employment law, Legal

Pay Days For Hourly and Exempt Employees

payday word circle marked on a calendar by a red pen

How often and by what dates am I required to pay employees?

All wages for the normal work period for non-exempt employees must be paid at least twice each calendar month on days designated in advance by the employer.

For work performed between the 1st and 15th days of the month payment must be made by the 26th day of the same month. For work performed between the 16th and last day of the month payment must be made by the 10th day of the next month.

An employer also may choose to pay employees weekly, bi-weekly or semi-monthly with payment within seven days of the end of the pay period.

Even when an employee fails to turn in a record of time worked, the employer remains legally obligated to pay the employee on the established payday.

Salaries of executive, administrative and professional employees may be paid once a month on or before the 26th day of the month.

What are the payday requirements when an employer is closed?

Occasionally, the designated payday will fall on a holiday or on another day that the employer may not be open for business. The question then becomes: When are the employees required to be paid?

If the employer is closed on a Saturday, Sunday or holiday, which happen to be the designated payday, the employer may pay wages on the next regular workday.

What is the penalty for failure to pay wages on payday?

The penalties are costly, and inability to pay is not considered a defense for failure to meet the payday.

Civil Penalties

When an employer fails to pay wages (as required by Labor Code Section 204) on a regular payday, the employer, under Labor Code Section 210, is subject to a civil penalty for each such missed payday.

The initial penalty for failure to pay wages is $100 per employee per missed payday. So if your company has 25 employees, the potential civil penalty is $2,500.

Civil penalties for subsequent missed paydays are much more severe. The penalty is $250 per employee, plus 25 percent of the amount unlawfully withheld.

Most penalties required by the Labor Code and the Industrial Welfare Commission Wage Orders go to the employees; however, payday penalties go to the state of California. These penalties may be recovered by the Labor Commissioner through a hearing process outlined in Labor Code Section 98(a) or by going directly to the courts.

Labor Code 1194.2 provides for recovery of wages because of nonpayment of the minimum wage. An employee can recover liquidated damages in an amount equal to the wages unlawfully unpaid and interest thereon. The Labor Commissioner may assess liquidated damages based on the current minimum wage multiplied by all unpaid hours in the pay period (except overtime hours).

Business Law, employment law, Legal

Minimum Wage in California

State Minimum Wage Requirements

The state minimum wage will reach $15 per hour in 2022. The schedule of increases depends on the size of your business. Large businesses with 26 or more employees will reach $15 per hour in 2022. Small businesses with 25 or fewer employees will have until 2023 to reach the $15 per hour rate.

Dates
Employers With 26 or More Employees
Employers With 25 or Fewer Employees

1/1/18

$11/hour

$10.50/hour

1/1/19

$12/hour

$11/hour

1/1/20

$13/hour

$12/hour

1/1/21

$14/hour

$13/hour

1/1/22

$15/hour

$14/hour

1/1/23

$15/hour*

$15/hour*

 

*Once the minimum wage reaches $15 per hour for all businesses, wages could then be increased each year up to 3.5 percent (rounded to the nearest 10 cents) for inflation as measured by the national Consumer Price Index.

Until the minimum wage reaches $15 per hour, the governor has the authority to suspend increases based on current economic conditions. These “offramps” are discretionary and would come into play only if there are declining state revenues from sales tax; there is a decline in the labor market; or there is a budget deficit (this offramp is permitted to occur only twice).

Employers should be mindful of the effect of future state minimum wage increase on exempt/nonexempt classifications and ensure that employees meet the salary basis test for the particular exemption claimed.

In 2018, employers with 26 or more employees must pay all work that qualifies for overtime at $16.50 per hour (time and one-half) or $22.00 per hour (double-time).

Employers with 25 or fewer employees must pay $15.75 per hour (time and one-half) or $21 per hour (double-time).

Some cities and counties in California have adopted their own local minimum wage rates that are separate from the state rate. This is part of a growing trend. Eligibility rules may vary from city to city. If a local ordinance provides for a higher minimum wage rate than the current state rate, the local rate must be paid.

Effective July 1, 2018, the minimum wage for Los Angeles is $12 per hour for employers with 25 or fewer employees working in the City. Future increases are as follows:

Effective Date
City of Los Angeles Minimum Wage (Per Hour)

7/1/2019

$13.25

7/1/2020

$14.25

7/1/2021

$15

7/1/2022

Increases tied to the Regional Consumer Price Index

Business Law, employment law, Legal

What You Need to Know About Travel Time Pay in California

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TRAVEL TIME VS COMMUTING TIME: WHAT IS THE DIFFERENCE?

But before we delve into the topic, let’s make sure that you understand the difference between commuting time and travel time. The former refers to an employee’s personal time spent to commute back and forth from work to home, while travel time is time spent traveling by an employee for work-related activities.

Under California employment laws, travel time should be paid, and can be either local trips or travel away from home.

ARE YOU ELIGIBLE FOR TRAVEL TIME PAY?

You are eligible to receive pay for local travel time only if you are a non-exempt employee (meaning: you are employed on an hourly basis). Exempt employees, who are paid based on their performance and expertise, are not entitled to travel time pay.

For non-exempt employees, travel time – as well as education and training time – are classified as “working hours,” which means their employers are legally required to pay them for it.

If you are asked by your employer or supervisor to drive to a store to pick up some items during normal work hours, you should be paid for your travel time.

TIME SPENT TRAVELING AWAY FROM HOME

An employer in Los Angeles and elsewhere in California is required to compensate his employees for any time spent traveling away from home. Let’s say, for example, that your employer directs you to attend a two-day event in New York City. Since you will have to spend time traveling from Los Angeles to New York City, your employer should pay travel time.

HOW TO CALCULATE TRAVEL TIME PAY?

Calculating travel time pay for salaried employees, who get paid bi-weekly or monthly, is not a problem, since they get paid regardless of the number of hours worked.

Hourly employees, meanwhile, should be paid on an hourly basis, which means travel time may not be as easy to calculate. It is highly advised to speak to an employment law attorney to find out whether or not travel time pay was calculated properly in your particular situation.

IS ONE-DAY OR OVERNIGHT STAY PAID?

If you have not been for a one-day or overnight stay, seek immediately legal advice of a lawyer. While hourly employees in Los Angeles and elsewhere in California are generally required to receive travel time pay in these situations, there are certain exceptions. That is why you should speak to an attorney to learn more.

SHOULD YOUR EMPLOYER COMPENSATE FOR TRAVEL EXPENSES?

Definitely. Travel time itself is not the only thing that an employer pays for. Travel expenses should be compensated by your employer, as employees can generally deduct unreimbursed travel expenses. In case you are traveling for both work-related activities and personal travel, you will have to keep separate checks for business-related expenses.

 

Business Law, employment law, Legal

Upcoming Business and Employment Law Seminar: Legal Reasons #75

I am glad the week is done as I and my senior associate Jemal Yarbrough cannot wait to present information that we feel is vital for anyone considering starting a business or any business with employees. One of the main things that motivated me to start my own law practice was to find ways to be in service to others in the legal arena and give information that is beneficial (and affordable) to anyone who desired it.

As in house counsel for Ziba Beauty for the past 17 years, I know it is very easy to run afoul of the many employment laws in California.  Too often, small businesses are not aware of the various rules in regard to wage and hour issues as well the recent uptick in sexual harassment claims. If you are interest, please do come out.

 

Happy Friday!

Business Law, employment law, Legal

Common Small Business Employee Lawsuits: Legal Reasons #74

The most common lawsuits brought against businesses are wrongful termination suits brought by employees or candidates who have suffered a negative employment action. This can be anything from being fired to being demoted or even passed over for an advancement opportunity. If the employee or candidate believes that the action was taken for a reason related to race, gender, religion, identity, or another protected classification, that employee might file a lawsuit. For this reason, it is important to document any sort of negative or positive behaviors at work, so that if an employee does complain of discrimination, the courts can see the employee’s work history and the real reason why he or she may have been passed over for a promotion. Disparaging remarks made about any of these protected classes have no business in a work place as they can create a hostile work environment and lead to lawsuits as well.

Many employers choose to save money by denying their employees overtime pay. This can create many extra costs, as employees will sue for the money they are owed, and the legal fees can be significant. It is a good idea to have contracts establishing the boundaries of a relationship between an employer and an employee to minimize confusion.

It also makes sense to put agreements with vendors and customers in writing. The contracts should include a general description of the work to be performed, a list of any items to be delivered, a project schedule with deadlines, the fee, and the circumstances under which additional fees might be charged, warranties included with the work, how long the contract lasts, how it can be terminated, and how disputes will be resolved.

Personal injury lawsuits against businesses are also common, so it is important to make sure that a place of business is kept in safe condition. Floors should always be dry and warnings should be presented to customers of any dangerous conditions. Drivers should be selected carefully as any accident they cause can be made the responsibility of the business that employs them. Employees who are injured at work are usually precluded from suing their employer and are instead referred to worker’s compensation courts which have their own legal fees. Most states require employers to carry insurance in case of a workplace injury.

Business Law, employment law, Legal

4 Common Legal Mistakes by Small Businesses:Legal Reasons #72

1) Failing to “put it in writing” early

Before founders do any significant work together, it is essential to put into place a written agreement which outlines the roles and obligations of each respective party. Founder Agreements provide clarity regarding critical aspects of the work relationship, including but not limited to ownership percentages, salaries, removal grounds and procedures, governance and management, voting protocol and profit-sharing.

2) Failing to carry out buy-sell provisions

The decision by one founder to leave the company can lead to internal turmoil, customer erosion and disruption in revenue flow. These issues also could arise in the event a founder passes away or experiences long-term disability.

Simply put, failing to plan for the end is planning to fail. A properly drafted buy-sell agreement executed by the founders of the business at the outset (in conjunction with a founder agreement) can effectively account for how the company will proceed in the event of unanticipated change.

3) Using inadequate employment agreements

It is critical to invest in properly drafted agreements that can serve as the foundation for the employment relationship. Common terms included in an employment agreement include, among other things, the length of employment or whether the employment is at-will; the classification of the worker (i.e., employee/independent contractor, exempt/non-exempt); and rights and restrictions upon termination.

Employers should be mindful to not expose the company to liability by disregarding any prior-employment related obligations of job candidates, including any restrictive covenants and/or obligations to return sensitive documents that belong to the prior-employer.

4) Misclassifying workers

Many employers hire independent contractors rather than employees and/or misclassify employees as exempt under the Fair Labor Standards Act in an effort to avoid the payroll obligations that come with the traditional employment relationship, such as the duty to pay minimum wage and overtime. Serious liability can result from these misclassifications, including substantial wage repayment going back as far as three years and other harsh penalties.