Every employer should know what wage order applies to its business. Why? Because employees are filing more lawsuits based on violations of little known provisions of the wage orders, resulting in large verdicts and settlements against local businesses. Even if an employer makes an innocent mistake, an employee may recover damages, penalties and attorney’s fees that can add up to hundreds of thousands of dollars.
What are wage orders? They are rules promulgated by California’s Industrial Welfare Commission, governing wages, hours and working conditions in California. Currently there are 17 wage orders. 12 wage orders cover specific industries including manufacturing, personal services, professional, clerical, technical, mechanical, public housekeeping, amusement and recreation, mercantile, transportation, and handling agricultural products after harvest. 5 orders cover certain occupations, including household, construction, mining and agriculture. If your business is covered by an industry order, follow that order even if it seems like an occupational order might also apply. Assuming your business is not covered by an industry order, an occupational order will apply. If you have any doubt about which wage order applies to your business, consult the IWC publication,
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. Wage orders 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. The penalties can be assessed for every pay period when a violation occurred, so they can add up quickly. For example, an employer’s failure to properly pay overtime can result in a claim for overtime, and a claim that the employer failed to provide accurate wage statements because the true amount of wages earned was not properly recorded on the pay stub. Each subsequent pay period can also be wrong, because the year to date hours and wages may not be accurate. By the time an employee sues, the employee may seek unpaid wages and record keeping penalties going back either 3 or 4 years.
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 and overtime, 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.
While different mandates apply to different businesses, some of the little known 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;
- Providing reporting time pay;
- Paying for working split shifts;
- Requiring employer to keep detailed wage and time records.
The best defense is to make sure you are familiar with and in compliance with all wage order provisions. If you have any questions about the wage orders and how they apply to your business, please contact Sara Boyns, Chris Panetta, or Sharilyn Payne at 373-1241.
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