employment law compliance

February 14, 2025February 14, 2025

California Overtime Laws Explained: What Employers Need to Know

Summary

California has some of the most comprehensive employment laws in the country, including overtime rules.
Compliance can be tricky because there are many nuances and rules that employers need to understand and implement.
Payroll software can ensure that workers entitled to overtime compensation in California are paid correctly and simplify compliance for employers.

California has some of the strictest overtime laws in the country, ensuring that employees are paid fairly for the extra hours they work. However, due to these strict rules and recent court decisions, many employers struggle to get it right, which can lead to costly lawsuits and hefty fines.

If you’re running a business in California, understanding overtime rules and staying updated with the regulations is crucial to staying compliant and paying your workers correctly. This guide will explain who qualifies for overtime, how it’s calculated, and best payroll practices to get it right.

Knowing the difference between California’s overtime rules and federal overtime laws

Under the Fair Labor Standards Act (FLSA), non-exempt employees earn overtime pay if they work more than 40 hours in a workweek at a rate no less than one and a half times their hourly rate. This is also known as time and a half pay.

Sounds simple, right? Well, California has its own rules. According to the California Division of Labor Standards Enforcement (DLSE), overtime applies when an employee works more than 8 hours in a single workday or over 40 hours in a single workweek. Additionally, for especially long shifts, California law requires double-time pay, a rule that goes beyond federal law.

When federal and state laws differ, the more beneficial rule to the employee prevails.Here’s a brief breakdown of how federal and California overtime rules differ:

Rule	FLSA Law	California Law
When overtime pay takes effect	Over 40 hours a week	Over 8 hours in a workday or 40 hours in a workweek
Overtime pay rate	1.5x of regular rate after 40 hours	1.5x after 8 hours a day 2x after 12 hours a day
Seventh consecutive day	NA	1.5x for first 8 hours 2x after 8 hours
Double time	NA	2x regular rate after 12 hours a day or after 8 hours on 7th consecutive workday

Key areas of CA overtime rules that employers must know

California’s overtime laws are strict, and understanding them is essential for staying compliant and ensuring employees are paid correctly. Below are some of the most important areas employers should know when handling overtime pay.

Regular rate of pay

Understanding an employee’s regular rate of pay is at the core of calculating overtime pay in California. So, what is it exactly?

The regular rate of pay refers to compensation for the work done, and it goes beyond a worker’s hourly wages. It could also include commissions, piecework earnings, and salary. The regular pay rate should never be lower than the applicable minimum wage.

It’s important to note that bonuses may or may not be included when computing the regular rate of pay. If it’s a nondiscretionary bonus or bonuses tied to work performance or output, it’s typically included in the computation of the regular rate of pay. Discretionary bonuses, meanwhile, are not included since they are bonuses or rewards that are not usually incentives that are discussed before work commences or are given during special occasions.

Alternative workweek schedules and multiple pay rates

What if your employees don’t work the standard 8-hour workday, 40-hour workweek? If your employees work on an alternative schedule, like 10 hours a day for 4 days or 12 hours a day for 3 days, the computation for weekly overtime will still apply once you hit the 40-hour mark for the workweek.

Meanwhile, if an employee has two or more pay rates, the overtime computation will be based on a weighted average based on their total earnings for the workweek.

Commissions and piecework payments

California employees earning commission or piece-rate pay have two ways to calculate their regular rate of pay for overtime. First, they can use the commission as the regular rate of pay and calculate overtime by one and one half times (1.5x) that rate for hours exceeding 8 hours in a day or two times(2x) for any hours beyond 12 in a single day.

Meanwhile, another way to calculate is to get a regular hourly rate from all the earnings. You do that by adding up all earnings for the week (including commissions and overtime pay) and dividing it by the total number of hours worked (including overtime hours). For each overtime hour, an employee gets an extra .5 pay for hours over 8in a day or 40 in a week or an extra 1x pay for hours over 12 in a day.

If a team works together on a piece-based pay, the total number of pieces made is divided among the workers. The regular rate is calculated by dividing their earnings by their work hours. The regular rate cannot be less than the minimum wage.

Unauthorized employee overtime

What employees work overtime and it’s not authorized? Employers still need to pay up. Workers are entitled to overtime pay if they “suffered or permitted to work, whether or not required to do so, ” meaning that it is work that the employer knew or should have known about.

In such cases, employers can discipline their workers if they incur unauthorized overtime, but workers must still be paid.

Collective bargaining agreements

According to California’s Labor Code, allows some exemptions from state overtime rules if a valid collective bargaining agreement meets specific conditions such as a clear outline of overtime rates and rules, a regular hourly wage that is at least 30% more than the state minimum wage, and providions for wages, hours, and working conditions.

CBAs in construction, hospitality, motion picture and TV production, healthcare can often modify overtime rules.

Who’s entitled to overtime pay in California?

Most hourly employees qualify for overtime. Salaried employees may also be eligible if their job duties don’t meet exemption requirements. Typically, executives, administrative professionals, and some high-level salaried employees are exempt, but employers must ensure they meet the strict exemption criteria.

When should employees receive overtime pay?

Overtime must be paid by the next regular payday, but not later. Regular wages for hours worked must be paid on time according to the usual pay period. Only overtime can be deferred to the next regular pay period.

The cost of noncompliance to California overtime rules

Non-compliance to California overtime laws can set your business back big time. It can result in repayment of unpaid wages, penalties, massive settlements, and expensive lawsuits.

Take the case of AOCLSC. While the company didn’t admit to the allegations, it settled a $920,000 lawsuit filed for allegedly failing to pay the correct hourly, minimum, and overtime wages under California law. The complaint also included failure to provide meal breaks, rest periods, and accurate wage statements.

As a result of the settlement, non-exempt employees who worked for the company in California between May 8, 2019 and May 15, 2023. The same goes for the Private Attorneys General Act class of AOCLSC employees who worked between June 1, 2021, and May 15, 2023.

Then there’s Alvarado v. Dart Container Corporation of California, which underscores just how precise overtime calculations must be. It centered around how the regular rate of pay for overtime calculations was computed, especially with a flat-sum bonus involved. In this lawsuit, the plaintiff received a $15-dollar bonus for working the weekend, and the court ruled that the bonus should be included in calculating the regular rate of pay.

Again, this further reiterates that employers should carefully examine all the remunerations an employee receives because even seemingly minor bonuses can impact payroll calculations.

The takeaway? Getting overtime laws wrong, even unintentionally, can lead to financial consequences and wage claims. California’s wage and hour laws have comprehensive rules and protections to ensure employee are paid fairly. However, they can be complex, and employers must correctly calculate regular pay rates, bonuses, and overtime wages to avoid costly mistakes.

Payroll best practices for complying with CA overtime rules

California overtime laws can be complicated, nuanced, and constantly evolving, with court rulings shaping how they’re applied. But with the right payroll practices, California employers can stay compliant, avoid mistakes, and pay employees accurately.

Classify employees correctly from the start

Misclassifying employees is one of the biggest (and most expensive) mistakes employers make. Get employee classifications correct upon onboarding. If you get this right from day one, you’ll properly calculate accurate wages, pay proper overtime, and comply with the rules. However, that can be easier said than done, and you should double-check whether a worker’s duties meet the overtime pay criteria.

Many assume salaried employees are automatically exempt from overtime, but that’s not always true. Some salaried workers still qualify for overtime, depending on their job duties and earnings. Always double-check the latest state and federal rules to properly classify employees.

Track employee time accurately

Overtime calculations are only as good as your timekeeping system. Wage and overtime calculations will depend on employee time logs. You should have a system that accurately records total hours of work, break and rest times, and hours of overtime, not just for accurate pay computations but also for proper recordkeeping.

If you ever face an audit or a wage dispute, having clear, reliable time records can protect your business and prove compliance. Invest in a digital time-tracking system that makes it easy to maintain accurate records and minimize errors.

Calculate the regular rate of pay correctly

A miscalculated regular rate of pay can easily land you in legal hot water and result in unpaid wages. Overtime pay is based on this rate, so it must include all eligible earnings like commissions, piecework, and nondiscretionary bonuses. Get this wrong, and you risk underpaying employees, leading to potential lawsuits and penalties.

Automate compliance at critical steps

Compliance mistakes often happen when things slip through the cracks. Automation can safeguard your team from committing unintentional violations. Implement a system that alerts you when you’re about to hit unplanned overtime, an employee missed a meal or rest period, there are discrepancies in time logs, or when you’re creating schedules that can create unnecessary overtime.

Optimize schedules to minimize overtime

Overtime isn’t necessarily bad, but it’s often unavoidable when demand is high. However, excessive or unplanned overtime can drain your budget and create compliance risks.

Using labor forecasting, you can prevent unnecessary overtime, ensure proper staffing levels, and avoid last-minute surprises. With demand-based scheduling, you can pay overtime when it’s needed, but never by accident.

Workforce.com payroll can simplify compliance with CA overtime laws

Workforce.com is an all-in-one system designed to handle complex labor laws and ensure you release accurate pay every payday.

Payroll compliance starts long before payday. It begins with onboarding, time tracking, scheduling, and shift management. Workforce.com streamlines each step to reduce errors, prevent compliance risks, and ensure workers are paid correctly.

Onboarding is automated; employees enter their details, eliminating double data entry and reducing errors.
Time and attendance tracking records employee time logs, daily overtime, and ensures employees take meal and rest breaks.
Alerts will be sent when employees fail to take breaks, are about to exceed their legal work limits or hit unplanned overtime.
Accurate payroll calculations based on employee classifications, overtime rates, and state-specific rules that are automatically factored into payroll.

See Workforce.com in action and discover how it can help you ensure compliance in California and beyond. Book a call today.

This information is for general purposes only and should not be considered legal advice. While we strive to keep it updated, laws and regulations can change at any time. It’s always a good idea to consult with a legal professional or relevant authorities to compliance with the most current standards.

June 2, 2020June 29, 2023

Employers grapple with laws about work schedules

Chicago’s fair workweek law goes into effect on July 1, 2020.

Chicago joins the ranks of other cities like San Francisco, Emeryville, San Jose, Berkeley, New York City, Seattle, SeaTac and Philadelphia that have predictive scheduling laws. Oregon, meanwhile, is the only state with one of these laws in effect, while New Hampshire and Vermont have more limited scheduling-related laws.

The past few years has seen a wave of predictive scheduling laws, making it a hot topic in industries like retail and hospitality, said Ari Hersher, partner at Seyfarth law firm. Hersher described predictive scheduling as “the next big thing” — much like a wave of paid sick leave laws that began surging in the late 2010s and created a patchwork of local and state laws across the United States. COVID-19 has only increased this trend of paid sick leave laws.

Also read: Shift scheduling strategies can be improved through technology

The COVID-19 pandemic has had a few notable impacts on fair workweek laws in 2020, he added. Industries like retail, food service and hospitality that have been greatly impacted by the pandemic are also the industries primarily impacted by predictive scheduling laws. While COVID-19 has not stopped cities and states from enacting the laws currently in place, it’s uncertain if new laws will continue with the same momentum as they did pre-pandemic.

“It remains to be seen what will happen post-COVID. I think there will be an interesting push and pull,” Hersher said. “There will be a strong desire to not overly restrict these businesses like retail that have been so devastated by the coronavirus, but also [give] all these employees — who may have kids out of school or need to work multiple jobs in order to manage — the scheduling stability and notice that they can manage their lives.”

COVID-19 aside, these laws already exist in several municipalities. Hersher went over these laws about work schedules and how employers can work with them.

Also read: How to reduce compliance risk

The meat of these laws

Laws vary by city or state, but they generally include four common provisions, according to the National Retail Federation. These provisions are:

Advanced posting of schedules.
Employer penalties for unexpected schedule changes.
Record-keeping requirements for employers.
Prohibitions on requiring employees to find replacements for scheduled shifts if they are unable to work.

Predictive scheduling laws are meant to address common concerns hourly employees have, including unpredictable, unstable and often insufficient work hours. As a 2018 Economic Policy Institute article explained, “Employers in some industries have increasingly adopted scheduling practices that leave workers in desperate need of additional work yet hampered in their ability to actually seek supplemental work elsewhere or find a new job altogether.”

Certain scheduling practices that some employers adopt “shift more of the risk and costs of doing business from firms onto their employees,” the article continued. For example, they may require employees to maintain “open availability” for all hours the store is open, giving them basically no input in the days or times they work.

Also read: Leave management should be as simple as submit, approve and hit the beach

Impact on employers

These laws put a strain on employers, for whom most scheduling changes aren’t intended, Hersher said. Employees may call in a few days or hours before their shift starts, leaving employers little time to find a replacement. They need flexibility to create good schedules.

Also read: Predictive Scheduling Laws — What Are They, Where Do They Exist and Employers’ Reaction

The financial penalties for breaking predictive scheduling laws are substantial for employers, he added.

In addition, some employers may have to comply with multiple predictive scheduling laws, depending on what states or cities they operate in. Complying with this patchwork of laws is complicated and requires different workplace policies for different locations.

The Society for Human Resource Management suggests that employers should audit their locations. “A centralized staffing model can quickly become outdated, or even worse, a liability. Location-specific policy changes may need to be made, and managers may require retraining on how to handle staffing shortages.”

Also read: 3 Steps to Navigating Effective Wage and Hour Compliance

Potential solutions

Using predictive analytics to create schedules weeks in advance is one solution to avoid overstaffing and understaffing, Hersher said. Certain technology solutions may help, too, if they can help employers take different regions’ predictive scheduling laws into account as they create schedules.

Communication is also key. Some newer predictive scheduling laws include the “suggested interactive process,” he said. This is optional but encourages employers to have a dialogue with new employees. Usually, when someone begins an hourly job, their manager tells them what their days and hours will be. With the interactive process, the new employee can have their say in the conversation. “I have another job or other responsibilities these days and times, but what about this schedule instead?”

The employer has the ultimate decision over the employee’s schedule, Hersher said, but having that conversation can help employees feel respected and heard.

Laws about work schedules during the COVID-19 pandemic

Fair workweek laws are still in place and being enforced in the midst of COVID-19, Hersher said. For example, in San Francisco the Office of Labor Standards Enforcement is continuing to pursue complaints, file investigations and move forward with these laws like before. On a city-to-city basis, there are realistically different enforcement levels, he said, but it’s important to remember that municipalities or agencies don’t need to pause their enforcement work in light of store closures.

“Retail is already facing a lot of challenges. And whether the government wants to put a lot more financial burden on their existence is something they’ll really have to consider,” Hersher said. “It’s a delicate balance to come up with a law that doesn’t force shops to close but is also protective to employees.”

Hersher believes the conversation around predictive scheduling will have to evolve because of coronavirus.

While predictive analytics generally can help businesses with employee scheduling, it will be much more difficult to predict scheduling needs for the next year and half or so because of the pandemic, he said. Historical data from previous years may not be applicable in post-pandemic times, and businesses don’t know to what degree people will return to restaurants and stores.

He suggested that employers do what they can to create schedules far in advance and focus on honest conversations with employees.

“Employers can say, ‘We’ll give you 30 days notice, but please understand that our scheduling needs are volatile,’ ” he said. “People should [try to] understand each others’ needs and be mindful of them.”

Employers can also communicate to all their employees and explicitly ask who would want additional hours if they become available and what other days and times they could work. Taking a proactive measure like this can help both sides in helping employees get more hours and helping employers get the people they need.

May 25, 2020July 11, 2023

How to reduce compliance risk

Compliance is complicated and time-consuming, and employers don’t have the time to become experts in every rule or regulation that impacts their business. For any organization, addressing how to reduce compliance risk requires the right external and internal resources.

Failure to adhere to compliance requirements exposes an organization to lawsuits, costly fines and other penalties as well as negative publicity and harm to business reputation, noted XpertHR in its report “Top HR Compliance Challenges for 2020.” The organization surveyed 700 HR professionals, 28.3 percent of whom said recruiting and hiring was their top concern. Meanwhile, 16.2 percent said so about benefits and 10.1 percent about pay and scheduling issues.

Of those challenged by pay and scheduling issues, 13.3 percent said they are extremely challenged by the misclassification of exempt and non exempt employees, compared to only 6.6 percent in 2018. And 9.8 percent feel extremely challenged by state and local minimum wage increases, down from 12.9 percent in 2017.

In 2020, 21 states and many localities — including 20 in California alone — will be impacted by minimum wage increase, the report noted.

Also read: Labor compliance software sorts through complex legal issues

XpertHR Legal Editor Beth Zoller said that it’s also important for employers to be proactive about trending issues like harassment training, hairstyle discrimination, pregnancy accommodations and prohibiting pre-employment drug testing.

No matter what the compliance issue, there are many ways to efficiently address how to reduce compliance risk, ultimately benefiting both employees and employer.

Also read: Regulating recruiting amid constant technological innovations

Workforce planning

In the XpertHR survey, 8.3 percent of respondents said workforce planning was their top compliance concern. Zoller defined “workforce planning” as “the continual process an employer uses to align the organization’s business needs and priorities with those of its workforce to make sure it can comply with legislative, regulatory, service and production requirements and organizational objectives.”

Among today’s global workforce, she said, employers must understand both the internal and external factors that impact workplace processes like recruiting, retention, training and performance management.

These internal and external factors include the rise of flexible working arrangements and remote workers, the use of independent contractors to replace traditional workers, and the use of technology to increase communication and productivity, Zoller said. All these are areas in which employers must be careful to be compliant with the various regulations, such as those regulating remote work, classifying employees correctly.

Also read: Tax compliance a key consideration for remote work policies

Benefits compliance

Benefits compliance was the second biggest compliance concern for employers, according to the XpertHR survey. Dorian Smith, national practice leader for Mercer’s Law & Policy Group, specializes in health and welfare benefits.

There are different trusted advisors HR or workforce management professionals can reach out to for different buckets of compliance, he said. For health benefits, representatives from the insurance carrier or third-party administrator can provide guidance. Attorneys specializing in ERISA can help answer retirement-related questions. Complying with a variety of regulations means partnering with a combination of different advisors that cover an employers’ bases.

Employee leave laws

Even before the COVID-19 pandemic introduced new employee leave requirements through legislation like the Families First Coronavirus Response Act, the paid leave landscape in the United States was a “hornet’s nest,” Smith said. COVID-19 rules simply added another layer to an already complicated paid leave environment, where employers often must pay attention to different state and local laws that could affect their business.

Whichever HR or workforce management professional deals with paid leave at an organization should maintain a relationship with the carrier that administers the leave program, and a major carrier should have an understanding of the paid leave environment, Smith said. Still, while they can provide support to navigate the organization through compliance, they generally don’t provide strategic support, he added.

He gave an example of an organization that is looking to shut down a location. They may have the right to do so compliance-wise, but strategically they should think about the make-up of the workforce in that location. Are they predominantly older or part of another protected class? That is a strategic way to look at this situation, since an organization does not want to be exposed to a discrimination lawsuit.

Many areas of compliance are “part compliance, part strategy,” he said. “You can’t do strategy without thinking about compliance.”

Smith also suggested that organizations should engage with their internal or external legal counsel before they make decisions regarding paid leave strategies. Smaller organizations will likely need more external help because they may not have internal resources. But it doesn’t stop there.

“This issue isn’t isolated to smaller firms. Even larger employers with ample internal resources will need outside help,” Smith said.

Mercer, for its part, began a toolkit during the COVID-19 pandemic that is updated every week to reflect what state and local paid leave laws have been amended or created. This is meant to help organizations stay current on changing laws.

On XpertHR’s survey, 5.7 percent of respondents said that “leaves of absence” was their No. 1 compliance concern. Of these people, 28.9 percent said they are extremely challenged by keeping up with rapidly changing leave laws, up from 11.2 percent in 2017 and 19.5 percent in 2018. And 16.1 percent said they feel challenged in determining which leave laws apply to their organization, up from 8.3 percent in 2017.

Depending on size and location, an employer may be required to comply with a variety of different leave laws, Zoller said. These leave laws include paid sick leave, paid family leave, bereavement leave, domestic violence leave, jury duty leave and military leave.

She suggested that employers invest in online compliance tools to help them stay up to date with changing laws and requirements on the federal, state and local level.

Best resources

Considering how to reduce compliance risks may be daunting. But regardless of the type of compliance issues an organization has, there are resources available. These resources include:

Internal or external legal counsel.
Online compliance tools.
Your insurance carrier.
Consulting firms that specialize in your compliance area of interest.

Don’t get bogged down by weighty compliance responsibilities. Creating smart partnerships can help an organization stay compliant.

April 21, 2020June 29, 2023

How technology fits into an HR manager’s job description

HR tech; hr manager; workforce management software

While human resources used to be a more functional role, over the years it has become more strategic, with more HR executives earning a seat at the table. On the front lines, HR managers also have an evolved job description, increasingly relying on technology to take over the automatable parts of their job so that they can focus on more human tasks.

Just as employees are expected to grow with the times and learn technology skills like data science and programming that make them more attractive to employers and relevant to the jobs of the future, HR managers must do the same.

Technology is gaining a larger role in many traditional HR duties, from recruiting to scheduling to performance management. This has been happening for a while and means that HR managers must be prepared to learn new systems and skills related to the software an organization uses. Relying on current skills is not going to get an HR manager far. They must be willing to be flexible, show curiosity and learn new skills.

Also read: HR 101 for new human resources managers

However, if an HR manager is tech-savvy enough to manage various HR technology systems, ultimately they will have more time to focus on the HR duties that require timeless skills like tact and empathy.

Programs enabled with artificial intelligence, for example, can help answer common employee and candidate questions, leaving HR professionals time to focus on other responsibilities rather than repeatedly answer the same common, basic questions. Chatbots can’t answer more complex questions, but they can alert a person to answer those queries.

In the recruiting context, technology can help HR managers quickly review resumes. This has both advantages and risks. On one hand, employers don’t spend as much time going over resumes. On the other hand, recruiting technology may make biased decisions if it has been programmed with biased training data. Still, with appropriate training data, this has potential to make the recruiting process better.

Also read: How the talent acquisition game has changed in the past decade

And with scheduling, workforce management software can help HR managers create schedules, even considering compliance laws that make scheduling complicated. Different states and localities have varied regulations regarding paid time off, sick leave and overtime. But the appropriate software can take regulations into account as someone creates a schedule for its workforce.

Meanwhile, some HR tasks should always retain the human touch. Managers should always terminate employees face to-face, avoiding doing so via text message, email or other forms of virtual communication. Managers also have key communications responsibilities — for those times as common as the annual open enrollment and as unique as a crisis or global pandemic. Being able to effectively, strategically and sympathetically communicate information is part of the HR job description that does not change with the advance of HR technology solutions.

Given these tech-enabled and human-centric HR tasks, when a company is looking for a new HR manager, employers should include certain responsibilities in their job description. Some of these skills are constant:

Consults legal counsel to ensure that policies comply with federal and state law.
Develops and maintains a human resources system that meets top management information needs.
Oversees the analysis, maintenance and communication of records required by law or local governing bodies, or other departments in the organization.
Advises management in appropriate resolution of employee relations issues.

Other responsibilities can likely be streamlined through technology:

Recruits, interviews, tests and selects employees to fill vacant positions.
Responds to inquiries regarding policies, procedures and programs.
Administers benefits programs such as life, health and dental insurance, pension plans, vacation, sick leave, leave of absence and employee assistance.
Prepares budget of human resources operations.
Responds to inquiries regarding policies, procedures, and programs.

Additionally, the rise of technology solutions adds extra responsibilities to that list, like understanding how to use several types of tech tools. These include:

Knowing how to use social media to post jobs, research candidates and communicate with employees.
Knowing how to use an applicant tracking system.
Using talent management software and learning management systems can help you streamline hiring, onboarding, training and retention processes.
Using time and attendance software to quickly and efficiently create compliant, fair schedules.

While HR practitioners are expected to do more than ever before, they have more technology and tools available to make their jobs more efficient in many ways.

October 29, 2019October 28, 2019

Best Practices for ADA Compliance

This summer marked the 29^th anniversary of the original Americans with Disabilities Act.

I have Type 1 Diabetes, which makes me a beneficiary of the ADA (as amended). The ADA protects my right to wear my insulin pump on a plane, eat a snack when my glucose is low and bring needles when I go to court. As an individual, I rely on ADA protections on a daily basis.

As an attorney, I regularly counsel employers who feel overwhelmed by administering such a technical law.

Put succinctly, Title I of the ADA requires employers to make certain reasonable accommodations for otherwise qualified individuals with disabilities. This is easier in theory than practice. Even a letter-perfect ADA policy might be insufficient if management is not properly trained or if employees are not given guidelines for how to raise the need for a potential accommodation. There are, however, some steps employers can take to protect themselves and their employees.

The ADA requires employers to engage in an “interactive process” with an employee who signals a potential need for an accommodation.

If a company doesn’t know about the problem, it’s difficult to address the issue or provide the accommodation. Clear policies outlining how employees should request an accommodation are essential. This typically includes specific direction on whom to contact and how. Employees at all levels should be educated on how to address a possible accommodation need.

By contrast, policies that are silent on this point or that direct employees to an “immediate supervisor” or “management” could foster dead-end conversations with someone who inadvertently misinforms an employee or ventures to make his or her own determination of whether the individual has a legally protected disability, creating significant liability for the company.

The corollary is training management at all levels on how to respond to an employee’s remark that “the fluorescent lights give them migraines” or that they “can’t stand at the register for the whole shift.” If the employee’s communication could indicate a need for a medical accommodation, liability could arise for the company even if the individual to whom it is disclosed is not serving in an official HR role.

Also read: A Textbook Lesson on the ADA’s Interactive Process

Consider the company that recently landed in hot water when a well-intentioned but misinformed supervisor unequivocally informed an employee that she could not miss work or take a leave of absence to treat her anxiety. The employee subsequently resigned. By failing to direct the issue through the proper channels, the supervisor misinformed the employee, failed to fulfill the company’s legal obligations, caused the employee to resign and led to costly litigation that could have been avoided with an ADA-compliant response.

Well-intentioned employers may also miss the mark determining whether the individual has a “disability.”

While it may seem straightforward, ADA protections extend to conditions that may not be visible, and the determination is highly fact-specific. For example, migraines, irritable bowel syndrome and mental health issues may be considered disabilities in the right circumstances.

While employers may request certain medical information under appropriate circumstances, it should be handled with care to avoid legal violations for mishandling medical information. This, again, makes it essential to direct employees to the appropriate recipient for such a disclosure.

Even if an individual has a legally protected disability, the ADA does not require that an employer automatically provide the requested accommodation. It does, however, require an accommodation that is reasonable, i.e., one that does not pose an undue hardship for the employer.

Reasonableness is a fact-specific determination that should be made through an interactive process between the employer and the individual. Depending on the circumstances, it could include anything from a modified work schedule to providing accessible workplace equipment, or even a leave of absence from work. The fact that it would cost the company money, or that co-workers will be jealous, or that you’ve always scheduled shifts for specific eight-hour windows, does not automatically mean that the accommodation is unreasonable.

Returning to the example above about the employee with anxiety, the company was not under an obligation to give the employee precisely what she requested. What was not permissible, however, was her supervisor’s immediate rejection of the accommodation that she requested without further dialogue about what she needed to do her job.

Also read: An Expensive Lesson on Disability Harassment

To avoid liability, employers should position employees to navigate complicated medical issues when they arise. At a minimum, everyone should be trained to direct inquiries to the same, central location, such as HR or a member of upper management. Finally, legal advice should be sought when the answer is in doubt; it is cheaper to resolve an issue on the front end than to clean up in litigation.

August 26, 2019April 11, 2023

3 Steps to Navigating Effective Wage and Hour Compliance

restaurant industry employees, wage and hour compliance for employers

Restaurant operators face many unique challenges — labor management being a top one.

In addition to today’s tight labor market, operators must also manage high employee turnover, complex scheduling as well as ever-increasing regulations around hour, wage and tip reporting requirements.

It’s no surprise that the restaurant industry continues to be a major target for Fair Labor Standards Act and class-action litigation. This type of litigation has proven to be costly in recent years as claims can be triggered by any number of employee complaints, including pay and hourly discrepancies.

In 2018 alone, the U.S. Department of Labor collected more than $42 million in employee back wages from the food services industry. This amount will only continue to increase as attorneys are now spending enormous resources on TV, radio, billboards and social media marketing campaigns to attract and inform hospitality employees on compliance violations.

Because much of the wage and hour legislation is new, and not coming off the back of federal law, there is little case history or precedence. And while there is a risk that employers do not pay their employees correctly under these new rules, the greater risk is that they do not have sufficient processes and auditable history in place to demonstrate compliance when challenged. This leaves restaurant operators vulnerable.

To avoid costly and time-consuming litigation, here are three steps restaurateurs can take now to better manage wage and hour compliance.

1. Begin internally: Start by educating managers on the statutory requirements for scheduling and paying employees, which can vary from city to city and state to state. For example, San Francisco, Seattle and the state of Oregon have started to implement “secure scheduling” or “predictive scheduling” ordinances. These rules require employers to provide schedules to employees up to two weeks in advance and extra pay if the schedules are changed. This creates a burden for employers who are not accustomed to being locked down so far in advance.

Once managers are up to speed on the current legislative landscape, conduct a thorough wage and hour audit to identify any existing or potential violations. The most common violations we see are the misclassification of employees as exempt vs. non-exempt status, the improper calculations of overtime wages for tipped employees, failing to maintain valid tip pools and the misuse of the federal tip credit.

The violations mentioned above are fairly easy to prevent; it simply takes commitment. Therefore, the last step should be to make compliance a companywide initiative by assigning responsibilities to someone internally or through an outsourced HR relationship. As the complexity of managing a workforce seems to grow exponentially each year with the addition of new legislation, continue to evolve internal processes and train managers to help ensure future compliance.

2. Enlist technology: In addition to scheduling requirements, operators are also required to manage employee breaks. For instance, in California, if a meal break starts just one minute later than required, the employer must pay an additional hour of pay to the employee. In New York, employers must pay an additional hour pay (called spread of hours) if the daily work schedule spans greater than 10 hours, regardless of the number of hours worked.

As pay and scheduling requirements vary depending on the location of the business, it’s nearly impossible for operators to manually manage multiple locations on their own. Restaurant-specific technology, with legislation and business rules built in, can enable operators to proactively manage compliance as well as provide an auditable history should claims of noncompliance arise. Utilizing technology can also help operators significantly reduce payroll errors as well as support and drive scheduling and time and attendance compliance efforts.

3. Educate employees: The expansion of restaurant locations and low unemployment has made it more difficult to find labor. These labor challenges often have a negative impact in the areas of training and enforcing best practices, areas that impact wage and hour compliance. Once you have finalized your company’s wage and hour-related policies — and have the technology in place to automate compliance — the final step is to effectively communicate these policies to your employees. Educating employees regarding their compensation, rights and obligations and encouraging them to come to management with any questions can help to significantly minimize future wage and scheduling claims. Policies can be communicated directly during daily shift meetings and through monthly training classes as well as in the employer handbook, which should be updated regularly.

With the daily demands of operating a restaurant, many lack the time needed to effectively manage wage and hour compliance. By following these tips, operators can significantly reduce their risk of noncompliance as well as more efficiently manage their business.

January 7, 2019June 29, 2023

Your 2019 Employment Law Compliance Checklist

Today is the start of the first full week of 2019. Which means it’s a perfect time to take a step back and review your efforts at HR and employment law compliance for the coming year.

This list is not mean to be complete or exhaustive, but should provide a high level look at the top 20 issues that you should be reviewing this year, and every year for your business.

☑️ How many employees do you have (15 / 20 / 50)?

☑️ When is the last time your handbook has been reviewed and updated?

☑️ When was your last harassment / respectful workplace training?

☑️ Do you require restrictive covenants for key employees?

☑️ Do you have employees that work in states in which marijuana is legal?

☑️ Do you have federal contracts?

☑️ Are your employment law posters up to date?

☑️ Has your state or local minimum wage increased?

☑️ How are you calculating and paying overtime to non-exempt employees?

☑️ When did you last analyze your exempt employees?

☑️ Do you have independent contractors?

☑️ Is all of your workplace OSHA compliant?

☑️ Are your OSHA 300 logs up to date and your 300A form posted?

☑️ Are your FMLA forms up to date?

☑️ Are you managers trained on the ADA interactive process?

☑️ Are you job applications and workplace accessible for the disabled?

☑️ Do you know what devices are accessing your network?

☑️ Have you tested your network for security?

☑️ Are employees trained on cybersecurity compliance?

☑️ Do you have necessary and appropriate insurance (EPLI / Cyber / D&O)?

Questions about how to execute this list in your business? Call your employment counsel.

Also read: EEOC Offers Sage Advice on Following Checklists for Harassment Compliance

Also read: Workplace Compliance By Carrot Trumps Compliance By Stick