Questions surrounding wages, salaries, and bonuses are common and misconceptions about them are prevalent. Below are some of the most frequently asked and misunderstood questions relating to them.
When is overtime compensation owed?
If an employer cannot prove it deserves an overtime exemption, the business must pay overtime on both a daily and weekly basis. Overtime pay is due to such “non-exempt” workers, even if they receive salaries. Special overtime rules apply after 12 worked hours in a day, and on the 7th day of a work week. And different overtime rules apply to workers covered under alternative workweek arrangements, as well as those who live on the premises at care facilities. In many cases, the consequences of not complying with overtime rules is payment of wages in excess of $100,000 per employee.
Why do Salaried Workers still have to be paid overtime?
Both federal and state law have two sets of requirements for a business to qualify for an overtime exemption. The first requirement is that the employee be paid a “guaranteed” salary. The second requirement is that the employee spend more than 50% of the workweek performing managerial, supervisory, or other high level management functions. Businesses often fail these two tests by either (a) paying a “non-guaranteed” salary or (b) failing to assign management work consuming more than 50% of the employee’s work hours. Failure to meet any one of these exemption tests means the business instantly owes three years of overtime wages to that employee.
Why are proper pay stubs so critical?
Hundreds of employees are now filing lawsuits, on behalf of themselves and all the others in the workplace, when the pay stub has even a single inadequacy. Each pay stub must comply with nine (9) requirements of California law. Failure to comply with even one of those requirements can result in tens of thousands of dollars in liability.
When is the final paycheck due?
California law is more stringent than federal law, and our state’s law requires the final paycheck be offered to the employee either on the actual date of termination, or in some resignation cases, three days afterwards. The penalty for not having that paycheck ready is severe – the business has to compensate the worker an additional 6-weeks of pay. Final pay rules for other wages, salaries, and bonuses are slightly different.
Are verbal or emailed agreements acceptable for commission arrangements?
California now requires that every commission agreement be in writing and provided to the employee. In addition, the IWC-Orders require that all commission calculations be retained and explained to the employee. Most businesses do not realize (a) any ambiguity in the commission agreement must be interpreted to the benefit of the employee, (b) forfeitures of commission are disfavored, and (c) statements that the employer can control how the commission agreement is interpreted, are generally not lawful.
What documents are required in every personnel file?
Most business are unaware of the specific documents required when personnel files are audited. Documents related to immigration status, tax deductions, wage information, and workers compensation are all required in today’s personnel files. Most small businesses need help in understanding and compiling the required documents that comply with federal and state laws.
To make an appointment to discuss your wages, salaries, and bonuses issue, please call 408.796.7551, or fill out the contact form with a brief description of your employment issue.