Wednesday, October 14, 2009

California Labor Law Tips for Small Business Owners

California's current economy, like the rest of the world's, is on shaky ground.  There is an eruption of employment-related claims in our state, coming from employees who are laid off, terminated for cause, or who are still working, but afraid of losing their jobs.  A significant source of complaints concern wage and hour issues - nonpayment, late payment, unpaid overtime, and other wage and working condition issues that affect employers regardless of size.

There are several key areas of wage and hour compliance issues from which most complaints arise.  If small employers (or any size company, for that matter) can avoid these common pitfalls, companies will be far ahead of the game when it comes to complaints, hearings, lawsuits, settlements and awards.

It is important to note that wage-related claims in California have up to a four-year statute of limitations, requiring back pay, interest and penalties. In other words, it is best to get the rules right in the first place and follow them.  It can be much more costly in the end if you try to cut corners.

Meal and Rest Periods

Unlike Federal law, California law requires rest and meal periods for non-exempt employees.  Generally, a non-exempt employee cannot work more than 5 hours without a 30-minute unpaid meal period (California Labor Code, Section 512).  Three exceptions exist.  Rest periods must be 10 minutes per every 4 hours worked or major fraction thereof.  They must be paid time and, if possible, be taken in the middle of the 4 hours (California Wage Orders).  If these periods are not given, the employer must self impose a wage/penalty payable to the employee of one-hour of pay at the "regular rate" (California Labor Code, Section 226.7).

The recent California Supreme Court ruling that these payments are a wage has led to a large increase in claims.  Plaintiffs' lawyers are seeking, in addition to the wage/penalty, penalties for failure to pay all wages due on paydays, as well as penalties for not reporting all wages on the required pay stub.

The bottom line is to make sure you know the Labor Laws and comply with them.  If you are not already working with a business lawyer, employment lawyer, or human resources consultant, you should seriously consider it.  It is well worth the investment in the long run. 

If you have any question or concerns regarding anything in this post, please feel free to contact me at email the outhouse general counsel or (714) 795-0930.

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