Wage and Hour laws govern the payment of minimum wages and maximum working hours of the workforce in the U.S. The Fair Labor Standards Act (FLSA) imposes federal wage and hour regulations. California enacted the Industrial Welfare Commission and California Labor Law which regulates wages, rest and meal periods, overtime, maximum work hours, vacation pay, record keeping requirements, and labor condition. Employers are required to comply with both Federal and State wage and hour regulations.
Disputes involving wage and hour continue to rise in California and can be very costly to the employer. The burden of proof falls on the employer to ensure accurate timekeeping and compliance. Below are a few tips to help mitigate Wage and Hour Claims:
- Make sure employees are appropriately classified as exempt or nonexempt
- Verify the employment status of any workers classified as independent contractors- should they be considered employees?
- Are meal and rest period policies set out in the employee handbook? Require that employees take their lunch breaks, clocking in and out appropriately.
- Make sure managers are trained on how to administer breaks and what actions to take if employees miss meal or rest breaks.
- Have employees sign the appropriate disclaimer that attests to the accuracy of their recorded time.
- Pay the proper overtime hours
- Reimburse the employee for necessary expenses
- Provide employees with the applicable itemized wage statement
- Payment of final wages should comply with California requirements, i.e. wages, accrued and unused vacation, etc.
- Review compliance regulations with your employment attorney and make sure the board of directors is informed.
Wage & Hour claims can be very costly to your operations, and implementing Best Practices will go a long way toward mitigating lawsuits. In California, most Employment Practice Liability Insurance (EPLI) policies exclude Wage and Hour claims. There are insurance carriers that will provide a sub-limit of coverage for Defense only (legal costs). Discuss with your insurance broker coverage options which may include a Defense sub-limit under your Employment Practice Liability policy. There is no such thing as a “standard” EPLI policy. It is important to have a clear understanding of the coverage forms. Feel free to call us if we can be of assistance in obtaining the appropriate insurance coverage to protect your organization. We can also assist you with referrals for employment law attorneys and HR professionals. Be Prepared. We are here to help.
**** This is intended for informational purposes only. Consult with your attorney and HR professional.