Primer on California Wages, Overtime Pay and Employee Benefit Laws
|Prepared By: Melissa C. Marsh, Los Angeles Employment Attorney
Written: March 2009 - Last Updated: March 2016
If you are an employer and you have failed to pay your employees properly, please Schedule a Low Cost Telephone Consultation if you would like our assistance on how to minimize the potential for employee lawsuits. In this instance, we suggest you schedule at least 30 minutes.
If you are an employee and your employer has failed to pay you all of your wages, or is failing to provide you with benefits, or is treating your unfairly, please schedule Schedule a Low Cost Telephone Consultation as soon as possible. We can help you document your situation to build a proper case, and determine if you are entitled to receive compensation, or been discriminated or retaliated against.
The following article provides a primer on California employment laws that every employer and employee should know. If you are only interested in a particular topic, click a link and it will take you to the relevant section.
California Employment Law Basic Facts - Updated July 1, 2011
California Minimum Wage Laws
California Overtime Pay Laws
California Meal and Rest Periods Laws
California Pay Days and Pay Periods
California Payroll Laws and Allowable Deductions
California Holiday and Vacation Pay Laws
California Law on Tips and Gratuities
Payment of Final Wages
Collecting Unpaid Wages, Overtime, and Penalties
Q. Does an employer have to reimburse his or her employees for their mileage?
A. YES. Pursuant to California Labor Code §2802, California employers are required to reimburse employees for all expenses incurred by the employee in performing their duties, including expenses for travel, dining, and mileage (other than to and from work/home). The employee cannot agree to waive this right to receive reimbursement.
In addition, the California Labor Commissioner has stated that any employer who reimburses its employees at less than the standard IRS mileage rate presently 54 cents per mile in 2016 (57.5 cents per mile for 2015, and 56 cents for 2014) will have to prove that the employee's actual vehicle expense was in fact less than the standard IRS mileage rate, or be subject to liability for the difference.
Q. How many hours does an employee have to work to be full-time?
A. Part-time status is determined solely by the employer. Generally, most employers consider employees who work more than 32 hours per week to be full time employees. However, some employers consider all employees who work less than 40 hours a week to be part time.
Q. Can an employee be forced to work 7 days a week?
A.The Fair Labor Standards Act (FLSA) does not limit the number of hours per day, or per week, that an adult employee can be required to work. However if you initially agreed to work say 5 days a week, and your employer unilaterally decides to increase your work schedule to 7 days a week hoping you will quit, this may be deemed a termination and would entitle the employee to unemployment insurance benefits, and possibly damages for wrongful termination.
Q. Do On Call employees have to be paid for the time spent waiting to work?
A. Generally, employees who are "On Call" must only be paid for the time when they are called in to work. The Fair Labor Standards Act requires the waiting time to be paid only if the employee must remain on, or so close to, the employer’s premises that the employee could not use the time effectively for his or her own personal purposes. If while on call, whether compensatory or not, the employee actually does engage in work (responds to a call), all time spent by the employee performing his job duties or otherwise responding is compensable time and must be paid unlessde minimus.
To determine whether an employee must be paid for time spent 'On Call', the courts typically apply a seven factor test: (1) whether there was an on-premises living requirement; (2) whether there were excessive geographic restrictions on the employee’s movements; (3) whether the frequency of calls was unduly restrictive; (4) whether a fixed time limit for response was unduly restrictive; (5) whether the On Call employee could easily trade On Call responsibilities; (6) whether use of a pager could ease restrictions; and (7) whether the employee had actually engaged in personal activities during the On Call time period.
For more information, see: Paying California Employees For On-Call Time and Compensability of Travel Time and Off-The-Clock Work.
At present, the California Minimum Wage is $10.00. With few exceptions, California employers must pay their employees at least the $10.00 state minimum wage since it is higher than the federal minimum wage ($7.65 as of Jan. 1, 2016), but in a some cases a California employer must pay their employees a higher local living wage. A California employer must [ay the higher local living wage, if the city in which they operate, or provide services to, has enacted a local minimum wage ordinance.
Local Minimum Wage For Various California Cities
||Minimum Wage – 1/1/2016
||Scheduled Minimum Wage Increases
||10-1-2016 - $12.53/hour
||$12.25/Hour for business with 55 or less employees; and $14.44/Hour for business with 55+ employees
||July 1, 2016 - $13/Hour for business with 55 or less employees; and $14.82/Hour for business with 55+ employees
| Long Beach
||$13.80/Hour for Hotel Workers
||Jan. 1, 2017 - $10.50 for employers with 25 or more employees.
||$10.50/hour for businesses with 26 or more employees; $15.37/hour for hotel workers
|| July 1, 2017 - $10.50/Hour all employers
|| July 1, 2018 - $13.25/Hr
||January 1, 2017 - $10.50/Hour
||January 1, 2017 - $11.50/Hour
||July 1, 2016 - $13.00/hour
Some employees who are exempt from the minimum wage law include: as outside salespersons, individuals who are the parent, spouse, or child of the employer, and apprentices regularly indentured under the State Division of Apprenticeship Standards. Minimum Wage Order (MW-2007). There is also an exception for learners, regardless of age, who may be paid not less than 85% of the minimum wage rounded to the nearest nickel during their first 160 hours of employment in occupations in which they have no previous similar or related experience.
Some California employers are required to pay more than the state minimum wage if they are subject to a "local living wage ordinance." These local living wage laws require California employers to pay a wage higher than the state's minimum wage, and they are spreading rapidly among local governments. For example, San Diego enacted a local living wage ordinance that requires employers providing services to the county (including medical workers) to pay their workers at least $12.02 per hour plus $2.41 per hour in health benefits (July 1, 2015 – June 30, 2016). In San Francisco, the minimum wage ordinance requires employers to pay all employees who work in San Francisco more than two hours per week, including part-time and temporary workers at least $12.25 per hour (7/1/2015-6/30/2016). In the city of Santa Monica, employers in the city's "tourism zone" must pay their hotel workers at least $13.25 per hour, and employers providing services to the City of Santa Monica must pay their workers $13.54 per hour (unless they fall within one of the exceptions). For more information, see 2016 Local City Living Wage Increases in Los Angeles and Santa Monica. See also, Local Living Wage Ordinances May Apply To ALL Employees, Even If They Work Outside The City.
On March 28, 216, California passed legislation increasing its minimum wage to not less than $15 per hour by 2022. Effective July 1, 2017, California's minimum wage shall not be less than $10.50 per hour and effective January 1, 2018, the minimum wage shall not be less than $11 an hour, with a $1 added for each year thereafter.
Q. Can an employee agree to work for less than the minimum wage?
A. No. In California, all employers are required to pay at least the state's required minimum wage and this cannot be waived by any agreement unless the employee falls into one of the four exceptions: (1) outside salespersons paid on commission; (2) apprentices regularly indentured under the State Division of Apprenticeship Standards; (3) learners, regardless of age (but only for up to 160 hours), and (4) individuals who are the parent, spouse, or child of the employer. Learners in occupations in which they have no previous similar or related experience must be paid at least $6.80 per hour (85% of the state's minimum wage) for the first 160 hours worked.
Q. Can an outside salesperson agree to work for less than minimum wage?
A. Yes. Outside salespersons are exempt from all California Industrial Wage Orders, including the state's minimum wage and California's Labor Code §1171. Inside Salespersons, however, must be paid at least the minimum wage and they are only exempt from overtime if they earn at least 1.5 times the minimum wage and if more than half of their compensation represents commissions. To be considered an outside sales person, the individual must spend at least 51% of their time away from the employer's place of business on actual outside sales visits. If the sales person is merely sitting at home and placing cold calls on behalf of the employer, the sales person is considered an "inside sales person."
Q. Is a volunteer entitled to the minimum wage? (CA)
A. YES, if you are working for a for-profit company. Only non-profit employers (such as churches and community-based organizations) can have unpaid volunteers. A true volunteer is not an employee and does not have the right to minimum wage.
Q. Are tips counted towards an employee's receipt of the minimum wage, or is the employee entitled to minimum wage plus tips?
A. Employees working in the state of California are entitled to California's minimum wage ($10 per hour) plus all of their tips. An employer may not use an employee's tips as a credit toward its obligation to pay the minimum wage.
Q. What can I do if my employer terminates me because I asked why I wasn't paid the minimum wage?
A. If your employer discriminates or retaliates against you in any manner (written warning, demotion, suspension, termination, etc.), you can file a discrimination/retaliation complaint with the Labor Commissioner or a discrimination/retaliation lawsuit in court.
If your employer has paid you less than the minimum wage and you would like the assistance of a Los Angeles, California employment attorney to negotiate a settlement with your employer, or to file a wage claim, call 818-849-5206 or Email Melissa C. Marsh.
First it must be stated that California's overtime pay laws apply not only to California employers, but also to out of state employers who send an employee into California, even on a temporary basis.
California's overtime pay laws require the payment of time and one half to non-exempt employees for: (1) each hour worked over eight in a single workday, (2) each hour worked over forty in a single workweek, and (3) the first eight hours worked on the seventh day of work in a particular workweek. California's overtime pay laws also require employers to pay employees double time for: (1) each hour worked over twelve in a single day and (2) each hour worked over eight on the seventh consecutive day of work in any given work week.
Whether an employee is exempt from overtime pay, or non-exempt from overtime pay, often gets employers who either intentionally, or accidentally, misclassify their employees into serious trouble. For more on who is exempt from overtime pay, please see California's Overtime Pay Laws – Who is Exempt From Overtime?.
If your employer has failed to pay you overtime, and if you would like the assistance of a Los Angeles, California employment law attorney to determine if you are entitled to overtime pay, or to file a wage claim, please Schedule a 15 Minute Telephone Consultation. We can help determine if you are entitled to receive compensation for lost overtime wages and if appropriate assist you with filing a claim with the Labor Commissioner, Small Claims, or in Superior Court.
Q. If an employee works unauthorized overtime is the employer obligated to pay for it?
A. Yes. California employers must pay overtime, whether authorized or not at the rate of one and one-half (1.5) times the employee's regular hourly rate for all hours worked in excess of 8 in a day and for the first 8 hours of work on the seventh consecutive day of work in a work week. Employees are entitled to double time (2.0 times the employee's rate of pay) for all hours worked in excess of 12 hours in any day and for all hours worked in excess of 8 on the seventh consecutive day of work in a work week.
If an employee works unauthorized overtime, the employer is limited to disciplining or terminating the employee. The employer must remit payment to the employee for all of the overtime hours worked.
Q. If an employee signs a paper agreeing to be salaried and exempt from overtime, can the employee still get overtime pay?
A. Yes. An employee who is entitled to overtime pay (non-exempt) cannot waive his or her right to overtime pay wages. It does not matter if the employee signed a paper agreeing to be exempt from overtime or agreeing to no overtime. The employee's actual job duties determine whether the employee is exempt from overtime and whether or not that employee is entitled to overtime pay. If the employee's job duties and salary do not meet all the requirements for an overtime exemption, the employee is entitled to overtime pay.
Q. Can an employee waive his or her right to overtime pay compensation?
A. No. California Labor Code Section 1194 requires that an employee be paid all overtime compensation even if the employee agreed to work for regular pay. In fact, a California employee cannot waive his or her right to overtime pay.
Q. When is a computer professional entitled to overtime?
A. A large portion of California's computer professionals are not entitled to overtime pay. Pursuant to Labor Code §515.5, to be exempt from overtime pay the computer professional or programmer must earn at least $87,185.14 annually, or a monthly salary of at least $7,265.43, which is effectively an hourly rate of $41.85 (2016). In 2015, to be exempt from overtime pay, the computer professional or programmer had to have earned an annual salary of at least $ 85,981.40 per year, or monthly salary of $7165.12, an effective hourly rate of $41.27.
In addition to meeting the wage requirement, the computer professional must also spend at least 50% of his or her time on:
- systems analysis (including consulting with users) to determine hardware, software or system functional specifications; or
- computer hardware design, development, documentation, analysis, creation, testing or modification (including prototypes); or
- computer software design, documentation, testing, creation or modification.
For more information on the Computer Professional Exemption From Overtime, See, California Overtime Laws Pertaining To California Computer Programmers and Software Engineers and Effect of California’s 2016 Minimum Wage Increase on Computer Professionals.
Q. If a worker agrees to work as an independent contractor, is he or she still entitled to overtime pay?
A. If a worker is misclassified as an independent contractor, when in fact that worker should be classified as a non-exempt employee, the worker is entitled to overtime pay. California employers often try to avoid paying overtime wages by classifying an employee as an 'independent contractor.' But many workers who are treated as 'independent contractors' and given a 1099 actually are entitled to receive not only overtime compensation, but a host of other benefits. The legal distinction between who is an employee and who is an independent contractor depends on the extent to which the employer dictates the terms and conditions of the job; simply treating a worker as an independent contractor, or having the worker sign an agreement saying they are an independent contractor does not excuse the employer from paying overtime and regular wages.
If you have been denied overtime pay because your employer said you were an independent contractor, and you would like the assistance of a Los Angeles, California attorney to determine if you are entitled to overtime pay, or other benefits, and to help you file a wage claim with either the California Labor Commissioner or a California Small Claims Court, call 818-849-5206 or Schedule a Telephone Consult and California Employment Law Attorney Melissa C. Marsh will answer your questions.
In California, Labor Code §512 provides that an employer must provide each employee with a 30 minute (minimum)uninterrupted off-duty meal period for every work period that exceeds 5 hours, but permits the employer and employee to agree to waive the meal period in writing if the workday is not more than six hours. Employers must also provide a second 30 minute (minimum) uninterrupted off-duty meal period if the workday will exceed ten hours, but again permits the employer and employee to agree to waive this second meal period if: (a) the total workday is not more than twelve hours and (b) the first meal period was not waived.
In addition to the required meal period(s), a California employer must also provide each employee with a 10 minute rest period ("break") for every 4 hours worked, or major fraction thereof which the California Supreme Court has defined as more than two (2) hours. California employers must therefore provide a 10 minute rest break to all nonexempt employees who work more than three and one -half (3 ½) hours but less than six (6) hours in a day. Two 10 minute rest breaks are required for nonexempt employees who work more than six hours, but less than 10 hours in a day. Three 10 minute rest breaks are required for nonexempt employees who work 10 to 14 hours in a day. Employees who work less than 3 ½ hours in a work day are not entitled to a rest break.
A question arose as to whether the employer must offer the required meal and rest breaks, or actually ensure their employees take the required meal and rest breaks. In Brinker Restaurant Corp. v. Superior Court, the California Supreme Court held that while employers cannot impede, discourage or dissuade employees from taking meal and rest breaks, employers need only provide employees with an opportunity to take their uninterrupted off-duty break, and are not required to ensure they are in-fact taken.
According to California Labor Code §512, the employer must provide an initial uninterrupted 30 minute meal break "no later than the end of an employee’s fifth hour of work" and a second 30 minute meal period "no later than the end of the employee's 10th hour of work." According to the California Supreme Court, neither the Labor Code nor IWC Wage Order No. 5 "impose [any] additional timing requirements."
Although the California Labor Commissioner has long taken the position that the meal period should be taken as close to the middle of a shift as is possible and that a second meal period must be provided no later than five hours after the end of a first meal period, the California Supreme Court in Brinker disagreed. According to the Court, meal periods can be provided early in a shift, even during the first hour of work and even before the first rest break.
Pursuant to California Labor Code §226.7, for each workday an employer fails to provide an employee with the required meal or rest period in compliance with California Labor Code §512, the employee is owed one additional hour of pay at the employee's regular rate. On-duty meal periods are permitted only in limited circumstances.
Q. Can the employer require an employee to work through lunch? Can an employee waive lunch to leave early?
A. No. California Labor Code §512 requires all California employers to provide their employees who work more than 5 hours in a day a 30-minute uninterrupted meal period during which the employee is relieved of all duties. The employee can only waive the meal period if the employee's works no more than 6 hours in a work day. In very limited circumstances an employer is allowed to provide a paid "on duty" lunch break. To provide a paid "on duty lunch break, the employer must: (1) prove that the nature of the work prevents the employee from being relieved of all duties (e.g. the employee is the only worker in a kiosk or the only security guard on site); and (2) have the employee sign an agreement consenting to an "on duty" paid meal period and advising the employee that she or he may, in writing, revoke the agreement at any time.
Q. Does the employer have to pay an employee for an on-duty meal or lunch?
A. Yes. California employers are required to pay the employee at the employee’s regular rate of pay for any on-duty meal period. Unless the employee is relieved of all duties during the required 30 minute meal period, the meal period is considered "on duty."
Q. Can the employer require an employee to stay on the premises during the meal period?
A. Yes, so long as the employee is relieved of all work duties, or falls into the exception that permits an employer to provide "on duty meal periods." However, if the employer requires an employee to stay on the premises, the employer must pay the employee his or her regular rate of pay for the meal period and provide the employee with a break room in which there is a table and chair(s), refrigerator to store meals and a microwave to warm food and beverages. Minor exceptions to this general rule exist under IWC Order 5-2001 for healthcare workers.
Q. What is the penalty if an employee fails to take their required meal break?
A. Labor Code §226.7 provides that if the employer fails to provide the required 30-minute meal period to any employee who works 6 or more hours a day, the employee is entitled to one additional hour of regular pay for each day the employee worked at least 6 hours and the meal period was not provided. The additional hour is not counted as hours worked for overtime calculation purposes. If your employer fails to pay the additional one-hour's pay, you may file a wage claim with the Division of Labor Standards Enforcement (DLSE) also known as the Labor Commissioner.
If your employer failed to provide you with either a meal period or rest break, and you would like the assistance of a Los Angeles, California attorney to file a wage claim or help you file a wae claim, call 818-849-5206 or Schedule a 15 Minute Telephone Consult and California Employment Law Attorney Melissa C. Marsh will answer your questions.
In California, all non-exempt employees must be paid their wages at least twice a month on days designated in advance by the employer as "regular paydays". California Labor Code §207 requires the employer to establish a regular pay day and to post a notice that shows the day, time and location of payment. Pursuant to California Labor Code §204, wages earned between the 1st and 15th of any calendar month must be paid on or before the 26th day of the month; wages earned between the 16th and last day of the month must be paid on or before the 10th day of the following month
An employer may also opt to pay its non-exempt employees weekly, bi-weekly or semi-monthly so long as payment is made within seven days of the end of each pay period. If an employer is closed on a payday due to a recognized holiday, payment may be made on the next business day.
Employers may pay exempt employees (e.g. executive, administrative and professional employees) once a month on or before the 26th day of the month.
Q. If an employee fails to submit a time sheet, does the employer still have to pay wages?
A. Yes. Even when an employee fails to turn in a time card or time sheet, the employer remains legally obligated to pay the employee on the established payday.
Q. If the employer fails to pay the employee on the regularly scheduled payday, what can the employee do?
A. The employee may contact the Division of Labor Standards Enforcement (DLSE) and explain that the employer is not paying the employees on the regularly scheduled paydays. The DLSE will contact and explain the law to the employer. Additionally, the employer's failure to post the payday notice required by Labor Code §207, and failure to pay wages in good funds on the regular designated paydays as prescribed in Labor Code §§ 204, 204b, 205, and 209, respectively, is a misdemeanor. See, Labor Code §215.
In California, every employer must provide its employees with an itemized statement of wages. This itemized statement, which should appear on the pay stub, must state the following:
- Employee's name and last four digits of the employee's social security number;
- Employer's name and address;
- Dates for which the employee is being paid;
- Gross wages earned;
- Net wages earned;
- If the employee is non-exempt with hourly pay, then total hours worked;
- Applicable hourly rate(s) and the number of hours worked by the employee at each rate (standard, time and a half, or double time); and
- All deductions taken.
If an employer fails to provide the appropriate itemized wage statement, the employer may be fined $250.00 per employee for the first violation and $1,000 per employee for subsequent violations. However, the penalty for the first violation may be waived if the employer can show that the error occurred due to a clerical error, or inadvertent mistake.
California Labor Code § 226 requires an employee’s wage statement to include an accurate itemized statement of the following information:
- gross wages earned;
- total hours worked by the employee (expect for salaried employees who are exempt from overtime pay);
- the number of piece-rate units earned (if the employee is paid on a piece-rate basis);
- all deductions;
- net wages earned;
- the dates of the period for which the employee is paid;
- the name of the employee and only the last four digits of the employee’s Social Security number;
- the name and address of the employer (or legal entity that is the employer);
- all applicable hourly rates in effect during the pay period and numbers of hours worked at each hourly rate by the employee; and
- accrued sick pay.
For more on California pay stubs and wage statements, please see California Employers Get 33 Days to Correct Wage Statement Errors.
California Labor Code Sections 221, 224 and 300 prohibit a California employer from deducting from an employee's wages any debts owed by the employee unless: (1) the law requires it (e.g. taxes, wage garnishment ordered by a court); or (2) the deduction was pre-authorized by the employee in writing and then only if the deduction relates to insurance premiums (e.g. health, life, etc.), hospital or medical dues, benefit plan contributions (e.g. 401K), or the deduction was a charge back on advanced unearned commissions. See also, Steinhebel v. Los Angeles Times Communications, LLC, 126 Cal.App.4th 696 (2005).
Q. If an employee fails to submit a timecard, can the employer delay paying the employee his or her wage?
A. No. An employer is obligated to pay the employee on the established payday regardless of whether or not the employee submitted a timecard. There are no exceptions. The employer must pay all of the wages it reasonably knows are due for the employee's regularly scheduled work period.
Q. Is it legal for an employer to dock an employee's wages $20 for coming to work late?
A. The answer depends on how much you earn and how late you were. California Labor Code §2928 allows an employer to deduct a half hour's wage from an employee's paycheck if the employee is late to work by less than 30 minutes. Pursuant to the same code, if the employee is more than 30 minutes late, the employer may deduct the amount the employee would have earned during the time period the employee was absent.
For example, if an employee earns $10 per hour and is 10 minutes late, the employer may deduct $5 from the employee's paycheck. If on the other hand, the employee is 45 minutes late, the employer can deduct $7.50 from the employee's paycheck (the amount the employee would have earned during those 45 minutes).
While this may come as a surprise to some, California law does NOT require the payment of Holiday Pay or Vacation Pay. However, if your employer does offer either they must comply with various state laws.
Hours worked on holidays, Saturdays, and Sundays are treated like hours worked on any other day of the week. In California, there is no law that requires an employer pay an employee a special premium for work performed on a holiday, Saturday, or Sunday. California employers are merely required to pay the overtime premium required for work performed in excess of eight hours in a day or 40 hours in a week.
Similarly, there is no California law that mandates a California employer to offer their employees either paid or unpaid vacation time. However, if an employer does have an established vacation policy, or provides an employee offer letter, or agreement, providing for a paid vacation, then California law does dictate how that employee may take or use the vacation time. California law treats earned vacation time as wages, and as such provides that vacation time is earned, or vests, as labor is performed. For example, if an employee is entitled to two weeks of vacation (10 work days) per year, after six months of work the employee will have earned five vacation days which cannot be forfeited, even upon termination of employment. Pursuant to California Labor Code Section 227.3, all earned and unused vacation must be paid to the employee on the employee's final day. Although earned vacation time cannot be forfeited, an employer can place a reasonable cap on the amount of vacation benefits that may accrue.
Q. If an employer closes his business on a holiday, are the employees entitled to wages for that day?
A. Absent a contractual agreement to the contrary, no. Even if you would have normally been scheduled to work on the holiday, your employer chose to give everyone the day off. The employer has the absolute right and discretion to give the employees the day off, pay them their regular rate of pay for hours worked, or a premium rate. Regardless of what your employer chooses to do, the determination as to whether overtime pay is due is based upon hours actually worked, not the hours for which you are paid.
Q. Can an employer have a vacation policy only for full time employees?
A. Yes. An employer’s vacation plan/policy may exclude certain classes of employees, such as part-time, temporary, casual, probationary, etc. To avoid any misunderstandings in this area, however, the employers policy should clearly state which employee classification(s) are excluded.
Q. Is a vacation policy that states that all vacation time must be used by the end of the year or its forfeited legal?
A. No. Under California law, earned vacation time is considered wages, and vacation time is earned (vests) as work is performed. Vacation pay accrues (adds up) as it is earned, and cannot be forfeited, even upon termination of employment. Suastez v. Plastic Dress Up, 31 C3d 774 (1982). If the employer fails to pay an employee his or her accrued vacation pay upon termination, the employee can either file a wage claim with the Division of Labor Standards and Enforcement (Labor Commissioner), or the employee can file a lawsuit in court against the employer to recover not only lost wages, but also the waiting time penalty provided under California Labor Code §203 (up to 30 days pay).
Q. Can an employer force the employees to take their vacation at a particular time?
A. YES. A California employer does have the right to manage its vacation pay responsibilities, and one of the ways it can do this is by controlling when vacation can be taken and the amount of vacation that may be taken at any particular time.
California Labor Code §351 prohibits an employer (the owner, managers and supervisors) from collecting, taking or receiving, in whole or in part, a tip or gratuity left by a patron of its business for an employee. Labor Code §351 further provides that the employer must pay the employee the full amount of the tip as indicated on the patron's credit card. The employer may not deduct any credit card processing fees or costs from the employee's tips, nor can the employer deduct lost revenue from a server's paycheck if a patron leaves without paying.
California law allows the owner of a restaurant to require all employees to pool, or share, their tips with the other servers, host(ess), bartenders, bus boys and the kitchen staff who provide direct table service, or assist the employee providing direct table service. On March 27, 2009, the California Court of Appeal in Etheridge v. Reins International California, Inc. held that an employer's mandatory tip-pooling policy that requires tips to be shared with the kitchen staff, even if they do NOT provide direct table service does not violate Labor Code 351 and is enforceable. Employees who are NOT permitted to share in the tip pool include owner(s), manager(s), and supervisor(s) of the business, even if they provide direct table service to a patron.
If your employer has run afoul of California's laws regarding tips and gratuities, and you would like the assistance of a Los Angeles, California attorney to answer questions, or file a wage claim with either the California Labor Commissioner or a California Small Claims Court, call 818-849-5206 or Schedule a Low Cost Telephone Consult and California Employment Law Attorney Melissa C. Marsh will call you back at the time you select.
California law requires employers to remit the payment of final wages, including all accrued vacation, within specific time periods and in a specific manner.
If the employee is fired, the employer must pay the employee's final wages and all accrued vacation time immediately at the time and place of termination. (See, Labor Code § 201 and § 227.3). However, if the employee is engaged in the production of motion pictures and the employee’s employment was irregular and thus requires special computations to ascertain the amount due, the employer must remit payment of the final wage by the next regular payday. (See, Labor Code § 201.5).
If the employee gives at least 72 hours’ notice of his or her intention to quit, and quits on the day given in the notice, the employer must pay the employee's final wages and accrued vacation time at the time of quitting. (See, Labor Code § 202). If the employee quits without giving 72 hours’ notice, the employer must pay the employee’s final wages within 72 hours of quitting. Payment should be made available at the place of employment, unless the employee requests that the final pay be mailed to a designated address. In such a case, the date of mailing will be considered the date of payment. (See, Labor Code § 202 and § 208).
If during employment, the employee authorized direct deposit of his or her wages to the employee's account, that authorization is immediately terminated when the employee is fired or quits. Employers must follow the rules above, unless the employee voluntarily authorizes that final deposit and then only if the employer makes the deposit within the required timeframe.
An employer who willfully fails to pay wages due within the required timeframe may be assessed a waiting time penalty of up to 30 days’ pay for each calendar day the employee’s wages remain unpaid. (See, Labor Code § 203). The waiting time penalty is calculated by multiplying the daily wage rate by the number of calendar days up to 30. (See, Mamica v. Barca (1998) 68 Cal.App.4th 487.) An employee will not be awarded waiting time penalties if the employee avoids, or refuses, to receive payment of the wages due OR IF a good faith dispute exists concerning the amount of the wages due. Even if there is a dispute, the employer must pay, without requiring a release, whatever wages are due and not in dispute. If the employer fails to pay what is undisputed, the "good faith" defense will be defeated whatever the outcome of the disputed wages. (See, Labor Code Section 206).
Employees in California have several choices when considering how to collect unpaid wages, overtime compensation, penalties for missed meal periods and rest breaks, and a host of other Labor Code violations.
Option No. 1. Negotiation and Settlement
One of the most effective approaches is to negotiate directly with the employer. Informal negotiation is often the fastest way to settle an unpaid wage claim. Many employers, when properly advised of the law, the potential penalties they face, and the costs of defending a wage claim, will settle a wage claim.
Option No. 2. File a wage claim with the Labor Commissioner – Division of Labor Standards Enforcement
A wage complaint can be filed against a former employer for any unpaid wages or overtime due for work performed in the last three (3) years. If the employee's unpaid work goes back more than three (3) years, the employee cannot collect on that part of the claim. Cases that are filed with the Labor Commissioner are much less formal than a traditional lawsuit, and are often heard within 90 days.
Although we do not recommend employees do this on their own, you can file a wage claim with the Labor Commissioner by completing a wage claim form (.pdf) and filing it with the Division of Labor Standards Enforcement (DLSE) at the office nearest the employee's place of employment. A list of the local offices is located here. After your claim is completed and filed with the DLSE, it will be assigned to a Deputy Labor Commissioner who will determine, based upon the information presented in your claim, if your case should proceed or be dismissed. If the Labor Commissioner decides to proceed, the parties will be notified by mail of the date, time and place of the conference hearing. The purpose of the conference is to determine the validity of the claim, and to see if the claim can be resolved (settled) without a hearing. If the claim is not resolved at the conference, the matter will either be set for a hearing. At the hearing the parties will present their evidence and witnesses, just as they would in a regular court. After the hearing, the Labor Commissioner will issue an Order, Decision, or Award (ODA) which it will serve on all parties. Either party may appeal the decision to a civil court, but the decision is binding if not appealed. If the employer appeals the Labor Commissioner's decision, the DLSE will represent any employee who is financially unable to afford counsel in a civil court proceeding.
Option No. 3. Filing a claim in Superior Court
An employee can file a lawsuit for back owed wages, penalties, and other Labor Code violations in Superior Court. In some cases, filing a lawsuit in Superior Court may be the better course of action as there are certain penalties that are available in a regular court that cannot be recovered in a case heard by the Labor Commissioner.
Option No. 4. Filing A Class Action Lawsuit On Behalf of All Employees
When an employer has a large number of employees and has committed multiple wage and hour violations, a class action lawsuit may result in significant damages.
If you would like Melissa Marsh, a Los Angeles, California employment law attorney, to assist you in filing a wage claim please call 818-849-5206, or Schedule a Low Cost Telephone Consult and Melissa Marsh will call you back at the time you select.
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