Common Questions Regarding Unpaid Wages in California

Yes. The right to recover unpaid wages, either via a complaint with a regulatory agency and/or a lawsuit, is legally codified under California Labor Code Section 1194 LC. Hiring a skilled legal team to help you with your case will ensure that you have the best chance to recover your unpaid wages.

This depends on the specifics of your situation. An unpaid wages case is basically when an employer violates what are known as wage and hour laws and fails to pay the employee in question (you, in this case) the wages and/or benefits that they are legally entitled to, based on their employment contract. There are federal, state, and local (county and/or city) laws that protect employees from this type of employer malfeasance.

The central questions to any unpaid wages case are what kind of violations did the employer commit and whether the employee in question is exempt or non-exempt (see below for a detailed description of exempt versus non-exempt employees). There is also the question of whether an employment relationship was formed when the employee was initially hired (with California having a particularly stringent interpretation of this legal concept).   

In order to determine if an aggrieved employee has a solid unpaid wages case, then the legal team must determine if an employment relationship was formed. Some employee/employer hiring agreements are implicit and not explicit. This relationship is essentially formed when a company or entity hires an employee to perform a task, render a service, and/or produce a good (this also includes instances where the employer hires an employee for the benefit of a third party).

The legal language concerning an employment relationship can sometimes be vague, so California developed a more specific way to interpret the legal concept by introducing what is called the manner and means test. This is basically when the employer has a right to control the manner and means by which the employee does their job. The amount of control that the employer has on a given employee will also determine whether they are exempt (independent contractor) or non-exempt. (See below for a detailed description of exempt versus non-exempt employees as well as independent contractors).

Any person who has been hired by an employer/company to render services and/or goods for a specified payment. This payment may take the form of wages, salary, and/or fees. In the formal legal terminology an employee is sometimes referred to as an agent. 

The legal definition of an employee is explicitly codified in California Labor Code Section 3357 LC.

Any person and/or entity (such as a company or corporation) that retains the services performed and/or buys the goods produced by an employee. They are legally obligated to pay the employee via an agreement that can be either explicit or implicit. They can also control certain specifics of how the employee performs their work for them as long as these provisions do not contradict any wage and hour laws. In the formal legal terminology, they are sometimes referred to as a principal.

Both federal and state (California) law define wages as the financial compensation (or payment) rendered to an employee for services and/or work done for an employer. This includes, but is not limited to, any form of manual and/or physical labor. The form of this payment may include:

• An hourly wage. This is a sum of money to be paid for each hour worked. If a fraction of an hour is worked, then the employee is legally entitled to be paid for that portion of the hour. Federal and state laws both set minimum legal wages.
• An annual salary. This is an annual sum of money. It is a fixed payment paid at regular intervals of time (usually weekly, biweekly, or monthly). It is most common in white-collar positions.
• Commissions. This is a sum of money that is paid to the employee once they have completed some specific task (usually the act of selling some specified amount of services and/or goods). It may comprise a predetermined percentage of the sale or it may be a flat rate that is based on the total volume of sales.
• Piece-rate payments. This is a sum of money paid upon production of some item. It can also be referred to as a system of payment by results.
• Variable payments. This is a sum of money that depends on the task and/or completion of some project. This is most commonly used for freelance employees.

It is the employer’s legal obligation to pay the employee their wages.

When an employee is hired to do a job at an agreed-upon rate, they then have an inalienable right to receive the wages they have earned. This is the basis of the aforementioned explicit or implicit agreement entered upon when the employee is hired. The legal basis for an employee’s right to be paid their wages comes from two sources: state and/or federal labor laws and contract law.

There are both state and federal laws that guarantee an employee be paid the wages they have earned.

Essentially, a binding agreement is forged every time an employee accepts employment at some agreed-upon rate of payment. This means that the employer has a legal obligation to honor the contract that they developed with the employee. Most frequently, this is a formal contract in writing. However, an agreement made orally is substantial enough to create a legal obligation for the employer to pay the employee their wages. Remember that this agreement can be explicit (written) or implicit (oral).

This refers to the system of laws, either federal, state, county, and/or city, that guarantee certain protections and standards in regards to employees’ treatment and wages.

The federal law is known as the Fair Labor Standards Act (FLSA). It was signed in 1938 to protect vulnerable employees from being exploited by unscrupulous employers. The basic provisions in the law establish legal standards for minimum wage, child labor, overtime pay, and administrative tasks (specifically keeping records) that need to be followed by the employer. It oversees both private and public sector jobs. The civil regulatory body that oversees the enforcement and implementation of the FLSA is the United States Department of Labor (also referred to as The DOL).

The California Labor Code (also referred to as The Labor Code) is a system of civil law statutes that codify the rights of employees and the obligations of employers. Note that it is not part of the criminal law code (also known as The Penal Code) of the state of California. This means that violating the Labor Code is a civil offense. This usually entails financial penalties for the offending party (the employer) and possible financial compensation for the victim (the employee). California Labor Code Section 1194 LC explicitly allows the aggrieved employee the right to recover their unpaid wages. 

Furthermore, there is substantial overlap between the California Labor Code, California Family Code, and California Insurance Code. This means that a legal team specifically versed in these various statutes will have the best chance of recovering the aggrieved employee their unpaid wages.

There are two regulatory bodies that oversee the implementation and enforcement of California wage and hour laws: the California Division of Labor Standards Enforcement (also referred to as the DLSE or informally as the labor commissioner) and the California Department of Industrial Relations (also known as the DIR). Most unpaid wages cases fall under the jurisdiction of the DLSE. However, in cases where there is conflict regarding workplace safety, employment contracts, and/or insurance benefits (benefits are also considered wages under California wage and hour laws) then the jurisdiction would likely fall under the DIR.

Please note that there is considerable overlap between the DLSE and the DIR; an unpaid wages case can very possibly end up involving both agencies. It is best to retain the services of an attorney who can easily work with both entities.

No. Wages do refer to the amount of money paid to the employee as compensation, but it also refers to any benefits that the employee receives as a condition of their employment. This includes vacation hours (paid time off or PTO), sick pay, clothing, room, and/or board. Denial of financial compensation and/or any of these benefits would all legally comprise what is known as wage theft. 

Wage theft is when an employer or company fails to adequately compensate their employees for work performed or services rendered. It is a blanket term that refers to the various violations of what are known as wage and hour laws. The most common violations of these wage and hour laws include:

• Not paying overtime.
• Not paying the minimum wage. 
• Not providing mandatory meals and/or breaks.
• Making the employee work “off the clock”.
• Improperly classifying the employee as “exempt” from wage and hour laws.
• Not paying on time.
• Not paying commissions and/or bonuses.
• Not paying accumulated vacation time.
• Not paying for work-related tasks done outside the office or place of employment.

Overtime rates are legally guaranteed to all non-exempt employees. A common tactic that unscrupulous employers will use to try and get around paying overtime rates is pressuring or outright requiring employees to work “off the clock”. 

Paying overtime is based on two fundamental concepts regarding how much time an employee works (California Labor Code Section 510 LC):

• There are eight (8) hours in one workday
• There are forty (40) hours in one workweek

For any work done above these amounts of time, then the employer must pay time and a half (meaning, 1.5 times as much as their regular rate of pay). So, if an employee works 8 hours or more in a day or over 40 hours in a week, they will be paid time and half overtime. The employer must also pay time and a half for the first eight (8) hours of work performed on the seventh (7^th) consecutive work day in a particular workweek.

There is also double time (2 times as much as their regular rate of pay). This is triggered any time an employee works twelve (12) or more hours in a single workday or more than eight (8) hours on their seventh consecutive day of work in a workweek.

Some employers may develop an agreement with their employees that they do their work up to ten (10) hours in a single workday as part of a forty (40) hour workweek without overtime pay being triggered. Essentially, this means that the employees work ten (10) hour shifts for four (4) days a week rather than eight (8) hour shifts for five (5) days a week. This is sometimes referred to as an alternative workweek schedule and can only be implemented if 2/3 of the employees agree to its implementation (Labor Code Section 511 LC). 

Exemptions from overtime are codified in California Labor Code under Section 515 LC.

Legally, there is no explicit definition for what constitutes a full-time or a part-time employee. It varies from company to company and is entirely dependent on the employment agreement between the worker and the company. In California, it is usually anyone who works between thirty-five (35) and forty (40) hours a week for a given employer. However, in some cases it can be someone who works thirty (30) hours a week, or a total of one hundred thirty (130) hours per month. These hours are commonly referred to as work hours.

The question of whether an employee is part-time or full-time is germane as most companies require an employee be full-time in order for them to qualify for benefits. Remember that benefits count as wages too, so if an aggrieved employee is suing their employer for denial of benefits as an unpaid wage claim, then the question of their full-time or part-time status is important. Consequently, some companies will have a minimum number of hours worked per week (or, in some cases, measured per month) that the employee must work in order to be eligible for benefits. In some companies that is forty (40) hours per week (most widely considered to be “full-time”) but in others it can be thirty (30) hours per week (or 130 hours per month). As opposed to other parts of an employment contract, this specific provision is usually explicitly stated in a written contract. However, if there was an oral agreement, there may still be a case for an unpaid wage claim.

Furthermore, there are two basic tests to determine full-time status: the monthly measurement method and the look-back measurement method. The Internal Revenue Service (IRS) defines a full-time employee via the monthly measurement period as any worker who has performed one hundred thirty (130) hours of service per month. The look-back measurement period is when the employer determines the full-time status of an employee based upon the number of hours in the preceding measurement period (also referred to as the stability period). This preceding measurement period is not a legally defined increment of time, but is most usually either one (1) calendar month or three (3) months (also known as a yearly financial quarter). 

A work hour is each one (1) hour that an employee is legally entitled to payment for work performed. This also includes hours where no work was performed but still entitle the employee to payment, including: vacation hours (paid time off or PTO), sick days, disability, military duty, jury duty, and/or an approved leave of absence (either medical or personal). If a worker performs their work for a unit of time that is a fraction of the work hour, they will be paid their wages at a prorated amount. 

The entire system of wage and hour laws is based around this increment of time, and it is the discrete unit of time that forms the basis for all wages, regulations, and protections under the law.

This is the lowest possible wage that is allowed under a specific law (be it federal, state, county, or municipal law). In an unpaid wages case, the law that is most generous to the employee is the one that is always followed in determining their rate of pay.

There may also be minimum wages set by a certain labor union for the workers who are members of the said union. In this situation, an unpaid wages case becomes even more complex as the legal team has to not only know the ins and outs of all the wage and hour laws but must also know how to integrate union by-laws into the legal argument.

The current federal minimum wage, enacted on July 24, 2009, is $7.25 per hour. However, most states (and even some local municipalities like counties and even cities) have their own minimum wage laws. This is particularly true in parts of the country that have high costs of living (such as California). If an employer located in California, for example, pays below the state wage but above the federal wage, they would still be in violation state wage and hour laws.

The specific department within the US Department of Labor that deals with wage violations is known as the Wage and Hour Division (WHD).

The current minimum wage in the state of California, as of January 01, 2018, is $11.00 per hour for employers with twenty-six (26) or more employees. For a company with twenty-five (25) or fewer employees, it is $10.50 per hour.

However, Governor Jerry Brown signed a law into effect that would increase the California minimum wage to $15.00 per hour by the year 2022. Currently, the minimum wage increases by one (1) dollar per hour on January 01 of each successive year. That means on January 01, 2019 it will be $12.00 per hour, in 2020 it will be $13.00 per hour, in 2021 it will be $14.00 per hour, and in 2022 it will finally reach $15.00 per hour.

Smaller business (25 or fewer employees) will also increase to $15.00 per hour, except that they have until 2023 to implement it. Each year they will see a one (1) dollar increase on January 01^st, so that in 2019 it will be $11.00 per hour, in 2020 it will be $12.00 per hour, in 2021 it will be $13.00 per hour, in 2022 it will be $14.00 per hour, and in 2023 it will finally reach $15.00 per hour.

The state agency that regulates and enforces minimum wage is the California Department of Industrial Relations (the DIR). Minimum wage statutes are codified in California Labor Code Section 1182.12 LC. Furthermore, there are a few exceptions to when someone can be paid less than minimum wage in Section 1197 LC.

The minimum wage in Los Angeles county is currently at $13.25 per hour for businesses with twenty-six (26) or more employees and $12.00 per hour for business with twenty-five (25) or fewer employees.

There is a county law that is also increasing it to $15.00 per hour, just like state law, except that it is happening on an accelerated schedule. So on January 01^st of each successive year the minimum wage for businesses with 26 or more employees will increase as follows: in 2019 it will be $14.25 per hour and in 2020 it will be $15.00 per hour. For businesses with 25 or fewer employees it will increase on January 01^st of each successive year as follows: in 2019 it will be $13.25 per hour, in 2020 it will be $14.25 per hour, and in 2021 it will be $15.00 per hour.

Non-exempt employees must be provided with mandatory rest and meal breaks (California Labor Code Section 512 LC). The latter may also be informally referred to as “a lunch break” or “taking a lunch”.

If an employee performs their work in excess of five (5) hours in a workday then they must be allowed to take a meal break for no less than thirty (30) minutes. The employee may voluntarily agree to not take their meal break if their shift in a workday is no longer than six (6) hours.

If an employee has a shift that is longer than ten (10) hours, they must be allowed to take a second meal break that is also at least thirty (30) minutes. The said employee may voluntarily agree to not take the second meal break if they work no longer than twelve (12) hours in the given workday and they did not waive their first meal break.

Certain jobs that are part of a union may have a different set of rules for how employees take their meal breaks and will generally be part of the collective bargaining that the union will do on behalf of their members.

Furthermore, non-exempt employees are guaranteed a ten (10) minute rest break for every four (4) hour period that they work. This requirement is null if the employee’s shift on that workday is less than three-and-a-half (3.5) hours. Any work that is required of the employee during this rest break is considered working “off the clock” and as such is a violation.

This is a violation of wage and hour laws when an employer either explicitly requires or substantially pressures (implicitly requires) an employee to perform work of any kind while they are not being paid (or “on the clock”). This includes insinuations or encouragement from the employer that the employee should do unpaid work or that the employee will experience good fortune and a quicker promotion if they do unpaid work.

This is any employee who is subject to all the protections and provisions provided to them by wage and hour laws. Generally, a non-exempt employee works for an employer in a situation where they have less control over how to perform and/or execute their job.

Many of the caveats in wage and hour laws do not apply to what are known as exempt employees. One of the most common violations that an unscrupulous employer will try to do in order to pay their employees less is to improperly classify them as exempt. Some employers may try to make their employees sign contracts that state that they are exempt from certain provisions (like overtime pay) when in fact the employer has no legal right to make such a claim.

Under California labor code, there are three primary criteria for determining an exempt employee:

• They must earn a salary that is at least twice the minimum wage. In other words, the monthly sum of their salary is two times the equivalent minimum wage rate for an employee that is full-time (in this case, 40 hours a week). A common misconception is that every salaried worker is exempt.
• The employee must spend at least 50% of their time doing creative, managerial, administrative, and/or intellectual work. This is sometimes colloquially referred to as “white-collar” work (as opposed to “blue-collar” work which is more physical in nature).
• The employee must use discretion and/or independent judgment in fulfilling their duties. In this case, it means that they have some measure of control as to how they do their job.

Remember that a central question that is posed in a case that involves exempt versus non-exempt employees is the amount of control the employer has on how a job is done. The more control the employer has, the less likely the employee is to be exempt.

An independent contractor is the most widely recognized type of exempt employee. They have near total control on how to perform the specifics of their job, thereby making them exempt employees and not subject to most wage and hour law provisions.   

California Labor Code specifically codifies an independent contractor under Section 3353 LC. Furthermore, under Section 3357 LC an independent contractor is considered legally distinct from an employee.

This is any unlawful punishment levied against an employee for filing a complaint, including any complaint regarding unpaid wages. This may take the form of a demotion, a decrease in hours, an unlawful decrease in wages, hostile interactions in the work environment, and even firing.

California Labor Code Section 98.6 LC explicitly forbids any retaliation. This is informally known as the “whistleblower statute”.

This is when an employer fires an employee in retaliation for making an unpaid wage claim. This is a separate and serious offense and will constitute an additional part of any unpaid wage lawsuit or case. In fact, even if the original unpaid wage complaint is denied compensation, if the employer retaliated against the aggrieved employee in any way, including wrongful termination, the aggrieved employee may still be eligible for a financial settlement.

Yes. Undocumented workers are just as protected under wage and hour laws as documented workers. This is particularly true in California, where both the statutes of the Labor Code and various Assembly Bills explicitly protect undocumented workers. At no point in time in the process of the claim and/or lawsuit will the question of the employee’s immigration status be addressed (at either the state or federal level). The employee’s immigration status is irrelevant to whether the employer violated the employee’s rights.

You may file a federal claim with the United States Department of Labor (DOL) or a state claim with the California Division of Labor Standards Enforcement (DLSE). You may also file a claim with Wage and Hour Division (WHD) of the California Department of Industrial Relations (DIR). Finally, you may directly sue your employer in court under California Labor Code. Any one of these should be done with a legal team who can best ensure that you recover your unpaid wages.

Stop Unpaid Wages is a top-notch firm handling unpaid wage cases throughout the state of California that can help you with your unpaid wage lawsuit and/or claim. Give us a call at 424-781-8411 today and get your money back!