California businesses are increasingly finding themselves the target of class-action labor lawsuits. Often referred to as a wage and hour suits, these claims can threaten the health of businesses large and small. A collection of employees, or former employees, alleging workplace violations can expose an employer to substantial liability. These suits may even have the power to push a business into bankruptcy.
The violations typically alleged in class-action wage and hour lawsuits include:
Not offering proper breaks
Under California law, workers get two types of breaks: rest breaks and meal breaks. An employee is entitled to a paid 10-minute rest break for every four hours worked. In addition, an employee is supposed to get a 30-minute meal break if they’re working at least a five-hour shift. For a 10-hour shift, the employee should get a second such meal break.
The penalty for failing to provide adequate breaks can be severe. An employer must pay each worker one hours’ worth of pay, at their regular hourly rate, for every day the worker did not get a rest or meal break.
Working off the clock
Employers cannot ask employees to work off the clock. That includes:
- Working during rest or meal breaks
- Filling out administrative paperwork outside of paid working hours
- Setting up or tearing down activities before or after a shift
Even a few minutes of off-the-clock work – such as locking up the store or setting an alarm – can be considered a labor violation.
Minimum wage errors
The California minimum wage is higher than the federal minimum wage, and it is rising. While there are a few exceptions, employers generally need to pay all workers at least the state’s minimum wage.
Employees cannot agree to work for less, nor can a lower rate be negotiated. In addition, there is no tip credit in California – meaning workers who earn tips cannot be paid less than minimum wage.
Incorrectly classified employees
Independent contractors do not have the same protections under labor laws as employees. They may not be eligible for things such as overtime pay or benefits. Incorrectly classifying someone who meets the criteria for an employee as an independent contractor can result in significant penalties.
How does the law define an independent contractor compared to an employee? No single question can answer that. Instead, courts must look at a number of factors in each case.
A class-action lawsuit can end in a number of different ways. Many result in a settlement, rather than going to trial. Every class action suit is serious, as they could result in a significant financial loss for the business, potentially leading to bankruptcy.
Any business facing such an action needs a sound strategy to mitigate risk and minimize the threat of an unfavorable outcome.