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What wages are employees entitled to be paid?

California law regulates the payment of wages. Under California law, “wages” is defined as money or other value that is received by an employee as compensation for labor or services performed. Employers who fail to pay wages earned by employees may owe employees compensation in addition to the wages they earned.

The California laws that pertain to the payment of wages include:

• Unpaid wages: Within the time required by law, employers must pay employees all their earned wages, including promised commissions and bonuses. Employers cannot promise one wage and later decide to pay a lesser wage for hours that an employee has already worked, even if the employer is not satisfied with the employee’s performance.
• Minimum wage: Employees must be paid minimum wage for each hour worked. The California minimum wage is currently $10.50 per hour. The state and local minimum wage typically increase every year. Covered employers must raise wages when a new minimum wage goes into effect.
• Overtime pay: Employers must pay employees who are not exempt from the applicable wage and hour laws time-and-a-half for working more than 8 hours in a day or 40 hours in a week.
• Commissions: Employees who are paid on commission must be provided a written contract that sets forth the method by which the commission shall be computed and paid and must be paid in accordance with the terms of the commission agreement.
• Breaks: Non-exempt employees working more than 5 hours in a day usually must be given a 30-minute unpaid meal break by their employers. Also, for every 4 hours of work, non-exempt employees must usually be given a paid 10-minute break. Employees who are not provided with meal and rest breaks are entitled to be compensated.
• Work without pay: Employers cannot require non-exempt employees to work without pay, whether before or after their shift or during an unpaid meal break.
• Illegal wage deductions: In most cases, an employer cannot make deductions from an employee’s pay for cash shortages, damaged equipment, lost merchandise, or any other reason that is not specifically authorized by law.
• Final paycheck: When employment ends, employees must be paid all their earned wages, as well as any accrued but unused vacation time. Otherwise, an employer may be subjected to late payment penalties.

Examples of common disputes that arise include an employer making unlawful deductions before calculating the employee’s commission, passing through the costs of business to the employee, withholding commissions that the employee has already earned, misclassifying an employee to avoid paying overtime or failing to pay the compensation provided in the employee’s offer letter.

What employees are entitled to overtime pay?

California exempts certain employees from overtime and some of the other required payments noted above. In most cases, an exempt employee must be paid a minimum threshold salary. Currently, under California law, that salary is $43,680.

Even if an employer pays the threshold salary, it cannot avoid paying overtime unless an employee meets the criteria for an exempt employee. Most exempt employees fall into the “white-collar” categories of executive, administrative, or professional employees, although some salespersons and computer technicians can also be classified as exempt.

The requirements for an exemption depending on actual job duties, not job titles or position descriptions. Therefore, it is insufficient for an employer to merely change an employee’s job title, such as from secretary to “administrative assistant,” in an attempt to meet the requirements of the exemption. When the classification is improper, the employee may be entitled to recover penalties, back pay, and other compensation.

When is an independent contractor actually an employee?

Independent contractors are not covered by wage protection laws, including minimum wage and overtime laws. Some employers misclassify employees as independent contractors to avoid paying overtime and payroll taxes, providing worker’s compensation coverage, or offering other benefits of employment such as health insurance.

Under California law, there is a presumption that a worker is an employee, not an independent contractor. California courts have developed a list of factors used to distinguish independent contractors from employees, and no one factor is controlling. Thus, if a worker signs an independent contractor agreement, that agreement is not dispositive of the relationship, but merely one of the factors a court will consider.

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