Where Did They Go Wrong?

California’s Labor Commissioner’s Office is tasked with ensuring employees receive all monies legally due them by their employers. Since this is a state agency, most of the money collected goes to the employees and a much smaller amount to the state. We’ve provided a few cases and tips below:

  • JPI Construction LLC — [San Diego] Cited $1.7 million for allegedly failing to pay overtime to hundreds of employees. They only paid employees for 40 hours per week even though the employees consistently worked more hours. TIP: This sounds like they paid a per diem wage (flat amount for the day) but failed to recognize that, in California, the per diem can only be used for the first 8 hours in a day, then overtime is due.

  • New Vision Drywall Inc (DBA Performance Drywall) — [San Diego] Assessed $50,000 in civil penalties and paid $860,608 in back wages and liquidated damages for failing to pay overtime wages. The company owed 568 employees overtime, some of which worked up to 58 hours per week. TIP: They were reported by a non-profit labor management organization, probably in response to conversations with employees. Employees will often talk to people outside your organization when they feel they are not treated fairly.

  • Adat Shalom Board & Care Inc — [Los Angeles] Owes over $8.5 million to 148 caregivers who were paid a flat monthly amount ($1500-$1800), without overtime or meal period premium pay even though they often worked 24 hours a day, six days a week. TIP: The Industrial Welfare Commission Orders (IWCs) for this industry specify how much money can be claimed for room and board. Beyond that, a company must pay employees fairly for the 24-hour care they are offering. Even using alternate workweeks, overtime must be factored in when the work continues beyond 11 hours or 40 hours in a week.

  • Perfect Point Corp (DBA South Coast Gymnastics) — [Irvine] Cited $1.3 million for failing to pay 28 employees overtime (resulting in minimum wage violations), lacking appropriate meal and rest periods, and paystub violations. TIP: The audits conducted typically go back three years to determine how widespread the wage theft may be. In the past few years, we have seen more paystub violations because the paystub did not include all the information legally required.

  • Z & Y Restaurant — [San Francisco] Reached a $1.6 million settlement for 22 employees regarding unpaid minimum wages, overtime, split shift premiums, and tips. In addition, legal violations regarding record keeping and paid sick leave were discovered. TIP: Split shifts occur when the employer requires the employee to leave and return to work later with more than an hour gap in the work. There is a possible split shift premium due that needs to be calculated and paid each time it happens.

When cited for not paying wages in full, you’re paying more than just what was owed to the employees. The amount owed to the employees, plus interest, is called liquidated damages. The agency does the math to determine the hourly wage paid by taking total wages divided by total hours worked. If overtime isn’t paid, the employee may have been earning less than minimum wage so that is another violation. Pay is due on a very specific schedule and, if you pay late, waiting time penalties kick in. Waiting time penalties are calculated by taking the rate of the employee’s daily wages multiplied by the number of days the payment is late (up to 30 days). Civil penalties are amounts paid directly to the state for failing to follow the law.

California is a state that is very protective of employees. Some companies purposely underpay employees. Other companies just don’t understand what is legally due to employees. However, ignorance of the law will never be a good defense. California has more laws around pay than other states so it is worth your time to ensure you are paying employees correctly and to understand all the little things requiring calculations that may impact that employee’s pay.

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