California Overtime and Labor Laws

California’s labor laws are enforced by the Division of Labor Standards Enforcement (DLSE) in the California Department of Industrial Relations. Minimum Wage California’s minimum wage is currently set at $8 per hour. The current Federal minimum wage rate is $7.25 per hour effective July 24, 2009.  Prior to July 24, 2009, it was $6.55 per hour. Overtime Regulations California Labor Laws require overtime pay to be paid to non-exempt employees under the following circumstances:

• Any hours worked over 8 per day at 1 ½ times regular pay rate
• Any hours worked over 40 per week at 1 ½ times regular pay rate
• First 8 hours on the 7th consecutive day worked at 1 ½ times regular pay rate
• Any work in excess of 12 hours per day at 2 times regular rate
• Any work in excess of 8 hours on the 7th consecutive day at 2 times regular rate

Statute of Limitations The statute of limitation for claims alleging the non-payment of wages is two (2), three (3) or four (4) years from the date of the alleged non-payment, depending on the underlying employment agreement or the type of claim.

• If the claim is based on an oral agreement, it must be filed within 2 years from the date the claim arose.
• If the claim is based on a written agreement, it must be filed within 4 years from the date the claim arose.
• If the claim is for minimum wage, unpaid overtime or other statutory claims, the claim must be filed within 3 years from the date the claim arose, but in many instances employees will be able to go back a total of 4 years under California’s unfair competition statutes.

Holidays Holidays are treated as regular work days. California does not require additional pay for work done on holidays nor does it require paid holidays, business closings on any holiday, or days off for any particular holiday. Vacation California state law does not require that employers provide either paid or unpaid vacation time. However, if paid vacation time is provided, California law considers earned vacation time as wages. Vacation time is earned as labor is performed and cannot be forfeited even upon termination of employment. An employer may place a reasonable limit on how many hours of vacation an employee may earn. Upon termination, all earned and unused vacation pay must be paid at the final rate of pay. Meal Breaks Employers are required to give employees the following rest and break periods:

• 30 minute meal break if the employee works more than 5 hours per day
  • (can be waived by mutual consent if total hours worked is no more than 6 per day)
• 2nd 30 minute meal break if the employee works more than 10 hours per day
  • (can be waived by mutual consent if total hours worked is no more than 12 per day and 1st meal period was not waived)

If the employee is not relieved of all duties, meal periods count as hours worked Rest Periods

• 10 minute rest period for any 4-hour work period or major fraction thereof.
  • (Not required if total time worked is less than 3 ½ hours)
• To be taken as close to the middle of the period as possible.
• Counts as time worked
• Employer can require employee to stay on the premises

The remedy for meal & rest period violations is 1 additional hour of pay. Protection against retaliation for bringing these claims is also provided. Reporting Time Pay California Labor Law requires reporting pay for employees who report to work expecting to work a certain number of hours but do not get to work their full schedule due to inadequate scheduling or lack of notice by the employer. The requirements are as follows:

• If an employee works less than half of their usual or scheduled time, they must be paid for half of the scheduled time, but no less than 2 hours nor more than 4 hours.
• If an employee reports to work a second time in 1 workday and are given less than 2 hours of work, they must be paid for 2 hours at regular rate of pay.

Reporting time pay is not counted toward hours worked in computing overtime. Pay Periods Per California labor laws, in general, wages must be paid at least twice a month on a payday designated by the employer. Overtime wages must be paid by the next regular payroll period following the payroll period in which the overtime wages were earned. State Law Penalties/Remedies Employees can recover overtime wages; meal & rest period penalties; and waiting time penalties under California labor laws. Liquidated damages of double the unpaid overtime wages is provided by Federal law, but not California law. The Private Attorney General Act of 2004 (PAGAA) allows private citizens to pursue fines for violations of the state labor law that normally only the State of California could enforce. Any fines recovered by the citizen are split with 75% going to the state and 25% going to the employee. The employee can recover these fines in addition to any other recovery to which they may be entitled. Some of the most common violations covered by PAGA include:

• Overtime payment violations
• Minimum Wage payment violations
• Failure to give required meal breaks
• Failure to pay tips & gratuities
• Failure to reimburse for business expenses
• Failure to include proper payroll information on paychecks.

Specific Exemptions Some jobs are considered exempt from the overtime and labor law requirements. If the job falls within an exempt classification, the employee can lose rights to the following:

• Overtime premium
• Minimum Wage
• Reporting Time Pay
• Meal Period Requirement
• Rest Period Requirement
• Meal and Lodging Credit Limits
• Uniform & Equipment Provisions

Some specific exemptions from the overtime and labor law requirements are as follows: Executive To be exempt as an Executive, you must be employed full-time, paid a salary of at least $640 per week and:

• Manage the business or a recognized department or division of the business
• Direct the work of 2 or more employees or the equivalent of 80 hours per week of subordinate time
• Have the authority to hire or fire employees or significant influence in the hiring or firing of employees
• Exercise discretion and independent judgment
• Engage in these activities more than 50% of the time

Administrative A person is considered to be employed in an administrative capacity if:

• They perform office or non-manual work related to management policies or general business operations.
• They regularly and directly assist a proprietor or administrative employee or perform special assignments or work requiring specializing training or knowledge, under only general supervision.
• They perform the above more than 50% of the time
• They are employed full-time and paid a salary of at least $640 per week.

Professional An employee is considered to be an exempt professional if:

• They are licensed by the State of California and working as a lawyer, doctor, engineer, dentist, accountant, etc.
• They work at an occupation commonly recognized as a learned or artistic profession. Learned or artistic profession means a field requiring an advanced degree (Masters or higher) or work that is creative in nature. Such work should be predominately intellectual and varied in character. Routine mental, manual, mechanical or physical work does not qualify.
• They must exercise discretion and independent judgment
• Must be employed full-time and be paid a salary of at least $640/week.

Computer Professional An employee is considered to be an exempt Computer Professional if:

• The application of systems analysis techniques and procedures (including consulting with users) to determine hardware, software or system functional specifications; or
• The design, development, documentation, analysis, creation, testing or modification of computer systems or programs (including prototypes) based on and related to, user or system design specifications; or
• The design, documentation, testing, creation or modification of computer programs related to the design of software or hardware for computer operating systems.
• Over 50% of their time is spent in one or more of the following duties:

In addition, they must be:

• Primarily engaged in intellectual or creative work that requires the exercise of discretion and independent judgment.
• Highly skilled and proficient in the theoretical and practical application of highly specialized information to computer systems analysis, programming and software engineering.
• Paid at least $36.00 per hour as of 1/1/2008 (an amount which may be adjusted each year).

The following employees do not meet the requirements for this exemption:

• Trainees;
• Entry-level employees and employees who lack the skill to work independently and without close supervision;
• Employees who merely operate computers; such as engineers, drafters, machinists who use software such as CAD/CAM;
• Employees who manufacture, repair, or maintain of computer hardware and related equipment;
• Employees who write content for, among other things, the World Wide Web or CD-ROMs;
• Employees who create imagery for effects used in the motion picture, television, or theatrical industry.

Prior to 2008 Between January 1, 2006 and January 1, 2008, exempt computer professional employees could be paid a salary; however, if their wage rate (based on the total hours worked) ever dropped below the minimum wage threshold, the exemption was removed. The minimum wage threshold was $47.81 for 2006 and $49.77 for 2007. As of January 1, 2008, the minimum hourly rate required to meet the Computer Professional exemption was reduced from the adjusted rate of $49.77 to $36.00 which resulted in many computer programmers being classified as exempt and no longer entitled to overtime. In September of 2008, the Computer Professional Exemption was further modified to allow either an hourly rate of not less than $36 per hour or a salary of $75,000 per year with pay of at least $6,250 per month. If this salary is paid and all of the other requirements are met, overtime pay is not required regardless of how many hours are worked. Outside Salespersons To be classified exempt as an Outside Salesperson, you must:

• Be 18 years of age or older,
• Regularly work more than 50% of the time away from your employer’s place of business, and
• Sell tangible or intangible items or obtain orders or contracts for products, services, or use of facilities.

Truck Drivers California law exempt many truck drivers from the overtime pay requirements. The regulations are specific and complex. Please contact us for an evaluation of your situation. National Service Program Participants National Service Programs, such as AmeriCorps, are exempt from California labor laws. Commissioned Employees If more than half of an employee’s pay comes from commissions and their earnings exceed 1 ½ times the minimum wage, they are exempt from California’s overtime provisions. This provision does not apply to minors. Movie picture projectionists Movie picture projectionists are exempt from California’s overtime pay requirements. Radio and Television Employees Announcers, chief engineers and news editors for radio or television stations in cities of 25,000 people or less are exempt from California’s overtime pay requirements. Class Actions Overtime and wage claims may be brought as a class action under California state law. The employees who bring the class action lawsuit as class representatives are usually awarded extra compensation in addition to their individual recovery as a form of “incentive pay.” Have questions about your own situation? Contact us and we can give you more information and review your specific circumstances. You can submit your information using the convenient online intake form, send an email or call Michael Lore.

The California labor law Breaks provision provides that employees must receive a 30 minute meal break if they work in excess of five hours. During this time, the employee must be relieved of all duties because it cannot be a working lunch. If an employer fails to give a proper meal break, the employee can recover one hour of pay at their regular rate of pay for each day they are not provided a proper meal break. There are exceptions to the rules regarding California labor law Breaks provision. A bona fide “exempt” employee is not subject to this rule. If the work day is less than six hours, the employee can agree to waive the time period. In the health care industry, an employee can agree, in writing, to waive this meal period. Further, employees working under a collective bargaining agreement may not be subject to the rules regarding meal periods. In some cases, an “on duty” meal break can be provided only when the nature of the job prevents the employee from being relieved of duty and if there is a written agreement between the employer and employee. The written agreement shall state that the employee may revoke the agreement at any time. These rules only apply to employees in California. Federal law does not have a meal time requirement. In addition the California labor law Breaks provision requires that employees get rest breaks if they work over three and a half hours a day. These mandatory breaks must be in the middle of each work period and must be 10 minutes for every four hours worked or fraction thereof. Rest breaks are work time and as such, the employee must be paid for them. If an employer fails to provide an employee a rest period, the employee can recover one hour of pay for each work day that the rest period is not provided. An exception to the rule is made for bona fide “exempt” employees. They are not subject to this rule. The rules laid out by the California labor law Breaks provision is very black and white in regard to rest breaks.  If you work at least 3.5 hours in a day, you are entitled to a rest break. Your employer must give you a rest break of at least 10 consecutive minutes for each 4 hours worked. Rest breaks must to the extent possible be in the middle of each work period. Rest breaks must be paid. Your employer may require you to remain on work premises during your rest break. You cannot be required to work during any required rest break. In addition the California labor law Breaks provision is very finite when it comes to meal breaks.  If you work over 5 hours in a day, you are entitled to a meal break of at least 30 minutes. BUT, you can agree with your employer to waive this meal period provided you do not work more than 6 hours in the workday. You can also agree with your employer to an on-duty meal break which counts as time worked and is paid.   If you work over 10 hours in a day, you are entitled to a second meal break of at least 30 minutes. You can agree with your employer to waive the second meal break if you do not work more than 12 hours and you did not waive your first meal break. Your employer has an affirmative obligation to ensure you are free to take your meal break off work premises. You cannot be required to work during any required meal break. Have questions about your own situation? Contact us and we can give you more information and review your specific circumstances. You can submit your information using the convenient online intake form, send an email or call Michael Lore.

Among the states, California has uniquely stringent labor laws. In January 2000, new overtime regulations went into effect for the state of California.  According the California labor law overtime provision hourly workers working more than eight hours in a day must be paid mandatory overtime for all hours worked over eight hours.  In addition, the California labor law overtime provision states that workers working more than twelve hours must be paid double time.  Workers working seven days straight in a single work week must be paid overtime for the first eight hours on the seventh day and double time after eight hours. According to the California labor law overtime provisions 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. 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 is permissible provided the employee is compensated for the overtime at not less than:

1. 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
2. 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.

According to the California labor law overtime statute, everyone is entitled to overtime pay, unless they meet one or more of the narrowly defined exemptions.  The exceptions to overtime pay are called “exemptions” because if you meet the qualification, you will be “exempt” from overtime pay.  Thus, the legal terminology is that exempt means no overtime and non-exempt means you get overtime.  The California labor law overtime provision has highlighted eight fields of work that are exempt from overtime. These exemptions are:

• Executive Exemption
• Learned Professional Exemption
• Creative Professional Exemption
• Administrative Exemption
• Outside Sales Exemption
• Computer-Related Occupation Exemption
• Highly Compensated Jobs (Does not apply to non-public sector employees in California)
• Physicians & Surgeons

It is also important to note the way in which rate of pay is calculated in California. An employee’s regular straight time rate of pay is used for calculating overtime pay. The regular rate must include commissions, production bonuses, piecework earnings and the value of meals and lodging. Not included in the regular rate are: gifts or awards; vacation, holiday, personal day, sick leave or split-shift pay; reimbursed expenses; discretionary bonuses; profit-sharing plans; benefit costs paid by employer such as health or accident insurance, life insurance, retirement plan contributions. Overtime pay is also excluded from computing the regular straight time rate. Have questions about your own situation? Contact us and we can give you more information and review your specific circumstances. You can submit your information using the convenient online intake form, send an email or call Michael Lore.

California overtime law defines overtime as any hours worked over an 8 hour day or 40 per week.  Though the Federal Fair Labor Standards Act (FLSA) forms the basis for most employee wage and hour regulations, most state overtime laws vary by state. California is only 1 of 4 states that require daily overtime pay.  If your company has instituted an alternative workweek in which you work 10 hours a day for 4 days a week, then there is an exception. California Overtime Rate of Pay

• Unless you meet an exemption, California pays daily overtime, as well as, weekly.
• Daily overtime is any hours worked over an 8 hour day.
• Alternative workweeks that meet California’s guidelines are paid daily overtime for hours worked over 10 hours a day after a 40 hour workweek.
• Weekly overtime is mandated by the FLSA, and consists of any hours over a 40-hour workweek.
• Overtime is calculated as 1.5 times an employee’s regular rate of pay.
• 2 times an employee’s regular rate of pay is paid for hours worked over 12 in a day, or any hours over 8 when worked on the 7th consecutive day in a week.

The “regular rate of pay” is determined by dividing the total compensation received by the number of hours worked. In the case of salaried employees, the maximum hours to be divided by, for most cases, are 40 hours.  Rate of pay for piece rate employees and other complicated applications is not so straightforward. If you are not sure what applies in your situation, contact an overtime lawyer who can determine if you are getting paid properly. Facts Concerning California Overtime Law

• California overtime law is more complicated than in other states, and the deck is stacked against employers who fail to comply with them.
• There are many factors that determine whether or not you are exempt from receiving overtime pay under California law and these exemptions can be confusing to both employers and employees.
• California overtime laws have been changing, which makes it more challenging for employers to follow these changes and comply with the State overtime regulations.
• Unfortunately, it is common for employers to purposefully misclassify employees as being exempt from any overtime pay, and the majority of workers have no knowledge of their protection under California overtime law.
• You are protected under the Fair Labor Standards Act (FLSA) against retaliation from your employer if you seek justice for overtime compensation violations.

The complications over changing requirements for computing overtime pay have always been a point of difficulty for employers in California.  Under the FLSA, overtime pay is defined as any hours worked over a 40-hour workweek.  But in the state of California, they also have daily overtime computations that call for overtime pay for any hours worked over an 8-hour day as well.  One of the things that make California so difficult to follow is that for years, state regulations required daily overtime in addition to overtime for hours worked in a 40 week.  All of a sudden, state legislature changed the law to only accommodate for a 40-hour workweek.  Soon after, the law changed again, and now California is required to acknowledge daily overtime payments effective January 1, 2001.  In August of 2004, “White Collar Exemptions” were implemented to their overtime laws as a modification to the FLSA, and then on January 1, 2007, a category for physicians and surgeons was added. Fluctuating rate calculations are not the only challenge to California employers.  The rules that determine whether or not an employee is exempt from overtime pay are tricky as well. Here’s the bottom line.  The odds of your employer misclassifying you as exempt from overtime pay often stems from confusion alone over California overtime law.  Potential miscalculations for overtime pay, if you are in fact non-exempt, are also common.  If you feel that you are not receiving the appropriate rate from your employer, contact an overtime lawyer today.  The Lore Law Firm specializes in overtime law and will be able to help you decide whether or not you have a case.

California labor laws for overtime are more stringent than any other state’s overtime laws.  They are designed to be more favorable to workers rather than employers, and because of their complexity, many employers are having a hard time complying.

• Fair Labor Standards Act (FLSA) sets the general guidelines for overtime pay nationally
• State overtime guidelines get more specific, especially in California
• California and Washington are required to pay daily overtime wages
• California has many narrowly defined exemptions
• Employers make many mistakes in determining overtime pay in California
• FLSA does require employers to keep accurate records of hours worked and wages paid
• California is one of the states that have record keeping requirements (pay stubs)

The national overtime standard set by the FLSA is 1.5 times the regular rate of pay for any hours worked over a 40 hour workweek for all non-exempt employees.  California labor laws for overtime get even more specific.  California also pays a daily overtime rate of 1.5 times the regular rate of pay for any hours worked over an 8 hour workday.  When work exceeds 12 hours in one day, all non-exempt employees are to be paid twice the standard rate.  Furthermore, if an employee works 7 consecutive days, they must be paid 1.5 times the usual rate for the first 8 hours, and double time for any hours over 8. This is known as the “7th consecutive day law” and it applies regardless of how many hours an employee has worked in the preceding 6 days.  The FLSA time-and-a-half overtime requirement for hours worked over 40 hours also applies in California. Nationally, in order for an employee to be exempt from overtime pay, they must typically be a salaried worker, and must pass several tests regarding job description and duties performed at work as defined by the FLSA.  However, California labor laws for overtime has slews of narrowly defined exemptions, which has been causing employers to become confused and, as a result, are misclassifying their employees.  For example, you can be eligible for overtime in California if you a labeled a “part time” employee, or you supervise other people. There has been a steady climb of wage and hour class action lawsuits against employers who are misclassifying their workers as exempt in recent years, and not just in California.  An example of a class action of this nature can be seen in a current case entitled Willix et al v. HealthFirst, Inc.et al. This is a good example of how a simple misclassification can lead to millions and millions of dollars in fines, penalties, and overtime reimbursement at the hands of the offending employer. California labor laws for overtime are notorious for being a minefield for the uniformed. This is why it is not recommended that you try to figure out everything for yourself.  If you think you are a victim of any wage and hour law violation in the state of California, or any other state, contacting an overtime lawyer is the smartest way to go. Finally, California is also unique in that it is one of the few states that have record keeping requirements, or pay stub requirements.  According to California Labor Code Section 226(a), every time you are paid, whether by check, in cash, or otherwise, you must be given a detachable part of the check or a separate writing showing required information. California labor laws for overtime are designed to protect you, the employee.  If you feel your employer is in violation of federal and/or state overtime laws, contact an overtime lawyer today.  

California exempt employees are workers who are not eligible for overtime pay because of their classification as exempt under the Federal Fair Labor Standards Act (FLSA) and related California labor laws. Meant to protect often vulnerable minimum wage or lower-waged employees, all such legislation includes definitions of those covered by the laws, and those who are excluded from protection. California’s labor laws are more stringent than the Federal overtime laws and are arguably among the most stringent in the nation. In order to protect employees from being taken advantage of, California exempt employees must meet rigorous requirements. In summary, California’s exempt employees include those who qualify under the following exemptions (unless otherwise noted, these employees must also meet the minimum salary test in which they receive at least twice the state’s minimum wages as salary): Executive:

• Primary responsibilities are management of the business, department, or subdivision
• Regular supervision and directing the work of two or more subordinates; the authority to hire, fire, and determine wage levels or recommend such for other employees of other employees
• More than 50% of the workday spent in activities related to management duties
• Discretionary power exercised or at least 20% equity ownership in a business and active involvement in the management of the company

Learned Professional:

• Performance of duties requiring advanced knowledge or learning acquired by a prolonged course of specialized educational instruction
• Generally only licensed or certified occupations are exempt including law, medicine, dentistry, optometry, architecture, engineering, teaching, and accounting, in which the employee has freedom of choice as to how to accomplish non-standardized work more than 50% of the time

Creative Professional:

• Principal duties involve work that requires invention, imagination, originality, or talent in a recognized field of artistic or creative undertaking

Administrative:

• Areas of responsibility in doing office (non-manual) work directly related to the general business operations or management of the employer or the employer’s customers which entails exercising discretion and independent judgment more than 50% of the time.

Outside Sales: Physicians & Surgeons:

• Employees 18 years of age or more whose primary duties include making sales or obtaining orders, contracts for services, or for the use of facilities
• Those who usually work away from the employer’s place of business selling tangible or intangible items more than 50% of the time.
• Employees who receive commissions from sales for compensation
• Licensed physicians and surgeons who perform duties for which a medical license is required, so long as they are paid at least the minimum wage set annually by the state

In California exempt employees also include the following categories: Computer-related Occupation:

• This exemption is very similar to the Learned Professional exemption but was specifically enacted to protect computer programmers and systems analysts, applications programmers and analysts, software engineers and specialists, and systems specialists.
• They must be paid at least a minimum amount dictated by law in order to be exempt from overtime pay requirements.

Highly Compensated Jobs (apply only to public sector employees):

• All employees guaranteed a total annual compensation of $100,000, not including medical or life insurance, pension, and retirement plan contributions or other fringe benefits
• Excluded from this exemption are “blue collar” workers, police officers, fire fighters, paramedics, EMTs, and other first responders, no matter how much they are paid.

Further complicating the classification of exempt employees in California is the fact that the legislators often change the law resulting in many unexpected twists in it. For example, Medical profession exemptions include physicians, but not nurses, and pharmacists are no longer automatically considered to be California exempt employees. Attorneys are exempt, but paralegals are not, and while certified public accountants are exempt, uncertified accountants are not. Overtime lawyers specializing in overtime law are not a luxury in California, but a necessity. If you are employed in the State of California and feel that your employer has misclassified you as a California exempt employee, it is in your best interest to contact a reliable overtime attorney who will help you determine if you might have a valid case.

California labor law protects the rights of California employees to receive overtime pay for those who work more than 8 hours a day and for those who work more than 40 hours in a week.  In California, you can still be entitled to overtime even if you are paid on a salary basis, even if your salary is $100,000.00 a year.  You can also be eligible for overtime even if your company labels you a “part time” employee or you supervise other people.  Even exceeding the Federal Fair Labor Standards Act guidelines, California labor law has many narrowly defined exemptions and can be very tricky. Top Ten Employer Mistakes Regarding California Wage and Hour Law Without adequate knowledge or legal counsel, the deck can be stacked against employers’ compliance with California labor law, and as a result, employers are making mistakes in determining whether or not workers are entitled to overtime pay as well as other mistakes regarding wages legally owed to employees. Consulting with an experienced overtime lawyer is a must for California employers as well as employees.

1. Misclassifying Employees as “Independent Contractors”
2. Maintaining an Unlawful Vacation Policy
3. Failing to Appropriately Pay Final Wages
4. Failing to Properly Handle Employee Expense Reimbursements, Uniforms, and Tools and Losses
5. Not Posting Required Notices Mandated by both State and Federal Law
6. Miscalculating Regular Rate of Pay
7. Not Properly Paying Employees for All Hours Worked
8. Not Providing Employees with the Required Breaks and Meal Periods
9. Employees Misclassified as Exempt from Overtime Pay
10. Not Understanding which Wage Order Applies (California has 17 Separate Wage Orders)

To get a complete explanation for the above list, contact our law office, as California has complicated definitions of what is legal and what is not. California labor law is complex, especially in Information Technology and the high tech industry, and the Labor Commission does not always have the time to assist in understanding these issues.  Therefore, it is suggested that if you have a complaint against your employer regarding overtime or any other wage and hour dispute that you do not only take it to the Labor Commission.  Contact an overtime attorney that specializes in California labor law, as they understand all of California’s quirks regarding this matter. The following is an example of a case filed in California state court regarding employee/employer disputes over aspects covered under the labor laws of California. California Wage/Hour Class Action Lawsuit: Oracle Corporation In October of 2010, 3,000 Oracle Corp. employees have brought suit against their employer in Alameda County, California alleging that Oracle Corporation misclassified them as exempt and deprived them of overtime pay. Judge Steven Brick’s order certified 3 subclasses of technical analysts, project managers, and quality assurance analysts or developers for Oracle and Peoplesoft, which Oracle bought in 2005.  It is the first class of Oracle employees to win certification in a coordinated proceeding that includes four different suits.  (Oracle Wage and Hour Cases, JCCPoo4597)  They say their employer violated the California Labor Code by failing to pay overtime and also failing to provide them with off-duty meal times. Brick also granted the plaintiff’s motion to strike the declaration of an expert witness whose opinions favored Oracle.   The exemptions provided for under the FLSA are very limited and narrow, and the burden is placed on the employer to prove that any given employee or class of employees is not exempt. While the issue of exemptions can be complicated, the following is a general overview of the primary tests devised by the Department of Labor:

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Executive Exemption To qualify for the executive employee exemption, all of the following tests must be met: The employee must be compensated on a salary basis (as defined in the regulations) at a rate not less than $455 per week; The employee’s primary duty must be managing the enterprise, or managing a customarily recognized department or subdivision of the enterprise; The employee must customarily and regularly direct the work of at least two or more other full-time employees or their equivalent; and The employee must have the authority to hire or fire other employees, or the employee’s suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees must be given particular weight.

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Administrative Exemption To qualify for the administrative employee exemption, all of the following tests must be met: The employee must be compensated on a salary or fee basis (as defined in the regulations) at a rate not less than $455 per week; The employee’s primary duty must be the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers; and The employee’s primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.

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Professional Exemption To qualify for the learned professional employee exemption, all of the following tests must be met: The employee must be compensated on a salary or fee basis (as defined in the regulations) at a rate not less than $455 per week; The employee’s primary duty must be the performance of work requiring advanced knowledge, defined as work which is predominantly intellectual in character and which includes work requiring the consistent exercise of discretion and judgment; The advanced knowledge must be in a field of science or learning; and The advanced knowledge must be customarily acquired by a prolonged course of specialized intellectual instruction. To qualify for the creative professional employee exemption, all of the following tests must be met: The employee must be compensated on a salary or fee basis (as defined in the regulations) at a rate not less than $455 per week; The employee’s primary duty must be the performance of work requiring invention, imagination, originality or talent in a recognized field of artistic or creative endeavor.

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Computer Employee Exemption To qualify for the computer employee exemption, the following tests must be met: The employee must be compensated either on a salary or fee basis (as defined in the regulations) at a rate not less than $455 per week or, if compensated on an hourly basis, at a rate not less than $27.63 an hour; The employee must be employed as a computer systems analyst, computer programmer, software engineer or other similarly skilled worker in the computer field performing the duties described below; The employee’s primary duty must consist of: 1) The application of systems analysis techniques and procedures, including consulting with users, to determine hardware, software or system functional specifications; 2) The design, development, documentation, analysis, creation, testing or modification of computer systems or programs, including prototypes, based on and related to user or system design specifications; 3) The design, documentation, testing, creation or modification of computer programs related to machine operating systems; or 4) A combination of the aforementioned duties, the performance of which requires the same level of skills.

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Outside Sales Exemption To qualify for the outside sales employee exemption, all of the following tests must be met: The employee’s primary duty must be making sales (as defined in the FLSA), or obtaining orders or contracts for services or for the use of facilities for which a consideration will be paid by the client or customer; and The employee must be customarily and regularly engaged away from the employer’s place or places of business.

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Highly Compensated Employees Highly compensated employees performing office or non-manual work and paid total annual compensation of $100,000 or more (which must include at least $455 per week paid on a salary or fee basis) are exempt from the FLSA if they customarily and regularly perform at least one of the duties of an exempt executive, administrative or professional employee identified in the standard tests for exemption (see above).

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Blue Collar Workers The exemptions provided for “white collar” employees do not apply to manual laborers or other “blue collar” workers who perform work involving repetitive operations with their hands, physical skill and energy.  Non-management employees in production, maintenance, construction and similar occupations such as carpenters, electricians, mechanics, plumbers, iron workers, craftsmen, operating engineers, longshoremen, construction workers and laborers are entitled to minimum wage and overtime premium pay under the FLSA, and are not exempt no matter how highly paid they might be.

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Collective Bargaining Agreements The FLSA provides minimum standards that may be exceeded, but cannot be waived or reduced. Employers may, on their own initiative or under a collective bargaining agreement, provide a higher wage, shorter workweek, or higher overtime premium than provided under the FLSA.

California labor and overtime laws are among the most stringent in the nation in an effort to protect vulnerable minimum wage and low wage-earning employees. Many of the California labor overtime rules and regulations were enacted to protect the workers who don’t feel that they can tell their employer “no” to working overtime without risk to their jobs. The definitions of employees as exempt and non-exempt are definite and precise. Non-exempt employees are those whom California labor overtime laws and the Fair Labor Standards Act (FLSA) protect who are entitled to overtime pay. These are usually minimum or lower-wage earners who are paid hourly.

• Employees who work more than 8 hours in a workday must be paid 1.5 times their usual hourly wages for each overtime hour worked. If they work more than 12 hours in a workday, they must be paid twice their usual rate.
• If an employee works 7 consecutive days, they must be paid time and a half for the first 8 hours, and two times their normal rate for each hour worked over 8. This 7th consecutive day worked applies no matter how many hours the employee worked in the first 6 days.
• Any non-exempt employee who works more than 40 hours per workweek must be paid 1.5 times their standard hourly pay.
• If an employee who misses work time for a personal reason wishes to make up the time during the week, he may do so with the employer’s permission. So long as she does not work more than 11 hours on the make-up day, the employer is not obligated to pay overtime. Employers are not required by law to grant an employee’s request to make up such time.
• According to California labor law regulations, if an employee works more than 5 hours, an unpaid, “off the clock” 30 minute meal period is mandated by law. If however, the employee works less than 6 hours and both the employer and employee agree, the meal time may legally be waived.
• If an employee works more than 10 hours, a second 30 minute meal period is required, and again if an employee works less than 12 hours, the second meal time may be waived if both are in agreement in California.
• In California employees are given a 10 minute rest break in the middle of the work period  for every 4 hours worked if they work more than 3.5 hours. Under the California Breaks Provision rest breaks are considered work and are paid or “on the clock.”

Employees must be paid for all of their work time that is spent engaged in work that benefits the employer at work, at home, before, or after work hours. This includes any work that is integral to the employee’s principal work. For example, cleaning a tanning bed in a tanning salon is considered an integral part of the job. Even unauthorized work by an employee must be compensated. Some of the most common violations of California labor overtime laws occur when supervisors encourage or require employees to work before clocking in or after clocking out. Employees who believe that they have not been paid overtime unlawfully are well-advised to contact an experienced California overtime lawyer who can best evaluate their situation to determine if they might have a valid claim under the California labor and overtime laws.  

Wage and hour claims can take several forms–in California expenses reimbursement claims are one of these. In some, employers place unreasonable (and often illegal) limitations on the employee’s filing for reimbursement. For example, in Stuart v. Radio Shack found that the employer’s internal rules are secondary to the statutes concerning California expense reimbursement claims. To determine if your situation was such a violation the help of an experienced wage and hour overtime attorney is invaluable. Q: In California, can my employer refuse to reimburse me for the purchase of office supplies I was sent to get because I lost my receipt and didn’t fill out the paperwork in the time frame described in the handbook? Probably not. Just because the employee handbook states a policy, or something has always been done a certain way doesn’t mean that it is right, just, or legal and California expense reimbursement claims are certainly a good example of this. This means that in California, companies must reimburse their employees for expenses when they know or have reason to know that the employee has claim for a reimbursable expense. If so, then the company must do everything possible (“exercise due diligence”) to make sure that the employee is suitably reimbursed. Does this mean that employers cannot set internal deadlines and standard operating procedures for reporting and paying expenses? No. However, employers should also realize that an employee’s failure to comply with their guidelines is NOT a legal defense for not paying a expense that was incurred in good faith. Q: I left my old job a month ago, and was recently told that having me sign an agreement when I was hired that they didn’t have to reimburse me for some expenses I had to incur because of my job was not legal. Is that true? My former employer told me I had to purchase my own power tools that I needed to do the job I was hired to do. Is that right!? Maybe—it depends on what your hourly wage was. § 8 of the Industrial Welfare Commission Order No. 16-2001 requires employers to provide and maintain uniforms and equipment required by employees to do their jobs unless the employees are paid at least twice the minimum wage or more. The foundation for most California expense reimbursement claims is California Labor Law 2802 which mandates that all employers must reimburse their employees for all expenses required to do their jobs. In addition to uniforms and tools, other expenses that employees may be entitled to be reimbursed for include office supplies (particularly if the employee works at home), cell phone usage related to work, automobile expenses when traveling to customers, internet service if necessary to performing duties, etc. Employees are encouraged to keep an itemized log of expenses and all receipts. Q: What are some examples of the types of expenses that should typically be paid or reimbursed by my employer?

• Tools and equipment
• Safety gear (e.g. armored transport employees – firearms and ammunition)
• Salesperson’s expenses – including cell phone expense, travel and hotel/motel costs
• Mileage driven during work (excluding commute to and from work) for work related activities
• Buying uniforms with company logos or uniforms that cannot be worn after work (e.g. restaurant employees and security guards)
• Work related training, seminars or education – including license fees
• Other job related purchases that are for the benefit of the employer

Remember:  just because your employer has always had certain rules regarding expense policies does not mean that it is or even has been legal, and any time an employer changes policy to eliminate expense reimbursements you should verify that it is legal. California employees are protected by law in many ways in addition to expense reimbursements: minimum wage laws, overtime pay laws as well as stringent exempt employee classifications. If you think that you have a valid California expense reimbursement claim or some other overtime law claim, fill out the Case Evaluation Form as completely as you can and one of our Lore Law Firm overtime attorneys will review your case to see if you may be eligible for recovery of the unreimbursed expenses or unpaid wages you may be owed.  

California law for overtime is arguably among the toughest overtime law in the U.S. Californians place a high value on protecting their most defenseless workers—low wage earners who often receive only the minimum wage. These workers are most often those who rely on their paychecks for day to day expenses and don’t have enough in savings to be able to risk their jobs by saying no to extensive overtime hours that could be detrimental to their families, and as such are protected under California law for overtime. The differences between those covered by the California wage and hour laws are very clear-cut. Non-exempt employees who are covered by these FLSA (Fair Labor Standards Act) based laws are usually, but not always, low wage earners who receive the minimum wage paid hourly.

• If they work more than 8 hours in one workday, they must receive overtime pay (1-1/2 times their regular hourly wages) for each hour worked in excess of 8. If they work more than 12 hours in one day, they must be paid 2 times their usual hourly pay rate.
• All non-exempt workers who work more than 40 hours in one workweek must also be paid overtime at the rate of 1.5 times their regular hourly wage per overtime hour worked.
• Whenever employees work 7 days in a row, they must be paid overtime for each hour worked on the 7th day, and 2 times their usual hourly wage for any hours worked in excess of 8.
• California also has stringent requirements for labor law meal and rest breaks when employees work more than 5 hours in a single day.
• Common overtime problems are especially prevalent in the following fields/positions: mandatory overtime for nurses, computer IT techs, and independent contractors.

Employee misclassification often happens when an employee is given a title such as Assistant Manager, but them spends most of the workday performing the same tasks as the rest of the employees. Some cases brought under California law for overtime have involved employees who had been misclassified as exempt employees in which the companies had to reimburse the employees for overtime pay that had been withheld. Just like the Federal requirements, California law for overtime is based on the premise that all non-exempt employees must be paid for all the work they actually do whether at work, at home, at a customer’s location and whether on or off the clock. Even work that is not authorized by the employer must be compensated. Some of the most common overtime violations in California involve employees being required to perform duties or attend mandatory training either before or after normal work hours. This is what is known as working “off the clock.” Beginning with the foundation laid by the Federal legislature in the FLSA FairPay overtime rules, California law for overtime now exceeds those requirements. In fact, California law has become so complex that most workers and some employers are confused as to what is and is not legal. This has led to a plethora of lawsuits as the California court system seeks to define these issues for the workplace. If you work in California and think that you may have been misclassified under California law and are owed outstanding overtime, complete our online Case Evaluation Form and one of our experienced lawyers will help you decide if you have a good legal case against your employer.  

California lunch break laws which are just one part of the stringent California labor laws, in general, require that employees are to be given off-the-clock meal breaks to most employees working over a 6 hour day. California Lunch Break laws state that:

“If an employer fails to provide an employee a meal period in accordance with the applicable provisions of this order, the employer shall pay the employee one (1) hour of pay at the employee’s regular rate of compensation for each workday that the meal period is not provided.” California Code of Regulations, Title 8, §11040.

• An “off duty” lunch period of no less than 30 minutes should be provided after 5 hours of work.
• Two “off duty” 30 minute meal periods are to be furnished for those employees working over 10 hours in one day.
• The proper “off duty” meal period is one in which no work related tasks are performed.
• “Off duty” meal periods can be waived if the work day is not more than 6 hours long.
• “On duty” meal periods are those which work is still being performed and, therefore, is considered time worked.
• “On duty” meal periods can only be provided if the nature of the work prevents an employee from leaving.
• “On duty” meal breaks are to be provided in a written agreement between employee and employer in which an on-the-job paid meal period is agreed to.
• It is a violation for an employer to have their employees take their break before or after their shift.
• California lunch break laws have been affected by the Supreme Court ruling of Murphy v. Kenneth Cole Productions, Inc.

Murphy v. Kenneth Cole Productions, Inc. affects the California Lunch Break

The plaintiff, a store manager for Kenneth Cole, filed an individual wage and hour claim against his former employer seeking unpaid overtime and waiting penalties, as well as, meal and rest period and itemized pay statement violations, because he regularly worked 9 to 10 hour days and rarely took meal and rest breaks. The trial court ruled against Kenneth Cole Productions and, in part, awarded “an additional hour of pay” under California Labor Code section 226.7, and applied a 3 year statute of limitations to this award. The Supreme Court’s ruling upholds the plaintiff’s award of $64,000 for unpaid overtime, missed meal and rest periods and penalties, as well as attorney’s fees of $62,000. The California Supreme Ruling also held that pay for employees missing meals is a “wage” rather than “penalty”, which allows for a 3 yr. statute of limitations, rather than 1 year for “penalty” back pay. Putting it simply, the ruling basically says that you need only to pay an employee an extra amount of money if they work through their lunch break, that missing meal periods is not illegal.

What is the difference between a “wage” and a “penalty”?

While it may seem like a frivolous legal distinction, the difference between “wage” and “penalty” is quite dramatic for several reasons.

1. On the surface, the case was about whether Meal Premiums could be sued for going back 1 year versus 3 years. Penalty suits have a statute of limitation of one year. Wage suits can go back 3 years.
2. If the court would have ruled in the other direction, then missing meals would be a criminal offense, meaning if the Meal Premium was a penalty, then it would be because the conduct was illegal.
3. Because the Meal Premium is defined as “wages”, then it must be used in assessing an employee’s regular rate of pay for overtime purposes.

It is important to note that although the Murphy Court held that Meal Premiums can go back 3 years, it is likely that employees will be able to go back a total of 4 years under unfair competition statutes. California labor laws are notoriously tricky, as the Top 10 California Overtime employer mistakes show, and the details concerning California lunch breaks regulations are no exception. Contact an overtime lawyer if you have a specific question that pertains to you and the California law for overtime enacted for your protection.