While it may not be every employer's worst nightmare, having a wage claim filed against an organization can be damaging. Are you prepared?

Employers and business owners in California face numerous risks in the course of running a business. These risks are multiplied with employees, and diligence is required to avoid unintentional labor law violations and potential claims.

In California, the "Labor Board" is officially known as the Labor Commissioner’s Office, also known as the Division of Labor Standards (DLSE), which is part of the Department of Industrial Relations (DIR). It is this agency that receives employee complaints regarding unpaid wages and employer retaliation in the workplace. This DLSE then attempts to settle wage claims through both investigation and hearings.

According to the DLSE website,

"When a wage claim is filed, the Labor Commissioner’s Office investigates the claim to determine if any wages or benefits are owed. In most cases, a settlement conference between the employee and employer is scheduled to resolve the issues. If the issues are not resolved at the conference, a hearing is scheduled so a hearing officer can review the evidence and make a decision on the claim."

Some of the basic legal requirements for employers includes keeping accurate records of actual time worked by employees, and providing itemized wage statements to employees each time they are paid. However, when it comes to wage claims, there are a variety of issues that can trip up employers and leave them open to wage claims from an aggrieved employee (or former employee).

Most Common CA Labor Board Claims

On a federal level, the Equal Employment Opportunity Commission (EEOC) deals with similar claims though primarily involving discrimination. In their 2017 statistics, the EEOC found that retaliation was the most common charge. In fact, California employees filed 2,752 retaliation charges in 2017, which was 50.7 pecent of all charges filed that year with the EEOC. 

Failing to pay employees properly for overtime work is one of the most common wage violations by employers, according to legal publisher Nolo.

Employees in California are entitled to time-and-half for work performed beyond eight hours in a day, or 40 hours in a week. In addition, employees are must be paid time-and-a-half for the first eight hours on their seventh consecutive workday. Employers must pay workers double time for any hours worked beyond 12 in a workday and for any hours worked beyond the first eight on their seventh consecutive workday.

Errors in any of these scenarios, intentional or otherwise, can result in wage claims by disgruntled workers.

According to a post at Crosner Legal, the most common claims filed with the Labor Board generally pertain to unpaid wages. These include the following:

• Employer’s failure to pay for all hours worked resulting in unpaid minimum wage and overtime
• Employer’s failure to pay a one-hour premium for all missed, late or shortened meal breaks and rest breaks
• Employer’s failure to reimburse for all business-related expenses, such as cell phone, uniform or tools
• Employer’s unlawful deductions of compensation due and owing
• Employer’s failure to pay all non-hourly/non-discretionary payment due, such as commissions, bonuses, and other flat amounts
• Employer’s failure to properly accrue all vacation and/or sick leave pay, or failure to pay all vacation and/or sick leave pay owed upon employment ending
• Waiting time penalties
• Independent Contractor Misclassification resulting in all or some of the foregoing violations
• Retaliation
• Equal Pay Violation

Although the Labor Commissioner's Office has no jurisdiction over independent contractors, problems arise if a worker claims to have been misclassified as an independent contractor and, therefore, was not provided basic labor rights.

Workers who believe their employer is misclassifying them as independent contractors can file a wage claim. If this happens, the Labor Commissioner’s Office may hold a hearing to determine if a worker has been misclassified as an independent contractor, according to the current three-part test.

Wage and Hour Compliance

All California employers are responsible for scheduling work hours for and paying the wages of their employees. In doing so, employers are required to comply with bewildering variety of statutes, regulations, interpretations and precedents. And these include both federal and state wage and hour laws.

In the state of California, wage and hour compliance is defined in the provisions of the California Labor Code and in the state of California's Industrial Welfare Commission (IWC) wage orders.

The IWC was established to regulate wages, hours and working conditions in California, according to the Department of Industrial Relations (DIR) . It was defunded by the California legislature in 2004 but its regulations consisting of 18 "Wage Orders" remain in effect and are enforced by the California Department of Industrial Relations, Division of Labor Standards Enforcement (DLSE).

In addition, the DIR website notes that "IWC wage orders must be posted by all employers in an area frequented by employees, where they may be easily read during the workday."

California employers must comply with both federal and state wage requirements and this creates a great deal of overlap. However, employers must be clear on the differences and avoid overlooking or misreading regulations. The challenge for HR staff and managers is to consistently maintain compliance with all of the federal and the state of California's laws and regulations regarding wages and hours.

HR Management Best Practices and California Wage Claims

As a business owner, or HR or payroll manager, you have a number of options for your payroll functions. Software that can be installed in-house, or cloud-based programs offer a good alternative.

But if you really want to take full advantage of the benefits available to you, outsourcing to a provider like Accuchex can still be the best decision.

If you are considering outsourcing payroll, download our free resource, the Payroll Outsourcing Guide, to help you make an informed decision. Or call Accuchex Payroll Management Services at 877-422-2824.