Compliance is Challenging
California has the most employee-friendly laws in the nation pertaining the hours and days of work and the timely compensation of employees. These laws, known collectively as “wage and hour laws,” are frequently violated by even the most honest, conscientious employers because they are so unique. No state other than California requires an employer to perform daily overtime calculations.
And these wage and hour laws are complicated, too. First, there’s the California Labor Code, which contains literally hundreds (if not thousands) of different laws and mandates. On top of that, an agency known as the Industrial Welfare Commission (“IWC”) publishes 17 different “Wage Orders” that set additional wage and hour rules in different industries and occupations. These Wage Orders have the force of law, so a California employer has to know about and comply with these, too. And if that weren’t enough, there’s also the regulations and opinion letters issued by the Division of Labor Standards Enforcement (“DLSE”) and the California Labor Commissioner.
Wage and Hour Counseling and Auditing
Wage and hour compliance is critical for California employers because the rules are complicated and the penalties for non-compliance are severe. That’s why Workplace Legal partners with clients to address potential wage and hour issues in advance — before a lawsuit is filed by an employee or an audit is commenced by a government agency.
Workplace Legal assists clients by reviewing HR policies and practices, flagging areas of non-compliance, and making go-forward recommendations for new policies and practices that are not only compliant but also fit the client’s real-world business and operational needs. Some of the wage and hour issues we focus on include:
- Whether a worker can properly qualify as an “independent contractor”
- Whether a new hire must be classified as “exempt” or “non-exempt” from overtime
- Advising employers on the proper calculation of overtime under California’s unique daily and weekly overtime system
- Ensuring compliance with California’s unique meal and rest period laws and obscure rules about employee seating, and workplace temperature
- Drafting compliant incentive compensation, bonus, and commission agreements
- Creating compliant alternative work week policies for employers, including guiding employers through the required employee voting on whether to approve those policies
- Advising employers on employee timekeeping policies
- Creating compliant paid time off (“PTO”), paid sick leave (“PSL”), and other leave of absence policies
- Ensuring compliance with unique local/municipal laws regarding minimum wages, paid family leave, healthcare, and other employee benefits that are often more generous than what is required by California state laws
- Developing remediation strategies for employers who have discovered inadvertent wage and hour violations, including determining the amount of back-due wages and penalties owed, drafting settlement agreements for the affected employees, and advising the employer on how to explain the issue to their employees
Responding to Labor Commissioner Audits
The California Labor Commissioner employs various methods to ensure that California employers are complying with the state’s wage and hour laws. One of these methods, when the Labor Commissioner suspects or is tipped off to widespread violations by a particular employer, is to commence an audit conducted by its Bureau of Field Enforcement (“BOFE”).
Various circumstances could cause the BOFE to pay your company a visit. And, in many instances, the employer will not be given any advance notice. During a BOFE audit, the auditor will review the employer’s books and records, inspect the workplace, ensure the posting of all required notices, and interview employees. The auditor will also interview the employer, including the executives or supervisors responsible for devising and implementing the company’s pay, meal and rest break, overtime, and other wage and hour policies.
An employer has the right to be represented by counsel during a BOFE audit, and Workplace Legal is frequently retained by employers to guide them through this process. We represent employers in dealings with the auditor, and we defend our clients against over-aggressive audit requests. We respond to the auditor’s questions about the company’s wage and hour policies, and we provide the auditor with documents and all follow-up information or explanations. And, finally, when the audit findings are announced, we work with the employer to correct any noted violations and to demonstrate the employer’s compliance back to the BOFE.
Labor Commissioner Hearings
A California employee who believes that an employer has not paid him properly or has violated other wage and hour laws can file a claim with the California Labor Commissioner’s office.
After a Deputy Labor Commissioner reviews the employee’s claim(s), if the claims are considered valid the Deputy Labor Commissioner sends the employer a written document entitled “Notice of Claim.” This notice contains a recitation of the wage and hour violations alleged to have been committed by the employer, and it includes a calculation of the back-due wages, penalties, and interest allegedly owed by the employer.
An employer who receives a “Notice of Claim” has 10 days from the date of issuance to file a written dispute with the Deputy Labor Commissioner. Workplace Legal regularly assists clients in drafting these written disputes. If the claim proceeds, Workplace Legal represents clients at the “Conference” that occurs thereafter, working with the Deputy Labor Commissioner and the complaining employee to attempt to resolve the matter as favorably as possible.
If a resolution is unsuccessful at the “Conference,” then Workplace Legal represents the client at the “Hearing” (called a “Berman Hearing”). This is an informal trial held in the Labor Commissioner’s offices where the employee’s claims are stated, evidence is taken, witnesses are called and cross-examined, and arguments are made. Workplace Legal has appeared for clients across the state in these Berman hearings.
The hearing officer then issues a decision. Both the employee and the employer have the right to appeal this decision. But the risks and costs of appeal are much greater for employers than for employees. Workplace Legal analyzes the pros and cons of an appeal, and advises clients on the best course of action going forward. When our client opts for an appeal, Workplace Legal represents the company in the new appellate proceeding that takes place in the Superior Court.
Wage and Hour Litigation
An employee with a wage and hour claim against an employer is not required to go to the Labor Commissioner. The employee is also free to file a lawsuit against the employer for violation of the California Labor Code’s and Wage Orders’ numerous wage and hour laws. Workplace Legal represents employers in wage-and-hour lawsuits in state and federal courts across California involving single-plaintiff claims, multi-plaintiff and class allegations, and representative claims for PAGA penalties resulting from Labor Code violations. Read more about our litigation practice here.