Janelle Thornton

July 20, 2023

Wage and hour litigation is costly in every way: not only in potential damages and legal fees (yours and the complaining employee(s)), but also in time, energy and peace of mind.  Your risk of making the most common mistakes (many of which can lead to this costly litigation) can be reduced if you take some simple steps. 

  1. Correctly calculate the regular rate of pay. When employees receive additional compensation, subject to some specific exclusions, the additional compensation must be included when you calculate the employees’ regular rate of pay for purposes of certain pay, such as overtime, meal and rest break premiums, and paid sick leave.  For example, if you are not considering non-discretionary bonuses and commissions, shift differentials, hazard pay, hero pay, and other incentives or compensation in doing the math on regular rate of pay, you have exposure for expensive litigation.
  2. Stop rounding employee time punches. Are you aware that rounding meal break time punches is unlawful?  And California courts regularly criticize rounding practices in general.  We are keeping an eye peeled for a decision on this subject in a pending California Supreme Court case, and in the meantime, if you can track exact time worked, we recommend you do so.
  3. Track all hours worked and have zero tolerance for off-the-clock work.  In general, employers are responsible for compensating employees for all time worked, even if work is not approved and even if the employee has worked those hours in violation of company policies forbidding unscheduled work or overtime.  Consider implementing strict time-tracking protocols and clearly written company policies that are consistently enforced.
  4. Take a close look at the contents of your paystubs and confirm they comply with the law. California has strict requirements for paystubs that often are the subject of wage and hour class and PAGA lawsuits and hefty penalties.  Periodically audit paystubs to ensure these requirements are met to reduce the risk of litigation.
  5. Ensure your overtime exempt employees actually meet the test for an overtime exemption and your independent contractors meet the test that exempts them from employee entitlements.  Remember, exempt employees need to meet both a salary test (which increases every year in California) and a duties test, as dictated by California law.  And there are strict regulations that apply to whether an a worker is an employee or a bona fide independent contractor.  Getting either wrong can be an expensive mistake.  

Common mistakes can become expensive litigation.  We can help you by auditing your existing practices to ensure you are in compliance and protected, or by providing you with the tools to audit yourself.  Let us know if we can help you become better protected from expensive wage and hour litigation. 

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