Minimum Wage & Overtime
Your Minimum Wage & Overtime Rights
The price of living in California is well above the United States average—according to USA Today, housing alone costs 76.7% more in California than in the rest of the country.
To address this concern, California has enacted numerous minimum wage laws to help struggling families afford the rising costs of living in the Golden State. For example, the minimum wage in California is set to increase to $15.50 per hour in California by 2023 for most employers.
Individual counties and cities in California have enacted their own wage ordinances to help families pay for necessities such as food, clothing, utilities, and housing, which may be more expensive in certain areas. For instance, starting July 1, 2022, the minimum wage in Los Angeles will be $16.04 and in San Francisco it will be $16.99.
Furthermore, the federal government as well as California limit the number of hours you can work in a week before you are owed overtime pay. For example, in California, if you work more than eight hours in a workday or more than forty hours in a workweek, you are entitled to overtime compensation.
Some employers in California violate the minimum wage and overtime laws by doing the following:
- Having you work “off the clock” before and/or after your shift or during your meal break;
- Paying employees “under the table” in cash;
- Miscalculating the overtime rate of pay;
- Promising to give time off in lieu of paying wages;
- Using tips and/or gratuities toward the minimum wage;
- Requiring you to arrive early for your shift;
- Requiring you to undergo exit searches at the end of your shift;
- Not compensating you for travel time during work or otherwise at the employer’s direction;
- Not compensating you for being “on-call” (this includes requiring you to respond to texts or emails while off duty);
- Not compensating you for time spent donning and doffing uniforms, safety gear or other equipment required for the job;
- Misclassifying you as “exempt” from overtime and/or designating you as a salaried employee when you should be classified as “non-exempt” or hourly (e.g., paying you as a salaried “manager” or “supervisor” when your job does not entail any management or decision-making duties).
If you suspect your employer has done any of these things, you should contact us to determine whether you are owed unpaid wages.
SOME FAQ REGARDING MINIMUM WAGE
1. What is the difference between federal, state, and local minimum wage?
Most employers in California are subject to both the federal and state minimum wage laws. Also, local entities (cities and counties) are allowed to enact minimum wage rates and several cities have recently adopted ordinances which establish a higher minimum wage rate for employees working within their local jurisdiction. The effect of this multiple coverage by different government sources is that when there are conflicting requirements in the laws, the employer must follow the stricter standard; that is, the one that is the most beneficial to the employee. Thus, since California’s current law requires a higher minimum wage rate than does the federal law, all employers in California who are subject to both laws must pay the state minimum wage rate unless their employees are exempt under California law. Similarly, if a local entity (city or county) has adopted a higher minimum wage, employees must be paid the local wage where it is higher than the state or federal minimum wage rates
2. May an employee agree to work for less than the minimum wage?
No. The minimum wage is an obligation of the employer and cannot be waived by any agreement, including collective bargaining agreements. Any remedial legislation written for the protection of employees may not be violated by agreement between the employer and employee.
3. Is the minimum wage the same for both adult and minor employees?
Yes. There is no distinction made between adults and minors when it comes to payment of the minimum wage.
4. I work in a restaurant as a waitperson. Can my employer use my tips as a credit toward its obligation to pay me the minimum wage?
No. An employer may not use an employee’s tips as a credit toward its obligation to pay the minimum wage. See below for more information about tips and gratuities.
5. Does my employer have to pay me for the time I spend undergoing exit searches at the end of my shifts?
California law requires employers to pay their employees a minimum wage for all hours worked. California regulations define hours worked to mean “the time during which an employee is subject to the control of an employer, and includes all the time the employee is suffered or permitted to work, whether or not required to do so.”
For example, in Frlekin v. Apple Inc., 8 Cal. 5th 1038 (2020), the California Supreme Court held that the time spent by Apple retail store employees waiting for and undergoing mandatory exit searches of their personal bags before leaving their employer’s premises was employer-controlled activity and therefore was compensable as “hours worked.”
6. Is my employer required to compensate me for the time spent obtaining a COVID-19 test or vaccination?
If the employer requires an employee to obtain a COVID-19 test or vaccination, then the employer must pay for the time it takes for the testing or vaccination, including travel time.
The employer must pay for the time it takes for testing or vaccination because such time would constitute “hours worked.” The term “hours worked” means the time during which a worker is subject to the control of an employer, and includes all the time the worker is suffered or permitted to work, whether or not required to do so. Under this definition, one way to determine whether time a worker spends performing a task must be paid as time worked is whether the employer exercised control over the worker by requiring the worker to perform that task. If an employer requires that a worker obtain a medical test or vaccination, the time associated with completing the medical test or vaccination, including any time traveling and waiting for the test or vaccination to be performed, would constitute time worked. However, unless otherwise required, the time spent waiting for COVID-19 test results is not compensable as hours worked, although the worker may be able to utilize paid leave while waiting for the results.
An employer cannot require the worker to utilize paid leave if the time is considered “hours worked” as referenced above.
If the time is not considered “hours worked,” the worker may be able to utilize the worker’s paid leave for time off from work to obtain testing or vaccination. Regular paid sick leave may be used for preventive care, which includes medical testing and vaccines, for the employee or the employee’s family members, and is protected against retaliation under the Labor Code.
7. Is my employer required to compensate me for the cost of a COVID-19 test or for the cost, if any, of getting a COVID-19 vaccination?
Yes, if an employer expressly requires an employee to obtain a COVID-19 test or a vaccination, or if the employee obtains the test or vaccination as a direct consequence of the employee’s discharge of the employee’s duties (i.e., the test or vaccination is effectively required for a job), the employer must pay for the costs of the test or vaccination as it is a reimbursement for necessary business expenses. If the employer requires a test or vaccination and there is no designated testing site, workers should ask which location(s) or vendor(s) are acceptable to the employer to avoid disputes over cost.
If the testing or vaccination is performed at a location other than the employee’s ordinary worksite, the employee may also be entitled to reimbursement for necessary expenses incurred to travel to and from the testing or vaccination location.
8. If I break or damage company property or lose company money while performing my job, can my employer deduct the cost/loss from my wages?
No, your employer cannot legally make such a deduction from your wages if, by reason of mistake or accident a cash shortage, breakage, or loss of company property/equipment occurs. The California courts have held that losses occurring without any fault on the part of the employee or that are merely the result of simple negligence are inevitable in almost any business operation and thus, the employer must bear such losses as a cost of doing business. For example, if you accidentally drop a tray of dishes, take a bad check, or have a customer walkout without paying a check, your employer cannot deduct the loss from your paycheck.
There is an exception to the foregoing contained in the IWC wage orders that purports to provide the employer the right to deduct from an employee’s wages for any cash shortage, breakage or loss of equipment if the employer can show that the shortage, breakage or loss is caused by a dishonest or willful act, or by the employee’s gross negligence. What this means is that a deduction may be legal if the employer proves that the loss resulted from the employee’s dishonesty, willfulness, or grossly negligent act. Under this regulation, a simple accusation does not give the employer the right to make the deduction.
Labor Code Section 244 clearly prohibits any deduction from an employee’s wages which is not either authorized by the employee in writing or permitted by law, and any employer who resorts to self-help does so at its own risk as an objective test is applied to determine whether the loss was due to dishonesty, willfulness, or a grossly negligent act. If your employer makes such a deduction and it is later determined that you were not guilty of a dishonest or willful act, or grossly negligent, you would be entitled to recover the amount of the wages withheld.
9. What, if anything, can my employer do if I experience shortages in my cash drawer?
Your employer may subject you to disciplinary action, up to and including termination of employment. Additionally, your employer can bring an action in court to try to recover any damages and/or losses it has suffered.
10. Can my employer deduct anything from my paycheck if I come to work late?
Yes, your employer can deduct money from your paycheck for coming to work late. The deduction shall not, however, exceed the proportionate wage that would have been earned during the time actually lost, but for a loss of time less than 30 minutes, a half hour’s wage may be deducted. Labor Code Section 2928. For example, if you earn $12.00 per hour and come to work 40 minutes late, your employer can deduct $8.00 from your paycheck. And if you come to work five minutes late, your employer can deduct $6.00.
11. What can I do if my employer doesn’t pay me at least the minimum wage?
You can either file a wage claim with the Division of Labor Standards Enforcement (the Labor Commissioner’s Office), or file a lawsuit in court against your employer to recover the lost wages. Additionally, if you no longer work for this employer, you can make a claim for the waiting time penalty pursuant to Labor Code Section 203.
12. What can I do if my employer retaliates against me because I questioned him about not being paid the minimum wage?
If your employer discriminates or retaliates against you in any manner whatsoever, for example, he discharges you because you asked him why you weren’t being paid the minimum wage, or because you file a claim or threaten to file a claim with the Labor Commissioner, you can file a discrimination/retaliation complaint with the Labor Commissioner’s Office. Alternatively, you can file a lawsuit in court against your employer.
For a free consultation and to learn more, contact us.
SOME FAQ REGARDING OVERTIME
1. What is “overtime” under California law?
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 (or double time as specified below). 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 requires the employee to be 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. In other words, an exception is a special rule.
2. What is the “regular rate of pay” and how is it determined?
Overtime is based on the regular rate of pay, which is the compensation you normally earn for the work you perform. The regular rate of pay includes a number of different kinds of remuneration, such as hourly earnings, salary, piecework earnings, and commissions. In no case may the regular rate of pay be less than the applicable minimum wage.
3. If an employee works unauthorized overtime is the employer obligated to pay for it?
Yes, California law requires that employers pay overtime, whether authorized or not, at the rate of one and one-half times the employee’s regular rate of pay for all hours worked in excess of eight up to and including 12 hours in any workday, and for the first eight hours of work 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 in any workday and for all hours worked in excess of eight on the seventh consecutive day of work in a workweek.
An employer can discipline an employee if he or she violates the employer’s policy of working overtime without the required authorization. However, California’s wage and hour laws require that the employee be compensated for any hours he or she is “suffered or permitted to work, whether or not required to do so.” California case law holds that “suffer or permit” means work the employer knew or should have known about. Thus, an employee cannot deliberately prevent the employer from obtaining knowledge of the unauthorized overtime worked, and come back later to claim recovery but at the same time, an employer has the duty to keep accurate time records and must pay for work that the employer allows to be performed and to which the employer benefits.
4. Is a bonus included in the regular rate of pay for purposes of calculating overtime?
Yes, if it is a nondiscretionary bonus. A nondiscretionary bonus is included in determining the regular rate of pay for computing overtime when the bonus is compensation for hours worked, production or proficiency, or as an incentive to remain employed by the same employer. Incentive bonuses include flat sum bonuses. To properly compute overtime on a flat sum bonus, the bonus must be divided by the maximum legal regular hours worked in the bonus-earning period, not by the total hours worked in the bonus-earning period. This calculation will produce the regular rate of pay on the flat sum bonus earnings. Overtime on a flat sum bonus must then be paid at 1.5 times or 2 times this regular rate calculation for any overtime hour worked in the bonus-earning period. Overtime on production bonuses, bonuses designed as an incentive for increased production for each hour worked are computed differently from flat sum bonuses. To compute overtime on a production bonus, the production bonus is divided by the total hours worked in the bonus earning period. This calculation will produce the regular rate of pay on the production bonus. Overtime on the production bonus is then paid at .5 times or 1 times the regular rate for all overtime hours worked in the bonus-earning period. Overtime on either type of bonus may be due on either a daily or weekly basis and must be paid in the pay period following the end of the bonus-earning period.
Discretionary bonuses or sums paid as gifts at a holiday or other special occasion, such as a reward for good service, which are not measured by or dependent upon hours worked, production or efficiency, are not subject to be paid at overtime rates and thus are not included for purposes of determining the regular rate of pay.
5. Are salaried employees entitled to overtime?
It depends. A salaried employee must be paid overtime unless they meet the test for exempt status as defined by federal and state laws, or unless they are specifically exempted from overtime by the provisions of the California Labor Code or one of the Industrial Welfare Commission Wage Orders regulating wages, hours and working conditions.
6. Can an employer require an employee to work overtime?
Yes, in general an employer may dictate the employee’s work schedule and hours. Additionally, under most circumstances the employer may discipline an employee, up to and including termination, if the employee refuses to work scheduled overtime. However, an employer cannot discipline an employee for refusing to work on the 7th day in a workweek and is subject to a penalty for causing or inducing an employee to forego a day of rest. An employee who is fully apprised of the entitlement to rest may independently chooses not to take a day of rest.
7. When must I be paid for the overtime hours I work?
Overtime wages must be paid no later than the payday for the next regular payroll period after which the overtime wages were earned. (Labor Code Section 204.) Only the payment of overtime wages may be delayed to the payday of the next following payroll period as the straight time wages must still be paid within the time set forth in the applicable Labor Code section in the pay period in which they were earned; or, in the case of employees who are paid on a weekly, biweekly, or semimonthly basis, not more than seven calendar days following the close of the payroll period.
8. Can an employee waive his or her right to overtime compensation?
No, California law requires that an employee be paid all overtime compensation notwithstanding any agreement to work for a lesser wage. Consequently, such an agreement or “waiver” will not prevent an employee from recovering the difference between the wages paid the employee and the overtime compensation he or she is entitled to receive. (Labor Code Section 1194.)
9. What can I do if my employer doesn’t pay me my overtime wages?
You can either file a wage claim with the Division of Labor Standards Enforcement (the Labor Commissioner’s Office), or you can file a lawsuit in court against your employer to recover the lost wages. Additionally, if you no longer work for this employer, you can make a claim for the waiting time penalty pursuant to Labor Code Section 203.
10. What can I do if my employer retaliates against me because I told him/her I was going to file a wage claim for unpaid overtime?
If your employer discriminates or retaliates against you in any manner whatsoever, for example, he discharges you because you file a wage claim or threaten to file a wage claim with the Labor Commissioner, you can file a discrimination/retaliation complaint with the Labor Commissioner’s Office. In the alternative, you can file a lawsuit in court against your employer.
For a free consultation and to learn more, contact us.
SOME FAQ REGARDING TIPS AND GRATUITIES
1. What is the law regarding 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.
2. What is a tip?
A tip is money a customer leaves for an employee over the amount due for the goods sold or services rendered. Tips belong to the employee, not to the employer.
3. When a customer pays their bill with a credit card and the payment includes a tip, when can the employee expect to receive the money from the employer?
Payment of a gratuity made by a patron using a credit card must be paid to the employee not later than the next regular payday following the date the patron authorized the credit card payment. Labor Code Section 351.
4. My employer is deducting the credit card processing fees from my tips. Is this legal?
No. Labor Code Section 351 provides that the employer must pay the employee the full amount of the tip that is indicated on the credit card. The employer may not make any deduction for credit card processing fees or costs that are charged to the employer by the credit card company from gratuities paid to the employee.
5. I work in a large restaurant as a waiter. My employer told me that I am required to share my tips with the busboy and the bartender. Am I obligated to do this?
Yes. Labor Code Section 351 provides that “every gratuity is hereby declared to be the sole property of the employee or employees to whom it was paid, given, or left for”. The section has been interpreted to allow for involuntary tip pooling so long as the tip pooling policy is not used to compensate the owner(s), manager(s), or supervisor(s) of the business, even if these individuals should provide direct table service to a patron or are in the chain of service to a patron. In addition, the policy must be fair and reasonable. Therefore, your employer can require that you share your tips with other staff that provide service in the restaurant so long as the employees that share in the tip pooling policy are employees to whom the tip was paid, given, or left for. In this regard, the courts have validated policies that distributed tips among employees who provide “direct table service” or who are in the “chain of service” provided that employee in the chain of service bears a relationship to the customers’ overall experience.
6. Are the tips I receive considered part of my “regular rate of pay” for overtime calculations?
No. Since tips are voluntarily left for you by the customer of the business and are not being provided by the employer, they are not considered as part of your regular rate of pay when calculating overtime.
7. Is a mandatory service charge considered to be the same as a tip or gratuity?
No, a tip is a voluntary amount left by a patron for an employee. A mandatory service charge is an amount that a patron is required to pay based on a contractual agreement or a specified required service amount listed on the menu of an establishment. An example of a mandatory service charge that is a contractual agreement would be a 10 or 15 percent charge added to the cost of a banquet. Such charges are considered as amounts owed by the patron to the establishment and are not gratuities voluntarily left for the employees. Therefore, when an employer distributes all or part of a service charge to its employees, the distribution may be at the discretion of the employer and the service charge, which would be in the nature of a bonus, would be included in the regular rate of pay when calculating overtime payments.
8. My employer deducts my tips from my paycheck. Is this legal?
No. Your employer can neither take your tips (or any part of them), nor deduct money from your wages because of the tips you earn. Furthermore, your employer cannot credit your tips against the money the employer owes you. Labor Code Section 351.
9. My employer pays me less than the minimum wage because he includes my tips in my hourly pay. Is this legal?
No. Unlike under federal regulations, in California an employer cannot use an employee’s tips as a credit towards its obligation to pay the minimum wage. California law requires that employees receive the minimum wage plus any tips left for them by patrons of the employer’s business.
10. What can I do if my employer credits my tips against my wages?
You can either file a wage claim with the the Labor Commissioner’s Office, or you can file a lawsuit in court against your employer in to recover the lost wages. Additionally, if your employer is crediting your tips against your wages, you are being underpaid your wages and thus, if you no longer work for this employer, you can make a claim for the waiting time penalty.
11. What can I do if my employer retaliates against me because I objected to his crediting my tips against my wages?
If your employer discriminates or retaliates against you in any manner whatsoever, for example, he discharges you because you object to his crediting your tips against your wages, or because you file a claim or threaten to file a claim with the Labor Commissioner, you can file a lawsuit in court against your employer.
For a free consultation and to learn more, contact us.