In recent years, nearly half of the wage and hour cases filed in the U.S. have been in California.
Wage and hour litigation continues to escalate to epidemic proportions in California. Every form of business, large and small, for profit and non-profit, is subject to potential liability for inadvertent mistakes in timekeeping, job classification, and payroll processing. The costs associated with wage and hour litigation can be staggering, especially in the class litigation context. Cook Brown attorneys are particularly adept at defending class and representative actions related wage and pay matters in state and federal court, as well as arbitrations.
California’s Private Attorneys General Act (PAGA) authorizes individual employees to sue employers for civil penalties on behalf of the state. PAGA was enacted 15 years ago to support the state’s efforts at policing wage and hour violations. Unfortunately, these benevolent intentions have led to unforeseen consequences for California businesses. Whereas the state’s enforcement efforts were traditionally focused on employers who willingly underpaid employees, PAGA cases enables private law firms to sue even compliant and conscientious employers for technical and harmless Labor Code violations.
Prosecution of PAGA has become a lucrative specialty practice, leading to thousands of PAGA lawsuits each year. As the vast majority of PAGA recoveries are paid to attorneys, more and more law firms are becoming PAGA specialists, and employers find themselves confronting multiple and overlapping PAGA claims. Cook Brown has been monitoring these developments on the legislative and judicial front since PAGA’s enactment to ensure its clients are armed to prevent and or defend PAGA claims. In every case, it aims to minimize client exposure, reduce PAGA liability and minimize unnecessary attorney’s fees. At the same time, it assists clients in formulating business strategies that will preclude future PAGA lawsuits.
PAGA lawsuits commence with a letter notifying a business and the state of the alleged discovery of Labor Code violations. You can read about strategies for responding to any such letter here.
Wage and Hour Audits
When confronting a wage-and-hour audit by a regulatory agency, employers must act quickly to gather pertinent records, interview witnesses, and determine exposure. Cook Brown has extensive experience assisting employers in prevailing on these audits. Additionally, the best way to be prepared for a wage-and-hour investigation is to review your company’s current practices. Employers must not only be aware of all federal and state requirements but have such information readily available. Cook Brown has experience providing proactive solutions and advising employers on the policies necessary to avoid the red flags that often trigger these enforcement actions, such as:
- Record-keeping and retention requirements — personnel files, wage records, medical privacy;
- Exempt status — review positions for proper classification and independent contractor status;
- Time Off Practices — vacation, sick leave, PTO, holidays, military leave, crime victims, and other leaves of absence;
- Pay practices for nonexempt employees — on-call pay, split shifts, travel time, bonus payments and shift differentials in overtime calculations, etc.; and,
- Deductions of pay for salaried exempt employees.
Minimum Wage and Overtime
California has one of the highest minimum wages and strictest overtime laws in the country. Compliance with wage and hour laws poses many challenges for employers, including:
- Determining which Wage Order and other regulations and statutes apply to the employer’s industry or employee-base;
- Properly establishing an alternative workweek schedule;
- Determining the difference between exempt and non-exempt classifications;
- Determining the effect of California’s Wage Orders on exempt employees;
- Properly calculating the regular rate for purposes of paying overtime;
- Implementing make-up time policies;
- Properly calculating hours worked.
While on the surface, the payment of wages appears to be straight forward, California has ensured that it is not. It is tremendously technical and requires constant vigilance of the ever-changing regulatory landscape. Employees can either file a wage claim with the Division of Labor Standards Enforcement (the Labor Commissioner’s Office), or file a lawsuit in court against employers seeking back wages and waiting time penalties pursuant to Labor Code Section 203. Cook Brown has extensive experience defending employers against such wage claims and counseling employers on payment practices.
Meal and Rest Periods
California law generally requires employers to provide non-exempt employees the opportunity to take meal and rest periods. The failure to comply can subject an employer to one hour’s pay for every missed break. Although employers are not obligated to police employees to ensure they take breaks, employers must be able to demonstrate that duty-free breaks are readily available. Disputes concerning the availability of breaks has resulted in a tidal wave of class action litigation.
Cook Brown has extensive experience representing employers confronting meal and rest period claims — both in court and before the Labor Commissioner. Cook Brown works with clients on cost-effective measures to control litigation costs and reduce exposure. Our attorneys routinely advise clients on recommended industry-specific meal and rest period policies, as well as record-keeping practices and procedures to avoid litigation.
Compensable Hours Worked
Apart from overtime and minimum wages, both state and federal law require employers to properly pay employees for “hours worked.” Over the years, the courts have determined that any activity during which the employee is under the employer’s control might constitute hours worked. Employee claims for back wages often include:
- Travel time;
- Loading tools and materials or other “off-the-clock” activities;
- Waiting time or on-call time (i.e., waiting to be engaged v. engaged to be waiting);
- Donning, doffing and other activities preparing for work;
- Required meetings, lectures, training and team building activities;
- Overnight travel;
- Commute time after arrival at the office or first job site.
Problems can arise if these issues are not addressed before the employee gets to work. Cook Brown has solved this problem for clients by setting the right policy, training supervisors and advising employers on how to implement proper company practice. When disputes arise about hours worked, Cook Brown works with employers to prevent and defend such claims.