Accuchex Blog

Employee Classification, Overtime, And California Labor Laws

Posted by Tristan Ruhland on Jul 5, 2016 9:30:00 AM

California labor law stipulates clear definitions of exempt and non-exempt employees. Yet overtime issues continue to result in employee lawsuits.

A recent example of litigation over alleged violations of California labor employment law is a class-action California labor lawsuit involving Inter-Coast International Training (Inter-Coast).  The case is an employee labor law class action suit, Suzanne Taylor-Bacon et al v. Inter-Coast International Training, Inc., filed April 1, 2016.
According to court records, employees claim that they were not paid overtime in accordance with overtime laws.

Proper Employee Classification is Essential for Employers

The defendant was alleged to have improperly classified its instructors as exempt from qualifying for overtime although they were required to take on non-exempt administrative tasks such as grading exams, submitting attendance reports and adhering to course outlines.
According to the California labor lawsuit, these work requirements effectively put the employees into an overtime situation, for which the instructors should have been paid overtime.

California labor law allows for certain employees to be considered exempt from overtime if they are engaged in administrative tasks while employed as supervisors, undertake management functions, or are salaried employees who achieve a certain income threshold.
The contention in the overtime law is that if their work commitments require additional hours from time to time as needed, then management personnel and other highly paid staff members are already sufficiently compensated and thus, are not afforded the opportunity for overtime pay.
However, a common practice with many employers, in order to minimize the increased payroll costs of overtime, is to mis-classify their employees as exempt from overtime. Not only is this unfair to the employees, it opens the door to potentially costly and even crippling legal penalties.
When employees classified as exempt are forced to perform non-exempt tasks for the majority of their day, they are increasingly likely to the courts and file a California labor lawsuit.

Understanding the Recent Overtime Labor Law Changes Under the FLSA

The stipulations regarding overtime pay mandated in the Fair Labor Standards Act have been changed and the impact will be significant for states such as California. As a result of these changes, millions of workers will lose their current FLSA-exempt status on December 1, 2016.

The hardest hit industries are likely to be education, retail, health services, leisure, hospitality, and business and professional services. The Final Rule does not affect the outside sales or inside retail sales exemptions, which do not include a salary threshold, nor does it affect the current duties tests for the “white collar” exemptions. 

Getting Expert Help to Stay Up to Date and In Compliance

An updated payroll compliance strategy will help your organization meet its obligations, while providing accuracy and timeliness. So take time to understand the laws, prioritize employee and manager salary changes, and maintain accurate record keeping. In this way, you will make compliance a sure thing.

Another key step in maintaining HR compliance and increasing your company's cost-effectiveness is to consider outsourcing. A professional payroll management and workforce solutions provider such as Accuchex can offer much-needed help with Human Resources needs and questions.

Accuchex is a full spectrum Payroll Management Services provider offering expertise in Time Management, Insurance and Retirement issues, as well.

Free Guide: California Labor Law – What You Need To Know

Topics: california labor law, overtime pay, labor law compliance, employee classification, employee lawsuits

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