Silicon Valley Middle Market

Most Silicon Valley Middle Market company employers know that the California Labor Code and the Wage Orders generally require an employer to provide certain meal periods and rest breaks to non-exempt employees during their work day and that failure to do so results in a penalty equal to an additional one hour of pay for each violation.  According to California law, an employee must be relieved of all duties during their meal period and their rest breaks and this must include the ability to leave the employer’s premises.

In a recent decision involving Taco Bell’s discounted meal policy, through which it provided discounted food and drinks for any employee who worked a shift of at least two hours under the condition the employee not leave the premises during the break, the California Supreme Court rejected the employees’ arguments that the requirement they remain on premises if they purchased discounted food or drink meant that they were not relieved of all duties.
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Employers who adopt English-only policies in the workplace expose themselves to a risk of claims for discrimination.  Since the circumstances in which an English-only policy might be justified are quite narrow, employers should not adopt such a policy before conferring with counsel, and any such policies should be carefully drafted and narrowly tailored. 
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Middle Market employers in Silicon Valley need to be familiar not only with the state minimum wage, but also any local minimum wage laws that may be applicable to them, and on July 1, a few cities, including San Jose, San Francisco and Emeryville, had new minimum wages go into effect:

City Minimum Wage
San Francisco $14 per hour
San Jose $12 per hour
Emeryville $14 per hour for employers with 55 or fewer employees; $15.20 per hour with 56 or more employees

California’s minimum wage rose earlier this year to $10.50 per hour for employers with 26 or more employees.  In recent years, however, many cities and counties have enacted their own minimum wage rules. Compliance with local ordinances can be complicated, because some ordinances apply only to businesses that are based in the city in question, while others apply to all employees who work some minimum number of hours in the city.

What Should Employers Do Now?
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Employers in California, especially those in the Middle Market, are all too familiar with the tidal wave of wage and hour litigation they have confronted over the past decade plus – claims alleging misclassification, unpaid overtime, meal period and rest break violations, and pay stub violations, to name just a few.  A new decision from the California Supreme Court addresses claims based on long-ignored Labor Code statutes regarding days of rest.  Although the decision is favorable for employers in many respects, it nevertheless could foretell another species of wage and hour claim on the horizon.  In the wake of this decision, employers should consider adopting policies on days of rest and should be careful to avoid requiring non-exempt employees to work seven days within a single work week unless they work no more than 30 hours during the week and no more than six hours in any single day.
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It appears that 2016 saw a surprising and dramatic drop in patent litigation filings. As reported by Richard Lloyd of IAM Magazine,[1] recent studies released by the intellectual property firms Unified Patents[2] and RPX confirmed patent litigation filings were down almost 25% in 2016 from the prior year, the lowest volume of cases since 2011. Paradoxically, however, the risk of a patent lawsuit being brought against middle market companies may be higher than before.

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Take an extra bow if you own or run a Middle Market company. 

2016 was a great year for the Middle Market. Reports on company performance in 2016 are surfacing, and show the Middle Market continued to be a turbocharged engine driving economic growth in the U.S. The National Center for the Middle Market compiled 20 full quarters of data through Q4 2016 in its recently-released Middle Market Indicator (MMI).[1] Annual revenue growth in the Middle Market in 2016 was 6.9%, far above the S&P 500 rate of 4.4%. The Middle Market led hiring growth at 5.4%, exceeding its five-year historic average rate of 3.4%, and blasting ahead of large businesses at 2.4%, and small businesses at 1.4%.

The MMI estimates that Middle Market revenue in 2016 increased at almost double the rate of national GDP growth. Already employing approximately 47.9 million people, the Middle Market created three out of every five net new private sector jobs in 2016. That’s 60% of net new jobs last year, for a sector comprised of about 200,000 companies and making up about 1/3 of the private sector GDP.

What drives the Middle Market success? Organic growth fueled by upside opportunity not always available to large corporations or within the reach of resource-limited small companies.  Innovation to stock pipelines of new products and services.  MMI reports that 40% of Middle Market companies introduced a new product or service in 2016. Unlike large public companies, private companies making up most of the Middle Market can more easily exercise conservative fiscal management with low debt and high reinvestment or savings rates, and cautious hiring practices.  And a five-year run of overall domestic economic growth, low interest rates, cheap energy, and almost no inflation to drive up the cost of materials and wages, certainly set a perfect stage for great performance.

Will there be an encore performance for the middle market in 2017?

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