September 27, 2016
Five Less Obvious Wage-Hour Violations
By: Jennifer Brown Shaw and Brooke Kozak
Misclassifying employees as “exempt,”
maintaining “use-it or lose-it” vacation
policies, and denying employees meal
and rest breaks are examples of wagehour law violations we have already
thoroughly discussed. Below are a few
unlawful practices of which employers
may not be as aware.
December 1, employers paying
salaried, exempt employees less than
$47,476 per year may lose the
exemptions applicable to those
workers.
garnishments). Employees also may
authorize certain deductions such as
union dues, insurance premiums or
benefit plan contributions.
California employers are not
Employers must monitor changes to
permitted to offset amounts owed by
the federal and state minimum wages the employee against unpaid wages.
to ensure they satisfy both federal and For example, if an employee quits
state criteria for the salary basis
with a “negative” paid time off
Minimum Salary Levels of Exempt
exemptions.
balance, that is considered a debt
Employees Regularly
owed to the employer that the
California law ensures minimum
Failing to Calculate the Regular Rate employer is not allowed to take from
the final check. If an employer loans
wage, overtime pay, and meal and rest of Pay Correctly When Paying
money to an employee, the employer
break protections for most employees. Overtime
may not take a “balloon” payment
However, some employees are exempt
from the final check either. The courts
from those protections if they meet
Employers must pay overtime
certain requirements. The principal
premiums to non-exempt employees, consider the employer to be the same
as any other creditor, and therefore
exemptions – called the “white collar” e.g., “time and one-half” for hours
or “executive, administrative and
worked over eight in a workday or 40 not entitled to help itself to unpaid
professional” exemptions – require
in a workweek. There also are “double wages in the employer’s possession.
employees to earn a minimum base
time” premiums, e.g., for hours worked
Employers make other unlawful
salary. Employees who earn less than over 12 in a day.
payroll deductions as well, including:
the minimum salary do not qualify for
deducting the cost of required
the above exemptions, regardless of
Overtime premium rates are
their duties.
multiplied by the employee’s “regular uniforms, photographs, or medical or
physical examinations. Nor may the
rate of pay.” For employees whose
employer deduct for breakage or loss
Employers must be mindful of federal, hourly rates vary, or who earn
state and local wage-hour law and
compensation besides hourly pay, the of property caused by the employee’s
negligence.
must comply with whichever law is
“regular rate” calculation may be
more favorable to employees. For
complex. Incentive pay, production
example, effective December 1, 2016,
bonuses, commissions, on-call pay,
Failing to Pay for All Compensable
the minimum salary level for exempt
and shift differentials are examples of Time
employees under federal law increases wages that must be factored in to
avoid miscalculation of the regular
Compensable “hours worked”
from $455/week to $913/week. This
rate.
includes the time the employee is
federal minimum will adjust
"suffered or permitted" to work (i.e.,
periodically beginning on January 1,
performing work the employer knew
2020. California’s minimum salary is Improper Deductions From Wages
or should have known about). But
two times the state minimum wage,
California employers must pay at least
An
employer
generally
may
withhold
which by law will increase over the
minimum wage to employees for each
amounts from an employee's wages
next several years to $15.00 / hour.
hour they are under the employer’s
only if required to do so by state or
Because the federal minimum salary
federal law, e.g., income taxes or wage
will be higher than the state’s as of
control, whether the employee is
productively working or not.
It is illegal for employers to refuse to
pay an employee for working
unauthorized overtime. When
employees do not follow instructions
or policies, the employer’s remedy is
disciplinary action or discharge.
when “on call.” Finally, travel time
under California law includes a great
deal of paid time, some of which
employers may not realize is
compensable.
employees resist direct deposit
because, for example, they do not wish
to maintain bank accounts.
Employers have responded by offering
the option of receiving their wages on
a debit or payroll card.
Paying Employees Correctly
California employers must pay
workers in cash, or via a form of
Other mistakes employers make in
payment that readily can be
this area include failing to pay
exchanged for cash, free of charge, at a
employees for preparatory work, such California-based business such as a
as turning on equipment or changing bank. Most employers do not pay in
in and out of mandated uniforms and cash. California law imposes
protective gear, requiring employees
significant detail about everything
to take calls or respond to electronic
from the timing of payment, to what
communications after hours without must be included on the check itself,
compensation; unfavorable time clock to what information must be provided
rounding policies; and allowing
on a pay check stub. Employers who
employees to “volunteer” to perform
do not comply with the minutiae of
unpaid work.
these laws expose themselves to
potentially massive penalties.
Employers must be careful not to
transform “on call” time into hours
Many employers offer “direct deposit”
worked by imposing too many limits of wages into an employee’s account,
on employees’ off-work activities
lawful if voluntarily authorized. Some
The legislature has not expressly
addressed the use of payroll cards in
lieu of paper checks. Employers that
treat payroll cards as a lawful means of
payment may be in for a surprise if the
practice is challenged. Employers
therefore should treat payroll cards
like direct deposit. Among other
things, the employees’ participation
should be voluntary. The entire sum
of net pay must be accessible without
a charge to the worker. Employers
offering payroll card programs are still
required to distribute proper itemized
wage statements, and must ensure
employees are furnished with an
address where they may receive the
full amount of the paycheck in cash.
Reprinted by permission of The Daily Recorder.
th
71 Stevenson Street, 4 Floor
San Francisco, CA 94105 Tel: (415) 983‐5960 Fax: (415) 983‐5963 th
980 9 Street, Suite 2300
Sacramento, CA 95814 Tel: (916) 326‐5150 Fax: (916) 497‐0708 Reprinted by permission of The Daily Recorder.
th
71 Stevenson Street, 4 Floor
San Francisco, CA 94105 Tel: (415) 983‐5960 Fax: (415) 983‐5963 th
980 9 Street, Suite 2300
Sacramento, CA 95814 Tel: (916) 326‐5150 Fax: (916) 497‐0708