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As a California employer, one of your first and most important responsibilities is to comply with not just federal employment laws but also California employment laws. Many of those laws will have financial implications for your business.
The right to overtime wages, for example, can drastically increase what it costs for you to staff your business when you have to pay workers 150% of what you usually pay. Trying to minimize overtime wages can help you keep your operating expenses more manageable, but the wrong practices could leave your company vulnerable to wage claims by your workers.
What are some of the ways that companies may unintentionally run afoul of overtime laws?
Through enforcement of a no-overtime policy
Many businesses have a company policy forbidding overtime. Your company can have a stance against allowing workers to put in enough hours during one shift or over a workweek to qualify for overtime pay.
Enforcing the rule is trickier than establishing it. Your company needs to enforce that rule specifically by preventing workers from putting in too many hours. Once the workers put in the time, you have a legal obligation to pay them according to the law, regardless of your company policy.
Through low salaries
In theory, many workers paid on a salary basis are exempt from overtime pay requirements. However, only those who have a competitive salary are technically exempt and can work overtime without the requirements for you to pay them overtime wages. If you pay workers less than $35,568 per year, they are not exempt and should receive overtime pay for hours over 40 despite the salary arrangements for their weekly paycheck.
By requiring work off the clock
If you tell your workers that they must be present at the business for 10 minutes before the beginning of their shifts, you have to pay them for their time. If you want them to do prep work or cleaning, they should receive compensation for that as well. Having workers do some of their responsibilities off the clock might lead to them later asking for overtime wages for all of those hours worked without pay.
Understanding the rules that govern overtime wages can help your company avoid potentially expensive worker wage claims.