10 Scary Laws That Affect California Employers

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​Employment practices that work in other states may not work in California.

California workplaces exist in "a different world," according to James J. McDonald Jr., J.D., SHRM-SCP, an attorney with Fisher Phillips in Irvine, Calif. Employers should recognize that an employment practice that works in the other 49 states may not be appropriate there, he told attendees at a June 22 concurrent session at the Society for Human Resource Management 2016 Annual Conference & Exposition.

McDonald said employers must be aware of the "10 scariest" laws that regulate workplaces in California:

  1. Unlimited damages. There are no caps on damages in California. Federal anti-discrimination statutes, such as Title VII of the 1964 Civil Rights Act and the Americans with Disabilities Act, cap noneconomic damages at $300,000. California, however, has unlimited compensatory and punitive damages.
  2. Class actions. Class actions are common in California for more than just overtime claims, McDonald said. Class claims are also asserted for missed meal and rest breaks, improper record-keeping, failure to provide suitable seating to workers, improper payroll deductions, and more.
  3. Private Attorneys General Act (PAGA) claims. PAGA allows employees to act on behalf of the state and recover extra penalties for labor code violations.
  4. Minimum wage for all hours worked. It's becoming more difficult for California employers to calculate the minimum wage rate, especially if they have piece-rate employees, McDonald said. Piece-rate workers are paid a set rate for each unit they produce, rather than on an hourly basis. Under federal law, employees must earn an average hourly rate at or above the minimum wage. In California, piece-rate and commission workers must additionally be paid minimum wage for all time that isn't spent on piece-rate or commission work, such as preparation time, waiting time between jobs or customers, training time, and break time.
  5. Daily overtime. It's not enough in California to pay time-and-a-half for work hours exceeding 40 in a workweek. Employers must pay time-and-a-half for hours worked beyond eight in a day or 40 in a week. Double time must be paid for hours in excess of 12 in a day. Additional rules apply to work performed on the seventh day in a workweek. Out-of-state employees who train or work temporarily in California are also subject to the state's overtime rules, McDonald said.
  6. Meal and rest breaks. Nonexempt employees must be provided an unpaid, duty-free, 30-minute meal break before the fifth hour of work. The break can be waived if the employee works no more than six hours. A second break must be provided after 10 hours but can be waived if the first break was taken. Employees are also entitled to a 10-minute paid rest break for every four hours worked, and certain outdoor workers are entitled to additional cool-down breaks.
  7. Suitable seating. Employees must be given suitable seats when the nature of the work reasonably permits the use of a seat. When the nature of the work requires standing, as it does for certain customer-facing jobs, an adequate number of seats must be placed near the worksite for employees to use.
  8. Fair Pay Act. California's Fair Pay Act broadens employee protections provided by federal and state equal pay laws. Under the Fair Pay Act, employees must show that an employee of the opposite sex performed substantially similar work "when viewed as a composite of skill, effort and responsibility, and under similar working conditions." The act doesn't require that comparable employees work in the same establishment.
  9. Paid sick leave. Employees who work at least 30 days in California are entitled to accrue paid sick leave, which employers may limit to 24 hours (or three days) per year.
  10. Waiting time penalties. If an employee isn't paid "all wages due" upon termination, he or she may continue to receive pay for up to 30 additional working days.
McDonald recommended that California employers have workers sign arbitration agreements, which are generally enforceable in the state. Unlike many jurors, arbitrators don't usually carry a bias against employers, so "cases are likely to be decided based on evidence vs. emotion," he said.

McDonald cautioned that the agreement to arbitrate must be mutual. Furthermore, employers can't put limits on employee rights, shorten statutes of limitations or put caps on damages. Even though the employer has to pay the arbitration fees, it's usually less expensive than taking a case to court, he said.

Employers that operate in multiple states may need a separate handbook for California employees, he noted, and their human resources staff and legal counsel should be "current with California's ever-changing laws."
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