracts that favour the insured, unambiguous and do not unnecessarily shift risk to your company. They search for contracts that fairly delineate obligations and liabilities, guaranteeing that your business is not subjected to undue hardship.

Even though adding a client as an additional insured may seem commonplace, doing so can put your limits at risk and raise your liability exposure.

Three Key Takeaways

• Review Indemnification and Hold Harmless Clauses in contract with legal counsel.
• If at all costs, avoid adding client as an additional insured, including a waiver of subrogation and primary & non-contributory wording.
• Have your own service agreement prepared/ready for clients to sign. This way you can create a contract that is in your favour when it comes to risk, insurance, and liability.

If you have any questions regarding your security agreements and insurance, please feel free to call or email us. We’re here to help you navigate the complexities of security guard contracts and liabilities.

Contact Shaun Kelly (661) 616-4712 or John Koskinen (805) 585-6724

Shaun Kelly joined Tolman & Wiker Insurance Services in 2005.  He specializes in all lines of property and casualty insurance for industries including contract security firms, agriculture, construction, oil and gas. Shaun received a BS in Business Administration with a major in Finance from California State University in Fresno, California. He is an active member of several industry associations, including the Association CALSAGA, the Kern County Builders Exchange and the Independent Insurance Agents of Kern County. Shaun can be reached at 661-616-4700 or skelly@tolmanandwiker.com.

Born and raised in Duluth, Minnesota, John Koskinen began his entrepreneurial journey at the age of 12 by mowing lawns. He has three years of experience in the insurance industry, specializing in claims, sales, and advisory services. John earned his Bachelor’s degree from UCSB in Santa Barbara.

Passionate about the security industry, he enjoys supporting first responders and helping other entrepreneurs thrive. To deepen his involvement, he obtained his BSIS guard card.

John lives with his wife in Ventura, CA. In his free time, he enjoys cooking, surfing, skiing, hiking, and helping others.

Good News for California Employers – PAGA Reform Is Here!

Jaimee Wellerstein, Esq., Bradley, Gmelich & Wellerstein, LLP, CALSAGA Legal Advisor

California employers can breathe a sigh of relief (for once)! On June 27, 2024, California Gov. Newsom signed Assembly Bill (AB) 2288 and Senate Bill (SB) 92, significantly reforming the 20-year old Private Attorneys General Act of 2004 (PAGA). While employers may not have gotten rid of this one-sided adversary, they’ve finally been given some tools to defend PAGA claims. As a result of this new law, the November ballot initiative to repeal PAGA has been withdrawn.

The PAGA reform will apply to civil actions brought on or after June 19, 2024, and will not apply to matters in which notice was filed before June 19, 2024.

Here are the highlights about PAGA reform:

Standing

AB 2288 provides that a plaintiff must have personally suffered each Labor Code violation they seek to pursue on behalf of other aggrieved employees within one year of filing the required administrative notice (PAGA Notice) with the California Labor & Workforce Development Agency (LWDA). This is a significant win for employers as previously, any employee that suffered even one Labor Code violation was entitled to file a PAGA lawsuit for all alleged violations, even for those the employee did not suffer.

PAGA Penalties

AB 2288 reforms PAGA’s penalty structure by incorporating new caps and reductions, as follows:

1. For employers who proactively take steps to comply with the Labor Code before receiving a PAGA notice, the maximum penalty that can be awarded is 15% of the applicable penalty amount.
2. For employers who take steps to fix policies and practices after receiving a PAGA notice, the maximum penalty that can be awarded is 30% of the applicable penalty amount.

Examples of such reasonable steps include, but are not limited to, conducting periodic payroll audits and taking action in response to the results of those audits, disseminating lawful written policies, training supervisors on applicable Labor Code and Wage Order compliance, and/or taking appropriate corrective action with regard to supervisors as needed. Whether or not the employer took reasonable steps will be a decision left to the discretion of the court, which can take into account factors such as the size and resources available to the employer, and the nature, severity and duration of the alleged violations.

3. Penalties for wage statement violations under Labor Code Section 226 that do not cause injury (i.e. misspelling of company name or forgetting to add “Inc.” on the wage statement) will be capped at $25 per employee per pay period. Note: there is no cap on penalties for a failure to provide wage statements.
4. The penalty for isolated errors that do not extend beyond the lesser of 30 days or four consecutive pay periods will be capped at $50.
5. Penalties will be reduced by 50% for employers who pay employees on a weekly basis (such as private patrol operators).
6. Creates a new penalty ($200 per pay period) if an employer acted maliciously, fraudulently, or oppressively. However, this penalty will be assessed only after (1) a court or agency “has issued a finding or determination to the employer that its policy or practice giving rise to the violation was unlawful” within the 5 years preceding the allegation violation, or (2) the court determines an employer acted maliciously, fraudulently or oppressively.
7. Employees may not receive penalties for “derivative” violations (in other words, PAGA penalties when an employee has already received penalties for the underlying violation) for (1) failure to timely pay wages at termination (i.e., Labor Code §§ 201-203); (2) failure to timely pay wages during an employment (i.e., Labor Code § 204) if the violation was neither willful nor intentional; or (3) wage statement violations (i.e., Labor Code § 226) that are neither knowing or intentional, or a failure to provide a wage statement.
8. The allocation of penalties to the LWDA will decrease from 75% to 65%.
9. The allocation of penalties to the aggrieved employees will increase from 25% to 35%.

Employer Cure Provisions

The reform contains various cure provisions and separate processes for small and large employers, as follows:

Small employers (with fewer than 100 employees during the period covered by the PAGA Notice) may submit a confidential proposal to LWDA to cure the alleged violations. If deemed necessary, the LWDA will have the ability for a conference with the parties. The employer will be provided time to complete the cure, and the employee will be given an opportunity to respond. All proceedings will be deemed confidential.

Large employers (with at least 100 employees during the period covered by the PAGA Notice), will be able to request an early evaluation conference, which will include a statement regarding whether the employer intends to cure any or all of the alleged violations, and a request for a stay of court proceedings. While the proceedings are stayed, the parties will work with a neutral evaluator assigned by the court through a multistep process designed to help resolve the dispute.

Importantly, an employer may only use the notice and cure provisions once in any 12-month period for violations of the same provisions set forth in the PAGA Notice. 

Strengthening Enforcement Agency

The Administration will pursue a trailer bill to give the California Department of Industrial Relations (DIR) the ability to expedite hiring and filling vacancies to improve and expedite enforcement of employee labor claims.

Judicial Discretion (Manageability)

AB 2288 expressly provides the courts with the power to manage PAGA claims, including the discretion to limit the evidence to be presented at trial or “otherwise limit the scope of any claim filed pursuant to this part to ensure that the claim can be effectively tried.”

Injunctive Relief

For the first time, AB 2288 allows PAGA plaintiffs to seek injunctive relief.

Employer Takeaway

PAGA reform should be viewed as an opportunity – employers are given the chance to lower and cap potential exposure, and in some cases, cure the violations before penalties even arise. The new law is intended to incentivize employers to be proactive and stay compliant, so you are encouraged to take action immediately.

Employers should become familiar with the new law. Take reasonable steps to become compliant, including conducting regular audits, ensuring policies and procedures are lawful and disseminated to employees (and documented), train (and retrain) supervisors on all applicable wage and hour issues, pay employees correctly, and correct/modify/change anything, as needed.

If you have any questions about how this new law may affect your business or need assistance conducting audits, preparing compliant policies or revising your practices or policies, please contact your attorneys at Bradley, Gmelich & Wellerstein LLP. We are here to help.

Jaimee K. Wellerstein, Esq. is a Partner and the firm’s Employment Team Head. Representing employers in all aspects of employment law, Ms. Wellerstein collaborates with her clients to develop proactive business and legal strategies to try to avoid workplace conflict and employment disputes. She provides legal advice and counsel to numerous businesses, including conducting individualized training programs for both management and employees.

Ms. Wellerstein performs internal audits of her clients’ employment practices to ensure compliance with the rapidly-changing world of employment laws, and guides investigations of employee allegations regarding harassment, discrimination, and employee misconduct. When litigation cannot be avoided, Jaimee K. Wellerstein aggressively defends her clients against employment law claims in the state and federal courts, as well as at administrative hearings, arbitrations, and mediations. Having defended numerous representative and individual lawsuits on behalf of her clients, Ms. Wellerstein is a skilled litigator and negotiator with a broad spectrum of experience upon which to draw.

A frequent speaker on numerous topics, including employment law and contract law, Ms. Wellerstein regularly conducts training seminars and programs for managers and employees in all areas of employment practices and policies.

Navigating California’s Updated Sick Time Policy with Ease

Jordan Wallach, Belfry Software, CALSAGA Associate Member

Managing paid sick leave in the security industry can be complex. Staying up-to-date on state laws is critical to maintain smooth operations for your California security business.

As of January 1, 2024, California law mandates that employers provide at least 40 hours, or five days, of paid sick leave per year. This applies to full-time, part-time, and temporary workers who:

• Work for the same employer for at least 30 days within a year
• Complete a 90-day employment period before taking any paid sick leave

Common reasons for paid sick leave include recovery from physical/mental illness or injury, seeking medical diagnosis, treatment, or preventative care, and caring for an ill family member.

The new policy is an increase from the previous required paid sick leave of 24 hours or three days. This change requires security companies to adjust their systems to ensure operations aren’t disrupted while complying with the new requirements.

Security firms typically handle numerous contracts, each varying in pay rates, schedules, and qualifications, making sick leave management an added challenge. Typically, companies use multiple systems for scheduling, time tracking, and payroll, leading to manual data transfers that increase the risk of errors and consume significant time. This manual process not only makes compliance more challenging, but also affects employee satisfaction and can lead to higher turnover.

An integrated system would be immensely helpful. By streamlining processes, companies can eliminate unnecessary steps in managing time off and reduce human error.

Belfry’s all-in-one software platform addresses these challenges by integrating scheduling, time tracking, and payroll, simplifying the management of new sick leave requirements – including the granular requirements around accruals and waiting periods.

Employees can request time off through Belfry’s user-friendly interface, and managers can approve these requests and adjust schedules accordingly. Automated time tracking ensures accurate recording of hours worked and sick leave taken, reducing administrative burden and minimizing errors.

Just because the updated California sick leave policy adds complexity for security firms doesn’t mean you have to add extra complexity to your operations. Belfry’s comprehensive platform enables businesses to navigate these changes smoothly — ensuring compliance, reducing errors, and enhancing overall efficiency.

Jordan Wallach is the Co-Founder and CEO of Belfry, the modern operating system for security guard services companies and a CALSAGA Member. Prior to founding Belfry, Jordan was a consultant at McKinsey & Company and a Product Manager at Microsoft, building software used by millions of people worldwide. He has a bachelor’s degree in Data Science from Stanford University.