How Can California Employers Protect Themselves from Wage and Hour Claims?

Wage and hour claims are among some of the most common lawsuits faced by employers in California. These types of claims can arise when an employee accuses their employer of withholding the wages they earned or having paid the employee improper wages. An employee might file a wage and hour claim when they resign or are terminated — or the wages might be sought while they are still employed with the company. Employers should have an understanding of how they can protect themselves from wage and hour claims before they occur.

What Can California Employers Do to Protect Themselves from Wage and Hour Lawsuits?

The California Labor Code provides many protections to workers regarding their wages and hours. However, employers are not always versed in these laws or aware of their legal duties. Failing to adhere to these laws — whether mistakenly or intentionally — can result in serious legal consequences. Not only can employers end up paying more than the original wages, but in some cases, they may also face criminal liability.

Employers can do a few things to help protect themselves from wage and hour lawsuits, including the following:

• Don’t mistakenly or intentionally misclassify employees — It’s crucial for employers to know the difference between independent contractors and employees. While independent contractors work on a freelance basis, employees are those over whom an employer can exercise control. Employees have many legal rights that are not afforded to independent contractors, including the right to overtime pay, meal breaks, and minimum wage. Moreover, there are very few circumstances in which an individual qualifies as an independent contractor. Always seek legal advice regarding the proper classification of all employees.
• Know which employees are “exempt” — Knowing whether employees are exempt or nonexempt for the purpose of overtime pay can be confusing. In California, employees may be exempt based on salary, duties, the independent judgment rule, or if they fall into a specific exemption category.
• Don’t ask employees to work during their lunch breaks — Under California law, an employer may not permit an employee to continue working through their lunch break or remain “on-call” during that time.
• Know when employees are entitled to overtime pay — In addition to understanding who is exempt from overtime pay, it’s critical to know when it must be paid. California overtime begins after eight hours have been worked in a single workday and must be paid at a rate of 1.5 times an employee’s regular pay rate. Overtime may also apply when an employee works over 40 hours per week, regardless of how many hours are worked in a day.
• Don’t have employees work off the clock — It is illegal to have employees work off the clock in California. Employees must be paid for all hours worked.
• Know the final paycheck rules — California has specific laws in place concerning when employees must be paid. Employees who quit without notice must receive their final paycheck within 72 hours. If the employee provides 72 hours of notice or is terminated, they must receive their final paycheck upon separation.

If you’re an employer who was subjected to a wage and hour lawsuit, it’s necessary to begin collecting relevant evidence to support your defense as soon as possible. This can include time logs, employment records, payroll documentation, and any other evidence that can shield you from liability and establish your defense.

Defense Strategies in Wage and Hour Claims

There are several viable defenses an employer may assert when it comes to a wage and hour lawsuit. If an employee brings a claim for willful failure to pay wages, an employer might be able to show that they acted in good faith and with reasonable grounds to believe they did not intentionally violate the law. This is referred to as the “good faith defense.”

Additionally, an employer may be able to argue that the employee’s claim should be barred if it was not raised before the statute of limitations expired. Depending on the facts and circumstances, an employer may also assert that the employee meets the criteria for an exemption or another exception applies.

It’s also essential for employers to understand where the claim should be adjudicated. The Labor Commissioner only has the authority to hear certain claims, such as demands for compensation, actions to recover wages, and those involving monetary penalties. If the employee has filed any other type of claim, it cannot be decided by the Labor Commissioner and must be heard in court. Notably, counterclaims made by an employer must be filed in court.

What Happens After a Wage and Hour Claim is Filed?

In cases filed with the Labor Commissioner’s Office, a settlement conference to resolve the issue is typically scheduled after the claim has been investigated. If a resolution is not reached, a hearing will be scheduled at which a hearing officer can review the evidence and make a determination on the claim. The party who does not prevail at the hearing stage may file an appeal with the California Superior Court within ten days of the decision.

In the event a wage and hour claim is filed in court in connection with another employment issue, the parties may negotiate a settlement during the litigation process. Mediation may also be utilized to help the parties reach an agreement. If a resolution cannot be reached, a judge will hear the case and determine the outcome.

Contact an Experienced California Employment Law Attorney

It’s vital for employers to understand the state and federal employment laws regarding wages and hours. The employment law attorneys at White & Bright, LLP skillfully assist employers in California with a wide variety of employment litigation matters and advise them regarding their legal obligations. We welcome you to contact or call us at (760) 747-3200 to learn more about our legal services.