California business owners must familiarize themselves with minimum wage regulations in order to ensure compliance with state and federal labor laws. If an employee feels they have been intentionally underpaid or improperly classified as an independent contractor, he or she may bring a costly and disruptive minimum wage lawsuit against your business. Whether an employee has already filed a claim, or you simply wish to reduce your company’s risk of inviting wage and hour litigation, aggressive legal advocacy from an experienced employment law attorney is essential.
Updates to California’s Minimum Wage Laws
As of July 24, 2009, the federal minimum wage is $7.25 per hour under the Fair Labor Standards Act, or FLSA. California minimum wage is slightly higher. While previously set at $8.00 per hour, California’s minimum wage increased to $9.00 per hour effective July 1, 2014, making it $1.75 higher than the national minimum.
Moreover, employers should plan to accommodate another increase in the near future, as the California minimum wage is scheduled to increase again on January 1, 2016, rising from the current $9.00 hourly rate to a rate of $10.00 per hour. Proposed legislation seeks to increase the minimum wage to $15 per hour by 2020, though only time will tell if such controversial legislation is successfully enacted.
The majority of California employers are required to comply with both state and federal minimum wage laws. In cases where a conflict arises between the provisions of state and federal law, employers are generally bound to follow the more rigorous standard (i.e. the higher minimum wage).
Employers should also be wary of employees who offer to work for less than minimum wage. Tempting as such an arrangement may seem from a business perspective, the potential legal complications far outweigh the short-term financial benefits. No waiver or contract may be drafted to legitimize the underpayment of an employee.
Labor Laws for Exempt Workers and Tipped Employees
In most cases, California employers are required to pay their employees at least the minimum wage. However, employees who are classified as “exempt employees” are exempt from the normal minimum wage regulations. In California, exempt workers generally include but are not limited to the following:
- “Any individual who is the parent, spouse, child, or legally adopted child of the employer.”
- Apprentices under the State Division of Apprenticeship Standards.
- Outside salespeople.
Additionally, minimum wage laws are slightly different for servers, waitstaff, bartenders, and other employees who receive tips in addition to regular pay. Federal minimum wage law provides that tipped employees who receive at least $30 per month in tips must be paid at least $2.13 per hour.
If wages and tips together do not amount to at least $7.25 per hour, or the standard federal minimum wage, then in most states the employer must increase wages accordingly in order to satisfy the $7.25 per hour requirement.
California, however, is an exception to this rule. California employers are strictly prohibited from counting their tipped employees’ tips toward the minimum wage. California employees must be paid at least the $9.00 minimum wage, even if they earn additional tips.
What Happens if My Business is Sued Over a Wage and Hour Dispute?
If an employee feels they have not been paid at least the minimum wage, he or she can potentially follow two courses of action:
- The employee can file a wage claim with the Division of Labor Standards Enforcement (DLSE).
- The employee can sue the employer directly.
- If the employee has already left the company, he or she can also file a waiting time penalty claim. Section 203 of the California Labor Code provides that “if an employer willfully fails to pay… any wages of an employee who is discharged or who quits, the wages of the employee shall continue as a penalty from the due date thereof at the same rate until paid or until an action therefor is commenced.”
Once a claim has been filed with the DLSE, the employee’s allegations will be investigated by an assigned Deputy Labor Commissioner. Upon being scrutinized by the Labor Commissioner, the claim may either be dismissed, or a conference may be scheduled for further review. If the conference fails to resolve the issue, the claim may be dismissed, or may be reviewed again at a hearing.
Once the hearing concludes, the Labor Commissioner will serve on both parties an Order, Decision, or Award (ODA), which either party may appeal. Our employment lawyers have extensive experience appealing unfavorable DLSE decisions to appellate courts.
Employers must also keep in mind that retaliation against employees and former employees is expressly prohibited by law. If an employee feels he or she has been a victim of employer retaliation, the employee may file yet another complaint with the Labor Commissioner, leading to further expense.
By bringing years of experience to every case we handle, the skilled wage and hour attorneys of Bellatrix PC have obtained favorable outcomes for numerous clients ranging from corporations to partnerships to limited liability companies. We represent both unionized and non-unionized clients across a wide array of industries, and are prepared to vigorously defend your company’s interests no matter how complex the case. We will walk you through each and every stage of the process, so that you can focus on running your business efficiently while we handle the legal work on your behalf.
If an employee or former employee has filed a minimum wage lawsuit against your company, or if you are being investigated by the DLSE, it is critical to take immediate legal action. To schedule a confidential consultation, call the experienced business lawyers of Bellatrix PC at (800) 449-8992.
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