Top 10 Wage and Hour Law Mistakes by Employers

California’s wage and hour laws are not always easy to conform to and often employers are confused about how to comply with statutes. Employers have cause to worry: often, failure to follow the law can leave a company open to lawsuits and/or regulatory action.

To keep you informed about the laws that are most easily breached, this story looks at a presentation by Jennifer Shaw, partner of the Shaw Valenza law firm in San Francisco at the Society for Human Relations Managements annual convention and exposition. Shaw treated attendees at the conference to her “Top 10” list of the most common wage and hour infractions.

1. Misclassification of employees as independent contractors – One of the main factors in showing independent status is if the employer has control over the work and how that work is carried out.
2. Improperly imposing the company’s vacation policy – First off, there is no statute that requires an employer to offer vacation time, but if they do, they cannot impose a “use-it-or-lose-it” policy. An employer must pay out accrued vacation at the end of employment. That said, an employer can cap accrued vacation at a certain level as long as it is reasonable.
3. Failure to pay full amount of final wages – When you terminate an employee you are obligated to pay their wages immediately. Also, if an employee gives 72 hours’ notice or more of their intent to leave your employ, you must pay their wage or salary on their last day of work. If not, you have 72 hours to pay. If you pay via direct deposit, the same rules apply. You must make the deposit to their account on their last day.
4. Improperly handling expense reimbursement, breakage or loss and the use of uniforms and tools – You are required by law to pay all expenses an employee incurs on behalf of the company. If you require uniforms or certain tools, you must provide them at no cost to the employee. You also are barred by law from charging an employee for any breakage or loss they may be responsible for.
5. Failure to post notices as required by law – An employer is obligated under federal and state laws to post a variety of notices in the workplace. In California, along with other required postings, employers must post applicable wage orders.
6. Improperly calculating wages – Be mindful of how you calculate wages to be paid for piecework, bonuses and commissions.
7. Failing to pay overtime – All non-exempt employees that work more than eight hours in a day and 40 hours in a week are due overtime. Your employee cannot opt to forgo overtime pay and if an employee works overtime without your approval, you are obligated to pay them. You are allowed, however, to reprimand them for doing so. You are also not allowed to trade overtime for time off instead of paying the overtime rate of time and a half.
8. Failure to provide breaks and meal periods – Under state law employees are due a 10-minute break for every four hours worked in addition to a 30-minute break after working five hours. Employees can forgo a meal break if they work less than six hours. It is best to cover your bases and require that your employees take all of their 10-minute breaks and lunch periods.
9. Misclassifying non-exempt staff as exempt – Many companies don’t properly classify their non-exempt employees. Non-exempt employees are paid a salary instead of an hourly wage (which makes them exempt from overtime laws). But they can only be considered exempt if their salary is at least twice the state minimum wage. That also means that whenever the state’s minimum wage increases, the minimum salary for exempt workers also climbs.
10. Wage order mistakes – With 17 different wage orders establishing the state’s minimum wage, it’s easy to understand why employers are confused. For the best resource for finding out which wage order applies to your employees, you can visit the Industrial Welfare Commission’s website (www.dir.ca.gov/iwc/iwc.html). There you’ll see a link that reads: “Find out which wage order pertains to my occupation.”