- According to a study by Rutgers University, between $2.6 and $4.6 billion in wages were stolen from California workers every year over the past decade.
- Wage theft can happen in any industry, but it’s especially problematic for domestic workers, farmworkers, food preparation and service staff, and personal services workers like nail technicians and stylists.
- Every worker deserves to be paid what they have rightfully earned. It’s the law.
Wage theft is a broad term that encompasses the many ways employers fail to pay workers everything they’re owed. California has a robust Labor Code that protects workers’ rights, providing stronger protections for hourly workers than the federal Fair Labor Standards Act.
Your employer may intentionally try to cheat you, but your employer might also inadvertently commit wage theft by failing to understand all the nuances of the Labor Code. Here are five scenarios where that might happen.
1. Rounding your work time instead of tracking it down to the minute
Many employers have a practice of rounding time entries to the nearest fifteen-minute increment. If you punch in at 8:57 am, take a 30-minute unpaid lunch, and punch out at 5:32 pm, that’s eight hours and 35 minutes from start to finish, but you may only be paid for eight hours.
This unpaid time lost to “rounding” can quickly add up. In fact, the California Supreme Court in recent years has held that employers who try to estimate a worker’s time on the clock are violating the law by not paying them for every minute worked.
In a 2018 ruling against Starbucks, the court said those minutes matter. A lawsuit claimed the coffee chain underpaid employees by estimating the final minutes of their shifts after they clocked out but still had more work tasks to complete. “[A] few extra minutes of work each day can add up,” the court said, rejecting Starbucks’ argument that the lost wages were insignificant to the affected workers. And in a subsequent ruling by the California Court of Appeals, Home Depot was found to have illegally rounded the total work time of its non-exempt employees, in one case by 470 minutes over the course of a 5-year period.
2. Interrupting your rest or meal breaks
California workers are entitled to a10-minute paid rest breaks for every four hours of work and 30-minute unpaid meal periods for every five hours of work. If you have an eight-hour workday, you should typically get two rest breaks and one meal period in between. Similarly, California courts have also found that meal periods that are less than 30 minutes on some days and longer on others violate the Labor Code.
You should be able to take your mind off work during a break, which means your boss shouldn’t ask you to do anything. Even small interruptions can be disruptive.
There are lots of ways a rest or meal break can be interrupted. Think of a nurse who’s called to tend to a patient, or a receptionist who has to answer a phone call. The specifics vary from industry to industry.
If you don’t get an uninterrupted rest or meal period, your employer is supposed to pay you an hour of wages as a penalty. In some circumstances, you can agree to waive your right to a break, but your employer may not pressure you into giving one up.
3. Misclassifying you as an independent contractor
In general, the Labor Code covers employees but not independent contractors. The independent contractor label means you’re in business for yourself, which is why employee protection laws don’t apply.
There are many harmful impacts that can result from mistakenly (either knowingly or unknowingly) being misclassified as an independent contractor, rather than an employee. For example, if you’re an independent contractor, you have no right to overtime, paid sick days and family leave, unemployment insurance, or workers’ compensation.
A company might intentionally misclassify its workers as independent contractors to save money. Or a well-meaning employer could find it simpler to pay workers as independent contractors and not have to handle the payroll and other paperwork that comes with classifying them as employees.
No matter the situation – your employer can’t just decide you’re an independent contractor. That’s because California has a strict “ABC” test for classifying workers, and the default is you’re an employee unless proven otherwise. Under that test, if you answer no to any of these questions, you are an employee:
- Do you have freedom to decide how to complete your assignments, without the company controlling your work?
- Do you perform work that’s outside the company’s line of business?
- Do you operate as a separate business?
What do these look like in real life? Think about a bakery that needs some extra help to complete a big order. If it brings you on to decorate cakes, you’re probably an employee because you’re performing work in the bakery’s line of business. On the other hand, if you’re a plumber and the bakery hires you to repair a leak, you may be able to clear all three prongs.
Keep in mind there are a few industry-specific exceptions to the ABC test. The most significant is Proposition 22, which is a 2020 law that mandated independent contractor status for app-based ride-hailing and delivery workers.
4. Delaying or shorting your final paycheck
California requires final paychecks to be prompt and complete when your employment ends. An employer that violates this requirement is subject to waiting time penalties — they’re called “waiting time” because your former employer makes you wait for money you’ve earned.
For example, your employer can’t hold onto a final paycheck to reimburse itself for debts it claims you owe. It also can’t hold your final paycheck as leverage to get you to return any of its property that you may have, such as uniforms, tools, or keys.
Prompt pay is required regardless of whether you resign or are fired. If you resign with advance notice or are fired, your final paycheck is due on your last day of work because your employer had time to prepare for your departure. If your employment ends with fewer than three days of notice, your final pay is due within three days of the date you quit.
Here are some real-life examples of how the waiting time penalty applies:
- A L’Oreal hair model was hired for a one-day job, but L’Oreal waited over two months to pay her $500 fee. Even though her employment was brief and didn’t end with her being fired or resigning, the California Supreme Court held that the prompt pay rule equally protects workers who have brief “gigs.”
- An office manager at a bus tour company was fired, but instead of giving him his final paycheck immediately, the company paid him five days later based on his regular pay schedule. An appeals court said this violated the law.
- A law firm professional resigned on a Friday, and the law firm sent her a handwritten check the following Tuesday. However, the check had a mistake and needed to be reissued. Even though the original check was paid on time, the employer owed waiting time penalties because it waited until it got the first check back before issuing another.
No matter how your employment ends, the Labor Code requires your employer to promptly pay you any unpaid wages. It also requires paying out your unused vacation time and any payments you’re owed for interrupted rest or meal breaks.
If your employer doesn’t pay everything it’s supposed to when your employment ends, you may be entitled to a penalty for each day you have to wait, up to 30 days. That’s on top of the unpaid wages the company already owed you.
5. Failing to reimburse you for expenses
If you have to pay out-of-pocket costs to complete your work, California’s Labor Code requires your employer to reimburse your expenses. The idea behind the law is that you’re performing work for your employer’s benefit, and the company should bear those expenses as its costs of business.
Cell phones, home internet, and automobile mileage are some common expenses that employers may have to reimburse, if you use them for work purposes. For example, if you use your car to deliver packages, your employer may have to pay for gasoline, wear and tear, and commercial insurance.
California’s reimbursement rule goes a lot further than federal law. The federal rule requires reimbursement only if a worker’s expenses cause their pay to fall below minimum wage. By contrast, California law applies regardless of whether an expense causes your pay to go below less than minimum wage. And it applies regardless of whether you’re paid a salary or on an hourly basis.
The reimbursement law works in your favor even when it’s hard to separate business and personal expenses, such as if you use your personal cell phone for work but you pay a flat monthly fee for a plan with unlimited minutes.
And given the recent boom in remote working, California courts have interpreted reimbursement laws more broadly. One big win for workers came in 2022, when Amazon failed to dismiss a lawsuit brought by a software engineer who paid for the physical space, internet, and electricity he needed to work from home. The court in that case said Amazon may have to reimburse employees because the tech giant “surely knew — or at the very least, had reason to know — that its software development engineers who worked from home during the pandemic were incurring basic costs related to that work.”
The bottom line – if your employer knows or should have reason to know that you’ve footed the bill for a necessary work-related expense, California law requires it to reimburse you.
If you think your employer may be committing wage theft, an experienced labor and employment attorney can help you assert your rights. Contact us today for a confidential consultation.
