Employers in California must carefully abide by both federal and state wage rules. Federal rules include requirements to maintain certain payroll records even after someone leaves a company, as well as minimum pay standards and overtime pay requirements.
Several California laws expand on those federal rules, meaning that business is operating in California may be subject to more significant minimum wage and overtime requirements than businesses operating in other states. Overtime pay concerns contribute to many wage claims pursued in civil court, partially because California has more complicated overtime rules than other states.
There are multiple scenarios in which employers may face expensive wage claims brought by their workers. Managers and executives familiar with common reasons for wage claims can help avoid making mistakes that could cost their companies money. What company decisions might lead to wage claims brought by workers?
Treating an employer as an independent contractor might seem like a way to save the company money. However, unless they are actually an independent contractor, the organization assumes a lot of risk by classifying them as one. Independent contractors are generally not eligible for overtime wages, and therefore those that have put in long shifts as contractors might try challenging their classification as a way of receiving more money from the company.
Rounding time clock records
Employers have long chosen to pay workers in increments smaller than an hour. Some companies use 15-minute increments, while others might use five-minute increments to calculate payroll. There has recently been a high-profile employment lawsuit in California looking at timeclock rounding practices in particular. Given the proliferation of highly accurate timekeeping software, employers will have a very hard time justifying the decision to round the time that their workers are on the clock.
Requiring off-the-clock work
Perhaps a small coffee shop set out a tip jar to collect money for a pizza party while the shop was closed. Workers then had to come in and engage in a deep clean of the entire business, and the pizza was their primary compensation. Maybe workers simply have to clock out before they finish their responsibilities every day, meaning that they have 10 minutes per shift for which the company does not pay them. Organizations need to be careful about ensuring that workers do not have to fulfill routine job responsibilities off the clock, as such practices could lead to expensive worker wage claims.
Learning about and avoiding company practices that are more likely to trigger wage claims can help businesses minimize the risk of expensive employment litigation.