For many California employers, wage and hour laws may be one of the most complex legal issues facing their business. The California Labor Code adds layers upon layers of complexity to the myriad federal laws under the Fair Labor Standards Act. California’s Wage Orders regulate different industries in different ways, and depending on how your particular business is organized, may have different rules applying to some of the same types of employees over various divisions.
There are any number of possible exemptions available for different types of employees performing different types of work.
Have you recently audited your payroll practices? Have you correctly classified your workers as exempt and non-exempt for purposes of overtime? Do your written job descriptions match your employees’ actual duties? Are your written meal and rest period policies compliant with California law? If not, your company may face legal exposure in class action litigation.
The worst part of dealing with a class action lawsuit may not even be having to pay back wages to your employees and former employees. More than likely, any class action lawsuit will include claims for statutory penalties, interest and attorney’s fees on top of those wages. These claims are really the “tail that wags the dog” on these lawsuits because the penalties usually exceed the actual unpaid wages by several times.
Any time an employer fails to pay even a few dollars of overtime on a paycheck, California Labor Code section 226 allows employees to collect either $50.00 or $100.00 per paycheck for a period reaching back one year from the date the lawsuit is filed. While that does not sound like a lot on its face, when multiplied by 26 or 52 paychecks per year, and again by the total number of employees on your payroll, it can quickly add up to tens or hundreds of thousands of dollars in exposure.
For help with any aspects of the Fair Labor Standards Act (FLSA), California Labor Code, the California Private Attorney General Act (PAGA) or Class Actions specific to wage and hour laws – contact The Jett Law Firm, APC to discuss your legal strategies.
If an employee’s quits or is fired without having been paid all his or her wages, including missing overtime or meal and rest period premium wages, the employee can request imposition of “waiting time penalties” under California Labor Code section 203, which amount to a full day’s pay at the employee’s regular rate for each day the wages go unpaid following termination of employment, up to 30 calendar days. In this situation, “30 calendar days” does not mean just a month’s wages, but more like six weeks’ wages if your employees work a regular five-day workweek. Again, these amounts are multiplied for each former employee who has not been paid all wages upon termination. Exposure under Section 203 can easily reach tens, hundreds of thousands, or even millions of dollars in a class action situation, depending on the number of employees you have had and how much turnover your workforce normally sees.
In addition to those amounts, California provides for the assessment of “civil penalties” for criminal violations of the Labor Code. Depending on the nature of the offense, civil penalties can be assessed on a “per paycheck” or “per employee” basis. Under the California Private Attorneys General Act (“PAGA”), a private citizen (i.e., an employee) may bring a civil lawsuit against the employer as a collective action on behalf of all injured employees at the company, acting like a bounty hunter for the State of California to collect civil penalties for it. The employees get to keep 25% of whatever amount of civil penalties is assessed, and 75% is paid to the State of California through an agency known as the Labor Workforce Development Agency.
Attorney’s fees are awarded on a mandatory basis whenever an employee receives a court judgment on either his or her wage claims, or statutory penalty claims, or civil penalty claims under PAGA.
These penalties, interest and attorney’s fees quickly dwarf the amount of wages an employer may have “saved” by cutting corners in the calculation and payment of its overtime, meal period and rest period wage obligations.