Wage and Hour
If you are a non-exempt employee, under no circumstances may an employer pay you less than the minimum wage, even if you agree to a lower wage. The current minimum wage in California is $8.00 an hour.
In California, your employer may not count your tips toward the minimum wage.
If paid by piece rate or commission sales, your employer must still pay you at least the current minimum wage.
In California, an employer must follow the list of rules below with regards to payment of overtime for employees in California. There are some exceptions to these rules for certain employees that are discussed below.
- An employer must pay an employee 1.5 times their regular rate of pay for any time worked more than 8 hours in a day.
- An employer must pay an employee 2 times their regular rate of pay for any time worked more than 12 hours in a day.
- An employer must pay an employee 1.5 times their regular rate of pay for any time worked more than 40 hours a week, unless those hours have already been counted as an overtime hour, for example when computing daily overtime.
- An employer must pay an employee 2 times their regular rate of pay for any time worked more than 8 hours in a day on the seventh consecutive day in a workweek.
- (California Labor Code section 510; IWC Orders 1-2001-13-2001, 15-2001, 16-2001 section 3.)
- The Statute of Limitations for claiming unpaid regular wages, overtime and wages for missed meal and rest breaks is three years under the state Labor Code. You can claim one additional year, for a total of four years, if you add an unfair business practice claim under the Business and Professions Code or if you had a written contract for these wages. You may claim these wages by filing a claim with the Labor Commissioner or a lawsuit in civil court, however, to make the unfair business practice claim, your claim must be made through a lawsuit filed in civil court.
There is also federal law mandating overtime pay in some situations but California law is usually better for California workers under which to pursue claims.
Determining an employee’s regular rate of pay for purposes of California Overtime
Usually, a nonexempt employee’s regular rate for purposes of calculating overtime is taken by adding up everything of value that an employer compensates an employee with, excluding discretionary bonuses, in exchange for a week’s work and then dividing that total by the number of hours worked. Thus, if you are paid an hourly rate, that alone may not be your actual “regular rate of pay” if you receive some additional compensation. Special rules apply if part of your compensation is based on commission sales or a piece rate.
Finding a regular rate for purposes of California Overtime for workers paid a salary is a much simpler 3-step process:
- Step 1: Take the monthly value of all compensation and multiply it by 12 to get the annual salary for purposes of calculating overtime.
- Step 2: Divide the annual salary by 52 to get the weekly salary.
- Step 3: Divide the weekly salary by 40 to get the regular rate.
A bookkeeper is paid $20.00/hr. as an hourly rate. She is also given a company car to use in her free time, valued at $50/week. She works 8 hour shifts 5 days a week and works a 5 hour shift on Saturday. She is provided with her meal and rest breaks. Her regular rate is found as follows:
(20 x 8)5 + (20 x 5) + 50 = 950, so $950.00 is her total pre-tax compensation for the week. She worked 45 hours so dividing her total compensation by the hours worked we get
950/45 = 21.1111 and then by law it rounds up to $21.12
$21.12 is her regular rate of pay for purposes of California Overtime Law. For her 5-hour shift on Saturday she was paid $20.00/hr. but because this was more than 40 hours in a week she should have been paid 1.5 times her regular rate of pay for each hour worked. ($21.12 x 1.5) x 5 so she is owed $58.40 for each week that she worked with this compensation and with these hours. ($158.40 – $100.00 = $58.40). Since the statute of limitations goes back four years for Unfair Business Practices so long as there was a written contract for those wages, and assuming she worked 50 weeks per year with the same schedule and has worked like this for the past four years, if she filed a lawsuit for unpaid overtime she could recover up to $11,680.00 in unpaid overtime ((50 x 4) x 58.40 = $11,680.00).
John is paid a salary of $4,000/month but his employer also pays for health insurance to cover non-industrial injuries and illnesses. The health insurance he receives for himself and his family is valued at $400/month. The total monthly value of his compensation is $4,400.00. That figure multiplied by 12 is $52,800. $52,800 is John’s annual salary. $52,800 divided by 52 is $1015.39. $1015.39 is John’s weekly salary. $1015.39 divided by 40 is $25.39. $25.39 is John regular rate for purposes of California overtime.
If John had worked 50 hours per week but was paid his regular rate the entire time (and was not excluded from California Overtime law based on one of the exemptions listed below) John would be entitled to at least $126.95 per week of unpaid overtime, not including money for penalties and interest that could be added to that figure. (($25.39 x 10 x 1.5) – ($25.39 x 10)) = $126.95 If he had worked 50 weeks a year like that for the past four years he would receive at least $25,390 in unpaid overtime. ((50 x 4)$126.95 = $25,390).
Missed meal and rest break law in California
Unless an employee is exempt under one of the exemptions discussed below a employer must follow these rules:
- For every shift worked that is 5 hours or longer the employer must provide the employee with an unpaid, uninterrupted 30-minute meal break.
- For every shift worked that is 10 hours or longer the employer must provide the employee with two unpaid, uninterrupted 30-minute meal breaks. If you work 12 hours or less in a day though, the second meal break can be waived by mutual agreement.
- Your employer must permit you to leave the premises for your meal break. An “on-duty” meal is permitted only under very limited circumstances, if you and your employer have a written agreement and it must be compensated at your regular rate of pay.
- For every 4 hours worked, or major fraction thereof, the employer must provide the employee with a paid, uninterrupted 10-minute rest break.
- If the employer does not provide the employee with either a meal or rest break, that employer then owes the employee an additional hour’s pay for each workday on which the employee missed a meal break and each workday on which the employee missed a rest break.
Exceptions to overtime and meal and rest break requirements
There are some employees that are exempt from overtime and meal and rest break requirements and therefore cannot bring successful claims for these types of unpaid wages. Some of these exemptions are very rare so it would be impracticable to list them all here. The more common exemptions are:
The Executive Exemption
Employees who spend over half of their working hours managing a business or a department of a business are generally exempt.
The Administrative Exemption
Employees who spend over half their working hours assisting either a business owner or an employee exempt under a different exemption are exempt so long as they were assisting the other person in matters of significance.
The Professional Exemption
Employees who work in “learned or artistic” professions or have certain licenses to do specific jobs can be found to be exempt under this exemption.
The Computer Software Professional Exemption
Employees who work in computer software and make over $41.00/hour can be found to be exempt under this exemption.
The Outside Salesperson Exemption
Employees who generally work away from their employer’s office location can be found to be exempt under this exemption. However, this exemption does not apply if the employee spends significant time doing the same work as other non-exempt employees.
Examples of employees who have been found to be entitled to overtime pay are:
- Insurance claims adjusters and investigators
- Probation officers
- Police Detectives
- Satellite Dish installers
- Electronics technicians
- Financial or escrow workers who work for real estate or title companies.
Other exemptions include persons employed by the federal government, parents, children, and spouses of the employer; and employees covered by a collective bargaining agreement if certain wage levels and overtime premiums are met. For more information on who is exempt and who is, check here: http://www.dir.ca.gov/dlse/faq_overtimeexemptions.htm
If a worker is an independent contractor rather than an employee, that worker is not entitled to overtime pay, Workers’ Compensation Insurance, California State Disability Insurance, Unemployment Insurance, or various other benefits. However, many employers say that their employees are independent contractors because they want to avoid wage and hour requirements, and pay less taxes and Workers’ Compensation Insurance Premiums. Just because your employer says that you are an independent contractor, (and even if you agree with your employer that you are an independent contractor), that does not mean that you are an independent contractor under California law.
Under California law, there is no clear-cut test for determining whether a worker is an employee or an independent contractor. Instead, there is a list of factors that the judge is supposed to consider in making the ruling. The most important factor that courts consider is whether the employer or the worker has the right to control how the work is done. If the employer has the right to control how the work is done, the worker is almost certainly an employee. If the worker has the right to control how the work is done, the worker is almost certainly an independent contractor. (See California Labor Code Sections 3353 and 3357.)
Below is a list of factors that a judge is also supposed to consider in determining whether a worker is an employee or an independent contractor. If you answered yes to these questions, it is more likely that you are an employee.
|Answer Weighs towards independent contractor||Questions||Answer Weighs towards employee|
|NO||DOES THE EMPLOYER CONTROL HOW THE WORK IS DONE? (this is the most important question)||YES|
|Yes||Is the worker is engaged in a distinct occupation or business?||No|
|Yes||Does the worker provide their own tools, equipment, and/or place of work?||No|
|Yes||Does the work being performed require a lot of specialized skill||No|
|Short time||Over how long a period of time are the services to be performed?||Long time|
|No||Is the work being performed part of the regular business of the employer?||Yes|
|By the job||Is the method of payment by the job or by salary/by the hour?||Either by salary or by the hour|
|Independent contractor||Do the parties believe they are creating an employee-employer relationship or a independent contractor-employer relationship||Employee|
|No||Is the work the type of work that is usually performed with supervision?||Yes|
The analysis above is from the California Supreme Court Case S.G. Borello & Sons v. Dept. of Industrial Relations (1989) 48 Cal.3d 341. It is presently the controlling law in the state of California.
Why it matters whether a worker is an employee or an independent contractor
Why it matters whether a worker is an employee or an independent contractor
The burden to prove that a worker is an independent contractor is on the employer. If the employer either cannot submit evidence sufficient to prove that it is more-likely than not that the worker is an independent contractor rather than an employee, or if after all the evidence Is submitted on both the employer’s side and on the employee’s side it is more-likely-than-not that the worker is an employee, then as a matter of law that the worker is an employee rather than an independent contractor.
Employees are legally entitled to the following benefits to which independent contractors are not.
- Workers’ Compensation insurance
- Unemployment insurance (so long as the worker was not working in the US illegally)
- Social Security benefits (so long as the worker was not working in the US illegally)
- California State Disability Insurance
- Legal remedies for workplace harassment and discrimination under the California Fair Employment and Housing Act and federal law
- Health and safety protections under Cal-OSHA
All of that combined is a very big deal.
Retaliation for pursuing wage and hour claims
It is illegal under both California Law and Federal Law for your employer to retaliate against you for filing a claim for unpaid wages with the Labor Commissioner or the Department of Labor, filing a lawsuit for unpaid wages in court, and whistle-blowing about wage and hour violations by your employer even if not related to your own wages. It is illegal under the Fair Labor Standards Act at Title 29 U.S.C. Section 215(a)(3) and also under California Law at Labor Code Section 98.6(a). Actions that constitute retaliation include but are not limited to a firing, demotion, or reducing your work hours.