Exploring Wage and Hour Disputes in California
The regulation of wages and hours is one of the foundational aspects of employment law, and one that often gives rise to disputes levied at employers.
Marian Birge, a highly experienced employment lawyer practicing in California, offers an informed perspective on the basis of wage and hour protections for employees in the state and illustrates where employers most often fall short of legal requirements.
To open the discussion, can you give some background into the Fair Labor Standards Act and the obligations it establishes for employers?
The federal FLSA (29 USC §201 et seq.) was a landmark law enacted in 1938 to establish a minimum wage for workers and restrict exploitive child labour. The history of federal, state and industry efforts to institute pro-labour legislation is fascinating. Briefly, prior to 1938, the Supreme Court had expressed profound hostility toward wage and hour laws; as examples, it held that a federal child labour law was an unconstitutional imposition on state authority under the guise of commerce power1 and struck down a District of Columbia law that set minimum wages for women and children, finding it an intolerable legislative interference with freedom of contract.2
President Roosevelt’s Secretary of Labor, Frances Perkins, was an indispensable ally in pushing through an ultimately successful bill that, though greatly changed, was revolutionary in linking minimum wages to subsistence levels and basic decency. She was also the first woman ever to serve in a presidential cabinet. In an interesting aside, Arkansas’s new female governor recently signed a bill into law that rolls back several state child labour protections.
Today, the FLSA establishes wage, hour, record-keeping, and youth labor standards for many types of enterprises including those engaged in commerce or in the production of goods for interstate commerce. As one example, a construction business may be subject to the FLSA if it has two or more employees and annual gross sales of $500,000 or more. Restaurant businesses with annual gross sales from one or more establishments that total at least $500,000 are also subject to the FLSA.
Generally, FLSA standards include a minimum wage of $7.25, overtime pay for more than 40 hours in a workweek, and protections against retaliation and pay discrimination based on sex. The underlying policy of the law is to deter and prevent “labor conditions detrimental to the maintenance of the minimum standard of living necessary for health, efficiency, and general well-being of workers.” (29 U.S. Code §202(a)).
The FLSA also defines the kinds of workers (executive, administrative, professional, outside sales and certain IT workers) who are exempt from overtime and break rules owing to the nature of their work. The FLSA does not cover issues regarding sick leave, PTO, or meal and rest breaks.
The law is administered by the Wage and Hour Division of the US Deparment of Labor, which offers administrative interpretations and opinions and may investigate compliance issues and supervise payment of compensation to claimants. Section 216 authorises civil penalties (including a potential for liquidated damages), equitable relief and attorneys fees.
What further legislation governing the payment of wages and hours exists in California? How far do such laws vary from state to state?
There is quite a bit of variance. Somewhat incredibly, the federal minimum wage has remained at $7.25 since 2009. Employers in the US must comply with state as well as federal laws, so in those states that have promulgated more robust wage/hour laws, employees are entitled to the state’s higher minimum wages and greater protections. Five states have not adopted a state minimum wage, and two – Georgia and Wyoming – have adopted a minimum wage lower than the federal minimum.
On the other hand, California’s minimum wage went to $15.50 in 2023 and, after 2023, the minimum will increase based in part on annual review of the rates of change in the US Consumer Price Index for Urban Wage Earners and Clerical Workers. By comparison, the District of Columbia’s rate is $16.10, Washington is $15.74, New Mexico’s and Hawaii’s are $12.00, and Arizona is $13.85. California’s statutory protections for workers are, if not the strongest, some of the strongest in all the states. Interestingly, California’s economy is the largest in the States, the largest sub-national economy in the world, and is expected to pass Germany as the world’s fourth largest economy.
In your experience as a longtime employment lawyer, what kinds of wage and hour disputes most often arise?
The main areas of dispute tend to fall under: (1) compensable time claims, where employees allege failure to pay for all time worked (pay below the minimum, unpaid overtime, missed meal and rest breaks, unpaid wait or travel times); and (2) the mischaracterisation of workers as exempt executives, administrators or professionals, or as independent contractors. Because the legislative purpose behind these laws is to deter and prevent the unfair and anti-competitive harm that accrues when the normal costs of doing business are shifted to workers, pay violations often lead to heavy statutory penalties and, under most laws, plaintiffs’ lawyers may recover statutory attorney fees.
California’s statutory protections for workers are, if not the strongest, some of the strongest in all the states.
What legal recourse is available to an employee who believes they have not received fair compensation for their work? What first steps should they take to address this?
Private sector former or current employees may assert FLSA claims individually, or on behalf of similarly situated individuals in a collective lawsuit. Employees who are covered under more robust state law claims may also file individual lawsuits, and in some states, may assert individual and collective claims in Private Attorney General (‘PAGA’) actions. In these types of lawsuits, small claims can add up to significant back pay awards.
Alternatively, employees may file state administrative claims. In California, the Labor Commissioner’s Office – a division of the Department of Labor Standards Enforcement – helps employees file administrative claims at no cost and investigates, seeks conciliation where possible, and schedules administrative hearings. Decisions and awards by the Labor Commissioner are forwarded to the Superior Court and become enforceable legal judgments. Employees may also report an employer’s retaliation for complaining of violations. The Department is authorised to investigate, conduct discovery, and issue citations.
By the same token, what steps should companies take to ensure that they remain in full compliance with US wage and hour laws?
Because many states, like California, have promulgated employment laws that are far more favourable to employees than analogous federal laws, employers who operate in multiple states should be keenly aware of each state’s employment laws. Wage/hour and anti-discrimination laws can be somewhat byzantine and may change with surprising speed, so it is not a wise idea to rely on human resource managers or payroll services to navigate the variously applicable laws and provide needed safeguards.
As one example, after several counties in California set minimum wages that exceeded the state’s minimum, some companies were caught off guard with employee lawsuits. And, though corporate counsel in Delaware may be fully versed in federal wage laws, she may not be expected to be aware of the particulars in other states where the company does business, so having local counsel to confer with is a wise idea. Resources like state Chambers of Commerce often provide helpful guides, required posters, legal news and updates.
Employers who operate in multiple states should be keenly aware of each state’s employment laws.
How can an experienced employment lawyer assist with both of the above scenarios?
Many employment lawyers assist businesses with risk management by vetting compliance issues. An employment lawyer can review handbooks, assist with employment policies and practices, investigate internal complaints, prepare or revise contracts and severance agreements, answer HR questions and provide updates on changes in the law. Employers in California should invest in meticulous compliance in order to avoid surprises in the form of administrative agency investigations, citations, or lawsuits seeking civil penalties and plaintiffs’ attorney fees.
Marian Birge, Co-Founder
2173 Salk Ave Suite 250, Carlsbad, CA 92008, USA
Tel: +1 760-579-7650
Marian Birge possesses more than 20 years of experience in civil litigation, representing plaintiffs and defendants. Her areas of practice include employment law, discrimination, wrongful termination, disability issues, retaliation, contracts and business disputes, and she is also an experienced appellate lawyer. She represents clients in litigation and before administrative agencies, in mediation and through negotiations.
Garcia & Birge is a law firm based in San Diego, California, with a focus on employment law. The firm’s lawyers enshrine principled advocacy as part of their mission statement and bring a wealth of experience to bear as forceful advocates in litigation. Garcia & Birge work with both employees and employers and provide legal representation, consulting services, and quality legal and strategic solutions created together with their clients.
1 Hammer v. Dagenhart, 247 U.S. 251, 38 Sup. Ct. 529 (1918). The Hammer court held that Congress did not have the power to prohibit interstate commerce of cotton goods made at a factory that had, within 30 days of shipment, employed children under 14, or allowed children between 14 and 16 to work more than eight hours a day, more than six days in any week, or between 7:00pm and 6:00am.
2 Adkins v. Children’s Hospital, 261 U.S. 525, 43 Sup. Ct. 394 (1923). Chief Justice William Howard Taft (who became the 27th President of the United States) dissented. See also Morehead v. N.Y. ex Rel. Tipaldo, 298 U.S. 587, 56 Sup. Ct. 918 (1936).
