Protecting Your California Business From Wage and Hour Lawsuits

Wage and hour lawsuits are the number-one area of risk exposure in many companies.  However, owners can protect their California businesses from these expensive and time-consuming claims by knowing and following wage and hour laws, and by keeping detailed records.  Here are the basics.

1.  Post and deliver the required notices and orders.  A good first step in avoiding wage and hour lawsuits is to make sure you post and deliver the enormous number of required state and federal notices and orders that exist for the benefit of employees.  There are many orders that are industry-specific and you will need to be sure you select the correct one.  Your San Diego Law Firm business attorney can easily help you create and annually update a list of the notices and orders you need; many are available in poster or pamphlet format.  It is a very good idea to keep a checklist that each required item has been posted, or delivered to the applicable employee; this can refute any later claims of non-delivery.

2.  Know which wage order applies.  You can find information for the wage orders for 17 industries at the Industrial Welfare Commission’s (IWC) website (www.dir.ca.gov/iwc/iwc.html ).  Your business attorney at San Diego Law Firm can assist you if there is any uncertainty about which industry category encompasses your business.

3.  Require employees to take their breaks and meal periods.   California law requires employees to be given a paid 10-minute break every three and one-half hours and a 30 minute lunch break after five hours; the lunch break can only be skipped if the employee works less than 6 hours that day.  There are additional requirements for long work days and long work weeks.  The California Supreme Court has held that as long as the employer provides the break time and relieves the employee of all duty, the employer does not need to police the employee to make sure he or she does not work during the break.  However, you can still require the employee to take breaks to avoid later disputes over whether or not breaks were available.

4.  Properly classify employees as exempt or nonexempt.  In California, an exempt employee must have a fixed salary that is at least twice the minimum wage; for many specified, highly skilled jobs, it must be much higher than this.  It should also be remembered that some exempt employees, such as highly skilled computer professionals, are not exempt from timekeeping, rest breaks and meal periods requirements.

5.  Do not misclassify employees as independent contractors.  Whether a worker is an independent contractor is a legal issue that depends mainly on whether the employer has control over the work to be done and the manner in which it is performed.  An agreement between a worker and an employer to classify the worker as an independent contractor cannot change this.  A misclassification can lead to substantial penalties; if there is any question about a worker’s status, one of San Diego Law Firm’s experienced business attorney should be consulted.

6.  Pay employees for all hours worked.  California employees cannot waive their right to overtime pay.  If they work unauthorized overtime, they can be disciplined, but they still must be paid.  Overtime rules cover all hours worked over 8 in one day and 40 in one week.  Private sector employees cannot receive compensatory time instead of overtime pay.

7.  Calculate overtime correctly.  In some cases, an employee is paid by salary or piecework, and may receive bonuses and commissions.  All of these are factors that must be considered in correctly calculating overtime pay.

8.  Accrue authorized vacation time.  Employers who offer vacation must accrue unused vacation and pay for it when the employees depart.  Employers can impose a “reasonable cap” on vacation accrual and dictate when vacation must be taken.

9.  Reimburse employees for expenses, uniforms, tools, and losses. California employers must reimburse their employees for “all expenses” they incur on behalf of the employers.  Employees cannot be required to pay for specific uniforms or specific tools that are needed for their jobs.  Employees also cannot be charged for losing or breaking company property unless they were grossly negligent or intentionally dishonest. 

10.  Pay final wages on time.  When an employee is terminated, his wages are due at the time and place of termination.  No deductions other than payroll can be taken unless the employee agrees at that time.  If an employee quits with at least 72 hours’ notice, wages must be paid on the last day of work.  If the employee quits with less than 72 hours’ notice, wages are due within 72 hours after notice is given.

11.  Review employee job functions and pay rates annually.  Job duties and compensation can change over time, and employee who were exempt from overtime pay requirements may no longer be exempt at a later date.

12.  Keep excellent records of everything related to wages and hours.  The best employee records are electronic ones that show each employee’s hire date, termination date, and dates of absence, and that show changes in job, supervisor, work location, state of employment, work schedule and pay rate. Time records should also be kept electronically, by security-swipe if possible, or by computer log-in and log-out.  If time records are changed to correct an inaccuracy, the changes should be listed and signed off on by the employee, and this signature should also be signed. Pay records should be kept weekly so that any overtime due can be correctly calculated and paid, even if the employee is only given a check once a month. 

13.  Maintain your own electronic records.  Keep a copy of your employee data on a secured server off-site rather than with a time and payroll vendor; you need to be able to access it electronically as soon as it as required if you are the subject of a wage-and-hour violation claim.  Do not allow vendors to be the exclusive source of your records.  You can lose a lawsuit because a vendor went out of business, lost your records, or converted them to PDF’s that could not be reviewed in time to provide information required by court rules.  Because of the danger of flood, fire, loss, theft, and computer breakdown, you also should not keep your only copy of the records on your business premises.

Call San Diego Law Firm for Skilled Help with All Employment Disputes 

San Diego Law Firm’s business trial attorneys have many years of experience in litigating and resolving all types of employment disputes, including wage and hour claims.  We can offer you competent, understanding support in defending against these claims, and in helping you comply with employment law requirements so you can avoid problems before they arise.  We now offer extended evening hours so you can meet with us without disrupting your business. Please call us at (619) 794-0243 to make an appointment. We look forward to helping you.