Wage and Hour

Minimum Wages

Effective January 1, 2008, the California Industrial Welfare Commission requires a minimum wage of $8.00 per hour.

The minimum salary for exempt employees, such as managers, executive, administrative and professionals exempt from overtime compensation must be at least double minimum wage.

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Overtime

In California, most employees are subject to both the Federal Fair Labor Standards Act (FLSA) and the California Labor Code.

The FLSA generally applies to employees, who in any work week engaged in interstate "commerce or in the production of goods for commerce, or employed in an enterprise engaged in commerce or in the production of goods for commerce." An "enterprise" means a business that 1) has employees engaged in commerce or in the production of goods for commerce, or has employees handling, selling or otherwise working on goods or materials that have been moved in or produced for commerce; and 2) is an enterprise whose annual gross volume of sales made or business done is at least $500,000, or, irrespective of gross sales or business volume, is 1) an enterprise which is primarily engaged in the care of the sick, the aged or the mentally ill who reside in institutions; or 2) is a school for mentally or physically or gifted children or a preschool, elementary or secondary school.

In general, the distinction between FLSA and California law, is that under FLSA, overtime is required to be paid after 40 hours of work, whereas California generally requires overtime after 8 hours per day. The industry specific Wage Orders should be consulted to determine the applicable wage order for the particular type of industry, to determine the exact requirements for the payment of overtime.

Generally, under both Federal and California law, certain exceptions may apply. These exceptions are generally for employees employed in executive, managerial, administrative, professional positions or as outside salespersons. These are known as "white collar" exemptions. Exempt employees are required to be paid a salary, which is generally not based upon the quantity or quality of their work. Additionally, California law requires that the salary be at least two times the minimum wage, for the employee to be exempt from the payment of overtime.

To determine if an employee is exempt, usually requires a fact-specific inquiry. The most frequently disputed exemption issue is whether or not an employee is a "supervisor." Employers frequently give employees titles of "supervisor" or "manager," then pay them a salary, only later to find out that the employee was not truly exempt from overtime pay, due to the nature of their duties or the number of persons they supervised.

You should contact our office for an appointment to have us evaluate your exact job position to determine whether you may be entitled to unpaid overtime pay.

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Rest and Meal Breaks

Under the Federal Fair Labor Standards Act (FLSA) and California law, the time of an employee's rest periods are counted as compensable working time. Employees must be given 10-minute rest periods for every 4 hours of work, to be taken in the middle of each 4 hour period as far as practical.

The employer must allow the employee to take a meal period after 5 hours of work, unless the work day can be completed within 6 hours. The meal period must be at least 30 minutes, during which time the employee must be completely relieved of their duties. If employees are required to eat at their work stations, they must be compensated for the time.

If the employer does not provide the employee with the required meal break, the employer must pay the employee an additional hour of pay.

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Waiting or On-Call Time

While an employee is on-duty, all waiting time is compensated. While an employee is off-duty, however, but required to be on-call, the time during which the employer controls the employee's time may be compensable. If the employee cannot use their time effectively for their own purposes, then the time may be compensable. To determine whether the waiting time must be compensated, the Courts consider the degree to which the employees are free to engage in personal activities during on-call time, agreements regarding on-call time between the employer and the employee, whether there are on-premise living requirements, the amount of time spent by the employee handling on-call duties, or whether using a pager can ease restrictions.

Generally, under the Federal Labor Standards Act, if employees are not required to remain on the employer's premises but are merely required to leave word about how they can be reached and are sufficiently unrestricted so they can use their off duty time for personal purposes, then compensation may not be required.

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Pay Periods

Generally, employees must be paid at least twice per month. Work performed between the 1st and 15th of the month must be paid between the 16th and 26th of the month. Work performed between the 16th and the last day of the month must be paid between the 1st and 10th of the next month.

Special provisions are made for wages paid to certain employees, such as weekly or bi-weekly employees, executive, managerial and professional employees, employees who are union members or covered under collective bargaining agreements, agricultural employees, certain household domestic employees or employees of vehicle dealers who are paid on a commission basis.

The employer must post a notice in a conspicuous place, specifying the regular paydays and the time and place of payment.

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Prompt Payment of Wages Upon Termination

Employees must normally be paid not later than their regularly scheduled paydays. However, if an employee quits employment, they must be paid within 72 hours after their last day. If an employee is discharged, payment of wages must be made immediately.

Employees who are not paid their wages during the required time may file a complaint with the Labor Commissioner or file a civil action. Labor Code §203 provides that employers who fail to pay wages as required may be assessed up to 30 days pay for the employer's willful failure to pay the wages due. "Willfulness" does not require any evil purpose, but merely requires an intentional failure or refusal to pay the wages.

Labor Code Section 203 penalties usually occur in cases where an employee leaves employment and it is later determined that the employee is still owed wages in the form of overtime or minimum wages. Under such cases, the Labor Commissioner and courts routinely award Section 203 penalties, which in some cases may exceed the actual wages owed. For example, if an employee leaves employment and is still owed just one day's pay, which the employer does not pay for 31 days, then the employer is subject to the employee's daily wage continuing for 30 days. Further, "30 days" does not mean one month, but rather 30 days worth of wages.

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Expense Reimbursement

California Labor Code Section 2802 provides that an employer must reimburse its employees for all reasonable and necessary losses they incur during the regular discharge of their duties.

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Accurate Wage Statements

Itemized statements must be provided to employees with their pay. The statements should show their wages earned, the total hours worked for the pay period, their rate of pay, a listing of all deductions taken from the pay and the net wages earned. The employer should provide current and former employees with their right to inspect or copy their records.

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Misclassification as Independent Contractors

An true "independent contractor" is typically an individual that is in business for themselves. Some companies misclassify employees as independent contractors so they can evade the wage laws, such as the requirement to pay overtime, provide meal and rest breaks and reimburse expenses.

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Salesperson Misclassification

Certain employees are exempt from some wage laws relating to overtime pay and meal and rest periods. Frequently, "Route Sales Representatives" may be entitled to overtime if, for example, less than half their pay is from commissions.

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