MARCH 2016 – Top ten things employers do to get sued

Employers’ most important tool of operation to keep them out of Labor Board Hearings and courtrooms is information. For the next several months a series of “must know” facts about employment issues will be published in the chamber newsletter. The information was provided CalChamber HR Specialists.

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The top ten things employers DO to get sued

Employers unintentionally may violate employment laws, simply by trying to provide some flexibility for an employee, save money for the company, or just be nice.

The following is a list of the top 10 mistakes that may lead to employment lawsuits. Keep in mind that this list will not apply to all employers, as regulations and collective bargaining agreements may override these general rules.

Classify all employees as exempt, whether they are or not

It is easier to pay everyone a salary, rather than dealing with meal and rest breaks, overtime, time records and such. Why not just pay everyone a salary? They’ll like the fact that they always make the same amount of money each pay period, and it won’t be a problem.

Under both state and federal law, certain types of positions may be exempt from overtime requirements, as well as meal and rest breaks. Other positions may be exempt only from overtime. An exempt employee is usually someone who is paid a specified amount of money regardless of the number of hours worked in a week. An employee who does not qualify for one of the exemptions is considered to be nonexempt and therefore subject to overtime, as well the required meal and rest breaks and time-keeping requirements.

Merely paying someone a salary does not guarantee that employee is truly exempt, nor do job titles. An exempt employee is normally someone who is a high-level executive, administrative or professional employee. Additionally, certain artists and outside sales staff may be exempt.

Employers sometimes designate employees as “nonexempt salaried”. This status does not exist. A nonexempt employee must be paid for all hours worked in the pay period, including overtime. There is a specific requirement in California that all hours worked and the corresponding rates of pay be included on the detachable portion of the employee’s check.

More employers are being sued for failure to provide meal and rest periods for nonexempt employees. This may result from improper classification of an employee as exempt. If an employee is truly nonexempt but classified as exempt the employer is neither tracking the hours worked, nor the meal and rest breaks, since exempt employees are not subject to such requirements.

Once the employee challenges the exempt status of the job, the additional wages and penalties start to add up. These include back pay for overtime, penalties for failure to pay overtime, additional “wages” for failure to provide meal and rest breaks and penalties for failure to pay all wages at termination, if the employee is no longer with the company. There are also penalties for failure to provide employees with the required wage statement information.

The nonexempt employee may be joined by other employees who wish to challenge their exempt status. The class-action lawsuit on the basis of missed meal and rest breaks as well as exempt status is rapidly becoming popular with plaintiffs’ attorneys.

Be nice to employees-let them take lunch whenever they want to

Employees must be provided at least a 30-minute, unpaid off-duty meal period if they are employed for a work period for more than 5 hours. The meal period must be provided no later than the end of the employee’s fifth hour of work.

Failure to provide the meal break within this time frame can result in one additional hour of wages owed to the employee at the employee’s straight time pay. The additional wage must be paid in the pay period which missed meal break occurred.

Your recordkeeping practices should reflect that you provide you employees their meal break before the end of the 5th hour of work. “Late lunches”, after the end of the employee’s 5th hour, are not permitted. “Early lunches” may be allowed, as long as the lunch is provided no later than the end of the fifth hour of work.


Next month’s edition will address “Independent Contractor” classification errors, harassment and discrimination training mistakes and workweek schedules.