Wage and Hour Red Flags

January 2016

Part Two of a Two-Part Article By George F. Camerlengo Last month, we discussed the fact that many California employers, despite their best intentions, are frequently hit with costly wage and hour claims and lawsuits by their employees, as well as the Labor Commissioner’s own enforcement agency. We discussed eight key points, the last of which was that generally, employees cannot agree to waive rights under the Labor Code. (Written settlement agreements purporting to give up such rights for less than full reimbursement are not legally enforceable.) We conclude herein with points 9 through 16. 9. Employer must pay for all known time worked at home, traveling or “off the clock.” As noted in Part One of this article, nonexempt employees cannot waive such wages, and employers who rely on employees’ verbal statements giving up such wages do so at their peril. “Off-the-clock” work is often the subject of class action litigation and often results in significant liability. The best way to avoid such exposure is to have: 1) an accurate timekeeping policy; and 2) a written policy given to employees, which states that off-the-clock work is prohibited. Are you an employer feeling overwhelmed by your payroll system? Outsourcing your payroll to a service such as Cloudpay can help you to focus on running your business with the peace of mind that your employees are getting paid correctly and in a timely manner. Head to cloudpay.net for more. 10. Failure by the employer to maintain adequate time records. On the other hand, an employee can prove his or her hours without written documentation. 11. Employees must be paid at least two times each calendar month under Labor Code§§ 204-209 or employers face penalties for each employee and each missed pay period. There are exceptions for exempt employees, employees covered by collective bargaining agreements, and certain other categories of employees (agricultural, domestic service workers, commissioned automobile salesmen). 12. A “draw” against commission is a salary; the employer must pay all commissions when earned. 13. Employers cannot unilaterally change employment agreements (written or verbal) retroactively. 14. Using volunteers, interns, or similar individuals whose primary duties are the same as paid workers likely violates the Labor Code. The Division of Labor Standards Enforcement takes the position that individuals who volunteer their services without contemplation of payment for humanitarian, public-service or religious reasons are not employees. Using unpaid interns as volunteers may pass muster only if the employer can show the arrangement is primarily for the educational benefit of the intern, and the intern does not displace regular workers, and whose activities primarily do not primarily provide immediate advantages to the employer. 15. Starting July 1, 2015, California employees now accrue sick leave at the rate of one hour for every 30 hours and worked (Labor Code § 245 et seq.). 16. Employers must allow workers to use sick leave for family medical leave (Labor Code § 233). CONCLUSION Avoiding the above mistakes, while important, is only half the battle. Knowing the basic rules, communicating them to your managers and your employees, then making reasonable efforts to confirm the rules are actually being followed are also sound preventative measures. Having access to reliable sources of accurate information also helps. As my good friend (and walking encyclopedia of wage and hour law) Fred Duscha, puts it: “During my 25 years working for the Labor Commissioner, it amazed me how often employers got into trouble by ignoring such simple rules as keeping time records and providing deduction statements on paydays. If companies only followed half of the ‘red flag’ rules in this article, they would be way ahead of the game.” Enough said! George F. Camerlengo, a partner with with Gray Duffy, has more than 40 years’ experience as a civil litigator in the California Bay Area. The author is greatly indebted to Fred Duscha, formerly a senior attorney for the Labor Commissioner for 25 years, for his invaluable insights and review of the contents of this article. Read part one >>

Please Note: This article is necessarily general in nature and is not a substitute for legal advice with respect to any particular case. Readers should consult with an attorney before taking any action affecting their interests.