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California

California employment laws are both complex and numerous. For complete details, please contact the California Department of Industrial Relations (www.dir.ca.gov).

Minimum wage

Although there are some exceptions, almost all employees in California must be paid the minimum wage as required by state law. Effective January 1, 2008, the minimum wage in California is $8.00 per hour. There are some employees who are exempt from the minimum wage law, such 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.

There is 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.

There are also exceptions for employees who are mentally or physically disabled, or both, and for nonprofit organizations such as sheltered workshops or rehabilitation facilities that employ disabled workers. Such individuals and organizations may be issued a special license by the Division of Labor Standards Enforcement authorizing employment at a wage less than the legal minimum wage.

Overtime

In California, the general overtime provisions are that a nonexempt employee 18 years of age or older, or any minor employee 16 or 17 years of age who is not required by law to attend school and is not otherwise prohibited by law from engaging in the subject work, shall not be employed more than eight hours in any workday or more than 40 hours in any workweek unless he or she receives one and one-half times his or her regular rate of pay for all hours worked over eight hours in any workday and over 40 hours in the workweek. Eight hours of labor constitutes a day's work, and employment beyond eight hours in any workday or more than six days in any workweek is permissible provided the employee is compensated for the overtime at not less than:

One and one-half times the employee’s regular rate of pay for all hours worked in excess of eight hours up to and including 12 hours in any workday, and for the first eight hours worked on the seventh consecutive day of work in a workweek; and

Double the employee’s regular rate of pay for all hours worked in excess of 12 hours in any workday and for all hours worked in excess of eight on the seventh consecutive day of work in a workweek.

There are, however, a number of exemptions from the overtime law. An "exemption" means that the overtime law does not apply to a particular classification of employees. There are also a number of exceptions to the general overtime law stated above. An "exception" means that overtime is paid to a certain classification of employees on a basis that differs from that stated above.

Tips and Gratuities

Labor Code Section 351 prohibits employers and their agents from sharing in or keeping any portion of a gratuity left for or given to one or more employees by a patron. Furthermore it is illegal for employers to make wage deductions from gratuities, or from using gratuities as direct or indirect credits against an employee’s wages. The law further states that gratuities are the sole property of the employee or employees to whom they are given. "Gratuity" is defined in the Labor Code as a tip, gratuity, or money that has been paid or given to or left for an employee by a patron of a business over and above the actual amount due for services rendered or for goods, food, drink, articles sold or served to patrons. It also includes any amount paid directly by a patron to a dancer covered by IWC Wage Order 5 or 10.

Deductions

Under California law, an employer may lawfully deduct the following from an employee’s wages:

Paydays, pay periods and final wage

Paydays and Pay Periods In California, wages, with some exceptions (see below) must be paid at least twice during each calendar month on the days designated in advance as regular paydays. The employer must establish a regular payday and is required to post a notice that shows the day, time and location of payment. Wages earned between the 1st and 15th days, inclusive, of any calendar month must be paid no later than the 26th day of the month during which the labor was performed, and wages earned between the 16th and last day of the month must be paid by the 10th day of the following month. Other payroll periods such as weekly, biweekly (every two weeks) or semimonthly (twice per month) when the earning period is something other than between the 1st and 15th, and 16th and last day of the month, must be paid within seven calendar days of the end of the payroll period within which the wages were earned.

Overtime wages must be paid no later than the payday for the next regular payroll period following the payroll period in which the overtime wages were earned. An employer shall be in compliance with Labor Code Section 226(a) relating to total hours worked by the employee if the overtime hours are recorded as a correction on the itemized statement for the next regular pay period and include the dates of the pay period for which the correction is being made.

Exceptions to General Payday Rules

Executive, administrative and professional employees: May be paid once a month on or before the 26th day of the month during which the labor was performed if the entire month’s salary, including the unearned portion between the date of payment and the last day of the month, is paid at that time. Such employees may be paid more frequently, however.

Workers employed by a farm labor contractor: Must be paid on payroll periods at least once every week on a business day designated in advance by the farm labor contractor. Payment on such payday must include all wages earned up to and including the fourth day before such payday.

Employees in agriculture, horticulture and viticulture, stock or poultry raising, and household domestic service who are boarded and lodged by their employer: Must be paid once in each calendar month on a day designated in advance by the employer as the regular payday. No two successive paydays shall be more than 31 days apart, and the payment must include all wages up to the regular payday.

Employees of a motor vehicle dealer licensed by the Department of Motor Vehicles who are paid commission wages (mechanics and other employees performing repair or related services are not considered commissioned employees.): Must be paid once during each calendar month on a day designated in advance by the employer as the regular payday. However, when such employees are covered by a collective bargaining agreement that provides for the date on which wages shall be paid, such arrangement takes precedence over state law.

Final Payment of Wages

An employee who is discharged must be paid all of his or her wages, including accrued vacation, immediately at the time of termination.

A group of employees who are laid off by reason of the termination of seasonal employment in the curing, canning, or drying of any variety of perishable fruit, fish or vegetables, must be paid within 72 hours after the layoff. Payment shall be made by mail to any such employee who so requests and designates a mailing address therefor.

An employee engaged in the production of motion pictures who is laid off and whose unusual or uncertain terms of employment require special computation in order to ascertain the amount due, must be paid by the next regular payday. The payment of wages to employees covered by this section may be mailed to the employee or made available to the employee at a location specified by the employer in the county where the employee was hired or performed labor. The payment shall be deemed to have been made on the date that the employee’s wages are mailed to the employee or made available to the employee at the location specified by the employer, whichever is earlier. For purposes of this section, an employment terminates when the employment relationship ends, whether by discharge, lay off, resignation, completion of employment for a specified term, or otherwise.

An employee engaged in the business of oil drilling who is laid off must be paid within 24 hours after discharge, excluding Saturdays, Sundays, and holidays.

If employees are employed at a venue that hosts live theatrical or concert events and are enrolled in and routinely dispatched to employment through a hiring hall or other system of regular short-term employment established in accordance with a bona fide collective bargaining agreement, these employees and their employers may establish terms in their collective bargaining agreement the time limits for payment of wages to an employee who is discharged or laid off.

An employee without a written employment contract for a definite period of time who gives at least 72 hours prior notice of his or her intention to quit, and quits on the day given in the notice, must be paid all of his or her wages, including accrued vacation, at the time of quitting. An employee without a written employment contract for a definite period of time who quits without giving 72 hours prior notice must be paid all of his or her wages, including accrued vacation, within 72 hours of quitting. An employee who quits without giving 72-hours prior notice may request that his or her final wage payment be mailed to a designated address. The date of mailing will be considered the date of payment for purposes of the requirement to provide payment within 72 hours of the notice of quitting.

The place of the final wage payment for employees who are terminated (or laid off) is the place of termination. The place of final wage payment for employees who quit without giving 72 hours prior notice and who do not request that their final wages be mailed to them at a designated address, is at the office of the employer within the county in which the work was performed.

Direct Deposits

Direct deposits of wages to an employee’s bank, saving and loan, or credit union account that were previously authorized by the employee are immediately terminated when an employee quits or is discharged, and the payment of wages upon termination of employment in the manner described above shall apply UNLESS the employee has voluntarily authorized that deposit and provided that the employer complies with the provisions of the Labor Code relating to the payment of wages upon termination or quitting of employment.

Waiting Time Penalty for Failure to Pay Wages

An employer who willfully fails to pay any wages due a terminated employee (discharge or quit) in the prescribed time frame may be assessed a waiting time penalty. The waiting time penalty is an amount equal to the employee’s daily rate of pay for each day the wages remain unpaid, up to a maximum of thirty (30) calendar days. Mamika v. Barca (1998) 68 Cal.App4th 487.

An employee will not be awarded waiting time penalties if he or she avoids or refuses to receive payment of the wages due. If a good faith dispute concerning the amount of the wages due, no waiting time penalties would be imposed. A "good faith dispute" that any wages are due occurs when an employer presents a defense, based in law or fact which, if successful, would preclude any recovery on the part of the employee. The fact that a defense is ultimately unsuccessful will not preclude a finding that a good faith dispute did exist. However, a defense that is unsupported by any evidence, is unreasonable, or is presented in bad faith, will preclude a finding of a "good faith dispute".

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.

Meal Periods

Under California law employees must be provided with no less than a thirty-minute meal period when the work period is more than five hours (more than six hours for employees in the motion picture industry covered by IWC Order 12-2001.

Unless the employee is relieved of all duty during the entire thirty-minute meal period and is free to leave the employer’s premises, the meal period shall be considered "on duty," counted as hours worked, and paid for at the employee’s regular rate of pay. An "on duty" meal period will be permitted only when the nature of the work prevents the employee from being relieved of all duty and when by written agreement between the employer and employee an on-the-job meal period is agreed to. The test of whether the nature of the work prevents an employee from being relieved of all duty is an objective one. An employer and employee may not agree to an on-duty meal period unless, based on objective criteria, any employee would be prevented from being relieved of all duty based on the necessary job duties. Some examples of jobs that fit this category are a sole worker in a coffee kiosk, a sole worker in an all-night convenience store, and a security guard stationed alone at a remote site.

Rest Periods

Employers of California employees covered by the rest period provisions of the Industrial Welfare Commission Wage Orders must authorize and permit a net 10-minute paid rest period for every four hours worked or major fraction thereof. Insofar as is practicable, the rest period should be in the middle of the work period. If an employer does not authorize or permit a rest period, the employer shall pay the employee one hour of pay at the employee’s regular rate of pay for each workday that the rest period is not provided.

Every employer, including the state and any political subdivision, must provide a reasonable amount of break time to accommodate an employee desiring to express breast milk for the employee’s infant child. The break time shall, if possible, run concurrently with any break time already provided to the employee.

The employer shall make reasonable efforts to provide the employee with the use of a room or other location, other than a toilet stall, in close proximity to the employee’s work area, for the employee to express milk in private. An employer is not required to provide an employee break time for purposes of lactating if to do so would seriously disrupt the operations of the employer.

Holidays

Hours worked on holidays, Saturdays, and Sundays are treated like hours worked on any other day of the week. California law does not require that an employer provide its employees with paid holidays, that it close its business on any holiday, or that employees be given the day off for any particular holiday.

If an employer closes its business on holidays and gives its employees time off from work with pay, such a circumstance exists pursuant to a policy or practice adopted by the employer, pursuant to the terms of a collective bargaining agreement, or pursuant to the terms of an employment agreement between the employer and employee, as there is nothing in the law that requires such a practice.

Additionally, there is nothing in the law that mandates an employer pay an employee a special premium for work performed on a holiday, Saturday, or Sunday, other than the overtime premium required for work performed in excess of eight hours in a workday or 40 hours in a workweek.

Vacation

There is no legal requirement in California that an employer provide its employees with either paid or unpaid vacation time.

However, if an employer does have an established policy, practice, or agreement to provide paid vacation, then certain restrictions are placed on the employer as to how it fulfills its obligation to provide vacation pay. Under California law, earned vacation time is considered wages, and vacation time is earned, or vests, as labor is performed. For example, if an employee is entitled to two weeks (10 work days) of vacation per year, after six months of work he or she will have earned five days of vacation. Vacation pay accrues (adds up) as it is earned, and cannot be forfeited, even upon termination of employment, regardless of the reason for the termination. (Suastez v. Plastic Dress Up (1982) 31 C3d 774).

An employer can place a reasonable cap on vacation benefits that prevents an employee from earning vacation over a certain amount of hours. (Boothby v. Atlas Mechanical (1992) 6 Cal.App.4th 1595).

And, unless otherwise stipulated by a collective bargaining agreement, upon termination of employment all earned and unused vacation must be paid to the employee at his or her final rate of pay.

Reporting Time Pay

"Reporting time pay" is partial compensation for employees who report to work expecting to work a specified number of hours and who are deprived of that amount because of inadequate scheduling or lack of proper notice by the employer. The provisions of the law regarding reporting time pay are as follows: Exceptions to the requirement for reporting time pay are as follows: Additionally, employers are not obligated pay reporting time pay under the following circumstances: The reporting time pay provisions do not apply to employees on paid standby status or when an employee has a regularly scheduled shift of less than two hours, such as a relief cashier who works only during a one-hour period in the middle of the day.

Personnel Files and Records

California law requires that employers allow employees and former employees access to their personnel files and records that relate to the employee’s performance or to any grievance concerning the employee.

Inspections must be allowed at reasonable times and intervals. To facilitate the inspection, employers must do one of the following: (1) keep a copy of each employee’s personnel records at the place where the employee reports to work, (2) make the personnel records available at the place where the employee reports to work within a reasonable amount of time following the employee’s request, or (3) permit the employee to inspect the records at the location where they are stored with no loss of compensation to the employee.

Retaliation/Discrimination

Any employee, who is discharged, threatened with discharge, demoted, suspended, or in any manner discriminated and/or retaliated against in the terms and conditions of his or her employment for engaging in a “protected activity” under the jurisdiction of the labor commissioner may file a complaint with the Division of Labor Standards Enforcement (DLSE). Examples of some protected activities include filing or threatening to file a wage claim with the Labor Commissioner’s office, taking time off to serve on a jury, complaining about a safety or health hazard, and/or refusing to perform work that may be hazardous.

Workers’ Compensation Insurance

Every California employer using employee labor, including family members, must purchase Workers’ Compensation Insurance.

If you fail to have Workers’ Compensation Insurance for your employees, it can be expensive as the DLSE is required to issue and serve a stop order/penalty assessment prohibiting further use of employee labor until you do purchase Workers’ Compensation Insurance.

Effective January 1, 2011, the penalty assessed for failure to have Workers’ Compensation Insurance is based upon the greater of (1) twice the amount the employer would have paid in workers’ compensation insurance premiums during the period the employer was uninsured, or (2) $1,500 per employee.

However, there are exceptions for partnerships, if the only persons performing labor are the partners and corporations where the corporate officers are the sole shareholders; in which case, the corporation, officers and directors come under the Workers’ Compensation provisions only by election.

Independent Contractors

Employers often improperly classify their employees as independent contractors to avoid paying payroll taxes, minimum wage or overtime, or complying with other wage and hour requirements such as providing meal periods and rest breaks, etc.

Additionally, employers do not have to cover independent contractors under Workers’ Compensation Insurance. However, because potential liabilities and penalties are significant it is important that each working relationship be thoroughly researched and analyzed before classifying an individual as an independent contractor and not an employee.

You should understand that the DLSE presumes that the worker is an employee. However, the actual determination of whether a worker is an employee or independent contractor depends upon a number of factors which must be considered. Consequently, it is necessary to closely examine the facts of each relationship and then apply the law to those facts. The most significant factor to be considered is whether the person to whom service is rendered (the employer or principal) has control or the right to control the worker, the work to be done and the manner and means in which it is performed.

Wage Theft Protection Act of 2011 - Notice to Employees

Effective January 1, 2012, employers must provide notice to employees, at the time of hire, of their rate(s) of pay, designated pay day, the employer’s intent to claim allowances (meal or lodging allowances) as part of the minimum wage, and the basis of wage payment (whether paying by hour, shift, day, week, piece, etc.), including any applicable rates for overtime. The law requires that the notice contain the employer’s "doing business as" names, and that it be provided at the time of hiring and within 7 days of a change if the change is not listed on the employee’s pay stub for the following pay period.

The notice must be provided in the language the employer normally uses to communicate employment-related information to the employee, through translated notices provided by the Department of Labor.

All private sector employers are covered unless there is a specified exception. The notice is not required for an employee: directly employed by the state or any political subdivision, including any city, county, city and county, or special district; an employee who is exempt from the payment of overtime wages by statute or the wage orders of the Industrial Welfare Commission; or for an employee who is covered by a valid collective bargaining agreement if it meets specified conditions. It is important to note that charter schools, private schools, and not-for-profit corporations are covered, as they are not public entities.

Unlike New York’s law, annual notices to employees are not required under California’s wage theft protection law. California requires that changes to information initially provided in the notice shall be accomplished by issuing a new notice containing all changes within 7 calendar days after the change or in the manner described in Labor Code 2810.5(b)(1)-(2).

Information provided on this site is for informational purposes only. State laws may change and therefore we cannot guarantee that this information is complete or accurate. For detailed information please contact your state’s labor department. If you need legal advice, please consult an attorney.

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