BUSINESS LAW: Employment Law - Overtime Wages

The Law Offices of David D. Murray has handled employment related cases since 1983, representing California clients in negotiation and litigation concerning matters such as:

      • Wrongful Discharge from employment
      • Sexual Harassment and Hostile Workplace environment
      • Negotiation of Termination Agreements
      • Violation of immigration law - Form I-9 Reporting
      • Unemployment claims
      • Wage/Hour claims
      • Overtime Wage claims

In the arena of employment-related contracts and agreements, the Law Offices of David D. Murray have successfully negotiated and drafted:

    • Employment Agreements
    • Independent Contractor Agreements
    • Separation Agreements
    • Settlement Agreements
    • Company Handbooks
    • Company Policy Manuals

EMPLOYERS LIABILITY FOR FAILURE TO PAY MINIMUM WAGE . . . . . (California Law - other states may be different)

It is unlawful to "secretly pay" a wage less than the minimum wage (as established by statue) while purporting to
pay the minimum wage (California Labor Code 223).

The California minimum wage is $8.00per hour. Employers who fail to pay the statutory minimum, or who fail to pay overtime rates established by law, may be sued by aggrieved employees in either state or federal court (29 USC 216(b)). The employee may collect all unpaid wages, as well as an additional equal amounts as liquidated damages and other penalties, plus costs, and a reasonable attorney fee (29 USA 216(b)).

A law suit may also be brought on behalf of others "similarly situated", so if an emplohyer has other employees
who have been treated in a same or similar manner, the employer's liability may be further increased.

Further, pursuant to California Labor Code section 1194(2), employees seeking to recover unpaid minimum wage compensation are also entitled to recover "liquidated damages" in an amount equal to the wages unlawfully unpaid and interest thereon. Pursuant to California Labor Code section 1197.1, in addition to any other penalty, an employer who fails to pay minimum wage is subject to a civil monetary penalty for each underpaid employee for each pay period for which the employee is underpaid for each initial failure to pay, and thereafter, the penalties are assessed for each underpaid employee, for each pay period. Other penalties and the potential for the award of attorneys fees, punitive damages and injunction, make compliance with overtime laws critical to the wise employer.

Employers should be aware of their rights, and should report any violation of law to the California Labor Commissioner. Further advice on this subject can be obtained from qualified legal counsel.

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EMPLOYEES AND EMPLOYERS WORK TIME OR HOURS WORKED . . .
(California Law - other states may be different)

To the extent that federal and state requirements conflict, employers must follow the law that provides the most protection for the employee. [Aguilar v. Association for Retarded Citizens, 234 Cal.App.3d 21, 34-35, 285 Cal.Rptr. 515 (1991); see also 29 U.S.C. 218(a)]

Hours Worked:

In the State of California the "hours worked" by an employee is significant in the determination of whether the employer has complied with both its minimum wage and its overtime compensation obligations. The wage orders broadly define"hours worked" as the time during which an employee is subject to the control of the employer,a nd includes all the time the employee is "suffered or permitted to work, whether or not required to do so"
[8 Cal. Code Reg., sections 11010-1130, 11-60-1110, 1113 &. 11140, para. 2(G)

Because "hours worked" under the wage orders include time when the employee is "permitted to work, whether or
not required to do so," the Division of Labor Standard Enforcement ("DLSE") has historically taken the position that an employee who works overtime even though not requested to do so must be paid overtime compensation as required by the wage orders if the employer or supervisor knew or had reason to believe that the employee was working and did not prevent the overtime work.

The DLSE has also taken the position that the mere promulgation of a rule against overtime work is not enough to avoid liability for overtime pay. Under Federal law, governed by the Fair Labor Standards Act (FLSA), the number of hours that the employer has "employed" an employee refers to hours the employee was made "to suffer or permitted to work." [29 U.S.C. 203(g)].

Work not requested by suffered or permitted must b counted as work time, including work performed at home that the employer knows or has reason to believe is being performed. [29 C.F.R. § 785.112].

An employee's failure to report overtime work will not defeat a claim for overtime if the employer knew that the employer knew that the employee worked the unreported overtime. [Forrester v. Roth's I.G.A. Foodliner, Inc.
(9th Cir. 1981) 646 F.2nd 413, 414]

The mere promulgation of a rule against overtime work is not enough. Management has the power to enforce that
rule and must make every effort to do so. [29 C.F.R. 785.13].

Standby, Waiting or On-Call Time:

Under the law of the State of California, an employee who is required to remain at the place of business and respond to emergency calls must be paid for that waiting time. The DLSE's operation and procedures manual states that on-call or standby time is not compensable when the employee is not required to remain on the employer's premises and is free to engage in personal pursuits, subject only to the requirement that the employee can be reached if needed. Such on-call or standby time is not considered hours worked.
[DLSE Enforcement Policies and Interpretation Manual, section 46.2].

The central inquiry is whether the time in question is best characterized as "controlled" or "uncontrolled." For example, an employee who is required to stay at home and keep the telephone line free from calls from the employer who is required to stay at home and keep the telephone line free for calls from the employer is not free to engage in personal pursuits. Such on-call time would be considered hours worked. [Wilcox, California Employment Law (Matthew Bender 1996) 3.07(1)(3), p 3-60]. However, pager systems, cell phones separate from the employee's personal telephone, or other arrangements for periodic call-ins that allow normal movement in the community are alternatives that may allow the employee to engage in personal pursuits. [DLSE Enforcement Policies and Interpretation Manual, sections 46.2 - 46.4.2.2].

Under Federal law, time within which an employee is on-call but free to pursue his/her own interests effectively relieved from duty and away from the employer's premisses does not constitute work time. Under the FLSA, the courts examine two factors in determining whether on-call time must be considered "hours worked":

(1)   the degree to which the employee is free to engage in personal activities;

        and

(2)   any agreements between the parties.

        [Owens v. Local No. 169 (9th Cir. 1992) 971 F. 2d 347, 350].

An employee who is required to remain on-call on the employer's premises or so close that the employee cannot use the time effectively is deemed to be working while "on-call."
[29 C.F.R;. 785.17; Brock v. DeWitt (W.D. Mo. 1986) 633 F.Supp. 892, 895-896 (where restaurant employees were directed to report, but not permitted to clock in until there was sufficient work were found to be entitled to compensation for on-call time)].

An employee who is not required to remain on the employer's premises but merely required to leave word at his or her home or with company officials where he or she may be reached is not generally regarded as working while on-call. [29 C.F.R. 78517; Leonard v. Carmichael Property and Management Co., Inc. (S.D. Fla. 1985) 614 F.Supp.
1182, 1186].

Travel and Sleeping Time:

Under the laws of the state of California, arrival a the designated or prescribed reporting place starts the day's work, unless travel time to the place is beyond the time required for the normal or usual commute between home and work. Thus, time spend traveling between and the usual work place is not counted as hours worked.

The fact that the employee commutes in a vehicle owned, leased, or subsidized by the employer and used for the purpose of ride sharing, as defined in Vehicle Code section 522, does not alter this rule. [Labor Code section 510].
This rule shall not be construed to affect, change, or limit an employer's liability under the workers' compensation law. [Labor Code 510].

Under DLSE policy, if an employee is required to be on duty for less than 24 hours, the employee is considered to be working for the entire period, even though the employee is permitted to sleep or engage in other activities when not busy. On the other hand, if the employee's on-duty period extends for 24 hours or more, both sleep time and uninterrupted meal periods of at least 30 minutes many be excluded from working time. The sleep time exclusion may not exceed eight hours during each 24 hours of duty, and the employer must furnish adequate sleeping facilities. [DLSE. Enforcement Policies and Interpretation Manual, section 43.2; Aguilar v. Association for Retarded Citizens (1991) 234 Cal.App. 3d 21, 30, 285 Cal.Rptr. 515].

If an employee resides on the premises of a location covered by Wage Order 5-98 for the Public Housekeeping Industry, only the time actually spent working will be considered compensable time. [DLSE Enforcement Policies
and Interpretation Manual, section 45.3 - 45.3.1].

Special rules apply to ambulance drivers; an employer and employee working as an ambulance driver working a
24-hour shift may enter into an agreement to exclude up to three one-hour, duty-free meal periods and up to 8 hours
of uninterrupted sleep from "hours worked" provided adequate sleeping facilities are provided by the employer. [Merzon v. Schaefer Ambulance Service (1990) 224 Cal.App.3d 16].

Under Federal law the Portal-to-Portal Act [29 U.S.C. 251-262, no employer will be liable for the failure to pay the minimum wage or overtime compensation for time spent in walking, riding, or traveling to and from the actual place of performance of the employer's principal activity or activities. Thus, certain travel time at the commencement or cessation of the workday need not be counted as working time unless it is compensable by contract, custom, or practice. [29 U.S.C. 254(a),(b)].

If an employee regularly works at a fixed location in one city, and is given a special one-day work assignment in another city, the travel time involved is considered work time. [29 C.F.R. 785.37].

An employee who is required to be on duty for less than 24 hours is considered to be working even when he or
she is permitted to sleep or engage in other personal activities when not busy. [29 C.F.R. 785.21].

If the employee is required to be on duty for 24 hours or more, the employer and the employee may agree to exclude bona fide meal periods and a bona fide regularly scheduled sleeping period of no more than eight hours, provided
that adequate sleeping facilities are furnished and the employee can usually enjoy an uninterrupted night's sleep.
[29 C.F. R. 785.22(a)].

In the absence of an agreement, the eight hours of sleeping time and meal periods constitute hours worked.
[29 C.F.R. 785.22(a)].

Both Employers and Employees should be aware of their rights, and should report any violation of law to the California Labor Commissioner. Further advice on this subject can be obtained from qualified legal counsel.

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