Million-Dollar Mistakes: How CA Contractors Can Avoid Costly W&H Penalties

[Bracken]

[00:00:04] Hey, everyone, welcome to the webinar. Uh, we'll give everyone a, a couple of minutes to, to join in. Um, how's everyone doing today, Alex? Jeff? Royce?

[00:00:15] It's, it's Tuesday, so, you know, can't complain too much, right? Doing great. Absolutely. Yeah, that's what we like to hear.

[00:00:23] Taco Tuesday. Oh, yes, yes. Okie dokie. Hey, looks like we're still having people trickle in, so we'll just give everyone a little bit more time.

[00:00:36] I'm gonna go ahead and share my screen so everyone knows they are in the right spot. So let's go ahead and do that.

[00:00:46] Perfect. Can you guys, oh, I don't know if that worked. Let's try that again. All right, there we go. Everyone see the screen? Okay.

[00:01:02] Got it. Good deal. Um, and then we should also have the chat on, so, um, everyone go ahead and throw in the chat what type of work you do. I'm assuming you're all from California, otherwise I would ask you to tell us where you were from too.

[00:01:14] But, um, if we do have any floaters out there, um, throw in where you guys are from and, uh, what type of work you do.

[Alex Medina]

[00:01:22] I thought you were gonna tell 'em to leave if they're not from California. Wait, that's my joke. I got that in like slide six. Oh, shoot.

[Bracken]

[00:01:26] Oh, Royce. All right. Oh, go Bears. Okay. Awesome. Well, we're gonna just jump right in then. We have a lot of really good info for you guys, so super excited to be able to share that with you today.

[00:01:42] So welcome to Million Dollar Mistakes, how California Contractors can avoid costly wage and hour penalties. Um, I, boy do they make it hard on you guys in California, so we're super excited to, to be able to chat a little bit more. Um, quick intro for both myself and, um, Royce here.

[00:01:59] We're with Busy busy. I'm the senior partner manager at Busy busy. We're a mobile time tracking, job costing and safety app built for the construction industry.

[00:02:08] Um, Royce, I will let you introduce yourself. You, you know, know yourself better than I do.

[Royce]

[00:02:11] Yep. So I've been with Busy busy for seven years. Been in the tech space for about 15, or I guess longer now. Bracken makes fun of me for being older than her,

[00:02:25] but, um, we originally got introduced to Medina McKelvey, and Cal Comply, just from one of my personal clients. Uh, they're in Northern California. We'll keep it a bit anonymous. Let's call 'em Mike. You had a couple hundred employees and had one little slip up that wasn't even a real slip up,

[00:02:45] but it turned into a very big PAGA lawsuit, and they got us in touch or recommended that we get in touch with Alex and Jeff and team over there. And it's been a great partnership since, and we're, we're tackling it from two different ways to make sure you guys stay protected.

[Bracken]

[00:02:58] Yep. We're, we're super excited to be joined today by, uh, some California compliance experts. So Jeff Russell, CEO at Cal Comply, and Alex Medina, co-founder of Cal Comply. And, um, also co-founder of one of the leading wage and hour training. Cal Comply is one of the leading wage and hour training companies in California, but also Medina McKelvey, a California employment law firm.

[00:03:18] So, uh, like Royce was saying, ever since we were introduced to, to the Medina McKelvey group, I've pretty much been obsessing over getting them in front of our audience and just trying to get some more exposure to other California contractors, um, just because the, the need for, um, better technology and training for California contractors is, is huge.

[00:03:42] And so with both education and technology working together, we, you know, really see a lot of California, uh, contractors survive, but, but also thrive. So, um, getting over to, to Jeff here. Um, Jeff, we're just super excited to have you here.

[Jeff Russell]

[00:03:57] Yeah. Hey, Bracken and hey Royce, thanks so much for, for having us on. Royce. Great beard, by the way. I love it, man. Looks good. Um,

[Royce]

[00:04:06] It's a filter. Yeah.

[Jeff Russell]

[00:04:07] Yeah. Well, it, it's great to be here. I'm Jeff Russell. I'm the CEO of Cal Comply. We provide wage and hour training, testing, and certification for California employers to train their employees and managers on wage and hour issues.

[00:04:22] Because, you know, if you don't know already, this is the big topic. This is the high stakes environment in California where, uh, wage and hour issues are at the top, the top of your risks. And, um, I've spoken with countless employers, uh, over the years about wage and hour risks, lawsuits, costs, and everything else under the sun. And, um, that's why we're here today.

[00:04:45] This is the biggest legal risk facing, uh, employers in California. It's the biggest financial risk. And, um, I strongly encourage just right off the bat. I wanted to strongly encourage everyone to just try to stay for the whole conversation and also try to engage with us

[00:05:01] because you have not only the, the busy busy team who are experts on the timekeeping space, but also, uh, myself and then Alex, who we brought along, who is one of the best people I know to talk about this, uh, this situation in California. Um, and I want to, to kind of kick things off by setting the stage here.

[00:05:21] Like what's at stake here? Uh, with a quick example, a quick story of, you know, the impact that the wage and hour landscape, the legal landscape has on employers. And, uh, I wanna tell you a story about this company called Sunray Solar. They're also known as, uh, Sunray Construction. They're an HVAC and solar installation company with over 200 employees based in Rocklin, very close to our headquarters.

[00:05:45] And, uh, in February, 2023, one of their employees sued them in an individual lawsuit, you know, alleging, uh, wage and hour violations, everything under the sun. Um, and that's what they do in these cases. You know, they throw everything at the wall and see what sticks. And one day later they file a class action lawsuit. So you get hit with both of these lawsuits at the same time.

[00:06:10] Uh, and they were claiming in the class action systemic issues, you know, workers logging extra hours without compensation, rushing through breaks, you name it. Sunray denied the allegations, but it involved over 700 current and former employees in the lawsuit.

[00:06:29] And they faced mounting legal costs over time and eventually settled it in 2024 for a whopping $2.3 million. Um, that's crazy. Yeah, it's nuts. This is, this is what's at stake. This is why we're kind of setting the tone here. This is why this conversation is so important.

[00:06:48] It's so important not only to understand the risks, how we got to this place where employers are paying out these exorbitant amounts, um, but also we're here 'cause we want to talk about some solutions, right? Not only for, um, just employers in general, but we're gonna talk about some specific solutions for contractors, um, and the specific problems that you might encounter. And, uh, today I brought along my friend and colleague, Alex. Alex, I think, uh, you're one of the best people to talk about this problem. And, uh, why don't you introduce yourself?

[Alex Medina]

[00:07:21] Sure. Hey, everybody. Uh, Alex Medina here. I am a business owner who happens to be a lawyer. Uh, I like to joke, dunno how long I can say it for much longer, but I'm not as young as I look. I've been practicing law for 23 years. I've got four boys, three are teenagers.

[00:07:35] So that kind of keeps me young or old or whatever. But that's a terrible picture, by the way. We gotta swap that thing out. So I, I speak on class action wage and hour PAGA lawsuits all the time. The content I have is like hours worth of content.

[00:07:47] They told me I have 15 minutes. So I have a timer to keep me honest here. And you all are gonna interrupt me and stuff. Uh, when I'm on webinars and things and on Zoom or whatever. I'm a, like, classic multitasker. I'm gonna talk so fast and give you so much information

[00:07:59] that you're not gonna be able to multitask because I'm gonna talk so fast and it's gonna be so fun. This is the most fun you're ever gonna have with a lawyer and you're not gonna get a bill for it. So are you ready to go? Let's go.

[00:08:08] Um, I'm gonna talk to you about why in the world, like a silly thing, like a meal and a rest break can cost all of you as business owners millions of dollars. So, um, I am a son of an immigrant from the Philippines who was a small business owner. Being a business owner has been part of my DNA since I was a kid.

[00:08:27] And now as a business owner myself, I've always thought about like, what are the risks of being a business owner? So let's think about that. Like what are the biggest threats to being a business owner? It's not what you think. You can look at this for yourself. I'm not gonna be the guy who like sits there and reads the, the, you know, the PowerPoint you all can read.

[00:08:43] Uh, it's not these types of things. These are all very, very bad things. If any of these happen to you as business owners, I would feel very bad for you. I really would. And I would talk to you about it and I would agree with you, but I'd tell you, go talk to your insurance broker, 'cause every single thing on here is covered by insurance.

[00:09:03] Let's go to the next slide. What's the real biggest threat to your business? Um, it's PAGA. It's a four letter word. You can say it in front of your kids — Private Attorneys General Act. The reason why this is the biggest threat, because chances are these types of lawsuits, these wage and hour lawsuits are not covered by insurance. Or if they are covered by insurance, it's called EPLI, Employment Practices Liability Insurance.

[00:09:29] I'm just gonna say it. Um, I don't think there's a filter on this like my new iPhone that somehow censors me without me giving consent to censor me. It's crappy insurance. I'm gonna say it right now. It's crappy insurance. You don't have good coverage. It's cost of defense. Most likely it's not gonna cover what you need to cover and you're not gonna get good counsel.

[00:09:40] So this PAGA thing is an epidemic. It's one of the most lucrative industries in the state of California. The 10 richest lawyers in California are PAGA lawyers, they make 10 times more money than I do. They drive Bentleys. They drive Lambos, they have private jets. It's crazy. Okay? It allows one employee with one lawyer to sue on behalf of the state of California to come after all of your employees. Let's go into the details a little bit.

[Jeff Russell]

[00:10:01] And Alex, that's not just current employees, right?

[Alex Medina]

[00:10:08] It's current and former employees. Current and former. And they don't have to want to be involved. It just takes one person and they usually get solicited.

[00:10:16] We live, like all throughout history, we have different ages, like age of enlightenment, age of technology, stone age, whatever — this is called the age of entitlement. I made that up 'cause I have three teenagers. I'm an expert on entitlement. Have you ever fired anybody? Was it ever their fault? No. It's always somebody else's fault. So they go to a lawyer and they say,

[00:10:32] I was wrongfully terminated because of X, Y, and Z — harassment and termination lawsuits. There's no money in them 'cause they're covered by insurance. Then the lawyer says, tell me about your meal and your rest breaks. That's how a PAGA lawsuit is born.

[00:10:43] There's tons of lawyers, thousands of cases every year. How many? 30 to 50 per day. We monitor every class and PAGA lawsuit. Virtually no insurance coverage. What's the standard of a PAGA lawsuit on the labor code? There's over 305 ways to get hit with a PAGA lawsuit and the standard to win, if you want to fight — let's go, let's beat these PAGA lawsuits, 'cause this is ridiculous — the standard's perfection,

[00:11:07] because these laws, it's called strict liability. It means you either violated the law or you didn't. It doesn't matter if you didn't mean to violate the law. It doesn't matter if the employee took a short lunch or went to lunch one minute after five hours, you, the employer, have the responsibility to go monitor and enforce it like a health and safety issue. You either violated or not. You don't get credit for good behavior.

[00:11:29] You don't get credit for having good culture. I hear all the time — oh, hold on. Sorry, Jeff. Oh, that was my bad.

[Jeff Russell]

[00:11:35] Oh, no worries. Whoever's doing that — it's like, I've never ran a slide deck before. You guys, I'm, I'm sorry, I actually thought you had gone ahead. So I typed a bracket. I was like, I think he's ahead of you.

[Alex Medina]

[00:11:44] I, I don't like to read all these things and maybe you'll get coverage of this or not. I played — this whole time I have what I call a PAGA bingo card. So whenever I meet a new client for the first time, I secretly will say all the things that people will say —

[00:11:56] well, we have a great culture, check. We didn't mean to do it, check. Um, we didn't do anything wrong, check. Um, we have great, you know, like, um, all this other kind of stuff — because it's just, did you violate the law or not?

[00:12:07] So the thing is, even if you have like an A in compliance, like a 3.7 GPA, like your kid's gonna get into a good college, um, it doesn't matter. That's gonna cost you six figures. If you have more than 50 employees, it's usually like five to 10K or more per employee, plus your legal fees. So look at the example on the bottom. Let's say you have 50 employees and you're gonna settle a PAGA case. You're looking at 250 to 500,000 bucks plus legal fees. So who's at risk? Any business that has hourly employees. This covers all non-exempt hourly employees, current and former. Let's go to the next one.

[Jeff Russell]

[00:12:46] One thing I'll highlight right there, Alex, is like, we talked to a lot of companies on the tech side and they're like, oh, we're, we're too small for that. We're too small to need to track time. We're too small to need to take photos on the job site. We're too — like, nobody's gonna come after us, we're too small. And it's like a 50 employee company could be a $500,000 settlement. Like no company is, I would say, too small for this.

[Alex Medina]

[00:13:02] Yeah, that's — no such thing. I've got, you know, construction companies, 15 to 20 to 25. I might even update that slide now because inflation is real and I'm tracking these cases in real time and the cost is going up. And I want to emphasize that last clause there — it's plus legal fees. It's your own legal fees, plus you have to pay the other side's legal fees. So I think I have another slide on that, so I'm not gonna get ahead of myself.

[Jeff Russell]

[00:13:29] It's crazy.

[Alex Medina]

[00:13:29] Okay, so what does it apply to? All current and former employees for one year, regardless of their willing participation. That means it goes back a year to the date that they file the claim. But it goes forward every single day. So if you've got a violation issue that you don't even know about — and by the way, there are laws that you don't know about because the state has designed it that way.

[00:13:48] Um, I don't have it here. I'm gonna jump ahead. Why does PAGA exist? It's a tax. Okay? 65% of PAGA proceeds goes straight to the state of California, right into the general fund. It pays for the general fund, whatever the general fund goes to — salaries, you know, budget shortfall, whatever. 35% goes to the employees ostensibly. But the lawyers who file these lawsuits, they get the money right off the top.

[00:14:21] So let's say you got a million dollar PAGA settlement, okay? Which is very, very common. That Sunray one, 2.3 million, that's common too. But just to make the math easy, 'cause I'm just a dumb wage and hour lawyer and I can't do math, um, 350,000 bucks is gonna go to the lawyers just for filing a lawsuit. The remaining 650,000, 65% of that's gonna go to the state of California. The peanuts that are left go to the employees.

[00:14:49] So PAGA is designed ostensibly to protect the health and safety of the employees. That's what everybody says. That's why we have PAGA. We're gonna protect the employees. The state's too big, we can't enforce the laws on our own. So we're gonna deputize private citizens to enforce the labor code and we're gonna have penalties, so they get compensated for that.

[00:15:12] But what we really see is it goes to the employees and to the state. It's like a tax, right? It's not about the employees. The other thing is, if you decide to fight, and even if we fight and we defeat 99% of their claims, you pay a hundred percent of the other side's attorney's fees plus your own. So you're talking like five to $700,000 in attorney's fees, plus whatever the judgment is at trial. That's just like one violation. So over one year, think about how many lunch breaks you might have at your company.

[00:15:42] How many rest breaks. If your overtime calculations are off by even 1 cent — there's over 305 ways to get hit with a PAGA lawsuit and the government knows how to collect. Um, can we just go back to one slide?

[Jeff Russell]

[00:15:56] Yeah, probably. I say yes, but we'll see. While you're doing that, Alex, I wanted to hit on one thing you just said, and that is that the employer — you're basically saying the employer always pays both sides' attorney's fees. Meaning there's no way you can win these things.

[Alex Medina]

[00:16:13] It is set up to be punitive in nature and it's really tough. Yeah. And so, um, that's why hardly any of these cases ever goes to trial. Uh, 98 to 99% of them settle. So of the thousands that are filed, under 10 ever go to trial per year. And that's because the risk and the cost of fighting them is so high. It's a rigged system.

[00:16:37] So a lot of companies, they will hire a law firm and think, oh, I'm gonna win this thing, because they'll either be told, you can win this, but you can't unless you're gonna be perfect. So again, think about how many thousands of meal breaks you have. Are you really gonna be perfect? Most people think they are. The devil's in the data. You look at your meal periods. If you've got one 29-minute meal period, that's a PAGA lawsuit. You've got no defense to it. Let's go to the next one.

[00:17:01] Uh, I think we went through that one. I'm doing pretty good on time. Okay, let's look at the penalty structure. Um, the penalties stack on top of each other. This is the thing that's gonna make you wanna move to Idaho or something like that.

[00:17:11] Um, the penalty structure for PAGA is a hundred bucks per violation per employee per meal period. And then there are what are called derivative penalties. So let's pick a 29-minute lunch break. Let's say somebody, um, through no fault of their own — um, even though it's considered your fault in California, 'cause we have burden shifting, it's presumed to be your fault unless you have individualized proof for every single violation in writing.

[00:17:34] Um, let's say, uh, as Susie comes back from lunch, she thinks it's 30 minutes. She badges in, swipes in, and it actually ends up being 29 minutes. And it's in your time records. That's a violation. That's a hundred bucks under PAGA.

[00:17:46] Uh, and let's say you don't pay what's called a meal period premium in California, which is one hour of pay at the regular rate of pay. That's a separate penalty of a hundred bucks, okay? Because you didn't pay the premium. That's actually considered wages in California. So your pay stubs are wrong. That's a separate penalty. That's a third thing for that 29-minute lunch break.

[00:18:05] And then let's say Susie leaves, she just gets another job and she leaves your company. Everybody knows within 72 hours you have to give people their final paycheck, right? That's the law — but the final paycheck has to be accurate. Her final paycheck was not accurate because she didn't have a meal period premium. So what's the penalty for an inaccurate final paycheck? It's called waiting time penalties in California — 30 days of pay. 30 days of pay for one minute.

[00:18:36] So that's four separate penalties, plus attorney's fees, just for that one 29-minute meal period. We're not even talking about late lunches, missed lunches, second lunches or rest periods. That's all just for one short lunch break. Let's go to the next one. Okay? These are the top 15 risks. There's 305. So if I do the math, that's like 290 other ways to get hit with it. Short, missed, late, second lunches.

[00:19:00] I wanna pause on just one thing while you can all multitask and read some of the other things. The number one thing when I meet new clients that they don't understand in the state of California is rest breaks. I'm gonna pause here. You have an obligation to monitor and enforce rest breaks in California — the 10s, every four hours, 10-minute uninterrupted, off-duty rest breaks. Okay? It's not enough to say we don't track them.

[00:19:27] How are we supposed to know, they're out on a job site — you can't say that anymore, okay? If they don't take a 10-minute uninterrupted off-duty rest break, you — I'm gonna look close, this is gonna be creepy — you have to pay them an extra hour of pay equal to their regular rate of pay for a missed or uninterrupted or short rest break period. It's been the law for 10 years, nobody's doing it.

[00:19:53] And it is a six figure issue. That's a big deal. Those cases are hot right now. Okay, let's go to the next one. I'm almost outta time. Um, 30 to 50 new lawsuits filed per day. Settlements are routinely six or seven figures, nearly $10 billion in PAGA awards. That's not the settlements. Um, I would probably say hundreds of billions in settlements.

[00:20:09] Um, all the big companies got hit a long time ago. Target, Walmart, Starbucks, you name it. They've got the systems in place. It's now the small and medium sized companies. Let's get to the hope part. There is some hope, uh, in my last two minutes left. Okay? Oh yeah. Unique challenges for construction companies. It's really, really tough for you because you've got all the different wage orders. Um, you've got AWS's, alternative work week schedules, you have prevailing wage.

[00:20:37] Um, it's really, really, really tough. I believe personally, there's some extra gotchas in your industry because they know it's so hard in your industry. And the more they get you, the more money the state makes. Go to the next one. Yeah, maybe the next one's me. Do I get to hit pause? Do I get extra time?

[Jeff Russell]

[00:20:56] Yes. You got it. And, yes, you can get some minutes back. What was your time?

[Alex Medina]

[00:20:58] Uh, do I have to tell the truth? I'm a lawyer. I do. Uh, 13 minutes.

[Jeff Russell]

[00:21:03] Nice. Crushing it, ahead of the curve, man. Nice job. Yeah. So as you can see everyone, this is a nightmare, right? Uh, and it's a nightmare that's unique to California and it's not just unique to certain employers. It's hitting everyone. And there's unique challenges, especially for construction companies because of the issues that Alex just talked about in the previous slide.

[00:21:32] And if you have any questions about those, by the way, another reminder, please throw them in the chat right now. Feel free. We will get to them at some point. If we don't get to them on the call today, we will reach out to you separately and we will talk to you about them — more than happy to schedule some time to chat about them.

[00:21:47] Um, but I want to give a quick example right now of just another example of another company. The first company we covered was a little bit smaller. This is a larger construction company. Uh, Swinerton Builders. They've been around since the 1800s. They are very big. Uh, and they're based in San Francisco.

[00:22:04] And they were sued in August, 2019 by a former employee — wage and hour class and PAGA lawsuits, the same thing, alleging a lot of the same problems, inaccurate wage statements, unpaid overtime, you name it. Again, they throw everything at the wall and see what sticks in these cases. The unique thing about this case though is that, uh, the cases take time and it occurred in August, 2019. So you know what happened six months later, right? The pandemic, COVID-19. So it was like a fever dream.

[00:22:35] Yeah. We all lived through that, right? That could be 18 different webinars on its own. Um, in this case it dragged everything out and, uh, it halted work. So they were facing — it seems like a smallish case compared to the last one we talked about. But they still settled in 2020 for $620,000. And you know, Alex, you can talk about whether this sounds like a good deal or not. I mean, it sounds crazy to even use the words "good deal" when we're talking about $620,000, right?

[Alex Medina]

[00:23:08] That case is probably 1.1 million today, 'cause of inflation. I'm not kidding, I'm not exaggerating. That's a screaming deal right now. Um, I don't really see small PAGA cases even settling that low anymore. Um, the price of poker has gone up so much.

[Bracken]

[00:23:24] Well, question here — if they settled for 620,000, I mean, they still paid out lawyers on both sides, right? Like that's not —

[Alex Medina]

[00:23:36] Well, no. So that's a really great question. So, um, when you settle a class and/or a PAGA case, the other side's attorney's fees are baked into the settlement. The only thing that's on top of that would be any payroll taxes. But then you pay your own attorney's fees separately. Okay? So still that's not even the baseline number. Yeah. You don't get that deal today in 2025.

[Bracken]

[00:23:56] Well, I feel like we've kind of instilled the sense of fear in people, um, which in a lot of ways it's not something that we ever wanna do. But it feels like, again, that same thing I said earlier, which is like, oh, it won't happen to me. Um, so I think the question to ask now is, what can business owners do?

[Alex Medina]

[00:24:13] Yeah. Besides — this is my dumb joke, I had another dumb joke, but I took it out 'cause nobody laughed when I did this presentation. So, um, you can move to these places, but the weather's not as great as California and we don't have wineries in Tahoe. So, um, let's talk about actual hope here. Um, for the first time in 21 years — um, I'm jumping ahead — because the law allows you to do this, but yeah, you want sophisticated HR and payroll systems, contemporaneous timekeeping.

[00:24:39] If you have paper timekeeping, just stop. Um, clear policies, not just a handbook. You wanna have a culture of compliance, comprehensive audits, compliance plans, training and testing. Let me just pause here for a second before we talk about new PAGA. You want to treat wage and hour compliance like a health and safety issue. Your industry, like no other industry, gets this — this is like the big racket of this whole PAGA industry.

[00:24:59] So the reason PAGA exists, um, is because they're able to say, hey, we are able to penalize companies because — and this is what the courts say, the legislature and the governor have all said — this is a health and safety issue. We're protecting employees. There's actually a court case that says that meal and rest breaks are akin to a health and safety issue.

[00:25:21] Now you all, and we all are dealing with actual life and limb health and safety issues. So we know that even though 30-minute and 10-minute rest breaks are important — like we don't wanna minimize that — it's not the same as a dude's arm getting chopped off on a construction site, let's be real, right? But the law says that you're gonna pay out more money for somebody not taking a 30-minute rest break than somebody's dude getting an arm chopped off, because you have insurance for that.

[00:25:48] So we have to treat these cases just as seriously. So in order to minimize and mitigate against the risk, you need to treat meal and rest breaks just like you would a health and safety issue. Monitor, enforce, train, test, certify — hit it from all angles to make sure — uh, this analogy is gonna get weird — that your meal and rest break limbs are all intact. So let's go to the next one. And that's where the hope comes in, because for the first time in 21 years, PAGA was reformed. We call it new PAGA.

[00:26:18] I'm old enough to remember during the Super Bowl, they rolled out New Coke. It was terrible. So then they said, nobody likes New Coke, now we're gonna have Coke Classic. So we have new PAGA and we have old PAGA. Under new PAGA, companies that treat wage and hour compliance like a health and safety issue actually qualify for penalty reduction up to 85%. Okay? You have to take reasonable steps to comply with the labor code. What does that mean? Glad you asked.

[00:26:42] Next slide. Missed it, sorry. Okay. Uh, do an audit — essentially identify your noncompliant policies and practices. Fix your noncompliant policies. Fix your noncompliant practices. Train everybody — train, test, and certify supervisors and employees on wage and hour practices. It doesn't have that on here 'cause I put in a plug, sorry.

[00:26:58] Um, but you also need to repeat this. You need to do periodic payroll audits. That means at least once a year, do this process over again. You should have a law firm do it. It does not have to be me. And I really do mean that, because you want this process covered by the attorney-client privilege so that if you get sued, all of your compliance stuff and the stuff you find isn't discoverable. If you do these reasonable steps — 85% penalty reduction. Um, I'm out of time, but there are some questions that we have in there. There are some good questions. Do you want to get to those now?

[Bracken]

[00:27:31] Uh, well, there are some solutions, obviously — Cal Comply, Busy busy.

[Alex Medina]

[00:27:34] So, um, I leave it to my wonderful partners here to decide when and how to answer the questions.

[Bracken]

[00:27:39] Let's go ahead and hit through, um, both Cal Comply and Busy busy and then grab questions, um, at the end. That way we make sure we get everyone taken care of. So, um, I mean, like Alex was saying, there are ways — there are shortcuts, there are ways to help protect yourself. Um, we talk all the time to companies who are still using paper timecards, paper spreadsheets.

[00:28:02] Um, they're doing their daily logs on paper. And there's more than one reason as to why that fails. You know, paper is disorganized, filing systems fail. And with the construction industry, I mean, you don't want to go through all of the hard work of getting accurate data, tracking time correctly, making sure your employees are being compliant, just to lose all of those forms or documents crumbled up in a foreman's truck.

[00:28:31] So the other thing with paper time cards that we see all the time is that they're typically being filled out at the end of the week. Um, so one thing I always like to ask — do you remember what you had for breakfast, lunch, and dinner on Saturday? And snacks? You either had a really weird diet that day and you do remember, you didn't eat enough, or you have a freakish memory and I'm super jealous of you.

[00:28:55] But most often you cannot remember those things, which begs the question of how do you expect your employees to remember exactly what they worked on when they're sitting on the tailgate of the truck Friday afternoon, trying to fill out a time card. So, which comes with all those other issues, right? Like your labor job costing's off, and so on and so forth. So that could be a whole different conversation, but that's why we partnered with Cal Comply, is to show you guys some shortcuts on how you can start to protect yourself.

[00:29:22] So I'm gonna actually let Royce share his screen for a second. He's gonna quickly show you guys some really, really short and easy steps that can help protect you. So lemme go ahead and stop this screen share.

[Royce]

[00:29:38] Yeah, let me go ahead and share. So what you're seeing is the Busy busy app, and we'll run through four of the simplest ways that you can protect your business. I don't talk as much as Alex, but I could talk about Busy busy and time tracking for your business for over an hour.

[00:29:53] I'm gonna keep it to just a few minutes today. So as you can see, this is a fake iPhone pulled up. This app works on any kind of smartphone or tablet. You even have a web version. But what you're seeing here is what an employee would see on their phone if they were clocked in using something like Busy busy here. So I'm clocked in, I'm ready to go home.

[00:30:14] There is an actual live "go on break" button. There is a description, they can switch from job to job. I know that job costing, as Bracken mentioned, is important in construction. Um, but a few things I want to go over very specifically — and we'll save the rest for a personalized demo for you guys later on. When the employee is done working for the day and they go to clock out, they hit this clock out button and we have a series of daily sign off questions to protect your business. And these are questions that Alex recommended that we word this way.

[00:30:50] So the first one it asks, "were you injured? Yes or no?" So obviously a "no" will protect your business. Inevitably things might occur — if things do occur, you're getting an immediate alert system to whoever you designate to get those notifications that you can handle them as necessary. The next question is "my time correct? Yes or no?" If yes, great, that's a protection for you. If no, they can request a change be made to their timecard.

[00:31:14] And again, those notifications might go to different folks. The next question, "I certify I didn't work off the clock." Yes, I did not work off the clock. If no, again, I have to explain what happens. So it can be corrected right away, not next week, not next month, and especially not a year after you let me go. Um, Alex, we haven't talked about this one at all and it's not something that comes up as often as these meal breaks. How often is this getting more popular? Are you seeing more suits come in on this off-the-clock thing?

[Alex Medina]

[00:31:46] This is huge. It's in every single PAGA and class action case. So you get meal break, rest break violations, overtime violations, and off-the-clock work violations. Um, this should always be coupled with a very strong off-the-clock work prohibition in every handbook. And I just wanna say something — um, I want to praise Busy busy for this. This is called an attestation, and more particularly, this is called an interactive attestation.

[00:32:09] And what is so amazing about this — and this does not exist in almost every single timekeeping provider of the clients that I work with when they work with them, and I'm not gonna name names — um, one of the most important appellate decisions that's come down in probably the last 15 years in the wage and hour industry is called Donahue versus AMN Services. February, 2021, it changed the game, okay? It literally changed the landscape of wage and hour cases in February, 2021.

[00:32:36] It's what shifted the burden of proof from the plaintiffs to the defendants — that basically, if I can boil it down so I don't sound like a total legal nerd, it basically is, you as the employers are guilty until proven innocent now with meal and rest breaks. In that case, what the employers argued was that we are okay on meal and rest breaks because all of our employees sign off when they clock out, because they say, yes, we got all our meal and rest breaks.

[00:33:00] So look at the Busy busy one here where it says, "I took my required rest breaks and meal periods." All it said was yes. I get that all the time. It's on my bingo card. Uh, when I meet with clients it'll say — but we have everybody say they took their meal and rest breaks. Well, it says yes every single time. What the Supreme Court of California said was, that's not a real attestation, 'cause you're forcing someone to say yes. That's like making your boyfriend say, "yes, you have to say you love me," right? That's not a real attestation.

[Bracken]

[00:33:30] That doesn't work, by the way. What — you can't do that, the boyfriend.

[Alex Medina]

[00:33:33] Yeah, that doesn't work. "You must say you love me." Um, so now the standard is an interactive attestation. It doesn't say that in the case, but that's now the best practice. And so what I love about this — um, I'm a cat person, don't judge me, my favorite emoji, and it's only reserved for like the most narrow of things, is that emoji that has the cat with the heart eyes. This is a cat-heart-eye thing, okay? Because you have the yes and the no, because then you can show that this is treating it like a health and safety issue. You then follow up with your employees.

[00:34:06] Why the heck did you work off the clock? Why didn't you take your rest break? You know the rule. We've trained you, we've tested you, you certified you, and then you pay them the premium. You didn't take a rest break, bro, don't do that. We're gonna progressively discipline you, but we're gonna pay you the premium. We're gonna have a record of it. If you get sued in PAGA, guess what you just did? You shifted the burden of proof back to the plaintiff and you just took a huge step in preventing a PAGA case like this. Like, that's baller right there.

[Royce]

[00:34:31] Thanks Alex. So as he said it better than I can, this is an easy, very simple, interactive way to protect your business. So each one of these questions can be customized, you can add your own. And as PAGA inevitably shifts and changes, this program is able to accommodate new questions or different questions as necessary. But each one of these can trigger alerts to go to different people in your organization to be handled immediately.

[00:35:02] Same thing on the meal breaks here — yes, no, if no, please explain why. And those would get notified to management immediately. So a couple other quick things I want to hit on, easy ways to protect yourselves. I'm now clocked out, but I wanted to pull up and show you the timecards where at the end of the week, the employees can review and digitally sign their timecard. They can be approved by management as well. And that's all done either via the app or the web version.

[00:35:31] Um, another thing while I'm on this topic is overtime can be calculated according to California law. So if it's standard California hours, it'll calculate according to those rules. We can even accommodate for prevailing wage situations for you folks to do government work. Okay? One other quick thing we're not gonna go too far into is there is a complete safety module built into Busy busy.

[00:35:54] So you can do all of your toolbox talks, you can assign them out, give them a date, a person that's officiating the training, and then send out reminders to get it done. They can pull the training topic from our library, choose who was there from a list of employees and get signatures from everybody. And it's all stored here in the cloud. You're audit ready, you're good to go.

[00:36:18] And then as you can see, our training module isn't just trainings. You can do observations, you can do your incident reporting. So if someone does say they were injured, it triggers alerts and paperwork to be done — compliant OSHA, Cal/OSHA. Uh, you can assign inspections out and you can do even JSAs and JHAs. So again, this is something I could spend a full hour with each of you on with your different use cases, but I'm not going to for now. Um, those are the quick and easy ways Busy busy can help, along with others, keep your company safe from unnecessary lawsuits.

[Bracken]

[00:36:52] Love it. Great. Um, so Busy busy, one way to really quickly help protect your company. And again, Cal Comply — gonna give this over to Jeff and let him explain a little bit more about Cal Comply because, uh, I mean, it's huge. As soon as I saw it — I already mentioned this to you guys, but I wanna double down on it. As soon as I saw Cal Comply, I'm like, we have to do a webinar together.

[00:37:20] We have to get this in front of more people because it is something that we hear all the time at Busy busy — the need for, you know, toolbox talks, OSHA, health and safety. But how else can you help protect yourself from wage and hour litigation? Cal Comply.

[Jeff Russell]

[00:37:34] Yeah, we're talking about solutions here. Uh, before I get into Cal Comply, I do want to say I did talk to an employer recently — we talk about paper time cards and basically outdated methods of tracking time. I talked to an employer recently who was using a separate, specific Gmail address, and having their employees email that email address with the time that they spent that day working. Either it was a daily practice or an end of the week practice. And I didn't even know what to say to 'em. I was just like, that's not a good idea, you know?

[00:38:16] And so just to speak — not to over-praise what you guys are doing at Busy busy, but that looks amazing. So I want to echo it.

[Alex Medina]

[00:38:24] I'll, I'll send you your check later, Jeff. I can owe you one too, Alex. I want one of the hats — we want one of your hats, uh, Royce, it looks great.

[Jeff Russell]

[00:38:35] Um, so when it comes to other solutions, we're talking about training and tools here, right? Tools are absolutely imperative. Tools like Busy busy are imperative to moving forward, getting those systems set up, getting your procedures set up. Alex talked about one of the reasonable steps when it comes to PAGA reduction in penalties is you need to get your practices set up, your lawful procedures, and then perform audits of those.

[00:39:07] So not only do you need to have those systems set up properly, but they need to be set up in a way that you can audit everything. Um, one of the most important things that people also don't consider in this process is everybody has to learn all these new things, right? If everyone has been submitting their time to one simple Gmail address, every week they have to learn how to do something a different way. And they also have to learn the rules and responsibilities that they're supposed to follow.

[00:39:33] And that's where we have some other solutions. Uh, and that's where we've been kind of focusing our time at Cal Comply — we were the first wage and hour training on the market. We're the most comprehensive. Uh, we offer training that is California specific. 'Cause a really important thing — you'll see a lot of other providers out there providing wage and hour training now that there's hope for PAGA cases, now that there's the ability to reduce your penalties by doing training. Some other people have provided it, but it's not California specific. So that's what we've been focusing on

[00:40:08] because training is reinforcement. It helps people learn a new way of operating in order to make sure that you're reducing those penalties. And unfortunately, California requires a hundred percent compliance, as we talked about before. Employers basically always lose these cases. And it's because as human beings, we're not built for 100% compliance, right? That's why we need these tools. That's why we need regular reminders and regular training to maintain habits, learn new standards of work, and just comply with the policies that California wants us to comply with.

[00:40:50] And the problem — just to dive into this a little bit more, Bracken, you can go to the next slide — is people forget things super easily without reinforcement. They forget much of what they learned. Back in the day, uh, 1800s, I believe there was a German psychologist named Hermann Ebbinghaus, and he came up with this graph right here.

[00:41:08] And if you're a little confused, don't worry, I'm gonna walk you through it. Right at the beginning, at the top of that line, right near the number one, you'll see the green line starts. Basically this is showing that people forget things without reinforcement. You follow the line all the way down to the red line — within a few days, half is forgotten. We forget half of what we learn without any sort of reinforcement.

[00:41:30] In contrast, when you have repetition, when you have regular learning, that green line shows that we retain things on average much more. So that's kind of the evidence behind — look, there's these policies, there's these procedures, there's these rules, there's these risks. But if we can train people and give them the tools they need to succeed, we can insulate our business to these risks and we can help reduce the exposure of California employers. Um, and Bracken can go to the next slide.

[00:42:03] When it comes to reducing that exposure, your employees are your first line of defense on these cases. They're the ones that are going out and saying, you know, I was wrongfully terminated. And they speak with an attorney, and the plaintiff's attorney talks to 'em about that, but then asks about their meals and rest breaks. So we found that not only if we can train managers, but also the employees — train your whole team on wage and hour training that was built by legal experts designed specifically for California employers. It can help you meet those reasonable steps and qualify for penalty reduction of up to 85%, certifying your workforce against this.

[00:42:43] We've seen numerous cases where employers have taken on this training, they've helped reduce the violations of their business, and ultimately helped reduce their exposure to wage and hour cases. Um, and I won't go through every bullet point here, but just like the Busy busy team, more than happy to talk with anyone who's interested in this. We serve employers in the thousands all the way down to 10 employees. And it's just had a huge impact. It's one of the reasons I'm here today is 'cause I love helping California employers.

[Alex Medina]

[00:43:15] If I could jump in, 'cause I wrote most of the content for Cal Comply and was the co-founder of it, and I use it in mediation all the time. Um, a lot of people say — I can't even count how many times — I could go back and tell you how many cases, but off the top of my head I can't even remember, because it's every single class and PAGA case that I have, our clients use Cal Comply to mitigate against PAGA penalties. And so it's just part and parcel of what we do, because it allows us to go to mediation

[00:43:51] and say, whatever issues they had, whether they were a 2.0 on academic probation or they were already on the honor roll — that's how PAGA works, you fight back with compliance and say, we took whatever the issues were, we remediated against them. They trained, tested and certified them. It's like traffic school. I mean, what Jeff said is way more sophisticated, but that's the analogy I can think of — you watch the videos, you go through the training, all the supervisors, all of the employees, and then they take a test, they get a hundred percent, and then that certification that they sign goes into their personnel file.

[00:44:21] So not only are we helping the employees and employers have a culture of compliance, and then we're helping them get out of these lawsuits for lower than what is the market value of these settlements — but then for any future case, all of you know this 'cause you've gotten those records requests from those law firms that we all know about, that ask for their payroll files and personnel files — that if they get a certification from that employee showing that you are treating wage and hour compliance like a health and safety issue, along with an arbitration agreement — free advice for you — that is going to be a red flag saying, don't sue me, because we are going to make it very hard for you,

[00:45:02] and your ROI, your return on investment, is going to go way down because you're gonna have to spend a lot of time and money to get very little out of us, because the pie is going to be a lot smaller because of the penalty reduction for doing very minimal effort on your end in terms of rolling out a fairly streamlined training program.

[Jeff Russell]

[00:45:22] You took the words right outta my mouth, Alex. That's what I was gonna say.

[Alex Medina]

[00:45:25] It's okay. I, it probably sounded better coming from you.

[Bracken]

[00:45:30] Um, well, and just to circle back, that is exactly again why we are presenting to you guys today and where this partnership really comes into play. One of my favorite quotes is by Benjamin Franklin, and it's "an ounce of prevention is worth a pound of cure." And I think that really proves itself both in California wage and hour litigation and just in general with protecting your business.

[00:45:56] Um, the fact that California considers wage and hour to be up there with like OSHA and up there with — sorry, I just got distracted — up there with doing your toolbox talks and things that way. Like as a California contractor, you guys have a leg up because you're already used to doing those toolbox talks and you're used to doing those trainings. If you're not, you should be.

[00:46:18] Um, and that's really where a super strong defense comes into play. Um, and again, with "the ounce of prevention is worth a pound of cure" — one thing that Busy busy does, shameless plug, is we have a lunch break reminder. You've been working on the clock, you're about to hit five hours, we'll ping their phones and remind them that it's time to take that break or that lunch. But again, prevention is cheaper than defense, and I don't want to scare you guys, but there are ways to prevent it.

[00:46:50] So, um, let me skip actually to the next slide here. Uh, opportunity for you guys to schedule a demo with both Busy busy and Cal Comply, chat with us. We'd love to strategize with you and go through a bit of a strategy session there. Um, but yeah, combining — correct me if I'm wrong, Jeff and Alex — but combining Busy busy records with Cal Comply's training and audits creates that layered defense for contractors.

[Jeff Russell]

[00:47:13] Yeah, absolutely. And by the way, I'm just recognizing right now we probably should include a link to speak with Alex. 'Cause as you can tell everyone, he's chock-full of knowledge and has been in this space for so long and knows exactly what to do. So if anyone wants advice, we will reach out after this to make sure you have all of our contact information. You can get in touch with us, and we're also gonna answer some of your questions here really shortly.

[Alex Medina]

[00:47:39] Yep. Happy to chat with anybody.

[Bracken]

[00:47:41] Awesome. One thing that we had noted here to talk about as well is positioning compliance not as a burden, but as a competitive advantage in construction bidding, recruiting. I mean, I think that better labor job costing gives you a competitive edge in your estimates, right? 'Cause you can actually go back and look at those things. But the same thing goes for the legal compliance and protecting yourself that way. It does give you a competitive edge. I know that Alex has seen it, I know Jeff's seen it. I mean we see that all the time at Busy busy — again, just ounce of prevention, pound of cure. So I think that, um, if everybody has had a chance to scan these QR codes like Jeff mentioned, we'll hit you up after. But we do have some really solid questions that, um, would love to try and get answered for you guys today. So I'm gonna go ahead and stop sharing my screen. This is your last shot to grab a QR code. Um, I'm gonna go ahead and turn that off and then let's see what we can get answered for these guys.

[00:48:37] Okay. Um, I — pretty good ones. I can hear most of these. Yeah, I've looked at 'em.

[Alex Medina]

[00:48:43] Just on your last point though, um, on a competitive advantage, Bracken, I think that's a really good — yeah, please. I like to think of it like this: uh, California and their system of laws, it's like chaos, right? And so compliance is like an anchor that gives you order in the chaos. And if you can have that culture of compliance, it's like giving you an anchor. And obviously you want to have fewer lawsuits, right? But just think of what that means. Just like when you have safety on a job site — that same type of thing. You're just gonna get sued less and your people are gonna be happier. Um, it's just gonna create a lot more peace and harmony. So just think of it like that. That's how we think about it in terms of my own culture at my own firm.

[00:49:24] Okay, so, um, Emily, you are awesome. You got a lot of great questions. I'm gonna try to hit all of them in order here. We got just a little bit of time here. Thankfully I talk fast. Can you talk about non-discretionary bonuses for non-exempt employees? The reason you were asking about that is a deadly thing in California, which is a trap to get PAGA penalties called the regular rate of pay.

[00:49:44] Okay? So, um, let me just give a little bit of overview for that. In California, there are different ways to pay certain types of things based on other types of compensation. So let me give a quick example. Most people know that when you pay overtime, it's not at their base hourly rate. Most people think it's time and a half, right? Even though the minimum wage is not 15 bucks an hour, it's different in different jurisdictions in different states. I'm not smart enough to do the math on those things. So I'm just gonna pick 15 bucks an hour or 10 bucks an hour, right? So time and a half of 10 bucks an hour would be 15 bucks an hour, right?

[00:50:19] It's not actually time and a half. What the law says, or the wage order says, is it's one and one half times the employee's regular rate of pay. That's the thing. RROP, regular rate of pay. All right? What that means is anytime you, the employer, pays an employee additional compensation, you have to factor that additional compensation into the regular rate of pay in different scenarios. Okay? This is super complex, it's super high level. We're not gonna cover here — you just need to know to spot the issue. These are the situations, okay?

[00:50:58] Overtime, sick leave, vacation, double time, split shifts, okay? There's a couple others that are kind of minor, but — oh, and meal period premiums and rest period premiums. Essentially those seven times, if you pay your people anything besides an hourly wage, you have to factor that additional pay in. So if you pay a non-discretionary bonus, like a production bonus — let's say if you finish three additional framing jobs on a certain period of time during that pay period, you have to add that bonus in. And there's a very complex formula and it might skew their overtime rate. So instead of it being 15 bucks an hour, it might be $15 and 3 cents an hour instead of 15 bucks an hour.

[00:51:54] And if you don't get it right, there is no "almost," right? And there's penalties and derivative penalties and fees on top of that. And plaintiff's lawyers love regular rate cases because, like I said, it's not only a PAGA case, there's a class action case, it goes back four years. And those are multimillion dollar cases. Those are like a dunk on top of a layup, okay? So you have to get that right. It's so bad that usually the prevailing advice is not to pay bonuses, because I don't know of a single payroll provider in California who knows how to get it right.

[00:52:26] I have threatened to sue almost every payroll provider out there — the ones that start with P, the ones that start with A, the ones that start with whatever. I'm not gonna dump on other payroll companies, but I have yet to find a single payroll provider who knows how to do it right. Okay? And that — sick leave, vacation, all of those things. And by the way, if you think your bonus plan is discretionary, you can't solve it just by saying it's discretionary. A non-discretionary bonus is a type of compensation where the employee reasonably expects to get it. Even a Christmas bonus, if you give it to them every year, can be found to be non-discretionary.

[00:53:10] So you gotta be super careful. A true discretionary bonus is like you're walking around and you're like, good job, here's 50 bucks. Or like the jelly of the month club from Christmas Vacation. Like courts, they just are trying to find ways, because — why? PAGA penalties follow the money. 65% to the state. Um, there are some cases where things have been truly discretionary, but if there are any objective criteria, most of the time an incentive compensation program will be found to be non-discretionary.

[00:53:37] You need to talk to a wage and hour lawyer, not an HR consultant, not even an advice and counsel lawyer — a wage and hour lawyer who knows regular rate of pay. If you are vetting a lawyer — and I'm not asking you for more business because I'm super busy, I'll probably refer you out — um, ask them how many regular rate of pay class action cases they've done. Super, super complex. Okay? If an employee received multiple PAGA cases with overlapping wage and hour complaints with the same class, can the other PAGA cases filed later be dismissed? Depends. Depends on if the other PAGA cases are alleging the same claims as the other ones, okay? And if they're covering the same time period.

[00:54:19] So lemme give you an example. There's a class action and a PAGA case. PAGA cases go back a year. Class actions go back four years. They both continue in perpetuity until the case ends. So let's say you got PAGA case number one and they allege everything, all the same cases. Then three weeks later, another PAGA case is filed. Those two cases are exactly the same. You theoretically could just settle the first one. But a lot of the time what you want to do is you just settle them all together, invite everybody to the same mediation, and you let all the plaintiff's lawyers figure out how they're gonna split up the pot, because they all get mad at each other and whatever.

[00:54:58] But if the second case is filed and there's an additional claim that's not in the first one, then it won't knock out the other one. So it's very important to make sure that you look at all of the claims that are involved, because you might have one that doesn't have expense reimbursement, or — and in the construction industry, what we're seeing a lot of now in PAGA cases are heat illness prevention plans, workplace violence prevention plans, potable water — 'cause you have to provide drinkable water on the construction sites. We see that a lot. That's a PAGA violation.

[00:55:28] Um, suitable seating, which is crazy. Gosh, all those types of things are PAGA violations. It's any violation of the labor code. So if you're gonna get multiple overlapping, usually the best course is talk to your lawyers, see if they have experience with that, and just have them all consolidated with one mediation and settle it all at once. Get a volume discount. Okay? What clock out systems do you recommend? Um, Busy busy, easy.

[00:55:54] Um, let's see. But yeah, here's the thing though — you wanna make sure that you are working with a system that is gonna keep all of your data secure and safe over a long period of time. Because these cases can go back multiple years. And you want to be able to run reports easily and manipulate the data, because in wage and hour cases, the devil's in the data. Like as your lawyer, I'm gonna be asking you, hey, can you run this report? Can you run this report? And if you have to do manual stuff and ask your lawyers to do manual stuff — like, I charge way too much per hour. The more things that I have to do, my team has to do manually, the more money you're gonna spend. Okay. Um, what else?

[Jeff Russell]

[00:56:31] There was another question we had coming through the Q&A. Sorry, Jeff, go ahead. Yeah — use of an employee's personal phone, how do you compensate?

[Alex Medina]

[00:56:35] So 2802 of the Labor Code requires you to reimburse employees for reasonable business expenses. Um, on personal cell phones, I usually recommend that you just kind of go above and beyond. It's a little nuanced. You're supposed to technically do like a study of their use versus personal use, but it's kind of a case by case basis. So you can either give business phones, or oftentimes we'll usually see something like 40 bucks a month. Um, I'd have to know a little bit more about your business and how many employees and what markets you're in.

[00:57:05] But if you go a little high and it's very minimal use — it's only for clocking in and out — um, you probably could maybe even get away with 25 bucks a month. Um, but it's a little bit more nuanced than that. Usually everybody has unlimited data. Expense reimbursement claims are usually an add-on claim. They're not things that usually drive an entire case. They're not things to be worried too much about — as long as you take kind of a reasonable position and stick to it and you are consistent in your reimbursement. I don't get too worried about expense reimbursement, as long as you're doing something and you're paying them something.

[Jeff Russell]

[00:57:37] I wanna echo something you just said, Alex — you recommend people go above and beyond. In case anyone hasn't recognized here, that's kind of a theme. We're all trying to help you, give you solutions that help you go above and beyond. But also the general recommendation in California — Alex, correct me if I'm wrong — is, yeah, go above and beyond. It's just the risks are too high.

[Alex Medina]

[00:57:59] Yeah. Um, here's one — I'll get a break from in a second. Somebody said, can an in-field supervisor sign off for the entire crew daily, acknowledging they took all their breaks? And done — absolutely not. No. Um, yeah. So first of all, meal breaks need to be contemporaneously tracked by the employee. You need a contemporaneous record of every single person in real time. You should have four punches every single day from every single employee that they punch, not you. And you should not have the ability to change anybody else's punches.

[00:58:30] You need to have a time sheet correction form that the employee uses that says, hey, I forgot to clock in or out, or I made a mistake on this. Four punches a day, in real time, to the second — in for the day, out for lunch, in for lunch, out for the day. No rounding, real time, no exceptions. No employer should ever clock in and out for an employee, clock in and out for lunch, or manipulate their time. There should be time sheet correction forms. Okay, rest breaks — there was a question on that.

[Bracken]

[00:58:57] Uh, how do we do that, people drop off — when you have to. Yeah, how do you combat staff not taking all breaks? We allow it and encourage breaks, but some still do not take them.

[Alex Medina]

[00:59:03] Okay. Hardest thing to explain, especially in a minute. So, um, because the law is designed to trap you in this — technically under the law, all you have to do is authorize and permit rest breaks. So you should not track them. If you track your 10-minute rest breaks, all you are doing is creating a roadmap for violations. To give you an example, let's say we're gonna track rest breaks. You're never gonna be a hundred percent no matter what you do. So let's say you're 90% — you are gonna have a 10% violation rate that you're gonna pay for without exception. All right? That sucks.

[00:59:36] So, um, the problem is, if you don't track them, then when you get sued, the burden's gonna shift to you because they're gonna say, we didn't get our rest breaks. And then it essentially becomes like a requirement. So it's that health and safety approach. You have to take that multi-step approach to make it impossible for the plaintiffs and the plaintiff's lawyers to say that the employees did not understand or realize their obligation to take rest breaks, and you have to pay rest period premiums. Your question is going to be, how do we know to pay a rest period premium if we don't track them? Glad you asked.

[01:00:17] Okay. If you take a health and safety approach to rest breaks, you're gonna catch them, because if you took a health and safety approach to a true danger on the job site, you would be monitoring and enforcing them just like you would if somebody had a life and limb issue. So it starts with a daily interactive attestation — the yes and no thing that Royce showed you. If you don't get any "nos" from time to time, somebody is lying to you, because there's no such thing as human perfection over a year. In a PAGA case, for four years in a class case, you will not have perfection. So that means you have not created a culture where people feel safe to tell you that they missed a rest break.

[01:00:58] And in your industry, you've got people who want to get the job done, you've got customers, you've got pressure to get work done and to work through breaks, and people don't want to take them. You have to force them to take them and create a culture where they feel safe to take them and to tell you when they didn't. And then you need to pay them. A California case said that proof of a lawful rest period policy is proof of one period premium paid. It's crazy that a violation is proof of compliance. Hard to describe, but that's the way it is.

[01:01:25] Um, and then having a training, whether it's Cal Comply or something else, a record that you train, test and certify — there's many other things, but if you can show that you treat rest breaks like you would any other health and safety issue, you will catch those violations. And you wanna be on that edge — you want to be like 97 to 99% compliant. You're never gonna be perfect.

[Bracken]

[01:01:45] Um, awesome. Is there anything else? We had a couple come through. I know that Royce has to jump, but — yeah, and I'm sure a lot of people have to head out — but a couple that came through the Q&A: is Cal Comply available in Spanish? I think it is, but I'll let Jeff answer that one.

[Jeff Russell]

[01:02:03] Yeah, awesome. Basically, also available in Spanish.

[Alex Medina]

[01:02:07] No bueno on the bell system. Oh — no bueno on the bell system. Vanessa, email me separately, I'll talk to you about that. But it's — uh, smart plaintiff's attorneys have said basically a bell system interrupts lunch. Let's say you have a lunch but the bell says at 12:30 — lemme give you an example. Bell, eh, everybody goes to lunch. "Hey, Roberto, come here for a second, I gotta ask you something." Takes two minutes, and Roberto goes to lunch and he comes back to lunch with everybody else. Roberto's lunch was interrupted by two minutes. Plaintiff's lawyers say your bell system actually rounds lunch or breaks. California just makes it hard on you guys. It's crazy. I would tell you to move to Utah, but we're full right now, so.

[Bracken]

[01:02:42] And no buzzer or — no, no lockout features too.

[Alex Medina]

[01:02:45] Uh, I just changed my thinking on lockout features, so that you can't clock in before 30 minutes for short lunches. I literally changed my position on this two weeks ago after a mediation, um, where the plaintiff's lawyer refused to reduce their settlement because they said lockout features are a form of rounding, and that's the new wave on the plaintiff's lawyers. So this stuff is moving really, really fast in California.

[Bracken]

[01:03:05] Well, and even when we talked prior to two weeks ago, that was a feature Busy busy had and that we were really proud of. And we were like, yeah, if they go on lunch break, they are stuck in lunch break until 30 minutes hits. Talked to Alex last week. He's like, nope, not anymore. Like it is an ever-changing landscape. I mean, being a contractor already feels like walking on a landmine of lawsuits, but being in California makes it even tougher. So, um, I sent everybody the links, chat with us. Alex would love to chat with you. He'll refer you to someone who can help you out. Jeff, Royce and I all happy to chat with you. So we'll be in touch. We'll send you guys a recording of this, and yeah, I mean, just really appreciate both of you taking some time to chat with all of us.

[01:03:44] Thanks everybody. Thanks for giving up an hour of your time. Appreciate everybody.

[Jeff Russell]

[01:03:50] Thank you. Thanks, Jeff. Bye all.

[Alex Medina]

[01:03:52] Thanks so much. Thanks everyone. Yeah. Appreciate it.