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California Law Imposes Stiff Penalties on Employers in Wage and Hour Cases

California is not known as easy place to be an employer, and it has some of the best laws for workers in the country.  One way that is clear is in the system of penalties that California imposes on employers.  Minimum wage employees and employees who are owed overtime are often owed a relatively small amount of unpaid wages.  However, in addition to the fact that employees who prevail in such cases are entitled to have their attorneys fees paid by their employer, California also imposes stiff penalties which are added on top of the employee’s unpaid wages.  Often employees who are owed relatively little unpaid wages may still be owed significant penalties.

WAITING TIME PENALTY — 30 DAYS OF WAGES

Under Labor Code section 203, when a termination of an employee occurs, whether because the employee quit or was laid off or fired, the employee must be paid all wages within 72 hours.  Often times, an employee who is owed a relatively small amount of unpaid past wages will nevertheless be able to recover a sizable penalty under Labor Code section 203.

For every day that the employee has not received his or her full pay after termination, his full pay at 8 hours per day continues as a penalty for 30 complete days.  Assuming that an employee usually works about 20 days a month, this really means that an employee who has been cheated out of even a small amount of wages can recover a month and a half worth of wages as a penalty.   For example, if a mechanic was being paid the proper double minimum wage of $22 per hour, and works 8 hours per day, the daily penalty is $22 for 8 hours, or $176 per day.  That penalty continues for up to 30 days, so the total penalty under Labor Code section 203 for such an employee would be the daily penalty is $176 times 30 days which equals $5,280.  Quite often, the 203 penalty to a cheated employee is greater than their unpaid wages.

Employers may defend if the failure to pay the wage was an innocent mistake, or “not wilful.”  However, employees hoping to claim that their failure to pay was not willful cannot argue “ignorance of the law” as their excuse.  Recently, the California Court of Appeal held in the 2018 decision Diaz v. Grill Concepts Services, Inc.(Case no. B280846, 2nd Dist.) that an employer’s failure to investigate a change in the local wage scale constituted a willful failure to pay.  Hence, the employer was required to pay the waiting exposing it to waiting time penalties under the Labor Code.  The appellate court held that judges do not have discretion to relieve the employer from this penalties on fairness grounds.

INCOMPLETE WAGE STATEMENTS  — $100 PER PAY PERIOD

Under California Labor Code section 226 subsection (a), California employers must semimonthly or when wages are paid provide an accurate wage statement itemizing several such as hours worked, pay rates, deductions, and more.  Despite clear law,  many sophisticated employers including many automotive dealerships continue to violate this law, exposing themselves to serious penalties.  Information that must be included in the wage statement include:

  • gross wages earned
  • total hours worked by the employee, except if they were paid on a piece-rate basis, in which case the piece rates must be itemized
  • all deductions
  • net wages earned
  • the dates included in the pay period
  • the name of the employee
  • only the last four digits of his social security number or an employee identification number
  • the name and address of the legal entity that is the employer
  • all applicable hourly rates in effect during the pay period
  • the corresponding number of hours worked at each hourly rate

The penalty for failing to provide an accurate, timely, and complete wage statement is $100 per pay period (except that the first violation is only $50) up to an aggregate penalty of $4,000.   In addition, a prevailing party in such case is entitled to an award of costs and reasonable attorney’s fees.

FAILURE TO PROVIDE WAGE STATEMENTS WITHIN 21 DAYS AND PERSONNEL RECORDS WITHIN 30 DAYS — $750

Employers are required to keep Labor Code section 226 records in a central location for at least three years, and to produce such records for copying or inspection within 21 days.  Employers are also required to maintain an provide a copy of personnel records pursuant to Labor Code section 1198.5 and must comply with request for such records within 30 days.  Each Labor Code section provides that a failure by an employer to permit a current or former employee to inspect their records within the allotted time period results in a penalty of $750.

REST BREAK AND MEAL BREAK PENALTIES  — ONE HOUR PER DAY WITH A MISSED BREAK

Under California law, rest periods must be separately compensated in a piece-rate system. In Bluford, the court ruled that Safeway’s drivers’ were owed for uncompensated rest breaks because the itemized pay sheets failed to specifically account for rest breaks and did not contain information that would enable a driver to determine if he had been paid a wage for his breaks.

An employee who works at least six hours is also entitled to an uninterrupted 30 minute meal period during the first five hours.  (Really, the employee is entitled to a meal period if they work only five hours, however, if the shift is between five and six hours, the break can be waived if the employee consents.)   However, this is meal break is not voluntary.  Employers who knowingly allow employees to work during their lunch breaks are in violation of the law, and this is a common subject of litigation.   Automotive dealerships are particularly prone to forcing their service advisers to work through their meal breaks when work is busy.

Although their are rare circumstances when an employer may instead provide an “on duty meal period” if the employee agrees in writing to accept an on-the-job paid meal period, these are severely limited to circumstances when the nature of the work must prevents the employee from being relieved of duty during the meal period.   That is rarely ever the case.

Labor Code § 226.7 section (b) requires a one additional hour “premium wage” when an employer fails to provide a legally mandated meal or rest breaks.

 

IF YOU ARE A CALIFORNIA EMPLOYEE WHO WOULD LIKE TO VIEW HIS WAGE STATEMENTS AND PERSONNEL FILE, CONTACT GLENN NUNES LAW ONLINE OR AT 424-281-0785 TO SCHEDULE A FREE CONSULTATION WITH GLENN NUNES WHO CAN DISCUSS THE DETAILS OF YOUR PARTICULAR SITUATION.

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