What are the Fair Labor Standards Act (“FLSA”) and the California Labor Code?
The FLSA is a set of federal wage and hour laws that establish things such as minimum wage, overtime regulations, and related employee-employer standards. Similarly, the Labor Code sets out California specific wage and hour laws – laws that generally mirror the regulations set forth in the FLSA, but provide California employees and employers with California specific regulations.
As an employer in California, it is important to be aware of and understand the wage and hour rules and regulations set forth in the Labor Code. A failure to abide by these rules and regulations will often lead to lengthy and costly litigation, something every employer wishes to avoid. Because California employers are most likely to be defending against a lawsuit alleging Labor Code violations, the aim of this article is to cover the most prevalent issues you will encounter under the Labor Code as an employer.
What are the typical claims in a wage and hour lawsuit?
A wage and hour lawsuit typically includes claims of unpaid wages, wages paid below the applicable minimum wage, and either unpaid or improperly calculated overtime pay.
Who can sue for wage and hour lawsuits?
For an individual to initiate a claim under the Labor Code, an employer-employee relationship must either exist at the time the lawsuit is filed, or at some point within three years from the date when the most recent alleged violation occurred. More often than not, part-time and full-time employees who are paid on an hourly basis are considered to be an employee under the Labor Code. However, there are exceptions for individuals such as unpaid interns, externs, apprentices, and graduate assistants. Those exceptions are not considered employees under either the Labor Code.
Ultimately, whether an individual qualifies as an employee under the Labor Code requires a fact intensive analysis and must be considered on a case-by-case basis.
What are the wage and hour rules and regulations?
Minimum wage: The applicable minimum wage varies greatly from types of jobs, the status of the employees, and the local rules in cities and counties. Keeping track of the different minimum wages that may apply to your situation can be a challenge.
Overtime pay: In general, any nonexempt employees must receive pay at 1.5 times their regular rate for all hours above 40 hours per workweek. An employee may also be eligible for 2 times their regular rate if they work more than 12 hours in one day, or more than eight hours on the seventh consecutive day of the workweek. There are significant qualifications to overtime pay requirements.
Garnishment: An employee’s organization is limited in how much of an employee’s earnings they may garnish in one week. It’s important to be careful on how much you may limit your wage garnishing to comply with applicable laws.
Record-keeping: Detailed payroll records are required under the Labor Code, and there are numerous requirements that employers must follow to ensure compliance with the record-keeping requirements of the Labor Code.
Who is exempt from overtime laws?
Generally, exempt employees are not required to be paid overtime pursuant to the Labor Code. To be considered exempt, the employee’s salary must be at least double the applicable minimum wage, and they must perform executive job functions, such as managing other employees, or otherwise have the ability to make independent decisions on the job. As noted earlier, however, whether an employee qualifies as exempt is largely a fact-based inquiry that must be examined on a case-by-case basis.
Lower-level jobs that are done in-person are typically considered non-exempt, meaning employees in such roles are typically required to be paid overtime. However, it’s important to be careful when determining whether to forego paying your employees overtime pay, as the exemptions to the overtime law are sometimes held to be narrow and the categories of jobs that require overtime pay have been expanded over time.
What are the penalties for violating wage and hour laws?
The penalties for violating wage and hour laws vary greatly depending on the size and scope of the violations.
Some penalties are forms of back pay for wage violations that an employee would have received if they were paid their agreed upon wage in the first place. The courts refer to these types of penalties as “damages.” The courts are generally concerned with making people “whole” again, which means that they will mainly be focused with giving back all money that is owed to employees under the applicable laws. These damages can come from unpaid hourly wages or unpaid overtime wages.
Other penalties are for missed meal and rest breaks. In California, employers owe a penalty of one hour of pay at the employee’s regular rate for every workday in which a meal break and rest break are not provided. If an employee works an eight-hour shift, and the employer does not provide meal and rest breaks, the employee can collect two hours of pay – one hour for the missed meal period and one hour for the missed rest breaks.
If an employer does not pay the minimum wage, there are significant penalties as well. The employer may be required to pay “liquidated damages” to the employee. This means that if the employee was paid less than the minimum wage, they are entitled to liquidated damages equal to the amount of their lost wages.
Waiting time penalties may apply as well. If an employee is terminated, their employer must make the employee’s final paycheck available immediately. Further, the final paycheck must account for all wages the employee has yet to be paid to date, and unused vacation time. If the employee quits and gives at least 72 hours notice, the employer must provide the final paycheck to the employee on their last day on the job. Conversely, if an employee quits without giving at least 72 hours notice, an employer has 72 hours to pay their final paycheck. If an employer fails to comply with these requirements, every day the employee’s final paycheck is late, an employee is entitled for a full day of wages at the employee’s regular rate up to a maximum of 30 days.
Maintaining accurate wage statements is important as well. Penalties apply to employers who do not provide accurate wage statements to their employees. An employer must pay $50 to the first violation, and $100 for each subsequent violation up to a maximum penalty of $4,000.
If an employee files a lawsuit under the Private Attorneys General Act (PAGA), an employee may also be able to collect penalties for each payday law violation discussed above. Although PAGA penalties are separate from a lawsuit alleging Labor Code violations, because PAGA seeks to enforce the wage and hour rules and regulations discussed in this article, it is paramount for employers to ensure they are in compliance with the Labor Code to avoid any additional liability under PAGA.
How can I comply with wage and hour laws?
Navigating the complex and ever-changing rules the local, state, and federal authorities have put in place for wage and hour issues may feel like an impossible task. At Rupal Law, our attorneys have significant experience advising employers on how to navigate any wage and hour lawsuit they may be facing, and how to ensure they are in compliance with the Labor Code moving forward to avoid any subsequent wage and hour lawsuits.
Are you looking for an experienced Southern California Employment Lawyer?
Look no further! Trusted Corona, California based firm Rupal Law is committed to helping our clients succeed. For an obligation free consultation, please email us at info@rupallaw.com, or give us a call at (951) 460-0830.
