Question:

A friend of mine has been sued for violations of a wage order. I have a small business and I’ve never heard of a wage order. What is it and how do I protect my company from a lawsuit?

Answer:

The Industrial Welfare Commission wage orders, which govern wages, hours and working conditions in California, contain many detailed requirements that employers are not familiar with. When an employer fails to comply with the provisions of a wage order, the employer can be sued for damages suffered by an individual employee, or by a class of employees. Even if the employer made an innocent mistake, an employee may recover damages, penalties and attorney’s fees that can add up to hundreds of thousands of dollars.

Recent lawsuits illustrate the importance of knowing and complying with the specific requirements of the wage order that applies to your business. In one recent case, a class action lawsuit was allowed to proceed despite the employer’s argument that the failure to include the starting date of the pay period on an employee’s paystub was an inadvertent mistake. In another case, an employer was sued for putting an abbreviation of the legal name of the business on the paystub. Although the most common wage order violation cases historically involved missed meal or rest periods, these recent record keeping cases illustrate the risks of failing to comply with the detailed provisions of the wage orders. In the words of one commentator, the “new battlefield” of claims against employers focuses on violations of the wage orders.

What can you do to protect your business and make sure you are complying with the law? An important first step is to know which wage order governs your business. The wage order that applies to your business must be posted in an area frequented by employees, where it may be easily read during the workday. If you don’t know which wage order applies to your business, go to
http://www.dir.ca.gov/iwc/wageorderindustries.htm and click on the tab, “which wage order pertains to my occupation.” Then read the wage order that applies to your business and make sure you are complying with all of the requirements listed in the wage order.
Different mandates apply to different businesses. Some of the specific items that employers must comply with that appear in most wage orders include:

  • Providing clocks in the workplace;
  • Furnishing paystubs or wage statements containing specific information;
  • Providing suitable seating for employees;
    Limiting wage deductions for cash shortage, loss or breakage;
  • Furnishing uniforms and equipment;
  • The maximum deduction from wages allowed when an employer furnishes meals and lodging to employees;
  • Making changing rooms and resting facilities available;
  • Maintaining reasonably comfortable temperatures in work areas;
  • Furnishing adequate elevator or escalator service;
    Making meal and rest periods available;
  • Paying wages and overtime;
  • Providing reporting time pay;
  • Paying for working split shifts;
  • Requiring maintenance of specific wage and time records.

The best defense is to make sure you are familiar with and in compliance with all wage order provisions.
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