Category Archives: Wage & Hour

Is Wage Theft Still a Problem in California?

Since becoming a lawyer, I’ve had many casual conversations with family, friends and colleagues about the work I do. I’m asked (more often that I’d like to admit) whether or not things like wage theft are actually a significant problem in today’s modern workforce. Depending on where I’m asked this question, and who’s asking it, I’m often inclined to pinch the bridge of my nose, squint my eyes and let out an audible sigh. Sadly, I do find myself explaining to folks that, yes, in fact wage theft is alive and well in America, and definitely in the Golden State.

Here is a Simple Wage Theft Example

For evidence of this unfortunate business practice, one need look no farther back in history than June 2017, when reports surfaced that Los Angeles City Attorney Mike Feuer intended to take legal action against fast food behemoth Carl’s Jr.

The reason? The company stands accused of failing to pay 37 workers the legal minimum wage of $10.50 an hour at seven Los Angeles locations. According to KCET.com, the city alleged the company engaged in the wage theft between July and December of 2016.

Under the city’s action against the company, Carl’s Jr. is facing a total of $1.45 million in restitution and penalties. The alleged lost wages totaled more than $5,000.

While it might shock some folks that a company with such a high profile as Carl’s Jr. would potentially engage in such shady employment practices, keep in mind that Andrew Puzder, former CEO of Carl’s Jr.’s parent company CKE Restaurants was tapped as President Trump’s first pick for U.S. Labor Secretary. Puzder served as CEO from September 2000 until March of 2017.

Although his nomination was derailed after old allegations of domestic abuse surfaced, it raised unsettling questions about how powerful business interests view workers.

In December of 2016, OC Weekly examined a 2009 interview with Puzder archived by Cal State Fullerton’s Center for Oral and Public History. In the interview, Puzder reportedly lamented the state of the law in California. “I think the big change in California, it’s really become a kind of socialist state,” he said proceeding to disparage business practices such as mandatory breaks for minimum wage employees. “Have you ever been to a fast food restaurant and the employees are sitting and you’re wondering, ‘Why are they sitting?” Puzder asked. “They are on what is called a mandatory break.”

Sadly, and unsurprisingly, Carl’s Jr. isn’t the only company in California to have accusations labor of labor violations leveled at them.

Here is more information on meal breaks and rest breaks. Here is the basics of California overtime law.

Wage Theft from an Economic Point of View

A May 18, article published by the San Jose Mercury News highlighted recent figures compiled by the Economic Policy Institute. The statistics showed California’s low-wage workers losing close to $2 billion a year in minimum wage violations.

The Institute’s report argued that wage theft hurts low-income workers in every demographic category, but particularly young people, women, people of color and immigrant workers. The study’s authors estimated that if California’s numbers were representative of the rest of the country, American workers could be getting cheated out of more that $15 billion a year — enough to build Trump’s border wall.

The above-mentioned examples highlight just some of the more recent examples of wage theft in the Golden State.  Depending on whom you ask, an argument could be made that the problem has been a systemic issue for many years.

In 1988, the Los Angeles Times reported on a contractor in Costa Mesa who allegedly refused to pay three immigrant workers a combined total of $1,800 in back wages. After the workers notified police, the case was referred to the district attorney’s office. A warrant was issued and the contractor was charged with grand theft of labor wages. At the time, a spokesman for the Costa Mesa Police Department said it was the first arrest of its kind in city history.  I can’t help but wonder how many times similar situations had happened before, and have happened since.

Conclusion on Wages

Long story short, I believe wage theft is a big problem in California — probably bigger than even most employment lawyers and other labor experts realize. I personally see the effects this crime can have on my clients, effects that often go unnoticed by media reports. These include stress-related illness, depression and difficulty paying basic bills such as rent and groceries.

If there’s any bit of good news for people who feel they’ve been denied their rightful payment for their hard work, it’s that employment lawyers typically take cases on a contingency basis. Usually there is no fee for consultation. In addition, there are laws to protect workers from retaliation from employers, should they report wage theft. While the decision to go to a lawyer and blow the whistle on an unethical employer isn’t always easy, the option is there, and is something to be considered when the going gets rough.

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Confusion Still Exists in 2017! California Overtime Laws – Exempt, Non-Exempt, Salary, Hourly, Misclassification, and Statutes of Limitations

Unpaid Overtime in 2016 - California Employment LawLots of people call our law firm and say, “My boss just switched me from hourly to salary. Is this legal?” What are the implications of being switched? Is it legal? Most importantly, how is that going to affect your pay going forward? This article tries to clear up some of the confusion over this common employment problem. Employment lawyers like us commonly get these questions so we thought we’d write a blog on the subject.


Overtime is the Still the Main Issue in 2017

One of the first things that everyone is concerned about is overtime. Companies often change an employees’ classification in an effort to pay their employees less money for the same amount of work. For example, lots of hourly employees work an hour of overtime work per day. But if they were paid a salary, they wouldn’t get paid that extra hour of OT. So sometimes this change is made for illegal reasons.

It would be helpful to talk about salary versus hourly payment structures. The presumption for California employees is that they are owed some basic employment rights. Along with meal and rest breaks, they are supposed to receive overtime compensation for all hours worked over eight in a day and/or forty in a week. They are also supposed to be paid double-time if they work more than twelve hours in a day. But CA employment law has built several exemptions to these rules. If you are properly classified as an exempt employee, the employer does not have to pay you overtime and can pay you a salary. Generally, employers want to do this because it makes their payroll much more stable and predictable.

Salary, Overtime, and Misclassification

It might be surprising to note that not every employee who is paid a salary is “exempt.” If the employee is misclassified the employer still has an obligation to pay overtime. Or if the employee is considered as non-exempt by the employer, they can still pay the employee a salary, but the employee is still entitled to overtime payments if they work more than 8 hours a day or 40 in a week.

Another common scenario is when an employer classifies an employee as exempt because the employee performs some job duties that constitute exempt duties. BUT, if the employee spends more than 50% of his or her time performing non-exempt duties, then the employee is misclassified and may be owed overtime pay.

Calculating the Overtime Rate in a 2017 Salary Misclassification Case

To figure this out you’ve got to do some basic math. You need to first figure out the employee’s pay rate. You take the employee’s annual salary, divide it by 52 (weeks in a year) to find the weekly salary, and then divide by 40 (the maximum straight-time hours worked). For example, Joe’s annual salary is, conveniently, $52,000/yr. His weekly rate is $1,000/week, and his “regular rate” comes out to be $25/hr.

Now you multiply that pay rate times 1.5. So if your pay rate came out to be $25/hr, your overtime rate would be $37.50/hr. Then you would multiple this overtime rate times the number of overtime hours worked (more than 8 in a day and/or 40 in a week).

Mr. Robertson has handled several misclassification cases where salaried employees have worked for two or three years without overtime compensation. When someone is working 2 OT hours per day that adds up to a large amount.

Statute of Limitations in Misclassification Overtime Cases

California overtime laws allow you to collect back wages for four years if you include an unfair competition cause of action. BUT, this rule is very deceptive and many good people are unable to collect a substantial portion of their lost wages because they delay taking action. Basically, it plays out something like the hypothetical below.

Hypothetical Recovery in Misclassification Case – Two Scenarios:

Scenario #1:

You worked for a company for four years as a misclassified salaried employee. You were getting paid a salary of $41,600 per year. You worked nine hours a day as opposed to the standard eight. But because you were misclassified and was paid a salary, you didn’t get paid for that extra hour each day.

Under this scenario, if you filed your case on your last day of work, you would be owed $31,200 (a total of $7,800 per year at $30 per overtime hour). This does not include penalties, interests, or attorney’s fees. That is just the overtime amount that you’re owed.

Scenario #2:

Under the same set of facts, if you quit and wait three years to file your lawsuit, you would only be owed $7,800. Therefore, the statute of limitations ate away at your damages substantially.

Don’t Wait – Call an Employment Lawyer ASAP

Please keep in mind that both of the situations above are more complicated than what is presented and have various exceptions for each. But due to the statutes of limitations, it is wise to call an overtime attorney immediately if you think you’ve been misclassified. If you feel as though you should be receiving overtime, contact Mr. Robertson so that we may give you a free consultation.

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New Overtime Law Whiteboard Video

Mr. Robertson is proud to release his latest video. This one is all about California’s overtime law. It details misclassification, off the clock work, and lots more.

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February 4, 2017 · 1:32 am

San Diego Unpaid Overtime Verdict of $300,000 for Dishwashers in Restaurant

The purpose of the overtime pay is obvious. First, overtime encourages an employer to reduce amount of hours worked or hire more employees. Second, overtime ensures that employees are compensated fairly for the burden of working long hours. Unfortunately, California employers fail to pay overtime quite frequently. Rather than hiring an extra helping hand or simply paying the employee what he or she is owed, some employers would rather violate law in order to save a few bucks. That’s why employment lawyers spend a lot of time litigating overtime cases.

California Overtime Law

Under California law, employees are generally entitled to overtime pay if they work more than 40 hours per week or more than eight hours in one day. This is unlike federal law, where employees are entitled to overtime pay only if they work more than 40 hours per week, regardless of the amount of hours worked on any given single day.

Under both federal and California law, if an employee works overtime, then the employer must pay the employee one and a half times an employee’s regular rate. For example, if Mark the Mechanic is paid $12.00 per hour, but works 42 hours in a given week, then his rate of pay for those 2 overtime hours is $18.00 per hour instead of $12.00 per hour. If he has not been paid the correct amount, he can hire a wage & hour lawyer.

Overtime Case Example – Atempa v. Pama

Atempa is a 2015 case out of the Superior Court of San Diego County and Judge Joel Wohlfeil’s courtroom. Plaintiffs, Marco Atempa and Keilyn Reyes, were employees of defendant, an Italian restaurant. During their employment, Defendant would alter the employees’ time sheets and essentially cut the hours its employees worked every pay period. In doing this, Defendant would avoid compensating its employees for overtime pay and thus save money. Eventually, employees began to notice the time being cut from their paychecks. Plaintiffs, a cook and a dishwasher, sued Defendant on behalf of over 70 harmed employees. After an eight day bench trial, the court ruled in favor of the Plaintiffs. The amount awarded was just under $300,000.

Wage and Hour Attorney Help Recover Unpaid Overtime

Unfortunately, what happened to the Plaintiffs in Atempa is fairly common. Our firm receives calls almost every week of employers who fail to compensate their employees properly for overtime hours worked. Sadly, employers all too often try to take advantage of their employees in an effort to save money. But at the end of the day, the employer risks significant legal liability by doing this, and if brought to court will end up paying out more than if they just simply paid their employees properly to begin with. If you feel your employer is not compensating you properly, call an attorney immediately.

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The Law Regarding Payment for On-Call Hours

There are a lot of California employees out there who are required to be on-call or work on-call hours. What is an on-call employee? An on-call employee is a one who either stays on the employer’s premises during off hours and can called to work for an immediate reason or emergency, or one who does not stay on the employer’s premises, but will still be called in to on work during their off hours by the employer during their off hours for an immediate reason or emergency. Generally, employers are required to compensate employees while they are on-call. If you are required to remain on-call during off hours, and you may not be getting compensated, you should contact an overtime lawyer.

Mediola v. CPS Security Solutions, Inc., (2015) 60 Cal.4th 833

The defendant, CPS Security Solutions, Inc., was a security company that hired security guards to remain on-call at construction sites and provide security. While on-call, the security guard resided in a trailer on the construction site. When the security guard was not on-call, he or she would be patrolling the construction site. CPS paid the guards hourly while they were on duty patrolling the construction site, however the defendant did not pay guards while they were on-call unless there was an emergency that required the security guard to act, or if the security guard was still on-duty and was unable to be relieved. The security guards filed a class action alleging minimum wage and overtime violations for defendant’s failure to compensate them for the on-call hours.

On-Call Hours Are Generally Compensable

The case eventually worked its way to the California Supreme Court. To determine whether on-call hours should be compensated, the California courts apply the following test. On-call hours are compensable if the employee spends the time primarily for the benefit of the employer and its business. The factors to determine if the employee is spending his or her time primarily for the benefit of the employer and its business include, but are not limited to the parties’ agreement, degree to which the employee is free to engage in personal activities, whether there was an on-premises living requirement, and whether there was heavy restrictions on the employee’s movements. Considering the security guards were required to live on the construction site while they were on-call, not allowed to leave the premises while on call, and were not engaging in personal activities if required to remain at the construction site, the Supreme Court held that the security guards’ should be compensated by the defendant for working on-call hours.

If You Are An On-Call Employee And You Are Not Being Compensated, Call a Wage and Hour Lawyer

At the end of the day, Mediola v. CPS Security Solutions, Inc. reassures California employees that the state courts are still on the side of the little guy. If you are required to be on-call as a condition of employment, and you feel your employer is not compensated you fairly or properly, then call a wage and hour lawyer immediately to evaluate your situation.

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California Meal and Rest Periods are Mandatory Even for Motor Carrier Companies

Under California law, an employer is required to provide employees a 30 minute meal break during a work period longer than five hours with some exceptions. Further, an employer is required to provide a second 30 minute meal break if an employee works more than 10 hours in a day. Also, under California law, employers are required to provide 10 minute rest periods for every four hours worked by an employee. But the law for Truckers is rapidly evolving and changing, as the below case demonstrates.

In 2013, truck drivers brought a class action suit against their employer in part for failing to provide the required meal and rest breaks under California law. In May 2013, the bench trial court awarded the truck drivers damages. The employer filed an appeal.

On appeal, their employer argued that the FAAAA (Federal Aviation Administration Authorization Act) preempted California law here and thus the required meal and rest breaks did not apply to truck drivers. The employer cited to a clause which basically stated that a state may not enact or enforce a law related to a price, route or service of any motor carrier. However, the court was not convinced by the employer’s argument. Citing to a recently decided case on the same matter in the 9th Circuit Court of Appeals (Dilts v. Penske Logistics, LLC), the court held that the FAAAA does not preempt California law when it comes to meal and rest breaks.

As the above case shows, California meal and rest break laws apply to motor carrier employers and are not preempted by the FAAAA. Therefore, if a California employer fails to provide meal breaks, the employer will be liable for one hour of pay at the employee’s normal rate of compensation for each workday the meal break was not provided. Also, if an employer fails to provide rest breaks, the employer will be liable for an extra hour of pay for each workday the rest breaks are not provided. At the end of the day, this is a huge win for employees, especially truck drivers, as it solidifies the authority California’s meal and rest break laws in the workplace.

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Case Update: The 9th Circuit Sides with Employees in an Employee vs. Independent Contractor Dispute

In Alexander v. FedEx Ground Package System Inc, former FedEx drivers from California and Oregon filed lawsuits against FedEx alleging they are owed unpaid wages under state and federal law. In August of this year, the 9th Circuit Court of Appeals reversed a lower court ruling and approved the lawsuits to move forward holding that the former FedEx drivers were in fact employees, and not independent contractors.

Alexander discusses the differences between employees and independent contractors, and the different rights and entitlements of these two groups under state and federal laws. Simply put, FedEx argued that the drivers were independent contractors and therefore not entitled to the protections and unpaid wages the group was alleging whereas the drivers argued that they were employees of Fedex, and therefore were entitled to the protections and unpaid wages they were alleging.

Independent Contractor Misclassification Standards

In determining whether workers are either employees or independent contractors, both Federal and California courts will look at a number of factors, including, but not limited to: the employer’s right to control the manner and means of the employee’s performance, the employee’s skill required to do the job, who provides the equipment and materials required to do the job, whether compensation is by time or per diem, whether the parties believe they are creating an employment or independent contractor relationship, length of time for which the services are to be performed, and whether the service rendered is an integral part of the employer’s business. It should be noted that this list is not exhaustive, it is just some of the factors courts will consider in determining whether a worker is an employee or independent contractors. The importance and weight given to each factor depends on each circumstance. But the courts often find the right to control the manner and means of the employee’s performance as the most important factor to consider.

The case held that the drivers were employees, not independent contractors. In deciding this, the Court noted a variety of factors which led to its ruling that the FedEx drivers were employees. The Court noted that the drivers wear FedEx uniforms, drive FedEx approved vehicles, and are told where and when to deliver packages. In this case, the 9th Circuit placed substantial weight on the employer’s right to control the manner and means of employee’s performance. Essentially, because the drivers were told how to do their job, specifically what hours to work as well as when and where to make deliveries, the drivers constituted employees, not independent contractors.

At the end of the day, this is a huge win for laborers. Even though a laborer may be classified as an independent contractor, he or she may nonetheless pursue damages for unpaid wages if their job description and duties can be described as an employee. Alexander v. FedEx Ground Package System Inc. clarifies that if a laborer categorized as an independent contractor is performing as an employee, then he or she can still allege damages for unpaid wages as if he or she was an employee.

If you need assistance figuring out whether you are properly classified, contact an employment lawyer today.

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