California Employment Law Advocate : California Employment Lawyer & Attorney : Robert Ottinger Law Firm : California, San Francisco, Los Angeles, Oakland : workplace discrimination, harassment, severance packages, wrongful termination, retaliation, sexual harassment, Family Medical Leave Act, overtime violations, executive employee contracts,

This is a common question.  Believe it or not, your employer can require you to work overtime in California.   An employer can even discipline employees for refusing to work overtime.   The law only requires that you be paid time and half for each hour of overtime that you work, but you do have to work overtime if asked.    Of course you can refuse, but your employer is free to fire you.   If your company requires overtime and you don’t want to do it, then vote with your feet and find another job – that is your only recourse. 

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People often want to know if they are entitled to overtime pay if they are paid a salary.   Most of the time people people wrongly assume that overtime pay is only for hourly workers.  

Being paid a salary has no bearing at all on your right to receive overtime pay.   Rather, the nature of your work is really all that matters. A salaried employee must be paid overtime unless they meet the test for exempt status as defined by federal and state laws, or unless they are specifically exempted from overtime by the provisions of one of the Industrial Welfare Commission Wage Orders regulating wages, hours and working conditions.

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People call and ask this question all of the time.  We always tell them that yes, your employer does have to pay you overtime even if your company did not approve it.

Here is the formal answer to this question provided by the California Department of Labor.

Yes, California law requires that employers pay overtime, whether authorized or not, at the rate of one and one-half times the employee's regular rate of pay for all hours worked in excess of eight up to an including 12 hours in any workday, and for the first eight hours of work on the seventh consecutive day of work in a workweek, and double the employee's regular rate of pay for all hours worked in excess of 12 in any workday and for all hours worked in excess of eight on the seventh consecutive day of work in a workweek.

An employer can discipline an employee if he or she violates the employer's policy of working overtime without the required authorization. However, California's wage and hour laws require that the employee be compensated for any hours he or she is "suffered or permitted to work, whether or not required to do so." California case law holds that "suffer or permit" means work the employer knew or should have known about. Thus, an employee cannot deliberately prevent the employer from obtaining knowledge of the unauthorized overtime worked, and come back later to claim recovery. The employer must have the opportunity to obey the law.

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In California, an employer may lawfully deduct the following from a person’s wages:

• Deductions that are required of the employer by federal or state law, such as income taxes or garnishments.
• Deductions expressly authorized in writing by the employee to cover insurance premiums, hospital or medical dues or other deductions not amounting to a rebate or deduction from the wage paid to the employee.
• Deductions authorized by a collective bargaining or wage agreement, specifically to cover health and welfare or pension payments.

Most any other kind of deduction from your pay would violate the Labor Code.  

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Companies often try to pass on certain business expenses to their employees.  They typically do this is by making deductions for expenses such as uniforms from an employee’s pay and this is illegal.   Some deductions are permissible if they are truly for the benefit of the employee and that subject will be covered in the next blog post.   But here are some examples of common illegal payroll deductions:

1. Gratuities.  An employer cannot collect, take, or receive any gratuity or part thereof given or left for an employee, or deduct any amount from wages due an employee on account of a gratuity given or left for an employee.  Labor Code Section 351  However, a restaurant may have a policy allowing for tip pooling/sharing among employees who provide direct table service to customers.
   
2. Photographs.  If an employer requires a photograph of an applicant or employee, the employer must pay the cost of the photograph. Labor Code Section 401
   
3. Bond.  If an employer requires a bond of an applicant or employee, the employer must pay the cost of the bond. Labor Code Section 401
   
4. Uniforms.  If an employer requires that an employee wear a uniform, the employer must pay the cost of the uniform. Labor Code Section 2802, Industrial Welfare Commission Orders, Section 9.  The term "uniform" includes wearing apparel and accessories of distinctive design and color.
   
5. Business Expenses.  An employee is entitled to be reimbursed by his or her employer for all expenses or losses incurred in the direct consequence of the discharge of the employee’s work duties. Labor Code Section 2802
   
6. Medical or Physical Examinations.  An employer may not withhold or deduct from the wages of any employee or require any prospective employee or applicant for employment to pay for any pre-employment medical or physical examination taken as a condition of employment, nor may an employer withhold or deduct from the wages of any employee, or require any employee to pay for any medical or physical examination required by any federal or state law or regulation, or local ordinance. Labor Code Section 222.5

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In these challenging economic times (and also in good times) companies try to save dollars by hiring people and labeling them as independent contractors instead of employees.   We get a lot of calls from people who want to know what the difference is between these two labels. 

First, the independent contractor label is usually good for the company and bad for the person.  The company saves money because Independent contractors are not entitled to receive any benefits such as health insurance.  This is a huge savings for companies.  

I write this post so people who are working as independent contractors can tell if they are being illegally deprived of benefits.  Here is an excerpt from the California Department of Industrial Relations that explains how they determine if someone is an independent contractor or an employee:

The most significant factor to be considered is whether the person to whom service is rendered (the employer or principal) has control or the right to control the worker both as to the work done and the manner and means in which it is performed. Additional factors that may be considered depending on the issue involved are:

1. Whether the person performing services is engaged in an occupation or business distinct from that of the principal;
2. Whether or not the work is a part of the regular business of the principal or alleged employer;
3. Whether the principal or the worker supplies the instrumentalities, tools, and the place for the person doing the work;
4. The alleged employee’s investment in the equipment or materials required by his or her task or his or her employment of helpers;
5. Whether the service rendered requires a special skill;
6. The kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the principal or by a specialist without supervision;
7. The alleged employee’s opportunity for profit or loss depending on his or her managerial skill;
8. The length of time for which the services are to be performed;
9. The degree of permanence of the working relationship;
10. The method of payment, whether by time or by the job; and
11. Whether or not the parties believe they are creating an employer-employee relationship may have some bearing on the question, but is not determinative since this is a question of law based on objective tests.

Even where there is an absence of control over work details, an employer-employee relationship will be found if (1) the principal retains pervasive control over the operation as a whole, (2) the worker’s duties are an integral part of the operation, and (3) the nature of the work makes detailed control unnecessary. (Yellow Cab Cooperative v. Workers Compensation Appeals Board (1991) 226 Cal.App.3d 1288)

Other points to remember in determining whether a worker is an employee or independent contractor are that the existence of a written agreement purporting to establish an independent contractor relationship is not determinative (Borello, Id.at 349), and the fact that a worker is issued a 1099 form rather than a W-2 form is also not determinative with respect to independent contractor status. (Toyota Motor Sales v. Superior Court (1990) 220 Cal.App.3d 864, 877).

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Companies frequently “misclassify” employees by giving them inappropriate titles, paying them a salary and depriving them of overtime pay.   It is a dirty secret.  Just give an employee a nice title and pay them a salary and they will never know about all the overtime pay they are missing.  People often think that overtime pay is only for people who are paid by hour or for lower ranking employees.   This is not true.   

The overtime laws do not care about titles or rank or if you are paid by a salary.  Your right to overtime pay is based entirely on the work you do – labels and method of pay are not important. 

A good example of the label game is the so called “manager” or “assistant manager.”   Someone who is truly a manager is not entitled to overtime pay.   But you are not a manager unless you spend at 50% of your time actually managing other people.   Many managers only spend a small fraction of their time managing and instead spend most of their time doing other work.   A large retail chain was recently caught misclassifying its managers.  It had to pay millions in overtime to their store managers because the managers only spent 20-30% of their time managing and spent the other 70% of their time stocking shelves, sweeping floors and doing other retail work.  

Another good example of the label game is a company that had a staff of “engineers.”   None these “engineers” had engineering degrees and none of them had even graduated from college.   Rather, these engineers did technical work and design on pumps and other mechanical products.   The company did not pay its engineers overtime pay because they were misclassified as professional employees.   Certain professionals such as lawyers, doctors, highly trained or educated scientists or the like are exempt from overtime.   But these so called '”engineers” were not exempt because they were not highly educated or trained and therefore they had the right to overtime pay. 

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People often call our law firm to find out how overtime rates are applied in California.   Unlike many other states and federal law, California overtime is based on a work day and not a work week.   In California, overtime must be paid for each hour worked over 8 hours in a work day.   It does not matter how many hours are worked in the week, all that matters is how many hours are worked on a given work day.  

Federal law is much different.   Under the Fair Labor Standards Act (the federal law), overtime is calculated on a weekly basis. Under federal law, a person is entitled to overtime for each hour worked over 40 in a work week.   A person might work 12 hours on a given work day and not be entitled to any overtime so long as that person works less than 40 hours during that work week.  

California employees, however, need not worry about the federal law because that does not apply to them.   Instead, the California daily basis test applies to them instead of the federal weekly basis test.  The bottom line is that California employees are entitled to overtime pay for each hour worked over 8 hours in a given work day – regardless of how many hours they work during the week.  

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Today a person called our firm to see if he she was entitled to be reimbursed for the expenses she incurs on the road.    The caller, lets call her Jane, works for a large television station as a sales woman.   She travels throughout California selling advertising.   She is paid a commission for her sales.

Jane often drives her own car on her sales trips and has to pay for her own gas, hotels, calls, meals and every other expense that she incurs in connection with her employment.   Her company never reimburses her for these expenses.  Jane called our law firm today to see if she had the right to be reimbursed for the expenses. At our firm, we frequently get calls from sales people asking similar questions. 

The simple answer is yes, a company must reimburse employees for all NECESSARY expenses they incur as a direct consequence of doing their job.   This is required by California Labor Code Section 2802.  This right cannot be waived by agreement.  Under certain circumstances, a company can attempt to reimburse an employee for these expenses by increasing the salary or commission but only if there is a clear method of apportioning the amount used to reimburse expenses.  

We agreed to help Jane recover her expenses and hopefully Jane will soon receive a check to cover all of those past expenses.  

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