Wage & Hour Law Definitions Every Employee Needs To Know | Southern California Attorneys

Jun 6, 2022 | Employment

If you work for someone else in the state of California, there are both state and federal labor laws that protect your right to be paid and treated fairly by your employer. The bad news is that employers frequently attempt to take advantage of their employees in order to maximize profits; the good news is that wronged workers  in California can fight to recover compensation if they have been the victim of wage & hour law violations. Wage & hour law is complicated, however, especially in California, and sorting through all of the legal jargon can be confusing if you are doing online research about your options or are talking about your situation with an attorney.  In this article, we’ll explain some of the most common wage & hour law definitions* you need to know about so you can stand up for yourself with confidence, choose a lawyer you trust, and ultimately win the damages you deserve!

At Southern California Attorneys, A.P.C., we’ve dedicated our practice to advocating for the rights of workers in California. Our award-winning, multilingual attorneys have 60 years of combined experience, and we are on your side.  After exploring these wage & hour law definitions, call our office today to schedule a FREE consultation and discuss your next steps. You don’t have to pay us anything unless and until we win your case, and everything you discuss with us will stay entirely confidential until you decide to take action.

*Note: these definitions are just meant as simple introductions to the terms and not as exhaustive explanations; for specific information about a certain definition, or how it applies to a specific case, please call our law firm!

“ABC” test –

The ABC test is a way for employers to classify their employees as either employees or independent contractors. You may sometimes either hear this term in conjunction with or in place of something known as “AB5”, or Assembly Bill 5, because that bill resulted in the ABC test being codified into the California Labor Code in September of 2019. The test states that a worker should be considered an independent contractor only if they meet all of the three criteria outlined in the test (ABC) which have to do with the amount of behavioral, financial, and relationship control they have over their duties.

Attorney-client privilege –

California Evidence Code 954 makes all communications between wage & hour attorneys and their clients/prospective clients privileged and confidential. This means that nothing about the communications – by either party – may be disclosed to others. For workers who want to talk to a lawyer about their pay situation but don’t want their employers to know yet, or for workers who are undocumented immigrants and fear being deported, this can provide peace of mind!

Back wages –

Back wages refers to the difference between the amount that the employer actually paid the employee and the amount that the employee should have been paid according to California wage & hour laws.  This could include pay for work that was performed but never paid, that could have been performed but was prevented, or that should have been compensated differently.

Class action lawsuit –

Employers who commit wage & hour violations often take advantage of many workers, or even all of their workers, not just single employees. A class action wage & hour lawsuit allows plaintiffs who have experienced similar injustices to join together and pursue back wages through one unified court action, instead of all taking action individually (which could make litigation more expensive for all of the workers involved). For example, if 800 workers at one company were denied fair overtime pay, it may be in their best interest to join in a class action lawsuit and seek compensation.

Class certification –

Class certification is a court’s ruling that one or more important issues in a case or class action wage & hour lawsuit can be resolved for multiple plaintiffs without looking at each plaintiff’s circumstances. Class certifications are usually “wins” for plaintiffs. According to the Society for Human Resource Management (SHRM), plaintiffs won 199 of 245 conditional certification rulings (81%).

Contingency fee –

Many wage & hour law attorneys in California, including those at Southern California Attorneys, A.P.C., work on a contingency fee payment basis. This means that their fees are contingent – or dependent – upon you receiving a monetary recovery in your case. If you don’t get compensation, your attorneys don’t get paid their legal fees. If and when your attorneys do win your case, they are paid as a percentage of your settlement, which essentially means that your employer will pay for their services!

Defendant –

In wage & hour claims, the defendant will always be the employer. This can be an individual or company who is sued by the wronged employee.

DOL –  

The U.S. Department of Labor (DOL) is the federal agency responsible for investigating and enforcing fair labor standards, including wage & hour law issues. In California, the Division of Labor Standards Enforcement and the Office of the Labor Commissioner is the state branch of the DOL that handles state-specific labor law issues and claims.

Exempt employee –

Employees in California can be classified into different categories that affect the payment and benefits they receive. One of those classifications is “exempt”; exempt employees generally are salaried (but not always) in white collar fields (but not always). Exempt employees are not entitled to protections and especially overtime provisions of the FLSA. Employers will frequently attempt to classify their employees as exempt so they don’t have to give them overtime pay.

Fair Labor Standards Act (FLSA) –

This is the federal law that establishes minimum wage, overtime pay, recordkeeping, and youth employment standards affecting employees both in the private sector and in the Federal, State, and local governments. It serves as the basis for most wage  & hour law claims.

Family and Medical Leave Act (FMLA) –

This is a federal law that entitles many, but not all, employees to take specified amounts of unpaid, job-protected leave for specified family and medical reasons with a guarantee that group health insurance coverage will continue in the same manner as if the employee had not taken leave. It provides job security and peace of mind.

Federal minimum wage –  

The minimum wage is the least amount of money that employers are required to pay nonexempt workers per the FLSA. The federal minimum wage is currently $7.25. However, the minimum wage in California is $15 per hour, and workers in California are required to be paid this amount – not the federal amount.

Final pay –

Final pay is the sum of all of the wages that an employer or company owes its outgoing employees, whether the employees quit or were fired/let go. Final pay may include the regular wages from the last or most recent pay period, vacation pay, bonus pay, and commission pay (if applicable). According to California wage & hour laws, employees whose employment is terminated must be given their final pay on the same day as they are terminated; employees who quit must get their final pay within 72 hours. If employers fail to issue final pay on time, they are subject to penalties of a full day’s wage for every day the payment is late up to 30 days. These are known as waiting time penalties.

Good faith –

When accused of committing a wage & hour violation, employers may be able to avoid legal liability and having to pay back wages if they can prove they were acting in “good faith” – that they had reasonable grounds for believing that they were following the law or relying on any written regulation of the DOL. Recently, a wage & hour (specifically misclassification) case in California was resolved in favor of the employer when Walmart was found to have been acting in good faith in their misclassification of a freelance model.

Independent contractor –

Independent contractors are workers who provide specific services in exchange for compensation; the results are managed, but not the methods they take to achieve those results. A worker is classified as an independent contractor and not an employee in California if they meet all criteria of the ABC test (see definition above). Independent contractors are not entitled to overtime pay or other important protections under the FLSA.

Misclassification –

How an employee is classified determines how they are paid and what benefits they receive. Generally, nonexempt employees have more protections than exempt ones or independent contractors. Because employers don’t have to pay overtime wages or minimum wage or payroll taxes or rest breaks to exempt employees and independent contractors, many employers dishonestly misclassify employees. This is one of the most common wage & hour law violations in California.

nonexempt employee –

Employees in California can be classified into different categories that affect the payment and benefits they receive. One of those classifications, and perhaps the most common, is “nonexempt”; these employees generally are paid hourly (but not always) in blue collar fields (but not always). nonexempt employees receive the most protections, including overtime provisions, under the FLSA.

Overtime rules –

Overtime rules in California govern how nonexempt employees are paid for hours worked beyond the standard workweek, which is 40 hours per week in 7 consecutive 24-hour days. These overtime rules require employees to be paid either 1.5x their regular rate of pay or double their regular rate of pay (also known as double  time) depending on their situation. When an employee works any hours over 8 in a single workday, over 40 in a single workweek, or over 6 consecutive days in a single workweek, they are entitled to time-and-a-half (1.5x the regular rate of pay). When an employee works any hours over 12 in a single workday or over 8 on the 7th consecutive day in a workweek, they are entitled to double time. (See the definition for “regular rate of pay” below).

PAGA claim –

PAGA stands for “Private Attorney General Act”. This term refers to a state law that allows employees who have been victims of wage & hour violations to file a lawsuit on behalf of themselves and other employees at the company in order to recover civil penalties (which are otherwise only recoverable by the State of California). In essence, PAGA deputizes private citizens, giving them power to enforce the code on the state’s behalf. You can learn more about PAGA claims in our blog.

Plaintiff –

In wage & hour claims, the plaintiff will always be the wronged employee or group of employees. This term refers to the party bringing the legal claim/lawsuit against the employer accused of committing the wage & hour law violation.

Proposition 22 (Propv22) –

Proposition 22, or Prop 22, was a ballot measure that passed in November 2020 but was recently declared unconstitutional; a legal battle is still in the works to decide whether or not it will be law in California. The measure allows ridesharing companies to keep their rideshare drivers classified as independent contractors rather than employees and offer them limited benefits.

Retaliation –

Retaliation refers to any negative action taken against an employee by an employer because the employee first took legal action against that employer. This is illegal in California, and protects employees from the fear of being fired, being passed up for a promotion, being harassed, being underpaid, or otherwise mistreated at work because they stood up for their legal right to be paid fairly according to state and federal labor laws.

Regular rate of pay –

In California, an nonexempt employee’s regular rate of pay determines their overtime compensation and also their meal and rest period payments. A regular rate of pay may be the same as the employee’s hourly wage – that’s known as “straight pay” – but often, the regular rate of pay includes other amounts. For example, if the nonexempt employee earns a discretionary bonus, a flat-sum/attendance bonus, commissions, piece-rate pay, or something else, then additional formulas will have to be used to calculate what the regular rate of pay is. If you get paid a straight $16 per hour, then your regular rate of pay may be $16 per hour, but if you have a more complex payment structure, your regular rate of pay may be more than that.

Tip credit –

tip credit is a system of payment where employers pay their employees less than the minimum wage because the tips that they are expected to earn will add up to minimum wage or higher (the tips make up the difference between what the employees are paid by the employer and the minimum wage). However, in California, tip credits are illegal. Employers have to pay their nonexempt employees at least the minimum wage for every hour, and then the tips they earn on top of that.

Tip pooling –

Tip pooling, unlike a tip credit, is legal in California; employers can require employees to pool their tips, which are then distributed fairly. However, tip pooling is complicated, and there are many rules; only certain employees can be included in the pool (no managers and supervisors are allowed), and tips need to be distributed according to a reasonable system based on service.

Waiting time penalties –

(See definition for “final pay” above). In California, when an employee is terminated or resigns, they are owed final pay by their employer either the same day they are fired or within 72 hours if they resigned. If the final pay is late, the employer is subject to waiting time penalties, which are equal to the employee’s daily rate of pay for each day the final pay is late, up to 30 days. The daily rate of pay is equal to the wages the worker receives for work, bonuses, commissions, and vacation pay (if applicable), divided by 52 workweeks and then divided again by 40 hours in the workweek. Waiting time penalties can add up to even more than the final pay amount in some cases.

If you believe that you may be a victim of wage theft or another California wage & hour law violation, contact Southern California Attorneys, A.P.C, today! We are committed to excellence in the practice of law and compassion for the people we represent. We can listen to your story, explain your options, and build a strong case for you to receive compensation from your employer if you have a case! You don’t have to pay us until we win, and even if you are undocumented we can protect your rights. Call now for a free consultation.

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