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California Penalties For Failing To Pay Overtime To Non-Exempt Employees

Prepared By: Melissa C. Marsh, Los Angeles Employment Attorney
Written: March 2009

Under California's overtime pay laws, an employee is entitled to be paid overtime pay at a rate of time and one half 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 any workweek. California's overtime pay laws also require employers to pay employees who work in California 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 workweek. Employers who fail to adhere to California's overtime pay laws can be assessed a number of penalties that will far exceed the actual amount owed to any terminated employee seeking back overtime pay wages owed.

Myth #1. - A salaried employee is exempt from overtime pay. Untrue.
Myth #2. - An employee with the title manager, or supervisor, is exempt from overtime pay. Untrue.
Myth #3. - An employee who agrees to be exempt from overtime pay is exempt. Untrue.

To determine if you, or your employee, is exempt from overtime pay see California's Overtime Pay Laws – Who is Exempt From Overtime? Misclassifying an employee as exempt from overtime pay can be a very costly mistake to an employer. Employees improperly treated as exempt from overtime pay can be awarded a significant amount in back owed wages, overtime pay, and in penalties.

Typical Unpaid Overtime Wage Example:

Assume an employee is paid $20 per hour. Assume the employee was employed for 6 months until she was terminated. Assume further that our employee was misclassified as exempt from overtime pay and is now asking her former employer for $1,000 in unpaid overtime (100 hours). California employers, listen up, take the offer! Why? Under California law when an employee is improperly classified as exempt from overtime pay, or is improperly paid, the single violation of the Labor Code often triggers multiple wage violations. Let's look at them.

Waiting Time Penalties – Up to 30 days Pay.

In addition to the actual damages owed of $1,000 for unpaid overtime, the misclassified employee is also entitled to up to 30 days pay for the employer's violation of California Labor Code $$201 and 202 which require all California employers to remit payment of all earned, but unpaid compensation, within 72 hours if the employee quits without notice, or on the date of termination if the employee is terminated. California Labor Code §203 provides that an employer's willful failure to remit payment entitles the employee to one full day's pay, up to 30 days, from the date the employee was terminated until the employee is paid, or files a lawsuit. Based on our hypothetical, our employee is entitled to $4,800 ($20 per hour x 8 Hours x 30 days).

Wage Statement Violations – Up to $4,000.

Now we are up to $5,800, but it doesn't end there. The terminated employee can also seek penalties for violations of California’s pay stub and wage statement laws. Pursuant to California Labor Code §226, California employers are required to provide every employee with an accurate wage statement that sets forth the employee's gross wages, total hours worked, all deductions taken, net wages earned, amongst other things. Since overtime hours were omitted our employee's wage statement inaccurately sets forth her gross wages and rates of pay for overtime hours worked. Since a violation of Labor Code §226 has arguably occurred our employee is entitled to: (1) $50 for the initial pay period in which a violation occurs and $100 per employee per pay period for each additional violation up to $4,000 plus an award of reasonable attorneys fees and costs.

So now our little employee who was seeking a mere $1,000 is now owed $9,800 plus reasonable attorney's fees and costs.

Missed Meal and Break Penalties – One Hour of Pay For Each Violation.

Since our employee was misclassified as exempt from overtime, it is also likely that are employee was denied the required daily meal period and rest breaks. California Labor Code §512 provides that all non-exempt employees (those entitled to overtime pay) must be given a 30 minute meal period if they work more than five hours a day, and they must be given a 10 minute rest break for every four hours worked (or major fraction thereof). Assuming our employee was given her rest breaks, it is likely she was not given an off-duty meal period. Unless the employee is relieved of all duty during his or her thirty minute meal period, the meal period is considered "on duty" and the employee must be paid for that time at his or her regular rate of pay (in our example $20). If the employer violates Labor Code §512, the employee is entitled to one hour of pay ($20) for every day a meal period was not provided.

Let's assume out worker was employed for just 6 months and that during that six months there were 123 days of work. Our employee would be entitled to additional $2,460 (123 x $20).

Now our employee is owed a total $12,260 plus reasonable attorney's fees and costs. Isn't that $1,000 offer looking attractive.

Pay Period Violations – Not likely To Be Incurred, But Can Be.

Our employee can also seek penalties for the employer's violation of California Labor Code §204, which requires California employers to remit payment of overtime wages no later than the payday for the next regular payroll period following the payroll period in which the overtime wages were earned. Although California Labor Code section 204 does not expressly provide for civil penalties, penalties can be obtained under California’s Private Attorneys General Act which provides for a $100 per employee per pay period for the initial violation, and $200 per employee for subsequent pay periods, plus reasonable attorney's fees and costs.

Our employment law practice consists of: (1) assisting employees with their wage claims and (2) counseling employers who seek to comply with new state and federal employment laws, providing human resource training, and providing essential contracts and employee policies to prevent employee lawsuits. To schedule a consultation, call 818-849-5206 or Send Us An Email.

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Los Angeles, California employment lawyer, Melissa C. Marsh, is based in Sherman Oaks and West Hollywood, and serves individuals and businesses throughout Los Angeles County, including: West Hollywood, Miracle Mile, Beverly Hills, Century City, Santa Monica, Burbank, North Hollywood, Valley Village, Toluca Lake, Studio City, Sherman Oaks, Van Nuys, Encino, and Woodland Hills.

© 2009 Melissa C. Marsh. All Rights Reserved.

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Disclaimer: The information presented on this web site was prepared by Melissa C. Marsh for general informational purposes only and does not constitute legal advice. The information provided in my articles and alerts should not be relied upon, or used as a substitute for professional legal advice from an attorney you retain to advise or represent you. Your use of this Internet site does not create an attorney- client relationship. Transmission of this article is not intended to create, and receipt of it does not constitute, an attorney-client relationship. All uses of the contents of this site, other than personal uses, are prohibited. You may print or email a copy of any information posted on this web site for your own personal, non-commercial, use, but you may not publish any of the articles or posts on this web site without the Express Written Permission of Melissa C. Marsh.

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Located in Los Angeles, California, the Law Office of Melissa C. Marsh handles business law and corporation law matters as a lawyer for clients throughout Los Angeles including Burbank, Sherman Oaks, Studio City, Valley Village, North Hollywood, Woodland Hills, Hollywood, West LA as well as Riverside County, San Fernando, Ventura County, and Santa Clarita. Attorney Melissa C. Marsh has considerable experience handling business matters both nationally and internationally. We routinely assist our clients with incorporation, forming a California corporation, forming a California llc, partnership, annual minutes, shareholder meetings, director meetings, getting a taxpayer ID number (EIN), buying a business, selling a business, commercial lease review, employee disputes, independent contractors, construction, and personal matters such as preparing a will, living trust, power of attorney, health care directive, and more.