California employment laws are some of the most complicated and technical in the nation. They are also some of the easiest for disgrunted employees to recover sizeable monetary sums, far exceeding any amount of unpaid wages, for minor and inadvertent offenses. This primer is not intended to be all inclusive. In fact, its very abbreviated and meant for the busy startup entrepeneur or small business owner.
- Meal Periods: You must provide a 30 minute unpaid meal period roughly in the middle of the shift but no later than the fifth hour. If employees work less than 6 hours, they can waive the meal period in writing. It’s unpaid so its unrestricted – it’s employees’ own time to use how they want or go where they want to go. Other than that, you must provide the meal period regardless of whether employees wants it.
- Rest Breaks: You must allow employees one 10 minute paid rest break per 4 hours worked. Rest breaks are not required for shifts less than 3.5 hours. However, for all shifts in excess of 3.5 hours, a rest break is earned by the second hour of any 4 hour segment. Unlike meal periods, if an employee doesn’t want to take a rest break, you don’t have make him or her take it. However, you cannot interfere with his or her or his right to take one – although you can control the timing of a break as long it is approximately in the middle of each 4 hour period.
- Overtime: An overtime premium is owed anytime an employee works over 8 hours in a day or 40 hours in a week. While most people understand this, violations of overtime come up in various technical ways, such as adjusting time cards to match the shift, working in two related businesses, missed meal periods, etc.
- Clock rounding and clock adjusting: Clock rounding is when an employer rounds employees’ total time based on their clocking in and out to a rounder number, e.g., to the nearest 15 minutes. Rounding is legal only if it is neutral, i.e., employees times are rounded up as often as they are rounded down, so that overall, the employee does not lose any paid time. Clock adjusting is different than clock rounding. It refers to an employer adjusting the time an employee clocked in or out. Typically this is done by employers to reflect the actual shift an employee is assigned. For example, if an employee has an 8:30 AM – 5 PM shift, with a 30 minute lunch break, and clocks in at 8:28 AM and clocks out at 5:35 PM, for a total of 8 hours and 7 minutes, the employer may not adjust the time to 8 hours to match the approved shift time. To do so would be illegal. The employer’s only legal remedy to ensure employees timely start and stop work is to closely supervise them and discipline them via counseling, supspension, or termination. Warning: if you make an employee clock in or out closely in accordance with their shift start and stop times, make sure they don’t start any work before they clock in or continue any work after they clock out, as that conduct would also be a violation.
- Improper salaries: Many businesses give salaries to employees instead of hourly wages. California and U.S. law only allow salaries for employees who are “exempt” from wage law. Such exemption is only allowed for certain classes of employees, high paid professionals or managers, etc. The law does not look at what you label your employee. The law looks at what actually they do most of their time at work to determine whether they are exempt. Improper salaried employees can result in some of the highest liability of all claims against employers because these employers typically have not kept track of the hours salaried employees worked and thus are unable to rebut employee claims.
One of the problems with these types of violations is that they tend to be systemic. That is, if they apply to one employee, they often apply to all employees, thus making the business vulnerable to a class action on behalf of all the employees, even though these employees aren’t making a claim. Additionally, the penalties for violations often far exceed the claim for unpaid wages. In addition to strict compliance, the best defense against wage claims is meticulous and extensive documentation. Documentation comes in two forms:
- Policies and procedures – In addition to helping to avoid violations, they can be strong proof of an employers practices. Please make sure to use policies drafted by a reputable trade organization or law firm specific to your state and industry. ‘Home-made” are more often “proof” of violations than proof of compliance.
- Documentation of complaints and performance: Have a good employee complaint and claim procedure and make sure the employees know about it. For example, have employee’s review their check stubs and sign acknowledgment / claim forms to claim any unpaid time. These forms can be used to bar later claims. Also, document performance, counseling, and discipline. These can later be used to rebut claims of discrimination or retaliatory termination.
The words on policies, procedures, and forms are very important and tricky. Use an attorney or a reputable source. Also, if you have not been in compliance but are concerned that coming into compliance might trigger claims, consult an attorney to develop a strategy to minimize such risk.